DoD Financial Management Regulation Volume 5, …

[Pages:37]DoD Financial Management Regulation

Volume 5, Chapter 3 August 1999

TABLE OF CONTENTS

CHAPTER 3 KEEPING AND SAFEGUARDING PUBLIC FUNDS

0301 Cash Operations

0302 Cash Review Requirements

0303 Safeguarding Funds and Related Documents

0304 Advancing Funds to Agents

0305 Advancing Funds to Friendly Foreign Nations

0306 Travelers Check Program

0307 Weapons for Cash Program

Figure 3-1. Sample DD Form 1081 (Statement of Agent Officer's Account) (Advance of Funds)

Figure 3-2. Sample DD Form 1081 (Statement of Agent Officer's Account) (Return of Funds/Vouchers)

Figure 3-3. Model Intergovernmental Agreement

Table 3-1. Maximum Levels of Authorized Cash Holdings

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KEEPING AND SAFEGUARDING PUBLIC FUNDS

0301 CASH OPERATIONS

030101.

Appropriated Funds

A. Deposit Funds. Amounts appropriated by the Congress are held in an expenditure account by the Treasury subject to disbursement by DOs of the United States. Disbursements may be made by EFT, Treasury check, or cash. Cash funds are obtained by DOs as described in Chapter 7 of this volume. Every disbursing office authorized to make disbursements is identified by a DSSN. Each disbursement of funds is charged by the Treasury Department to the DSSN making the disbursement. DOs outside the United States are authorized to maintain official checking accounts with banks designated by the Secretary of the Treasury in accordance with regulations outlined in Chapter 14 of this volume. These special accounts outside the United States denominated in local or third country currencies and are known as limited depositary accounts (LDAs).

B. Cash Funds. When it is necessary to make all or some disbursements in cash, upon approval of the commander or other authority, DOs are authorized to maintain on hand, at their own personal risk, currency and coin required for official disbursements and accommodation transactions.

C. Selection of Payment Method. Subject to the policies outlined in this

volume, payments may be made by EFT, check, or cash. In the United States, EFT is the

prescribed method of payment and shall be utilized to the maximum extent possible. When use

of EFT is not practical; i.e., for payments going to a foreign country address where EFT is not

available, Treasury checks (rather than cash) are the preferred method of payment. Consult

section 2402.

030102.

Cash Held at Personal Risk. Funds that qualify as cash held at personal

risk include U.S. currency and coin on hand; foreign currency and coin on hand; imprest funds;

change funds; and cash on deposit in an LDA. Cash held at personal risk is for making miscella-

neous cash payments, making change, conducting accommodation exchanges, and other specifi-

cally authorized transactions.

030103.

Approving Authority. Service commanders of DOs, deputies, agents, and

cashiers of the DO within their commands are the approving authority for granting requests to

hold cash funds at personal risk. The DFAS Center Directors of DOs, deputies, agents, and

cashiers of the DO within their organizational structure, to include defense accounting officers

(DAOs), are the approving authority for granting requests to hold cash at personal risk. Cash on

hand must be kept to the minimum necessary to meet normal requirements. To ensure that good

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cash management procedures are in effect within the Department, the approving authority shall

review each request to ensure that it is in line with the total non-payroll requirements.

030104.

Requests for Approval. Each DO shall request authority to hold cash at

personal risk from the approving authority. Scheduled payday cash requirements, including the

amount required to cash payday paychecks, shall not be included in the request. The approving

authority is responsible for ensuring the amount of the request is within the guidelines set forth

below and that management controls exist to ensure that routine reviews of cash requirements are

being conducted. A new request to hold cash at personal risk shall be submitted semiannually (or

whenever a review of cash requirements will result in a major change), allowing sufficient

approval time for the cash authority to become effective on October 1 and April 1 of each fiscal

year. Requests to hold cash at personal risk shall be made in writing and shall include the name,

title, and duty station of the accountable requestor; a description of the payments and transactions

requiring the use of cash; a statement attesting that adequate facilities are available to safeguard

the cash; and a breakdown of where the cash will be held by accountable position. For

emergency and extraordinary expense funds security concerns may require omission of the duty

station, description of payments, location of facility, or other information that may compromise

classified information. However, this information shall be kept on file and available for review

by cleared personnel. The request shall include the amount to be held personally by the DO as

well as the amounts to be held by all deputies, agents, and cashiers of the DO. The request shall

not include the amount held by authorized imprest fund cashiers and authorized change fund

custodians. Imprest funds and change funds are approved separately and are not to be included in

the DO's cash holding authority. Approval of all requests shall be indicated by an appropriate

endorsement and the original request shall be returned to the DO for retention.

