Environmental Cleanup:

Cash Management Practices at Rocky Mountain Arsenal

NSIAD-96-145: Published: Aug 16, 1996. Publicly Released: Aug 16, 1996.

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GAO provided information on cash management practices at Rocky Mountain Arsenal.

GAO noted that: (1) the settlement agreement between the Army and Shell Oil Company does not provide for timely or efficient collection of environmental cleanup costs; (2) if the government does not collect the receivables in a timely manner, it will lose the opportunity to invest these funds in other projects; (3) poor cash management practices at the Arsenal have cost the government more than one million dollars since 1989; (4) the Army bills Shell quarterly rather than monthly because in the past the Arsenal did not have the capacity to process disbursements on a monthly basis; (5) the Army and Shell take 90 days to exchange quarterly payments and document cost claims; (6) the 30-day extension period has cost the government an additional $500,000 in interest costs since 1989; (7) changing from a 90-day payment cycle to a 60-day payment cycle could be accomplished without any additional cost to the government; (8) the government has lost more than $22,000 in interest for checks processed after the payment due date; and (9) the Army should consider using an electronic payment system, since it costs less, accelerates the availability of funds to the receiving party, improves internal controls, reduces remittance processing time, and lessens paper and postage requirements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: As a result of GAO's work, the Army has implemented the three recommendations. Procedures and systems to accommodate the changes in cash management practices are being designed and they are set to become effective with the start of the new fiscal year on October 1, 1997.

    Recommendation: The Assistant Secretary of the Army (Financial Management & Comptroller) should instruct the program manager at Rocky Mountain Arsenal to work with Shell to amend the financial manual accompanying the settlement agreement to bill monthly rather than quarterly.

    Agency Affected: Department of Defense: Department of the Army

  2. Status: Closed - Implemented

    Comments: As a result of GAO's work, the Army has implemented the three recommendations. Procedures and systems to accommodate the changes in cash management practices are being designed and they are set to become effective with the start of the new fiscal year on October 1, 1997.

    Recommendation: The Assistant Secretary of the Army (Financial Management & Comptroller) should instruct the program manager at Rocky Mountain Arsenal to work with Shell to amend the financial manual accompanying the settlement agreement to eliminate the extra 30 days currently allowed for the payment cycle.

    Agency Affected: Department of Defense: Department of the Army

  3. Status: Closed - Implemented

    Comments: As a result of GAO's work, the Army has implemented the three recommendations. Procedures and systems to accommodate the changes in cash management practices are being designed and they are set to become effective with the start of the new fiscal year on October 1, 1997.

    Recommendation: The Assistant Secretary of the Army (Financial Management & Comptroller) should instruct the program manager at Rocky Mountain Arsenal to work with Shell to amend the financial manual accompanying the settlement agreement to establish networks that exchange payments by way of electronic funds transfer, rather than by mail.

    Agency Affected: Department of Defense: Department of the Army

 

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