The Government Needs To Do a Better Job of Collecting Amounts Owed by the Public

FGMSD-78-61: Published: Oct 20, 1978. Publicly Released: Oct 20, 1978.

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Government accounts receivable are generally identified as assets from the time transactions giving rise to a claim are complete until payment is received or a claim is determined to be uncollectible. Payments usually are required within 30 days from billing, and interest charges may be levied if payments are not made when due. The public's debt to the federal government has increased from $10.4 billion in 1973 to $14.6 billion in 1977.

Errors amounting to $1.5 billion in accounts receivable were identified at 12 agencies. Problems included failure to include unrecovered beneficiary overpayments as accounts receivable, failure to include amounts because of delays, amounts shown as due for the wrong time period, overstatements due to errors, and amounts already collected shown as due. Most agencies did not take prompt and agressive collection action on delinquent accounts or adhere sufficiently to prescribed collection procedures. Other problems involved inadequate identification and follow-up action on delinquent accounts, lack of knowledge relating to collection actions, lack of documentation in claims files, and failure to take required action in referring delinquent receivables for further action. During fiscal year 1976, five federal agencies wrote off claims of about $200 million. There were inconsistencies in agencies' practices relating to charging interest. Improvements are needed in accounting systems and financial management.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Treasury should revise the Treasury Fiscal Requirements Manual instructions for preparation of financial statements to require: accounts receivable not due within a year or less to be classified as noncurrent assets, unrecovered beneficiary overpayments to be reported and identified as accounts recievable, and consideration to be given to past collection experience in computing an allowance for uncollectible accounts. The Secretary should also emphasize the need for agencies to review financial statements for completeness and accuracy. The Director of the Office of Management and Budget in concert with the Department of the Treasury, should issue guidelines providing that government receivables bear interest at not less than an established minimum rate unless otherwise specified or precluded by statute. The Director should emphasize to the heads of departments and agencies the need to obtain the Comptroller General's approval of their accounting systems and ensure that an adequate portion of internal audit resources are devoted to reviewing financial statements submitted to the Treasury.

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