MANUFACTURING OPERATIONS:

The Mint Suspends Its FY 2002

Planned Production Of

Golden Dollar Coins 

 OIG-02-066 March 19, 2002

Office of Inspector General

*******

The Department of the Treasury
Contents

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066) 

Page 1

Audit Report....................................................................................................... 2

Results in Brief.................................................................................................. 2

Background....................................................................................................... 3

Findings and Recommendations.......................................................................... 4

FY 2002 Planned Production of the Golden Dollar.......................................... 4

Recommendation.......................................................................................... 6

Appendices

Appendix 1: Objectives, Scope, and Methodology........................................... 8

Appendix 2: Schedule of Monetary Benefits.................................................... 9

Appendix 3: Management Comments ........................................................... 10

Appendix 4: Major Contributors To This Report............................................. 11

Appendix 5: Report Distribution.................................................................... 12

Abbreviations

FRS Federal Reserve System

FY Fiscal Year

Mint U.S. Mint

OIG Office of Inspector General

SBU Strategic Business Unit
OIG Audit

Report

The Department of the Treasury

Office of Inspector General

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

Page 2

March 19, 2002

Henrietta Holsman Fore

Director

United States Mint

Incident to another review we were performing at the U. S. Mint 

(Mint), which was related to the Sacagawea Golden Dollar (Golden 

Dollar), we learned that the Mint planned to produce 40 million 

Golden Dollars during the second quarter of fiscal year (FY) 2002. 

This information, along with other Golden Dollar production, 

inventory, and shipment information obtained as part of our ongoing review, prompted us to perform additional work.

Our objective in performing this additional work was to assess the 

Mint’s need to produce additional dollar coins during the second 

quarter of FY 2002. Our efforts with regard to this objective 

began December 11, 2001, and continued through

February 6, 2002. A more detailed description of our objective, 

scope, and methodology is provided as Appendix 1.

Results in Brief

Our review found that the Mint’s planned production of 40 million 

Golden Dollars during the second quarter of FY 2002 is not 

warranted at this time. We also estimate that if the Mint 

suspended its planned production of FY 2002 Golden Dollars and 

redirected its production efforts to other coin denominations, the 

Mint could avoid $2.18 million in manufacturing costs. 
The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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After being briefed on January 24, 2002, on the results of our 

review, the Mint Director informed us that she planned to suspend 

FY 2002 production of the Golden Dollar. We, therefore, 

recommended that the Mint Director ensure that the planned 

suspension of FY 2002 production of the Golden Dollar was 

implemented.

In its written response, the Mint outlined a course of action that 

should fully satisfy our recommendation. For instance, the Mint 

confirmed its plan to suspend FY 2002 production of Golden 

Dollars and stated that it may reevaluate its need to produce 

Golden Dollars in FY 2003. The complete text of the Mint’s 

response is provided in Appendix 3. 

Background

The Mint’s mission is to manufacture the highest quality 

circulating, numismatic, and bullion coins and dispense them in a 

timely manner. To accomplish its mission, the Mint is composed of 

three Strategic Business Units (SBU)- Circulating, Numismatic, and 

Protection. Each SBU is a profit center with a business head 

directing its budget, resources, facilities, and staff.

The Circulating SBU is responsible for producing sufficient coinage 

(pennies, nickels, dimes, quarters, half dollars, and dollars) to meet 

the needs of commerce and the consumer while doing so in a costeffective manner. The Circulating SBU dispenses its coinage 

through the Federal Reserve System (FRS).

To meet the demands of the FRS, the Mint operated 24 hours a 

day, 7 days a week during FY 2000. This rate of production was 

attributed, in part, to a strong economy and the popularity of the 

Golden Dollar.

The Golden Dollar was formally introduced in January 2000. In its 

first 9 months, the Mint produced and shipped 979 million Golden 

Dollars. By year’s end, the billionth Golden Dollar rolled off Mint 

presses.
The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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Due to the downturn in the economy in early 2001, the Mint 

experienced a sudden and dramatic decline in shipments of dollar 

coins, including Golden Dollars. Early indications are that 

shipments of Golden Dollars may decline even more in FY 2002. 

