Federal Investments Seminar Negative Balances September 3, 2003 Presented by Jeremy Durgin

Negative Balances An epidemic or just a small outbreak?

Negative Balance What is it? What causes it? What are the potential effects? How is it diagnosed? What to do about it?

What is it? FOCUS: Last Business Day of the Month. It is when a fund’s cash balance on Treasury’s General Account Ledger, according to the STAR system, becomes negative.

How is it diagnosed?

What causes it? Errors of the third kind Timing Differences Overdrawing

Causes – Errors of a third kind Disbursements recorded to wrong fund account by another agency Bottom Line – Balance Not Really Negative

Causes - Timing Differences Late recognition of receipts Utilization of estimates Recording/Reporting error Early recognition of disbursement Bottom Line – Balance Not Really Negative

Causes – Overdrawing Late recognition of disbursements Utilization of estimates Recording/Reporting error Early cutoff time Bottom Line – Balance Really Negative Improper Monitoring/Understanding

What are the potential effects? “No officer or employee of the United States shall make or authorize an expenditure from or create or authorize an obligation under any appropriation or fund in excess of the amount available therein; nor shall any such officer or employee involve the government in any contract or other obligation, for the payment of money for any purpose, unless such contract or obligation is authorized by law.” Anti-Deficiency Act

What are the potential effects? Upper management involvement Contacted by BPD personnel

What are the potential effects? Administrative, civil, and even criminal action Audit Findings

What to do about it? Preventive Medicine Treatment

What to do about it? Preventive Medicine “When a program agency plans to disburse moneys from a government investment account and the moneys in the account are invested in Treasury specials, the program agency must redeem securities in an amount sufficient to produce a cash balance in its account at least equal to the amount planned to be disbursed before making the disbursement.” Operating Circular – Section 6010

What to do about it? Preventive Medicine – cont’d Improvement to procedures Adequate Communication Adequate monitoring/understanding

What to do about it? Treatment Stop, Drop, and Roll Notify Bureau of the Public Debt (304) (fax) Early redeem, retract interest, make corrections, etc (as necessary)

Negative Balances An Epidemic or just a small outbreak? It’s up to You.