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Subject:  CASH MANAGEMENT

          10-40-00  Purpose
                10  Authority
                20  Scope and Applicability
                30  Billings and Collections
                40  Deposits
                50  Disbursements 
                60  Cash Advances
                70  Cash Held Outside Treasury
                80  Restrictions on Financial Transactions with 
                    Foreign Countries and International Organizations 
                90  Foreign Currency
               100  Responsibilities of OPDIVs, STAFFDIVs, and regions

10-40-00  PURPOSE

This chapter provides Departmental policy and guidelines for use in
establishing effective cash management practices in order to maximize
cash balances available to the Treasury for investment and to avoid
unnecessary borrowing to finance Federal programs.

10-40-10  AUTHORITY

Treasury Department Circular 1084 issued under 5 U.S.C.301 and 31
U.S.C.484, 492 (a), 492c, and 1002 requires all Federal Departments
and agencies whose financial transactions affect the cash account of
the treasury to ensure that financial activities are conducted in a
manner which (a) will make the maximum amount of cash available to the
Department of the Treasury on a continuing basis and preclude
unnecessary borrowing, (b) gives full consideration at all times to
the earning value of Treasury cash balances in determining the
cost/benefit relationship of financial decisions, (c) incorporates the
cash management practices contained therein. This circular establishes
the policy regarding cash management practices within the Federal
Government relating to the development and promulgation of
regulations, systems, and procedures. Treasury fiscal requirements
manual volume I, chapter 6-8000   Cash Management, supplements this
authority. It provides detailed fiscal instructions for implementing
the provisions of Treasury Circular 1084.

General Services Administration's Federal Procurement Regulations and
Office of Management and Budget's Circular A-125 implement the prompt
Payment Act (P. L. 97-177) require Federal agencies to pay interest
penalties when payments are late, and to take discounts only when
payments are made within the discount period.  Circular A-125 further
prescribes policies and procedures to be followed in paying for
property and services acquired under federal contract, defining
contract as any enforceable agreement, including rental and lease
agreements and purchase orders, between an agency and a business
concern.

10-40-20  SCOPE AND APPLICABILITY   

The policy and guidelines prescribed in this chapter apply to each of
the Department's Operating Divisions (OPDIVS), Office of the Secretary
(OS) Staff Divisions (Staff Divs), and regions. These organizations
must use the guidelines in this chapter for establishing effective
cash management practices when developing regulations, systems and
procedures and conducting financial activities encompassing billing
and collections, of the Treasury, foreign currency considerations, and
restrictions on financial transaction with foreign countries and
international organizations.

          10-40-30  BILLINGS AND COLLECTIONS

     A.   Timeliness.  Departmental component organizations responsible for
     the preparation of goods or services to those outside the U.S.
     Government will ensure that invoices are issued one day after the
     day the billing office is advised that the goods have been
     shipped or the services completed. when the actual value cannot
     be ascertained at this time, and the estimated cost is less than
     $50,000, preparation of the invoice may be delayed until one
     working day after the actual value is determined. Should of time
     be unduly long, a partial should be considered. Partial billing
     identified as such, must accomplished for not less than 75% of
     the estimated value within one working day after the goods have
     been shipped or released or the services completely provided: (1)
     the actual value cannot be determined and the estimated value is
     $50,000 or more; or the estimated value is less than $50,000 and
     determined to be cost effective by the billing component
     organization. A statement that the final billing will be
     completed when the actual value is determined must accompany each
     partial. Final billing will be accomplished within a reasonable
     period of time. In preparing billings, the payment due date will
     not be more than 30 days from the date of invoice.

               1.   Contracts which authorize the sale of goods or services to
          an organization outside the U.S. Government will include
          provisions which:

                    a.   Establish a definite payment due date,

                         b.   Require that payment be received no later than the due
               date.

                    c.   Provide the payment by wire when applicable, and

                         d.   Provide for additional charges for payments received
               after the due date.

     B.   Charges for late payments.  Departmental components will apply a
     late charge for overdue payments. The charge will be computed at
     a percentage rate based on the current value of funds to the
     treasury. The current value of funds rate is transmitted in
     Treasury Fiscal Requirements Manual bulletin prior to the first
     day of each calendar quarter. The collection of these charges is
     to be promptly deposited for credit to the General Account of the
     U.S. Treasury unless contrary to prescribed statute or
     regulation. The latter part of this provision provides an
     exemption to those programs, which are dependent upon prompt
     payment or reimbursement to continue operations.

     The application of late charges for payments that are late does
     not relieve the debtor of the obligation to pay when due, nor
     does it relieve Departmental components of their responsibilities
     to undertake additional measures to collect debts in accordance
     with the provisions of the Federal Claims Collection Standards (4
     CFR 101   105). These standards are implemented in chapter 4-70
     of the Department's General Administration manual.

     The late charge applied to a delinquent debt will remain in
     effect until payment is made, or a different rate is applied in
     the case of an authorized payment schedule. The late charge is
     applicable to each 30-day period. Charges will not be prorated on
     a daily basis for overdue payments received during the month
     (i.e., 10, 15, or 20 days late) but for the full 30-day period.
     When a partial payment is received, the amount received will
     usually be applied first to the amount due for the late charge
     and then to the principal owed. Complete instructions on
     accounting for and reporting of late charges are contained in the
     Department's issuance "Policies on charging Interest and
     Penalties".

