This is the accessible text file for GAO report number GAO-15-87R entitled 'Improper Payments: Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act' which was released on December 9, 2014. This text file was formatted by the U.S. Government Accountability Office (GAO) to be accessible to users with visual impairments, as part of a longer term project to improve GAO products' accessibility. Every attempt has been made to maintain the structural and data integrity of the original printed product. Accessibility features, such as text descriptions of tables, consecutively numbered footnotes placed at the end of the file, and the text of agency comment letters, are provided but may not exactly duplicate the presentation or format of the printed version. The portable document format (PDF) file is an exact electronic replica of the printed version. We welcome your feedback. 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Washington, DC 20548: December 9, 2014: Congressional Addressees: Improper Payments: Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act: Improper payments--such as duplicate or erroneous payments, payments to ineligible recipients, or payments for ineligible services--have been a long-standing challenge of the federal government and have annually totaled billions of dollars.[Footnote 1] For fiscal year 2013, federal agencies reported an estimated $105.8 billion in improper payments, a decrease of $1.3 billion from the prior year revised estimate of $107.1 billion.[Footnote 2] Based on our review of Office of Management and Budget (OMB) data, the $105.8 billion estimate was attributable to 84 programs across 18 agencies (see enclosure I).[Footnote 3] Five programs accounted for approximately $82.9 billion, or 78 percent of the total improper payments estimate in fiscal year 2013 (see enclosure II for a list of the five programs with the largest estimates for fiscal years 2011 through 2013). Fiscal year 2013 marked the 10th year of implementation of the Improper Payments Information Act of 2002 (IPIA),[Footnote 4] as well as the 3rd year of implementation of the Improper Payments Elimination and Recovery Act of 2010 (IPERA).[Footnote 5] IPIA requires executive branch agencies to annually identify programs and activities susceptible to significant improper payments, estimate the amount of improper payments, and report these estimates along with actions planned or taken to reduce them. IPERA expanded on IPIA and added new requirements toward ensuring that agencies perform risk assessments for all programs, publish corrective action plans to reduce improper payments, and meet planned improper payment reduction targets and error rates. Subsequent to IPERA, the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) was enacted to further enhance improper payments requirements and give agencies additional tools to address improper payments.[Footnote 6] IPERA calls for executive agencies' offices of inspector general (OIG) to annually determine whether their respective agencies are in compliance with six specific IPERA criteria. OMB, which is directed by statute to provide guidance to executive agencies on the estimation and reporting of improper payments, has also asked the OIGs to assess compliance with one additional criterion, which calls for agencies to report on their efforts to recapture improper payments.[Footnote 7] In total, for fiscal years 2011 through 2013, the OIGs were required to annually assess and report on their respective agencies' compliance with the following seven criteria: [Footnote 8] * publish an annual financial statement and accompanying materials in the form and content required by OMB--typically a performance and accountability report (PAR) or agency financial report (AFR)--for the most recent fiscal year and post that report on the agency website; * conduct a risk assessment for each specific program or activity that conforms with IPIA as amended; * publish estimates of improper payments for all programs and activities identified as susceptible to significant improper payments under the agency's risk assessment;[Footnote 9] * publish corrective action plans for programs and activities assessed to be at risk for significant improper payments; * publish and meet annual reduction targets for all programs and activities assessed to be at risk for significant improper payments; * report a gross improper payment rate of less than 10 percent for each program and activity for which an improper payment estimate was obtained and published; and: * report on efforts to recapture improper payments. Some of these criteria are not applicable to agencies that determine through risk assessments that none of their programs or activities are susceptible to significant improper payments.[Footnote 10] Per OMB guidance, effective for fiscal years 2011 through 2013, an OIG was required to issue a report on its assessment of compliance with these seven criteria, as applicable, within 120 days of the publication of the agency's annual PAR or AFR.[Footnote 11] Objective, Scope, and Methodology: In light of congressional interest in agency efforts to estimate, reduce, and recover improper payments, we performed our work under the authority of the Comptroller General to assist Congress with its oversight responsibilities.[Footnote 12] The objective of this review is to provide information on compliance with the seven IPERA criteria discussed above for the 24 agencies that are subject to the Chief Financial Officers Act of 1990 (CFO Act),[Footnote 13] as reported in their OIGs' IPERA reports. Although IPERA requirements apply to the head of each executive agency, we reviewed only those agencies designated as CFO Act agencies because these agencies represented over 99 percent of total government-wide improper payments reported in fiscal year 2013. To address our objective, we reviewed the agencies' fiscal year 2013 OIG IPERA reports, which were the most current available at the time of our work, and summarized information related to their compliance with IPERA criteria and identified common findings and related causes for improper payments as reported by the OIGs. We also reviewed the agencies' fiscal year 2012 and 2011 OIG IPERA reports and compared agencies' compliance with each IPERA criterion over the first 3 years following the law's enactment, as reported by the OIGs. Our work did not include validating or retesting the data or methodologies used by the OIGs in coming to their conclusions. We also obtained and summarized OMB and agencies' data on improper payment estimates by agency program (see enclosures I through III). We conducted our work from April 2014 to December 2014 in accordance with all sections of GAO's Quality Assurance Framework that are relevant to our objectives. The framework requires that we plan and perform the engagement to obtain sufficient and appropriate evidence to meet our stated objectives and to discuss any limitations in our work. We believe that the information and data obtained, and the analysis conducted, provide a reasonable basis for any findings and conclusions in this product. CFO Act Agencies' Reported Compliance with IPERA Criteria: OIG IPERA Reporting for Fiscal Year 2013: For fiscal year 2013, OIGs for 13 of the 24 CFO Act agencies reported that their agencies complied with all of the IPERA criteria that were applicable to their agencies. As shown in figure 1, the OIGs for 10 agencies reported that their agencies did not satisfy at least one of the specified criteria, and the OIG for the National Science Foundation (NSF) did not issue a report, stating that NSF was not required to report improper payment data in its fiscal year 2013 PAR. Figure 1: Fiscal Year 2013 CFO Act Agencies' Compliance under IPERA as Reported by Their OIGs: [Refer to PDF for image: illustrated table] Agency: Agency for International Development[A]; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Agriculture; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: No; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: No; Reported on recovery efforts: Yes; Total non-compliance: 3. Agency: Department of Commerce; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Defense; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 1. Agency: Department of Education; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Energy; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Health and Human Services; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: No; Published corrective action plan: No; Published and met reduction targets: No; Reported an estimate below 10%: No; Reported on recovery efforts: Yes; Total non-compliance: 4. Agency: Department of Homeland Security; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Housing and Urban Development; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: No; Published and met reduction targets: No; Reported an estimate below 10%: Yes; Reported on recovery efforts: Total non-compliance: 3. Agency: Department of the Interior; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Justice; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Labor[B]; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: Reported on recovery efforts: Yes; Total non-compliance: 1. Agency: Department of State; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Department