RD375 - Annual Report on the Commonwealth's Recovery Audit Program


Executive Summary:
In accordance with section 2.2- I822.1 ofthe Code of Virginia the Department of Accounts entered into a contract with PRG-Schultz USA, Inc. (auditors) in early 2005 for recovery audit services. The audit process involves a review of state agency expenditures to vendors for payment for goods and services to identify duplicate and erroneous payments, unclaimed credits and contract terms compliance. Reports regarding the status of these services have been submitted to the respective Chairs of the Senate Finance and House Appropriation Committees for the previous two calendar years.

Review of Fiscal Years 2002, 2003, and 2004 Expenditures

The cost recovery audit for this period is complete and $502,517 was recovered from vendors. Most of the recovered funds stemmed from duplicate payments. In January, 2007, approximately $114,500 was returned to the general fund, with the balance of recovered funds transferred back to the state agencies that originated the erroneous expenditures, net of the auditor's 20% fee.

An additional $60,587 in overpayments is subject to subsequent collection through the Commonwealth's set-off debt collection process. This represents the remaining verified claims for which vendors have failed to respond to repeated administrative collection efforts.

Review of Fiscal Years 2005 and 2006 Expenditures

The PRG-Schultz auditors are currently engaged in the collection of overpayments made to vendors by state agencies for fiscal years 2005 and 2006. The auditors have completed their review and analysis of vendor payments and are focusing on the collection of overpayments (claims).

To-date, $244,719 in overpayments has been collected from vendors. Additionally, the auditors have identified an additional $200,428 in potential claims. PRG-Schultz is currently working with vendors to determine the validity of these potential claims. The auditors plan to complete the audit for this period in the next several months.

Review of Fiscal Year 2007 Expenditures

Expenditure data for fiscal 2007 was recently provided to the auditors. The auditors will spend the next several months analyzing this data before beginning field work to identify and confirm potential overpayments.