Recovery of Certain State Agency Overpayments
Background
Agencies affected by recovery audits
SB 1569 and SB 1863 (79th Regular Session) and SB 1571 (86th Regular Session) allow the Comptroller’s office to contract with one or more consultants to perform audits to recover overpayments. Participating state agencies and institutions of higher education must have biennial expenditure totals over $50 million. By rule, the Comptroller’s office will exempt certain agencies with a relatively low proportion of vendor payments.
Where recovered funds go
GAA, Article IX, Section 8.02 (f), appropriates 50 percent of recovered funds to the audited agency. The remaining 50 percent shall be transferred as unappropriated revenue to the originating fund or account. Consultants will be compensated out of the agencies’ appropriated share.
After the consultants have identified overpayments, agencies will collect recovered funds from vendor(s) either as a cash overpayment refund or an overpayment credit memo. Agencies receiving overpayment credit memos must transfer the 50 percent due the state and the payment to the consultant out of existing current year appropriations.
Recoveries from local fund expenditures will be deposited to the appropriate local fund and the consultant paid from those funds.
Comptroller’s office requirements
When the recovery audit identifies overpayments, the Comptroller’s office establishes appropriation number 29802, (titled Recovery Audit Account) for the current appropriation year (AY) on the USAS Appropriation Number Profile (20) screen. Appropriation 29802 receives deposits of recovered cash overpayment refunds and is used to record expenditures for the consultant’s recovery audit fees.
Agency requirements
When the recovery audit identifies overpayments, the agency establishes a program cost account (PCA) on the USAS Program Cost Account Profile (26) screen for the current AY, inferring appropriation 29802 and program code 3991. The PCA may also infer the fund used on the original purchase voucher document that recorded the overpayment.
Recovery Transactions
To comply with the statutory disposition of recovered funds or overpayment credit memos, the following recovery transactions must be completed in the order they are presented.
Follow these steps for cash overpayment refund transactions:
- Deposit the cash overpayment refund into the Recovery Audit Account appropriation (29802).
- For the state’s 50 percent share, transfer the recovered state funds to fund 0001 or to the identified fund(s) other than general revenue.
- For the agency’s 50 percent share, pay the consultant, transfer remaining federal funds, if applicable, and transfer any remaining amount to the agency or institution identified fund(s).
Note: The payment to the consultant from federal funds shall be made from the agency’s current appropriation items from non-federal methods of finance unless the rules of the federal program allow payment from the recovered federal funds.
Follow these steps for overpayment credit memo transactions:
- Record the overpayment credit memo in USAS.
- Transfer the state’s 50 percent share of the credit memo and the amount due the consultant from the agency’s appropriations.
- Pay the consultant, lapse remaining budgets and transfer remaining cash balances.