National Fine Center: Progress Made but Challenges Remain for Criminal Debt System
Released: 1995-06-26T00:00:00

Letter

Background

Approximately 50,000 criminals are convicted in federal courts each year. Federal courts may impose one or more of the following four monetary penalties upon conviction.

Fines: amounts the court sets as punishment. Fines may accumulate interest, and those that are not paid promptly may result in additional penalties.

Restitution: amounts paid to identifiable crime victims that are entitled to compensation.

Special assessments: fixed amounts, ranging from $5 to $200, assessed for each count upon which the defendant is convicted. The courts are required to impose special assessments on each offender convicted of a crime.

Reimbursement of costs: an amount equal to the court and legal costs of the trial.

Following enactment of numerous laws relating to the imposition and collection of monetary penalties during the 1980s, federal courts have imposed criminal fines and ordered monetary restitution in greater amounts. According to DOJ, an estimated $1.5 billion in monetary penalties were assessed against persons convicted of federal crimes in fiscal year 1994. DOJ also estimated that, as of the end of fiscal year 1994, about $4.5 billion in criminal fines, restitution, special assessments, and court costs were outstanding for persons convicted of federal crimes.

Criminal debtors have been allowed to make payments directly to victims or to local offices of one of three different agencies within judicial districts—the Clerk of the Court, probation office, or U.S. Attorney’s Office (USAO). For example, criminal debtors may make payments based on the monetary penalties routinely imposed by federal courts as follows.

Debtors may pay the courts directly.

Debtors may pay the local USAO, which forwards receipts to the Clerk of the Court or deposits the receipts in DOJ lock boxes.Incarcerated debtors may pay their debts through the Inmate Financial Responsibility Program.

Debtors may periodically pay their debts through probation officers, who are members of the federal court staff.

Debtors may pay restitution directly to victims or through the courts or their USAO.

This has created a fragmented process for tracking and collecting criminal debt and resulted in a lack of standardized procedures, discrepancies among agency collection records, and duplication of effort.

The Criminal Fine Improvements Act of 1987 transferred responsibility for the processing of criminal fines and assessments from DOJ to AOUSC. The House Judiciary Committee’s report on the act set forth the expectation that AOUSC was to establish a centralized and highly automated system capable of receiving all criminal debtor payments; processing fines, restitution, forfeiture of bail bonds and collateral, and special assessments; and retrieving up-to-date information on the status of any obligation covered by the system for all 94 judicial districts. By using this centralized debt system and relieving DOJ of recordkeeping responsibilities, it was expected that additional DOJ resources would be available to perform debt collection enforcement and, therefore, collect more of the outstanding debt. The Executive Office for United States Attorneys (EOUSA), within DOJ, is responsible for providing direction and administrative support over debt collection activities. U.S. Attorneys’ staff within each judicial district are responsible for enforcing collection of delinquent or defaulted criminal debts.

However, because implementation of the NFC system is still in the early stages, DOJ has continued to perform much of the recordkeeping as well as debt collection enforcement functions. After the system becomes fully operational in all districts, DOJ is expected to be relieved of the recordkeeping function but will retain responsibility for enforcing legal collection actions on delinquent and defaulted criminal debt. DOJ will be one of the primary users of the NFC system because the system will identify delinquent and defaulted accounts that require legal enforcement action.

After receiving initial funding of $2.2 million in 1990, AOUSC initiated an NFC project in Raleigh, North Carolina, and began developing a prototype automated information system to centralize criminal debt for one judicial district. However, in an August 1993 report on the Raleigh Fine Center, we concluded that the project would not be operational by its 1995 target date due to difficulties in reconciling debtor accounts and training staff. We also raised concerns about the lack of computer systems security controls to prevent unauthorized access to sensitive information contained in the NFC database. As a result of our report and a program review performed subsequently by AOUSC, in October 1993, AOUSC discontinued development efforts in Raleigh. According to AOUSC officials, the project would have been too difficult and costly to expand to the remaining 93 judicial districts primarily because of the inadequately developed and documented computer software. The system continues to operate in the Raleigh location only.