               1.   Charges for Late Payments covered by Contracts, Agreements,
          or Other Formal Agreements. Except where prohibited or
          expressly provided for by Law, Departmental components will
          ensure that charges for late payments are stipulated in all
          contracts, agreements, or other formal payment arrangements.

 
               2.   Charges for Late Payments not covered by Contracts,
          Agreements, or Other Formal Agreements.  Initial
          notification will inform the debtor of the basis for the
          indebtedness, the date by which payment is to be made due
          date), and the requirement for additional charge for
          payments received after the due date.

               3.   Delinquent Accounts Agreements.  Any agreement that is   
          made with a debtor to extend credit and schedule overdue   
          payments over a period of time should contain a provision
          for late payment charges. The computation rate for late
          charge should be equivalent to Treasury borrowing rate at
          the time of the agreement and for the same duration period.

               4.   Collections.  Collection of charges for late payments will
          be promptly deposited for credit to the General Account of
          the U.S. Treasury.  A six digit account symbol will be used.
          The first two digits identify the Departmental component
          administratively responsible for accounting for the
          receipts.  Use 1499 as the latest four digits to identify
          the account as "Miscellaneous Interest Collections Not
          Otherwise Classified."

               5.   Waiver of Late Charges.  Departmental components may request
          a waiver of late payment from the Deputy Assistant Secretary
          for Management and Budget, 200 Independence Avenue, S.W.,
          Washington D.C. 20201.  Such request must be accompanied by
          detailed justification that the administrative cost of
          collecting such charges exceeds the amount of the charges 

     C.   Volume and Character of Collections.  Departmental Components
     should consider the full range of options available when
     establishing procedures for collecting funds For credit to the
     account of the U.S. Treasury. Consideration will be given to:

               1.   Wire funds transfers,

               2.   Treasury Financial Communications Systems (TFCS)

               3.   Minimization of total cost including direct costs, cost of
          purchased services, interest cost on money involved in the
          collection system.

          Major changes in collection systems or procedures and requests
     for use of the TFCS must be submitted to the Deputy Assistant
     Secretary, finance. These changes can only be made with the
     approval of the Banking and Cash Management Operations Staff,
     Department of the Treasury (see Treasury Fiscal Requirements
     Manual 6-8095).

          10-40-40  DEPOSITS  

     A.   Departmental components will follow the following procedures to
     ensure its receipts are deposited to the General Account of the
     U.S. Treasury on a timely basis. All processing systems will
     provide for separation of payments received e.g., checks, money
     orders, etc. from the accompanying accounting documents at the
     initial stage of processing. All deposits will be made promptly.
     Encoders will be used by components processing over 5,000 items
     per day for deposit. The following policy governs frequency of
     deposits:

                              Receipts of $1,000 or more will be deposited daily.
                    
                              Receipts less than $1,000 will also be deposited will
               also be deposited within 24 hours. 

               1.   Receipts or accumulations of $1,000 or more must be
          delivered to Federal Reserve Banks and Branches no later
          than noon of the following business day, or mailed no later
          than the next morning.

               2.   Over the counter deposits  with commercial banks will be
          timed to maximize the amount of daily deposits. Transmittals
          of deposits must be limited to no more than one each day.

               3.   Deposits mailed to commercial banks can only be made when
          specifically authorized by the Banking and Cash Management
          Operations Staff, U.S. Treasury. Requests for this authority
          must be submitted through the Deputy Assistant Secretary,
          finance.

     B.   Reporting Large Deposits.  Financial officers of Departmental
     components depositing a total of $10 million or more in one
     transaction, other than Treasury checks, will report on the day
     of deposit, the name of the Departmental Component, the amount
     deposited, and the name and location of the depository by wire
     (to commercial facilities, TWX 7108229201, 02, 03, or 04) and
     addressed to:
               Funds Control Section
               Division of Government Accounts and Reports
               Bureau of Government Financial Operations
               Department of the Treasury
               Room 1010, GAO Building
               Washington D.C. 20226

          The TWX numbers above identify the TWX machines in Main Treasury.
     In lieu of the TWX wire, each office has the option of calling
     the Treasury Funds Control Section directly on FTS 202-566-2171.

          10-40-50  DISBURSEMENTS 

     A.   Timeliness of Disbursements.  Invoices, bills, statements, or any
     other documents which are authorized for payment by a financial
     officer of a departmental component, including progress and final
     payments, will be paid when due. Each Departmental component is
     responsible for ensuring that its payment system provides for the
     following:

               1.   Payments are to be made as close as possible to, but not
          later than the due date, or if appropriate, the discount
          date whenever performance satisfies the provisions of the
          contract, and a proper invoice is received.

               2.   The payment due date shall be (1) the date on which the
          payment is due, or (2) 30 days after receipt of a proper
          invoice for the amount of the payment due, if a specific
          date on which payment is due is not established by contract.

               3.   All Standard Form (SF) 1166s must be mailed to the
          appropriate Treasury disbursing office 5 days in advance of
          the payment due date to insure Treasury issues checks on
          time. 

