TABLE OF CONTENTS

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page i

OVERVIEW ............................................................................... 1

BACKGROUND .......................................................................... 1

OBJECTIVES, SCOPE, AND METHODOLOGY ................................ 2

AUDIT RESULTS ......................................................................... 3

Finding 1 Progress Has Been Made Toward Implementing the Legislatively

 Mandated Provisions of DCIA, However, More Needs To Be Done ..... 3

Finding 2 Federal Agencies Should Refer Eligible Delinquent Debt to FMS For

Collection Activities and Ensure That Referrals Are Timely ............... 5

Finding 3 Agency Portfolio Management Practices Should Be Improved ........... 8

 Accounts Receivable Balances Should Be Verified and Reviewed

For Existence, Accuracy, and Completeness ............................. 9

Delinquent Debt Should Be Properly Classified ........................ 13

Delinquent Debt Should Be Timely Processed .......................... 15

Agencies Should Assess Interest, Penalties, and Administrative

Costs on Outstanding Debt ................................................. 18

Procedures to Implement DCIA Provisions Should Be Established 21

Finding 4 FMS’s Procedures to Implement DCIA Cross-Servicing Provisions Are

 Generally Effective ................................................................ 22

APPENDICES

Appendix A PCIE/ECIE Non-Tax Delinquent Debt Project Participants ........ 25

Appendix B Summary of PCIE/ECIE DCIA Results ................................. 26

Appendix C Government-wide Portfolio Non-Tax Delinquencies Over

 180 Days (FY 1998) . ......................................................... 27
TABLE OF CONTENTS

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page ii

Appendix D Federal Non-Tax Delinquent Debt Referrals and Collections

(FY 1998) ....................................................................... 28

Appendix E Federal Non-Tax Delinquent Debt Referrals and Collections

(FY 1997) ....................................................................... 29

Appendix F Federal Non-Tax Delinquent Debt Eligible to Be Referred to

FMS (24 CFO Agencies FY 1998) .......................................... 30

Appendix G Abbreviations .................................................................. 31

Appendix H Major Contributors to This Report ....................................... 32

Appendix I Report Distribution ........................................................... 33

Appendix J Participating OIG Reports .................................................. 34
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 1

Overview

To assist in the oversight of the debt collection process, the Department of

Treasury (Treasury) Office of Inspector General (OIG) led a President’s Council

on Integrity and Efficiency (PCIE) and Executive Council on Integrity and

Efficiency (ECIE) Government-wide review of non-tax delinquent debt. Sixteen

Offices of Inspector General, including the Treasury OIG, participated in this

review. All participants except the Federal Communications Commission issued

individual reports on their respective agencies. (See Appendix A for a list of the

participants and Appendix J for a copy of each participant’s report.)

The non-tax delinquent debt represented by the agencies of the respective

participants was approximately $29.7 billion of the estimated $46.4 billion of

non-tax debt over 180 days delinquent. In addition, the Treasury OIG conducted a

review of Treasury’s Financial Management Service’s (FMS) cross-servicing

activities and FMS’s oversight of the private collection agencies used to collect

delinquent debt. (See footnote on page 22 for reference.)

Generally, Federal agencies have worked diligently towards meeting the objectives

of the Debt Collection Improvement Act (DCIA), which are to (1) maximize

collections of delinquent debts owed to the Federal Government and (2) reduce

losses arising from inadequate debt management activities. We found that

progress has been made in collecting Federal non-tax delinquent debt. Since

enactment of the DCIA, cumulative collections of Federal non-tax delinquent debt

through administrative offset and cross-servicing have risen from approximately

$1.5 million at the end of Fiscal Year (FY) 1997 to about $15.4 million as of the

end of FY 1998. Also, collections of Federal non-tax delinquent debt through

Tax Refund Offset (TRO) have increased from approximately $0.7 billion to

$0.9 billion between calendar years 1997 and 1998.

However, this audit identified several areas where improvements are needed.

Specifically, more needs to be done to ensure that Federal agencies are referring

delinquent debt to FMS for collection activities and are adequately managing their

respective portfolios to ensure that loss to the Federal Government is minimized.

Background

Significant Congressional concern regarding the estimated $51.3 billion in non-tax

delinquent debt owed to the Federal Government at that time prompted the

Congress to enact the DCIA effective April 26, 1996. The DCIA requires

individual program agencies to aggressively pursue the collection of debt once it

becomes delinquent past 30 days. In this regard, the program agency may employ
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 2

collection tools, such as demand letters, negotiated repayment agreements, wage

garnishment, and debt sales, to collect non-tax delinquent debt. Also, the DCIA

requires the program agencies to reduce losses arising from debt management

activities by requiring proper screening of potential borrowers, aggressive

monitoring of accounts, and sharing of information among Federal agencies.

Along with this, the DCIA specifically mandates that Federal agencies, with

certain exceptions, transfer non-tax debt over 180 days delinquent to FMS for

collection. FMS uses both centralized administrative offset and Government-wide

cross-servicing to facilitate collection of the non-tax delinquent debt.

The agency programs reviewed by the participating OIGs and reported on herein

represent a wide spectrum of accounts receivable. These delinquent receivables

include student loans, medical care, housing credit assistance, small business loans,

benefit payments, leases, fines, fees, penalties, compensation, pensions, and various

administrative debts.

Objectives, Scope, and Methodology

The objectives of the audit were to (1) determine whether the reported $60 billion

in non-tax delinquent debt accurately represents the universe of non-tax delinquent

debt and (2) assess the collectibility of the delinquent debt. Also, the audit

evaluated the program agencies’ portfolio management activities to ensure that

their practices minimize loss to the Government.

To accomplish these objectives, the audit (1) compared agency performance to the

requirements of the DCIA and implementing regulations, (2) traced accounts

receivable balances to source documents, (3) evaluated the age and collectibility of

accounts receivable, (4) examined procedures used to certify the existence of the

delinquent debt, (5) examined procedures used to document and classify

delinquent debt, and (6) evaluated procedures used to resolve delinquent debt

returned by FMS to the program agency as not eligible for collection.

The audit focused on non-tax delinquent debt as of the end of FY 1998.

The audit field work was conducted at the various program agencies between

October 1998 and April 1999. This audit was conducted in accordance with the

Government Auditing Standards issued by the Comptroller General of the United

States.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 3

Audit Results

Finding 1 Progress Has Been Made Toward Implementing the Legislatively

Mandated Provisions of the DCIA, However, More Needs to Be

Done

Generally, Federal agencies have worked diligently towards meeting the objectives

of the DCIA, which are to (1) maximize collections of delinquent debts owed to

the Government and (2) reduce losses arising from inadequate debt management

activities. As a result, progress has been made in collecting Federal non-tax

delinquent debt. Since enactment of the DCIA, cumulative collections of Federal

non-tax delinquent debt through administrative offset and cross-servicing have

risen from approximately $1.5 million at the end of FY 1997 to about $15.4 million

as of the end of FY 1998. Also, collections of Federal non-tax delinquent debt

through TRO have increased from approximately $0.7 billion to about $0.9 billion

between calendar years 1997 and 1998.