In April 1994, AOUSC began its current two-phased implementation approach that emphasized using an off-the-shelf accounting system which could be enhanced rather than developing a system totally in-house. Under phase I, AOUSC plans to install an off-the-shelf accounting system to support establishing debtor accounts, billing debtors, recording receipts, paying victims, and reporting on a limited scale for new criminal debts. Also, AOUSC officials plan to enhance the off-the-shelf system to automate certain processes, most of which are now performed manually. For example, they plan to automate the calculation of interest and penalties that are to be assessed on criminal fines. Phase I was also to include reconciling existing criminal debt accounts and entering agreed upon balances into the NFC system.

By phase I’s scheduled completion in September 1996, AOUSC expects that all 94 judicial districts will be providing new criminal debt information to NFC. To minimize the impact on NFC and judicial district staffs caused by the need to manually perform some processing and billing functions, AOUSC decided to add low volume districts—those generally having fewer than 200 convicted criminals annually—first. Larger districts would be added later as planned system enhancements became operational. See appendix III for a table showing proposed time frames for adding judicial districts to NFC.

Once the selected system is fully operational under phase I, AOUSC plans to expand the system during phase II to improve users’ access to NFC information and increase management information reporting capabilities. During phase II, which is projected to be completed within 3 to 5 years, AOUSC intends to either further enhance its selected off-the-shelf accounting system or perform a completely new procurement. AOUSC officials have been unable as yet to provide information, including cost estimates, on specifically how they will accomplish phase II.

Scope and Methodology

Our review focused primarily on AOUSC’s efforts to centralize criminal debt in its NFC system under its phase I implementation. We were unable to analyze the AOUSC’s phase II implementation due to the lack of specificity at this stage as to what AOUSC planned to accomplish. We reviewed available project and systems planning documentation for phase I, including systems and functional requirements, and discussed project and systems status with NFC, EOUSA, and judicial district officials. We also reviewed (1) training documents used to orient and instruct judicial district staff on the process for submitting data to NFC, (2) the NFC implementation schedule for adding judicial districts to the NFC system, and (3) the AOUSC’s draft reconciliation strategy. In addition, we observed data entry and processing of judicial district input data on the interim NFC system and reviewed monthly reports generated by the system. We also discussed with AOUSC officials their strategy for selecting an off-the-shelf accounting system for later use.

Further, we reviewed documentation and discussed with Raleigh Fine Center personnel lessons learned from the prior systems development effort and observed operation of the system with Raleigh personnel. We reviewed current and planned NFC staffing needs and obtained NFC budgetary and expenditure data. We performed our review from August 1994 through January 1995 in accordance with generally accepted government auditing standards. A detailed description of our scope and methodology is in appendix II. The Director, AOUSC, and the Director, EOUSA, provided written comments on a draft of this report. These comments are presented in appendixes IV and V, respectively.

AOUSC Has Begun Centralizing Criminal Debt

Since April 1994, AOUSC has progressed in implementing phase I of its NFC approach. AOUSC officials have (1) established a process for centralizing and maintaining federal criminal debt accounts, (2) developed a formal training program for judicial district staff, (3) selected an off-the-shelf accounting system which became operational in April 1995, (4) installed an inexpensive interim software package that was used through March 1995 until the selected system became operational, (5) begun processing new criminal debt information for 25 of the smaller judicial districts, and (6) begun converting criminal debt information from the interim to the off-the-shelf system.

AOUSC officials selected an off-the-shelf accounting system that could be modified to meet unique billing and disbursement needs. AOUSC officials told us that they selected this accounting system based on published external evaluations of commercially available microcomputer accounting software as well as AOUSC’s internal evaluations of several software packages. This decision was consistent with Office of Management and Budget (OMB) Circular A-130 guidance that encourages agencies to purchase off-the-shelf financial systems rather than develop their own.

