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Testimony: 

Before the Subcommittee on Federal Financial Management, Government 
Information, Federal Services, and International Security, Committee on 
Homeland Security and Governmental Affairs, U.S. Senate: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Thursday, March 29, 2007: 

Improper Payments: 

Agencies' Efforts to Address Improper Payment and Recovery Auditing 
Requirements Continue: 

Statement of McCoy Williams, Director: 
Financial Management and Assurance: 

GAO-07-635T: 

GAO Highlights: 

Highlights of GAO-07-635T, a testimony before the Subcommittee on 
Federal Financial Management, Government Information, Federal Services, 
and International Security, Committee on Homeland Security and 
Governmental Affairs, U.S. Senate 

Why GAO Did This Study: 

The federal government is accountable for how its agencies and grantees 
spend hundreds of billions of taxpayer dollars and is responsible for 
safeguarding those funds against improper payments as well as for 
recouping those funds when improper payments occur. The Congress 
enacted the Improper Payments Information Act of 2002 (IPIA) and the 
Recovery Auditing Act to address these issues. Fiscal year 2006 marked 
the 3rd year that agencies were required to report improper payment and 
recovery audit information in their Performance and Accountability 
Reports. 

GAO was asked to testify on the progress agencies have made in these 
areas. Specifically, GAO focused on (1) trends in agencies’ reporting 
under IPIA from fiscal years 2004 through 2006, (2) challenges in 
reporting improper payment information and improving internal control, 
and (3) agencies’ reporting of recovery auditing efforts. This 
testimony is based on GAO’s previous reports on agencies’ efforts to 
implement IPIA requirements for fiscal years 2005 and 2004 and current 
review of available fiscal year 2006 improper payment and recovery 
auditing information. The Office of Management and Budget (OMB) 
provided technical comments that were incorporated as appropriate. 

What GAO Found: 

GAO identified several key trends related to IPIA reporting 
requirements.
* Risk assessments. For fiscal years 2004 through 2006, some agencies 
still had not instituted systematic methods of reviewing all programs 
and activities or had not identified all programs susceptible to 
significant improper payments. Further, certain agencies’ risk 
assessments appeared questionable. GAO also noted that OMB’s recently 
revised IPIA implementing guidance, which allows certain agencies to 
perform risk assessments every 3 years instead of annually, may result 
in fewer agencies conducting risk assessments in the future.
* Improper payment estimates. Since fiscal year 2004, agencies have 
made some progress in reporting improper payment information. The 
number of programs reporting improper payment estimates for fiscal year 
2004 totaled 41, compared to 60 programs for fiscal year 2006. The 
total improper payments dollar estimate was $45 billion in fiscal year 
2004, $38 billion in fiscal year 2005, and about $42 billion in fiscal 
year 2006. 
* Noncompliance issues. Although not currently required by IPIA to do 
so, some agency auditors continued to report problems related to 
agencies' risk assessments, definition of programs for IPIA purposes, 
sampling methodologies, lack of reporting for all risk-susceptible 
programs, and supporting documentation. 

Although showing progress under OMB’s continuing leadership, agencies’ 
fiscal year 2006 reporting under IPIA does not yet reflect the full 
scope of improper payments. Major challenges remain in meeting the 
goals of the act and ultimately improving the integrity of payments. 
First, some agencies have not yet reported for all risk-susceptible 
programs. For example, the fiscal year 2006 total improper payment 
estimate of about $42 billion did not include any amounts for 13 risk-
susceptible programs that had fiscal year 2006 outlays totaling about 
$329 billion. Second, certain methodologies used to estimate improper 
payments did not result in accurate estimates. Finally, GAO noted that 
internal control weaknesses continued to plague programs susceptible to 
significant improper payments. 

From fiscal years 2004 through 2006, the number of agencies reporting 
recovery auditing information for contract overpayments and the dollar 
amounts identified for recovery and actually recovered increased. For 
fiscal year 2004, 12 agencies reported recovering about $53 million, 
compared to 18 agencies that reported recovering about $256 million for 
fiscal year 2006. Given the large volume and complexity of federal 
contract payments and historically low recovery rates for certain 
programs, GAO emphasized that it is much more efficient to pay bills 
properly in the first place. Effective internal control calls for a 
sound, ongoing invoice review and approval process as the first line of 
defense in preventing erroneous payments. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-635T]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact McCoy Williams at (202) 
512-9095 or williamsm1@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the governmentwide problem of 
improper payments in federal programs and activities and agencies' 
efforts to address key requirements of the Improper Payments 
Information Act of 2002 (IPIA)[Footnote 1] and Section 831 of the 
National Defense Authorization Act for Fiscal Year 2002, commonly known 
as the Recovery Auditing Act.[Footnote 2] Since fiscal year 2000, we 
have issued a number of reports and testimonies aimed at raising the 
level of attention given to improper payments. Our work over the past 
several years has demonstrated that improper payments are a long- 
standing, widespread, and significant problem in the federal 
government. IPIA has increased visibility over improper 
payments[Footnote 3] by requiring executive agency heads, based on 
guidance from the Office of Management and Budget (OMB),[Footnote 4] to 
identify programs and activities susceptible to significant improper 
payments,[Footnote 5] estimate amounts improperly paid, and report on 
the amounts of improper payments and their actions to reduce them. 
Similarly, the Recovery Auditing Act provides an impetus for applicable 
agencies to systematically identify and recover contract overpayments. 
This act requires, among others things, that all executive branch 
agencies entering into contracts with a total value exceeding $500 
million in a fiscal year to have cost-effective programs for 
identifying errors in paying contractors and for recovering amounts 
erroneously paid. As the steward of taxpayer dollars, the federal 
government is accountable for how its agencies and grantees spend 
hundreds of billions of taxpayer dollars and is responsible for 
safeguarding those funds against improper payments as well as having 
mechanisms in place to recoup those funds when improper payments occur. 

OMB has played a key role in the oversight of the governmentwide 
improper payments problem. In 2005, OMB established Eliminating 
Improper Payments as a new program-specific initiative under the 
President's Management Agenda (PMA). This separate PMA program 
initiative helps to ensure that agency managers are held accountable 
for meeting the goals of IPIA and are, therefore, dedicating the 
necessary attention and resources to meeting IPIA requirements. OMB 
continues its commitment to identify all improper payments 
governmentwide by working with agencies to establish corrective action 
plans to address their root causes. OMB also annually reports[Footnote 
6] on agencies' efforts to address IPIA and Recovery Auditing Act 
requirements. 

Today, my testimony will focus on three key areas: 

* trends in agencies' reporting under IPIA for fiscal years 2004 
through 2006, 

* challenges in reporting improper payment information and improving 
internal control, and: 

* agencies' reporting of recovery auditing efforts to recoup improper 
payments. 

