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CHAPTER 1-160

DRAWDOWN ANALYSIS

1-160-00 What does this chapter do?

1-160-10 What is a drawdown and why do we analyze it?

1-160-20 What are the requirements for managing Federal cash and where do they come 

from?

1-160-30 What must you do when you manage Federal cash?

1-160-40 What must we do to monitor your use of Federal cash?

1-160-50 What types of drawdown reviews will we conduct?

1-160-60 What will we do in a Level 1 drawdown review?

1-160-70 What will we do in a Level 2 drawdown review?

1-160-80 How will we resolve problems identified in drawdown reviews?

1-160-00 What does this chapter do?

This chapter explains our policies and procedures for reviewing how you use Federal cash 

received from an assistance agreement awarded by us, the Office of Surface Mining Reclamation 

and Enforcement (OSMRE). This information applies to all OSMRE assistance agreements.

1-160-10 What is a drawdown and why do we analyze it?

A drawdown is your request for a cash payment from your assistance agreement. We analyze 

your drawdowns to ensure that you are managing Federal cash in accordance with Federal 

requirements. 

1-160-20 What are the requirements for managing Federal cash and where do they come 

from?

A. The Federal government requires that you minimize the time you hold Federal cash in 

order to minimize the interest costs to the U.S. Treasury. 

B. The Department of the Interior requires that methods and procedures for payment must 

minimize the time that elapses between when you receive the funds and when you or 

your subrecipient pay them out. This requirement comes from the Uniform 

Administrative Requirements, Cost Principles, and Audit Requirements for Federal 

Awards at 2 CFR Part 200, Subpart D. 

C. The Cash Management Improvement Act (CMIA) of 1990 (P.L. 101-453), as amended 

by the Cash Management Improvement Act of 1992 (P.L. 102-589), provides the general 

rules and procedures for the efficient transfer of Federal financial assistance between the 

U.S. Treasury and states. All Federal funds transfers to states are covered. However, 

only major assistance programs (the highest-dollar programs) are included in written 

Treasury-State Agreements. These agreements specify how transfers of Federal funds to 
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states will take place. They assess interest liability for not performing the terms of the 

agreement. 

D. U.S. Treasury Rules Applicable to Federal Assistance Programs not Included in a 

Treasury-State Agreement, at 31 CFR 205, require you to minimize the time between 

when you drawdown Federal funds and pay them out for your assistance program. The 

payments must be limited to the minimum amounts you need. The payment must be 

timed in accord with your actual, immediate cash requirements to carry out your 

program. The timing and amount of payments must be as close as is administratively 

feasible to your actual cash outlay for direct program costs and the appropriate share of 

any allowable indirect costs. You must exercise sound cash management in paying funds 

to any subrecipients.

1-160-30 What must you do when you manage Federal cash?

A. You must limit advances of Federal funds to the minimum amount you need to meet your 

actual and immediate cash payments.

B. You must pay out Federal funds as soon as is administratively feasible under your 

financial management systems.

C. If you have a CMIA Treasury-State Agreement, you must comply with it.

1-160-40 What must we do to monitor your use of Federal cash?

A. We must monitor your compliance with Federal requirements. We will review your use 

of funds paid by Treasury to ensure that you do not request excessive amounts of advance 

funds and that you do not keep cash in excess of the immediate need. 

B. We will determine the appropriate timing, magnitude and complexity for our review. 

C. If we find indications during a drawdown review that Federal funds may not be properly 

accounted for, we will review the issue sufficiently to determine whether further action is 

needed.

1-160-50 What types of drawdown reviews will we conduct?

A. We will perform a Level I drawdown review the first time we review your systems, after 

significant changes to your systems, or when the reviewer determines it is appropriate. A 

Level I review has the following objectives.

1. To understand your systems for requesting and making payments.
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2. To determine in calendar days the minimum administratively-feasible time for 

you to make payments.

3. To identify major problems or changes in your systems.

B. We will periodically perform a Level II review to monitor continuing performance of a 

system we have previously reviewed. The objective of the review is to determine 

whether your systems for requesting and paying Federal funds continue to comply with 

Federal requirements.

1-160-60 What will we do in a Level 1 drawdown review?

A. We will review your procedures to the extent needed to draw and support conclusions 

about your systems.

1. The reviewer will collect information about your systems. This phase may 

include the following steps:

a. Review your laws, regulations, policies, procedures and financial 

management systems. This will include reviewing your processes for 

requesting, and paying out Federal funds.

b. Flowchart or outline the processing steps according to your written 

policies, and/or the actual procedures being followed.

c. Test the procedures used to request Federal funds. If you have multiple 

OSMRE assistance programs, we will review transactions adequate to test 

each program.

d. Test the procedures for paying out Federal funds.

e. Develop an expenditure rate. Compare the amount of Federal funds 

requested to your expenditure rate. 

f. Determine the frequency rate for cash draws.

g. Track the amount of the cash balance on hand, and the Federal funds 

requested for each drawdown request.

2. Evaluate the data to make the following determinations:

a. What is the actual and optimum number of days required to pay funds 

under your systems?
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b. Do significant trends exist or are they developing?

c. Are there any procedures under your control which should be corrected or 

streamlined? 

d. Are there any procedures not under your control which can be 

streamlined?

B. The awarding office will report the review findings.

1. We will write a report explaining and justifying the office’s findings and 

recommendations determinations about your systems and file the report with 

adequate supporting documentation in the official assistance agreement file.

2. We will present the results of the review to you. If necessary, the awarding office 

will work with you to resolve any issues or recommendations.

1-160-70 What will we do in a Level 2 drawdown review?

A. Our awarding office will review the minimum number of cash requests and payments 

required to determine whether there have been any changes in the payment practices or 

timeframes established in the level I review. 

B. We will determine whether you are requesting cash payments on an advance or 

reimbursement basis. If we find that you continue to operate on a reimbursement basis, 

the review is complete.

C. If you are requesting cash advances, we will determine whether your system continues to 

meet the timeliness standard for paying out Federal funds. If we find that you continue to 

pay out Federal funds timely, the review is complete.

D. If there have been significant changes in your systems, we will conduct a level 1 review 

or other review steps as necessary to determine that the systems are in compliance.

E. We will complete and document the review.

1. If the review raised any issues or concerns, our awarding office will work with 

you to resolve the findings.

2. Our awarding office will file the review and any supporting documentation in its 

official assistance agreement file.

1-160-80 How will we resolve problems identified in drawdown reviews?
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A. The awarding office will address and resolve any issues discovered in drawdown 

reviews. We may use the following approach for resolving problems:

1. Collect all necessary information. Document the critical time path and identify 

the most problematic points in the process. Determine the scope and extent of the 

problem. Identify any changes in the grantee's systems, procedures or internal 

controls, or in key personnel which may have contributed to the problem. If 

additional information is needed, perform further review procedures.

2. Develop suggestions for resolution of issues.

3. Present our suggestions to you. We will work with you to consider mechanisms 

or improvements within your systems to address the issues.

4. Develop an agreement between you and us with actions, and a schedule for 

resolving the issues.

B. The awarding office must document any resolution agreement: We will conduct followup reviews as necessary to ensure that changes and improvements are being made, and 

that the problem has been resolved.