of Transportation; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 1. Agency: Department of the Treasury; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: No; Reported on recovery efforts: Yes; Total non-compliance: 2. Agency: Department of Veterans Affairs; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: No; Reported on recovery efforts: Yes; Total non-compliance: 2. Agency: Environmental Protection Agency; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: General Services Administration; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: National Aeronautics and Space Administration; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: N/A; Published corrective action plan: N/A; Published and met reduction targets: N/A; Reported an estimate below 10%: N/A; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: National Science Foundation[C]; Published PAR/AFR: NR; Conducted risk assessment: NR; Published estimate: NR; Published corrective action plan: NR; Published and met reduction targets: NR; Reported an estimate below 10%: NR; Reported on recovery efforts: NR; Total non-compliance: No report issued. Agency: Nuclear Regulatory Commission; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Office of Personnel Management; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: Yes; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: 0. Agency: Small Business Administration[D]; Published PAR/AFR: Yes; Conducted risk assessment: NR; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: No; Reported on recovery efforts: Yes; Total non-compliance: 2. Agency: Social Security Administration; Published PAR/AFR: Yes; Conducted risk assessment: Yes; Published estimate: Yes; Published corrective action plan: Yes; Published and met reduction targets: No; Reported an estimate below 10%: Yes; Reported on recovery efforts: Yes; Total non-compliance: . Yes: OIG reported compliance; No: OIG reported noncompliance; N/A: Not applicable: Agency programs did not meet the risk-susceptible threshold and therefore were not required to comply with this criterion; NR: Nonreporting: OIG IPERA report did not specify if agency complied with IPERA criteria or OIG did not issue an IPERA report. AFR: Agency financial report; CFO: Chief financial officer; IPERA: Improper Payments Elimination and Recovery Act of 2010; OIG: Office of inspector general; PAR: Performance and accountability report. [A] The Agency for International Development (USAID) OIG reported that USAID's fiscal year 2013 risk assessment did not identify any programs or activities that exceeded IPERA threshold requirements for significant improper payments. Since USIAD did not identify programs with significant improper payments, it was not required to comply with the IPERA criteria to publish an estimate, prepare corrective actions, publish and meet reduction targets, or report error rates less than 10 percent. However, in its fiscal year 2013 AFR, USAID included information on programs susceptible to "erroneous payments," and the OIG classified these areas in its report as "compliant" with IPERA. [B] The Department of Labor OIG did not conclude on whether the agency complied with the requirement to report a gross improper payments rate of less than 10 percent. The OIG stated that the agency reported an improper payment rate of 9.32 percent for its Unemployment Insurance (UI) program, but used a methodology that reduced the reported improper payments by the amount of subsequent recoveries. The OIG stated that this methodology understated the actual improper payment rate and noted that without this netting of recoveries against overpayments, the UI improper payment rate would have been 11.50 percent. Although the methodology was approved by OMB in fiscal year 013, guidance under IPERA will require agencies to discontinue netting recoveries beginning in fiscal year 2014. [C] The National Science Foundation (NSF) OIG did not issue an IPERA report for fiscal year 2013. The OIG stated in its IPERA report for fiscal year 2012 that NSF's risk assessment did not identify any programs that met the threshold for reporting improper payments, and that OMB had approved a 3-year cycle for conducting risk assessments. Although NSF did not identify risk-susceptible programs, OIG evaluated NSF's improper payments process for fiscal year 2012 and issued a report with findings and recommendations. The OIG informed us that NSF stated in its corrective action plan to address the 2012 OIG audit findings that it would perform a comprehensive improper payment internal control review that will take 2 years and had decided, after consulting with OMB, that it would not report IPERA data in its fiscal year 2013 AFR. The OIG stated that as a result of NSF's decision, and after consulting with OMB, it decided not to issue a fiscal year 2013 IPERA report on NSF's compliance with the PAR/AFR publication or the reporting of recovery activities criteria, and notify Congress accordingly. [D] The Small Business Administration (SBA) OIG did not report on the agency's compliance with conducting a risk assessment. However, the SBA OIG later confirmed that there were no new programs or activities requiring risk assessments, as reported in the agency's fiscal year AFR, and that it agreed with the agency's approach of waiting 3 years before performing another assessment. Since SBA did not perform a risk assessment in 2013, the OIG did not report information related to compliance for this criterion in its IPERA report. Source: Fiscal year 2013 agencies' OIG IPERA reports. GAO-15-87R. [End of figure] IPERA and OMB guidance do not require agencies' OIGs to use a specific method or format for evaluating and reporting on compliance with IPERA criteria. The OIGs varied widely in the reporting formats and levels of detail used to document and report on agency compliance under IPERA. The OIG IPERA reports we reviewed for fiscal year 2013 ranged from brief reports that indicated the agencies' compliance under IPERA in one paragraph to extensive reports with information on how the OIGs evaluated improper payment methodologies, reliability issues, and other factors. Common Areas of Noncompliance and Related Reported Causes: Fiscal year 2013 OIG IPERA reports showed that most CFO Act agencies reported on improper payments in their PARs or AFRs, conducted program risk assessments, and reported on actions to recover improper payments. However, the OIGs reported that many agencies did not meet planned reduction targets or achieve and report gross improper payment error rates below 10 percent.[Footnote 14] Figure 2 summarizes CFO Act agencies' reported compliance by IPERA criterion for fiscal year 2013. Figure 2: Fiscal Year 2013 CFO Act Agencies' Overall Compliance by IPERA Criterion, as Reported by Their OIGs: [Refer to PDF for image: stacked horizontal bar graph] Published PAR/AFR: Yes: 23; No: 0; NR: 1; N/A: 0. Conducted risk assessment: Yes: 22; No: 0; NR: 2; N/A: 0. Published estimate: Yes: 14; No: 2; NR: 1; N/A: 7. Published corrective action plan: Yes: 15; No: 2; NR: 1; N/A: 6. Published and met reduction targets: Yes: 7; No: 10; NR: 1; N/A: 6. Reported an estimate below 10%: Yes: 11; No: 5; NR: 2; N/A: 6. Reported on recovery efforts: Yes: 22; No: 1; NR: 1; N/A: 0. Yes: OIG reported compliance. No: OIG reported noncompliance. NR: Nonreporting: OIG IPERA report did not specify if agency complied with IPERA or OIG did not issue an IPERA report. N/A: Not applicable: Agency programs did not the risk-susceptible threshold and therefore were not required to comply with this criterion. AFR: Agency financial report; CFO: Chief financial officer; IPERA: Improper Payments Elimination and Recovery Act of 2010; OIG: Office of inspector general; PAR: Performance and accountability report. Source: Fiscal year 2013 agencies' OIG IPERA reports. GAO-15-87R. [End of figure] The most common area where OIGs found agencies noncompliant with the IPERA criteria was in publishing and meeting annual improper payment reduction targets, which 10 CFO Act agencies did not meet. Although 9 of these agencies published improper payment reduction targets, an additional agency that was required to publish its target did not, and none of these 10 succeeded in meeting their targets for fiscal year 2013. The OIGs reported that factors affecting compliance with this requirement included the programs' structures and continued challenges with supporting documentation.[Footnote 15] For example, the Department of Health and Human Services (HHS)[Footnote 16] and the Department of Agriculture (USDA)[Footnote 17] OIGs reported that administrative and documentation errors prevented these agencies from meeting their reduction targets; the Department of Housing and Urban Development (HUD) OIG reported errors and system limitations, among others, as impediments to HUD achieving its reduction targets;[Footnote 18] and the Department of Transportation (DOT) OIG reported payments for ineligible goods and services, incorrect payment calculations, and payments made with insufficient supporting documentation as challenges that prevented the agency from meeting its annual reduction target.