PDF AIMD-00-234 Debt Collection: Treasury Faces Challenges in ...

GAO

August 2000

United States General Accounting Office

Report to the Subcommittee on Government Management, Information and Technology, Committee on Government Reform, House of Representatives

DEBT COLLECTION

Treasury Faces Challenges in Implementing Its Cross-Servicing Initiative

GAO/AIMD-00-234

Contents

Letter Appendixes

3

Appendix I: Objectives, Scope, and Methodology

12

Appendix II: GAO's June 8, 2000, Testimony

15

Appendix III: Comments From the Financial Management Service

48

Abbreviations

CFO DCIA FMS OMB PCA PMAC SOP

Chief Financial Officer Debt Collection Improvement Act Financial Management Service Office of Management and Budget private collection agency contractor PCA Monitoring and Control standard operating procedures

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GAO/AIMD-00-234 FMS Cross-Servicing Implementation

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GAO/AIMD-00-234 FMS Cross-Servicing Implementation

United States General Accounting Office Washington, D.C. 20548

Accounting and Information Management Division

B-285723

Leter

August 4, 2000

The Honorable Stephen Horn Chairman The Honorable Jim Turner Ranking Minority Member Subcommittee on Government Management,

Information and Technology Committee on Government Reform House of Representatives

On June 8, 2000, we testified before your subcommittee on the Department of the Treasury's Financial Management Service's (FMS) implementation of the cross-servicing provision of the Debt Collection Improvement Act (DCIA) of 1996.1 In our testimony, we reported that for FMS' crossservicing program to become a fully implemented and mature program, many challenges lie ahead that must be overcome to assure success in the collection of delinquent debt.

In our testimony, we pointed out that the success of FMS' cross-servicing program significantly depends on agencies identifying and promptly referring eligible delinquent debt to Treasury because as delinquent debt ages, the likelihood of collection diminishes. In addition, we identified the following issues that FMS needs to address.

? FMS officials stated that as of September 30, 1999, about 89 percent of the $59.2 billion of debts over 180 days delinquent were excluded from cross-servicing. However, the accuracy and completeness of amounts reported by agencies including exclusions from cross-servicing were not required to be, and were not, independently verified. In addition, several agencies' reporting of debt balances and related aging was not accurate. For example, a December 1999 report2 stated that of the 16 agencies

1Debt Collection: Treasury Faces Challenges in Implementing Its Cross-Servicing Initiative (GAO/T-AIMD-00-213, June 8, 2000).

2PCIE/ECIE Review of Non-Tax Delinquent Debt, The President's Council on Integrity and Efficiency, the Executive Council on Integrity and Efficiency, and Department of the Treasury Office of Inspector General (December 1999).

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