CHAPTER 27. RECORDS, REPORTS, AND ACCOUNTING

27.01 RECORDS

a. As managers, all field station Fiscal activities, VACO Finance Service, and the Debt Management Center (DMC) must establish and maintain accounts receivable records in a current status by program, type of debt, and appropriation. All collection actions taken, collections received, amounts offset, waiver action, etc., including adjustments of any kind on a debtor's account, are to be timely documented in the Department's accounts receivable records.

b. Complete records are to be maintained, by program, type of debt, and appropriation, of accounts receivable waived, compromised, suspended, terminated or referred to the District Counsel (DC) or Department of Justice (DOJ) for enforced collection so that reports required by paragraph 27.02 and ad hoc reports required by management can be completed.

c. All VA components who refer accounts receivable to other VA components or external agencies for additional collection action or advice are responsible for keeping informed of the current status of those receivables (reconciling their accounts with the component the debts were referred to) and for reporting and accounting purposes.

27.02 REPORTS

a. U.S. Treasury Standard Form 2209, "Report on Accounts and Loans Receivable Due From the Public"

(1) The Treasury SF Form 2209 (Schedule 9) is a combined accounting/management information form. It contains information on loans receivable which are defined in part as "only the principal for all direct loans and defaulted guaranteed loans", and accounts receivable which are defined in part as "all other amounts owed the Government." Some examples of accounts receivable include benefit overpayments, employee debts, fees charged the public. Accounts receivable also includes any interest, administrative costs, and penalties assessed on delinquent debts.

NOTE: Individual line items on the Schedule 9 only appear to be selfexplanatory. Please be advised that they are not. Careful attention must be paid to the Treasury's definitions and instructions for each line item. See Appendix U for the Schedule 9 form and instructions.

(2) The Schedule 9 report is a cumulative report which is prepared quarterly on a fiscal year basis. It is due to Treasury approximately 25 days after the end of the first three quarters of the fiscal year and 45 days after the end of the fourth quarter. It is transmitted to Treasury electronically using the Government OnLine Accounting Link System (GOALS). Information on the Schedule must agree with VA's debt collection budget information exhibits under OMB Circular A11 "Preparation and Submission of Budget Estimates." These exhibits are commonly called the 42's, and 40B's and are due in September of each year. Receivable information reported on Schedule 9 reports must also support and reconcile to the General Ledger and the Statement of Financial Condition (SF 220).

(3) Reporting Requirements.

(a) VACO Finance Service: Beginning with second quarter reporting (April 1993), VACO Finance Service is responsible for compiling a complete Schedule 9 report (Parts I and II) for each type of loan and accounts receivable that they have responsibility for collecting, by appropriation, regardless of the dollar level of receivables. Schedule 9's are to be received in VACO (047G7) by COB 20 days after the end of the first three quarters of each fiscal year and by COB 30 days after the end of the fourth quarter of each fiscal year.

(b) Veterans Benefits Administration: When Chapter 30 and Chapter 106 debts are centralized in CARS, VBA will be responsible for compiling a complete Schedule 9 report (Parts I and II) for each type of loan and accounts receivable that they have responsibility for collecting, by appropriation, regardless of the dollar level of receivables. Until Chapter 30 and Chapter 106 debts are centralized in CARS, the DMC will continue to submit pages 2, 3, and 4 of the Schedule 9 for each type of loan and accounts receivable that they have responsibility for collecting, by appropriation, regardless of the dollar level of receivables. They are to be received in VACO (047G7) by COB 20 days after the end of the first three quarters of each fiscal year and by COB 30 days after the end of the fourth quarter of each fiscal year.

(c) Veterans Health Administration: Schedule 9 data for VHA appropriations will be obtained from the MCCR National Database.

(4) Schedule 9 reports by appropriation are as follows:

Veterans Benefits Administration

36X0102 Compensation and Pension Debts

36X0137 Education Benefits Ch 30/106 debts at St. Louis RO, and

Ch 34/35 debts at Debt Management Center (DMC) St. Paul

36X4010 Reopened Insurance Funds

36X4012 Veterans Insurance Fund

36X4023 Guaranty and Indemnity Fund

36X4024 Direct Home Loan Program

36X4025 Home Loan Guaranty Debts

36X4114 Vocational Rehabilitation

36X4118 Education Loan. Debts maintained by the St. Paul VARO&IC.