This testimony is based on our previous reports on agencies' efforts to 
implement IPIA requirements for fiscal years 2005 and 2004[Footnote 7] 
and our current review of available fiscal year 2006 improper payment 
information reported by 36 of the 38 federal agencies that the 
Department of the Treasury (Treasury) determined to be significant to 
the U.S. government's consolidated financial statements. (See app. I 
for a list of the 38 agencies.) The remaining 2 federal government 
corporations have a different year-end reporting date and had not 
issued their annual reports as of the end of our fieldwork. We reviewed 
improper payment information reported in the 36 agencies' fiscal year 
2006 performance and accountability reports (PAR) or annual reports. We 
also reviewed OMB guidance on implementation of IPIA and the Recovery 
Auditing Act and its annual report on agencies' efforts to identify and 
reduce improper payments. In addition, we reviewed GAO reports and 
agency Office of Inspector General (OIG) management challenges reports 
to identify internal control weaknesses and program integrity issues 
for agency programs reporting improper payment estimates for fiscal 
year 2006. We did not independently validate the data that agencies 
reported in their PARs or annual reports or the data that OMB reported. 
However, we are providing agency-reported data as descriptive 
information that will inform interested parties about the magnitude of 
reported governmentwide improper payments and amounts recouped through 
recovery audits and other improper payment-related information. We 
believe the data to be sufficiently reliable for this purpose. We 
provided information on the major findings discussed in this statement 
to OMB. OMB provided technical comments that we have incorporated as 
appropriate. We conducted our work in March 2007 in accordance with 
generally accepted government auditing standards. Details on our scope 
and methodology related to fiscal year 2005 and 2004 findings can be 
found in our prior reports.[Footnote 8] 

Significant Trends in IPIA Reporting: 

I would now like to focus on agencies' efforts to address select IPIA 
reporting requirements during the first 3 years of IPIA implementation, 
fiscal years 2004 through 2006. Generally, agencies must perform four 
key steps to address the improper payments reporting requirements--(1) 
perform a risk assessment, (2) estimate improper payments for risk- 
susceptible programs and activities, (3) implement a plan to reduce 
improper payments for programs with estimates exceeding $10 million, 
and (4) annually report improper payment estimates and actions to 
reduce them. OMB requires the results of these steps to be reported in 
the agencies' PARs, in the Management Discussion and Analysis section 
and as a separate appendix, for each fiscal year ending on or after 
September 30, 2004. Today, I will touch on progress made and challenges 
that remain in these areas. 

Risk Assessments: 

Our past and current reviews of agencies' reported risk assessments 
have raised questions regarding their adequacy. For fiscal years 2004 
through 2006, we found that some agencies still had not instituted 
systematic methods of reviewing all programs and activities or had not 
identified all programs susceptible to significant improper payments. 
We also reported that certain agencies' risk assessments appear 
questionable. Conducting a risk assessment is an essential part of 
agencies' efforts to comply with IPIA. Risk assessment is a key step in 
helping to gain a reasonable level of assurance that programs are 
operating as intended and that they are achieving their expected 
outcomes. Done properly, it entails a comprehensive review and analysis 
of program operations to determine if risks exist, what those risks 
are, and the potential or actual effect of those risks on program 
operations. The information developed during a risk assessment forms 
the foundation or basis upon which management can determine the nature 
and type of corrective actions needed. It also gives management 
baseline information for measuring progress in reducing improper 
payments. 

* For the first year of reporting under IPIA, we reported in March 
2005,[Footnote 9] that of the 29 agencies reviewed, 23 had completed 
risk assessments for all programs and activities for fiscal year 2004. 
However, for 3 of these, agencies' auditors raised noncompliance issues 
with the risk assessments. For example, agency auditors for the 
Department of Justice (DOJ) and the National Aeronautics and Space 
Administration (NASA) reported that the risk assessments did not 
consider all payment types or programs. The auditor for the Department 
of Homeland Security (DHS) reported that the agency did not institute a 
systematic method of reviewing all programs and identifying those it 
believed were susceptible to significant erroneous payments. 

* Regarding the second year of IPIA reporting, we reported in November 
2006,[Footnote 10] that the same number of agencies, 23, had performed 
risk assessments of all of their programs and activities based on our 
review of 35 agency PARs or annual reports for fiscal year 2005. 
Similar to the first year of IPIA reporting, we noted that auditors for 
DOJ and DHS again raised noncompliance issues regarding the adequacy of 
the agencies' risk assessments. We noted other risk assessment 
deficiencies as well. For example, the Department of Agriculture (USDA) 
OIG reported[Footnote 11] that the agency's risk assessments were not 
adequate to estimate the agency's susceptibility to improper payments 
because the guidance from the USDA's Office of the Chief Financial 
Officer (OCFO) was not sufficiently prescriptive and detailed to 
translate into meaningful results. As such, the OIG recommended that 
the USDA OCFO strengthen guidance over its IPIA risk assessments to 
provide reasonable assurance that the requirements of the act are met. 
Further, the OIG stated that USDA should identify risk factors that are 
discrete to the program being assessed and consider information from 
all sources, such as audit reports. 

* For fiscal year 2006, the third year of IPIA reporting, we found that 
30 of the 36 agencies had reported performing some type of assessment 
to identify programs and activities susceptible to significant improper 
payments. The remaining 6 agencies either did not report improper 
payments information in their PARs or annual reports, or did not report 
assessing for risk of improper payments for all of their programs and 
activities. Of the 30, 18 agencies reported reviewing all programs and 
activities as part of the risk assessment process, while the remaining 
12 agencies provided enough details that indicated some level of review 
was performed. For example, 1 agency reported that it had evaluated its 
major programs based on its developed risk criteria. Although the major 
programs made up a significant portion of the agency's outlays, the 
agency did not report that it had assessed the remaining programs and 
activities. We also found instances where an agency's description of 
the risk assessment performed contradicted its assertion that all 
programs and activities had been reviewed. For example, 1 agency 
reported in its PAR that it had assessed all programs and activities, 
but also reported in the same PAR that assessments for two activities 
had not been conducted. Another agency reported that it had assessed 
all of its payment programs, but later stated in its PAR that its risk 
assessment only covered certain types of programs. 

Similar to the previous years, agency auditors continued to find 
inadequacies in agencies' risk assessments for fiscal year 2006. The 
DHS auditor reported that the agency did not perform a risk assessment 
for all programs and activities. Further, the NASA auditor reported 
that the agency had potentially violated certain requirements of IPIA 
as NASA had been unable to provide the auditor with sufficient 
documentation to support performance of an annual review of all 
programs and activities that the agency administers. 

