Imprest Funds

Background

Imprest funds are fixed- or petty-cash funds in the form of currency or coin that have been advanced as Funds Held Outside of Treasury. Historically, agencies have used imprest funds to make a variety of payments to all classes of payment recipients. Agencies typically used imprest funds to reimburse employees for expenses, to make small purchases, to make emergency beneficiary payments, and to pay informants, among other uses.

The National Performance Review Report, Report on the Elimination of Imprest Funds in the federal government Through the Use of Electronic Commerce (NPR Report), issued January 1996, recommended that agency imprest funds be eliminated because most federal payments could be made electronically and by other noncash alternatives. On April 26, 1996, the President signed into law the Debt Collection Improvement Act of 1996 (DCIA). This legislation requires the use of electronic funds transfer for most federal payments, with the exception of tax refunds, starting January 2, 1999. On September 25, 1998, Treasury published a final rule (EFT rule) implementing the requirements of the DCIA. The EFT rule established the circumstances under which waivers from EFT are available and set forth the responsibilities of federal agencies and payment recipients under the regulation, among other requirements.

Treasury's policy on the use of imprest funds has been updated to reflect the recommendations of the NPR Report and the requirements of the DCIA--implemented by the EFT rule--for federal payments. In addition, Treasury is requiring agencies to eliminate imprest funds because they are labor intensive and require relatively more internal controls than noncash payment mechanisms, and because the government does not earn interest on money held in these accounts.

Waivers

Waivers from the imprest fund policy are available to agencies in limited circumstances. A waiver is conditioned on the payment being waived under 31 CFR 208, and on satisfying one of the specific imprest fund waivers. The agency making the payment is solely responsible for determining if the waiver criteria are met. There is no requirement that agencies consult Treasury prior to granting a waiver, unless a federal agency requires clarification or interpretation of policy.

Imprest funds may be used when:

(a) A payment by EFT is waived in accordance with the provisions of 31 CFR 208, Management of Federal Agency Disbursements, at §208.4 Waivers; and

one of the following exceptions applies:

(b) Payments involve national security interests, military operations, or national disasters;
(c) Payments are made in furtherance of a law enforcement action;
(d) The amount owed is less than $25;
(e) The political, financial, or communications infrastructure of a foreign country does not support payment by a noncash mechanism; or
(f) Payments are made in emergencies, or in mission-critical circumstances, that are of such an unusual and compelling urgency that the government would otherwise be seriously injured, unless payment is made by cash.

Agencies using imprest funds for waived payments should continue seeking electronic or other noncash, cost-effective means to make payments. In addition, federal agencies are required to report their imprest funds in General Ledger Account 1120 - Imprest Funds on their annual financial statements.

Effect on Existing Guidance

The Imprest Fund Policy affects two FMS operating manuals, the Treasury Financial Manual (TFM), Volume I, at the former Part 4, Section 3000, Imprest Fund Cash Held at Personal Risk by Disbursing Officers, and the Manual of Procedures and Instructions for Cashiers (Cashier's Manual). The relevant policy sections of that former TFM part and the Cashier's Manual have been replaced by this Policy Directive. The operational guidance contained in the TFM will be merged into the Cashier's Manual. A new TFM Volume I, Part 4, Section 3000, Third-Party Draft Procedures for Imprest Fund Disbursing Activities has been issued covering Third Party Drafts.