The Treasury’s Submitted Plan Is Unclear and Incomplete

The Secretary of the Treasury’s submitted plan does not demonstrate how it will enable the Treasury to meet the audit plan objectives required under the act. A written plan should define the audit’s objectives and the scope and methodology to achieve those objectives. The Treasury plan’s audit objectives are not clearly stated and do not include the findings and reporting elements that the Treasury expects to develop. The plan does not describe analytical methods for studying the holding of genuine U.S. currency abroad and developing estimates of counterfeit U.S. currency abroad. However, it describes elements of a methodology that might be used to study the use of genuine U.S. currency abroad. However, the plan does not fully explain how the Treasury intends to analyze the information obtained to reach conclusions about the use of U.S. currency abroad. The Treasury official responsible for developing the plan stated that the audit objectives—to study the use and holding of genuine U.S. currency in foreign countries and develop estimates of the amount of counterfeit U.S. currency circulating outside the United States each year—are the same as those stated in the act. Further, the official told us that, with the assistance of the Federal Reserve, the Treasury intends to submit a written addendum to Congress to better explain its proposed methodologies, with the caveat that these methodologies may change based on information obtained abroad during the course of the audits. They told us that the information obtained on genuine currency usage will also be reviewed to determine whether any of the information conflicts with their assumptions about the usage of genuine U.S. currency abroad. The Treasury Intends to Develop Estimates of Genuine U.S. Currency Held Abroad

According to the Treasury official responsible for developing the plan, the Treasury plans to address holdings by establishing estimates of the total amount of genuine U.S. currency abroad. To help assure that the Treasury corrects the deficiencies in the submitted audit plan, we recommend that the Secretary of the Treasury develop and submit an addendum to more fully explain the objectives and the methods the Treasury intends to use, including a discussion of assumptions and limitations associated with the use of the resulting information. Scope and Methodology

We reviewed the Antiterrorism and Effective Death Penalty Act of 1996 to determine its requirements for the Treasury’s audit plan. In doing so, we determined whether the plan would enable the Secretary of the Treasury to (1) study the use and holding of U.S. currency in foreign countries and (2) develop useful estimates of the amount of counterfeit U.S. currency that circulates outside the United States each year.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Secretary of the Treasury's audit plan on the uses and counterfeiting of U.S. currency in foreign countries, focusing on whether the plan will enable the Secretary of the Treasury to: (1) study the use of U.S. currency in foreign countries; (2) study the holding of U.S. currency in foreign countries; and (3) develop useful estimates of the amount of counterfeit U.S. currency that circulates outside the United States each year.

What GAO Found

GAO noted that: (1) the Secretary of the Treasury's submitted plan does not demonstrate how it will enable the Treasury to meet the audit plan objectives required under the Antiterrorism and Effective Death Penalty Act of 1996; (2) the plan does not clearly state the audit's objectives or the methodologies to achieve those objectives; (3) although the Treasury's plan identifies some elements of a methodology that could be employed to study the use of genuine U.S. currency abroad, it does not explain how the Treasury intends to analyze the information that might be collected; (4) the plan does not define the methodologies the Treasury expects to use to study the holding of genuine U.S. currency abroad and to develop estimates of counterfeit U.S. currency abroad; (5) the Treasury official responsible for developing the plan stated that the audit objectives of the plan are the same as those stated in the act; (6) he acknowledged that the plan does not fully address the methods for achieving the objectives; (7) this official and Federal Reserve officials said that the information obtained on genuine currency usage will be used to describe U.S. currency flows and will be reviewed to determine whether any of the information conflicts with their assumptions about the usage of genuine U.S. currency abroad; (8) the Treasury official stated that the Treasury intends to use a recently published Federal Reserve methodology to develop an estimate of the total holdings of genuine U.S. currency abroad; (9) the official also told GAO the Treasury would rely on an existing Federal Reserve methodology to develop rough estimates or ranges of estimates of counterfeit U.S. currency circulating outside the United States each year; (10) after GAO outlined its concerns about the submitted audit plan to Treasury and Federal Reserve officials, the Treasury official responsible for the plan told GAO that the Treasury, with the assistance of the Federal Reserve, planned to submit a written addendum to Congress explaining the Treasury's proposed methodologies in more detail, with the caveat that these methodologies may change based on information obtained abroad during the course of the audits; and (11) the Treasury official also indicated that the addendum would explain the assumptions the Treasury made and discuss the limitations associated with these estimates.