In addition, AMAC management does not have write-down policies and procedures for expired and uncollectible restitution orders, and has no policies and/or procedures in place for the restitution process at the onset of the review, the report said.

"We determined the internal control environment over AMAC's restitution orders process needs improvement," the report said.

As a result of not having policies and procedures in place over the restitution order process, the auditors had to rely on interviews and walk-throughs of the process to assess internal controls over the restitution order process, the report noted.

The report concluded that the AMAC needs to make improvements in the following areas: Follow-up efforts and reconciliations, write-down actions, and policies and procedures.

During the review process, the OIG sought to understand why the AMAC did not follow up on reconciliation efforts. The AMAC cited a lack of staff and a determination that collection efforts after an offender's prison term would not be fruitful. However, the OIG disagreed as it benchmarked with the FDIC on the same efforts, determining that the FDIC, with the assistance of the Financial Litigation Unit, collected more restitution after the prison term was completed.

Further, the AMAC, by not conducting regular reconciliation efforts with the DOJ, puts the tracking efforts and payment activity at risk, as well as puts the NCUA at risk of not recovering all restitution payments made.

The OIG made the following eight recommendations for AMAC management:

• Establish a line of communication and, if necessary, enter into a Memorandum of Understanding with both the DOJ's FLU and the Treasury Offset Program to maximize restitution recovery opportunities.
• Once a line of communication is established based on the first recommendation, follow up periodically with the DOJ and the Treasury Offset Program regarding the status of offenders. Follow-up activity should extend through the end of the statute of each restitution order currently on file.
• Develop a process to reconcile restitution orders listed in the AMAC's accounting system, AFTECH, with the Clerks of the U.S. District Courts to ensure that all restitution orders and payments are accurately tracked.
• Once the process is developed based on the third recommendation, develop a requirement to provide for periodic reconciliation of AFTECH to the official restitution order tracking systems maintained by the Clerks of the U.S. District Court.
• Develop write-down and write-off policies and procedures for uncollectable and unenforceable restitution orders. This would include a requirement that all procedure steps are documented within the comment field in AFTECH to ensure justification for taking write-down or write-off actions.
• Perform a review of every restitution case currently tracked by AMAC to determine whether the case is unenforceable or uncollectable, and eligible for write-down or write-off action.
• Once the new processes are developed based on recommendations one through six, revise NCUA Instruction No. AMAC 3900.01 to reflect any function, procedures or processes conducted by any AMAC official related to internal and external monitoring and follow-up of restitution orders.
• Develop desktop procedures for all AMAC divisions involved in the restitution orders process. The procedures should capture the flow of the entire restitution order process from initial receipt of the order to the closing of the loan account.

According to the report, the first steps are to be completed by June 2016 and others to extend into 2017.