Recovery of Certain State Agency Overpayments

Overview

Applicable to

All state agencies and institutions of higher education with biennial expenditure totals over $50 million that have been notified of a recovery audit authorized by Senate Bill (SB) 1569 and SB 1863, 79th Legislature, Regular Session and SB 1571, 86th Legislature, Regular Session.

Policy

State agencies and institutions of higher education must process Uniform Statewide Accounting System (USAS) transactions in the order prescribed by the Texas Comptroller of Public Accounts (Comptroller’s office) to comply with statutory disposition of recovered funds or overpayment credit memos.

Legal citations

General Appropriations Act (GAA), Article IX, Section 8.02 (f), 87th Legislature, Regular Session; Senate Bills 1569 and 1863, 79th Legislature, Regular Session; SB 1571, 86th Legislature, Regular Session.

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.

Disposition of Cash Overpayment Refunds

USAS coding instructions

When an agency receives a cash refund from a vendor that has been identified as a recovered overpayment, the agency deposits the funds into the agency’s appropriation (Appn 29802/Recovery Audit Account) for the current AY. The agency determines if the recovered amounts are state or federal funds (receipts). There is a USAS transaction for each object code and fund number affected. When recovery transaction deposits are entered in USAS, the description (DESC) field on the Revenue/Receipts Transaction Entry (504) screen should be entered as “Overpayment Recovery XXXXXXXX”, where “XXXXXXXX” is the document number from the overpayment.

Refer to these instructions:

Step 1: Record the deposit

Enter a deposit voucher with a Document Type D, Batch Type 2 using this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195/Deposit of Revenue in Treasury	29802/Recovery Audit Account	*3703/3745	Same as Overpayment/Same as Overpayment/Determined by Agency
* 3703 is for Recovery Audit Reimbursements – State. 3745 is for Recovery Audit Reimbursements – Federal.

Step 2: Transfer 50 percent of the funds

Transfer 50 percent of recovered state funds from Appn 29802/Recovery Audit Account to the current AY, Appn 00000 – Unappropriated Activity (for funds other than General Revenue) or Appn 99906 – Unappropriated Receipts (for General Revenue).

Enter a journal voucher with a Document Type J, Batch Type 2 using the following coding blocks.

For funds other than General Revenue (GR), use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/Reverse-Deposit of Revenue in Treasury	29802/Recovery Audit Account	3703	Same as Overpayment/Same as Overpayment/Determined by Agency
195/Deposit of Revenue in Treasury	00000/Unappropriated Activity	3703	Same as Overpayment/Same as Overpayment/ Determined by Agency

For GR, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/Reverse-Deposit of Revenue in Treasury	29802/Recovery Audit Account	3703	0001/Determined by Agency/Determined by Agency
188/Deposit for Suspense or Funds Held for Others	99906/Unappropriated Receipts	3703	0001/Determined by Agency/Determined by Agency

Step 3: Pay the Comptroller-approved invoice

Upon receipt of the Comptroller-approved invoice, pay the consultant from Appn 29802/Recovery Audit Account. To make the payment, budget must first be established for the current AY for each fund affected. If the rules of the federal program do not allow payment to the consultant from the recovered federal funds, budget (or budget/cash, if collected) must be transferred from the agency’s current appropriation items from non-federal methods of finance. The consultant payment must be proportional to the funding of the total recovered overpayment.

If the payment to the consultant can be made from the recovered funds, enter a budget revision with Document Type A, Batch Type 1 using this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
006/Adjust Expenditure Budget	29802/Recovery Audit Account	7000	Same as Overpayment/Same as Overpayment/Determined by Agency
009/Adjust Revenue Budget	29802/Recovery Audit Account	3000	Same as Overpayment/Same as Overpayment/Determined by Agency

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
225/Establish Vouchers Payable	29802/Recovery Audit Account	7245	Same as Overpayment/Same as Overpayment/Determined by Agency

If the payment to the consultant cannot be made from the recovered funds due to the rules of the federal program, enter a budget revision for the current AY with Document Type A, Batch Type 1, using the following coding blocks.