However, because the latest version of the selected system was still under development by the vendor, AOUSC bought and started using an inexpensive (about $200) interim accounting software package having limited capability and processing capacity so that implementation for some of the smaller districts could begin in August 1994. AOUSC officials told us that the interim software package would accommodate processing requirements for the 23 judicial districts that they expected to have implemented through March 1995. According to the AOUSC Director, the selected off-the-shelf accounting system, which was received in October 1994 and began operating in April 1995, is replacing the interim system and is to provide the capability for processing criminal debt information for all 94 judicial districts by September 1996. Efforts to convert criminal debt accounts from the interim system to the off-the-shelf system are to be completed by May 1995.

AOUSC has also established a process for obtaining and updating debt information. Once implemented, Clerk of the Court staff in judicial districts are to manually complete standardized account establishment forms for newly convicted criminals, that include the monetary penalties imposed by the courts, along with (1) personal debtor data, such as address, date of birth, and social security number, (2) payment requirements, and (3) information on any restitution payments to be made to those harmed by the crime. In addition, judicial district staffs in the Clerk of the Court’s office, probation office, and U.S. Attorney’s Office also are to submit manually prepared account maintenance forms to NFC when information about the debtor or the account changes, such as a change of address. Under this process, once NFC staff receive completed forms, they are to enter data into the automated accounting system.

The NFC accounting system generates monthly billings to debtors, who, in turn, are to remit payments to NFC. NFC staff manually determine, based on payments received from debtors and the terms set forth in the sentencing documentation, any applicable amounts that are to be paid to crime victims. The NFC system also generates monthly statements to the judicial districts showing individual debtor account balances.

AOUSC has developed and begun conducting a formal training program at judicial districts aimed at defining the roles and responsibilities of staff in the Clerk of the Court’s office, the probation office, and U.S. Attorney’s Office who compile and submit criminal debt information to NFC. The primary goals of the training are to (1) promote effective communication among the entities involved in criminal debt activities and (2) ensure that complete and accurate standardized data are provided to NFC. This training is provided to judicial district personnel prior to the district sending criminal debt information to the NFC system.

According to AOUSC’s Director, as of April 1995, NFC implementation in the judicial districts was slightly ahead of schedule. On August 1, 1994, the NFC began receiving criminal debt information on new accounts from two judicial districts—Vermont and Maine. As of December 1994, 13 judicial districts were sending information on new criminal debt accounts to NFC. The NFC was expanded to 25 judicial districts as of April 1995, which was 2 more than the 23 AOUSC had initially planned in April 1994.

Our analysis of the criminal debt data received by NFC for the initial 13 districts showed that these new accounts amounted to about $6.4 million, which represented about 6 percent of the 13 districts’ criminal cases with outstanding balances, and about one-tenth of one percent of DOJ’s estimated $4.5 billion in total debt. We did not perform similar analysis for the 12 additional districts recently brought onto NFC.

Actions Needed to Complete NFC Implementation

Extensive planning and implementation effort remains if AOUSC is to fully implement a system to account for and report on criminal debt for all 94 judicial districts. Currently, only a small fraction of criminal debt accounts are on the NFC system. Before the larger courts are added, software enhancements will be needed so that NFC can effectively support certain billing, payment receipt, and disbursement functions, most of which NFC staff now do manually.

In addition, some of the larger challenges facing AOUSC and DOJ involve (1) ensuring that data for existing debtor accounts are reliable before entering the information into the NFC system and (2) developing a methodology for determining, tracking, and reporting the collectibility of new and existing debt. Further, while AOUSC has indicated that it will enhance the system to increase user access to NFC information and improve management reporting during phase II, it has not yet determined what specific enhancements will be made to NFC or how it intends to accomplish them.

Enhancing Software Capabilities

During phase I, in addition to replacing the interim software package with the selected off-the-shelf system, AOUSC plans to develop several software enhancements to automate certain functions, most of which are now performed manually by NFC staff. For example, one enhancement will automate the calculation of interest and penalties. While the selected off-the-shelf system—an accounts receivable/accounts payable package—has standard capabilities, legislation that calls for calculation of interest and default penalties for fines requires additional capabilities. Specifically, there are several statutes that specify interest rates and penalties that are to be calculated for fines. The applicable statute is determined by the date of the debtor’s offense. Automating such interest and penalty calculations would save staff time and eliminate errors inherent in manual calculations.

