Objectives, Scope, and Methodology

The objective of our review was to determine the advantages and  disadvantages of existing major information sources, namely, credit bureau  reports, CAIVRS, and the TOP database, to promptly identify delinquent  federal debtors for the purpose of denying them federal financial  assistance. As such,  credit bureau reports are a relatively good information source for  identifying certain delinquent federal nontax debtors. Second, CAIVRS contains limited information on delinquent debts. FMS’s TOP Database

TOP is a mandatory governmentwide delinquent debt matching and  payment offset system. However, the information from the TOP database also has some  limitations. On  the other hand, enhancing the information from the TOP database for the  Barring Delinquent Debtors Program may or may not be appropriate for  certain types of debt (e.g., debt from 91 to 180 days delinquent) because  federal credit agencies are already required by DCIA to report such debt to  credit bureaus, and credit-granting agencies are required to use credit  reports as a way to determine whether an applicant for federal financial  assistance owes a delinquent debt to the government. Conclusions

The federal government does not presently have an effective mechanism  for ensuring compliance with DCIA’s debtor bar provision. By  enhancing or supplementing information currently maintained in the TOP  database and allowing federal agencies access to certain current and  historical data on delinquent debtors, Treasury can improve the  information available to federal agencies to enhance the effectiveness of  agencies’ implementation of the DCIA debtor bar provision.
What GAO Found

The Debt Collection Improvement Act of 1996 seeks to maximize collections of delinquent nontax debt owed to the federal government. However, the act also seeks to reduce losses by requiring proper screening of potential borrowers and information sharing within and among federal agencies. The major information sources of data on delinquent federal debtors are credit bureau reports, the Department of Housing and Urban Development's Credit Alert Interactive Voice Response System (CAIVRS), and the Financial Management Service's (FMS) Treasury Offset Program's (TOP) database. There is no effective mechanism for federal implementation of the act's debtor bar provision. Although credit bureau reports, CAIVRS, and FMS's TOP database each contain some information on delinquent federal nontax debtors, none provides all-inclusive, timely data or maintains them long enough to serve as an adequate data source for successfully barring future financial assistance to currently delinquent debtors or those who did not meet their past obligations. The TOP database, with modifications, now provides an adequate reference point for identifying delinquent debtors to deny them additional financial assistance. Maximizing the TOP database as a delinquency reporting tool would require several changes, such as improving agencies' delinquent debt referral practices and enhancing or supplementing information in the TOP database.