departments must vigorously pursue the collection of receivables.

These measures
must be appropriate, timely and cost-effective. The results of the audit reveal that
the Department does not seem to be fully compliant with this requirement.

Monthly account statements are generated and are sent to all clients who have unpaid
balances with the Department. These account statements are generated during the first
three months following the original invoice.

When the balance is still outstanding after 90 days, the procedure that is followed
varies from one accounting office to another. For example, some offices do a direct
follow-up with the debtor, while other offices contact the managers to inform them of
the delay in payment. Other offices have not developed any clear procedures for
follow-up.

The accounting offices mentioned that they would like to receive more information
about the methods of collection available to them, especially for debts outstanding for
more than 90 days. For example, at what point should the services of a collection
agency be used, and beginning at what amount? Some accounting offices would also
like to have better definition of the roles and responsibilities of accounting office
employees and those of the managersin particular of who is responsible for
collecting sums receivablesin order to ensure that effective follow-up is done.

There is a significant lack of follow-up both within the regional accounting offices
and in Departmental Accounting. The lack of vigorous action on collections increases
the risk that receivables owed to the Department will not be recovered. Although
some of these debts are relatively small, they are receivables due to the Department
and should be collected, failing which they should be written off.

2.1.2 Value of Sums to be Recovered

At the time of writing, the balance of external accounts receivable3 was $2.2
million. Of that amount, accounts receivable totalling $521,000 were more than 365
days past due. Close to 86% of accounts that have been overdue for more than a year
are for less than $500. In addition, in 62% of cases, the amount in suspense accounts
consisted solely of accumulated interest. Steps should have been taken earlier to
collect these debts or to write them off.

Recommendation

1. The Assistant Deputy Minister, Finance and Corporate Branch, should:

 take the actions necessary to recover or write off the amounts over 365 days
past due; and
ensure that guidelines are sent to the Departments accounting offices
concerning the management of amounts to be collected. Those guidelines
should set out items such as:
o the roles and responsibilities of the personnel responsible for collections
(managers, accounting offices, Departmental Accounting); and
o the methods of collection that are available and when to use them
(standardize the process).