For committed budget transfers, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
012/Exp Appn Transfer – Out	*Determined by Agency	7000	Determined by Agency/Determined by Agency/Determined by Agency
018/Exp Appn Transfer – In	29802/Recovery Audit Account	7000	Determined by Agency/Determined by Agency/Determined by Agency

For collected budget transfers, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
015/Rev Appn Transfer – Out	*Determined by Agency	3000	Determined by Agency/Determined by Agency/Determined by Agency
012/Exp Appn Transfer – Out	*Determined by Agency	7000	Determined by Agency/Determined by Agency/Determined by Agency
018/Exp Appn Transfer – In	29802/Recovery Audit Account	7000	Determined by Agency/Determined by Agency/Determined by Agency
021/Rev Appn Transfer – In	29802/Recovery Audit Account	3000	Determined by Agency/Determined by Agency/Determined by Agency

Transfer cash from the current AY to fund the collected budgets.

Enter a journal voucher with Document Type J, Batch Type 5 using the following coding blocks.

For revenue transfers for collected budgets, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
405/Rev Transfer – In	29802/Recovery Audit Account	3703/3745	Determined by Agency/Determined by Agency/Determined by Agency
406/Rev Transfer – Out	*Same as overpayment	3703/3745	Determined by Agency/Determined by Agency/Determined by Agency

For cash operating transfers for collected budgets, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
403/Cash Transfer – In	29802/Recovery Audit Account	3968	Determined by Agency/Determined by Agency/Determined by Agency
404/Cash Transfer – Out	*Same as overpayment	7968	Determined by Agency/Determined by Agency/Determined by Agency
Note: Agency General Ledger (AGL) numbers are required for these transactions.

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
225/Establish Vouchers Payable	29802/Recovery Audit Account	7245	Determined by Agency/Determined by Agency/Determined by Agency

Step 4: Transfer federal funds (if applicable)

Transfer the federal funds (receipts) in Appn 29802/Recovery Audit Account to the current AY and appropriation determined by the recovered funds’ federal guidelines.

Enter a journal voucher with Document Type J, Batch Type 2 using the following coding blocks.

For appropriated federal funds (receipts), use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/Reverse-Deposit of Revenue in Treasury	29802/Recovery Audit Account	3745	Same as Overpayment/Same as Overpayment/Determined by Agency
179/Deposits in Excess of Revenue Budget	*Same as overpayment	3745	Same as Overpayment/Same as Overpayment/Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.

If there are no federal guidelines concerning the recovered federal funds, transfer to Appn 70000/Unappropriated Earned Federal Funds Receipts and use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/Reverse-Deposit of Revenue in Treasury	29802/Recovery Audit Account	3745	Same as Overpayment/Same as Overpayment/Determined by Agency
195/Deposits of Revenue in Treasury	70000/Unappropriated Earned Federal Funds Receipts	3745	Same as Overpayment/Same as Overpayment/Determined by Agency

Step 5: Transfer remaining state funds

Transfer the remaining state funds in Appn 29802/Recovery Audit Account.

Enter a journal voucher with Document Type J, Batch Type 2 using this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/Reverse-Deposit of Revenue in Treasury	29802/Recovery Audit Account	3703	Same as Overpayment/Same as Overpayment/Determined by Agency
179/Deposits in Excess of Revenue Budget	*Same as overpayment	3703	Same as Overpayment/Same as Overpayment/Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.

Step 6

Submit completed Recovery Audit Worksheet to your assigned appropriation control officer (ACO) at time of transfers.

Disposition of Overpayment Credit Memos

USAS coding instructions

When an agency receives an overpayment credit memo from a vendor, the agency determines if the recovered amounts are state or federal funds (receipts) and records the credit memo in USAS. Then, when an agency makes a purchase using an overpayment credit memo identified under the program, the state’s 50 percent share and the payment to the consultant — by amounts equivalent to the transactions that would have processed if a cash overpayment refund had been received — will be recorded in USAS.

Refer to these instructions:

Step 1: Record the credit memo

Enter a purchase voucher with a Document Type 9, Batch Type 4 using this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
248/Vouchers Payable – Credit Memo	*Same as overpayment	Same as overpayment	Same as Overpayment/Same as Overpayment/ Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.
Note: When using T-code 248, the payment distribution type (PDT) for this transaction and the corresponding payment voucher should be DD.

