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AFMD-85-21 1 (1985-04-08)

handle is hein.gao/gaobabnqw0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 ACCOUNTING AOD FINANCIAL MANAGEMENT DIVISION B-21 1306 APRIL8, 1985 The Honorable William H. Gray, III Chairman, Committee on the Budget House of Representatives 126822 Dear Mr. Chairman: Subject: Budget Treatment of Monetary Credits (GAO/AFMD-85-21) We are responding to former Chairman Jones' request for a statement of GAO policy concerning monetary credits as a back- door financing technique. Mr. Jones expressed concern about the increasing use of monetary credits, a financing technique that has fallen outside the purview of the regular appropriations pro- cess (hence, a backdoor technique). BACKGROUND Government agencies are, at times, authorized by statutes to use the monetary credit procedure to acquire property such as land or mineral rights without issuing checks. Some of these statutes give officials the additional option, not entailing monetary credits, of acquiring property by cash purchases (checks). When monetary credits are used, the government gives the seller credits in dollar amounts reflecting the agreed-upon value of the acquired property. The holder of the credits may apply them later to reduce the amount owed the government (by the holder) in other, sometimes unrelated, transactions with the government. In short, the government purchases property by pro- mising to reduce the amount it may later collect on other trans- actions from the parties involved. Because monetary credits do not entail cash disbursements by the government, they have at times not been recognized in budget totals and procedures as a form of spending, and not controlled by congressional appropria- tions and budget resolution actions. OBJECTIVES, SCOPE, AND METHODOLOGY Our basic objective was to develop a statement of policy for consideration by the Congress on the correct treatment of monetary credits in budget-related documents and procedures. It was not within the scope of this inquiry to ascertain what L)K ?/ (008486)

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