(See table 1.) The Office of Management and Budget (OMB) publishes guidance to assist auditors in planning audits under the Single Audit Act of 1984. The Three Key Agents of CMIA Have Made Progress in Achieving the Act’s Purpose

Our review showed that the Department of the Treasury, federal program agencies, and the states have made substantial progress in achieving the act’s purpose of timely transfers of funds. Most state officials acknowledged that CMIA has helped heighten their awareness of cash management, but several expressed concern over what they viewed as added administrative burden. They published final rules and regulations for implementing CMIA; contracted for development of clearance patterns that could be used by states that did not develop their own; developed and issued an Implementation Guide, Federal and State Review Guides, and a Treasury-State Agreement Form Book; negotiated first year TSAs, within the time period specified in the act, with all but two states and second year agreements with all but one state; reviewed the documentation for reimbursement of allowable direct costs over $50,000 submitted by the states; received first-year annual reports from all the states and submitted them to program agencies for review of federal interest liabilities claimed; issued several policy statements intended to clarify regulations; submitted to OMB suggested language on CMIA-related audit objectives and procedures for inclusion in the planned revisions to the Compliance Supplement for Single Audit Act reviews; and developed plans to revise the CMIA regulations to streamline processes to make them more flexible. FMS also plans to eliminate the prohibition on reimbursable funding to provide states with greater flexibility in funding techniques. The first year of implementation of CMIA resulted in a cumulative net state interest liability due to the federal government of approximately $34 million. OMB plans to issue a revised Compliance Supplement during fiscal year 1996 which will address CMIA requirements. Since FMS is not a funding agency, entities would not be required to submit reports to FMS. Conclusions

The Cash Management Improvement Act has heightened awareness of cash management at both the state and federal levels. Additional copies are $2 each.
Why GAO Did This Study

Pursuant to a legislative requirement, GAO reviewed the Financial Management Service's (FMS), federal agencies', and states' implementation of the Cash Management Improvement Act (CMIA) during 1994.

What GAO Found

GAO found that: (1) FMS, federal agencies, and states have complied with CMIA requirements, established processes to implement CMIA, and made progress in achieving the act's goal of timely fund transfers; (2) total state interest liability during the first year of CMIA implementation was about $34 million; (3) states reported that while CMIA has improved their awareness of cash management, they are burdened by added administrative tasks; (4) states have not been able to effectively measure their compliance with CMIA, since the Office of Management and Budget has not published guidance for testing CMIA compliance; (5) FMS is taking action to address instances of state noncompliance in implementing CMIA which resulted in understatements of reported state interest liability; and (6) FMS is planning to revise CMIA regulations to allow states greater flexibility in funding techniques.