According to FMS, total non-tax delinquent debt increased from $51.9 billion in

FY 1997 to $60 billion at the end of FY 1998. Of this amount, approximately

$46.4 billion was over 180 days delinquent at the end of FY 1998. The DCIA

requires program agencies to refer non-tax debt over 180 days delinquent to FMS

for administrative offset and/or cross-servicing, with certain exceptions.

Accordingly, approximately $15.2 billion was excluded from referral to the

Treasury Offset Program (TOP), resulting in about $31.2 billion eligible for

referral to FMS for administrative offset during FY 1998. Of the $31.2 billion

eligible for TOP referral, another $23.1 billion was excluded from cross-servicing,

resulting in about $8.1 billion eligible for referral to FMS for cross-servicing.

Of the $31.2 billion of delinquent debt that was eligible to be referred to FMS for

TOP, $16.9 billion was actually referred to TOP. Of this amount, $3.7 million was

collected through the administrative offset process. Also, of the $8.1 billion of

delinquent debt that was eligible to be referred to FMS for cross-servicing,

$1.9 billion was actually referred. Of this amount, $11.7 million was collected

through FMS’s cross-servicing process (See Appendix D).

Thus, approximately $15.4 million of Federal non-tax delinquent debt that was

referred to FMS for TOP and cross-servicing collection activities was collected as

of the end of FY 1998. In addition to delinquent debt collections through TOP

and cross-servicing, FMS collected another $0.9 billion of Federal non-tax

delinquent debt through its TRO process.
DEBT Page 4

FY 1997, $9.4 billion was referred for TOP and $460 million was referred for

cross-servicing. Of these delinquent debt referrals, $0.4 million and $1.1 million

cross-servicing, respectively. In addition, FMS

had collected $0.7 billion through its TRO process as of the end of calendar year

Accordingly, as a result of increased agency participation

(17 agencies in FY 1997, in contrast to 39 in FY 1998) and improved debt

through TOP and cross-servicing increased from approximately $1.5 million to

about $15.4 million between 1997 and 1998. In addition, collections of

Federal non-tax delinquent debt through TRO have risen from approximately

Our analysis showed that FMS’s ability to collect non-tax delinquent debt

delinquent debt. Generally, successful debt collection becomes increasingly

difficult as the delinquencies age. According to a recent study conducted by

collectibility of Federal non-tax

delinquent debt, the majority of debt was between 1 and 6 years old, with the bulk

standards, the recovery rates for debt between 4 and 6 years delinquent ranges

from a low of 0.4 percent to a high of 1 percent. During FY 1998, 

collection rate for its cross-servicing/private collection agency function was

0.6 

Although progress has been made in the collection of Federal non-tax delinquent

debt, more needs to be done to ensure that Federal agencies are referring

respective portfolios to ensure that loss to the Federal Government is minimized.

Specifically, Federal agencies should refer eligible delinquent debt to FMS for

verified and reviewed for existence, accuracy, and completeness; delinquent debt

should be properly classified and processed in a timely manner; interest, penalties,

implement the provisions of the DICA should be established. Findings 2 and 3

discuss each of these areas in more detail.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 5

Finding 2 Federal Agencies Should Refer Eligible Delinquent Debt to FMS

For Collection Activities and Ensure That Referrals Are Timely

The audit revealed that significant portions of non-tax delinquent debt eligible to

be referred to FMS for collection activities were not referred for various reasons.

Of the 16 participants in the PCIE/ECIE review, 7 agencies did not fully meet the

delinquent debt referral requirements of the DCIA. Also, several agencies did not

refer their delinquent debt to FMS in a timely manner.

Table 1 reflects the Federal non-tax delinquent debt that was eligible to be referred

to FMS by the participating agencies, but was not. (See Appendix F for 24 CFO

agencies.)

Total 180 day

Delinquent Eligible Referred Not Referred Eligible Referred Not Referred

Agency Receivables TOP TOP (1) TOP Cross/Ser Cross/Ser (1) Cross/Ser

SBA $2,186,000 $692,000 $663,879 $28,121 $691,650 $599,088 $92,562

VA $1,308,096 $319,738 $255,089 $64,649 $721,778 $5,147 $716,631

SSA $444,019 $444,019 $565,121 $0 $444,019 $0 $444,019

OPM $90,766 $25,422 $6,042 $19,380 $25,422 $9,053 $16,369

DOJ (2) $34,667 $11,231 $333,408 $0 $11,084 $64 $11,020

TREA $4,648 $3,854 $2,157 $1,697 $2,870 $3,566 $0

CPSC $71 $16 $0 $16 $16 $10 $6

Total $4,068,267 $1,496,280 $1,825,696 $113,863 $1,896,839 $616,928 $1,280,607

(1) Referrals through 7/31/99

(2) Justice includes amounts on behalf of other program agencies

(3) Amounts referred may exceed amounts eligible because eligible amounts are established as of 9/30/98 and 

debt referrals as of 7/31/99.

(in thousands)

Table 1

FY 1998

Federal Non-Tax Delinquent Debt Eligible to be Referred to FMS

(Participating Agencies Only)

The DCIA requires program agencies to refer non-tax debt over 180 days

delinquent to FMS for administrative offset and/or cross-servicing, with certain

exceptions. Exceptions that exclude debt from TOP include debt that is in

bankruptcy, forbearance, or appeals, foreclosure, accelerated debt and foreign

debt. In addition, debt that is (1) at the Department of Justice for litigation,

(2) eligible for internal offset, (3) at a third party, or (4) at an agency that has a

waiver to the DCIA cross-servicing requirements is excluded from cross-servicing.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 6

Various reasons preclude program agencies from referring eligible delinquent

debt to FMS for collection activities. These reasons include electronic file

incompatibility problems and the uniqueness of the individual agency programs.

For example, the Department of Veterans Affairs (VA) had approximately

$320 million of non-tax delinquent debt that was eligible for referral to FMS for

TOP and about $722 million eligible for referral to FMS for cross-servicing at the

end of FY 1998. However, approximately $64.6 million and $716.6 million of this

delinquent debt was not referred to FMS for TOP and cross-servicing,

respectively. VA did not refer any delinquent debt to FMS for collection activities

until December 1998, because the agency had an application pending with FMS to

be designated as a debt collection center. Upon approval of the debt collection

center designation, VA would have been exempt from the delinquent debt referral

requirements of the DCIA.

However, the application was denied in November 1998. Subsequent to the debt

collection center denial, VA referred $252 million to FMS for TOP and

$3.3 million for cross-servicing. The agency was unable to refer approximately

$400 million to FMS for cross-servicing due to computer file format

incompatibility problems. In January 1999, VA received FMS’s automated file

format requirements and began reformatting its files to allow delinquent debt

eligible for cross-servicing to be referred to FMS.