[Footnote 19] Other reported reasons agencies did not meet reduction targets were inadequacies with, and changes in, sampling and estimating methodologies. The second most common noncompliance finding reported by the OIGs was the agencies' inability to achieve and report improper payment error rates below 10 percent. According to the OIGs' IPERA reports, 5 CFO Act agencies reported an improper payment error rate of 10 percent or higher for at least one of their programs or activities. The OIGs cited various reasons their agencies provided for not being able to comply with this criterion. Some reported as causes the complexities in the structure of the programs and the lack of documentation, which prevented accurate authentication and verification of eligible recipients. For example, the USDA OIG reported that USDA's School Breakfast and National School Lunch programs' high error rates of about 25 and 16 percent, respectively, were caused in part by authentication and verification errors.[Footnote 20] The Small Business Administration's (SBA) OIG reported that the main impediment to reducing SBA's improper payment error rate was incomplete documentation, such as loan applications, especially in times of major disasters, such as Hurricane Sandy.[Footnote 21] Finally, the Department of the Treasury (Treasury) OIG reported that the complexity of the tax law was a barrier to reducing the improper payment error rate for the Internal Revenue Service's Earned Income Tax Credit program.[Footnote 22] Other areas where agencies did not all comply with IPERA criteria according to the OIG IPERA reports included publishing improper payment estimates for risk-susceptible programs and publishing corrective action plans. OIG reports indicated that 2 agencies' remediation plans were incomplete and ineffective and did not properly target the root causes for improper payments. Two OIGs also reported that their agencies used incorrect sampling methodologies to calculate the improper payment estimates or did not publish improper payment estimates for their programs. For example, the USDA OIG reported that USDA's Federal Crop Insurance Corporation did not have an adequate sampling methodology to estimate its improper payments because it excluded significant payments, such as premium subsidies and indemnities below certain thresholds. Further, according to the HHS OIG, HHS did not publish estimates for its Temporary Assistance for Needy Families (TANF) program because it is a state-administered program and HHS asserts that statutory limitations prohibit it from requiring states to collect the information needed to perform an improper payment measurement.[Footnote 23] Reported Changes in Compliance since IPERA Enactment: According to OIG IPERA reports, agencies have shown overall improvement in reporting and addressing improper payments in the 3 years since IPERA was enacted in 2010. For example, in fiscal year 2011, the OIGs reported that 18 of the 24 CFO Act agencies had conducted risk assessments for all risk-susceptible programs; in fiscal year 2013, the OIGs reported that 22 agencies conducted the required assessments. Another area of improvement was agencies' reporting of their efforts to recover overpayments; in fiscal year 2013, the OIGs reported that 22 agencies reported on their efforts to recover improper payments, as compared to 15 agencies in fiscal year 2011. Although the OIGs have reported improvements by some agencies in certain areas over the 3-year period, the OIGs for several agencies have not reported agency improvements in meeting planned reduction targets or lowering improper payment error rates to less than 10 percent.[Footnote 24] For example, according to the OIG reports, USDA's School Breakfast and Lunch programs, Treasury's Earned Income Tax Credit program, and SBA's Disaster Assistance Loans program have not met planned reduction targets for the past 3 fiscal years, and their reported error rates have been among the highest reported error rates in the government, ranging from 16 to 28 percent for the past 3 fiscal years. Figure 3 shows the prevalence of reported compliance by criterion from fiscal year 2011 through fiscal year 2013. Figure 3: CFO Act Agency Compliance under IPERA, as Reported by Their OIGs (Fiscal Years 2011-2013): [Refer to PDF for image: stacked vertical bar graph] Number of agencies: Published PAR/AFR: 2011: Yes: 21; No: 2; Partially: 0; NR: 0; N/A: 1; 2012: Yes: 24; No: 0; Partially: 0; NR: 0; N/A: 0; 2013: Yes: 23; No: 0; Partially: 0; NR: 1; N/A: 0. Conducted risk assessment: 2011: Yes: 18; No: 5; Partially: 0; NR: 0; N/A: 1; 2012: Yes: 21; No: 2; Partially: 0; NR: 2; N/A: 0; 2013: Yes: 22; No: 0; NR: 2; N/A: 0. Published estimate: 2011: Yes: 12; No: 7; Partially: 0; NR: 0; N/A: 5; 2012: Yes: 12; No: 4; Partially: 1; NR: 2; N/A: 5; 2013: Yes: 14; No: 2; Partially: 0; NR: 1; N/A: 6. Published corrective action plan: 2011: Yes: 12; No: 6; Partially: 0; NR: 0; N/A: 6; 2012: Yes: 11; No: 4; Partially: 0; NR: 2; N/A: 7; 2013: Yes: 15; No: 2; Partially: 0; NR: 1; N/A: 6. Published and met reduction targets: 2011: Yes: 8; No: 10; Partially: 0; NR: 0; N/A: 6. 2012: Yes: 7; No: 8; Partially: 1; NR: 2; N/A: 6; 2013: Yes: 7; No: 10; Partially: 0; NR: 1; N/A: 6. Reported an estimate below 10%: 2011: Yes: 10; No: 9; Partially: 0; NR: 0; N/A: 5; 2012: Yes: 10; No: 6; Partially: 1; NR: 2; N/A: 5; 2013: Yes: 11; No: 5; Partially: 0; NR: 2; N/A: 6. Reported on recovery efforts: 2011: Yes: 15; No: 7; Partially: 0; NR: 0; N/A: 2; 2012: Yes: 18; No: 2; Partially: 1; NR: 2; N/A: 1; 2013: Yes: 22; No: 1; Partially: 0; NR: 1; N/A: 1. Yes: OIG reported compliance. No: OIG reported noncompliance. Partially: OIG reported partial compliance. NR: Nonreporting: OIG IPERA report did not specify if agency complied with IPERA or OIG did not issue an IPERA report. N/A: Not applicable: Agency programs did not the risk-susceptible threshold and therefore were not required to comply with this criterion. AFR: Agency financial report; CFO: Chief financial officer; IPERA: Improper Payments Elimination and Recovery Act of 2010; OIG: Office of inspector general; PAR: Performance and accountability report. Source: OIG IPERA reports for fiscal years 2011, 2012, and 2013. GAO- 15-87R. [End of figure] IPERA includes consequences for agencies whose OIGs find noncompliance with any of the six statutory criteria.[Footnote 25] If a program is found to be noncompliant in a fiscal year, the agency must submit a plan to Congress describing the actions that the agency will take to bring the program into compliance. If a program is found to be noncompliant for 2 consecutive fiscal years, and if OMB determines that additional funding would help the agency improve in this regard, steps may be taken to transfer or request that funding. Agencies for which OIGs have found programs to be noncompliant with IPERA for 3 consecutive years must submit to Congress a reauthorization proposal for each noncompliant program or activity or any proposed statutory changes they deem necessary to bring the program or activity into compliance. This is the third year of IPERA's implementation, and certain programs have been found to be noncompliant all 3 years. Therefore, agencies will be required to develop reauthorization proposals or propose statutory changes necessary to bring these programs or activities into compliance. Concluding Observations: According to OIG IPERA reports, agencies have made improvements in estimating and reporting improper payments since IPERA was enacted. However, many agencies are still reporting large improper payment estimates and error rates. As we have previously reported, many agencies are in the process of assessing program designs and implementing or refining preventive controls, such as validation of eligibility, predictive analytic tests, and training programs, to help decrease improper payments. [Footnote 26] Although strong preventive controls remain the frontline defense against improper payments, agencies also need effective detection techniques to quickly identify and recover those overpayments that do occur. The fiscal year 2013 OIG reports included numerous recommendations aimed at providing agencies with the tools necessary to address the causes for their improper payments and IPERA noncompliance issues. Agency Comments: We provided a draft of this report to the Director of OMB and the Inspectors General of all 24 CFO Act agencies. OMB provided written comments, reproduced in enclosure IV, that highlighted initiatives to reduce improper payments, which it considers a key priority. The Offices of Inspector General for 22 of the CFO Act agencies provided comments via email. In addition, the Offices of Inspector General for the Social Security Administration and the General Services Administration provided written comments, which are reproduced in enclosures V and VI, respectively. All of the Inspectors General generally agreed with the information presented in this report. The Offices of Inspector General for the Departments of Education, Health and Human Services, Labor, and Veterans Affairs; the National Science Foundation; the Small Business Administration, and the Social Security Administration also provided technical comments that were incorporated, as appropriate. We are sending copies of this report to the appropriate congressional committees. We will also send copies to the Director, Office of Management and Budget, and all CFO Act agencies' offices of