Another enhancement involves developing an automated interface to enable judicial districts to provide account establishment and maintenance data to NFC in automated formats. This improvement would reduce manual data entry tasks now performed by NFC staff and the corresponding risk of errors. Other enhancements include (1) automating transaction data from debtor payments sent to lock boxes and payments made through the Bureau of Prisons Inmate Financial Responsibility Program and (2) establishing an interface between NFC and a DOJ system to allow DOJ staff increased access to account information.

Ensuring Data Quality Before Recording Existing Debt Accounts

While AOUSC has begun entering new account information, a major challenge will be reconciling existing criminal debt accounts and entering the resulting amounts into the NFC system. NFC will not contain complete criminal debt information for its users and the Congress until it also includes complete and reliable data on the estimated $4.5 billion in existing criminal debt.

Separate records maintained by judicial district staffs within the Clerk of the Court’s office, probation office, and U.S. Attorney’s Office will need to be reconciled. Within a judicial district, each of these entities is responsible for receiving payments and maintaining accounting records, and they may not balance or update their records at the same time. Another reason that accounts may not agree is that the U.S. Attorney’s Office is generally the only entity within the judicial districts that calculates and applies interest and penalties on accounts. Accordingly, AOUSC must coordinate with these entities to develop and implement a reconciliation approach to identify differences among the accounts, determine reasons for the differences, and ensure that agreed-upon corrections are made.

AOUSC officials recognize the difficulties of reconciling existing debt records, and the magnitude of effort that will be needed to reconcile about 100,000 debtor accounts, nationwide. During the Raleigh National Fine Center project, judicial district staff took over a year to reconcile about 2,500 accounts. In our August 1993 report, we stated that the reconciliation, eventually completed in 1992, took longer than expected because judicial district and U.S. Attorney staffs had difficulty agreeing on account balances. This difficulty occurred despite the use of procedures directing that (1) account balances differing by $500 or less be considered reconciled because further reconciliation would not be cost-effective and (2) differences remaining would be decided in favor of the debtor.

A separate but related problem that occurred during the Raleigh reconciliation effort is likely to resurface during AOUSC’s future account reconciliation attempts. In Raleigh, although the team performing the reconciliation eventually reconciled all account balances under the procedures previously described, it found that many accounts lacked current addresses and social security numbers. Such information is critical since NFC cannot bill debtors without correct addresses.

AOUSC has begun preparing a strategy to guide the upcoming reconciliation process. This draft strategy, in part based on the reconciliation performed in Raleigh, identifies the roles and responsibilities of staff who are to perform the reconciliation and sets forth steps in the reconciliation process. However, the strategy has not yet been accepted by AOUSC, DOJ, and judicial district officials. AOUSC has not established time frames for beginning and completing reconciliations in each of the remaining 93 districts or estimated the resources needed to perform the process. In addition, the reconciliation strategy does not set forth steps to be followed if addresses and/or social security numbers are missing from debtor account information.

Determining Collectibility of Criminal Debt

While not specifically addressed by the Criminal Fine Improvements Act of 1987, a critical area that AOUSC and DOJ have not yet addressed is that of determining the collectibility of criminal debt accounts. Currently, AOUSC records all new criminal debt in its NFC system as accounts receivable without a determination by AOUSC or DOJ as to whether it appears collectible. Also, AOUSC officials have not established within the NFC system an allowance for doubtful or uncollectible receivables to properly account for and report on those receivables determined to have a low probability of collection. Without such allowances, decisionmakers, including the Congress, may be led to believe that substantially greater amounts are collectible.

Also, AOUSC officials recognize that, during the reconciliation process, there is a need to identify accounts that are no longer legally enforceable and have included procedures in AOUSC’s draft reconciliation strategy to address these instances. Accounts that are no longer enforceable include special assessment cases when the 5-year statute of limitations on collecting the debt has expired or when a debtor has died. These accounts would not be transferred to NFC.