     B.   Cash Discounts.  Departmental Components will adhere to the
     following procedures to achieve cash discounts for goods or
     services received except as specifically provided by contract or
     other agreement executed pursuant to law:
  
               1.   Modify payments systems, if necessary, to automatically take
          advantage of cash discounts as a matter of routine and to
          eliminate any need for special handling.

               2.   Take the offered discount when the discount terms, converted
          to an effective annual interest rate, is equivalent to or
          greater than the percentage rate based upon the current
          value of funds to the Treasury. This percentage rate is
          published in Treasury Bulletins for each three month period.
          Refer to section 10-40-30 and I TFRM 6-8020.20.

                    The conversion formula (TFRM 6-8040.30") to convert sales
          discount terms to an effective annual interest rate is shown
          below:

                    Conversion Formula:  Discount %     x  No. of Days in a year
                                       100%- Discount %    Time Span    Discount
                                              In Days to - Period
                                              Due Date     In Days

                    To accomplish the effective annual interest rate when
          discount terms are  of 1% in 10 days, net 30 days, use the
          Conversion formula illustrated below:

                    Effective Annual =      .005        X     360    = .09 or 9%
                                1.00 - .005        30 - 10

                    In this example the offered discount will be taken when the  
          Treasury published rate was 9% or lower; it would not be
          Taken when the treasury rate was higher than 9%.

                    A table prepared below computing the effective annual rate
          for several discount terms. Use of a table will preclude the
          necessity of computing effective rates on each invoice. 

                                             Discount Rate  Term      Effective Annual Interest Rate
                                   (to be Compared with Current
                                   Value of Funds Rate Published in
                                   Treasury Bulletins for Each
                                   Three Month Period.)
                                                                     of 1%          10 days, net 30 =    9%  
                                                                     of 1%          20 days, net 30 =   18%  
                                                                of 1%          20 days, net 60 =    5%
                                                               1%     10 days, net 30 =   18%
                                                               1%     20 days, net 30 =   36%
                                                               1%     20 days, net 60 =    8%
                                                               2%     10 days, net 30 =   37%

               3.   Base discount payment date upon the date of receipt of the
          invoice, authorized for payment, unless otherwise provided
          on the contract or invoice.

               4.   Do not make payments to achieve cash discounts unless the
          related goods and services have been received except as
          specifically provided by contract or other agreement.

               5.   Record economical discounts in the accounting system as an
          item of expense. Purchases are to be recorded net of
          discount, whether taken or not.

               6.   Schedule all discounted payments for check issuance on the
          last day of the discount period.

               7.   Lost economical discounts must be summarized and reported to
          Treasury in accordance with 1 TFRM 6-8080.40.

     C.   Use of Treasury Financial Communications Systems (TFCS). 
     Financial officers of departmental components must use the TFCS
     for making Treasury disbursed vendor payments in excess of
     $25,000 beginning October 1, 1983. A letter requesting approval
     and a completed questionnaire as incorporated in 1 TFRM 4-2500
     must be forwarded to the Deputy Assistant Secretary, finance,
     room 705-d Humphrey for transmittal to:

                    Assistant Commissioner
                    Banking and Cash Management
                    Bureau of Government Commercial Operations
                    Department of Treasury
                    Treasury Annex No. 1, PB-704k
                    Washington, D.C. 20226

          Certifying officers must inform Treasury of payments in excess of
     $50 million in a single transaction or in a multiple transaction
     of a common nature at least two days prior to the date of
     payment. The required information must be transmitted by wire (to
     commercial facilities, TWX 7108229201, O2, 03, 04) to:

          Funds Control Section
          Division of Government Accounts and Reports
          Bureau of Government Financing Operations 
          Department of the Treasury
          Treasury Annex No. 1
          Room 1010, GAO Building
          Washington, D.C. 20226

          The TWX numbers above identify the TWX machines in main Treasury.
     In lieu of the TWX wire, each office has the option of calling
     the treasury Funds Control Section directly on FTS 202-566-2171

     D.   Late Payments.  Department components will make every effort to
     pay their bills on time and avoid late payment interest
     penalties. Late payments must be reviewed and reported to
     Treasury pursuant to I TFRM 6-8080.40.

     E.   Interest Penalty Requirements. Interest penalties must be paid
     when late payments occur or discounts are taken after expiration
     of the discount period, without the need for business concerns to
     request them. An interest penalty will be paid automatically when
     all of the following conditions are met:
.               1.   There is a contract or purchase order with a business
          concern. 

               2.   Federal acceptance of property or services has occurred and
          there is no disagreement over quantity, quality, or contract
          provisions.

               3.   A proper invoice has been received (except where no invoice
          is required, e.g. some periodic lease agreements) or the
          Department fails to give notice that the invoice is not
          proper within 15 days of receipt of an invoice (3 days for
          meat or meat food products, and 5 days for perishable
          agricultural commodities.)

               4.   Payment is made to the business concern more than 15 days
          after the due date (3 days for meat or meat food products,
          and 5 days for perishable agricultural commodities.)

          An interest will also be paid on the discount amount when
     Department components take a discount period has expired, and
     fail to correct the underpayment within 15 days of the expiration
     date of the discount period (3 days for meat or meat food
     products, and 5 days for perishable agricultural  commodities.)

