The main objective of the Cash Management Improvement Act is to require

• What Is the Cash Management Improvement Act (CMIA)?

CMIA requires states and federal agencies to minimize the time between when federal funds are

drawn (transferred to the state) and when those funds are spent (final disposition).

The goal is to reduce idle funds, ensure efficient use of federal funds, and reduce interest liabilities

for both parties.

• Key Objective:

By minimizing the time between fund transfers and usage, the act ensures that federal funds are

used promptly for their intended purposes, preventing excess cash from sitting idle in state accounts.

• Why Other Options Are Incorrect:

A . States to pay invoices within 30 days: This is unrelated to CMIA; it is part of general payment

practices.

C . Federal agencies to take discounts: This relates to payment terms, not the timing of fund

transfers.

D . Federal agencies to disburse payments via EFT: While electronic funds transfers are a common

practice, CMIA focuses on minimizing idle funds, not payment methods.

• Reference and Documents:

Cash Management Improvement Act (1990): Mandates reducing the time between fund transfer and

usage.

Treasury Financial Manual: Provides specific guidelines for implementing CMIA.