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006.09.1 R1-19-4-1807. Cash Management Improvement Act

AR ADC 006.09.1 R1-19-4-1807Arkansas Administrative Code

West's Arkansas Administrative Code
Title 006. Department of Finance and Administration
Division 09. Office of Accounting
Rule 1. Rules and Regulations of the Financial Management Guide
Ark. Admin. Code 006.09.1 R1-19-4-1807
006.09.1 R1-19-4-1807. Cash Management Improvement Act
Purpose of the Cash Management Improvement Act
The purpose of the Cash Management Improvement Act is to ensure efficiency, effectiveness and equity in the exchange of funds between the States and the federal government for federal assistance programs. The Cash Management Improvement Act of 1990 (CMIA) was enacted by Public Law 101-453, as amended by the Cash Management Improvement Act of 1992 (Public Law 102-589), codified in the United State Code (USC) at 31 U.S.C. 6501 and 31 U.S.C. 6503. The implementing regulations are found in the Code of Federal Regulations (CFR) at 31 CFR Part 205. The general provisions of the Act are as follows:
1. Federal agencies must make timely fund transfers and grant awards to State agencies.
2. State agencies must minimize the time period between the deposit of federal funds in the State's account and the disbursement of funds for program purposes.
3. With some exceptions, the State is entitled to interest from the federal government from the time the State's warrants are redeemed until federal funds are deposited in the State's account.
4. The federal government is entitled to interest from the State from the time federal funds are deposited in the State's account until the State warrants are redeemed
5. The State must enter into a Treasury-State Agreement (TSA) with the U.S. Department of the Treasury, Financial Management Service (FMS), to set forth terms and conditions for implementing CMIA. On October 12, 2000, the FMS issued a Notice of Proposed Rulemaking (NPR) proposing revisions to the regulations implementing the Cash Management Improvement Act of 1990, as amended. The Final Rule finalizes the proposed rule with changes that updates the current regulations and, through comments received in response to the NPR, addresses various concerns raised since the initial issuance of the regulations.
The Treasury-State Agreement defines the drawdown methods to be used by agencies. The Department of Finance and Administration-Office of Accounting (DFA-OA) with the assistance of all affected State agencies negotiates the TSA with FMS. The TSA outlines by program, the funding techniques and the forecast describing the amount of funds subtracted from a State's bank account on a daily basis after a State makes a disbursement. The forecast used by the State to draw down funds from the federal government is referred as a clearance pattern. Generally, conformance with the TSA assures that the State does not owe the federal government, or is not due from the federal government, interest liability on its draw downs. The State or the federal government may propose amendments to the TSA at any time during the duration of the contract. A copy of the TSA agreement may be obtained from the DFA - Office of Accounting-Reconciliation Section or printed from P1-19-4-1807.
Federal Assistance Programs and State Agencies Subject to the CMIA
The programs listed in the Catalog of Federal Domestic Assistance are subject to CMIA regulations. Currently, programs with $25.6 million or more in annual federal expenditures are required to be subject to the TSA (CMIA agreement). The threshold dollar amount that determines if a Federal program is required to be included in the TSA is calculated annually using a formula furnished by FMS. The list of federal assistance programs impacted by CMIA is revised annually as federal expenditures increase or decrease from the threshold. The $25.6 million threshold was established consistent with the Cash Management Improvement Act Guide to CMIA Thresholds under the Final Rule and was utilized in the preparation of the FY2005 TSA. State agencies that administer CMIA programs are subject to CMIA regulations.
Responsibilities of the DFA-Office of Accounting
The responsibilities of DFA-OA are to: 1. Annually identify the State agencies and federal assistance programs that will be considered as CMIA programs and notify affected State agencies. 2. Negotiate with FMS new agreements and amendments to the existing TSA. 3. With the assistance of the Treasurer of State and affected State agencies, develop warrant clearance and redemption patterns. 4. Prepare annual interest reports for submittal to FMS (submitted in December each year for the previous State fiscal year). 5. Direct State agencies as to the payment of State interest liability and/or receipt of federal interest liability. 6. Certify, with affected agencies' concurrence, every five years that clearance patterns correspond to a program's clearance activities.
Responsibilities of Agencies Administering CMIA-Covered Programs
The responsibilities of the State agencies that administer CMIA programs are:
Request federal funds in accordance with the approved funding technique described in the TSA and in amounts needed for immediate payments.
Document the amount of federal funds requested and when federal funds are deposited in the State's account. If federal funds are not available when required per the TSA, process the request which will document federal funds were properly requested by the State in accordance with the TSA.
For the federal draw systems that reject requests when federal funds are not available in the system, make the request and print the rejection notice as evidence of the State's conformance with the TSA. If necessary, make appropriate phone calls to federal agencies to notify them that federal funds are not available per the TSA. Document efforts made to request federal funds per the TSA.
When federal funds are not available per the TSA, maintain documentation of the amount of State funds expended, the dates of these expenditures, the date federal funds were requested and the date federal funds were received. Maintain this documentation for use in calculating federal interest liability on late federal funds. Note: In most cases, the State cannot calculate a federal interest liability unless the State has made a request through a federal draw system and had it rejected or has notified the applicable federal agency that federal funds are not available per the TSA. 3. Calculate the State and federal interest liabilities by program. Notify DFA-OA of proposed changes to the funding techniques and clearance patterns. A State agency shall not make a change until it is reviewed and approved by DFA-OA and FMS. 4. Certify to DFA-OA-Reconciliation Section that CMIA programs conform to the drawdown methods described in the TSA. DFA-OA-Reconciliation Section requests this certification in December of each year.
How to Calculate Interest Due from or Due to the Federal Government
In cases where interest is owed to the federal government or due from the federal government under the TSA, agencies should calculate and document interest owed (interest payable) or due. The interest rate to be used is the annualized rate equal to the average equivalent yield of 13-week Treasury Bills auctioned during the State's fiscal year. The interest rate is provided to the State by FMS. Agencies may contact DFA-OA to obtain the necessary annualized rates. Agencies should be aware that interest calculations could be audited.
Responsibilities of Agencies Receiving Federal Funds Not Designated as CMIA Programs
State agencies receiving federal funds not designated as CMIA programs are subject to Subpart B of the CMIA. The principal responsibility of these State agencies is that they must minimize the time between the drawdown of Federal funds from the Federal government and their disbursement for Federal program purposes. Neither a State agency nor the Federal government will incur an interest liability on the transfer of funds for a Federal assistance program subject to this Subpart B.
PLEASE NOTE: See Federal/State agreement appendix P1-19-4-1807.
Also see ACA§ 19-4-1906.
Current with amendments received through January 15, 2024. Some sections may be more current, see credit for details.
Ark. Admin. Code 006.09.1 R1-19-4-1807, AR ADC 006.09.1 R1-19-4-1807
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