          Payment of interest penalties will be charged to the currently
     available appropriation (FY/CAN) for the administration or
     operation of the program that funded the applicable invoice
     (contract).

          Each OPDIV, STAFFDIV, and Region (and the Division of Accounting
     Operations, OS) shall report to the Deputy Secretary, Finance,
     705-D Humphry Building, 200 Independence Ave, S.W., Washington,
     D.C. 20201, no later than 20 calendar days after the end of each
     quarter, the following data: 
     
          1.   Number of interest penalties paid;

          2.   Amount of interest penalties paid;

          3.   Why interest penalties were incurred;  

               4.   Relative frequency, on a percentage basis, of interest
          penalty payments to the total number of payments; and

               5.   Number, total amount, and relative frequency, on a
          percentage basis, of payments made 5 days or more before 
          the due date, except where cash discounts are taken.

          10-40-60  CASH ADVANCES

     A.   General Policy. The Deputy Assistant Secretary, Finance has the
     responsibility for establishing and monitoring the cash
     management practices of the Department's recipients. Cooperation
     of Departmental component organizations that advance fund awards
     and recipients receiving such funds is essential in meeting with
     this responsibility. (see section 10-40-90c) as a minimum, the
     Departmental components that advance fund awards must establish
     systems and procedures that ensure:

               1.   Federal (HHS) cash is not maintained in excess of immediate
          disbursing needs;

               2.   Excess balances are promptly returned to the Treasury
          Department;

               3.   Interest earned on Federal (HHS) cash, except where contrary
          to law, is promptly paid to the Treasury Department; and

               4.   Noncompliance with these requirements will result in
          termination of advance funds.

     B.   Timeliness of Advances. Each awarding organization will ensure
     that its procedures specify:

               1.   Advance payments will be made only at times and in amounts
          necessary to meet immediate disbursing needs; 

               2.   Where large amounts of funds are disbursed on a daily basis
          under the letter-of-credit system, receipts not under a
          checks paid systems must give considerations to the delay of
          drawdown technique when submitting payment vouchers; and
          that

               3.   Monitoring evaluation will be based on cash payment and not
          on accrued liabilities.

     C.   Interest Earned on Balances. Departmental components shall
     require that all interest earned by recipients on advances of
     Federal funds, except where specifically prohibited by law, be
     remitted to them. Such interest shall be promptly deposited by
     departmental components in the General Account of the U.S.
     Treasury using a six-digit account symbol. The first two digits
     will identify the departmental component. The last four digits
     (1499) will identify the account within the fund group as
     "Miscellaneous Interest Collections Not Otherwise Classified".

     D.   Recoveries of Disallowed Expenditures. Departmental components
     shall require funds returned as soon as possible immediately upon
     determination that an expenditure of advance funds is
     disallowable in accordance with the terms of a contractual
     arrangement. Under no circumstance can the return of such funds
     be delayed more than thirty days from the date of notification by
     the departmental component. The Departmental component, except
     when prohibited by law, shall take appropriate measures to ensure
     that no further withdrawals are made by a recipient funded by a
     letter of credit pending disposition of recovery action with that
     recipient.

     E.   Recoveries of Unused Cash Advances. If cash is advanced in excess
     of final expenditures reported by a recipient. Departmental
     components are responsible for immediately collecting that unused
     cash. (see Office of Management and Budget circulars A-102 and A-
     110 as implemented in HHS 45 CFR 74).

               1.   If an award will be closed within thirty days, the
          departmental component or the Federal Assistance Financing
          Branch if paid through the Departmental Federal Assistance
          Financing system, may defer collection until the closing
          transaction is processed. If there is doubt concerning when
          the award will be closed, collection action will be started
          without delay.

               2.   Collection action is not required if unused funds can be
          immediately offset against or applied to other awards from
          this department held by the recipient or applied to new or
          continuation awards about to be released to the recipient.
          If, for example, there is an unused balance of $50,000 on a
          Head Start award, the letter of credit funding of a new or
          continuation Head Start award should be reduced by $50,000.

          10-40-70  CASH HELD OUTSIDE TREASURY 

     A.   Cash Held at Personal Risk Including Imprest Funds, by Disbursing
     Officers and Cashiers. Quarterly, Departmental components shall
     review funds held by their accountable officers to ensure that
     such funds are commensurate with actual needs and do not exceed
     maximum limitations. (see Volume I, Treasury fiscal requirements
     manual 4-300).

     B.   All Other Cash Held Outside Treasury. Departmental components
     authorized to maintain funds with depositaries for specific
     purposes, or to control the maintenance of such funds, must
     establish procedures to monitor such accounts on a continuing
     basis. These procedures shall, as  minimum ensure that:
               1.   fund balances are maintained at the minimum amount required
          to meet immediate disbursement needs (checks issued and in
          process) and are commensurate with the activity in the
          account;

               2.   Funds in excess of the immediate needs for which the account
          was established are promptly withdrawn from the account and
          deposited with Treasury; and

               3.   Where fund balances as authorized by Treasury or provided by
          law may bear interest, such interest shall be at the highest
          possible interest rate commensurate with the administration
          of the account.