inspector general. In addition, the report is available at no charge on the GAO website at [hyperlink, http://www.gao.gov]. If you or your staff have any questions about this report, please contact me at (202) 512-2623 or davisbh@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff members who made major contributions to this report include Elizabeth Martinez (Assistant Director) and Bruce David. Signed by: Beryl H. Davis: Director: Financial Management and Assurance: List of Addressees: The Honorable Thomas R. Carper: Chairman: Committee on Homeland Security and Governmental Affairs: United States Senate: The Honorable Darrell Issa: Chairman: Committee on Oversight and Government Reform: House of Representatives: The Honorable John L. Mica: Chairman: The Honorable Gerald E. Connolly: Ranking Member: Subcommittee on Government Operations: Committee on Oversight and Government Reform: House of Representatives: [End of section] Enclosure I: Reported Improper Payment Estimates by Agency and Program/Activity for Fiscal Year 2013: CFO Act agencies: Agency: Department of Health and Human Services; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $65,289,000,000; Outlays: $800,659,000,000. Reporting program: 1. Medicare Fee-for-Service (Parts A and B); Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $36,033,000,000; Error rate: 10.10%; Outlays: $357,397,000,000. Reporting program: 2. Medicare Advantage (Part C); Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $11,767,000,000; Error rate: 9.50%; Outlays: $123,696,000,000. Reporting program: 3. Medicare Prescription Drug Benefit (Part D); Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,091,000,000; Error rate: 3.70%; Outlays: $57,056,000,000. Reporting program: 4. Medicaid; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $14,376,000,000; Error rate: 5.80%; Outlays: $246,931,000,000. Reporting program: 5. Children's Health Insurance Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $646,000,000; Error rate: 7.10%; Outlays: $9,065,000,000. Reporting program: 6. Foster Care; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $70,000,000; Error rate: 5.30%; Outlays: $1,326,000,000. Reporting program: 7. Child Care Development Fund; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $306,000,000; Error rate: 5.90%; Outlays: $5,188,000,000. Agency: Department of the Treasury; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $14,450,000,000; Outlays: $60,300,000,000. Reporting program: 8. Earned Income Tax Credit; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $14,450,000,000; Error rate: 24.00%; Outlays: $60,300,000,000. Agency: Social Security Administration; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $6,783,000,000; Outlays: $823,711,000,000. Reporting program: 9. Old Age, Survivors & Disability Insurance; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,448,000,000; Error rate: 0.32%; Outlays: $770,300,000,000. Reporting program: 10. Supplemental Security Income; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $4,335,000,000; Error rate: 8.12%; Outlays: $53,411,000,000. Agency: Department of Labor; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $6,230,810,000; Outlays: $69,783,000,000. Reporting program: 11. Unemployment Insurance; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $6,225,000,000; Error rate: 9.32%; Outlays: $66,788,000,000. Reporting program: 12. Workforce Investment Act; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $5,810,000; Error rate: 0.19%; Outlays: $2,995,000,000. Agency: Department of Agriculture; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $6,162,000,000; Outlays: $115,025,000,000. Reporting program: 13. Supplemental Nutrition Assistance Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,553,000,000; Error rate: 3.42%; Outlays: $74,639,000,000. Reporting program: 14. Federal Crop Insurance Corporation Program Fund; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $566,000,000; Error rate: 5.23%; Reported by agencies in PARs/AFRs for FY 2013: Outlays: $10,828,000,000. Reporting program: 15. Marketing Assistance Loan Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $8,000,000; Error rate: 0.34%; Outlays: $2,344,000,000. Reporting program: 16. Wildland Fire Suppression Management; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $835,000,000. Reporting program: 17. Rental Assistance Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $20,000,000; Error rate: 1.79%; Outlays: $1,108,000,000. Reporting program: 18. Farm Security & Rural Investment Act Programs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $158,000,000; Error rate: 6.93%; Outlays: $2,277,000,000. Reporting program: 19. Child and Adult Care Food Program, Family Day Care Homes--Tiering Decisions; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $10,000,000; Error rate: 1.09%; Outlays: $917,000,000. Reporting program: 20. Conservation Reserve Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $6,000,000; Error rate: 0.38%; Outlays: $1,651,000,000. Reporting program: 21. Miscellaneous Disaster Programs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $24,000,000; Error rate: 3.78%; Outlays: $655,000,000. Reporting program: 22. Noninsured Assistance Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $13,000,000; Error rate: 5.23%; Outlays: $256,000,000. Reporting program: 23. Special Supplemental Nutrition Program for Women, Infants, and Children; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $198,000,000; Error rate: 4.38%; Outlays: $4,520,000,000. Reporting program: 24. National School Lunch Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,774,000,000; Error rate: 15.69%; Outlays: $11,304,000,000. Reporting program: 25. School Breakfast Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $831,000,000; Error rate: 25.26%; Outlays: $3,290,000,000. Reporting program: 26. Milk Income Loss Contract Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,000,000; Error rate: 0.17%; Outlays: $401,000,000. Agency: Department of Education; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,843,700,000; Outlays: $160,376,000,000. Reporting program: 27. Pell Grants; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $731,000,000; Error rate: 2.26%; Outlays: $32,338,000,000. Reporting program: 28. Direct Loan; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,056,000,000; Error rate: 1.03%; Outlays: $102,497,000,000. Reporting program: 29. Family Federal Education Loan Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $10,817,000,000. Reporting program: 30. Title I - Grants to States[A]; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $56,700,000; Error rate: 0.39%; Outlays: $14,724,000,000. Agency: Department of Housing and Urban Development; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,324,000,000; Outlays: $30,949,038,000. Reporting program: 31. Public Housing/Rental Assistance; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,324,000,000; Error rate: 4.30%; Outlays: $30,949,038,000. Agency: Department of Veterans Affairs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,074,040,000; Outlays: $72,436,000,000. Reporting program: 32. Compensation; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $321,100,000; Error rate: 0.67%; Outlays: $48,181,000,000. Reporting program: 33. Pension; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $92,430,000; Error rate: 1.75%; Outlays: $5,268,000,000. Reporting program: 34. Education-Chapter 33; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $8,769,000,000. Reporting program: 35. Education-Chapter 1606; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $480,000; Error rate: 0.33%; Outlays: $146,000,000. Reporting program: 36. Education-Chapter 1607; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $390,000; Error rate: 0.44%; Outlays: $88,000,000. Reporting program: 37. Vocation Rehabilitation and Employment; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,150,000; Error rate: 0.27%; Outlays: $786,000,000. Reporting program: 38. Non-VA Care Fee; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $429,070,000; Error rate: 9.64%; Outlays: $4,447,000,000. Reporting program: 39. State Home Per Diem Grants; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $135,230,000; Error rate: 15.94%; Outlays: $848,000,000. Reporting program: 40. Supplies and Materials; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,530,000; Error rate: 0.11%; Outlays: $2,230,000,000. Reporting program: 41. Civilian Health and Medical Program of the Department of Veterans Affairs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $20,920,000; Error rate: 2.26%; Outlays: $924,000,000. Reporting program: 42. Beneficiary Travel; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $69,740,000; Error rate: 9.32%; Outlays: $749,000,000. Agency: Department of Defense; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $1,064,880,000; Outlays: $615,760,000,000. Reporting program: 43. Military Retirement Benefits; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $19,900,000; Error rate: 0.04%; Outlays: $56,600,000,000. Reporting program: 44. Military Health Benefits; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $67,600,000; Error rate: 0.32%; Outlays: $20,500,000,000. Reporting program: 45. Military Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $286,600,000; Error rate: 0.29%; Outlays: $98,700,000,000. Reporting program: 46. Civilian Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $96,400,000; Error rate: 0.17%; Outlays: $57,000,000,000. Reporting program: 47. Department of Defense Travel Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $474,800,000; Error rate: 6.50%; Outlays: $7,300,000,000. Reporting program: 48; Reporting program: CFO Act agencies: Department of Health and Human Services: Defense Finance and Accounting Service Commercial Pay[B]; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $117,300,000; Error rate: 0.03%; Outlays: $352,600,000,000. Reporting program: 49. U.S. Army Corps of Engineers Travel Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,280,000; Error rate: 1.43%; Outlays: $160,000,000. Reporting program: 50. U.S. Army Corps of Engineers Commercial Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $21,700,000,000. Reporting program: 51. Navy Enterprise Resource Planning Commercial Pay; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $1,200,000,000. Agency: Small Business Administration; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $694,400,000; Outlays: $19,373,200,000. Reporting program: 52. Disaster Loan Disbursements; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $121,100,000; Error rate: 18.40%; Outlays: $659,000,000. Reporting program: 53. 