Treasury Cash and Debt Management:

Comprehensive Written Policies and Procedures Are Needed

AIMD-98-61R: Published: Feb 13, 1998. Publicly Released: Feb 13, 1998.

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Pursuant to a legislative requirement, GAO reviewed the Department of the Treasury's cash and debt management functions.

GAO noted that: (1) the Office of the Fiscal Assistant Secretary's Office of Cash and Debt Management (OCDM) and the Financial Management Service's Funds Control Branch (FCB) have not fully developed formal written policies and procedures for forecasting and tracking cash flows and monitoring federal debt relative to statutory debt ceiling limits; (2) because of the magnitude of federal receipts, outlays, and debt financing and the complexity involved in forecasting their impact on federal cash flows, Treasury's processes, systems and transaction flows in the cash and debt management areas should be sufficiently documented; (3) OCDM operates with a small, highly experienced staff and has experienced low staff turnover over the years, creating what appears to be a relatively stable work environment; (4) however, if staff should leave unexpectedly, the inadequate documentation of the OCDM's processes could expose the cash and debt management functions to inherent operational risks that could affect the fiscal activities the office is charged with achieving; and (5) while FCB's exposure to operational risks would not likely be as great as OCDM's, documenting FCB's processes is also important.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In response to the recommendation, Treasury staff have developed a written operating guide for cash forecasting for Treasury's Office of Cash and Debt Management (OCDM). The guide includes sections for estimating receipts and outlays as well as a section for the debt financing process. According to the Director of OCDM, the guide was developed using GAO's cycle memorandum for cash and debt management that was provided to OCDM in February 1998, and is comparable in detail to the cycle memorandum.

    Recommendation: The Acting Fiscal Assistant Secretary of the Treasury should ensure that comprehensive written documentation be developed and maintained for the key processes, systems, and transaction flows related to forecasting the federal government's daily cash balance and complying with the statutory debt ceiling.

    Agency Affected: Department of the Treasury: Office of the Assistant Secretary of the Treasury (Fiscal)

  2. Status: Closed - Implemented

    Comments: In response to the recommendation, Treasury staff in the Financial Management Service's Funds Control Branch have developed a high-level standard operating procedures document for tracking daily cash receipts and outlays. In addition, detailed standard operating procedures (SOPs) for key processes, systems, and transaction flows related to tracking daily cash receipts and outlays were completed to supplement the high-level document in December 1998.

    Recommendation: The Acting Fiscal Assistant Secretary of the Treasury should direct the Financial Management Service's Assistant Commissioner for Financial Information to develop and maintain comprehensive written documentation for the key processes, systems, and transaction flows related to tracking daily cash receipts and outlays.

    Agency Affected: Department of the Treasury: Office of the Assistant Secretary of the Treasury (Fiscal)

 

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