AOUSC will need to work with DOJ to ensure that realistic determinations of collectibility are made on new criminal debts as the accounts are established, based on available information, and on those that have become delinquent or are in default. In addition, there is a need to assess existing debt accounts that are legally enforceable, but may be uncollectible. Although AOUSC has no authority to make adjustments to accounts or to write off debts, it could categorize certain debts as uncollectible for accounting purposes. We have worked with various agencies to develop methodologies for determining collectibility and, in some instances, have assisted them in applying the methodologies to their accounts receivable balances. Reliably estimating an allowance for uncollectible receivables requires consideration of both historical collection experience and current economic conditions. Also, a December 1992 standard recommended by the Federal Accounting Standards Advisory Board, and approved for use for fiscal years ending September 30, 1994, and thereafter, states that such an analysis should be performed on groups of accounts with similar collection risk characteristics and should include an evaluation of individual accounts to determine a debtor’s current ability to pay.

Court officials told us that sufficient information is often available at the time of sentencing to determine the offender’s ability to pay and, therefore, whether or not a monetary penalty imposed is likely to be collected. For example, in the 1993 bombing of the World Trade Center in New York City, each of the four defendants received 240 years in prison and $250,000 in fines. Although $1 million of outstanding fines resulted from this case, DOJ and AOUSC officials believe the probability of collecting these fines is low. Currently, however, the DOJ records these debts as being fully collectible.

It will be important for AOUSC to work cooperatively with DOJ to develop a methodology for determining collectibility. By not distinguishing between collectible and uncollectible criminal debt accounts, NFC will be unable to accurately report on the composition of the outstanding criminal debt balance. Similarly, users who are responsible for collecting debts will not have the ability to effectively target collection resources and realistically assess their performance unless information is available to identify which debts possess the best likelihood of collection, and thus, should be rigorously pursued.

Defining Phase II Objectives

AOUSC recognizes that the NFC system established during phase I will have to evolve to a more sophisticated financial information system during phase II so that it can be used to improve management of criminal debt collection activities. AOUSC officials told us that they have begun working with DOJ and other system users to define the necessary information and reporting requirements. They plan to address this more fully during phase II and, at the time of our review, had not yet determined what additional enhancements and capabilities will be needed to complete this phase.

According to AOUSC officials, at the end of phase II, the NFC system is to provide a repository of national statistical information on criminal debt produce reports to accommodate management information needs of the Congress, the judiciary, the executive branch, and other entities; provide the Clerk of the Court offices, probation offices, U.S. Attorneys’ Offices, and the Bureau of Prisons with easy access to account information so that the maximum level of debt collection can be achieved; and provide a means to account for the collection of bail bond and collateral forfeiture actions, as required by the Criminal Fine Improvements Act of 1987.

AOUSC officials believe that a successful implementation of phase II will enable them to fully meet the requirements of the act.

Conclusions

The two-phased NFC implementation approach chosen by AOUSC has enabled AOUSC to begin centralizing new criminal debt information in 25 of the smaller judicial districts. AOUSC has also purchased an off-the-shelf accounting system that, together with planned enhancements, should enable it to expand the NFC implementation to additional districts and more effectively accommodate information from the larger districts. The timely completion of these enhancements is important to the future efficient operation of NFC.

AOUSC and DOJ also face significant challenges that will require extensive planning, as well as coordination among other NFC system users, if AOUSC is to successfully implement the required system. These challenges include reconciling the estimated $4.5 billion in existing debt and developing a methodology for determining the collectibility of new and existing debtor accounts. It is also critical that AOUSC determines specifically how it intends to proceed beyond phase I to increase user access to NFC account information and improve management reporting. AOUSC will need to address these issues to fully centralize criminal debt for all 94 judicial districts and improve the government’s ability to collect what is owed.

Recommendations

As part of its efforts to complete the planned implementation of the NFC system, including enhancements such as the one needed to perform interest and penalty calculations, and various interfaces to facilitate the exchange of information between NFC and its users, we recommend that the Director, AOUSC, work with DOJ to finalize a reconciliation strategy to include time frames and resources for reconciling existing criminal debt accounts at judicial districts and entering the reconciled information into the NFC system and fully define a strategy for addressing additional actions needed to enable the NFC system to (1) provide a repository for national criminal debt statistical information, (2) produce reports to accommodate management information needs, (3) facilitate communication between NFC and its users, and (4) account for bail bond and collateral forfeiture actions.

