Review of Cancellation, Destruction, and Accounting for Unfit Currency

GAO is required by law to audit the cancellation, destruction, and accounting for currency unfit for circulation. A recent review indicated that the unfit currency operations carried out at Federal Reserve banks and branches are generally conducted in a satisfactory manner. In calendar year 1977, the Department of the Treasury's Bureau of Government Financial Operations conducted audits at the 37 Federal Reserve banks and branches, including observing and evaluating every phase of the unfit currency operations. Financial audits made by internal auditors included the counting and confirmation of selected lots of unfit currency before it was destroyed by incineration or pulverization.