36X8132 National Service Life Insurance

36X8133 Chapter 32 Education debts maintained by field stations

36X8150 U.S. Government Life Insurance

36X8455 VA Special Life Insurance Fund

36X0120 Veterans Insurance and Indemnities

Credit Reform - Loan Guaranty

36 1024 36 1118 36 1114

36 1025 36 4125 36 4126

36 4127 36 4113 36 4128

36 4128 36 4129 36 1119

36 4112

Veterans Health Administration

36X0144 Grants to the Republic of the Philippines

36X2431 General Fund Receipt Medical Debts

36X4013 Veterans Nursing Home Revolving Fund

36X4014 Medical Canteen Service (Revolving Fund) (VHA)

36X4048 VA Special Therapy and Rehab Act Debts

36X8129 National Service Life Insurance

36X5014 Medical Care Cost Recovery (MCCR)

36X8180 General Post Fund

36X4537 Supply Fund

36X4538 Parking Fund Obligation

36X8129 National Cemetery Gift Fund

VACO Finance Service

36X0163 Nursing Scholarship Program

Consolidated Schedule 9: 36X000

Receivables in the following appropriations are consolidated into one VAwide Schedule 9 Report 36X0000. A final consolidated Schedule 9 will be prepared by 047G7 upon receipt of appropriate Administration and VACO Finance Schedule 9's for the following appropriations.

36X0103 JOBS Bill (Houston RO) (VBA)

36X0110 Construction Major (VHA)

36X0111 Construction Minor (VHA)

36 0151 General Operating Expense (includes Employee Salary,

Travel and PCS moves and FOIA fees (VHA, VBA,

VACO Finance Service)

36 0152 Medical Admin & Misc. Operating Expense (MAMOE) (VHA)

36 0160 Medical Care debts (ineligible, tort feasor,

emergency/humanitarian, and sharing agreement

receivables (VHA)

36 0161 Medical and Prosthetic Research (VHA)

36 0170 Inspector General (VHA, VBA, VACO Finance Service)

36 0200 Reinstated Entitlement Program for Survivors (REPS) (VBA)

National Cemetery System

36 0129 National Cemetery

All Administration and VACO Finance Service

36F1099 Fines, Penalties, and Forfeitures

36F3220 Administrative Cost of Collection (Includes FOIA

receivables)

36F3875 Budget Clearing Account

b. Quarterly Report of Indebtedness (RCS 040455), VA Form 46494 (VBA ONLY)

(1) The Quarterly Report of Indebtedness is due in VACO (008B3) by the 10th workday following the end of the reporting quarter. VBA Fiscal activities are to reconcile Quarterly Listings before completing the report.

(2) Following are instructions for completing VA Form 46494. Also see Appendix V for completed sample.

(a) Section A, WorkStudy Allowance Overpayments. Workstudy allowance overpayments will be reported in Section A.

(b) Section B, Status of Accounts Under Jurisdiction of VBA Field Facilities. This section reflects the current status of accounts under the jurisdiction of VBA field stations. Note that each defaulted education loan debt or home loan guaranty debt will be reported separately when a veteran has more than one loan.

1. Column 1: Number and dollar amount of accounts where collection action is being pursued but no recovery or repayment agreement has been obtained. Special payments (32A, 42A, 45A, and 52A) should not be included in these figures. This column should include suspended accounts and accounts that have been referred to DC and DOJ but are not in a repayment status.

2. Column 2: Number and dollar amount of accounts which are being liquidated under repayment agreements. This will include accounts that have been referred to DOJ and DC and are in a repayment status.

3. Column 3: Number and dollar amount of accounts under VBA field facility jurisdiction which are currently being offset from benefits.

