In This Section

This section contains the following topics: 

Introduction

This topic contains general information on the finance activity, including

• accounts receivable (A/R) and the finance activity
• who is responsible for
  • the accuracy of award adjustments, and
  • determining whether a debt exists, and
• determining whether to notify the finance activity.

Change Date

February 14, 2025

VI.iii.2.B.1.a.    A/R and the Finance Activity

An accounts receivable (A/R) is created when an award adjustment that creates an overpayment in a beneficiary’s account is authorized.

Any A/R created as a result of an award adjustment is instantaneously reflected in the award system and is readily accessible for debt management and collection purposes.

If an award adjustment alone cannot remove or create a debt, a fiscal transaction will be needed.

Fiscal transactions are completed by the finance activity prior to the authorization of an award, and are used in the following types of cases:

• attorney fee cases when the user is unable to utilize the automated process through Veterans Benefits Management System (VBMS) – Awards (VBMS-A)
• award adjustments based on audit error worksheets (AEWs) showing an amount previously paid by the Defense Finance and Accounting Service (DFAS), and
• reversing debts in which the collection status is Due Process.

References:  For more information on

• processing the types of cases that still require the finance activity, see M21-1, Part VI, Subpart iii, 2.B.3
• receivable types, see M24-3, Chapter 1, Part 5, Appendix A, and
• where to view receivables in VBMS, see the VBMS Core User Guide.

VI.iii.2.B.1.b.  Who Is Responsible for the Accuracy of Award Adjustments

Senior Veterans Service Representatives (VSRs) and Certified VSRs that authorize awards are ultimately responsible for ensuring that an adjustment of benefits to a Department of Veterans Affairs (VA) beneficiary is accurate. 

VI.iii.2.B.1.c.  Who Is Responsible for Determining Whether a Debt Exists

Claims processors are responsible for determining whether a debt exists in a beneficiary’s account every time they process an award of compensation or pension.

Reference:  For more information on how to locate A/R balances, see M21-1, Part VI, Subpart iii, 2.B.2.a. 

VI.iii.2.B.1.d<d.  Determining Whether to Notify the Finance Activity</d

After a claims processor determines a debt exists in a beneficiary’s account, the case must be reviewed to determine whether the finance activity should be notified.

The collection status in the Enterprise Management of Payments Workload and Reporting for VA (eMPWR-VA) must be Collectible prior to authorization in order to ensure an award action reduces or removes an existing debt.

Follow local regional office (RO) procedures to contact the finance activity for fiscal transactions when award action alone does not remove existing debts that are in Collectible status. 

Reference:  For more information on viewing receivables in eMPWR-VA, see the eMPWR-VA User Guide.

Introduction

This topic contains information on

• reviewing awards for indebtedness, and
• debt management.

Change Date

February 14, 2025

VI.iii.2.B.2.a.  Reviewing Awards for Indebtedness

When an award is processed, the system automatically checks for the existence of a debt or an A/R in the beneficiary’s compensation or pension record.

Important:  A/R balances are displayed on the

• CURRENT AND HISTORICAL AWARD INFORMATION page in VBMS, and/or
• award print generated in VBMS-A.

Reference:  For more information on receivable types, see M24-3, Chapter 1, Part 5, Appendix A.

VI.iii.2.B.2.b.   Debt Management

The finance activity of each RO manages issues of indebtedness.

The Debt Management Center, located in St. Paul, Minnesota, is responsible for 

• VA’s debt collection, and
• processing requests for waiver of an overpayment. 

Note:  If VBMS does not show an A/R exists, and a claims processor believes there should be one, the finance activity must be notified.

Introduction

This topic describes how to handle cases that require special processing, including

• partial withholding of retroactive benefits
• example of a partial withholding of retroactive benefits
• attorney fee withholding
• AEWs involving DFAS payment, and
• eliminating an overpayment resulting from correction of an administrative error.

Change Date

July 21, 2023

VI.iii.2.B.3.a.  Partial Withholding of Retroactive Benefits

Occasionally, a partial withholding of retroactive benefits is appropriate but cannot be accomplished through input of any of the collection codes. 

A two-step award action is necessary in this situation, as shown in the example in M21-1, Part VI, Subpart iii, 2.B.3.b.

VI.iii.2.B.3.b.  Example:  Partial Withholding of Retroactive Benefits

Situation:

• An award adjustment that discontinued pension effective January 1, 2000,
  • was processed in June 2000, and
  • created a $2,500 overpayment.
• An award is subsequently processed in September 2000 that reinstates benefits effective January 1, 2000, but at a lower rate.  The new award entitles the payee to a $900 retroactive payment.
• A review of the claims folder indicates that only $300 of the retroactive payment represents benefits due the beneficiary during the period the overpayment was created (January 1, 2000, to June 2000).
• A waiver request is pending.

Actions:

• Process an award covering the overlapping periods (January 1, 2000, to June 2000).
• Process a second award covering the remaining period during which benefits are owed.

VI.iii.2.B.3.c.   Attorney Fee Withholding

All awards involving the payment of attorney fees must be processed in accordance with the instructions outlined in M21-5, Chapter 8, Section B.

For the limited number of attorney fee cases that require fiscal transactions by the finance officer, do not authorize an award involving attorney fees until after the finance activity confirms that the withholding for attorney fees has been successfully coded.

VI.iii.2.B.3.d.  AEWs Involving DFAS Payment

An AEW showing an amount previously paid by DFAS is generated for cases involving Combat-Related Special Compensation (CRSC)/Concurrent Retirement and Disability Pay (CRDP).

Referral to the finance activity is required on these AEWs to avoid overpayment.  Provide the finance activity the following information:

• Veteran’s name and claim number
• amount previously paid by DFAS, and
• name of authorizer to inform once the receivable amount is established in the system.

The finance activity establishes the amount previously paid by DFAS as a collectible receivable in eMPWR-VA.  This action ensures automatic deduction of the receivable from the generated retroactive payment amount.

Important:  The authorizer must authorize the award within one to two days of the date the finance activity established the collectible receivable.

References:  For more information on

• processing AEWs, see M21-1, Part VI, Subpart ii, 4.E
• CRDP, see M21-1, Part VI, Subpart ii, 4.A.6, and
• CRSC, see M21-1, Part VI, Subpart ii, 4.A.7.

VI.iii.2.B.3.e.  
Eliminating an Overpayment Resulting From Correction of an Administrative Error

If correction of an administrative error will create an overpayment, follow the instructions in the table below to eliminate the overpayment in the award system following completion and approval of the administrative decision referenced in M21-1, Part VI, Subpart i, 2.B.3.

Note:  When an administrative error results in the severance of service connection for all compensable disabilities, refer to claims processing procedures provided in the interim guidance document titled SOP for CUE Severance Award Processing.