In another example, the Department of Justice (DOJ) had non-tax delinquent debt

in excess of $29 million at the end of FY 1997. DOJ’s OIG believes that the vast

majority of this amount represented non-litigated agency debt that was eligible for

referral to FMS for collection activities. FMS records indicated that

approximately $18.6 million of this $29 million of delinquent debt was eligible for

referral to FMS for TOP and/or cross-servicing. However, at the time of our

review, none of this debt had been referred to FMS. DOJ management informed

the OIG that debt referrals to FMS for cross-servicing would begin once DOJ’s

Accounting Systems for the Department of Justice is published in the Federal

Register. This action was planned to take place during May 1999. Subsequent to

completion of this review, the OIG was informed by DOJ management that the

accounting system had been established and that referrals to FMS should have

begun.

In addition, the audit found that several agencies were not referring their

delinquent debt to FMS in a timely manner. Of the 16 agencies reviewed, 4 did

not consistently refer delinquent debt to FMS in a timely manner.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 7

Small Business Administration

The OIG concluded that the Small Business Administration (SBA) did not always

refer its delinquent debt to FMS in a timely manner. Of the 88 loan files that were

reviewed, 22 were not referred to FMS for collection activity. However,

subsequent to the audit, the auditors were made aware that 1 loan file was referred

to FMS for cross-servicing and notices of pending referral were sent to borrowers

for 4 additional loan files.

Consumer Product Safety Commission

The audit revealed that the Consumer Product Safety Commission (CPSC)

referred delinquent Freedom of Information Act (FOIA) fees to FMS for collection

in August 1998 that had been delinquent an average of 451 days before they were

referred. Also, other late referral instances were identified, which included a debt

owed by a vendor since 1996, but CPSC did not refer this debt to Treasury until

FY 1999.

Department of State

The audit revealed that the Department of State was sending debt to FMS for TOP

collection actions only once a year, and did not have a routine process to certify

and send its debt to cross-servicing after each debt became eligible. Accordingly,

debts were not being referred to FMS when they became 180 days delinquent. For

example, at the start of the OIG’s review, the Department of State identified a

batch of 346 debts totaling $464,206 that were eligible for cross-servicing,

however, these debts were not forwarded to FMS until January 1999.

Department of the Treasury

The audit revealed that Treasury did not refer all of its delinquent debt to FMS in a

timely manner. Specifically, the OIG reviewed 10 debt case files at Treasury’s

Departmental Offices for timeliness of referral. All 10 debt files were referred late

to FMS. The average delay in sending debt to FMS was 197 days.

At the United States Secret Service (Secret Service), the OIG identified 2 debt

cases that were eligible to be referred to FMS for collection; however, neither case

was forwarded until more than 400 days had elapsed. In addition, the OIG

identified 2 other debt cases (outside of the sample) that had not been referred to

FMS until more than 1,000 days had elapsed.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 8

Similarly, at the United States Customs Service (Customs), the OIG identified

14 debt case files, of 61 files reviewed, that had not been referred for collection

activity for more than 5 years. In one case, a debt was sent to FMS in August of

1998 for a travel advance that occurred in August of 1990.

National Aeronautics and Space Administration

The OIG found that some National Aeronautics and Space Administration

(NASA) installations did not timely transfer all debt delinquent over 180 days to

FMS. Specifically, the Johnson Space Center transferred 3 debts that averaged

883 days delinquent and did not transfer receivables totaling $741. Headquarters

transferred 4 debts that averaged 608 days delinquent and did not transfer 1 debt

that totaled $16,101 and was 600 days delinquent. Also, the Goddard Space

Flight Center did not transfer receivables that totaled $9,173. The NASA OIG

concluded that these were anomalies and did not consider them to be material.

Accordingly, NASA was not included in the agency summary totals.

In summary, according to FMS, during FY 1998, of the $31.2 billion that was

eligible for referral to TOP, $14.3 billion was not referred to FMS for collection

activities. Also, of the $8.1 billion eligible for referral to cross-servicing,

$6.2 billion was not referred. Similarly, during FY 1997, of the $29 billion eligible

for referral to TOP, about $19.6 billion was not referred to FMS for collection;

and of the $8.5 billion eligible for cross-servicing, about $8 billion was not

referred. Non-tax delinquent debt that is not referred for collection activities

cannot be collected by FMS. Also, delinquent debt that is not referred to FMS in a

timely manner reduces the likelihood of the debt being collected. Even though

FMS reported that Federal non-tax debt delinquent over 180 days decreased from

$47.2 billion in FY 1997 to $46.4 billion at the end of FY 1998, overall Federal

non-tax delinquent debt increased from $51.9 billion to $60 billion during this time

period.

Finding 3 Agency Portfolio Management Practices Should Be Improved

The audit identified numerous portfolio management deficiencies at many of the

agencies participating in the review. Specifically, 9 of the 16 agencies represented

in our PCIE/ECIE non-tax delinquent debt audit had inadequate debt management

practices. The audit identified instances where there was no support for the

accounts receivable balances, past due notices were not sent, aging was not

performed on the delinquent debt accounts receivable balances, and delinquent

debt accounts receivable balances were significantly overstated and/or understated,

as well as other portfolio management deficiencies. (See Appendix B.)
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 9

In an effort to reduce potential losses to the Government resulting from delinquent

debt, the DCIA requires individual program agencies to aggressively pursue the

collection of debt once it becomes 30 days delinquent. In this regard, the program

agency may employ collection tools, such as demand letters, negotiated repayment

agreements, wage garnishment, and debt sales, to collect non-tax delinquent debt.

Also, the DCIA requires the program agencies to reduce losses arising from debt

management activities by requiring proper screening of potential borrowers,

aggressive monitoring of accounts, and sharing of information among Federal

agencies. Inadequate debt management activities not only decrease an agency’s

ability to collect delinquent debt, but also reduce an agency’s ability to prevent

further losses to the Federal Government resulting from extension of credit to high

risk debtors.

Accounts Receivable Balances Should Be Verified and Reviewed

For Existence, Accuracy, and Completeness

It is critical that program agencies maintain accurate accounts receivable balances

to ensure that all delinquent debt is identified and accurate collection activities are

performed. Of the 16 agencies reviewed, 5 had inaccurate accounts receivable

balances as of the end of FY 1998. Also, 3 agencies did not accurately age their

accounts receivable. Financial statement audits conducted under the Government

Management Reform Act require that certain audit procedures be performed when

auditing accounts receivable. Specifically, audits of accounts receivable should

determine whether the receivables exist, are authentic obligations owed to the

entity, and contain no significant amounts that should be written off; and whether

the allowances for doubtful accounts are adequate and not excessive.

In an effort to ensure that the accounts receivable accurately represent monies

owed to the Federal Government and are collectible, Office of Management and

Budget (OMB) Circular A-129, Policies For Federal Credit Programs and

Non-Tax Receivables, requires agencies to ensure that delinquent debts are written

off as soon as they are determined to be uncollectible. Inaccurate accounts

receivable balances reduce an agency’s ability to verify the existence and accuracy

of delinquent debt, and ultimately decrease an agency’s ability to collect

outstanding debt.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 10

The 5 agencies that had inaccurate accounts receivable balances as of the end of

FY 1998 are discussed below.