4. Column 4: Number and dollar totals of columns 1 through 3.

c. Analysis of Costs

(1) Each Administration and VACO Finance is responsible for gathering information on the costs that they incur in collecting money owed to the Department, reference 4 CFR Part 102.14 "Analysis of costs." The purpose of gathering and analyzing this information is twofold. First, it can be used to establish minimum debt amounts where reduced collection action efforts are made or no collection action is taken. Second, it is used to determine the additional costs incurred by the Department for pursuing debts that have not been paid timely. This additional Administrative Cost is added to the amount owed when a debt becomes delinquent.

(2) In the case of establishing minimum debt amounts, each Administration and VACO Finance are responsible for reviewing and comparing the costs of collecting claims to actual recovery benefits. Each Administration and VACO Finance are to establish their own data base(s) to determine the cost effectiveness of their debt collection activity. This analysis is to be used to determine realistic points of diminishing returns to establish minimum debt amounts beyond which extensive collection action is not warranted. For example, three demand letters are sent to the debtor; however, personal interviews and credit checks are not conducted as the cost to do so will exceed the amount of the debt to be collected. Or, a study may show that sending three demand letters costs more than the recovery of debt that is less than $5.00 justifying the elimination of sending a third letter.

(3) Each Administration and VACO Finance Service are to submit a cost benefit/administrative cost analysis of their debt collection activity to VACO (047G7) by the COB of the 15th workday of October of each year beginning in 1993.

(4) Minimum debt collection amounts will not be accepted without a cost benefit analysis. At a minimum, the following factors must be included in the analysis when establishing points of diminishing returns for each type of debt or automated accounts receivable system the Fiscal activity uses for collecting one or more type(s) of debts:

(a) Associated dollar amounts for each overpayment.

(b) Actual recoveries versus actual costs.

(c) The size of the debt.

(d) The possibilities of collection through the agency's efforts and those of other agencies.

(5) The ability of the agency to collect a debt or class of debt through offset usually precludes establishing minimum debt collection points. Additionally minimum debt collection points are not be established for employee debts where collection can be accomplished by offset of salary or retirement funds.

d. Centralized Accounts Receivable System (CARS) Cost Reports (VBA Only)

(1) Purpose. CARS cost data provided by VBA field stations, District Counsels, and the Debt Management Center is used to determine collection costs for receivables maintained in CARS. This collection cost data is used by VACO (047G7) to determine the monthly administrative charges that are assessed all delinquent debts owed to VA that arise under programs administered by VBA.

(2) Fiscal Activity. The Fiscal activity is responsible for preparing the CARS Accounts Receivable Collection Report (RCS 040461). The following guidelines are to be followed by VBA field stations in the preparation of the report. Also see Appendix W for completed sample.

(a) Each year from May 1 through May 31, all divisions in a VBA regional office will record actual manhours and costs incurred in support of CARS. The Fiscal activity is responsible for insuring that all appropriate divisions within the station record these costs. The Fiscal activity is also responsible for consolidating all division reports and for preparing the final report. The CARS Accounts Receivable Collection Costs Report is due in VACO (047G7) by COB on the 15th workday of June each year.

(b) All direct or indirect costs incurred by the following activities are to be reported:

1. Committee on Waivers and Compromises. Costs incurred in the waiver process of a CARS case, i.e., control of case, preparation of VA Form 41042, Referral of Indebtedness to Committee on Waivers and Compromises, and VA Form 41837, Decision on Waiver of Indebtedness, and preparation of waiver denial letters.

2. Administrative Division Costs. Costs incurred for administrative tasks such as typing of replies to debt collection correspondence, copying debt collection material, etc.

3. Adjudication Division Costs. Costs incurred for adjudication tasks such as explaining an award processed on a CARS account that created a debt.

4. Finance Division Costs. Costs incurred for financial tasks such as inquiries on CARS debts from service organizations, personal visits, correspondence, audits requested by CARS, agent cashier functions, etc.

5. Loan Guaranty Division Costs. Costs incurred in responding either in writing or by telephone to questions relating to a CARS debt.

6. Veterans Services Division Costs. Costs incurred in responding to telephone and personal inquiries on CARS debts.

(3) DCs. The DCs are to report costs in support of CARS directly to the General Counsel who will forward a consolidated report to VACO (047G7). The consolidated report is due to VACO (047G7) by COB on the 15th workday of June each year.