Other agencies reported improving and refining their risk assessment 
methodologies for fiscal year 2006. For example, USDA's Farm Service 
Agency reported that it made improvements to its risk assessments and 
as a result, four additional programs were determined to be susceptible 
to significant improper payments. Two other agencies reported 
redefining their programs to conduct their risk assessments. DOJ 
reported that it addressed its noncompliance with IPIA by performing 
risk assessments in its U.S. Marshals Service component. Other agencies 
identified plans for improving future risk assessments. For example, 
the Office of Personnel Management (OPM) reported that it will assess 
in fiscal year 2007 whether any agency payment streams, other than its 
former OMB Circular No. A-11 programs,[Footnote 12] are susceptible to 
significant improper payments. The Department of Defense reported that 
it is developing a program to review its intergovernmental payments and 
payments for afloat and deployed forces. NASA reported that it plans to 
perform a risk assessment of the agency's commercial and noncommercial 
disbursement activities. 

Finally, we noted that the number of agencies conducting risk 
assessments may decrease in future reporting, because OMB's revised 
IPIA implementing guidance allows agencies to perform risk assessments 
every 3 years for those agency programs not deemed susceptible to 
significant improper payments. Prior to issuing its revised 
implementing guidance, OMB discussed the proposed changes with us. We 
advised OMB that the provision to perform risk assessments every 3 
years for those programs not deemed risk-susceptible was inconsistent 
with the IPIA requirement for agencies to review all programs and 
activities annually. In its fiscal year 2006 PAR, the General Services 
Administration (GSA) reported that because it does not have any 
programs or activities susceptible to significant improper payments, 
GSA will perform the next risk assessment in fiscal year 2008. 
Additionally, several programs included in OMB's former Circular No. A- 
11, reported that OMB had granted them a waiver from improper payments 
reporting because they did not have programs susceptible to significant 
improper payments. These programs included the Environmental Protection 
Agency's Clean and Drinking Water State Revolving Funds, the National 
Science Foundation's Research and Education Grants and Cooperative 
Agreements, and the Department of Veterans Affairs (VA) Insurance 
programs. OMB's previous implementing guidance required agencies to 
annually estimate improper payments for their programs that were 
included in former Circular No. A-11, regardless of amount. 

Improper Payment Dollar and Error Rate Estimates: 

Since fiscal year 2004, agencies have made progress in reporting 
improper payment information. For example, the number of programs 
reporting improper payment estimates for fiscal year 2004 totaled 41, 
as compared to 60 programs reporting for fiscal year 2006, a net 
increase of 19 programs.[Footnote 13] The total improper payments 
dollar estimate was $45 billion in fiscal year 2004, $38 billion in 
fiscal year 2005, and about $42 billion[Footnote 14] in fiscal year 
2006. (See app. II for further details.) 

We have previously testified[Footnote 15] before this subcommittee 
regarding the decrease in the total improper payment estimate from $45 
billion in fiscal year 2004 to $38 billion in fiscal year 2005. 
Specifically, we reported that the $7 billion decrease was primarily 
attributable to a decrease in the Medicare estimate that resulted from 
increased efforts to educate health care providers on the importance of 
responding to requests for medical records to perform detailed 
statistical reviews. Also, the Department of Health and Human Services 
(HHS) extended the time that providers have for responding to 
documentation requests from 55 days to 90 days. We further reported 
that these changes primarily affected HHS's processes related to its 
efforts to perform detailed statistical reviews for the purposes of 
calculating an annual improper payment estimate for the Medicare 
program. While this represents a refinement, it may not reflect 
improved accountability over program dollars given that GAO continues 
to designate the Medicare program as a high-risk area. Specifically, in 
our January 2007 report,[Footnote 16] we reported that further action 
must be taken to refine Medicare's payment methods and collection of 
data used as a basis for setting payment rates and address program 
integrity weaknesses, among others. Also, HHS's OIG continued to report 
the integrity of Medicare payments as a top management challenge for 
fiscal year 2006. 

For fiscal year 2006, the total improper payment estimate increased to 
about $42 billion from the reported $38 billion for fiscal year 2005. 
The increase in improper payments was primarily attributable to 15 
newly reported programs or activities totaling about $2.4 billion, and 
a $1.6 billion increase in USDA's Marketing Assistance Loan program due 
to improvements in how it measured its improper payments. In addition, 
several programs experienced increases in their improper payment 
estimates as a result of lax upfront eligibility controls to facilitate 
rapid benefit delivery to victims devastated by Hurricane Katrina. 
According to OMB, the programs most directly affected included the 
Federal Emergency Management Agency's Individuals and Households 
program (IHP), Department of Labor's (Labor) Disaster Unemployment 
Insurance (UI) program, and the Small Business Administration's 
Disaster Assistance Loan program. For example, Labor identified more 
than $100 million in improper payments related to Hurricane Katrina for 
the Disaster UI program. To respond to the challenges of the Gulf Coast 
hurricanes, on August 29, 2006, the President signed Executive Order 
13411, Improving Assistance for Disaster Victims, which established a 
task force on disaster coordination responsible for recommending 
specific actions to improve the delivery of federal disaster assistance 
while strengthening controls designed to prevent improper payments and 
other forms of fraud, waste, and abuse. 

Mr. Chairman, I commend agencies' efforts to decrease improper payment 
error rates. For example, from our review of agency programs initially 
reporting error rates in the first year of IPIA implementation, fiscal 
year 2004, we noted that of the 32 agency programs with changes in 
their error rates, 18 program error rates, or 56 percent, had declined 
when compared to fiscal year 2006. However, it should be noted that in 
this still-early stage of IPIA implementation, a decrease in the 
reported error rate may not signal improved accountability just as an 
increase may not necessarily indicate a greater number of control 
weaknesses. In some cases, these fluctuations may be attributed to 
changes in the estimating methodology used. For example, USDA's 
Marketing Assistance Loan program did not report an estimate in fiscal 
year 2004 and reported a small estimate for fiscal year 2005. However, 
with improvements in how it measures improper payments, this program 
estimated an error rate of 20.3 percent for fiscal year 2006. The 
Marketing Assistance Loan program is now in a greatly improved position 
to identify the root causes of these errors and ultimately improve the 
integrity of its payments--the primary goal of IPIA reporting. 

Table 1 highlights improper payment error rates for the 8 major 
programs that accounted for 86 percent of the $42 billion total 
improper payment estimate for fiscal year 2006. 