7(a) Guaranty Purchases; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $13,900,000; Error rate: 1.15%; Outlays: $1,211,400,000. Reporting program: 54. 7(a) Guaranty Approvals; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $510,900,000; Error rate: 4.60%; Outlays: $10,994,500,000. Reporting program: 55. 504 Certified Development Company Guaranty Approvals; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $34,400,000; Error rate: 0.54%; Outlays: $6,386,900,000. Reporting program: 56. Contract Disbursements; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $14,100,000; Error rate: 11.60%; Outlays: $121,400,000. Agency: Office of Personnel Management; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $352,490,000; Outlays: $120,069,600,000. Reporting program: 57. Federal Employee Retirement Programs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $278,300,000; Error rate: 0.36%; Outlays: $76,485,900,000. Reporting program: 58. Federal Employee Health Benefit Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $74,190,000; Error rate: 0.17%; Outlays: $43,583,700,000. Agency: Department of Homeland Security; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $178,000,000; Outlays: $13,767,000,000. Reporting program: 59. National Flood Insurance Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.02%; Outlays: $2,127,000,000. Reporting program: 60. Public Assistance Programs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $41,000,000; Error rate: 1.11%; Outlays: $3,670,000,000. Reporting program: 61. Homeland Security Grant Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $22,000,000; Error rate: 1.31%; Outlays: $1,699,000,000. Reporting program: 62. Assistance to Firefighters Grants; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $5,000,000; Error rate: 1.07%; Outlays: $425,000,000. Reporting program: 63. Detention/Enforcement and Removal Operations; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $73,000,000; Error rate: 4.33%; Outlays: $1,691,000,000. Reporting program: 64. Disaster Relief Fund Vendor Payments; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $23,000,000; Error rate: 3.11%; Outlays: $750,000,000. Reporting program: 65. Customs and Border Protection Custodial Refund & Drawback; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $7,000,000; Error rate: 0.36%; Outlays: $1,937,000,000. Reporting program: 66. Federal Protective Service; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.03%; Outlays: $878,000,000. Reporting program: 67. Customs and Border Protection Border Security Fencing; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.01%; Outlays: $173,000,000. Reporting program: 68. Transit Security Grants Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $7,000,000; Error rate: 2.06%; Outlays: $328,000,000. Reporting program: 69. Emergency Food and Shelter Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.34%; Outlays: $89,000,000. Agency: Department of Transportation; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $158,960,000; Outlays: $57,685,000,000. Reporting program: 70. Federal Highway Administration Highway Planning/Construction; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $82,910,000; Error rate: 0.20%; Outlays: $41,455,000,000. Reporting program: 71. Federal Transit Administration Formula Grants Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $72,350,000; Error rate: 0.73%; Outlays: $9,911,000,000. Reporting program: 72. Federal Transit Administration Capital Investment Grants Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $950,000; Error rate: 0.04%; Outlays: $2,386,000,000. Reporting program: 73. Federal Aviation Administration Airport Improvement Program; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $2,750,000; Error rate: 0.07%; Outlays: $3,933,000,000. Agency: Environmental Protection Agency; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $70,800,000; Outlays: $3,508,000,000. Reporting program: 74. Clean Water State Revolving Fund; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $15,600,000; Error rate: 0.73%; Outlays: $2,150,000,000. Reporting program: 75. Drinking Water State Revolving Fund; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $55,200,000; Error rate: 4.06%; Outlays: $1,358,000,000. Agency: General Services Administration; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $64,380,000; Outlays: $6,781,600,000. Reporting program: 76. Rental of Space; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $59,550,000; Error rate: 1.07%; Outlays: $5,556,000,000. Reporting program: 77. Purchase Card; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $4,280,000; Error rate: 7.79%; Outlays: $54,900,000. Reporting program: 78. Building Operations Utilities; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $250,000; Error rate: 0.06%; Outlays: $400,000,000. Reporting program: 79. Integrated Technology Service-Wide Area Network; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $753,000,000. Reporting program: 80. Other Sensitive Payments; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $300,000; Error rate: 1.67%; Outlays: $17,700,000. Agency: Agency for International Development; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $5,650,000; Outlays: $9,423,000,000. Reporting program: 81. USAID Twenty Seven Programs; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $5,650,000; Error rate: 0.06%; Outlays: $9,423,000,000. Agency: Department of Commerce; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: Department of Energy; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: Department of the Interior; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: Department of Justice; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: Department of State; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: National Aeronautics and Space Administration; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: National Science Foundation; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Agency: Nuclear Regulatory Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: N/R; Outlays: N/R. Non-CFO Act agencies: Agency: Railroad Retirement Board; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $61,800,000; Outlays: $11,347,300,000. Reporting program: 82. Retirement and Survivors Benefits; Improper payment estimate: $61,800,000; Error rate: 0.54%; Outlays: $11,347,300,000. Agency: Federal Communications Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $59,917,000; Outlays: $7,138,353,000. Reporting program: 83. Universal Service Fund - High Cost; Agency: Federal Communications Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $10,563,000; Error rate: 0.26%; Outlays: $4,119,737,000. Reporting program: 84. Universal Service Fund - Schools and Libraries; Agency: Federal Communications Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $49,354,000; Error rate: 2.21%; Outlays: $2,232,284,000. Reporting program: 85. Telecommunications Relay Services Fund; Agency: Federal Communications Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $0; Error rate: 0.00%; Outlays: $786,332,000. Agency: Total; Agency: Federal Communications Commission; Reported by agencies in PARs/AFRs for FY 2013: Improper payment estimate: $105,867,827,000; Outlays: $2,998,092,091,000. Legend: AFR = agency financial report; CFO Act = Chief Financial Officers Act of 1990; FY = fiscal year; NR = not reported; PAR = performance and accountability report. Source: GAO summary of Office of Management and Budget data and agencies' data. GAO-15-87R. [A] The Department of Education OIG stated that Education did not identify its Title I program as a program susceptible to significant improper payments in its risk assessment. However, the agency is required to include this program based on reporting requirements contained in OMB Circular A-136, Financial Reporting Requirements, revised October 21, 2013. Specifically, this requirement