(4) DMC. The DMC will accumulate and report by fiscal year, actual DMC personnel costs, credit report costs, space costs, and supply costs. The DMC will also report the costs incurred by the St. Paul VARO&IC Administrative Division, VSD, and the Automation Center in Austin. The report will be forwarded to reach VACO (047G7) no later than COB the 15th workday of October of each year.

e. Department of Justice Debt Collection Report (RCS 040462), VA 45320a

(1) All field stations (except the DMC) will maintain a record of debts that are referred to the DOJ for enforced collection and will prepare a monthly Department of Justice Debt Collection Report which is due in VACO (008B3) by the 5th workday of each month. The DMC will maintain similar records and will submit computergenerated COIN reports for debts maintained in CARS by the 5th workday of each month. One copy of the report for each appropriation or category is required.

(2) Following are instructions for completing VA Form 45320a. Also see Appendix X for completed sample.

(a) A separate report must be submitted for each type of debt and appropriation symbol (i.e., Education Loans, 36X4118). Negative reports are required. Note that each education loan debt or home loan guaranty debt will be reported as a separate debt when a veteran has more than one loan.

(b) Each individual report must balance before submitting to Central Office. The following balancing routines apply to page 1. Amounts will be rounded to the nearest dollar.

1. Line 1 plus line 2 plus line 3 minus line 4 equal line 5.

2. Sublines 4A through 4G equal line 4.

(c) Although most of the categories on the report are selfexplanatory, the following information may be helpful.

1. The amounts on page 1 are PRINCIPAL AMOUNTS ONLY for the duration of FY 1992. However, beginning in FY 1993, all amounts include principal plus all accrued late payment charges in order to reconcile with data reported in Treasury's Schedule 2209 Report.

2. Accounts on Hand Start of Month (Line 1) should equal Accounts on Hand EOM (line 5) for previous month. If there are no accounts on line 5 for the previous month, line 1 should be blank or zeros.

3. Accounts Referred During Month (Line 2) should reflect accounts (number and dollar) referred during the month of the report. If any accounts were reported in error, the next month's report should reflect the accounts referred for that month and a negative correction for the accounts reported in error. For example, 5 referrals are reported in November. It is subsequently discovered that only 2 should have been reported. In December, there were no referrals. To correct the previous month's error of 3, the referrals category in December should read 0(3), and the dollar value should correspond accordingly. All corrections should be made on current month's report. All accounts that were previously referred but not reported will be added to the current month's referrals.

4. Accounts Reestablished (Line 3). This line reflects accounts that are rereferred to DOJ when DOJ has returned them for additional information, current address, etc. Also, this line should be used for recording accounts that are transferred from one U.S. Attorney to another.

5. Dispositions (Lines 4A through 4G)

a. Line 4A (Cash Collections): This line reflects the dollar amount of cash collected.

b. Line 4B (Debit Vouchers): This line reflects the dollar amount of checks returned because of insufficient funds. This will be a negative entry.

c. Line 4C (Paid in Full): This line reflects the number of accounts that were completely repaid during the reporting month.

d. Line 4D (Waivers): This category includes only those accounts that have been referred to DOJ and then waived.

e. Line 4E (Compromises): This line reflects the number and dollar amounts of debts compromised by DOJ. Cash collections will be shown on line 4A.

f. Line 4F (Terminated by DOJ): This line reflects accounts that have been sent to DOJ for enforced collection and DOJ has determined that the debt is uncollectible and have closed their file.

g. Line 4G (Returned by DOJ): This line reflects accounts that are returned by DOJ because the statute of limitations has expired, the address is not current, debtor is in receipt of VA benefits, etc. This category should also be used for recording accounts that are returned by DOJ because the debt has been cleared by corrective award action, or accounts that are returned by DOJ and will be cleared by appropriate writeoff. i.e., death, bankruptcy, etc.

6. Accounts Settled During the Month (Line 7): Enter the total number and dollar amounts of debts that have been settled by DOJ during the current month. Accounts are settled if:

(a) A repay agreement with the debtor has been reached and the initial payment has been received,

(b) The account has been reduced by judgment,

(c) The debt has been repaid in full, or

(d) The account has been returned to the referring office. An account should be reported as settled only one time.

