Audit Reports

-A A +A

Weak Internal Controls for Collecting Delinquent Debt Put Millions of DOT Dollars at Risk

Project ID: 

In 1996, Congress enacted legislation aimed at decreasing delinquent debts that individuals and non-Federal entities owe the Federal Government. However, from fiscal year 1999 to September 30, 2013, DOT’s reported delinquent debt increased over 300 percent from approximately $170 to $737 million. Further, underreporting and overreporting errors indicate the increase is greater than reported. The longer debts remain delinquent, the greater the risk of them going uncollected. Yet it is unknown how much delinquent debt DOT has collected. While DOT reported decreases in its delinquent debt collections from fiscal year 2008 to September 30, 2013, these reports do not include all delinquent debt DOT collects because, according to a DOT official, the Enterprise Services Center (ESC) cannot separately track collections of accounts receivable and delinquent debts.

Ineffective internal controls—including inadequate debt collection policies and procedures, training, and oversight—underlie DOT’s mounting delinquent debt and reporting errors. In one case, over $1 million in debts were not referred to the Department of Treasury for collection until they were on average 115 days past the 180-day statutory limit for referral, increasing the risk that these debts will not be collected. Despite the identified errors and delays, DOT and Operating Administration policies do not require staff that report and collect delinquent debt to take training that would provide them the knowledge and skills needed to effectively carry out their responsibilities—such as debt collection processes and tools and Treasury requirements and assistance. A lack of clear oversight and accountability further undermine DOT’s debt reduction efforts. Finally, several ESC personnel said they do not use ESC’s standard operating procedures (SOP) for collecting administrative debt. Others indicated that they did not know the SOPs existed.

We made six recommendations to help DOT strengthen its internal controls and improve the accuracy of reported data and its collection of delinquent debt. The Department concurred with all of our recommendations.




Closed on 06.29.2017
No. 1 to OST

Develop and implement departmentwide policies and procedures for accurately identifying and reporting delinquent debt and recoveries, and collecting debts in a timely manner. Implementation of this recommendation could put $494.1 million in funds to better use.

Closed on 06.29.2017
No. 2 to OST

Establish clear policies and guidance for overseeing delinquent debt collections made by Operating Administrations and ESC.

Closed on 06.29.2017
No. 3 to OST

Require relevant training for all personnel who are responsible for identifying, collecting, and reporting on delinquent debt.

Closed on 06.29.2017
No. 4 to OST

Direct Operating Administrations that must comply with legal requirements outside of DCIA to develop clear and effective debt collection policies and procedures for their unique requirements and to share these policies and procedures with ESC.

Closed on 06.29.2017
No. 5 to OST

Direct ESC to clarify its SOPs, including (a) delineating the different processes for administrative and loan debts and (b) identifying the Operating Administrations that the SOPs apply to.

Closed on 06.29.2017
No. 6 to OST

Direct Operating Administrations that have loan programs to develop or enhance policies and procedures for complying with their specific requirements for delinquent loan collections.