Summary

GAO evaluated the District of Columbia's efforts to bill, record, and collect accounts receivable.

During its review of the District's billing and collection procedures, GAO found that agencies were receiving large numbers of dishonored checks. During fiscal year 1981, these checks amounted to $3.5 million. According to District officials, only about 40 percent of the dishonored checks received are repaid. At that rate, GAO estimated that the District would lose $2.1 million in 1981. The actual 1981 losses could not be determined, because records were not available at the agency level. GAO compared this estimate with the experience of other local jurisdictions and discovered that the District's dishonored check problem is a major one. For example, Fairfax County, Virginia, with about the same population, received dishonored checks totaling $629,000 during the same period; and Baltimore, Maryland, with a population one-third larger than the District's, received dishonored checks amounting to $578,325. GAO believes that these jurisdictions have limited problems with dishonored checks, because strong collection measures are used. GAO examined the District's efforts to collect payment on dishonored checks and found that aggressive action is not being used to obtain repayment of bad checks. There is a lack of followup on outstanding accounts, and there are no penalties on agencies failing to collect payment for dishonored checks. GAO felt that the agencies' lengthy processing time delays collection efforts to a point which lessens the chance of repayment. District agencies also lacked logs to enable easy identification of accounts paid with bad checks.