Region 5 Billing and Collection of Accounts Receivable

EXECUTIVE SUMMARY

Region 5's procedures for billing and collecting accounts receivable contained weaknesses which hindered its ability to timely recover debts owed the Federal Government. For Superfund oversight costs, Region 5 did not (1) promptly send initial billings, (2) timely send follow-up notices on unpaid balances, or (3) include delinquent amounts on subsequent billings. Billing and collection delays were caused by reliance on manual processes, prolonged review and approval procedures, and inconsistent follow-up strategies. As a result, the Superfund Trust Fund was not timely replenished.

Also, Region 5 was not able to timely record numerous accounts receivable which were established through judicial actions. Critical information on judicial orders did not promptly pass from the Department of Justice to Environmental Protection Agency (EPA) attorneys and ultimately to EPA financial managers. The establishment of accounts receivable was sometimes delayed to the extent that payments were received before judicial orders had been entered in Region 5's accounting records. As a result, Region 5's accounts receivable records were incomplete and the Comptroller's Office was not able to match collections to the related receivable. This latter issue was originally reported to Region 5 as a result of the Office of Inspector General's (OIG) Fiscal Year 95 Financial Statement Audit. Although some corrective actions have been taken by the Regional Comptroller and the Regional Counsel, ongoing procedural weaknesses persist.

AGENCY COMMENTS AND ACTIONS

The Regional Administrator, Region 5, has acted or agreed to act to address the findings in our report. The corrective actions include:

2. Emphasizing timely issuance of dunning letters through changes to the Collection Tracking System (CTS).

3. Recording contacts between the Regional Comptroller Office, other Region 5 offices, and Responsible Parties regarding collection efforts.

4. Modifying the CTS to include outstanding unpaid balances in annual billing and dunning letters.

5. Requiring the Regional Counsel to (a) provide the Regional Comptroller with judicial orders, so that the Comptroller can record the amounts in the Agency's financial accounting system, and (b) continue to emphasize to staff attorneys the importance of providing judicial orders timely to the Regional Comptroller's Office.

Additional recommendations are included at the end of each chapter, beginning with chapter 2. For details on the purpose and background of the report, see page 1( Chapter 1).

OIG EVALUATION

Region 5 provided corrective actions, including milestone dates, for each of our recommendations. These actions, when completed, will address our findings and recommendations.

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Audit Report

Created April 23, 1997

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