Table 1: Reported Improper Payment Error Rates for Major Programs for 
Fiscal Years 2004 through 2006: 

Agency: Health and Human Services; 
Program: Medicare (Fee-for- Service component); 
FY 2004: Error rate (percent): 10.1; 
FY 2004: Estimate (dollars in billions): $21.7; 
FY 2005: Error rate (percent): 5.2; 
FY 2005: Estimate (dollars in billions): $12.1; 
FY 2006: Error rate (percent): 4.4; 
FY 2006: Estimate (dollars in billions): $10.8. 

Agency: Department of the Treasury; 
Program: Earned Income Tax Credit; 
FY 2004: Error rate (percent): 24.5; 
FY 2004: Estimate (dollars in billions): 9.7; 
FY 2005: Error rate (percent): 25.5; 
FY 2005: Estimate (dollars in billions): 10.5; 
FY 2006: Error rate (percent): 25.5; 
FY 2006: Estimate (dollars in billions): 10.7. 

Agency: Department of Labor; 
Program: Unemployment Insurance; 
FY 2004: Error rate (percent): 10.3; 
FY 2004: Estimate (dollars in billions): 3.9; 
FY 2005: Error rate (percent): 10.1; 
FY 2005: Estimate (dollars in billions): 3.3; 
FY 2006: Error rate (percent): 10.7; 
FY 2006: Estimate (dollars in billions): 3.4. 

Agency: Social Security Administration; 
Program: Old Age, Survivors, and Disability Insurance; 
FY 2004: Error rate (percent): 0.3; 
FY 2004: Estimate (dollars in billions): 1.7; 
FY 2005: Error rate (percent): 0.7; 
FY 2005: Estimate (dollars in billions): 3.7; 
FY 2006: Error rate (percent): 0.6; 
FY 2006: Estimate (dollars in billions): 3.3. 

Agency: Social Security Administration; 
Program: Supplemental Security Income Program; 
FY 2004: Error rate (percent): 7.3; 
FY 2004: Estimate (dollars in billions): 2.6; 
FY 2005: Error rate (percent): 7.7; 
FY 2005: Estimate (dollars in billions): 2.9; 
FY 2006: Error rate (percent): 7.8; 
FY 2006: Estimate (dollars in billions): 3.0. 

Agency: Department of Agriculture; 
Program: Food Stamp Program; 
FY 2004: Error rate (percent): 6.6; 
FY 2004: Estimate (dollars in billions): 1.6; 
FY 2005: Error rate (percent): 5.9; 
FY 2005: Estimate (dollars in billions): 1.4; 
FY 2006: Error rate (percent): 5.8; 
FY 2006: Estimate (dollars in billions): 1.6. 

Agency: Department of Agriculture; 
Program: Marketing Assistance Loan Program; 
FY 2004: Error rate (percent): 0.0; 
FY 2004: Estimate (dollars in billions): 0.0; 
FY 2005: Error rate (percent): 0.7; 
FY 2005: Estimate (dollars in billions): 0.5; 
FY 2006: Error rate (percent): 20.3; 
FY 2006: Estimate (dollars in billions): 1.6. 

Agency: Housing and Urban Development; 
Program: Public Housing/ Rental Assistance; 
FY 2004: Error rate (percent): 6.9; 
FY 2004: Estimate (dollars in billions): 1.7; 
FY 2005: Error rate (percent): 5.6; 
FY 2005: Estimate (dollars in billions): 1.5; 
FY 2006: Error rate (percent): 5.4; 
FY 2006: Estimate (dollars in billions): 1.5. 

Total; 
FY 2004: Error rate (percent): [Empty]; 
FY 2004: Estimate (dollars in billions): $42.9; 
FY 2005: Error rate (percent): [Empty]; 
FY 2005: Estimate (dollars in billions): $35.9; 
FY 2006: Error rate (percent): [Empty]; 
FY 2006: Estimate (dollars in billions): $35.9. 

Estimate for all programs; 
FY 2004: Error rate (percent): [Empty]; 
FY 2004: Estimate (dollars in billions): 45.4; 
FY 2005: Error rate (percent): [Empty]; 
FY 2005: Estimate (dollars in billions): 38.4; 
FY 2006: Error rate (percent): [Empty]; 
FY 2006: Estimate (dollars in billions): 41.6. 

Major programs as a percent of total for all programs; 
FY 2004: Error rate (percent): [Empty]; 
FY 2004: Estimate (dollars in billions): 94 percent; 
FY 2005: Error rate (percent): [Empty]; 
FY 2005: Estimate (dollars in billions): 93 percent; 
FY 2006: Error rate (percent): [Empty]; 
FY 2006: Estimate (dollars in billions): 86 percent. 

Sources: GAO analysis of agencies' fiscal years 2004 to 2006 PARs and 
OMB. 

[End of table] 

Noncompliance Issues with IPIA Continue: 

Although they are not specifically required to do so by the act, some 
agency auditors have reported on noncompliance issues related to 
implementation of IPIA since the first year of IPIA reporting. For 
example, for fiscal years 2004 and 2005, we reported[Footnote 17] that 
agency auditors had identified instances of noncompliance, such as the 
lack of a systematic method for reviewing all programs and risk 
assessments that did not consider all payment types or programs. For 
fiscal year 2006, agency auditors reported instances of noncompliance 
such as an agency still being in its early stages of IPIA 
implementation or not yet having reported for all risk-susceptible 
programs. 

We found that the level of noncompliance and types of issues raised 
varied over the first 3 years of IPIA reporting. From our review of the 
agency auditors' description of the noncompliance, we classified the 
findings into three categories--full noncompliance, partial 
noncompliance, and potential noncompliance. We noted that agency 
auditors reported problems related to agencies' risk assessments, the 
definition of programs for IPIA purposes, sampling methodologies, lack 
of reporting for all risk-susceptible programs, and supporting 
documentation, as shown in table 2. Fully addressing these matters 
should lead to improved reporting under IPIA. Although IPIA does not 
include a separate reporting requirement for auditors to assess 
agencies' compliance, we noted that those that included this assessment 
provided a valuable independent validation of agencies' efforts to 
implement the act. 

Table 2: Noncompliance Issues Reported by Some Agency Auditors for 
Fiscal Years 2004 through 2006: 

Category of noncompliance: Full noncompliance; 
Fiscal year 2004: 3; 
Fiscal year 2005: 2; 
Fiscal year 2006: 1; 
Type of noncompliance issue: Defining programs and activities, risk 
assessment, sampling, early stages of IPIA implementation. 

Category of noncompliance: Partial noncompliance; 
Fiscal year 2004: 1; 
Fiscal year 2005: 1; 
Fiscal year 2006: 4; 
Type of noncompliance issue: Not estimating for all risk-susceptible 
programs, risk assessment, sampling. 