Step 2: Transfer 50 percent of the credit memo

Transfer 50 percent of the credit memo amount for state funded overpayments, the proportional state amount necessary to pay the consultant’s fees, and the proportional amount of federal fund (receipts) budget and cash necessary to pay the consultant’s fees.

Note: The transfer of federal fund (receipts) amounts in excess of the amount due the consultant is not required as federal guidelines will determine the disposition of the federal funds.

Enter a budget revision for the current AY with Document Type A, Batch Type 1, using the following coding blocks.

For committed budget transfers, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
012/Exp Appn Transfer – Out	*Same as overpayment	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency
018/Exp Appn Transfer – In	29802/Recovery Audit Account	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.

For collected budget transfers, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
015/Rev Appn Transfer – Out	*Same as overpayment	3000	Same as Overpayment/Same as Overpayment/ Determined by Agency
012/Exp Appn Transfer – Out	*Same as overpayment	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency
018/Exp Appn Transfer – In	29802/Recovery Audit Account	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency
021/Rev Appn Transfer – In	29802/Recovery Audit Account	3000	Same as Overpayment/Same as Overpayment/ Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.

Step 3: Fund the collected budgets

Transfer cash from the current AY to fund the collected budgets.

Enter a journal voucher with Document Type J, Batch Type 5 using the following coding blocks.

For revenue transfers for collected budgets, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
405/Rev Transfer – In	29802/Recovery Audit Account	3703/3745	Same as Overpayment/Same as Overpayment/ Determined by Agency
406/Rev Transfer – Out	*Same as overpayment	3703/3745	Same as Overpayment/Same as Overpayment/ Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.

For cash operating transfers for collected budgets, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
403/Cash Transfer – In	29802/Recovery Audit Account	3968	Same as Overpayment/Same as Overpayment/ Determined by Agency
404/Cash Transfer – Out	*Same as overpayment	7968	Same as Overpayment/Same as Overpayment/ Determined by Agency
* If the original appropriation is no longer available, transfer to a similar appropriation.
Note: Agency General Ledger (AGL) numbers are required for these transactions.

Step 4: Pay the consultant

Pay the consultant from Appn 29802/Recovery Audit Account. The consultant payment must be proportional to the funding of the total credit memo.

Enter a purchase voucher with Document Type 9, Batch type 4 using this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
225/Establish Vouchers Payable	29802/Recovery Audit Account	7245	Same as Overpayment/Same as Overpayment/ Determined by Agency

Step 5: Lapse the remaining budget

Lapse the remaining budget in Appn 29802/Recovery Audit Account.

Enter a budget revision with Document Type B, Batch Type 1 using the following coding blocks.

For committed budget lapses, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
036/Lapse Committed Rev Appn	29802/Recovery Audit Account	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency

For collected budget lapses, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
039/Lapse Committed Rev Appn	29802/Recovery Audit Account	7000	Same as Overpayment/Same as Overpayment/ Determined by Agency

Step 6: Transfer remaining cash

Transfer remaining cash in Appn 29802/Recovery Audit Account to Appn 00000/Unappropriated Activity (for funds other than GR) and Appn 99906/Unappropriated Receipts (for GR).

Enter a journal voucher with Document Type J, Batch Type 5 using the following code blocks.

For revenue transfers for funds other than GR, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
405/ Rev Transfer – In	00000/ Unappropriated Activity	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency
406/ Rev Transfer – Out	29802/ Recovery Audit Account	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency

For operating transfers for funds other than GR, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
403/ Cash Transfer – In	00000/ Unappropriated Activity	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency
404/ Cash Transfer – Out	29802/ Recovery Audit Account	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency
Note: AGL numbers are required for these transactions.

For GR, use this coding block:

T-code/Title	Appropriation Number/Title	COBJ	Appropriated Fund/Agency Fund/PCA
195R/ Reverse – Deposit of Revenue	29802/ Recovery Audit Account	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency
188/ Deposit for Suspense or Funds Held for Others	99906/ Unappropriated Receipts	3703	Same as Overpayment/ Same as Overpayment/ Determined by Agency

Step 7:

Submit completed Recovery Audit Worksheet to your assigned ACO at time of transfers.