Department of Veterans Affairs

In reporting on its audit of the VA Consolidated Financial Statement (CFS) for

FY 1998, the OIG qualified its opinion on material amounts of accounts and loans

receivable due to the inadequacy of supporting accounting records. Accordingly,

the amounts that the VA reported as delinquent debt at the end of FY 1998 could

not be attested to as accurate. Specifically, of the total net debt and foreclosed

property of $4.7 billion, the OIG qualified its opinion on the accounts relating to

the Housing Credit Assistance program, which was $3 billion of the total. Further,

the Veterans Health Administration’s receivables of $440 million were overstated

by $65 million. These inaccurate balances resulted from VA not consistently

following its accounting procedures and/or internal controls not operating

effectively. VA is in the process of correcting its accounting records and expects

to have the qualification removed for its FY 1999 CFS.

Small Business Administration

The OIG concluded that SBA accurately reported to Treasury in its Report on

Receivables Due From the Public that it had $1.7 billion in delinquent debt as of

the end of FY 1998. However, the receivable for loan guarantee fees was

overstated by about $22.6 million because loan modifications or cancellations were

not recorded in the loan accounting system.

Department of Justice

The OIG concluded that the Bureau of Prisons (BOP) inaccurately reported to

Treasury in its Report on Receivables Due From the Public that it had

352 delinquent debts owed by the public totaling $8.5 million as of the end of

FY 1997. The OIG determined that the reported delinquent receivables were

understated by 14 debts, or $4.2 million dollars. This resulted from delinquent

receivables that were incorrectly aged and identified as current receivables.

Consumer Product Safety Commission

The OIG concluded that the accounts receivable reported to the Treasury by the

CPSC were overstated by $158,859 at the end of FY 1998. This resulted from the

lack of adequate management controls over the recording and collection processes.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 11

U.S. International Trade Commission

The OIG found that 16 current and 21 former U.S. International Trade

Commission (ITC) employees had incurred nearly $7,000 in non-tax debt between

January 1996 and October 1998. About $2,400 of this debt related to health

insurance coverage. The other $4,600 related to salary overpayments mostly

resulting from errors in compensatory time payments and hourly rates. None of

these debts were recorded as receivables. In addition, approximately $3,000 in car

pool subsidy debt was not recorded as a receivable.

National Aeronautics and Space Administration

The OIG identified the following accounts receivable inaccuracies at NASA. The

OIG concluded that although it did not find material misstatements, there was a

potential for errors to occur and not be corrected in a timely manner.

• Goddard Space Flight Center overstated a receivable in the general ledger by

$135,433 as of September 30, 1998. This occurred because Goddard did not

post a payment received during the transition of the receivable from

Headquarters.

• As of September 30, 1998, Headquarters did not include in its general ledger

four bills totaling $16,580.

• As of September 30, 1998, Johnson Space Center incorrectly included a bill in

the general ledger for $2,168 and omitted one bill totaling $616.

• As of March 1999, NASA installations had not received and recorded $23,679

in payroll receivables.

Also, the OIG found that NASA was not accurately reporting delinquent

receivable amounts to Treasury because some installations were not correctly

identifying the amount of delinquent debts in their Report on Receivables Due

from the Public. As a result, NASA had been reporting a higher amount of

delinquent debts to FMS than actually existed. NASA reported $14 million in

delinquent debts as of September 30, 1997, and $8 million as of September 30,

1998, instead of the $3 million that actually existed at the end of each of these

fiscal years.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 12

The following 3 agencies did not accurately age their accounts receivable:

Department of State

The OIG found that the accounting system at the Department of State did not

produce a reliable aging schedule. The aging schedule ending balances did not

agree with the ending balances reflected on the “cumulative report.” The

Department of State is modifying and testing these reports. As long as the

Department of State does not have a reliable aging schedule, decisions on the

collectibility and management of accounts are hindered.

Also, the audit revealed that the Department of State did not have a write-off

policy for certain accounts receivable. Specifically, the Department of State

had not established write-off policies for repatriation loans; emergency medical,

dietary, and temporary assistance loans; and travel advances. The Department

of State did not establish write-off procedures for repatriation loans because of

repatriation loan statute restrictions (PL 98-164). However, the OIG concluded

that accounts which are unlikely to be collected inflate the accounts receivable

total, giving the impression that collections will be higher than actually realized.

The Department of State informed the OIG that it is working on establishing a

write-off policy for repatriation loans. Under the policy, an account would

remain open, but would not be shown on the books as part of total receivables.

Regarding travel advances, a write-off policy had been drafted, but the OIG

concluded that it was not adequate. The policy stated that advances over

120 days old and less than $25 should be written off. The OIG concluded that

there are very old accounts in the system that are greater than $25 and are

unlikely to be collected. Accounts that are unlikely to be collected should not

be shown on the books as future cash inflow.

Department of Justice

The OIG found that a schedule of receivables was maintained by BOP in its

Financial Management System. The system generated receivable reports used by

BOP to report delinquent debt. However, the review of the FY 1997 reports

disclosed that some receivables were not accurately aged. The OIG identified a

total of $9.1 million (this includes the $4.2 million previously mentioned) in

receivables that had been outstanding for a period greater than was identified in the

aging reports.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 13

Office of Personnel Management

The audit disclosed that accurate aging schedules at the Office of Personnel

Management (OPM) were not produced for its Revolving Fund (RF) and Salary

and Expense (S&E) accounts. Reliable information reports on the amount of

delinquent accounts receivable were not available. Due to this and other

deficiencies, the OIG did not test for compliance with DCIA. Also, the OIG

issued a disclaimer of opinion on OPM’s FY 1998 RF and S&E Financial

Statements.

Delinquent Debt Should Be Properly Classified

The audit revealed that some program agencies did not properly classify all of their

delinquent debt. Specifically, 4 of the 16 agencies reviewed did not properly

classify all of their delinquent debt. OMB Circular A-129 states that agencies shall

establish an accurate and timely reporting system to notify collection staff when a

receivable becomes delinquent. Delinquent debt that is not properly classified will

likely decrease the collectibility of the debt.

Department of Justice

The OIG identified a total of $9.1 million in receivables that had been outstanding

for a period greater than was identified in the aging reports. These amounts

included receivables reported as current that were actually delinquent and

delinquent receivables that were not aged properly. Specifically, delinquent

receivables aged incorrectly and associated with a miscellaneous appropriation

were identified as current receivables. Accounting transactions entered by the

BOP resulted in receivables being aged improperly by the accounting system.

Consumer Product Safety Commission

The OIG found that of the $251,667 in civil penalties reported as delinquent as of

the end of FY 1998, $201,167 was misclassified. Two debts totaling $155,000

had been collected and 2 debts totaling $50,000 should have been classified as a

current receivable because they were not due according to the terms of the

settlement agreement. These amounts were offset by $3,833 which was

erroneously recorded in September 1998.

Department of State

The OIG found that delinquent debt had been referred to FMS for collection

activity in situations where the associated statute of limitation had already expired.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 14

Of the 20 debt files reviewed, 2 debts were referred to FMS where the 10-year

statute of limitations had been exceeded. This occurred because the incur date was

manually input incorrectly during the accounting system change over. As a result,

FMS has received debt case files where the statute of limitations had expired and

which legally should not have been subject to TOP.