Category of noncompliance: Potential noncompliance; 
Fiscal year 2004: 0; 
Fiscal year 2005: 0; 
Fiscal year 2006: 1; 
Type of noncompliance issue: Documentation does not support work 
reportedly performed. 

Category of noncompliance: Total; 
Fiscal year 2004: 4; 
Fiscal year 2005: 3; 
Fiscal year 2006: 6; 
Type of noncompliance issue: [Empty]. 

Source: GAO analysis. 

[End of table] 

From our analysis, we noted that four agencies[Footnote 18] had 
reported noncompliance issues for at least 2 of the 3 IPIA reporting 
years. For example, agency auditors for DHS have reported noncompliance 
issues for the first 3 years of IPIA reporting. As mentioned earlier in 
this testimony, the first 2 years of noncompliance were primarily 
caused by inadequate risk assessments. For fiscal year 2006, DHS 
auditors reported that the agency had not fully complied with IPIA due 
to several inadequacies related to sampling methodologies, trained 
staff, and monitoring of results to ensure testing was completed for 
all required programs. DHS auditors recommended that the agency follow 
OMB guidance for fiscal year 2007, including completing the necessary 
susceptibility assessments, testing for all material programs, and 
instituting sampling techniques to allow for statistical projection of 
improper payments testing results. 

Challenges Continue in Reporting Improper Payment Information and 
Improving Internal Control: 

While showing progress, agencies' fiscal year 2006 reporting under IPIA 
does not yet reflect the full scope of improper payments across 
executive branch agencies. Major challenges remain in meeting the goals 
of the act and ultimately improving the integrity of payments. 
Specifically, some agencies have not yet reported for all risk- 
susceptible programs, and certain methodologies used to estimate 
improper payments do not result in reliable estimates. Also, we noted 
that management challenges related to agencies' internal control 
weaknesses continue to plague programs susceptible to significant 
improper payments. 

Improper Payments Estimate Excludes Several Large Risk-Susceptible 
Programs: 

The fiscal year 2006 total improper payment estimate of about $42 
billion did not include any amounts for 13 risk-susceptible programs 
having fiscal year 2006 outlays totaling about $329 billion. The 
Medicaid program represents the largest program that has not yet 
reported, with reported outlays of about $183 billion. OMB had 
specifically required 9 of these programs, including the Medicaid 
program to report selected improper payment information for several 
years before IPIA reporting requirements became effective. After 
passage of IPIA, OMB's implementing guidance required that these 
programs continue to report improper payment information under IPIA. 
See table 3 for more detailed information. 

Table 3: Risk-Susceptible Programs That Did Not Report Improper Payment 
Estimates and Target Dates for Estimates: 

Agency/program: Department of Agriculture--National School Lunch and 
School Breakfast Programs (previously School Programs); 
Fiscal year 2006 outlays (dollars in billions): $6.5; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: X. 

Agency/program: Federal Communications Commission--High Cost Support 
Program; 
Fiscal year 2006 outlays (dollars in billions): 3.8; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: [Empty]. 

Agency/program: Federal Communications Commission--Universal Service 
Fund's Schools and Libraries; 
Fiscal year 2006 outlays (dollars in billions): 1.7; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: [Empty]. 

Agency/program: Small Business Administration--504 Certified 
Development Companies; 
Fiscal year 2006 outlays (dollars in billions): 4.3; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: X. 

Agency/program: Department of Transportation--Airport Improvement 
Program; 
Fiscal year 2006 outlays (dollars in billions): 3.8; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: X. 

Agency/program: Department of Transportation--Capital Investments; 
Fiscal year 2006 outlays (dollars in billions): 3.1; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: X. 

Agency/program: Department of Transportation--Formula Grants; 
Fiscal year 2006 outlays (dollars in billions): 1.9; 
Target date for improper payment estimate: 2007; 
Previously required to estimate: X. 

Agency/program: Department of Health and Human Services--Child Care and 
Development Fund; 
Fiscal year 2006 outlays (dollars in billions): 4.9; 
Target date for improper payment estimate: 2008[A]; 
Previously required to estimate: X. 

Agency/program: Department of Health and Human Services--Medicaid; 
Fiscal year 2006 outlays (dollars in billions): 182.9; 
Target date for improper payment estimate: 2008; 
Previously required to estimate: X. 

Agency/program: Department of Health and Human Services--State 
Children's Insurance Program; 
Fiscal year 2006 outlays (dollars in billions): 5.8; 
Target date for improper payment estimate: 2008; 
Previously required to estimate: X. 

Agency/program: Department of Health and Human Services--Temporary 
Assistance for Needy Families; 
Fiscal year 2006 outlays (dollars in billions): 17.4; 
Target date for improper payment estimate: 2008[A]; 
Previously required to estimate: X. 

Agency/program: Department of Health and Human Services--Medicare 
Advantage; 
Fiscal year 2006 outlays (dollars in billions): 55.4; 
Target date for improper payment estimate: Did not report a target 
date; 
Previously required to estimate: [Empty]. 

Agency/program: Department of Health and Human Services--Medicare 
Prescription Drug Benefit; 
Fiscal year 2006 outlays (dollars in billions): 37.4; 
Target date for improper payment estimate: Did not report a target 
date; 
Previously required to estimate: [Empty]. 

Agency/program: Total; 
Fiscal year 2006 outlays (dollars in billions): $328.9; 
Target date for improper payment estimate: [Empty]; 
Previously required to estimate: 9. 

Sources: OMB and cited agencies' fiscal year 2006 PARs. 

[A] Although not reported in HHS's fiscal year 2006 PAR, according to 
OMB, both the Child Care and Development Fund and Temporary Assistance 
for Needy Families programs anticipate reporting a component error 
measurement in HHS's fiscal year 2008 PAR. 

[End of table] 

Of these 13 programs, 11 reported that they would be able to estimate 
and report on improper payments in the next 2 fiscal years, but could 
not do so for fiscal year 2006. The remaining 2 programs were silent 
about when they would report estimates in the future. As a result, 
improper payment reporting of these programs susceptible to risk remain 
unknown. OMB reported that some of the agencies were unable to 
determine the rate or amount of improper payments because of 
measurement challenges or time and resource constraints, which OMB 
expects to be resolved in future reporting years. For example, since 
fiscal year 2002, HHS has conducted pilots at the state level to 
further its progress toward reporting a national improper payments 
estimate for its Medicaid program. Each state is responsible for 
designing and overseeing its own Medicaid program within the federal 
government structure. This type of program structure presents 
challenges for implementing a methodology to estimate improper payments 
as HHS must work with states to obtain applicable documentation used in 
the calculation. An additional challenge that HHS and other agencies 
with state-administered programs say they face is the ability to hold 
states accountable for meeting targets to reduce and recover improper 
payments in the absence of specific statutory authority. In April 2006, 
we reported[Footnote 19] on the need for federal and state coordination 
to report national improper payment estimates on federal programs as 
state-administered programs and other nonfederal entities receive over 
$400 billion annually in federal funds. Thus, federal agencies and 
states share a responsibility for the prudent use of these funds. 

