Weaknesses Persist in Defense Overseas Cash Management Program

GAO is continuing its examination of cash management and unnecessary interest costs incurred overseas by the Department of Defense (DOD). Since the Treasury bears the cost of public borrowings, Defense organizations have little incentive to improve the management of cash beyond the general employee responsibility to conserve Government funds.

Because replenishment techniques are cumbersome and inefficient, Defense employees keep about $6 million in excess cash onhand in the Far East. Because the Army did not know the available amount of dollars for payroll and disbursement purposes, it could not determine whether its agent in Europe was making appropriate and timely dollar purchases from lending institutions. Premature Treasury withdrawals and excessive cash holdings generate unnecessary interest costs, and GAO estimates that improvements could save about $1 million in such costs annually. The President, the House Committee on Appropriations, and the Department of the Treasury have all taken steps to improve financial management by DOD. DOD has also formulated a cash management review program and is planning a number of other actions.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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