Improvements Needed in Controlling and Accounting for Treasury Banking Arrangements

AFMD-85-22: Published: Apr 3, 1985. Publicly Released: Apr 3, 1985.

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GAO reported on controlling and accounting for the Department of the Treasury's banking arrangements with commercial banks for handling federal agencies' deposits.

GAO found that Treasury's costs to have commercial banks process the deposits increase by about $14 million annually because delays deprive Treasury of the use of the funds and increase the government's interest costs, to the extent that Treasury must borrow additional funds to meet commitments. GAO also found deficiencies in controls over bank delays of funds collected through lockboxes and the Treasury Financial Communications System (TFCS).

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The budget submission states that the budget does not include compensation to banks from the use of government balances for facilitating the collection and control of government receipts. However, the submission does not specify the amount of the compensation. Treasury plans no further action.

    Recommendation: The Secretary of the Treasury should include costs of compensating banks for banking services in the Department's annual appropriation request.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Not Implemented

    Comments: The Financial Management Service's policy requires that accurate data be entered into the accounting system. Treasury does not believe there is a feasible alternative, therefore, this recommendation is no longer valid since Treasury has discontinued TFCS.

    Recommendation: The Secretary of the Treasury should determine whether it would be cost-effective to revise current procedures to allow the Federal Reserve to accept all funds received through TFCS, even though agency identification may be inaccurate.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: Treasury is drafting the necessary standards and is including these in the Treasury Financial Manual to be issued in December 1987.

    Recommendation: The Secretary of the Treasury should establish control standards for monitoring lockbox collections that must be implemented by all agencies using those systems.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Implemented

    Comments: Treasury officials stated that the monitoring system that has been installed will facilitate charges for delays.

    Recommendation: The Secretary of the Treasury should charge all banks delaying funds transfers.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Not Implemented

    Comments: Treasury will consider any Federal Reserve offers to operate the system.

    Recommendation: The Secretary of the Treasury should evaluate whether Federal Reserve operation of the revised Treasury General Account system would produce greater control at less overall cost to the government.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: Treasury issued a Treasury Financial Manual Bulletin to advise the agencies how to date deposit slips. However, the bulletin did not instruct the agencies on how to use those dates to detect bank delays. Treasury plans no additional work.

    Recommendation: The Secretary of the Treasury should advise federal agencies of their responsibilities for detecting bank delays.

    Agency Affected: Department of the Treasury

  7. Status: Closed - Not Implemented

    Comments: Treasury stated that it is not in a position, at this time, to examine alternative controls. Treasury wants to try to implement an automated system for identifying fund transfer delays before considering this recommendation.

    Recommendation: The Secretary of the Treasury should examine alternative controls for preventing and detecting bank delays in transferring agencies' deposits. These alternatives should include requiring agencies, rather than commercial banks, to initiate automated clearinghouse funds transfers from the Treasury General Account banks to Treasury's Federal Reserve account.

    Agency Affected: Department of the Treasury

  8. Status: Closed - Implemented

    Comments: According to agency officials, Treasury developed and implemented a system to monitor bank charges and compensation.

    Recommendation: The Secretary of the Treasury should consistently monitor bank charges and compensation to ensure that the overall costs to the government are minimized.

    Agency Affected: Department of the Treasury

 

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