states that any programs that had been previously identified in the former Section 57 of OMB Circular No. A-11 shall continue to report improper payment estimates, unless OMB has granted relief from reporting requirements. [B] This table includes the Department of Defense's Defense Finance and Accounting Service (DFAS) Commercial Pay improper payment estimate of $117.3 million and corresponding outlays of $352.6 billion as reported by the Office of Management and Budget in fiscal year 2013. However, the reported government-wide estimate of $105.8 billion in improper payments attributable to 84 programs or activities excludes DFAS Commercial Pay because of concerns regarding the reliability of its estimate. The government-wide improper payment estimate for fiscal year 2013 including this program is $105.9 billion. [End of table] [End of section] Enclosure II: Top Five Programs and Activities Reporting Largest Improper Payment Estimates for Fiscal Years 2011 through 2013: Dollars in millions. FY 2013: Agency: HHS; Program name: Medicare Fee-for-Service; Improper payment estimate: $36,033; Outlays: $357,397; Improper payment error rate: 10.1%. Agency: Treasury; Program name: Earned Income Tax Credit; Improper payment estimate: $14,500; Outlays: $60,300; Improper payment error rate: 24.0%. Agency: HHS; Program name: Medicaid; Improper payment estimate: $14,376; Outlays: $246,931; Improper payment error rate: 5.8%. Agency: HHS; Program name: Medicare Advantage (Part C); Improper payment estimate: $11,767; Outlays: $123,696; Improper payment error rate: 9.5%. Agency: DOL; Program name: Unemployment Insurance; Improper payment estimate: $6,225; Outlays: $66,788; Improper payment error rate: 9.3%. Agency: Total; Improper payment estimate: $82,901; Outlays: $855,112. Top five programs accounted for 78 percent of total estimated improper payments of $105.8 billion in programs producing estimates in FY 2013. FY 2012. Agency: HHS; Program name: Medicare Fee-for-Service: Improper payment estimate: $29,571; Outlays: $349,673; Improper payment error rate: 8.5%. Agency: HHS; Program name: Medicaid; Improper payment estimate: $19,235; Outlays: $271,011; Improper payment error rate: 7.1%. Agency: HHS; Program name: Medicare Advantage (Part C); Improper payment estimate: $13,100; Outlays: $115,183; Improper payment error rate: 11.4%. Agency: Treasury; Program name: Earned Income Tax Credit; Improper payment estimate: $12,600; Outlays: $55,400; Improper payment error rate: 22.7%. Agency: DOL; Program name: Unemployment Insurance; Improper payment estimate: $10,296; Outlays: $90,160; Improper payment error rate: 11.4%. Agency: Total; Improper payment estimate: $84,802; Outlays: $881,427. Top five programs accounted for 79 percent of the revised total estimated improper payments of $107.1 billion in programs producing estimates in FY 2012. FY 2011. Agency: HHS; Program name: Medicare Fee-for-Service; Improper payment estimate: $28,810; Outlays: $336,378; Improper payment error rate: 8.60%. Agency: HHS; Program name: Medicaid; Improper payment estimate: $21,900; Outlays: $269,241; Improper payment error rate: 8.10%. Agency: Treasury; Program name: Earned Income Tax Credit; Improper payment estimate: $15,200; Outlays: $64,700; Improper payment error rate: 23.5%. Agency: DOL; Program name: Unemployment Insurance; Improper payment estimate: $13,697; Outlays: $114,140; Improper payment error rate: 12.0%. Agency: HHS; Program name: Medicare Advantage (Part C); Improper payment estimate: $12,390; Outlays: $112,215; Improper payment error rate: 11.0%. Agency: Total; Improper payment estimate: $91,997; Outlays: $896,674. Top five programs accounted for 80 percent of the revised total estimated improper payments of $115.7 billion in programs producing estimates in FY 2011. Legend: DOL = Department of Labor; HHS = Department of Health and Human Services; Treasury = Department of the Treasury. Source: GAO summary of Office of Management and Budget data and agencies' data. GAO-15-87R. [End of table] [End of section] Enclosure III: Agency Programs and Activities with Reported Error Rates in Excess of 10 Percent for Fiscal Years 2011 through 2013: Fiscal year 2013: Agency: USDA; Program: Fiscal year 2013: School Breakfast; Error rate: Fiscal year 2013: 25.3%. Agency: Treasury; Program: Fiscal year 2013: Earned Income Tax Credit; Error rate: Fiscal year 2013: 24.0%. Agency: SBA; Program: Fiscal year 2013: Disaster Assistance Loans; Error rate: Fiscal year 2013: 18.4%. Agency: VA; Program: Fiscal year 2013: State Home Per Diem Grants; Error rate: Fiscal year 2013: 15.9%. Agency: USDA; Program: Fiscal year 2013: School Lunch; Error rate: Fiscal year 2013: 15.7%. Agency: SBA; Program: Fiscal year 2013: Contract Disbursements; Error rate: Fiscal year 2013: 11.6%. Agency: HHS; Program: Fiscal year 2013: Medicare Fee-for-Service; Error rate: Fiscal year 2013: 10.1%. Fiscal year 2012: Agency: USDA; Program: Fiscal year 2013: School Breakfast; Error rate: Fiscal year 2013: 25.2%. Agency: Treasury; Program: Fiscal year 2013: Earned Income Tax Credit; Error rate: Fiscal year 2013: 22.7%. Agency: SBA; Program: Fiscal year 2013: Disaster Assistance Loans; Error rate: Fiscal year 2013: 17.9%. Agency: USDA; Program: Fiscal year 2013: School Lunch; Error rate: Fiscal year 2013: 15.5%. Agency: VA; Program: Fiscal year 2013: Fee Program; Error rate: Fiscal year 2013: 12.0%. Agency: DOL; Program: Fiscal year 2013: Unemployment Insurance; Error rate: Fiscal year 2013: 11.4%. Agency: HHS; Program: Fiscal year 2013: Medicare Advantage (Part C); Error rate: Fiscal year 2013: 11.4%. Fiscal year 2011: Agency: SBA; Program: Fiscal year 2013: Disaster Assistance Loans; Error rate: Fiscal year 2013: 28.4%. Agency: USDA; Program: Fiscal year 2013: School Breakfast; Error rate: Fiscal year 2013: 25.0%. Agency: Treasury; Program: Fiscal year 2013: Earned Income Tax Credit; Error rate: Fiscal year 2013: 23.5%. Agency: USDA; Program: Fiscal year 2013: School Lunch; Error rate: Fiscal year 2013: 16.0%. Agency: VA; Program: Fiscal year 2013: State Home Per Diem Grants; Error rate: Fiscal year 2013: 13.7%. Agency: VA; Program: Fiscal year 2013: Supplies and Materials; Error rate: Fiscal year 2013: 13.6%. Agency: VA; Program: Fiscal year 2013: Fee Program; Error rate: Fiscal year 2013: 12.4%. Agency: DOL; Program: Fiscal year 2013: Unemployment Insurance; Error rate: Fiscal year 2013: 12.0%. Agency: HHS; Program: Fiscal year 2013: Child Care and Development Fund; Error rate: Fiscal year 2013: 11.2%. Agency: HHS; Program: Fiscal year 2013: Medicare Advantage (Part C); Error rate: Fiscal year 2013: 11.0%. Legend: DOL = Department of Labor; HHS = Department of Health and Human Services; SBA = Small Business Administration; Treasury = Department of the Treasury; USDA = Department of Agriculture; VA = Department of Veterans Affairs. Source: GAO summary of Office of Management and Budget data and agencies' data. GAO-15-87R. [End of table] [End of section] Enclosure IV: Comments from the Office of Management and Budget: Executive Office Of The President: Office Of Management And Budget: The Controller: Washington, D.C. 20503: November 7, 2014: Ms. Beryl Davis: Director: Financial Management and Assurance: U.S. Government Accountability Office: Dear Ms. Davis: Thank you for the opportunity to review the U.S. Government Accountability Office's (GAO) draft report entitled Improper Payments: Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act (GAO-15-87R). I am responding to the draft report on the behalf of the Office of Management and Budget (OMB). We appreciate GAO's work on this very important issue. The Administration has made reducing improper payments-payments made to the wrong entity, in the wrong amount, or for the wrong reason-a key priority. Our partnership with Congress has been vital to these efforts. Enactment of the Improper Payments Elimination and Recovery Act of2010 (IPERA) and the Improper Payments Elimination and Recovery Improvement Act of2012 (IPERIA), were both important milestones in this partnership. We continue to use the Budget to build on congressional and Administration action to reduce improper payments. For example, the President's FY 2015 Budget includes a number of program integrity proposals aimed at reducing improper payments and improving government efficiency. In addition, we recently provided agencies with new tools in a revised OMB Circular No. A-123, Appendix C to tackle improper payments. OMB A-l23, Appendix C provides guidance to agencies and Inspectors General on key improper payment activities, including risk assessments, estimating and reporting, recoveries, and compliance reviews. The enactment of IPERIA provided an opportunity for OMB to re- examine Appendix C to ensure agencies are able to more efficiently reduce their improper payment rates, while also complying with multiple legislative and administrative requirements. The goal of this overhauled version of Appendix C is to transform the improper payment compliance framework to create a more unified, comprehensive, and less burdensome set of requirements. Appendix C accomplishes the following, among other things: * Consolidates and streamlines reporting requirements so agencies can spend less time producing compliance reports and more time focusing on game-changing solutions for achieving