Cash Management Policy and Procedures Need Improvement

FGMSD-78-20: Published: Mar 17, 1978. Publicly Released: Mar 17, 1978.

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A recent review showed that the Department of Defense's (DOD) cash-on-hand balances exceeded requirements by about $50 million. If this money had been returned to the Treasury, Government interest costs could have been reduced by about $3.2 million annually.

In spite of promised action by DOD, cash-on-hand balances were still unnecessarily large in relation to operating needs. Excess balances could be reduced in the military banking facilities, finance and accounting offices, foreign currency accounts overseas, and aboard ships. Excess cash has been on deposit with military banking facilities overseas, and the central finance office in Europe had foreign currency accounts which were not needed with the military banking facilities. DOD has not developed criteria for the central finance offices to use in determining cash levels to be maintained at these facilities. Reviews showed that 26 military finance and accounting offices were holding about $15.5 million in excess cash, costing the Government about $1,075,000 annually in unnecessary interest costs. Excess cash balances continue because there is no incentive for Defense organizations to maintain minimum balances. The President has directed his reorganization staff to study cash management policies.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should: issue guidelines for determining the level of cash balances that should be maintained by central finance offices overseas, clarify DOD criteria for determining how frequently cash should be replenished at finance and accounting offices, and have the Secretary of the Navy develop detailed guidelines for determining what cash needs should be for deployed ships and ships in port.

    Agency Affected:

 

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