Report 2013-122 Recommendation 11 Responses

Report 2013-122: California Department of Toxic Substances Control: Its Lack of Diligence in Cost Recovery Has Contributed to Millions in Unbilled and Uncollected Costs (Release Date: August 2014)

Recommendation #11 To: Toxic Substances Control, Department of

The department should continue to resolve its questions about its authority to write off outstanding costs under $5,000. To the extent that it determines it cannot write off outstanding costs, it should pursue collecting the costs.

Annual Follow-Up Agency Response From November 2015

AB 274 authorizes DTSC to write off uncollected accounts of $5,000 or less incurred between Dec. 31, 1987 and Dec. 31, 2013, if the cost to pursue the recovery exceeds the value of the uncollectible account. AB 274 was signed by the Governor on Oct. 2, 2015 and takes effect Jan. 1, 2016. DTSC created procedures to process the write-offs and will begin implementation in January 2016. When cost effective, and within established guidelines, DTSC continues to make progress in resolving costs of $5,000 or less through collection; data cleanup; and write offs. DTSC will use all available tools and processes to resolve the remainder of audit backlog costs of $5,000 or less as quickly as possible by July 2016.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

1-Year Agency Response

AB 274 was introduced by the Assembly Committee on Environmental Safety and Toxic Materials. As proposed, AB 274 would authorize DTSC to not pursue and to write off uncollected oversight costs of $5,000 or less, incurred between December 31, 1987 and December 31, 2013, when the cost for DTSC to pursue the oversight costs exceeds the costs itself. When cost effective, and within established guidelines, DTSC continues to make progress in resolving costs of $5,000 or less through collection; data cleanup; and write offs. Through these efforts, DTSC reduced the original 713 sites with values of $5,000 or less to 553. DTSC will use all available tools and processes to resolve the remainder of audit backlog costs of $5,000 or less as quickly as possible by July 2016.

California State Auditor's Assessment of 1-Year Status: Partially Implemented

6-Month Agency Response

DTSC received questions from legislative staff about the DTSC's statutory authority to write of costs under $5,000. DTSC understands that there will likely be legislation introduced to further clarify DTSC's authority to write off costs under $5,000. DTSC will continue to work with legislative staff and the Legislature if/when such a bill is introduced. DTSC issued two internal guidance documents for pursuing collections and for discharging (writing off) accounts receivables (ARs) of $500 and for $25 or less per debtor for sites that are to be closed in the Cost Recovery Billing System (CRBS). The guidance aligns with Health and Safety Code section 25269.8 which allows the Department to "review all current outstanding receivables and make an appropriate adjustment for estimated uncollectible amounts consistent with current accounting practices and recognizing the present value of future collection." Although the Department has the authority to adjust its own books, the guidance follows the State Administrative Manual (SAM) and other applicable statutes to make those adjustments.

California State Auditor's Assessment of 6-Month Status: Partially Implemented

60-Day Agency Response

DTSC conducted a cost recovery work analysis to determine costs associated with conducting outstanding costs collection. DTSC is coordinating with Department of Finance and State Controller's Office for clarification on authority to write off outstanding costs under $5,000.

California State Auditor's Assessment of 60-Day Status: Pending

All Recommendations in 2013-122

Agency responses received are posted verbatim.