We also recommend that the Director, AOUSC, and the Director of DOJ’s EOUSA, work together to develop and implement a methodology for determining the collectibility of all criminal debt.

Agency Comments and Our Evaluation

In written comments on a draft of our report, AOUSC’s Director generally agreed with our findings and recommendations. However, the Director said that DOJ, by virtue of its criminal debt collection responsibilities, should assume the lead role for reconciling existing criminal debt accounts and for determining the collectibility of all criminal debt. Accordingly, the Director stated that these recommendations should be directed to DOJ, not AOUSC. Based on our discussions with both entities, DOJ and U.S. Attorneys are the primary parties who will ultimately determine whether or not criminal debt accounts are collectible. However, AOUSC also needs to ensure that the NFC system contains reliable information for reporting on the composition of the outstanding criminal debt balance. Therefore, we have revised our recommendation regarding developing a methodology for determining collectibility of criminal debt to place this responsibility with both AOUSC and DOJ.

While we agree that DOJ and the U.S. Attorneys have a major role in reconciling existing criminal debt account balances, it is AOUSC’s responsibility to ensure that the NFC system contains complete and reliable data on all criminal debt, including existing unreconciled accounts. As stated in our report, AOUSC had already prepared a draft reconciliation strategy and had provided it to DOJ for coordination. We have modified our recommendation regarding reconciling existing accounts to state that AOUSC should work with DOJ to finalize a reconciliation strategy.

In addition, the AOUSC Director stated that the draft report did not give AOUSC sufficient credit for the progress in implementing the NFC system. We updated the report to reflect progress through April 1995, but wish to point out that only a small percentage of new criminal debtor accounts are on the system. As noted in the report, we believe that AOUSC and DOJ still face significant challenges in their joint effort to reconcile existing debtor accounts and to report collectible amounts.

The AOUSC Director also provided a number of suggested clarifications that we have incorporated as appropriate. The AOUSC Director’s comments and our response are included in appendix IV.

DOJ’s Office of the Director, EOUSA, commented that the report should have placed more emphasis on the NFC’s lack of procedures, policies, and plans for developing the system. Our report describes the status of the NFC system implementation effort and indicates throughout the report that extensive planning and coordination will be needed to fully implement the NFC system. Nonetheless, progress is being made to enhance the reliability of accounting and reporting of criminal debt information. During our review, AOUSC officials recognized that additional planning would be required to ensure the NFC system would meet the needs of its users, and said that they were in the process of preparing formal plans. DOJ’s continued involvement in the NFC project is critical to ensuring that the NFC system is developed to meet the needs of all stakeholders, especially in light of DOJ’s responsibilities for enforcing the collection of criminal debt.

Also, the Director, EOUSA, stated that reconciliation of existing criminal debt accounts does not represent a major challenge to the NFC as we had reported. There are several factors, in addition to the experiences of the Raleigh reconciliation, which we used to conclude that the reconciliation effort will be a major challenge. First, at the time of our review, AOUSC had not finalized a reconciliation strategy for use by judicial district staff, of which the U.S. Attorney’s Offices are a part, including establishing time frames for performing the reconciliations and estimating the resources needed to perform the process. Second, AOUSC officials and some judicial district officials—representing small districts that were already providing new criminal debt information to NFC—stated that reconciliation of existing accounts would be a time-consuming and large undertaking. Third, discussions with the former Associate Director, Financial Litigation Unit, EOUSA, indicated that special assessments alone, which are applied to each count of a conviction and represent about 46 percent of criminal debts, would create a large amount of work during the reconciliation process. The comments from the Director, EOUSA, and our response are included in appendix V.

As agreed with your office, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the date of this letter. At that time, we will send copies of this report to the Director, Administrative Office of the United States Courts; the Director, Executive Office for United States Attorneys; the Attorney General; and interested congressional committees. Copies will be made available to others upon request. Please call me at (202) 512-7487 if you have any questions concerning this report. Other major contributors to this report are listed in appendix VI.