payment accuracy; * Establishes new reporting categories to provide more granularity on improper payment estimates to inform more effective corrective actions and more focused strategies for reducing improper payments; * Introduces a new internal control framework to ensure that payments are made in the right amount, to the right entity, and for the right purpose; and * Strengthens the statistical validity of agency improper payment estimates and includes payments to Federal employees in the definition of improper payments. Combating improper payments within the Federal Government is a top priority for the Administration and we will continue to explore new and innovative ways to address the problem. Every dollar paid in error represents an unacceptable waste of public resources, and this Administration is committed to keeping up the fight to reduce waste, fraud, and abuse and continuing to attack this challenge with every tool at our disposal. I look forward to working with you, as well the Congress, as we continue to prevent and reduce improper payments. Thank you again for your draft report. Sincerely, Signed by: David Mader: Controller: [End of section] Enclosure V: Comments from the Social Security Administration Office of Inspector General: Office of Inspector General: Social Security Administration: 6401 Security Boulevard: Baltimore, MD 21235-0001: Web: OIG.SSA.GOV: Facebook: OIGSSA: Twitter: @THESSAOIG: Youtube: THESSAOIG: November 4, 2014: Beryl Davis: Director, Financial Management and Assurance: U.S. Government Accountability Office: 441 G Street, NW: Washington, D.C. 20548: Ms. Davis, This letter is in response to your request—dated October 24, 2014—for the Social Security Administration's (SSA) Office of the Inspector General to provide comments on the Government Accountability Office's (GAO) draft report, Improper Payments: Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act (IPERA)(GAO-15-87R). We reviewed the SSA information in the draft GAO report and found that it is reported correctly. However, as a general comment, we note that you use the phrase Fiscal Year (FY) 2013 throughout the report, but the improper payment estimates that SSA reports in its FY 2013 Agency Financial Report is actually based on FY 2012 data. Therefore, we suggest that you consider adding a note regarding this in your report. Additionally, as a follow-up to the discussion we had on October 29th regarding the types of payments SSA includes and excludes from its improper payment estimates, please see the attachment. If you have any questions, please contact Audit Director Judith Oliveira at (617) 565-1765. Sincerely, Signed by: Patrick P. O'Carroll, Jr. Inspector General: Attachment: cc: Elizabeth Martinez: Steven L. Schaeffer: Judith Oliveira: Victoria Vetter: Attachment: Background: After the Improper Payment Act of 2002 was enacted, the Social Security Administration (SSA) and its Office of the Inspector General (OIG) had a series of discussions on what “improper payments” were and we could not come to an agreement. Basically, the OIG's position was that SSA should count everything and SSA disagreed. Therefore, we contacted the Office of Management and Budget (OMB). OMB issued guidance in August 2003-—agreeing with SSA's position and specifying what types of payments SSA should include in its improper payment estimates-—as shown in the Table below. OMB's guidance was specifically issued to SSA—-not all Federal agencies—based on the issues SSA and its OIG raised. Since OMB's August 2003 decision, we have requested that OMB re-visit this guidance-—most recently after the Improper Payments Elimination and Recovery Act of 2010 (IPERA) was enacted. However, OMB has not agreed to do this. As a result of OMB's guidance, SSA only includes certain payments in the improper payment estimates it reports in its Performance and Accountability Report/Agency Financial Report and other reports it is required to prepare under Executive Order 13520, IPERA, the Improper Payments Elimination and Recovery Improvement Act of 2012, etc. Over the years, we have included the fact that, under OMB guidance, SSA does not include all types of overpayments in its improper payment estimates. For example, see the two OIG audit report links below. 1. Overpayments in the Social Security Administration's Disability Programs (A-01-04-24065), April 2006, see Appendix E pages E-4 and E5. [hyperlink, http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-01- 04-24065.pdf]. 2. SSA's Plan to Reduce Improper Payments Under Executive Order 13520, as Reported in March 2011 (A-15-11-01126), September 2011, see Appendix D. [hyperlink, http://oig.ssa.gov/sites/default/files/audit/full/pdf/A-15-11- 01126.pdf]. OMB Guidance for SSA: The following table contains OMB's classification of SSA payments into one of two categories. * Unavoidable - Payments resulting from legal or policy requirements. These payments are not considered “improper” and may still be subject to recovery. These payments are not included in SSA's improper payment estimates. * Avoidable - Payments that should be reflected in SSA's improper payment estimate because they could be reduced through changes in administrative actions. Table: Type of Payment: Payments following a cessation of eligibility due to a continuing disability review; SSA Program: DI and SSI; Current Status: Not currently reflected as an error; Reason for Overpayment or Underpayment: When SSA is required by law to make payments during the appeals process, these payments are not erroneous; OMB Classification: Unavoidable. Type of Payment: Payments made under the Goldberg-Kelly due-process Supreme Court decision; SSA Program: SSI; Current Status: Reported as an unavoidable erroneous payment in the Annual Performance Plan (APP); Reason for Overpayment or Underpayment: When due process requires that SSI payments continue, although the Agency has determined that a payment reduction or termination is in order, such payments are not erroneous; OMB Classification: Unavoidable. Type of Payment: Payments made incorrectly because of program design; SSA Program: SSI; Current Status: Reported as an unavoidable erroneous payment in the APP; Reason for Overpayment or Underpayment: The law requires that SSI payments be made on the first of the month based on projected income for that particular month. Changes in the recipient's status can occur during the month, which causes the recipient's eligibility to change. Because SSA cannot prevent the overpayment, this situation should not be reflected in the Agency's erroneous payment rate; OMB Classification: Unavoidable. Type of Payment: death; SSA Program: OASI, DI, and SSI; Current Status: Not currently reflected as an error; Reason for Overpayment or Underpayment: Dollars released after death (either electronically or in the form of a paper check) that are reclaimed by the Department of the Treasury or returned unendorsed should not be reflected in the Agency's erroneous payment rate. Conversely, payments made after death that are improperly cashed or withdrawn, and are subject to overpayment recovery, should be reported; OMB Classification: Unavoidable, except for fraud or misuse. Type of Payment: Non-receipt of payment; SSA Program: OASI, DI, and SSI; Current Status: Not currently reflected as an error; Reason for Overpayment or Underpayment: Duplicate payments issued in accordance with the Robinson-Reyf Court decision are unavoidable and should not be reflected in the Agency's reports on erroneous payments. The only exception is duplicates incorrectly sent to abusers; OMB Classification: Unavoidable except for fraud or misuse. Type of Payment: Payments based on medical eligibility; SSA Program: DI and SSI; Current Status: Not currently reflected as an error; Reason for Overpayment or Underpayment: Payments are not erroneous if they are the result of a medical improvement review standard or a situation where the beneficiary would have been ineligible had the law permitted retroactive ineligibility; OMB Classification: Should not be included in the erroneous payment estimate. Type of Payment: Payments made for Title II beneficiaries based on earnings estimates; SSA Program: DI and OASI; Current Status: Not currently reflected as an error; Reason for Overpayment or Underpayment: When program design requires that the Agency make payments based on estimated earnings, these payments should not be considered erroneous; OMB Classification: Unavoidable. Type of Payment: Undetected error; SSA Program: OASI, DI, and SSI; Current Status: Not currently reported as an error; Reason for Overpayment or Underpayment: The Agency should not reflect undetected error in its erroneous payment rate unless it has evidence that a specific type of erroneous payment was made; OMB Classification: Should not be included in the erroneous payment estimate. Type of Payment: Duplicate payments to attorneys, vendors, and employees; SSA Program: Administrative Expense; Current Status: Not currently reported as an error; Reason for Overpayment or Underpayment: Agency systems do not capture when the overpayment occurs; however, this type of error does not meet the reporting threshold; OMB Classification: Avoidable. [End of table] [End of section] Enclosure VI: Comments from the General Services Administration Office of Inspector