Treasury's Plans to Study Genuine and Counterfeit U.S. Currency Abroad
NSIAD-97-104: Published: Apr 11, 1997. Publicly Released: May 12, 1997.
- Full Report:
Pursuant to a congressional request, GAO reviewed the Secretary of the Treasury's audit plan on the uses and counterfeiting of U.S. currency in foreign countries, focusing on whether the plan will enable the Secretary of the Treasury to: (1) study the use of U.S. currency in foreign countries; (2) study the holding of U.S. currency in foreign countries; and (3) develop useful estimates of the amount of counterfeit U.S. currency that circulates outside the United States each year.
GAO noted that: (1) the Secretary of the Treasury's submitted plan does not demonstrate how it will enable the Treasury to meet the audit plan objectives required under the Antiterrorism and Effective Death Penalty Act of 1996; (2) the plan does not clearly state the audit's objectives or the methodologies to achieve those objectives; (3) although the Treasury's plan identifies some elements of a methodology that could be employed to study the use of genuine U.S. currency abroad, it does not explain how the Treasury intends to analyze the information that might be collected; (4) the plan does not define the methodologies the Treasury expects to use to study the holding of genuine U.S. currency abroad and to develop estimates of counterfeit U.S. currency abroad; (5) the Treasury official responsible for developing the plan stated that the audit objectives of the plan are the same as those stated in the act; (6) he acknowledged that the plan does not fully address the methods for achieving the objectives; (7) this official and Federal Reserve officials said that the information obtained on genuine currency usage will be used to describe U.S. currency flows and will be reviewed to determine whether any of the information conflicts with their assumptions about the usage of genuine U.S. currency abroad; (8) the Treasury official stated that the Treasury intends to use a recently published Federal Reserve methodology to develop an estimate of the total holdings of genuine U.S. currency abroad; (9) the official also told GAO the Treasury would rely on an existing Federal Reserve methodology to develop rough estimates or ranges of estimates of counterfeit U.S. currency circulating outside the United States each year; (10) after GAO outlined its concerns about the submitted audit plan to Treasury and Federal Reserve officials, the Treasury official responsible for the plan told GAO that the Treasury, with the assistance of the Federal Reserve, planned to submit a written addendum to Congress explaining the Treasury's proposed methodologies in more detail, with the caveat that these methodologies may change based on information obtained abroad during the course of the audits; and (11) the Treasury official also indicated that the addendum would explain the assumptions the Treasury made and discuss the limitations associated with these estimates.
Recommendation for Executive Action
Status: Closed - Implemented
Comments: Treasury submitted to Congress an addendum to more fully explain the objectives and the methodologies it intended to use to meet the audit objectives required under the Antiterrorism and Effective Death Penalty Act of 1996. In July 1997, GAO testified that the addendum described the Treasury's audit objectives, provided new information that made it easier to understand the methodologies the Treasury intends to use to develop estimates of the amount of genuine and counterfeit U.S. currency abroad, and provided current Federal Reserve estimates based on those methodologies; see "U.S. Treasury: Observations on Plans to Study Genuine and Counterfeit U.S. Money Abroad" (GAO/T-NSIAD-97-201, July 10, 1997). However, GAO also testified that the addendum did not: (1) fully describe the methodology the Treasury will use to collect, summarize, and report information on the uses of genuine U.S. currency abroad; or (2) explain what additional fieldwork or information is needed.
Recommendation: To help assure that the Treasury corrects the deficiencies in the submitted audit plan, the Secretary of the Treasury should develop and submit an addendum to more fully explain the objectives and the methods the Treasury intends to use, including a discussion of assumptions and limitations associated with the use of the resulting information.
Agency Affected: Department of the Treasury