030105.

Determining Cash Requirements

A. General. In considering their cash requirements for disbursing and

accommodation transactions, DOs shall consider daily cash collections of all deputies, agents,

and cashiers of the DO over a representative period of time and average the results. If daily cash

collections exceed disbursement and accommodation needs, no further computation is necessary.

Otherwise, compute the cash requirements according to source and availability as shown in table

3-1. The portion of the DO's request to hold foreign currency at personal risk may be stated in

foreign currency units to preclude temporary increases due to extreme currency fluctuations. The

following types of disbursements which are authorized and/or required should be considered in

determining the minimum cash/negotiable instruments a DO must hold at personal risk to meet

normal daily cash transaction requirements:

1. Routine cash payments.

2. Emergency cash payments, e.g., emergency leave, etc.

3. Commercial contract travelers checks for travel cardholder

temporary duty travel advances.

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4. Cash travel advances for non-cardholder temporary duty travelers

and permanent change of station travelers.

5. Foreign currency requirements for accommodation exchanges.

6. tions. (See Chapter 4.)

Requirements for personal check cashing accommodation transac-

of the DO.

7. Cash transactions of remote/satellite deputies, cashiers, and agents

B. Special Circumstances. When special circumstances require DOs to increase their cash holdings beyond the amounts set forth above, the circumstances and duration of the expected need for increased cash shall be detailed in the request for approval to increase cash held at personal risk. The approving authority may authorize holding amounts temporarily in excess of the limits described above based on the circumstances provided. If the circumstances are more than temporary (over 30 days) or are expected to become permanent, the DO shall recompute the cash requirements based on the addition or deletion of anticipated services and requirements and submit a new request for approval.

C. Cash Collections. Coin and currency received as cash collections may be held for operating cash requirements up to the amount authorized to be held at personal risk. Cash collections that increase cash on hand above the authorized limit shall be deposited immediately.

030106.

Payroll Cash. Payroll cash is the cash required to meet mid-month, end-

of-month, or special payday requirements. DOs can forecast these requirements using historical

data and current personnel assigned figures. It should be ordered and withdrawn from the

institution or activity providing cash as close to the actual payday as practical. Any excess

amount drawn that results in the DO exceeding the authorized limit for cash held at personal risk

should be deposited no later than the next business day following payday.

030107.

Obtaining Cash Funds for Disbursing Purposes

A. Procurement by Exchange-for-Cash Checks. DOs are authorized to draw exchange-for-cash checks as described in Chapter 7 of this volume for procurement of cash necessary to meet authorized requirements. Funds can be obtained from other DOs, an FRB, FRB branch, or any commercial bank willing to provide the service. If the DO is unable to go to the bank to take possession of the funds due to excessive workload or location, arrangements can be made with the FRB or bank to ship the funds by registered mail or armored car. The commander shall approve and fund, as required, this type of delivery.

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B. Notification to the Bank. As required, DOs shall provide the bank with

advance notice of their cash requirements. At the time of notification, the DO should ascertain

and provide any other additional requirements of the financial institution such as date currency

required; identification required; denominations required; fees charged; and any policies or

procedures peculiar to the particular institution (e.g., letter of introduction).

C. Immediate Credit Procedures

1. Requirement. A few banks have negotiated agreements with the Treasury Department that permit them to receive immediate credit when cashing an exchangefor-cash check for DOs to obtain payroll cash (referred to as military payroll check by the Treasury Department). DOs who obtain their payroll cash from one of the banks so designated shall notify the Treasury by Telecopy-FAX or by message or telegram addressed to: U.S. Treasury Department, Financial Management Service, General Ledger Branch, (ATTN:MTAS), Washington, DC. There are two Telecopy-FAX lines available for this purpose: (202) 566-3020 and (202) 633-7728.