7. Accounts on Hand Start of Month should always equal Accounts on Hand EOM for the previous month.

(3) Note that page 2 will not be completed until further notice. Page 2 is to be used for reporting the dollar/cent amount breakdown of interest, administrative cost of collection fees, court costs, and marshall fees.

(a) Lines 1, 2, 3, and 4 are plus lines. Lines 5, 6, 7, 8, and 9 are minus lines.

(b) Accounts O/H Start of Month should be the same as accounts O/H EOM for the previous month.

(c) Line 4 (Accrued During Month) is for recording of interest accrued during the month on debts previously referred.

f. District Counsel Debt Collection Report (RCS 040464), VA FORM 45320b

(1) All field stations (except the DMC) will maintain a record of debts that are referred to the DC for enforced collection and will prepare a monthly District Counsel Debt Collection Report which is due in VACO (008B3) by the 5th workday of each month. The DMC will submit computergenerated COIN reports for debts maintained in CARS by the 5th workday of each month. One copy of the report for each appropriation or category is required.

(2) The instructions for the preparation of VA Forms 45320b, District Counsel Debt Collection Report, RCS 040464, are the same as for the RCS 040462, Department of Justice Debt Collection Report.

27.03 ACCOUNTING

a. All subsidiary accounts will be reconciled with the general ledger at the close of each month's business.

b. Accounts for which VBA stations maintain accountability that are waived, compromised, discharged in bankruptcy or debtor is deceased and collection from the estate cannot be effected, will be recorded in the existing general ledger writeoff accounts. All accounts on which collection efforts are suspended will have no accounting entry.

c. Accounts for which the VBA Systems Development Center (SDC) in Hines maintains accountability in the CP&E systems will require input to reflect writeoffs. Transaction code 07D will be used for this purpose. No accounting transactions are required for suspended cases.

d. Accounting entries for VHA stations are prescribed in MP4, part V, appendix A.

27.04 ADMINISTRATIVE COST STUDIES, PROGRAM DEBTS (VHA)

a. Beginning in 1993, VHA is to conduct a cost study of program debts that its Fiscal activities are responsible for. Cost studies are to be conducted to determine collection costs for receivables maintained manually and for receivables in the IFCAP accounts receivable module by type of debt and appropriation. This collection cost data is to be used to determine the monthly Administrative Costs charges that are assessed on all delinquent debts owed to VA that arise under programs administered by VHA and are accounted for by VHA Fiscal activities. VHA may model its cost studies after those conducted by VBA or develop its own methodology.

b. At a minimum, administrative cost studies are to include all direct and indirect costs per month that are incurred in maintaining delinquent accounts, defined as costs incurred to continue collection action when payment is not received timely, i.e., the costs of maintaining an account 31 to 60 days after the date of the initial demand letter. At a minimum, these costs include the following:

(1) Direct personnel costs, salary

(2) Indirect personnel costs

(3) Space

(4) Overhead

(5) Correspondence, phone costs

(6) Cost of Credit Reports

(7) Supplies

(8) Equipment, direct costs

(9) Equipment operating costs

(10) Depositing collections

(11) Reconciling accounting records

(12) Preparing reports, etc.

c. Completed costs studies are to be submitted to VACO (047G7) by COB on the 15th workday of October of each year beginning in 1993. This charge will be assessed on debts that become delinquent during the following calendar year. During the interim period, VHA should continue to assess administrative costs based upon current CARS studies.

d. Administrative cost studies should also include the costs of the collection of a debt on a timely basis to establish minimum debt amounts below which no collection action will be taken. These costs would include but not be limited to the cost of establishing an accounts receivable, sending the first demand letter, depositing a payment, etc. For example, if these costs amounted to $1.50 then no debt below this amount would be pursued as it would cost VA money to collect it even if payment was timely.

27.05 ADMINISTRATIVE COST STUDIES, EMPLOYEE AND ADMINISTRATIVE DEBT

Cost studies are to be conducted to determine the administrative costs charge to be assessed on delinquent employee and vendor debts in accordance with the guidelines outlined in paragraph 27.04.