Summary: Pursuant to a congressional request, GAO reported on the use of monetary credits as a financing technique for government acquisitions. When monetary credits are used, the government purchases property by promising to reduce the amount it may later collect on other transactions from the seller. Monetary credits do not entail cash disbursements and are frequently not recognized or controlled in budget processes as a form of spending.
GAO found that the amount of monetary credits that could be issued under existing statutes could reach at least $400 million, exclusive of any interest that might be added to the value of unredeemed credits. In addition, redemption of credits would reduce the retained collections of the redeeming agencies. While existing monetary credit statutes do not contain limits on credit amounts, Congress and the President have acted to bring monetary credits under appropriations control by including limits on cash or monetary credit purchases in budget requests and appropriations bills. GAO believes that the establishment of such limits is consistent with the intent of the Congressional Budget and Impoundment Control Act of 1974. GAO also compared two possible approaches to including monetary credits in budget processes. Under one approach, credit issuances are treated as cash expenditures and recorded as budget outlays and, under the other, appropriations are made to restore agencies' retained collections when reduced by credit redemption.