Department of the Treasury

The OIG found that Treasury’s Departmental Offices did not properly classify a

significant portion of its delinquent debt. Specifically, of the 23 debt cases

reviewed, 10 were not properly classified. In terms of dollars, misclassified debt

represented $567,088, which is 64 percent of the $891,952 of debt sampled. This

misclassification occurred because the accounting department did not closely

monitor the debt status to be knowledgeable of when the debt became delinquent.

Similarly, at Customs, the OIG found that delinquent debt was not always properly

classified. In the OIG’s sample of 61 debts, 4 debts totaling $5,092 were

misclassified as delinquent. Of the 4 debts that were misclassified, 2 debts were

inappropriately classified as accounts receivable; 1 debt had documentation in the

file stating that it had been written off; and the other debt had been collected by the

United States Department of Agriculture but was still being reported as a

receivable by Customs. Again, these debts were misclassified because Customs

was not closely monitoring its delinquent debt.

National Aeronautics and Space Administration

The OIG found that NASA’s functional offices did not forward bills of collection

they generated to accounts receivable offices for processing. At Ames Research

Center, Dryden Flight Research Center, and Stennis Space Center, debtors had

either paid off or negotiated cancellation of payroll receivables totaling $5,650, but

those installations had not notified the NASA payroll office of the liquidation of

the receivables.

Also, the Goddard Space Flight Center and Headquarters reports on receivables

did not show accurate delinquent receivable balances. The installations reported

debts under 30 days old as delinquent. Also, the Goddard Space Flight Center

and the Johnson Space Center were classifying as delinquent those debts for which

the debtor was making payments on the balance due in accordance with an

agreement between the installation and the debtor.

The OIG concluded that these were anomalies and not material misstatements.

Accordingly, NASA was not included in the agency summary totals.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 15

Delinquent Debt Should Be Timely Processed

The audit revealed that program agencies are not consistently sending notices to

debtors in a timely manner. Specifically, 4 of the 16 agencies reviewed did not

send demand letters to debtors in a timely manner. Also, 4 agencies (includes 2 of

the agencies previously mentioned) did not send demand notices to debtors in

certain instances. (See Table 2.)

Program Agency Late demand letter No demand letter

SMALL BUSINESS ADMN. X X

CONSUMER PRO. SAFE COMM. X

DEPARTMENT OF STATE X

OPM (1) X

TREASURY X X

INTERNATIONAL TRADE COMM. X

(1) The deficiencies identified relate only to Revolving Fund and Salaries and Expenses accounts.

Demand Letter Summary

Table 2

The DCIA requires agencies to aggressively pursue the collection of delinquent

debt. Along with this, program agencies are to ensure that the public is fully

informed of the Federal Government’s debt collection policies and that debtors are

cognizant of their financial obligations to repay amounts owed to the Federal

Government. Also, program agencies are required by the DCIA to ensure that

debtors have all appropriate due process rights, including the ability to verify,

challenge, and compromise claims, and access to administrative appeals procedures

which are both reasonable and protect the interests of the United States.

To facilitate these requirements, OMB Circular A-129 requires agencies to send

demand letters to the debtor, generally as soon as the account becomes delinquent

past 30 days.1 These letters should incorporate, as appropriate, due process

notices for referring delinquent accounts to credit reporting agencies, initiating

Federal salary offset, and referring debt to legal counsel for litigation.

 

1 Direct loans are considered to be delinquent when an agreed-upon payment is not paid by the due date, or by the

end of any “grace period” established in the loan agreement. Guaranteed loans are in default when the borrower

breaches the loan agreement with the private sector lender. It becomes a default to the Federal Government when

the guaranteeing Federal Agency repurchases the loan.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 16

Small Business Administration

The audit revealed that SBA used debt collection tools described in the DCIA and

OMB Circular A-129 in servicing 33 of the 39 delinquent business loans reviewed.

However, the remaining 6 loans contained no evidence of any attempts to collect

on the debt. A separate audit conducted by the OIG showed that Disaster Home

Loan Servicing Centers, which are responsible for servicing delinquent home loans,

should have initiated collection and liquidation actions earlier for 113 of the

265 loans reviewed. In addition, 46 of 165 disaster home loans reviewed were

written off without first being referred for litigation or to FMS for further

collection activity.

Consumer Product Safety Commission

The OIG found that an aggressive effort was not being made to collect delinquent

FOIA fees once they were 30 days past due. As a result, FOIA fees back to

FY 1994 were still outstanding. Files reviewed showed that 23 demand letters

totaling $4,292 were sent to debtors in August 1998 for debts ranging from 83 to

630 days past due.

Department of State

The audit revealed that the Department of State does not have adequate

procedures to track debtor late notices. Three progressively sterner late notices

and finally a due process notice are sent to each delinquent debtor. However, the

Department of State cannot track by date how many, which type, or to whom late

notices were sent. The accounts receivable tracking system is not able to provide

reports of debtors who received late notices by specific type and time period.

Without this verification, the Department of State cannot be sure that the debtors

have actually been sent appropriate notices seeking repayment of the debt.

Also, the audit revealed that many late notices were returned to the Department

of State because the addresses provided by the debtor were incorrect. When this

occurs, the OIG stated that the Department of State should identify the current

address of the debtor through the Internal Revenue Service using the debtor’s

social security number before sending the next notice. The Department of State

does not have a specific routine to accomplish this. If the notices are not sent to

the debtors’ correct address, the debtors cannot receive the notices informing

them of their owed debt. Accordingly, the debt remains uncollected.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 17

Office of Personnel Management

The OIG’s review of controls over OPM’s Revolving Fund and Salaries and

Expenses accounts receivable found that past due notices were not sent to

customers for outstanding balances.

Department of the Treasury

The OIG found that Treasury’s Departmental Offices was not sending demand

letters to debtors within its internally required 30-day intervals. In one instance,

the first demand letter requesting payment was not sent until 3 months after the

debt was due. Also, Departmental Offices neglected to send the second and third

demand letters in several instances. In another instance, no demand letter was ever

sent to the debtor.

Also, the OIG found that the Secret Service was not sending out the demand

letters in a timely manner. Of the 4 debt files reviewed, 90 days or more had

elapsed before the initial notification letter was sent to the debtor. In one instance,

more than 150 days had elapsed and a letter had not been sent.

Similarly, at Customs, the OIG found that demand notices were not being sent to

debtors in a timely manner. Specifically, the audit revealed that 67 percent of the

debtors were not contacted in a timely manner.

U.S. International Trade Commission

The OIG found that 16 current and 21 former employees incurred nearly $7,000 in

non-tax debt between January 1996 and October 1998. None of these employees

received notices regarding their debt.

National Aeronautics and Space Administration

The NASA OIG found that demand notices were not sent to debtors in a timely

manner at certain installations. Specifically, Headquarters averaged 162 days

between the original bill and issuance of the first demand notice to the debtor.

Similarly, at the Kennedy Space Center the average days between the original bill

and issuance of the first demand notice was 239 days. However, after changes in

its policy, this average decreased to 59 days. Johnson Space Center averaged

56 days between the original bill and the issuance of the first demand letter.

The NASA OIG concluded that these were anomalies and not material errors.