Certain Methodologies Used to Estimate Improper Payments Do Not Result 
in Accurate Estimates: 

We have previously noted that agencies employed different sampling 
methodologies to estimate improper payments, including statistical 
sampling, nonstatistical sampling, or a combination of the two. OMB's 
implementing guidance requires that agencies generally use a 
statistical sample to estimate improper payments. Agencies may also use 
an alternative sampling approach provided they obtain OMB approval 
prior to implementation. The advantage of using statistical sampling is 
that sample results can be generalized to the entire population from 
which the sample was taken. Based on our review of fiscal year 2006 
reporting, we found seven agencies that did not use statistical 
sampling to estimate improper payments for nine programs totaling about 
$202 million, with program outlays exceeding $88 billion. Given that 
total outlays for these nine risk-susceptible programs exceeded $88 
billion for fiscal year 2006, the improper payment estimate for these 
programs would likely have been much greater had statistically valid 
methods been used. 

For example, Labor analyzed fiscal year 2004 audits done under the 
Single Audit Act,[Footnote 20] as amended, to identify questioned costs 
for its Workforce Investment Act[Footnote 21] program, which, in turn, 
were used as a proxy for reporting its improper payment estimate. 
Specifically, the improper payment rate was determined by calculating 
the projected questioned costs and dividing this total amount by the 
corresponding outlays. Using this methodology, Labor reported a $6.4 
million improper payment estimate for fiscal year 2006. We do not 
believe this is a reasonable proxy for improper payment levels because 
single audits, by themselves, may lack the level of detail necessary 
for achieving IPIA compliance. Specifically, single audits generally 
focus on the largest dollars in an auditee's portfolio. Thus, all 
programs identified as susceptible to improper payments at the federal 
level may not receive extensive coverage under a single audit. 
Consequently, both the depth and level of detail of single audit 
results are, generally, insufficient to identify improper payments, 
estimate improper payments, or both. We noted that Labor's OIG reported 
the use of single audits as a major management challenge because 
serious deficiencies in single audits, including inadequate sampling 
methodologies have been reported, thus making them unreliable for 
purposes of estimating improper payments. 

We also found that five agencies used a combination of statistical and 
nonstatistical sampling methods to estimate improper payments totaling 
about $11.6 billion for ten programs. For example, VA reported that 
improper payment estimates for its Compensation and Pension programs 
are based on statistical sampling of its quality assurance program 
together with actual amounts of debt incurred that are referred to the 
VA Debt Management Center. In another example, the Railroad Retirement 
Board (RRB) reported that improper payment estimates for its Retirement 
and Survivors Benefits program and Railroad Unemployment Insurance 
Benefits program were based on a statistical sample of railroad 
retirement awards and unemployment and sickness insurance claims as 
well as special studies and audits that were not entirely statistically 
based. In its fiscal year 2006 PAR, RRB reported that in May 2005, its 
general counsel issued a legal opinion that since the levels of 
improper payments did not exceed OMB's designated thresholds--exceeding 
$10 million and 2.5 percent of program payments--the agency was not 
required to conduct statistical sampling. We noted that both of these 
programs were required to report improper payment information for 
several years before IPIA reporting requirements became effective. 
After passage of IPIA, OMB's implementing guidance required that these 
programs continue to report improper payment information under IPIA, 
including using statistical sampling to estimate improper payments. 

In addition, we noted instances where agencies estimated improper 
payments for only one component of the risk-susceptible program. For 
example, HHS's Medicare program is the largest of the programs 
constituting the total improper payment estimate, with an estimate of 
$10.8 billion for fiscal year 2006. However, this estimate represents 
payment errors only for its fee-for-service program component. HHS has 
not yet begun to estimate improper payments for its managed care 
component (also known as Medicare Advantage), with outlays totaling 
about $55 billion, or 14 percent of Medicare program outlays. HHS's 
auditor, an independent public accounting firm that audited its 
financial statements for fiscal year 2006, identified Medicare's 
managed care benefits payment cycle as a reportable condition in its 
report on internal controls. The auditor found that HHS lacks a 
comprehensive control environment in which the risk of inaccurate 
payments is not sufficiently mitigated. Specifically, HHS had 
inadequate procedures to review and process managed care payments, 
lacked documentation and procedures to determine eligibility of new 
providers, and provided inadequate oversight of managed care 
organizations. In its fiscal year 2006 PAR, HHS reported that a 
methodology to estimate improper payments for the Medicare Advantage 
program was in the initial stage of development. During fiscal year 
2007, HHS plans to perform a comprehensive risk assessment for the 
Medicare Advantage program to determine potential areas vulnerable to 
payment errors. HHS anticipates reporting on the measurement project 
and select findings in its fiscal year 2008 PAR. However, HHS has not 
yet provided a target date for reporting an improper payment estimate 
for its Medicare Advantage program. 

Improved Internal Control Is Key to Resolving Improper Payments: 

Agency OIGs reported management challenges in the annual PARs related 
to agencies' internal control weaknesses that continue to plague 
programs susceptible to significant improper payments. In accordance 
with OMB Circular No. A-136, OIGs are required to highlight issues that 
the OIGs consider to be the most serious management and performance 
challenges facing agencies. Management challenges involving internal 
control have a direct effect on program integrity and improper payment 
issues, and thus a review of the OIGs' statements on management 
challenges can be instructive in this regard. Generally, improper 
payments result from a lack of or an inadequate system of internal 
control, but some result from program design issues. 

Internal control is a major part of managing an organization. It 
comprises the plans, methods, and procedures used to meet missions, 
goals, and objectives and supports performance-based management. 
Internal control also serves as the first line of defense in 
safeguarding assets and preventing and detecting errors and fraud. Our 
Standards for Internal Control in the Federal Government provide a road 
map for entities to establish control for all aspects of their 
operations and a basis against which entities' control structures can 
be evaluated.[Footnote 22] Also, our executive guide on strategies to 
manage improper payments focuses on internal control standards as they 
relate to reducing improper payments.[Footnote 23] 

We found that over half of the programs reporting improper payment 
estimates also had reported management challenges that could increase 
the risk of improper payments, including challenges related to internal 
controls. For example, in the Department of Education's (Education) 
fiscal year 2006 PAR, the Education OIG reported that recent audits, 
inspections, and investigations continue to uncover problems with 
program control and oversight of program participants, placing billions 
of taxpayer dollars at risk of waste, fraud, abuse, and noncompliance. 
The OIG concluded that only by improving effective oversight of its 
operations and demanding accountability by its managers, staff, 
contractors, and grantees can the agency be an effective steward of the 
billions of taxpayer dollars supporting its programs and operations. 
Education's OIG also reported that identifying and correcting improper 
payments remains a challenge for the agency due to ineffective 
oversight and monitoring of its policies, programs, and participants. 