          10-40-80  RESTRICTIONS ON FINANCIAL TRANSACTIONS WITH FOREIGN
          COUNTRIES AND INTERNATIONAL ORGANIZATIONS 

     A.   General. Restrictions are placed on procurement, coproduction,
     grants and other significant transactions with foreign countries
     and international organizations involved in bilateral programs
     that require:

               1.   Outlay of U.S. dollars on foreign currencies;

               2.   Inflow of funds from foreign countries; and

          3.   Exchange of U.S. dollars and foreign currencies.

          The restrictions are intended to reflect U.S. Treasury policy
     with respect to funds which have a potential impact on interest
     costs to the Treasury and in the foreign exchange area.

     B.   Negotiating Financial Arrangements. Departmental components will
     observe the following policies, except for arrangements that may
     be entered into solely for implementing U.S. international
     monetary policy.

               1.   The U.S. Government will not permit the withdrawal of
          dollars from the account of the U.S. Treasury, for placement
          with any program management organization, prior to the need
          for the dollars as determined by the actual immediate
          funding requirements of the recipient organization to carry
          out the project;

               2.   Arrangements which require U.S. funding will be negotiated
          to provide for dollar outlays as close to the need for
          current program expenditures as possible;

               3.   Each program should be structured to the maximum practical
          extent so as to provide flexibility for the country or
          international organization to fund the program, conforming
          to their own fiscal needs and policy considerations;

               4.   Program funds will not be derived from interest earned on
          U.S. contributions. See 10-40-60C;

               5.   Each request for the temporary deposit and safekeeping of
          dollars in trust in an account of the U.S. Treasury will be
          decided on its own merit, according to established reasons,
          the specific financial arrangements proposed, and U.S.
          Government political and general financial considerations;

               6.   Unless otherwise required by law, the U.S. Government will
          not invest funds on behalf of a foreign country or
          international organization when receipt of such funds by the
          Government will serve as a basis for creating contract
          obligational authority for a Departmental component; and

               7.   Departmental components will alter or revise current
          practice to achieve these funding policies, and the
          principles set forth will not be compromised by internal
          administrative practices.

     C.   Exchange of U.S. Dollars for Foreign Currencies.  Departmental
     components will not hold more foreign currency than immediately
     required, nor will any transaction give the appearance of
     currency speculation in the exchange markets. Accordingly, the
     following guidelines will be adhered to accept for those
     exchanges entered into solely for implementing U.S. international
     monetary policy:

               1.   Conduct "spot" delivery for all exchange of dollars for
          foreign currency. Do not use forward contracts, or exchange
          directly with foreign governments or private contractors at
          negotiated rates:

               2.   Do not make an exchange prior to the time the foreign
          currency is needed for immediate funding requirements;

               3.   Appearance of currency speculation must be avoided;

               4.   U.S. and foreign program agencies involved in a program will
          be responsible for any change in program costs resulting
          from foreign currency denomination of the financial
          arrangements;

               5.   To reduce exchange risks, Departmental components may take
          steps to assure that a large portion of program funds be
          expended in the U.S., or that additional financial
          arrangements are dollar denominated. If these steps are not
          feasible, applicable financial arrangements may be entered
          into using a multiple currency "unit of account" which
          includes the dollar as one of the currencies, as set forth
          in the next paragraph.

               6.   The U.S. dollar is the preferred currency for all
          international financial arrangements unless the U.S.
          Government owed excess or near-excess currencies can be
          used. If the only alternative to the use of U.S dollars is
          the use of a foreign currency, Departmental components
          should together with Treasury consider the use of a
          "multiple currency unit of account" which include the dollar
          as one of its currencies. An example of such an account is
          the International Monetary Fund's "special drawing right"
          (SDR). The exchange value of the SDR is determined by the
          IMF on the basis of a basket of currencies assigned a weight
          in determining the SDR exchange value.

     D.   Policy exceptions.  Exceptions to Treasury policies and guide-
     lines referred to in this section will be made only when an
     exception would be advantageous to the U.S. Government. If a
     Departmental component anticipates such an exception, it should
     contact the foreign staff (1 TFRM 6-8095) at the earliest
     possible time on potential or pending financial negotiations.

     E.   Collections and Depository Arrangements.  All checks drawn and
     payable to foreign banks in U.S. dollars and/or in foreign
     currencies must be based on the geographic location of the
     foreign bank. Checks payable at foreign banks overseas depository
     purposes must be deposited at the following depositories:

                                        Area                          Overseas Depository 
                                        Africa                        Federal Reserve Bank of
                                        Caribbean                     of New York Check Processing
                                        Mexico                          Country Section
                                             Other Latin American               33 liberty Street
                                          Countries                   New York, NY  10045
             
                                        Canada                        The Royal Bank of Canada
                                   90 Sparks Street
                                   Main Branch
                                   Station B, Box 746
                                   Ottawa, Canada

                                        Area                          Overseas Depository 
                                        Europe, Asia, South           Bank of America, N.T., & S.A.
                                               Pacific, and Other               Department # 1055
                                               Areas not covered.               San Francisco, CA 94137
          
          The depository officer must transmit each check payable to the
     foreign bank with a fully prepared Certificate of Deposit (CD) to
     the appropriate depository in accordance with the following
     procedures:

               1.   A single CD must be prepared for all U.S. dollar checks
          payable to a depository for any day at foreign banks.

