Jump to content

Accounting Paid From Wrong LOA


Freyr

Recommended Posts

Hi all, as I was reconciling my payment records I saw that our accounting folks paid the contractor using the wrong LOA. The vendor billed to the correct one, but for some reason our side billed the LOA on the CLIN below it. My question is whether this is going to require us to 1) have the contractor pay back that money and reinvoice on that CLIN again or 2) if it'd be possible for us to issue a modification to move money around between two different LOAs. #2 seems like it'd be in violation of some kind of rule (misappropriations act?). Looking for the most efficient solution to the correct issue. Thanks!

Link to comment
Share on other sites

LOA = Line of Accounting?

If so is this clarification correct?   The vendor billed to the appropriate CLIN yet the government paid in accordance with a different CLIN and therefore a different LOA?  If this is correct then it would be my view that your solution is somewhere between 1 and 2.  Acknowledging that accounting/fiscal  should just correct their mistake but the new electronic systems prevent them from doing so I would probably just tell it like it is in a modification and then indicate movement of  money between CLINS and LOA's.

Something  like.....

When contractor invoice XX was paid the contractor billed against the correct CLIN but the government paid against the wrong CLIN and therefore the wrong LOA.   Therefore this modification corrects this error by -

1.  Increasing the quantity of CLIN XX back to a quantity of XX and a dollar amount of $XX and reducing CLIN XX by a quantity of XX and a dollar amount of $XX reflecting the amount charged to the wrong CLIN. 

2. This modification therefore also increases LOA XX to $XX and reduces LOA XX to $XX.

3. And then of course as supported by the modification do all the gyrations necessary in the electronic system to make the corrections.

 

Seems like a crazy thing to do but it seems to me that there is not only a LOA integrity issue but a CLIN issue too!  Correcting actually gets you out of possible misuse of funds issue rather creating one.

Link to comment
Share on other sites

Gotta tell you this happens a lot.

Good contractors perform periodic reconciliations to MOCAS or whatever contract payment system is being used. This issue should have been caught by the contractor, but perhaps they were waiting until the final contract closeout reconciliation -- which is not a good business practice. In fact, it may be an indication that the auditors should pay the contractor a visit and evaluate billing controls and related practices.

Good KOs perform similar reconciliations as well (good on you Freyr).

Another approach you may want to consider is to partner with the contractor and request submission of an adjustment invoice, where the contractor credits the amount of overpayment received and "reinvoices" against the proper CLIN/LOA. The net effect is a zero value invoice but it gets the payments correct in the system.

Hope this helps.

 

Link to comment
Share on other sites

Recognizing that we do not have all the facts, based on what was written originally, it seems like what we have is an accounting error.  To my simple mind, why can't the government accounting folks simply do a debit and credit to correct the error and move on?  Why is a contract action necessary?

Link to comment
Share on other sites

11 minutes ago, Retreadfed said:

Recognizing that we do not have all the facts, based on what was written originally, it seems like what we have is an accounting error.  To my simple mind, why can't the government accounting folks simply do a debit and credit to correct the error and move on?  Why is a contract action necessary?

I agree that it appears to be an internal government problem and accounting solution. The contractor shouldn’t have to do anything.

Link to comment
Share on other sites

3 hours ago, Freyr said:

Looking for the most efficient solution to the correct issue.

In my experience the most efficient solution is to have the contractor fix it rather than argue with DFAS (or whomever) regarding the accuracy of the reconciliation to the point where they will admit that a mistake was made.

Link to comment
Share on other sites

Guest
This topic is now closed to further replies.
×
×
  • Create New...