Audit finds state’s debt collection efforts lagging

By Cy Ryan (contact)

Tuesday, April 13, 2010 | 3:54 p.m.

CARSON CITY – State agencies were owed at least $482 million on June 30, 2008, but the program to collect this money has been hit with mathematical errors and a lack of adequate information.

A legislative audit says some state agencies reported “inaccurate or unsupported amounts, did not report accounts receivable information or reported untimely.”

These agencies were to report the receivables to the office of state Controller Kim Wallin, who makes the collection efforts.

The report, performed by Legislative Deputy Auditor Daniel Crossman, showed that 54.6 percent, or $263 million, was more than 60 days past due. And as the debts grow older, it becomes harder to collect.

Crossman said some agencies made unrealistic estimates on how much of the debt could be collected. Some suggested 100 percent of the money owed could be collected by the controller.

The audit said the controller’s office could make improvements by more oversight and training of agencies.

Wallin told the Legislative Commission’s Audit Subcommittee that she is holding monthly training sessions for the agencies. And she pushed through a 2009 law that will correct many of the deficiencies.

The controller’s office, Wallin said, is putting into place a new system to improve efficiencies in the reporting, debt collection and debt offset programs.

Sen. Bob Coffin, D-Las Vegas, said these problems occurred because of a shortage of employees. “We did not give her enough money to do the job,” Coffin said.

The audit said one-third of the agency reports were more than four months late in submission. “Even though agencies failed to prepare and submit reports in a timely manner, the (controller’s) office did not have established procedures for contacting and following up with agencies that missed reporting deadlines.”

The audit said the records in the controller’s office of receivables turned over to collection agencies contained inaccuracies. And there were disagreements between the agencies and the controller’s office.

In one case, records in the controller’s office indicated that about $6.5 million was turned over to the collection agency from the state Department of Motor Vehicles. But the records at the motor vehicle department indicated debts at the collection agency were about $2.6 million.

The audit said the controller’s office “is taking steps to improve its processes over monitoring accounts receivable and increasing the collection of the state’s accounts receivable.”

It noted the change in the law in 2009 and said the agency is putting in a new computer system aimed at improving efficiencies.

In the period from July 1, 2007 to Dec. 31, 2008, collection agencies picked up $1.3 million due the department of motor vehicles or 90 percent of the total. But on the other side, the collection agencies took in $57,969 for the Department of Business and Industry or only four percent of the total.