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DCCUBElNT RESUE 05673 - 81166128] r Reviev of Cancellation, Destruction, and Accounting for Unfit currency]. February 2, 1978. 2 pp. Report to Paul . Taylor, Acting Fiscal Assistant Secretary, Department of the Treasury; by Thomas . Colan, Assistant Director, General Government Div. Contact: General Government Div. Organization Concerned Department of the Treasury: Bureau of Government Financial Oerations. Authority: 31 U.S.C. 49a. (;AO is required b lau to auait the cancellation, destruction, and accounting for currency unfit for circulation. A recent review indicated that the unfit currency operations carried out at Federal Reserve hanks an tranches are generally conducted in a satisfactory manDer. YE calendar ar 1977, the Departmert of the Treasury's Bureau of Government Financial Operations conducted audita at the 37 federal Reserve banks and branches, includinq observing. ;d ealrating everZ phase of the uutit currency oiperations. Financial audits made auditors included the counting and ccnfirmation ofby internal selected l.ots of unfit currency before it was destroyed y incineratic cr pulverization. (RRS) UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. G.ENKRAL COVEftNM4t DIVISIO 20548 24 FEB 197S Mr. Paul H. aylor Acting Fiscal Assistant Secretary Department of the Treasyny Dear .r, Taylor: The General Acounting Office is required by law (31 U.S.C. 49a), to audit the cancellation, destruction, and accounting for currency of the United States unfit for circulation. On he basis of oul recent review we believe that the unfit currency operations carried out at the Federal Reserve banks and branches are generally conducted in a satisfactory manner. In reaching this conclusion we relied to a large extent on the work of the Treasury's Bureau of Government Financial perations and others. In calendar year 1977 the following audits were made of the 37 Federal Reserve banks and branches: -- th.e Bureau made an adit at each of the 37 barks and branches and an additional audit at two banks and one branch; --the internal auditors at the banks and b-raches made four to five procedural audits at each of the 37 banks and brandhes and four financial audits at each of the 35 banks fnd branches which destroyed unfit currency. The required number of financial audits were made at two branch banks which began destruction operations in 1977; --Federal Reserve Board examiners conducteC financial reviews at each of the 37 banks and branches; and --Federal Reserve Board operational analysts conducted procedural reviews at 13 of the 37 banks and branches. Prucedural audits made by the internal auditors included observing and evaluatilg every phase of the unfit currency operations for compliance with Treasury's regulations. Financial audits made by the internal auditors included the counting and confirmation of selected lots of unfit currency before being destroyed by incineration ur pulverization. Our audit work included (1) reviewing the unfit currency regulations issued by Treasury, (2)reviewing selected audit reports, and (3)observing the Bureau's audits at the Buffalo Branch of the Federal Reserve Bank of New York and at the Federal Reserve Bank of Richmond. The Bureau's audits disclosed some minor deviations from Treasury regulatiorns for which bank officials took or pFromised to take corrective action. We appreciate tile courtes-, sentatives during tlis re iew. aid cooperation extended to our repreSincerely yours, 'Inomas R. olal Assistant Director 2-
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