2. Notification. Notification should arrive at the Treasury Department at least 2 days before the transaction is to take place and should include the name and location of the disbursing office; the name and address of the bank; the amount of the check; the date the check will be presented to the bank (shall be same day cash is picked up); a statement that the bank will be requesting immediate credit; and the disbursing office point of contact and commercial telephone number. Do not use DSN numbers. If an error is detected, a correction shall be transmitted immediately. In the event that the check is not exchanged for cash, the DO immediately shall notify the Treasury Department.

D. Protection of Currency in Transit

1. Notification to Commander. When a DO or any other person leaves the disbursing activity with official cash funds in excess of $10,000, or for the purpose of picking up official cash funds in excess of $10,000, the installation commander and the security police shall be notified. Such notice may be made through the command duty officer or other duty officer by reporting the time of departure, destination, estimated time of return, amount, and the source or disposition of the cash funds, as appropriate, for entry in the ship or station log.

2. Transporting Cash. Cash shall be secured at all times. Safeguarding of such funds is a command responsibility. Specifically, the responsibility for providing security rests with the commander of the activity who requested such funds be made available. In this regard, the decision whether to have an armed escort, how many, or the type of transportation to be used is all part of the command's responsibility. The command should consider such things as amount of funds to be protected, the distance and terrain to be covered, type of transportation available, and local security forces which may be called upon.

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3. Liability. The deputy, agent, or cashier who has signed for the

funds is pecuniarily liable for such funds until their return to the DO. If a deputy, agent, or

cashier feels that adequate security has not been provided by the command, then the agent may

refuse to disburse such funds and return the funds to the DO.

E. Verification of Money. The DO shall verify all cash received prior to acceptance. Non-sealed money shall be verified by actual count prior to acceptance or immediately upon receipt of shipment. Sealed new money bricks (presented with the FRB's packaging intact) can be verified by bundle count at the DO's risk. When the bundle is needed, the bundle should be verified immediately upon opening with individuals standing by to witness both the breaking of the seal and the count verification. Discrepancies shall be reported immediately by issuing a claim to the Treasury Department via the bank from which the money was obtained. Claims shall identify the bundle/brick in question and include a signed statement from the witnesses. The Treasury Department normally does not approve these claims. If the claim is not approved, apply the regular request for relief procedures. Receipts by shipment shall be accepted and verified in front of the witnesses immediately upon receipt in accordance with the above procedures, depending upon how the money is packaged.

F. Expenses. Bank charges and shipping costs that may be incurred when procuring U.S. currency shall be charged to the operation and maintenance funds available to the disbursing activity.

G. Registered Mail Shipments of Currency. This method of obtaining funds is highly discouraged. If no other sources of cash are available and cash must be obtained using this method, it shall be accomplished by sending an exchange-for-cash check to an FRB via registered mail. Also, the DO shall make arrangements with the FRB to pay the registered mail costs. As provided in the previous subparagraph, costs incurred in procuring U.S. currency shall be charged to the operation and maintenance funds of the disbursing activity. Upon notification that the shipment has been made, the DO shall take action to alert the shipper to trace the funds if they have not been received within a reasonable period of time; maintain a copy of the exchangefor-cash check and report the check as funds in transit on the SF 1219 until the cash is received from the FRB; and if the cash or any portion of the order is not received in a reasonable time, initiate diligent action as described in Chapter 5 of this volume.

H. Obtaining Cash by Transfer from Officer Relieved. The obtaining of cash funds by transfer from another DO without the issuance of an exchange-for-cash check is authorized only upon the relief of a DO and only from the DO being relieved.

0302 CASH REVIEW REQUIREMENTS

030201.

Quarterly Cash Verification

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A. Purpose. The quarterly cash verification is the physical count of the cash,

negotiable instruments, and other assets that comprise a DO's total accountability (including

cash, negotiable instruments, and other assets in the custody of all deputies and agents). It is a

management control that, along with other controls, can be used to gauge the overall health of a

disbursing operation. It is not meant to alleviate management's responsibility to direct and

monitor all facets of a disbursing operation.

