Contract Management: Recovery Auditing Offers Potential to Identify Overpayments.
GENERAL ACCOUNTING OFFICE WASHINGTON DC NATIONAL SECURITY AND INTERNATIONAL AFFAIRS DIV
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For both private industry and government agencies, some payments are processed incorrectly for a variety of reasons. For instance, vendors make pricing errors on their invoices, forget to include discounts that have been publicized to the general public, neglect to offer allowances and rebates, miscalculate freight charges, and so forth. These mistakes, when not caught, result in overpayments. identifying and recovering overpayments is referred to as recovery auditing. Recovery auditing started about 30 years ago, and it is used in several industries, including the automobile, retail store, and food service industries, and within DOD, by the Army and Air Force Exchange Service and the Navy Exchange Service. An external audit recovery group may be the only group used by an organization or it may be used in combination with an internal group that examines invoices for overpayments prior to an external groups review. The demonstration program began in September 1996, when the Defense Supply Center, Philadelphia DSCP, competitively contracted with Profit Recovery Group International PRGI. The contract, which has been extended twice and will end in May 1999, covers purchases made during fiscal years 1993-95. It requires PRGI to identify and document overpayments and to make recommendations to reduce future overpayments. PRGI receives a fee of 20 percent of net collected funds.
- Administration and Management