Details are provided in the following chart.

The Mint ended FY 2001 with about 324 million Golden Dollar 

coins in storage.

Findings and Recommendations

Finding 1 FY 2002 Planned Production of the Golden Dollar

The Mint’s planned production of 40 million Golden Dollars during 

the second quarter of FY 2002 is not warranted at this time. 

Consequently, if the Mint suspended its planned production of

FY 2002 Golden Dollars and redirected its efforts to the production 

of other coin denominations, we estimate the Mint could avoid 

$2.18 million in manufacturing costs.

Our review identified three factors that had a significant impact on 

the Mint’s Golden Dollar production requirements for the second 

Shipments of Dollar Coins (In Millions)

Coin Designation FY 1998 FY 1999 FY 2000 FY 2001 FY 2002*

Susan B. Anthony 0.0 33.0 40.0 0.0 0.0

Golden Dollar 0.0 0.0 979.0 88.5 30.2

Total Shipments 0.0 33.0 1,019.0 88.5 30.2

Percent Decline (91.3) (65.9)

(From Prior Year)

* Estimated amount for the first three quarters of the year. Estimate based on first quarter actual and Federal 

Reserve System requests for the second and third quarter of the year. 
The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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quarter of FY 2002. First, the Mint’s shipments of Golden Dollars 

had dropped markedly over the last 15 months. Second, the 

Mint’s inventory of Golden Dollars was 88 times target inventory 

levels. Third, the Mint did not plan to ship any Golden Dollars to 

the FRS during the second or third quarter of FY 2002.

During the course of an ongoing review at the Mint, which was 

related to the Golden Dollar, we obtained information that raised 

concerns about the Mint’s plan to produce Golden Dollar coins in 

the second quarter of FY 2002. For instance, we learned that the 

Mint’s: 

• Shipments of Golden Dollars to the FRS declined from a high of 

about 1 billion coins in FY 2000 to less than 90 million coins in 

FY 2001,

• Shipments of Golden Dollars to the FRS for the first quarter of 

FY 2002 were less than 31 million coins,

• On-hand inventory of Golden Dollars at the beginning of

FY 2002 was 324 million coins, and

• Target inventory level for coins is about 5 to 10 days.

We also learned from the Mint that the FRS did not plan to request 

any shipments of Golden Dollars for either the second or third 

quarter of FY 2002.1 Based on this information, we estimated that 

the Mint had approximately 3.6 years inventory of Golden Dollars 

in storage or about 88 times more than the Mint’s target level. In 

addition, we estimate that it would cost the Mint about $2.18 

million to produce 40 million Golden Dollar coins. (See Appendix 2 

for a detailed analysis of the cost breakdown).

Without any real expectation of the Mint shipping these 40 million 

coins to the FRS during FY 2002, it would have been unlikely that 

the Mint could recoup its $2.18 million investment during this FY. 

 

1 The FRS does not project its requirements beyond 6 months.
The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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We, therefore, believe the Mint should redirect its manufacturing 

efforts to the production of other coin denominations. This would 

provide the Mint with a quicker turn around from the 

manufacturing of the coins to their shipment to the FRS and allow 

the Mint to recoup its cost.

We briefed the Mint Director on January 24, 2002, on the results 

of our review. During this meeting, the Director informed us that 

(1) she asked the Denver and Philadelphia Mints to suspend 

production of the Golden Dollar pending our

January 24th meeting and (2) the Philadelphia Mint had already 

minted 3 million of the Golden Dollars scheduled for production in 

the second quarter. The Director also informed us at the 

conclusion of our meeting that the Mint would not resume 

production of the Golden Dollar for the remainder of FY 2002, and 

the Mint would reevaluate its need to resume production of Golden 

Dollars in early FY 2003.

Recommendation

1. The Mint Director should ensure that the planned action to 

suspend further FY 2002 production of the Golden Dollar is 

implemented. Decisions as to future production of the Golden 

Dollar should appropriately consider planned shipments to the 

FRS and the amount of minted coins in storage available to 

meet shipping requirements.

