Millions Paid Out in Duplicate and Forged Government Checks

AFMD-81-68: Published: Oct 1, 1981. Publicly Released: Oct 1, 1981.

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GAO was asked to study the Treasury Department's accounting procedures for duplicate payments and payments on forged checks.

A GAO review disclosed that the Treasury is not meeting all legal requirements in accounting for and recovering the payments with the result that funds are being disbursed without congressional approval and amounts due the government are not recovered promptly. A GAO review of Treasury's procedures for handling duplicate payments and check forgeries showed that: (1) contrary to legal requirements, Treasury has paid both original and substitute checks in many cases; (2) second payments involving original and substitute checks were not charged to appropriations; (3) replacement checks for forgeries were not charged to the fund that Congress established for this purpose; (4) there is no appropriation for payment of a forged check discovered after the substitute check is issued; (5) the exact amount of receivables and losses resulting from the duplicate payments and check forgeries was not known because of inadequate accounting procedures and controls; (6) Treasury was not acting promptly and effectively to enable recovery of all the receivables; and (7) more efforts are needed to reduce the number of future duplicate payments and forgeries. Although they represent an extremely small percentage of the total checks issued by Treasury, the amounts involved are substantial and total millions of dollars.

Matters for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: Over three years have passed since the report was issued, and the original interested parties are no longer active in Congress. Therefore, since no congressional action is anticipated, the recommendation should be dropped.

    Matter: If Congress decides that Treasury should continue its current practice of issuing and paying substitute checks, Congress should authorize Treasury to charge all payments resulting from check forgeries to the Check Forgery Insurance Fund.

  2. Status: Closed - Not Implemented

    Comments: Over three years have passed since the report was issued, and the original interested parties are no longer active in Congress. Therefore, since no congressional action is anticipated, the recommendation should be dropped.

    Matter: If Congress decides that Treasury should continue its current practice of issuing and paying substitute checks, it should appropriate funds to absorb the payments.

  3. Status: Closed - Not Implemented

    Comments: Over three years have passed since the report was issued, and the original parties are no longer active in Congress. Therefore, since no congressional action is anticipated, the recommendation should be dropped.

    Matter: If Congress decides that Treasury should continue its current practice of issuing and paying substitute checks, Congress should provide the appropriations necessary for the fund's operation. The primary options for providing the resources are to: (1) increase the fund's existing appropriation; or (2) authorize a permanent indefinite appropriation for the fund.

  4. Status: Closed - Not Implemented

    Comments: Over three years have passed since the report was issued, and the original interested parties are no longer active in Congress. Therefore, since no congressional action is anticipated, the recommendation should be dropped.

    Matter: If Congress decides that Treasury should continue its current practice of issuing and paying substitute checks, it should amend 31 U.S.C. 528(a) to permit the procedure.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should strengthen the accounting for and control over the receivables by identifying and aging all receivables on hand.

    Agency Affected: Department of the Treasury

  2. Status: Closed - Implemented

    Comments: Treasury has been reluctant to seek additional appropriations for the Check Forgery Insurance Fund. As an alternative, Treasury is trying to implement a procedure where forgeries would be charged to the agencies that originally authorized the checks' issuance. However, this procedure has not been implemented.

    Recommendation: To take care of forgery cases, the Secretary of the Treasury should charge to the Check Forgery Insurance Fund those payments which the law presently allows. Sufficient appropriations should be sought for that purpose.

    Agency Affected: Department of the Treasury

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: For those duplicate payments not involving forgery, the Secretary of the Treasury should charge future cases where payees benefit from duplicate checks to the agencies responsible for them if Congress permits duplicate payments to continue.

    Agency Affected: Department of the Treasury

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should strengthen the accounting for and control over receivables by recording all receivables and related transactions in the appropriate accounts with proper supporting documents.

    Agency Affected: Department of the Treasury

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should strengthen the accounting for and control over the receivables by establishing procedures for writing off uncollectible amounts.

    Agency Affected: Department of the Treasury

  6. Status: Closed - Implemented

    Comments: Treasury included this work as part of an effort to document all accounts receivable. However, by the time the work was completed, most of the amounts were considered uncollectible. Treasury cited a lack of personnel as the main reason for not acting more quickly.

    Recommendation: The Secretary of the Treasury should expedite the collection of accounts receivable by locating and processing the checks necessary to collect the 34,000 pre-March 1979 duplicate payment cases.

    Agency Affected: Department of the Treasury

  7. Status: Closed - Not Implemented

    Comments: Treasury is opposed to shortening the time for acting on forgeries because of a fear that payees would not cooperate on forgery cases if given less than 60 days to complete a claim form. Although Treasury made some initial efforts regarding claim form standardization, no further action is anticipated.

    Recommendation: The Secretary of the Treasury should expedite the collection of accounts receivable by shortening the timeframe for acting on forgery cases and standardizing the claim forms used to document them.

    Agency Affected: Department of the Treasury

  8. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should expedite the collection of accounts receivable by implementing a system to ensure that checks involving all future duplicate payments are identified and processed promptly.

    Agency Affected: Department of the Treasury

  9. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should expedite the collection of accounts receivable by initiating a policy of collecting interest on all delinquent debts.

    Agency Affected: Department of the Treasury

  10. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury should expedite the collection of accounts receivable by requiring regularly scheduled followups on all uncollected receivables.

    Agency Affected: Department of the Treasury

  11. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of the Treasury, in cooperation with the affected agencies, should consider various alternatives for reducing the number of future duplicate payments and forgeries.

    Agency Affected: Department of the Treasury

  12. Status: Closed - Not Implemented

    Comments: Although Treasury initially agreed with the recommendation, there is a general reluctance to seek appropriations to cover the uncollectible amounts.

    Recommendation: For those duplicate payments not involving forgery, the Secretary of the Treasury should seek appropriations to cover those receivables on hand which cannot be recovered.

    Agency Affected: Department of the Treasury

 

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