Section 1 Chapter 1: Cash Management Flashcards
What are the eight financial management functions?
- Cash Management
- Investment Management
- Credit Management
- Acquisition Management
- Property Management
- Inventory and Supply Management
- Financial Management Systems
- Shared Services in Government
Prompt Payment Act (1982; 1988)
Requires federal agencies to pay invoices in a timely manner, generally within 30 days, or a penalty must be paid.
Cash Management Improvement Act (1990)
- Minimize the time between the transfer of funds to a state and the payout for program purposes.
- Ensure that federal funds are available when requested
- Assess an interest liability to the federal government, and/or the states, to compensate for the lost value of funds.
31 CFR Part 208 Management of Federal Agency Disbursements
Requires federal agencies to disburse payments via electronic funds transfer, with few exceptions.
Which two cash management functions should be done by two different people?
Collection/Recording and Deposit
Which periodic cash report analysis should be made to identify discrepancies or unusual transactions?
- Aged Collection Reports
- Aged Disbursements and Vendors
- Identification of collections and disbursements that are beyond normal parameters, both in activity and dollar amount
- Comparison of cash receipts and disbursements to budgeted and/or expected amounts for the period, and for year to date
- Review and payment timing and any penalties paid
Float
The period of time between when a check is issued and when it is presented for payment at the payers bank.
What is the purpose of the Federal Reserve System?
Provide the nation with a safer, more flexible, and more stable monetary and financial system.
What are the element of a property management system?
- Record keeping
-Safeguarding
-Maintenance
Debenture
Debt certificate (similar to a bond) that is backed ONLY by the general credit of the issuer, not its assets. It generally pays a higher interest rate.
What is a lockbox?
A post-office box, maintained by the government’s bank, to which payers are instructed to send their checks.
Federal Reserve Duties
- Formulate monetary policy through interest rates and money supply
- Participate in the payment system
- Distribute coin and currency
- Perform fiscal agency functions for the Treasury, certain federal agencies, and other entities
- Serve as the federal government’s bank
- Short term loans to depository institutions
- Broad based eligibility loans in unusual and exigent circumstances
- Consumer protection education
Banking Services provided to State and Local Banks
- Collection Services
- Concentration Bank Services
- Zero Balance Accounts
- Payment Services
- Short-term Borrowings
- Underwrite Bonds
- Investment advice/management
- Credit Cards
- Accounting services
- Safe deposit boxes and other safekeeping
- Information reporting services
- Bank account analyses
Zero Balance Account
An account into which cash from a master account is transferred at the close of banking each day to cover checks presented for payment
Compensating Balancing
Paying a bank by maintaining a minimum amount on deposit at the bank
What are the various Collection Systems
- Checks and cash deposits
- Lockbox services
- Concentration bank systems
- Over the counter collections
- Credit and debit cards
- Electronic collections
- Prepaid drawdown accounts
Improper Payment Identification Process
- Edit Checks: Identify disbursements that significantly exceed the norm for the type of payment involved.
- Data mining: Identify disbursements in the same amount to the same vendor within a given time period to discover potential duplicate payments
- Audit Checks: Verify that the amount paid on a contract for a specific expense category did not exceed the maximum amount permitted
Name the three possible payment types for all government program outlays.
- Proper
- Improper
- Unknown
What are the two main components of improper payments?
- Improper payments resulting in a monetary loss to the government
- Improper payments that don’t result in monetary loss to the government
Unknown Payment
Payments that could be proper or improper, but the agency in unable to discern whether the payment was proper or improper as a result of insufficient or lack of documentation.
OMB M-21-19
Requirements for Payment Integrity Improvement
Activities that reduce improper payments fall into three categories…
- Prevention
- Detection
- Recapture