Another example involved an agency's systems used to detect fraudulent 
activity. Specifically, Treasury's OIG reported that some tax credits, 
such as the Earned Income Tax Credit, provide opportunities for abuse 
in income tax claims. In past years, the Internal Revenue Service (IRS) 
used its Web-based Electronic Fraud Detection System (EFDS) to search 
for signs of fraud at the time that tax returns are filed to help 
eliminate the issuing of questionable refunds. For its 2005 processing 
year,[Footnote 24] IRS stopped over $412 million in improper payments. 
However, IRS was unable to utilize EFDS for the 2006 processing 
year[Footnote 25] because the contractor it had hired to update the 
fraud detection program could not produce a working program within the 
established timeframe. Because IRS believed that the contractor would 
deliver the updated program, it had not developed a contingency plan 
nor taken any action to return to the old system. As a result, the 
Treasury OIG reported that more than $300 million in fraudulent refunds 
may have been issued in 2006. We identified this issue as a material 
weakness during our audit of IRS's fiscal years 2005 and 2006 financial 
statements.[Footnote 26] 

Agencies' Reporting of Recovery Auditing Information: 

Section 831 of the National Defense Authorization Act for Fiscal Year 
2002 provides an impetus for applicable agencies to systematically 
identify and recover contract overpayments. The act requires that 
agencies that enter into contracts with a total value in excess of $500 
million in a fiscal year carry out a cost-effective program for 
identifying and recovering amounts erroneously paid to contractors. The 
law authorizes federal agencies to retain recovered funds to cover in- 
house administrative costs as well as to pay contractors, such as 
collection agencies. Any residual recoveries, net of these program 
costs, shall be credited back to the original appropriation from which 
the improper payment was made, subject to restrictions as described in 
the legislation. 

Recovery auditing is a method that agencies can use to recoup detected 
improper payments. Recovery auditing is a detective control to help 
determine whether contractor costs were proper. Specifically, it 
focuses on the identification of erroneous invoices, discounts offered 
but not received, improper late penalty payments, incorrect shipping 
costs, and multiple payments for single invoices. Recovery auditing can 
be conducted in-house or contracted out to recovery audit firms. The 
techniques used in recovery auditing offer the opportunity for 
identifying weaknesses in agency internal controls, which can be 
modified or upgraded to be more effective in preventing improper 
payments before they occur for subsequent contract outlays. 

I would like to emphasize that effective internal control calls for a 
sound, ongoing invoice review and approval process as the first line of 
defense in preventing unallowable contract costs. Given the large 
volume and complexity of federal payments and historically low recovery 
rates for certain programs, it is much more efficient and effective to 
pay bills and provide benefits properly in the first place. Prevention 
is always preferred to detection and collection. Aside from minimizing 
overpayments, preventing improper payments increases public confidence 
in the administration of benefit programs and avoids the difficulties 
associated with the "pay and chase" aspects of recovering improper 
payments. Without strong preventive controls, agencies' internal 
control activities over payments to contractors will not be effective 
in reducing the risk of improper payments. 

Beginning with fiscal year 2004, OMB required that applicable agencies 
publicly report on their recovery auditing efforts as part of their PAR 
reporting of improper payment information. Agencies are required to 
discuss any contract types excluded from review and justification for 
doing so. Agencies are also required to report, in table format, 
various amounts related to contracts subject to review and actually 
reviewed, contract amounts identified for recovery and actually 
recovered, and prior year amounts. 

From fiscal year 2004 to 2006, we noted that the number of agencies 
reporting recovery auditing information and the dollar amounts 
identified for recovery and actually recovered had increased, as shown 
in table 4. 

Table 4: Improper Payment Amounts Identified and Recovered for Fiscal 
Years 2004 to 2006: 

1; 
Department or agency: Agency for International Development; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
$5,900,000; 
Fiscal year 2005: Agency-reported amount recovered: $5,782,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
$17,100,000; 
Fiscal year 2006: Agency-reported amount recovered: $17,090,000. 

2; 
Department or agency: Department of Agriculture; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
$2,000; 
Fiscal year 2004: Agency-reported amount recovered: $2,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
333,000; 
Fiscal year 2005: Agency-reported amount recovered: 189,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
379,000; 
Fiscal year 2006: Agency-reported amount recovered: 538,000[A]. 

3; 
Department or agency: Department of Commerce; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
96,354; 
Fiscal year 2005: Agency-reported amount recovered: 84,551; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
96,000; 
Fiscal year 2006: Agency-reported amount recovered: 96,000. 

4; 
Department or agency: Department of Defense; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
6,300,000; 
Fiscal year 2004: Agency-reported amount recovered: 6,300,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
473,000,000; 
Fiscal year 2005: Agency-reported amount recovered: 418,500,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
195,300,000; 
Fiscal year 2006: Agency-reported amount recovered: 137,900,000. 

5; 
Department or agency: Department of Education; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
269,000; 
Fiscal year 2004: Agency-reported amount recovered: 79,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
274,367; 
Fiscal year 2005: Agency-reported amount recovered: 112,506; 
Fiscal year 2006: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2006: Agency-reported amount recovered: did not report. 

6; 
Department or agency: Department of Energy; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
6,000,000; 
Fiscal year 2004: Agency-reported amount recovered: 6,000,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
10,600,000; 
Fiscal year 2005: Agency-reported amount recovered: 9,500,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
11,900,000; 
Fiscal year 2006: Agency-reported amount recovered: 10,300,000. 

7; 
Department or agency: Environmental Protection Agency; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
130,000; 
Fiscal year 2005: Agency-reported amount recovered: 130,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
1,102,000; 
Fiscal year 2006: Agency-reported amount recovered: 0[B]. 

8; 
Department or agency: General Services Administration; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
14,409,000; 
Fiscal year 2004: Agency-reported amount recovered: 11,117,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
26,638,654; 
Fiscal year 2005: Agency-reported amount recovered: 8,317,187; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
46,721,742; 
Fiscal year 2006: Agency-reported amount recovered: 45,917,920. 

