Audit Division
Audit Summary
Management and Collection of the
State's Accounts Receivable
LA98-11
Results in Brief
As state government is asked to do more with limited resources, the
collection of amounts owed is more critical than ever. However, Nevada
does not have a comprehensive system to effectively manage its accounts
receivable to ensure it maximizes collections. For instance, most agencies
we reviewed lack accurate and reliable receivable information and do not
consistently use effective collection practices. As a result, agencies
collected only about half of the receivables we tested. By improving the
management and collection of receivables, the State could enhance programs
and services without raising taxes or fees.
Principal Findings
-
Agencies lack critical information to effectively manage their collection
activity. Although the six agencies we reviewed reported receivables totaling
$103.5 million at the end of fiscal year 1996, the actual amount is unknown
because some agencies' receivable balances were not complete or accurate.
For example, one agency did not know the receivable balances for two of
the taxes we examined. Furthermore, we identified 5 accounts at one agency
totaling $9.2 million that were incorrectly reported as receivables because
of data entry errors. (page 11)
-
The agencies reviewed do not consistently write off uncollectible accounts.
We estimate about $50 million of the 1996 fiscal year-end receivable balance
reported by the six agencies is not likely to be collected. (page 13)
-
Because most agencies reviewed lack complete and accurate information on
receivables, they can not measure the effectiveness of their collection
efforts. As a result, the State has no idea of how effective agencies are
at collecting receivables. (page 14)
-
Effective collection actions, such as phone calls, judgments, and payment
plans, were not consistently used by the agencies we reviewed. In addition,
only one agency used the services of a credit reporting service and collection
agency. (page 15)
-
The State lacks an effective process to ensure it does not make payments
to businesses that owe the State money. As a result, we found 5 delinquent
taxpayers that received payments totaling $41,000, even though they owed
the State over $200,000. (page 17)
-
Agencies seldom share information on debtors. In addition, not all agencies
are notified when a debtor files for bankruptcy. For instance, one debtor
failed to register for applicable taxes, notified only one of three agencies
about bankruptcy, and received payments for services to the State even
though it owed several agencies at least $83,000. (page 19)
-
Not all agencies have statutory authority to use effective collection actions
such as security bonds. As a result, some agencies are at a disadvantage
when attempting to collect delinquent accounts. Our testing showed agencies
claimed 34 bonds and increased collections by 61% on those accounts. (page
20)
Agency Response
to Audit Recommendations
Recommendation
Number
Accepted
Rejected
1 Maintain sufficient and reliable data on the
the effectiveness of collection
efforts........................
X
2 Establish policies and procedures for the
management
and collection of the state's
receivables...................
X
3 Coordinate collection efforts........................................
X
4 Obtain statutory authority to use effective
collection
techniques.................................................................
X
TOTALS
4
0