Accordingly, NASA was not included in the agency summary totals.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 18

Agencies Should Assess Interest, Penalties, and Administrative

Costs on Outstanding Debt

The audit revealed that some program agencies were not assessing interest,

penalties, and administrative costs on their delinquent debt balances. Of the

16 agencies reviewed, 7 did not assess interest on their delinquent debt or assessed

it incorrectly. Also, several agencies did not impose penalties or administrative

costs. OMB Circular A-129 requires agencies to assess interest, penalties, and

administrative costs on outstanding delinquent debt in accordance with 4 CFR 102,

Standards for the Administrative Collection of Claims. Specifically, except where

prohibited by applicable statutes, regulations, loan agreements, or contracts,

interest shall accrue from the date on which notice of the debt and interest charges

is mailed or delivered to the debtor.

Also, OMB Circular A-129 requires agencies to assess a penalty, not to exceed

6 percent a year, on any portion of the delinquent debt. Regarding administrative

costs, OMB Circular A-129 defines these costs to include both the direct and

indirect costs incurred in collecting debts from the time they become delinquent

until collections are made or agency collection efforts cease.

The lack of assessing interest, penalties, and administrative costs on delinquent

debt results in revenue loss to the Federal Government and may reduce the

debtors’ incentive to repay debt owed.

Department of Veterans Affairs

The OIG reported that VA does not charge interest and administrative costs on

compensation and pension accounts receivable balances. Accordingly, VA is not

in compliance with OMB Circular A-129 or Public Law 96-466 (Veterans

Rehabilitation And Education Act of 1980), which requires that interest and

administrative cost be charged on any amount owed to the United States for

indebtedness resulting from a person’s participation in a benefit program

administered by the VA Secretary, other than a loan, loan guaranty, or loan

insurance program.

As a result, more than $32 million in interest and administrative costs applicable to

the compensation and pension accounts receivable were lost during FY 1998. In a

July 1992 decision, the former VA Deputy Secretary decided that VA would not

charge interest on compensation and pension debts. The OIG has reported its

disagreement with the Deputy Secretary’s decision since 1992.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 19

Rather than continuing the noncompliance, the OIG recommended that VA

comply, or initiate legislative change to Public Law 96-466. During FY 1998, VA

requested relief from OMB regarding assessing interest and administrative costs.

The OIG reported that, as of the close of its audit work, this issue had not been

resolved.

Social Security Administration

The audit found that the Social Security Administration (SSA) did not apply

interest to its delinquent debt. Thus, the Federal Government is losing potential

revenue on SSA’s delinquent debt. However, due to the limited scope of the

audit, the OIG did not determine the cause or the significance of lost interest

revenue. The OIG reported that SSA is working on incorporating interest

assessment processes into its debt management program.

Department of Justice

The OIG found that BOP charged interest on receivables due from their

employees. However, BOP did not charge interest on the majority of debt owed

by the public. BOP only assessed $2,737 in interest while being owed a debt

principal of $12.7 million. According to BOP policy, interest is to be computed

monthly for each overdue bill. In its Department-Wide Debt Management Review,

DOJ reported that BOP did not charge interest, penalties, and administrative costs

on all delinquent debts as required by law. Instead, BOP decided to waive

collection of interest and penalties on certain types of receivables.

Consumer Product Safety Commission

The audit revealed that the CPSC did not accurately assess interest on its

delinquent FOIA fees and civil penalties during FY 1998. Although the amount of

interest was minimum, actions will be taken to ensure that interest is properly

assessed in the future. For example, a new accounting system, which has the

capability of calculating the correct amount of interest, has been put into place.

Department of State

The OIG found that interest, penalty, and administrative charges on some debts

that were forwarded to FMS for cross-servicing were not calculated correctly.

The Department of State’s former accounting system did not calculate interest,

penalty, and administrative charges correctly. However, the Department of State’s

new accounting system calculates interest, penalty, and administrative charges

correctly.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 20

As a result, the Department of State’s reported amount of delinquent debt for

accounts prior to the accounting system conversion date, October 1997, was

incorrect. When the debt was transferred to FMS for cross-servicing, the

Department of State did not adjust interest on the old debt because it would have

been too overwhelming.

Department of the Treasury

The OIG found that Treasury’s Departmental Offices did not assess interest and

administrative charges on several delinquent debt accounts. Departmental Offices

management stated that this situation occurred because the accounting department

did not closely monitor delinquent debt.

Similarly, at Customs, the OIG found that interest, penalties, and administrative

fees were not being charged on the delinquent debt. The OIG was informed by

Customs’ management that, prior to the DCIA, it was Customs’ policy not to

charge interest on employee debt. However, the audit showed that collection

letters that were sent to employees indicated that interest and penalties would be

charged.

As a result of these Treasury bureaus not assessing interest, penalties, and

administrative costs, revenue losses to the Federal Government occurred.

However, due to the limited scope of the audits, the OIG did not substantiate the

significance of revenue loss.

U.S. International Trade Commission

The audit of ITC identified approximately $10,000 in non-tax debt. ITC did not

charge interest or administrative charges on this debt.

National Aeronautics and Space Administration

The OIG found that NASA did not assess penalties and administrative fees at all

installations. Specifically, neither Headquarters nor Goddard Space Flight Center

assessed debtor’s penalties or administrative charges. Prior to February 1999,

Headquarters financial management personnel mistakenly believed that penalties

and administrative fees could be waived until the debts were transferred to FMS.

In February 1999, Headquarters financial management implemented a policy to

assess penalties and administrative fees.

When Goddard Space Flight Center implemented its automated accounts

receivable system in June 1997, it was designed to calculate interest only.

Goddard Space Flight Center did not implement procedures to assess penalties and
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 21

administrative charges. Goddard Space Flight Center’s Financial Management

Division indicated that the system would be modified to assess the additional late

charges. The OIG was not able to determine the total amount of uncollected

penalties and administrative fees because billings and collections were made

throughout the year and the audit was limited to bills outstanding as of January

1999 and at the end of FYs 1998 and 1997.

The NASA OIG concluded that these were anomalies and not material errors.

Accordingly, NASA was not included in the agency summary totals.

Procedures to Implement DCIA Provisions Should Be Established

The audit revealed that some of the program agencies reviewed did not establish

procedures to implement the provisions required by the DCIA or had minimal

procedures in place. Of the 16 agencies reviewed, 4 agencies did not establish

DCIA-specific procedures or had established minimal procedures.

The overall objectives of the DCIA are to (1) maximize collections of delinquent

debts owed to the Federal Government by ensuring quick action to enforce

recovery of debts and the use of all appropriate collection tools, and (2) reduce

losses arising from inadequate debt management activities by requiring proper

screening of potential borrowers, aggressive monitoring of all accounts, and

sharing of information among Federal agencies. To accomplish these objectives,

program agencies should establish specific procedures that provide guidance to

facilitate the requirements of the DCIA. OMB Circular A-129 states that it is the

agency’s responsibility to ensure that the standards set forth in the Circular and

supplementary guidance are incorporated into agency regulations and procedures

for credit programs and debt collection activities.

