Funds Held Outside Of Treasury 

Chad Morris and Margot Kaeser

July 11.2023
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The principal objectives of control of 

disbursements are to ensure that all 

disbursements are legal, proper, and correct 

and that all disbursements are accurately 

recorded, reported, and reconciled in a timely, 

efficient manner. 
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• Learn the definition of Funds Outside of Treasury (FHOT)

• Become familiar with statue and policies governing FHOT

• Understand when an FHOT may be needed

• Learn how to request an FHOT

• Learn about properly accounting for FHOT funds

• Learn how and when to properly report FHOT

Session Learning Objectives
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FHOT, also referred to as Cash held 

outside of the U.S. Treasury (CHOT)

and Imprest Fund:

• Are funds under the custodial responsibility of federal government entity 

and/or their employees, officers, or agents that are deposited in accounts 

at local depository institutions or held in an imprest fund

• A fixed-cash or a petty-cash fund in the form of currency or coin that has 

been advanced to a cashier (Accountable Official)

• An account that a Federal entity relies on to pay for small, routine 

expenses

• Is regularly replenished, in order to maintain a fixed balance

• May be foreign or domestic

Definitions of FHOT
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• 31 U.S.C. § 3302

• I TFM 6-3200, Section 3220

“Federal agencies receiving or holding public money from any 

source are statutorily required to deposit these funds into the U.S. 

Treasury, unless otherwise authorized by law. Except as otherwise 

provided by law, the Fiscal Service, as part of its mission, is the 

agency responsible for collecting, holding, disbursing, and 

accounting for public money on behalf of most Federal agencies. 

Consequently, Federal agencies generally may not hold public 

money outside of the U.S. Treasury and must deposit all public 

money into an account in the name of the U.S. Treasury....”

Statue and Policies Governing FHOT
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• 31 U.S.C. § 3302

• I TFM 4A-3000, Section 30165, 

“A federal entity must have legal authority to hold funds outside of 

Treasury because an imprest fund is a fixed cash or petty cash fund 

in the form of currency or coin that has been advanced to a cashier 

as “Funds Held Outside of Treasury.” Imprest funds are an exception 

to the general rule that federal entities receiving public money from 

any source are statutorily required to deposit these funds into the 

U.S.”

Statue and Policies Governing FHOT
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• First, in rare cases, a federal entity may have statutory authority 

to hold money without depositing it to the U.S. Treasury.

• Second, a federal entity may have implied authority to hold funds 

outside of Treasury if it has explicit statutory disbursing authority

• Third, a federal entity may obtain a delegation of disbursing 

authority from Treasury’s CDO, if, for reasons of economy and 

efficiency, the CDO determines such a delegation would be 

appropriate.”

Statue and Policies Governing FHOT
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• I TFM 4A-2000, Section 2050.20—Cash Advances 

•“It is the responsibility of grantor federal entities to monitor the 

cash management practices of their recipient organizations to 

ensure that federal cash is not maintained by them in excess of 

immediate disbursing needs. Federal entities must establish 

systems and procedures to assure that balances are maintained 

and commensurate with immediate disbursing needs, excess 

balances are promptly returned to the Treasury....”

Statue and Policies Governing FHOT
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• I TFM 4A-3000, Section 30140.20—Operating Account 

Balance Limitations

• “All Accountable Officers must ensure the amount of foreign 

exchange purchased with U.S. dollars (together with the balance 

on hand) is commensurate with immediate disbursing 

requirements, not to exceed a 5 to 7 business day supply, in order 

to:

• Minimize local currency operating bank balances,

• Minimize losses due to rate devaluations, and

• Avoid premature drawdowns on the TGA.”

Statue and Policies Governing FHOT
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• 31 USC § 3513

• I TFM 2-5100, Section 5130.10—Posting Agency Transactions 

to the USSGL

“Agencies must post account transactions to the USSGL and must 

prepare an adjusted trial balance at least monthly to verify that debit 

and credit postings are equal and to validate the data. ”

Statue and Policies Governing FHOT
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• I TFM 2-3400, Section 3440.30—Federal Account Symbols 

Requirements

“Entities use Treasury Account Symbols and Business Event Type 

Codes to report on cash and investments held outside of the U.S. 