Status of NFC Project Funding and Staffing

NFC Project Funding

AOUSC has received a total of $19 million from the Crime Victims Fund to support NFC development and operations since its inception through fiscal year 1994. An additional $6.2 million is to be made available to AOUSC in fiscal year 1995. Initially, AOUSC was to receive $2.2 million annually after the Fund had exceeded collections of $125 million through fiscal year 1990 and $150 million thereafter. However, because Crime Victims Fund deposits did not exceed these levels in some years, AOUSC was not provided funding for NFC. In 1992, legislation was enacted to ensure more funding stability for NFC, and $6.2 million was to be provided annually for fiscal years 1992 through 1995. Thereafter, the Fund was to receive $3 million annually.

As of September 30, 1994, about $6.7 million is reported to have been expended or obligated since the inception of the project. AOUSC officials estimated that an additional $4.2 million will be expended or obligated for fiscal year 1995. To date, the majority of the project’s total reported costs have been for personnel compensation and benefits, travel, and automation related expenditures. Table I.1 summarizes NFC’s reported funding activity.

NFC Project Staffing

NFC staffing is being accomplished in several ways—transferring staff from the Raleigh Fine Center project, reassigning individuals within AOUSC, hiring new employees, and detailing staff from various components of the federal judiciary and the Department of Justice. According to NFC project management officials, long-term staffing requirements have not been determined. As of November 1994, 23 full-time staff were assigned to the NFC project. At that time, AOUSC officials had proposed that another 11 staff would be added by the end of March 1995 to provide increased support for accounting related activities and systems analyses. Table I.2 summarizes current and proposed NFC staff by position description.

Scope and Methodology

Our review focused primarily on AOUSC’s efforts to centralize criminal debt on its NFC system under phase I implementation. We were unable to analyze AOUSC’s phase II implementation due to the lack of specificity at this stage as to what AOUSC planned to accomplish. To obtain information on the status of the NFC’s systems implementation, we reviewed available project and systems planning documentation. We also discussed project and systems status with cognizant NFC management and staff, EOUSA officials, and various officials within the Clerk of the Court’s office, probation office, and U.S. Attorney’s Office in several judicial districts that are currently providing criminal debt information to the NFC system—the District of Vermont, District of Maine, and Western District of Wisconsin. To determine what percentage of the 13 judicial districts’ outstanding criminal debt caseload was on the NFC accounting system, we obtained criminal debt case information from U.S. Attorney’s Offices for those districts and compared it to NFC caseload information.

To determine how the current system development approach differed from previous efforts, we reviewed available documentation, discussed prior system development efforts with judicial district personnel, and observed the operations of the prior Raleigh Fine Center system. Since the NFC began processing new criminal debt cases in August 1994, we observed data entry and processing of judicial district standard input data on the NFC accounting system and reviewed monthly reports generated by the system. We reviewed an NFC functional requirements document and discussed system needs with DOJ and EOUSA officials, and various judicial district staffs.

We discussed with AOUSC officials their strategy for selecting an off-the-shelf system for later use. We also reviewed an August 1994 draft of the AOUSC’s reconciliation strategy. In addition, we reviewed training documents used to orient and instruct judicial district personnel on the process for submitting data to NFC and reviewed the NFC implementation schedule for adding judicial districts to the NFC system. We also obtained information on current and planned NFC staffing levels, obtained budgetary and expenditure data for fiscal years 1990-1994, and estimated funding activity for fiscal year 1995. We performed our review from August 1994 through January 1995 in accordance with generally accepted government auditing standards.

Planned NFC Implementation Schedule by Judicial District and Expected Annual Accounts Through August 1996

Comments From the Administrative Office of the United States Courts

The following are GAO’s comments on the letter from the Director, Administrative Office of the United States Courts, dated April 16, 1995.