Department of Veterans Affairs

The OIG found that although VA implemented the provisions of the DCIA, the

agency had not incorporated the provisions of the DCIA in its policy guidance.

The existing guidance was being updated to include the DCIA provisions.

Consumer Product Safety Commission

The audit revealed that the CPSC’s standard operating procedures did not address

the requirement to transfer debts to FMS after 180 days, as required by the DCIA.

As a result, delinquent debt was not referred to FMS in a timely manner and some

of the debt that was eligible for referral was not referred at all.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 22

Department of the Treasury

The OIG found that Secret Service’s Accounts Receivable Manual did not include

procedures to facilitate the refund of unused airline tickets, and did not incorporate

the provisions set forth in OMB Circular A-129. Secret Service is in the process

of updating the Accounts Receivable Manual. However, at the close of our

review, much of the manual was still in draft.

Office of Personnel Management

The OIG found that, regarding OPM’s Retirement Program, there were limited

policies and procedures related to overpayments of annuities and collection of

delinquent accounts. Without documentation of policies and procedures, OPM

is less effective in collecting delinquent debts. OPM is currently working with

FMS to update and document accounting and financial management policies and

procedures relating to the overpayment process.

Finding 4 FMS’s Procedures to Implement DCIA Cross-Servicing Provisions

Are Generally Effective

In addition to leading the PCIE/ECIE non-tax delinquent debt review, the

Treasury OIG conducted reviews of FMS’s cross-servicing procedures and

processes and of its oversight of private collection agencies (PCA), to further

assess the implementation of DCIA provisions.2 Overall, we concluded that these

processes are generally effective in reducing non-tax delinquent debt. However,

we identified several areas where improvements were needed. With regard to

FMS’s cross-servicing function, our review indicated that FMS’s practices and

procedures to familiarize agencies with the debt collection process, initiate

collection efforts, and follow through with closure when debts are determined to

be uncollectible were generally effective. However, we found that FMS needed to

strengthen its procedures for designating debt collection centers and providing

waivers to the transfer provision of the DCIA.

Specifically, the audit revealed that FMS did not notify Federal agencies in atimely

manner of its decision to accept or reject applications requesting to become a debt

collection center. Our analysis of FMS’s application processing revealed that after

initial submission of the applications, the processing time ranged from 10 months

2The results of these Treasury OIG reviews are reported in the Financial Management Service’s Cross-Servicing

Program, Report Number OIG-99-104, and the Review of the Effectiveness of the Financial Management Service’s

Oversight of Private Collection Agencies, Report Number OIG-99-107.
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 23

to as long as 19 months. Also, the work performed by the VA OIG revealed that

the VA did not transfer delinquent debt to FMS pending a decision on its

application.

According to FMS’s procedures, Federal Debt Collection Center Designation

Policy, Procedures and Standards, debt collection center proposals should be

reviewed and evaluated by FMS within 120 days of submission and the requesting

agency should be notified of the decision within this timeframe. We were informed

by FMS management that the application review process is very time consuming,

due to the numerous opinions and analyses needed in making a decision. FMS’s

delay in rendering a decision regarding debt collection center approval may result

in delayed transfer of delinquent debt to FMS for collection activities.

Also, we found that FMS granted waivers to the transfer provisions of the DCIA

for longer than the 1-year timeframe allowed in the procedures. FMS is able to

grant a waiver to the transfer provision of DCIA for debts collected by the

agency’s debt collection center. This waiver is usually given for a specific type of

debt. FMS granted a waiver to one agency for 3 years and is planning to grant

another agency a similar 3-year waiver. At the end of 1 year, FMS will review,

with the agency, its debt collection operations and determine if continuation of the

waiver is warranted.

We were informed by FMS management that the 1-year timeframe was not

adequate to review an agency’s compliance. However, agency officials could not

provide empirical data to support their contention that a 1-year waiver is

insufficient. FMS needs to evaluate agency debt collection performance under the

DCIA waiver provisions and determine whether the current 1-year waiver

timeframe provides sufficient data to assess agency debt collection performance.

Also, FMS should review agency debt collection center applications on a more

timely basis.

Regarding its oversight of private collection agencies, we found FMS’s oversight

process to be generally effective. In addition, a survey of the PCAs indicated that

9 of the 10 PCAs that responded to our questionnaire were satisfied with the

service FMS provided. While FMS’s oversight of PCAs has been generally

effective, we identified several operational areas where FMS can make further

improvements.

Specifically, operational procedures at FMS’s Birmingham Debt Management

Operations Center (BDMOC) should be enhanced, the contracting officer’s

oversight procedures need improvement, and industry best practices should be
OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 24

implemented to improve debt collection services. These improvements include

implementing written procedures for the BDMOC, implementing a tracking system

for both verbal and written complaints, tracking the actions of the PCAs, and

monitoring collection procedures and practices to determine that cost-effective

methodologies are being employed.

Conclusion

The DCIA is an important legislative tool to improve the Government’s track

record regarding the management and collection of delinquent debt. Although

progress has been made in collecting Federal non-tax delinquent debt, more needs

to be accomplished to ensure that program agencies assume an aggressive

approach to collecting delinquent debt and that their portfolio management

activities minimize loss to the Federal Government.

The Treasury OIG is aware that implementation of the provisions of the DCIA is a

complex task requiring close coordination both within Treasury and with the

program agencies that it services. However, we believe that if the deficiencies

identified by this review are properly addressed, collections of Federal non-tax

delinquent debt will continue to increase and the risk of additional loss to the

Government will be minimized.
APPENDIX A

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 25

 PCIE/ECIE NON-TAX DELINQUENT DEBT PROJECT PARTICIPANTS

Consumer Product Safety Commission

Department of Education

Department of Justice

Department of State

Department of Transportation

Department of the Treasury

Department of Veterans Affairs

Federal Communications Commission3

General Services Administration

National Aeronautics and Space Administration

National Endowment for the Arts

Office of Personnel Management

Railroad Retirement Board

Small Business Administration

Social Security Administration

U.S. International Trade Commission

 

3

 The Federal Communications Commission OIG participated in the review, however, a report was not

prepared because it was determined that the agency’s non-tax delinquent debt was in bankruptcy,

foreclosure, or forbearance/appeals processes. Such debt is not subject to the referral requirements of

the DCIA.
 APPENDIX B

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 26

PCIE/ECIE Review of Non-Tax Delinquent Debt

Summary of PCIE/ECIE DCIA Results (1)

Program Agency

no referral to 

FMS

late referral 

to FMS

no demand 

letter

late demand 

letter

misclassification 

of debt

no or 

inaccurate 

interest

inaccurate 

A/R balance

inadequate 

DCIA 

procedures

inaccurate 

A/R aging

Inadequate use 

coll. tools

CONSUMER PRO. SAFE COMM. X X X X X X X

DEPARTMENT OF STATE X X X X X

EDUCATION

FEDERAL COMMUNICATION COMM.

GENERAL SERVICES ADMN.

