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DaCUslTf arcuas 05679 - [ 81106072 ] rstudy of Selected Aspects of FUIH's SfiteS foe Depositing County Ofiri.e Loan Collctions]. PUFSD-78-34; B-114873. april 18, 1978. 3 pp. oe = e Report to, Gordon Cavanaugh, Administrator, farerr and Financial lirector, Scantleburyp, L. D. by Administration; Gencral Nanaqement Studies Div. Contact: Financial and General flangevent Studies r.ti.-: Organization Concerned: Department of lgricultu:e. : s:- :ionekiatrs:btleta*'LJM A study of the Farmer system for depositinq county office loan collections i-t.be Federal ReservQ Bank concentrated oa the tien requird to make deposits ana the additional interest cost ubich the Tr4i.yJ may incur because of delayed depcditc. During fiscal year 1977, county office loan collect.ions totaled o*',jr 2.4 bi.lioa-aal averaged almost $9.8 aillioL a day. in uverage of 8 deys. waa required to deposit loa.: collections tc the Treesivrrs account at the St. Louis Reserfe Bank. nail time between county offices days, and ;:atlioal and the rational Finance Office aver&a44d Finance office processing time eviraged 5 days. If the daily county office loan collectAons ha' been delosited more gqickly, Governsant interest costs could habe teen reduced by about S642,000 for each Jay that the deposits were acceler&ted-. ater the study was completed, . lA hired additional peroannal to process collections at the National Office. Because mail- delays are inherent in the current systea and wcrkloada are e*lpected to increase, FsHA should examine alternative wavs of deasoiting county office loan collections. Several aystems could decrease the time required to deposit county office collections: uIs of local bank accounts, the Treasury tar and loaa system, lock boxes, and electronic funds transfer tachniquec. A study, including a cost-benefit evaluation, should be made cf each system. (RRS) UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, DO.C. AD oINANCAL Ot 0WvouW YOr" ONPAl. MALASY-MW April 18,1978 B-114873 Mr. Gordon Cavanaugh, Adtinistrator Farmers Home Admin-stration Department of Agriculture Dear Mr. Cavanauqh: We have completed a study of selected aspects of the Farmers Home Administration's (FmRA's) system for depositina county office loan collections in the Federal Reserve Bank. Our study concentrated on the time reauirad to make deposits and the additional interest cost which the Treauurv may incur because of delayed deposits. This repoLr is te inform you of our study results. During fiscal year 1977 county office loan collections totaled over $2.4 billion and averaged almost $9.8 million a day. Our study showed tha' an average of 8 days was required to deposit loan collections to the Treasury's account at the St. Louis Federal Restrve Bank. Mail time between the county offices and the ;aaional Finance Office averaged 3 days, and National Finance Office processing time averaged 5 days. Deposit delays, to the extent that they involve additional borrowing by the Department of the Treasury, aenerate unnecessary interest costs. If the daily county office loan collections had been deposited quicker, we estimate that Government interest costs could have been reduced by about $642,000 for each day that the deposits were accelerated. After we completed our study, FmHA hired additional Dersonnel to process collections at the National Finance Office. FmHA officials told us that collections are now promotly orocessed 3nd the only delay in making deposits results from the mailing time between the county offices and the National Finance Office. FGMSD-78-32 (90119) B-114873 FmBA's recognition of the need to reduce deposit delays and its hiring cf additional personnel to eliminate protcessing backlogs at the National Finance Office are a good start. However, more needs to be done. Mail delays are inherent in the current deposit system. In addition, workloads should increase as the loan programs grow and FmHA may not always be able to hire additional personnel to handle the workload. Therefore, FeHA should examine alternative ways of depositing county office loan collections. Several systems are available wh!:h could decrease the time required to deposit county office collection. These include ise of local bank accounts, the Tieasury tax and loan system, lock boxes, and electronic funds transfer techniques. The$re alternatives are not all inclusive, but are the solutions Aith the best potential suggested by various Government and private sector individuals with sxtensive cfsh management experience. Each system has advantages and disadvrantages, and before any is adouted, a study. including a cost/henefit evaluation, of each system, shculd be made. We discussed the results of our FmHR study 'itlh Department of the Treasury officials because the Trcas'lry has Government-wide reusonsibiiitiew for cash management and it incurs additional interest costs when colieccions are not promptly deposited. The Treasury officials agreed that FmHA's county office loan collections should be imore promDtly deposited, and they offered to work with your staff to reduce deposit delays. We briefed members of your staff on the results of our study and suggested that they work with the Treasury to select the best methods of reducinq the time required to make deposits. Your staff agreed with the results of our work and to study, with Treasury assistance, the various methods of reducing deposit delays. Because of FmBA's actions to solve deposit delay oroblems, we are not making any recommendations at this time. We would, however, appreciate being informed of the- progress you make in resolving the county office deposit problems. 2 We are sending copies ot this report to the President's manreorganization staff involves in reviewing Federal cash Aqriof agementl the Director, Office of Audits. Department Cash and Banking Commissioner, cultures and the Assistant DeOperations, Financial Management, Bureau of Government and courtesies the partment of the Treasury. We appreciate this durinq cooperation shown to us by your representatives study. Sincerely yours, D. L. Scantlebur ,ruct".or 3
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