               2.   Checks drawn in U.S. dollars must be accompanied by CDs
          prepared in the usual manner.

               3.   A separate CD must be prepared for each foreign currency
          check payable at foreign banks, except for those Canadian
          dollar items deposited with Royal Bank of Canada. For
          Canadian dollar items deposited with Royal Bank of Canada,
          adhere to the following:

                         a.   Prepare a single CD for all dollar checks deposited by
               a Government officer for any day.

                         b.   CDs accompanying Canadian dollar checks must be
               completed in the usual manner except the amount will
               be left blank.

                                   (1)  The U.S. dollar equivalent will be entered by the
                    depository when credit is received in the
                    treasury account.

                         c.   Pro-rate individual items on a single CD for each item
               upon receipt of the CD from the bank.

                         d.   The appropriate copies of the CDs will be distributed
               in accordance with established procedures


               4.   All foreign exchange (checks, bills and coins) collected
          outside the United States by departmental components must be
          delivered promptly into the custody of accountable officers
          for credit to accounts maintained by the department of
          treasury.

                         a.   HHS will advise accountable officers of the source of
               their collections and any restrictions on their use.

               5.   All foreign exchange disbursed outside the U.S. will follow
          the guidelines in accordance with Section 10-40-50. Requests
          for waivers should be forwarded to:

                              Cash Management Operations Staff
                              Bureau of Government Financial Operations
                              Treasury Department
                              Washington, D.C. 20226
                              (202) 634-5760

               6.   Departmental components desiring disbursing authority
          outside the U.S. must get concurrence from the Department of
          State and the Department of Treasury. Written requests must
          be coordinated with the Deputy Assistant Secretary, Finance
          and: (1) typed in triplicate, (2) with the volume of
          transactions for the use in connection workload
          requirements, and (3) signed by an agency official to:

                              Office of Financial Services
                              Department of State
                              Washington D.C.

               7.   Individual deposits of foreign items less than U.S. $15 in
          value should not be dispatched to either the Bank of America
          or the Federal Reserve Bank of New York.

               8.   Departmental components must reconsider the form of payment
          when the U.S. dollar equivalent of a check is less than the
          collection charge.

               9.   Checks drawn on foreign banks encoded with the ABA routing
          symbol shall be effected through the U.S. depository
          normally used for domestic deposits.

          10-40-90  FOREIGN CURRENCY  

     A.   General.  This section contains the Department's cash management
     policy as it relates to the purchase, custody, deposit, transfer,
     sale, and utilization of the foreign exchange. Procedural
     instructions regarding the receipt and disposition of foreign
     exchange owned by the U.S. Government are contained in Volume I
     of the Treasury Fiscal Requirements Manual, Treasury Department
     Circular No. 830, and Office of Management and Budget Circular
     No. A-20.

     B.   Designation of Financial Institutions to Maintain United States
     Government Operating Accounts.  Preference shall be given to
     American financial institutions unless a local bank's arrangement
     is clearly more advantageous to the U.S. Government. Treasury
     will consider three areas of service in determining the most
     beneficial banking arrangement: (1) minimum required service, (2)
     customary local banking practices, and (3) other special services
     which may be deemed necessary in a particular country or
     circumstance. The minimum required services are:

               1.   Capability to honor payments to payees in outlying areas,

               2.   Processing of checks and deposits,

          3.   Submission of monthly bank statement,

               4.   Acceptance of Treasury minimum/maximum funding procedures
          whenever applicable,

               5.   Any customary banking practices (such as payment of interest
          on the operating account, waiver of miscellaneous charge,
          preferential exchange rates on purchases with U.S. dollar,
          etc.) peculiar to a particular country, etc.

               6.   Other special services such as telex cost, funds transfer,
          overdraft, armored car service, etc.

                    The operating account will not be used to subsidize banking
          services that would otherwise be funded through the
          appropriation process. The level of balance will be
          determined solely by disbursing requirement. Generally, the
          operating account will not be subject to transfer more
          frequently than every two years.

     C.   Operating Account Balance Limitation.  All accountable officers
     shall ensure that the amount of foreign exchange purchased with
     U.S. dollars is commensurate with immediate disbursed
     requirement. This is essential to: (1) minimize local currency
     operating bank balances; (2) minimize losses due to rate
     devaluation; and (3) avoid premature drawdowns on the General
     Account of the U.S. Treasury. Adherence to this policy will
     result in interest savings to the U.S. Government and have a
     favorable impact on the U.S balances of payments. Specifically,
     accountable officers shall purchase:

               1.   Readily obtained currencies in an amount that, together with
          the checkbook balances on hand at the time of purchase,
          would not exceed the estimated requirements for the ensuing
          two to three day period.

               2.   Not readily available currencies in an amount that, together
          with the checkbook balance on hand at the time of the
          purchase, would not exceed the estimated requirements for
          the ensuing seven day period.

                    The above requirements apply only to accounts that are
          funded based on the accountable officer's checkbook balance.
          They are not applicable to the funding of accounts in which
          the level of actual bank balances has been established or
          concurred with by treasury.