B. Appointing the Cash Verification Team. The verification shall be conducted by a team of disinterested persons appointed by the commander. The appointment shall be made in writing and include at least two qualified personnel. At least one of the personnel must have accounting or disbursing experience. It is in a command's best interest to use the most competent personnel available. In the case where the DO also is the commander, the next higher commander in the administrative chain of command shall appoint the team. At small or remote locations, it may be desirable to limit the team to one member or have members appointed and provided from serviced or associated commands. Cash verification team members shall not be in the DO's chain of command. If possible, one member should be equal or senior in rank to the accountable individual. For imprest and change funds, especially those held at installations or activities other than the installation or activity of the DO, the commander who authorized the establishment of the fund and appointed the imprest fund cashier or change fund custodian is responsible for appointing the cash verification team. In all cases, the appointing commander shall require the cash verification team (or individual) to perform a verification of all funds held by deputies, branch office cashiers, disbursing agents, paying agents, collection agents, imprest fund cashiers, or change fund custodians, at least once each quarter. Cleared personnel will be appointed for the verification of emergency and extraordinary expense funds.

C. Cash Verification Procedures. Except as modified by this paragraph, the requirements of this volume shall be met by the cash verification team in conducting cash verifications. When desired by the commander appointing verifying officials, the DO shall conduct training for the verifying officials and/or provide written instructions with check-off lists. The specific procedures for conducting the verification are contained in appendix A. The team and the commander jointly are responsible to ensure that the verification is conducted randomly throughout a quarter. Verifications that are continuously held at or near the end of a quarter are counter productive. The quarterly cash verification may be omitted for any quarter in which a cash verification is made by representatives of an area audit office, a disbursing on-site examination team, or transfer of accountability has occurred.

D. Report of Verification

1. General. A written report of the results of each verification shall

be made. The original report shall be provided to the commander, a copy to the DO, and a copy

retained by the cash verification team. If funds are found to be in excess of that authorized to be

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held at personal risk in accordance with paragraph 030105 of this chapter, the report shall be

expanded to so state. Any shortage or overage in the DO's account-ability shall be reported as

prescribed in Chapter 6 of this volume. The verifying official(s) shall make an entry on the face

of the DO's daily statement of accountability, setting forth the result of the verification in

substance as follows:

"On (date) at (time) , the undersigned verified by actual count, cash in the amount of $

,

together with all documents supporting collections and disbursements, which (is)/(is not) in

agreement with this daily statement of accountability.

Signature and Rank of Verifying Official"

2. Limitations. Each report to the commander shall begin with the statement: "The quarterly cash verification is meant only to verify that cash and other assets for which the DO is accountable agrees with the total accountability amount recorded as on-hand on the DO's daily statement of accountability. It does not attest to the system of management controls or overall fiscal operation of the disbursing office. Strong management controls exercised by the appropriate members within the chain of command are mandatory and necessary to prevent and preclude major loss or fraud."

0303 SAFEGUARDING FUNDS AND RELATED DOCUMENTS

030301.

General. This section sets forth the responsibilities of commanders and

DOs for safeguarding public funds and the related instruments and documents. Its provisions are

equally applicable to deputies, agents, cashiers, and other custodians of public funds. DOs

should hold the number of accountable positions that require the storing of public funds to a

minimum. The most secure container that is available to a DO (vault, safe, etc.) shall first be

used for safeguarding currency; undelivered checks and bonds; negotiable instruments; public

vouchers; storing of blank U.S. Treasury checks, limited depositary checks, and U.S. savings

bonds; signature plates; safekeeping of valuables; and other records in that order. The command

security program should be written to take into account the maximum amount of each of these

items that would normally be on hand at any given time. Public funds and documents shall not

be stored in the same containers as classified material and documents.

030302.

Responsibilities

A. Commander. The commander is responsible for:

1. Ensuring that every individual entrusted with public funds is provided a vault, safe or other adequate secure facility (e.g., a strong box) for exclusive use and accessible only to that individual. If it is not possible to provide separate safes, separate locked compartments in one safe or strong boxes stored in one safe or vault shall be provided. To assure

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