Accounts Which Will Never Be Paid Are Included in District's Accounts Receivable

GGD-83-21: Published: Feb 16, 1983. Publicly Released: Feb 16, 1983.

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GAO reviewed the District of Columbia accounts to determine the reasonableness of the District's accounts receivable, their collectibility, and whether the receivables are fairly stated.

GAO found that some District accounts receivable are unnecessarily high because they include large amounts which District officials knew from the outset were not understated because the agencies did not record dishonored check amounts as receivables. Under current conditions, amounts which are recorded as receivables, though uncollectable, find their way into an allowance for uncollectable accounts and are ultimately written off as uncollectable. Thus, it makes the District appear less able to collect its debts than is justified. Accounts receivable represent a significant portion of the District's current assets.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Mayor's instructions to analyze accounts receivable were carried out according to a December 1983 report. The District will not categorize as medical charities those accounts for which there is no payability.

    Recommendation: The Mayor should direct department and agency heads to analyze accounts receivable and, as appropriate, reclassify as medical charities those for which there is no payability.

    Agency Affected: District of Columbia

  2. Status: Closed - Implemented

    Comments: The Mayor issued a directive to District agencies requiring improved determinations of payability; St. Elizabeths' patients accounted for the major dollar value of the finding leading to this recommendation. St. Elizabeths was not included in the corrective action because of a change in responsibility. The question of who will be responsible is under discussion.

    Recommendation: The Mayor should direct department and agency heads to determine collectibility of current charges before recording them as accounts receivable.

    Agency Affected: District of Columbia

  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: The Mayor should direct department and agency heads to record dishonored checks as accounts receivable.

    Agency Affected: District of Columbia

 

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