INTERNATIONAL TRADE COMM. X X X

JUSTICE X X X X X

NASA (2)

NATIONAL ENDOW ARTS

OPM (3) X X X X

RAILROAD RETIREMENT BOARD

SMALL BUSINESS ADMN. (4) X X X X X X

SOCIAL SECURITY ADMN. X X

TRANSPORTATION

TREASURY X X X X X X X

VETERANS AFFAIRS (5) X X X X

(1) The chart represents the types of deficiencies that were identified by the participating OIGs.

(2) Anomalies identified at NASA were considered not material by the NASA OIG.

(3) The deficiencies identified relate only to Revolving Fund and Salaries and Expenses accounts. OPM had limited procedures related to overpayments 

of annuities and collection of delinquent accounts.

(4) Of 88 loans sampled, 22 loans representing $1.5 million were not referred to FMS for collection activity; SBA used many collection tools however,

administrative wage garnishment and Federal wage matching were not used; receivable for loan guarantee fees was overstated by $22.6 million.

(5) VA implemented provisions of the DCIA, however VA had not incorporated the provisions of the DCIA in its policy guidance.
APPENDIX C

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 27
APPENDIX D

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 28
APPENDIX E

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 29
APPENDIX F

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 30

Total 180 day

Delinquent Eligible Referred Not Referred Eligible Referred Not Referred

Agency Receivables TOP TOP (1) TOP Cross/Serv Cross/Serv (1) Cross/Serv

ED $18,236,000 $13,939,164 $16,445,945 $0 $793,616 $983,753 $0

USDA (2) $6,091,376 $1,603,577 $1,280,720 $322,857 $1,332,674 $82,340 $1,250,334

HHS $4,262,051 $2,973,977 $379,410 $2,594,567 $379,277 $246,424 $132,853

DOE $2,291,674 $89,167 $537 $88,630 $88,623 $86,604 $2,019

HUD (2) $2,224,971 $658,632 $457,388 $201,244 $300,262 $242,774 $57,488

SBA $2,186,000 $692,000 $663,879 $28,121 $691,650 $599,088 $92,562

VA $1,308,096 $319,738 $255,089 $64,649 $721,778 $5,147 $716,631

EPA $787,354 $58,514 $1,465 $57,049 $58,514 $3,350 $55,164

DOD (2) $717,659 $163,856 $611,226 $0 $97,232 $112,223 $0

AID $635,688 $729 $118 $611 $711 $292 $419

INT $476,300 $37,100 $12,401 $24,699 $37,100 $34,690 $2,410

SSA $444,019 $444,019 $565,121 $0 $444,019 $0 $444,019

DOT $184,904 $85,747 $11,881 $73,866 $85,747 $30,670 $55,077

OPM $90,766 $25,422 $6,042 $19,380 $25,422 $9,053 $16,369

DOC $88,918 $13,975 $16,413 $0 $13,953 $13,154 $799

DOL $76,401 $16,881 $23,194 $0 $16,881 $46,192 $0

FEMA $40,034 $38,600 $16,111 $22,489 $38,600 $12,329 $26,271

DOJ (3) $34,667 $11,231 $333,408 $0 $11,084 $64 $11,020

GSA $14,986 $12,718 $2,038 $10,680 $12,718 $11,059 $1,659

STATE $7,553 $7,516 $59 $7,457 $7,475 $1,759 $5,716

TREASURY $4,648 $3,854 $2,157 $1,697 $2,870 $3,566 $0

NASA $2,017 $792 $206 $586 $773 $505 $268

NRC $1,114 $654 $192 $462 $654 $1,582 $0

NSF $377 $287 $342 $0 $287 $363 $0

Total $40,207,573 $21,198,150 $21,085,342 $3,519,044 $5,161,920 $2,526,981 $2,871,078

(1) Referrals through 7/31/99

(2) Eligible amounts as of 6/30/99

(3) Justice includes amounts on behalf of other program agencies

(4) Amounts referred may exceed amounts eligible in some instances because eligible amounts are established as of 9/30/98 

and debt referrals as of 7/31/99.

Source: FMS Debt Management Services

(in thousands)

FY 1998

Federal Non-Tax Delinquent Debt Eligible to be referred to FMS

(24 CFO Agencies)
APPENDIX G

ABBREVIATIONS

 

OIG-00-013 PCIE/ECIE REVIEW OF NON-TAX DELINQUENT DEBT Page 31

A/R Accounts Receivable

AID Agency for International Development

BDMOC Birmingham Debt Management Operations Center

BOP Bureau of Prisons

CFS Consolidated Financial Statement

CPSC Consumer Product Safety Commission

Customs United States Customs Service

DCIA Debt Collection Improvement Act

DO Treasury’s Departmental Offices

DOC Department of Commerce

DOD Department of Defense

DOE Department of Energy

 DOJ Department of Justice

DOL Department of Labor

DOT Department of Transportation

ECIE Executive Council on Integrity and Efficiency

ED Department of Education

EPA Environmental Protection Agency

FCC Federal Communication Commission

FEMA Federal Emergency Management Agency

FMS Financial Management Service

FOIA Freedom of Information Act

GSA General Services Administration

HHS Department of Health and Human Services

HUD Department of Housing and Urban Development

INT Department of the Interior

ITC U.S. International Trade Commission

 NASA National Aeronautics and Space Administration

NEA National Endowment for the Arts

NRC Nuclear Regulatory Commission

NSF National Science Foundation

OIG Office of Inspector General

OMB Office of Management and Budget

OPM Office of Personnel Management

PCA Private Collection Agency

PCIE President’s Council on Integrity and Efficiency

RF Revolving Fund

RRB Railroad Retirement Board

S&E Salary and Expense

SBA Small Business Administration

Secret Service United States Secret Service

SSA Social Security Administration

STATE Department of State

TOP Treasury Offset Program

Treasury Department of theTreasury

TRO Tax Refund Offset

USDA United States Department of Agriculture

VA Department of Veterans Affairs
APPENDIX H

MAJOR CONTRIBUTORS TO THIS REPORT

 

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Alexander Best Jr., Audit Manager

Beth Serepca, Auditor-in-Charge

Julie Poole, Auditor

Catherine An, Auditor

Dieu Nguyen, Auditor
APPENDIX I

REPORT DISTRIBUTION

 

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Treasury Departmental Offices

Under Secretary for Domestic Finance

Fiscal Assistant Secretary

Assistant Secretary for Management/Chief Financial Officer

Director, Financial Management/CFO/DO

Director, Office of Organizational Improvement

Director, Office of Strategic Planning

Desk Officer, Office of Accounting and Internal Control

President’s Council on Integrity and Efficiency

Gregory H. Friedman, Chair, Audit Committee

Gaston L. Gianni, Jr., Vice Chair, PCIE

Executive Council on Integrity and Efficiency

Thomas D. Blair, Vice Chair

House Committee on Government Reform and Oversight

 Subcommittee on Government Management, Information and Technology

Randall J. Kaplan

Office of Management and Budget

Tom Stack, Chief, Credit and Cash Management Branch

Esther Rosenbaum, OIG Budget Examiner

Participating Offices of Inspector General

Financial Management Service

Commissioner

Assistant Commissioner, Debt Management Services
APPENDIX J

PARTICIPATING OIG REPORTS

 

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