GAO’s Comments:

1. This issue is discussed in the “Agency Comments and Our Evaluation” section of the report. 2. See comment 1. 3. We have modified the Results in Brief and other sections of the report to reflect that 25 districts are providing new criminal debt account information for input into the NFC system and that the NFC implementation is slightly ahead of schedule. 4. The report has been modified to reflect the recent additional progress made by AOUSC. We have further updated the report to indicate that AOUSC (1) has begun converting criminal debt accounts from its interim accounting software package to the new off-the-shelf accounting system and (2) is planning to complete conversion efforts for all 25 districts by May 1995. 5. AOUSC is correct in its characterization of our report as emphasizing that much more needs to be done to completely implement the NFC system. We have modified the report to reflect that, as of April 1995, AOUSC was slightly ahead of schedule in implementing the NFC system. 6. We believe the discussions of AOUSC’s overall strategy and policies for the phase I NFC implementation effort are appropriate. 7. We have modified the Results in Brief section to reflect that AOUSC and DOJ should work together to determine the collectibility of criminal debt. We have further clarified that DOJ is responsible for enforcing the collection of delinquent and defaulted criminal debts. 8. See comment 1. 9. See comment 1.

Comments From the Executive Office for United States Attorneys

The following are GAO’s comments on the letter from the Director of DOJ’s Executive Office for United States Attorneys dated April 19, 1995.

GAO’s Comments:

1. This issue is discussed in the “Agency Comments and Our Evaluation” section of the report. 2. The available project and systems planning documentation we reviewed consisted of (1) a draft project plan, (2) the February 1994 functional requirements document, (3) training documentation presented during training sessions, (4) the judicial district implementation schedule included in our report as appendix III, and (5) a draft reconciliation strategy. AOUSC had coordinated these documents with DOJ. 3. At the time of our review, we were informed by both the NFC Project Manager and the former Associate Director, Financial Litigation Staff, EOUSA, that a decision had not been made as to how DOJ would be provided access to NFC data. Our report points out the need for AOUSC to complete system enhancements to automate certain functions, including establishing an interface between NFC and DOJ. Also, during our review, AOUSC was in the process of developing automated account establishment and maintenance forms to transfer criminal debt data from judicial districts to NFC. The fact that DOJ staff are working closely with AOUSC staff to implement the NFC system should help ensure that DOJ’s user needs are being met. 4. See comment 1. 5. Although NFC could enter reconciled amounts into the system without addresses and social security numbers, our report points out that the lack of this information was a problem during the Raleigh reconciliation. This information would be needed before collection of criminal debt could take place in other districts. 6. We have revised the report to clarify that AOUSC’s draft reconciliation strategy requires judicial district staff only to identify those existing debt accounts that are no longer legally enforceable because, for example, the defendant’s obligation to pay has expired or the defendant has died. These cases would not be transferred to NFC. The methodology for determining collectibility that we have recommended AOUSC and DOJ develop should address (1) steps to determine the collectibility of legally enforceable existing debt and (2) guidance as to when these accounts should be entered into the NFC system. 7. We have revised the report. 8. We agree that uncollectible debts may still be legally enforceable and as such, should be transferred to NFC. As stated in our report, uncollectible accounts should not be considered as valid accounts receivable for financial reporting purposes, however; AOUSC needs to account for these receivables for enforcement, compliance, and tracking purposes.

Major Contributors to This Report

Accounting and Information Management Division, Washington, D.C.

General Government Division, Washington, D.C.

Office of the General Counsel, Washington, D.C.

Jan B. Montgomery, Assistant General Counsel The first copy of each GAO report and testimony is free. Additional copies are $2 each. Orders should be sent to the following address, accompanied by a check or money order made out to the Superintendent of Documents, when necessary. Orders for 100 or more copies to be mailed to a single address are discounted 25 percent.

U.S. General Accounting Office P.O. Box 6015 Gaithersburg, MD 20884-6015 Room 1100 700 4th St. NW (corner of 4th and G Sts. NW) U.S. General Accounting Office Washington, DC Orders may also be placed by calling (202) 512-6000 or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and testimony. To receive facsimile copies of the daily list or any list from the past 30 days, please call (301) 258-4097 using a touchtone phone. A recorded menu will provide information on how to obtain these lists.

Address Correction Requested