Management Comments. The Mint stated that it would 

suspend production of Golden Dollars for the remainder of

FY 2002, conduct a review to determine demand requirements 

in the first quarter of FY 2003, and reevaluate its need to 

produce Golden Dollars in FY 2003.

OIG Comment. We consider this recommendation to have a 

management decision with a final action date of

September 30, 2002.
The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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* * * * * *

Pleased be advised that we are recording funds put to a better use 

totaling $2.18 million in the Inventory, Tracking and Closure 

system (ITC) for the above recommendation. A detailed 

breakdown of the monetary benefit claimed in this report can be 

found in Appendix 2. We will also include this monetary benefit in 

the OIG Semiannual Report to the Congress. Mint management is 

responsible for recording in the ITC system the amount of benefit 

actually realized as a result of the audit.

We would like to extend our appreciation for the cooperation and 

courtesies extended to our staff during the review. If you have any 

questions, please contact me at (202) 927-5904 or

William S. Schroeder, Audit Manager, at (202) 927-5419. Major 

contributors to this report are listed in Appendix 4.

Thomas E. Byrnes

Director, Manufacturing Operations
Appendix 1

Objectives, Scope, and Methodology

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

Page 8

Our audit objective with regard to this review was to assess the 

Mint’s need to produce additional dollar coins during the second 

quarter of FY 2002. Our fieldwork began December 11, 2001, and 

continued through February 6, 2002.

We interviewed Mint personnel at Mint Headquarters, Washington 

D.C., and at the Mint facilities in Denver, Colorado; and

Philadelphia, Pennsylvania. We also interviewed key personnel at 

the FRS. We collected and analyzed Golden Dollar shipping, 

production, and related cost information. In addition, we assessed 

current Mint inventory levels and demand needs of the FRS for the 

Golden Dollar.

We conducted our audit in accordance with generally accepted 

government auditing standards.
Appendix 2

Schedule of Monetary Benefits

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

Page 9

A recommendation that funds be put to better use is a recommendation 

that funds could be used more efficiently if management took actions to 

implement and complete the recommendation, including (1) a reduction in 

outlays, (2) a deobligation of funds from programs or operations, (3) a 

cost not incurred by implementing recommended improvements related to 

operations, (4) avoidance of an unnecessary expenditure noted in preaward reviews of contract agreements, or (5) any other savings which is 

specifically identified. The following funds put to better use will be 

recorded in the Inventory, Tracking and Closure (ITC) system. This funds 

put to better use will also be included in the OIG Semiannual Report to 

the Congress.

Funds Put To

Finding and Recommendation Number Better Use

Finding 1 – Recommendation 1 $2,183,000

The aforementioned monetary benefit was calculated as follows:

It is Mint management’s responsibility to record the actual amount of 

funds put to a better use as a result of its implementation of this 

recommendation in the ITC system.

Second QTR Figures Golden Dollar Coins

Planned Production 40 million

Actually Minted ( 3 ) million

Remaining Production 37 million

Type of Manufacturing Cost Per Coin

Total Mfg. Cost (FY 2000) $ .145

Less: Cost of Metal* $( .044)

Advertising Cost** $( .042)

Manufacturing Cost $ .059 X 37 million coins = $2.18 million

* This production run did not require any new purchases of metal.

** Cost not incurred in FY 2002
Appendix 3

Management Comments

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

Page 10
Appendix 4

Major Contributors To This Report

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

Page 11

Thomas E. Byrnes, Director, Manufacturing Operations

William S. Schroeder. Audit Manager

Andras Schneider, Auditor
Appendix 5

Report Distribution

The Mint Suspends Its FY 2002 Planned Production Of Golden Dollar 

Coins (OIG-02-066)

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The Department of the Treasury

Office of Strategic Planning and Evaluations

Office of Accounting and Internal Control

U.S. Mint

Director

Audit Liaison

Office of Management and Budget

OIG Budget Examiner