                    The seven-day maximum funding level may not be exceeded
          without a specific waiver of this requirement from the
          foreign currency staff, Department of the Treasury. (see
          volume I Treasury Fiscal Requirements Manual, 6-8095).

     D.   Acquisition of Foreign Exchange. 

               1.   Commercial Purchase.  Accountable officers or their duly
          authorized agents shall ensure that foreign exchange
          purchased commercially is purchased at the highest legal
          rate obtained from a legally authorized exchanged dealer
          whether purchasing for their own or other accountable
          officers' accounts. Bids should be solicited from at least
          three sources, if available, when foreign exchange is
          purchased at non-fixed rates. Accountable officers or their
          duly authorized agents shall ascertain that the rate
          received is the most favorable applicable to each
          transaction if foreign exchange is purchased commercially at
          a fixed rate.

                    This includes diplomatic rates or special rates established
          by agreement with the authorities of the country.
          Accountable officers or their agents may purchase foreign
          exchange from the Government or other legally authorized
          sources at rates more favorable than the official rate only
          if the accountable officer or agent has specific authority
          to do so from the Department of the Treasury. Address
          specific requests to the foreign currency staff, Department
          of the Treasury (see paragraph C above).

               2.   Collections. Foreign exchange must be promptly delivered
          into the custody of accountable officers for credit
          maintained by the Department of the Treasury. Only the
          secretary of the Treasury can authorize exceptions to this
          requirement. Collectors of foreign exchange will inform the
          accountable officer of the source of the collections and any
          restrictions on their use.
               3.   Currency Use Payments.  Payment in U.S. dollars is normally
          required for Surplus Agricultural Commodities purchased by
          agreement under the Agricultural Trade Development and
          Assistance Act of 1954 (Public Law 480). In non-excess
          currency countries where U.S. dollars are being used to
          purchase foreign exchange commercially, a Currency Use
          Payment (CUP) provision may be inserted in the purchase
          agreement whereby a percentage (ranging from 5% to 30%) of
          the dollar amount of the agreement may be paid in the
          currency of the country. All requests for CUP should be on
          an as-needed basis to avoid purchasing commercially in those
          countries where P.L. 480 agreements contain CUP provisions.
          Such requests should be made only after all other U.S. owned
          currencies have been exhausted, including those available
          through unfunding. U.S. Disbursing Officers and regional
          Disbursing Officers, or their agents, are responsible for
          contacting the American embassy in each country having a CUP
          agreement to determine the existence of any U.S. military
          requirements for currency.

               4.   Unfunding.  All foreign transaction (FT) program accounts
          susceptible to unfunding are to be fully unfunded prior to
          purchasing commercially. Foreign exchange held by
          accountable officers in program accounts may be used for any
          U.S. Government expenditure through the use of a contra
          account established by Treasury until such time as they are
          required in connection with the particular program intended.
          If necessary, the accountable officer may then purchase
          commercially with U.S. dollars to reimburse the program
          account.

               5.   Disposition of Excess Balances.  Efforts will be made to
          transfer those foreign currencies in excess of immediate
          disbursing requirements that may be utilized by other
          accountable officers in a particular locality, e.g.
          Military, state, or Treasury. Currencies obtained in
          designated excess or near excess currency countries must be
          acquired from sources provided by the U.S. Government.
          American embassies in these countries may be contacted
          concerning their acquisitions. Accountable officers in non-
          excess currency countries having excess balances should
          initiate action to effect transfers with other accountable
          officers using like currency.

               6.   Interest on Deposits.  Accountable officers will establish
          an interest bearing account if the collection of foreign
          currency causes the non-interest bearing local currency
          checking account to exceed a 30-day supply and all attempts
          to sell currencies to other accountable officers have been
          exhausted. All funds in excess of the operating account
          balance limitation (see volume I, Treasury Fiscal
          Requirements Manual (6-8070.25) must immediately be placed
          in a short term interest bearing account provided such an
          account is available. The deposit must be in a bank that has
          been designated as a depository of public moneys by the
          department of Treasury. Accountable officers should place
          such excess funds in the bank that maintains the operating
          account unless another designated depository can provide a
          more beneficial banking arrangement. The accountable officer
          will furnish the name of the bank, account number, the
          interest rate obtained, and the conditions and terms of the
          deposit by telegram to the Foreign Currency Staff,
          Department of the Treasury.

                         a.   If the balance is in excess of a six-month supply, the
               accountable officer will canvas the market to obtain
               the highest interest rates legally available for 3
               months, 6 months, and one-year deposits. This
               information must be submitted to Treasury for approval
               together with a proposed schedule for the placement of
               the excess balance, commensurate with disbursing
               requirements. The accountable officer is responsible
               for monitoring the interest bearing accounts to ensure
               that interest is being paid on a timely basis and in
               accordance with agreements reached between the
               accountable officer and the banks.

               7.   Limitations.  Unless authorized by the secretary of the
          Treasury, foreign exchange shall not be purchased from any
          source outside the United States except when exchange for
          the purpose intended is not available from accounts
          maintained by the treasury.