General: Office of Inspector General: U.S. General Services Administration: To: Beryl H. Davis: Director, Financial Management And Assurance: Government Accountability Office: From: [Signed by] Robert C. Erickson, Jr. Acting Inspector General: Subject: Draft Report - GAO-15-87R: Improper Payments - Inspector General Reporting of Agency Compliance under the Improper Payments Elimination and Recovery Act (IPERA): Thank you for the opportunity to provide comments regarding the subject draft GAO report. We agree with the presentation of the Office of Inspector General's conclusions regarding GSA's compliance with the IPERA requirements. If you have any questions, please contact Theodore R. Stehney, Assistant Inspector General for Auditing at (202) 501-0374. [End of section] Footnotes: [1] An improper payment is defined as any payment that should not have been made or that was made in an incorrect amount (including overpayments and underpayments) under statutory, contractual, administrative, or other legally applicable requirements. It includes any payment to an ineligible recipient, any payment for an ineligible good or service, any duplicate payment, any payment for a good or service not received (except for such payments where authorized by law), and any payment that does not account for credit for applicable discounts. Office of Management and Budget guidance also instructs agencies to report as improper payments any payments for which insufficient or no documentation was found. It is important to note that reported improper payment estimates may or may not represent a loss to the government. [2] In their fiscal year 2013 performance and accountability reports or agency financial reports, three federal agencies updated their fiscal year 2012 improper payment estimates to reflect changes since issuance of their fiscal year 2012 reports. These updates decreased the government-wide improper payment estimate for fiscal year 2012 from $107.7 billion to $107.1 billion. [3] The18 agencies that reported improper payment estimates included 16 agencies covered by this review as well as the Federal Communications Commission and the Railroad Retirement Board. This $105.8 billion estimate does not include the Department of Defense's Defense Finance and Accounting Service Commercial Pay program because of concerns regarding the reliability of its improper payment estimate. See GAO, DOD Financial Management: Significant Improvements Needed in Efforts to Address Improper Payment Requirements, [hyperlink, http://www.gao.gov/products/GAO-13-227] (Washington, D.C.: May 13, 2013). The government-wide improper payment estimate for fiscal year 2013 including this program was $105.9 billion. [4] Pub. L. No. 107-300 (Nov. 26, 2002). [5] Pub. L. No. 111-204 (July 22, 2010). [6] Pub. L. No. 112-248 (Jan. 10, 2013). IPERIA amended IPIA by requiring OMB to annually identify a list of high-priority federal programs for greater oversight and review by agency OIGs. IPERIA also established the Do Not Pay Initiative. This initiative requires federal agencies to conduct procedures to determine program and award eligibility prior to the release of funds and includes a thorough review of available databases to assist in determining eligibility. [7] Office of Management and Budget, Issuance of Revised Parts I and II to Appendix C of OMB Circular A-123, OMB Memorandum No. M-11-16 (Washington, D.C.: Apr. 14, 2011), was the OMB guidance in effect for fiscal year 2013. In October 2014, OMB issued new guidance for improper payments in Memorandum No. M-15-02, Appendix C to Circular No. A-123, Requirements for Effective Estimation and Remediation of Improper Payments. This new guidance, effective for fiscal year 2014 reporting, changes certain requirements, such as the reporting period for OIG IPERA reports, and also eliminated the need for OIGs to assess whether the agency has reported on efforts to recapture improper payments. [8] For purposes of this report, we will refer to all seven criteria as IPERA criteria. [9] Per OMB guidance, the annual estimate of improper payments reported in the PAR or AFR should coincide with the fiscal year being reported, to the extent possible. Agencies may utilize a different 12- month reporting period if it has been approved by OMB. For example, some agencies may have used fiscal year 2012 information in their fiscal year 2013 agency PARs or AFRs. [10] Pursuant to an amendment made to IPIA by section 4 of IPERIA, for fiscal year 2013, a program is considered susceptible to significant improper payments if its risk assessment determines that the program's improper payments may have exceeded (1) both 2.5 percent of program outlays and $10 million of all program activity during the fiscal year or (2) $100 million regardless of the percentage. For fiscal year 2014, the threshold is potential improper payments exceeding (1) both 1.5 percent of program outlays and $10 million or (2) $100 million regardless of the percentage. [11] OMB Memorandum No. M-11-16. [12] For Comptroller General's authority, see 31 U.S.C. § 717(b)(1). [13] The CFO Act, Pub. L. No. 101-576 (Nov. 15, 1990), established chief financial officers to oversee financial management activities at 23 major executive departments and agencies. The list now includes 24 entities, which are often referred to collectively as CFO Act agencies, and is codified, as amended, in section 901 of Title 31, United States Code. [14] "Error rate" refers to a program's estimated annual improper payments as a percentage of that program's annual expenditures. To comply with IPERA criteria, agencies should report improper payment error rates below 10 percent. [15] Beginning in fiscal year 2011, according to OMB's guidance--OMB Circular No. A-136, Financial Reporting Requirements, revised October 21, 2013, and OMB Memorandum No. M-11-16--agencies were required to classify the root causes of estimated improper payments into three general categories for reporting purposes: (1) documentation and administrative errors, (2) authentication and medical necessity errors, and (3) verification errors. While some agencies generally reported some description of the causes of improper payments for their respective programs in their fiscal year 2013 AFRs, many agencies did not use the three categories to classify the types of errors. [16] Department of Health and Human Services, Office of Inspector General, U.S. Department of Health and Human Services Met Many Requirements of the Improper Payments Information Act of 2002 But Did Not Fully Comply for Fiscal Year 2013, A-17-14-52000 (Washington, D.C.: April 2014). [17] Department of Agriculture, Office of Inspector General, Improper Payments Elimination and Recovery Act of 2010 Compliance Review for Fiscal Year 2013, Audit No. 50024-0005-11 ( Washington, D.C.: Apr. 15, 2014). [18] Department of Housing and Urban Development, Office of Inspector General, U.S. Department of Housing and Urban Development Compliance with the Improper Payments Elimination and Recovery Act of 2010, 2014- FO-0004 (Washington, D.C.: Apr. 15, 2014). [19] Department of Transportation, Office of Inspector General, Accuracy and Reliability of DOT's Improper Payment Reporting Can Be Improved, FI-2014-037 (Washington, D.C.: Apr. 15, 2014). [20] Department of Agriculture, Office of Inspector General, Improper Payments Elimination and Recovery Act of 2010 Compliance Review for Fiscal Year 2013. USDA's OIG reported that USDA used results from a school year 2005 study to develop its current formulas to estimate improper payment rates for its School Breakfast and National School Lunch programs and that this affected the reliability of the estimates. [21] Small Business Administration, Office of Inspector General, SBA's Progress in Complying with the Improper Payments Elimination and Recovery Act, 14-11 (Washington, D.C.: Apr. 10, 2014). [22] Department of the Treasury, Office of Inspector General, The Department of the Treasury Was Not in Compliance With the Improper Payments Elimination and Recovery Act for Fiscal Year 2013, OIG-14-032 (Washington, D.C.: Apr. 15, 2014). [23] HHS points to section 417 of the Social Security Act of 1935, as amended, which provides that no federal employee or officer may regulate the conduct of states under the part of the act containing the TANF laws except to the extent expressly provided in that part. See 42 U.S.C. § 617. In its March 2012 report on the Department's compliance with improper payment reporting, the HHS OIG recommended that the Department develop an improper payment estimate for the TANF program and, if necessary, seek statutory authority to require state participation in such a measurement. The HHS OIG stated that in subsequent reports, the OIG has continued to emphasize this recommendation but the recommendation remains unimplemented. [24] See enclosure III for a complete list of all programs that exceeded a 10 percent error rate from fiscal year 2011 through 2013. [25] The seventh criterion added by OMB--reporting on recovery auditing activities--does not trigger the statutory consequences for noncompliance. [26] See GAO, Improper Payments: Government-Wide Estimates and Reduction Strategies, [hyperlink, http://www.gao.gov/products/GAO-14-737T] (Washington, D.C.: July 9, 2014). 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