oversight

Review of the Department of Labor's Accounting System for Recording and Reporting Accounts Receivable from the Public

Published by the Government Accountability Office on 1977-08-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                          DOCMIWNT RESUME
 03110 -   A23534711

 tReview of the Department of Labor's Accounting System for
 Recording and Reporting Accounts Receivable from the Public-
 FGMSD-77-31; B-15968. August 17, 1977. 3 pp.

Report to lfred M. Zuck, Assistant Secretary for Administration
and anagement, Department of Labor; by arold L. Stugart
D. L. Scantlebury, Director, Financial and General anagemet(for
Studies Dv.).
Issue Area: Accounting and Financial Reporting (2800).
Contact: Financial and General Management Studies Div.
Budget Function: Miscellaneous: Financial Management and
    Information Systems (1002).

           The accounts receivable recorded in the accounting
 system approved by the Comptroller General in October 1972
 the Department of Labor were not accurate. As a result, the for
 balance of accounts receivable from the public reported
                                                          to the
 Department of the Treasury was inaccurate. Recorded and reported
 accounts receivable due from the public contained both
 overstatements and understatements, Findings/Conclusions:
                                                              As
 September 30, 1976, the Department of Labor reported accounts of
receivable from the public of $3,663,717, which were primarily
benefit payments due from employers and overpayments due
 recipients. The accounts receivable were understated by a from
$1,729,146 as a result of omissions, errors, and            net of
misclassifications. The reported accoants receivable from
                                                            the
public were overstated by $2,161,632 and understates by
$3,890,778. The lack of close supervision appeared to be
                                                           one of
the main contributing factors causing these errors.
Recommendations: To assure that amounts due from the public
accurately compiled and reported as accounts receivable on are
Department of Labor's statement of financial condition, the the
Assistant Secretary for AdministratioL and Management of
                                                           the
Department of Labor should emphasize to the Office of Accounting
personnel the need for increased supLvisory review over
                                                           the
preparation of financial statements and reports to the
Department of the Treasury. (SC)
                                  UNITED STATES GENERAL ACCOUNTING OFFICE
                                           WASHINGTON, D.C. 20546

      DIVISION      FINAL AND
                 IJAL
                    1MEZNrT ADA



P.4          B-159687
                                                              AUG 1 7 77

             The Honorable Alfred . Zuck
             Assistant Secretary for Administration
               and Management
             Department of Labor
             Dear Mr. Zuck:
                  This is our report reviewing the Department of Labor's
             accounting system for recording and reporting accounts re-
             receivable from the public. This review was performed at
             Department of Labor headquarters in Washington, D.C., and
             is part of a multiagency review on which we plan to issue
             an overall report to the Congress.
                  Our review showed that the accounts receivable recorded
             in the accounting system approved by the Comptroller General
             in October 1972 were not accurate. Consequently, the balance
             of accounts receivable from the public reported to the
             Department of the Treasury was inaccurate.
                  The following sections summarize the scope and results
             of our review and our recommendation to assure more accurate
             recording and reporting of accounts receivable.
             SCOPE OF-REVIEW
                  As of September 30, 1976, the Department of Labor
             reported accounts receivable from the public of $3,663,717,
             which were primarily benefit payments due from employers and
             overpayments due from recipients. We reviewed the accounting
             for and reporting of these receivables. We limited our re-
             view to the accounting records at the Washington, D.C.,
             headquarters.
             ACCOUNTS RECEIVABLE INACCURATELY
             RECORDED AND EPORTED
                  Recorded and reported accounts receivable due from the
             public contained bot'   -- statements and understatements.

                                                                            FGMSD-77-31
9-159687

The accounts receivable were understated by a net of
$1,729,146 as a result of omissions, errors, and
misclassifications.
    Accounts receivable should be promptly and
recorded. Proper accounting for receivables is accurately
                                                an important
form of control because it allows for the systematic
                                                      record-
ing of amounts due and provides management with needed
information on total overpayments, actions taken, and
                                                       the
overall effectiveness of collection actions.
     As of September 30, 1976, the Department of Labor's
reported accounts receivable from the public of $3,663,717
were overstated by $2,161,632 and understated by $3,890,778.
     The accounting and reporting errors which caut X the
overstatement follow.
     -- An error of $2,151,168 was made in posting to
        the general ledger account.
     -- Amounts due from the public included $10,464
        which was due from another Federal agency. This
        classification error was made because the receivable
        was posted to the wrong account.
     The accounting and reporting errors which caused the
understatements resulted when:
    -- An omission of $2.050,183 from the general ledger
       accounts resulted in this amount's exclusion from
       the report.
    -- Personnel in the Office of Accounting did not
       receive an amended report for inclusion in the
       consolidated statement of financial condition.
       However, this revised report, which indicated
       that receivables were $1,762,700 greater than
       was originally reported, was provided to Treasury
       for inclusion in the consolidated statement of
       financial condition.
    -- Amounts totaling $40,535 which were due from
       several sources were omitted when the financial
       statements were prepared.
    -- Amounts due of $37,360 under two benefit programs
       were not entered into the automated accounting system.


                             2
B-159687

     We discussed these accounting and reporting errors with
responsible personnel in the Office of Accounting, Although
we could not determine the exact causes of these errors, the
lack of close supervision appeared to be one of the main con-
tributing factors. The exercise of more care in the prepara-
tion of financial statements and reports to Treasury would
help solve this problem.
RECOMMENDATION
     To assure that amounts due from the public are accurately
compiled and reported as accounts receivable on he Department
of Labor's statement of financial condition, we recommend that
you emphasize to the Office of Accounting personnel the need
for increased supervisory review over the preparation of fi-
nancial statements and reports to Treasury. Officials of the
Office of Accounting agreed with our findings and initiated
corrective actions to provide more accurate accounting and
report nq.
     We would be pleased to discuss our review results with
you or your representatives and would appreciate receiving
your comments on the actions taken on our recommendation
within 30 days.
     We are sending copies of this report to your Depart-
ment's Director, Office of Audit and Investigations.
                             Sincerely yours,



                           /D. L. Scantlebur
                             Director




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