U.S. Treasury

The Treasury Department's October 1996 audit plan to study the uses, holding, and counterfeiting of U.S. currency abroad did not explain how it would allow Treasury to meet the audit objectives required by law. (See GAO/NSIAD-97-104, Apr. 1997.) The plan's audit objectives were not clearly stated. It did not specify how Treasury intended to analyze the information that might be collected, and it did not define the methodologies that Treasury might use to estimate the amount of genuine and counterfeit U.S. currency in circulation overseas. After GAO explained its concerns to Treasury and Federal Reserve officials, Treasury agreed to provide an addendum to the plan. The addendum clarifies Treasury's audit plan, but questions remain. For example, the addendum does not fully describe the methodology that Treasury will use to collect, summarize, and report information on the uses of genuine U.S. currency abroad. Moreover, because many of Treasury's methodologies for developing estimates are based on existing data, it is unclear what additional field work or information is needed. The addendum does not explain how the audit steps from the original plan, particularly those for the interviews planned for future trips abroad, are to be incorporated into any of the methodologies described in the addendum.

GAO noted that: (1) its review of the Treasury's original plan submitted to Congress indicated that it did not explain how it would enable the Treasury to meet the audit objectives required under the act; (2) the plan's audit objectives were not clearly stated; (3) although the Treasury's plan identified some elements of a methodology that could be employed to collect information about the uses of genuine U.S. currency abroad, it did not specify how the Treasury intended to analyze the information that might be collected; (4) the plan also did not define the methodologies that the Treasury expected to use to estimate the amount of genuine and counterfeit U.S. currency in circulation abroad; (5) after GAO outlined its concerns to Treasury and Federal Reserve officials, the Treasury agreed to submit to the Congress an addendum to the plan; (6) the addendum's purpose was to more fully explain the objectives and the methodologies the Treasury intended to use; (7) on April 21, 1997, the Treasury sent its addendum to the Congress; (8) the addendum adds some clarity to the Treasury's audit plan, but some questions remain; (9) the addendum describes the Treasury's audit plan objectives, provides new information that makes it easier to understand the methodologies the Treasury intends to use to develop estimates of the amount of genuine and counterfeit U.S. currency abroad, and provides current Federal Reserve estimates based on those methodologies; (10) however, the addendum does not clearly address a deficiency in the plan that GAO previously reported; (11) specifically, the addendum does not fully describe the methodology the Treasury will use to collect, summarize, and report information on the uses of genuine U.S. currency abroad; (12) furthermore, because much of the Treasury's methodologies for developing estimates are based on existing data, it is not clear what additional field work or information is needed; (13) the addendum does not explain how the audit steps from the original plan, particularly those for the interviews planned for future trips abroad, are to be incorporated into any of the methodologies described in the addendum; and (14) for example, questions remain about what useful new information the overseas trips are expected to yield and how it will be integrated into the Treasury's estimates of the amount of genuine and counterfeit U.S. currency abroad and information on the uses of genuine U.S. currency abroad.