                         a.   When Treasury authorizes a transfer of foreign
               currencies to an account within this department for
               the purpose of making an authorized expenditure,
               pursuant to the OMB allocation or an international
               agreement, the actual foreign currencies will be
               maintained by Treasury. Once the department determines
               that the transfer is in excess of its needs, it is
               responsible for promptly arranging with treasury to
               reduce the original authorization thereby making the
               funds available for other official requirements.
.               8.   Disbursements.  Domestic disbursements are applicable to
          foreign exchange disbursements. Refer to section 10-40-50.

               9.   Rate of Exchange.  Accountable officers shall make a
          concerted effort to preclude losses due to fluctuations in
          rates of exchange. The prevailing rate shall be used in
          converting foreign currency to expenditures to dollars
          unless otherwise authorized by the Treasury.

              10.   Utilization of Excess and Near-Excess Currencies. The
          following policy applies to utilization of excess and near
          excess currencies.

                         a.   Obligations will be made payable in the currencies of
               the excess and near excess currency countries rather
               than U.S. dollars.

                         b.   Contracts with American contractors will include a
               provision that obligations will be made payable in
               foreign exchange of excess and near-excess currency
               countries to the extent that the contractor may be
               expected to require such exchange for necessary
               expenses in the country involved. Further, the
               contract will provide that the contract be obtained
               solely from the accountable officer.

                         c.   Cost of living allowances, housing, etc. to employees,
               uniformed personnel and others under U.S. Government
               sponsorship must be paid in local currency to the
               extent possible under existing law in excess or near-
               excess currency countries.

                         d.   Employees, uniformed personnel, and others under U.S.
               Government sponsorship in any of the excess or near-
               excess currency countries must use the accommodation
               exchange service provided by the U.S. Government, or
               their delegated agents, to exchange checks, drafts,
               bills of exchange and other instruments payable in
               U.S. dollars for local currency.

     E.   Charges Against Deposits.  Department components must consider
     the following charges against deposits for collection purposes
     when dispatching payments for deposits within the United States.

               1.   The Bank of America will charge a handling fee equivalent to
          1/10 of 1% for such U.S. dollar checks and certain foreign
          currency plus the following:

                         a.   At least $5.00 but no more than $7.50.

                         b.   A $2.00 charge for each tracer for every thirty days.

               2.   The Bank of America will not access a General Collection
          charge against Foreign currency items payable in the
          currencies listed below:

                                                         Country          Currency            Country             Currency   
                                                         Australia   -    Australian dollar   Netherlands    -    Dutch Guilder
                                                              Australia   -    Australian shilling Northern Ireland    -    Irish pound
                                                         Denmark          Danish Kroner       Norway              Norwegian Kroner
                                                    Finland          Finmark             Scotland       -    Pound Sterling
                                                    France -    French Franc        Sweden         -    Swedish Kroner   
                                                         Germany     -    Deutsche Mark       Switzerland         Swiss franc
                                                              Hong Kong        Hong Kong dollar         United Kingdom      Pound Sterling

       This list may change without notice as a certain 
       currency suddenly becomes volatile.

         3.   The Federal Reserve Bank of New York will impose a
       collection fee equivalent to that of a subsequent collecting
       bank or paying bank plus, that bank's normal per item cost
       for handling such items.

            10-40-100   RESPONSIBILITIES: OPDIVs, STAFFDIVs, AND REGIONS.

       A.     It is the responsibility of each departmental component to
       incorporate the provisions contained therein in their billing and
       collection, accounting, and disbursing systems, and as an
       integral part of their comprehensive audits and review program.

       B.     Each Departmental component will develop written internal
       regulations implementing the cash management practices contained
       in this chapter. Such regulations will be available upon request
       to the Deputy Assistant Secretary, Finance not later than March
       15, 1979.

         1.   Provisions of existing contracts and other formal agreements
       not in compliance with these regulations at the time of
       release of this chapter that are subject to renegotiation
       and amendments will be amended upon the next renegotiations
       of such arrangements.

       C.     Review.  Each departmental component shall establish a system for
       monitoring its cash management practices within three months of
       the completion of its written internal regulations. The system
       will provide periodic, no less frequent than annual, review of
       cash management practices.

       D.     Reports to the Treasury.  Documentation summarizing Departmental
       component annual reviews of cash management practices will be
       forwarded September 30th, each year, to the Deputy Assistant
       Secretary, Finance. This office will transmit a consolidated
       Departmental report to the Special Financing Staff, Department of
       Treasury. Internal audit reports related to cash management shall
       be furnished upon request to the Deputy Assistant Secretary,
       Finance.

       E.     Waivers, Exemptions, and Other Applicable Regulations. Request
       for waivers to specific provisions of these requirements must be
       submitted to the Deputy Assistant Secretary, Finance, who in turn
       will coordinate these requests with the appropriate Treasury
       Department's Banking and Cash Management Staff. Such requests
       must identify the specific requirement, state the reason for the
       request, the period of time to be covered by the waiver, and
       include documentation supporting the request.  Departmental
       components shall immediately advise the Deputy Assistant
       Secretary, Finance, of any programs existing or new, that are
       exempt by law from one or more provisions of these regulations.
       The governing law and conflicting provision must be cited. The
       provisions of this chapter are designed to supplement existing
       cash management regulations and therefore do not relieve
       departmental components from compliance with OMB, GAO, and other
       Treasury regulations.