Treasury and changes in non-federal securities. They submit data to 

the Treasury using the following Business Event Type Codes 

(BETCs):

• Funds Held Outside the Treasury, Credit – FHOTXC; Adjustment 

to Funds Held Outside the Treasury, Credit – FHOTXCAJ; Funds 

Held Outside the Treasury, Debit – FHOTXD; Adjustment to 

Funds Held Outside the Treasury, Debit – FHOTXDAJ are used to 

report cash held outside of the U.S. Treasury, for both budgetary 

accounts and deposit funds.....”

Statue and Policies Governing FHOT
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• I TFM 2-3400, Section 3445—Reconciling Cash and 

Investments Held Outside of the U.S. Treasury

“ Each entity must do the following:

• Reconcile all transactions involving cash and investments held 

outside of the U.S. Treasury on a periodic basis, but no less 

frequently than quarterly, and

• Develop policies, systems, and operating procedures that ensure 

cash and investment activity reported on the entity's ATB and 

Statements of Transactions reported to Treasury, as applicable, 

reconcile with the entity's accounting records and related 

statements and reports received from financial institutions.”

Statue and Policies Governing FHOT
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• For reasons of economy and efficiency

• When the Federal entity needs an FHOT to support 

a specific program 

• If Fiscal doesn’t have the services available to 

support entity’s program

When would an FHOT be needed?
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As a preliminary matter, before 

a federal entity contemplates 

establishing an imprest fund, 

the federal entity should first:

• Discuss that option with Fiscal Service to 

determine if an alternative approach might be more 

suitable

Requesting an FHOT
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• Submit written request to Linda Chero CDO and AC DDM with a cc 

to the Division Director of POD. Letter should: 

 Outline program FHOT will support and why FHOT is needed to 

support the program

 Program’s legal status (authority, statue)

 TGA bank* and location for the funds

 How and who will be responsible for the control and reporting

 Include a request, if needed, for a waiver to the 5-7 days of funds on 

hand, EFT [31 U.S.C. § 3332(f) and 31 CFR § 208.4

• Include a letter from the requesting entity’s office of chief counsel 

that weighs in on legal status of program

*A depositary, a financial institution designated by the Department of the Treasury 

(Treasury) to hold public money and perform other services per 31 CFR 202.

Requesting an FHOT
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Properly Accounting and Reporting FHOT

• Funds are either IN the TGA or OUTSIDE the TGA

• Common scenarios with BETC detail can be found in 

TFM 2-3400 Appendix 1

• Proper reporting is validated by GTAS edits

• Reclassifications are often needed to ensure proper 

reporting
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Properly Accounting and Reporting FHOT

Standard TGA vs FHOT Accounting TGA FHOT

Withdrawal of cash reduces Agency’s Bank Balance (FBwT)

Decrease

Increase

Entity’s Funds Held Outside of Treasury are 

still reported in the Entity’s Bank Balance 

(FBwT) AFTER Cash withdrawal!

Correct Treatment per 

TFM Guidance

Incorrect Treatment

FBwT represents each 

Agency’s available funds 

within the TGA to pay its 

obligations. FBwT is the 

control to ensure the TGA 

maintains sufficient funds 

to pay Governmentwide 

obligations. 

Funds are in Agency’s 

possession (physical cash, 

local depository account, 

etc.) Funds are no longer 

reported in FBwT (TGA 

Bank balance.)
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Contact Information

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Primary Contact DDM Policy

Name: Margot Kaeser

Title: Director, Policy and Oversight Division

Phone: 202-345-3680

Email: margot.kaeser@fiscal.treasury.gov

Primary Contact Fiscal Accounting

Name: Chad Morris

Title: Manager, Cash Accounting Branch

Phone: 304-480-6848

Email: chadwick.morris@fiscal.treasury.gov