Q1. What is an imprest
A1. 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.
Q2. What does the Imprest
Fund Policy Directive require of federal agencies?
A2. The Imprest
Fund Policy Directive required all federal agencies to eliminate agency
imprest funds by October 1, 2001, except where provided under the Imprest
Fund Policy Directive.
Q3. Why are agencies
being required to eliminate imprest fund accounts?
A3. The Department of the Treasury
(Treasury) requires agencies to eliminate imprest fund accounts as part
of an overall plan to implement the requirements of the Debt Collection Improvement Act of 1996
(DCIA) of 1996 (DCIA) and the recommendations of 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. The DCIA requires federal agencies
to make all payments electronically (other than payments under the Internal
Revenue Code of 1986), except where a waiver is granted by the Secretary
of the Treasury. The NPR Report recommended that agency imprest funds
be eliminated because most federal payments could be made electronically
and by other noncash alternatives. In addition, Treasury requires 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.
Q4. After October 1,
2001, under what circumstances are agencies allowed to make payments from
an imprest fund?
A4. Agencies may make payments
from an imprest fund after October 1, 2001, only if:
(a) A payment by electronic
funds transfer (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
(b) Payments involving national
security interests, military operations, or national disasters, such
that agency activities could be threatened or compromised;
(c) Payments made in furtherance
of a law enforcement action, where an agency would want to avoid
leaving any trail that may jeopardize a particular operation or result
in endangering the safety of an individual;
(d) The amount owed is less
than $25. Agencies may not split a payment greater than $25 into
two or more smaller payments in order to meet this exception;
(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. This exemption
is intended to provide agencies with some flexibility in determining the
conditions under which a form of payment other than cash would "seriously
injure" the government. Treasury intends for agencies to invoke the "serious
injury" waiver only under those circumstances that the agency has determined
would negatively impact individual agency program objectives.
Q5. Must an agency have
an existing waiver from the Treasury EFT Rule at 31 CFR 208 before invoking
an imprest fund waiver?
A5. Yes. In order for an agency
to invoke an imprest fund waiver, the agency must also invoke a waiver
from the Treasury EFT Rule. (See A4(a) above.)
Q6. How does an agency
invoke a waiver from the Imprest Fund Policy Directive?
A6. Waivers from the Imprest Fund
Policy Directive are determined by the agency making the payment. An agency
that requires clarification on any waiver may direct inquiries to Imprest
Inquiry. (Contact information also is provided at the end of this
document and on the FMS Web site.)
EFFECT ON EXISTING GUIDANCE
Q7. What effect does
the Imprest Fund Policy Directive have on existing imprest fund guidance?
A7. The Policy
Directive replaces all of the existing policy guidance contained in
the TFM and the Cashier's Manual. The Policy Directive is the only source
of policy guidance on imprest funds. The operational guidance contained
in the TFM has been merged into a new Cashier's Manual. The TFM Chapter
on imprest funds, I TFM Chapter 4-3000,
has been replaced and is now titled Third-Party Draft Procedures for
Imprest Fund Disbursing Activities.
Q8. For agencies that
have, or nearly have, eliminated their imprest funds, what "best practices"
have they implemented?
A8. Several agencies with diverse
missions have eliminated or nearly eliminated their use of imprest funds.
For example, a large benefit agency has eliminated most of its imprest
funds by using a combination of EFT payments and third-party draft payments.
This agency uses third-party drafts to make most emergency and administrative
payments that cannot be effectively made by EFT. The agency has guaranteed
the acceptance of its third-party drafts by making agreements with financial
institutions near each of the agency's offices. Another agency has nearly
eliminated its imprest funds by using a combination of EFT and convenience
Q9. What noncash payment
mechanisms are available to agencies to use instead of imprest funds?
A9. The two noncash payment mechanisms available
to agencies are EFT and Third Party Paper. EFT payment mechanisms include:
Direct Deposit, Vendor Express, Government SmartPay Cards for Travel,
Fleet and Purchases, Automated Standard Application for Payments (ASAP),
the stored value card (for a closed environment), Intra-governmental Payment
and Collection System (IPAC), and the US Debit Card program. Third-Party
Paper payment mechanisms are paper-based instruments, which include third-party
drafts and purchase card convenience checks.
Q10. What steps should
an agency take to close an imprest fund?
A10. An agency may close an
imprest fund by liquidating the fund through the return of cash and/or
uncashed checks to the agency financial office. The financial office will
deposit the funds with an SF 215 (Deposit Ticket) in order to credit the
agency's Agency Location Code (ALC) number. The SF 215 deposit liquidation
must also be reported by the financial office on an SF 224 (Statement
of Transactions) using the "(41)" account symbol prefix for liquidation.
(See Cashier's Manual, Replenishments and Liquidations.)
Q11. How will Treasury
monitor the imprest fund activity of individual agencies?
A11. Treasury will monitor agency
compliance with the Imprest Fund Policy Directive by reviewing each agency's
annual financial statement, which requires agencies to report imprest
funds in General Ledger Account 1120 - Imprest Funds.
Q12. Must imprest funds always
be set at a fixed amount?
A12. Most funds are established
at a fixed amount because it is easier to manage and standard internal
controls are effective. However, certain funds operate within a predetermined
range. Agencies may operate a fluctuating fund if it is not practicable
to maintain an imprest fund. For example, some overseas imprest funds
are funded by collections made in foreign currency. Rather than deposit
those funds and have to repurchase foreign currency to replenish the fund,
those funds are retained as imprest funds and used as payment for goods
and services. In addition, some overseas funds require flexibility in
the amount of the fund because, in some areas, cash is the only accepted
payment method and needs are varied.