4. Basic Financial Management Principles

Federal Financial Management Requirements: Cash Management

Procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursement by grantees and subgrantees must be followed whenever advance payment procedures are used. Grantees must establish reasonable procedures to ensure the receipt of reports on subgrantees' cash balances and cash disbursements in sufficient time to enable them to prepare complete and accurate cash transactions reports to the awarding agency. When advances are made by letter-of-credit or electronic transfer of funds methods, the grantee must make drawdowns as close as possible to the time of making disbursements. Grantees must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the grantees.

Because of the short timeframe between request of funds and deposit into the agency bank account, many grantee agencies submit a drawdown request to coincide with payroll and accounts payable processing. Tribes are not covered by the Department of Treasury rules implementing the Cash Management Improvement Act. However, the Tribal TANF program is covered by 45 CFR Part 92. For Tribes operating TANF, 45 CFR Part 92.20(b)(7) states that procedures for minimizing the time elapsing between the transfer of funds from the U.S. Treasury and disbursements by the Tribe for TANF expenditures must be followed whenever advance payment procedures are used. The Tribe must establish reasonable procedures to ensure the receipt of reports on sub-grantees' cash balances and cash disbursements in sufficient time to enable the Tribe to prepare complete and accurate cash transactions reports. Tribes must monitor cash drawdowns by their subgrantees to assure that they conform substantially to the same standards of timing and amount as apply to advances to the Tribe. These rules apply to all Tribes operating a Tribal TANF program under Section 412 of Title IV-A of the Social Security Act, including those Tribes that elect to include Tribal TANF in a consolidated 102-477 plan through the U.S. Department of the Interior.

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