9; 
Department or agency: Department of Health and Human Services; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
2,100,000; 
Fiscal year 2005: Agency-reported amount recovered: 14,430; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
1,600,000[C]; 
Fiscal year 2006: Agency-reported amount recovered: 40,000[C]. 

10; 
Department or agency: Department of Homeland Security; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
2,191,000; 
Fiscal year 2005: Agency-reported amount recovered: 1,207,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
502,000,000[C]; 
Fiscal year 2006: Agency-reported amount recovered: 6,016,000[C]. 

11; 
Department or agency: Department of Housing and Urban Development; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
227,000; 
Fiscal year 2004: Agency-reported amount recovered: 40,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
reported not cost beneficial; 
Fiscal year 2005: Agency-reported amount recovered: reported not cost 
beneficial; 
Fiscal year 2006: Agency- reported amount identified for recovery: 
reported not cost beneficial; 
Fiscal year 2006: Agency-reported amount recovered: reported not cost 
beneficial. 

12; 
Department or agency: Department of the Interior; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
231,000; 
Fiscal year 2004: Agency-reported amount recovered: 231,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
1,548,620; 
Fiscal year 2005: Agency-reported amount recovered: 195,479; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
4,407,345; 
Fiscal year 2006: Agency-reported amount recovered: 505,743. 

13; 
Department or agency: Department of Justice; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
973,000; 
Fiscal year 2004: Agency-reported amount recovered: 780,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
1,044,320; 
Fiscal year 2005: Agency-reported amount recovered: 765,086; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
1,851,709; 
Fiscal year 2006: Agency-reported amount recovered: 1,734,421. 

14; 
Department or agency: Department of Labor; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
reported not cost beneficial; 
Fiscal year 2005: Agency-reported amount recovered: reported not cost 
beneficial; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
reported not cost beneficial; 
Fiscal year 2006: Agency-reported amount recovered: reported not cost 
beneficial. 

15; 
Department or agency: National Aeronautics and Space Administration; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
617,442; 
Fiscal year 2005: Agency-reported amount recovered: 617,442; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
256,255; 
Fiscal year 2006: Agency-reported amount recovered: 139,420. 

16; 
Department or agency: Social Security Administration; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
5,000; 
Fiscal year 2004: Agency-reported amount recovered: 5,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
317,000; 
Fiscal year 2005: Agency-reported amount recovered: 50,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
178,000; 
Fiscal year 2006: Agency-reported amount recovered: 178,000. 

17; 
Department or agency: Department of State; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
5,350,000; 
Fiscal year 2005: Agency-reported amount recovered: 5,190,000; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
2,397,200; 
Fiscal year 2006: Agency-reported amount recovered: 2,276,700. 

18; 
Department or agency: Tennessee Valley Authority; 
Fiscal year 2004: Agency-reported amount identified for recovery: did 
not report; 
Fiscal year 2004: Agency-reported amount recovered: did not report; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
909,573; 
Fiscal year 2005: Agency-reported amount recovered: 443,763; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
6,793,581[D]; 
Fiscal year 2006: Agency-reported amount recovered: 1,202,651. 

19; 
Department or agency: Department of Transportation; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
216,000; 
Fiscal year 2004: Agency-reported amount recovered: 216,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
2,663,984; 
Fiscal year 2005: Agency-reported amount recovered: 2,663,984; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
6,450,993; 
Fiscal year 2006: Agency-reported amount recovered: 45,109. 

20; 
Department or agency: Department of the Treasury; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
855,000; 
Fiscal year 2004: Agency-reported amount recovered: 669,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
428,977; 
Fiscal year 2005: Agency-reported amount recovered: 364,680; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
2,305,424; 
Fiscal year 2006: Agency-reported amount recovered: 1,442,708. 

21; 
Department or agency: Department of Veterans Affairs; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
29,500,000; 
Fiscal year 2004: Agency-reported amount recovered: 27,300,000; 
Fiscal year 2005: Agency-reported amount identified for recovery: 
23,001,137; 
Fiscal year 2005: Agency-reported amount recovered: 12,957,264; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
39,155,454; 
Fiscal year 2006: Agency-reported amount recovered: 30,378,423. 

Total; 
Fiscal year 2004: Agency-reported amount identified for recovery: 
$58,987,000; 
Fiscal year 2004: Agency- reported amount recovered: $52,739,000; 
Fiscal year 2005: Agency- reported amount identified for recovery: 
$557,144,428; 
Fiscal year 2005: Agency-reported amount recovered: $467,084,372; 
Fiscal year 2006: Agency-reported amount identified for recovery: 
$839,994,703; 
Fiscal year 2006: Agency-reported amount recovered: $255,801,095. 

[End of table] 

Sources: OMB and agencies' fiscal year 2005 and 2006 PARs. 

[A] According to USDA, amount recovered in fiscal year 2006 include 
some recoveries identified in fiscal year 2005. 

[B] Agency did not report an amount recovered in its par. According to 
OMB, only four improper payments were identified and dollars were not 
statistically significant. 

[C] We obtained this amount from OMB. 

[D] This amount represents the agency-reported amount of $1,208,498 and 
an additional $5,585,083 identified from Tennessee Valley Authority's 
(TVA) OIG contract compliance audits, which is also included in the 
annual report. TVA noted that there is a partial overlap between these 
two amounts, but could not identify the overlapped amount. 

[End of table] 

We are pleased that progress has been made over the past 3 fiscal years 
to identify amounts for recovery and those amounts actually recovered. 
We also noted that the rate of recovery of contract overpayments for 
fiscal year 2006, about 30 percent, had substantially decreased from 
the prior year reported recovery rate of 84 percent. In our November 
2006 report,[Footnote 27] we raised questions regarding the overall 
high recovery rate of 84 percent and found discrepancies, such as the 
contract costs identified for recovery were considerably lower than the 
corresponding OIG amount identified from that year's audit reviews. We 
determined that the discrepancies significantly decreased the overall 
recovery rate from 84 percent to 22 percent. Although we have not 
performed a detailed review of the agencies' recovery rates for fiscal 
year 2006, the reported overall recovery rate of 30 percent may provide 
a more realistic view of agencies' recovery audit efforts. 

From our review, we noted that 12 agencies reported recovering about 
$53 million for fiscal year 2004 compared to 18 agencies that reported 
recovering about $256 million for fiscal year 2006. In addition to the 
18 agencies, we found that 3 agencies--Education, the Department of 
Housing and Urban Development (HUD), and Labor--did not report recovery 
auditing information for fiscal year 2006. Education reported that it 
reviewed all of its vendor payments from fiscal years 1998 to 2005 and 
found that potential recoveries were minimal. During fiscal year 2007, 
Education plans to review fiscal year 2006 contract payments. Education 
also noted that its purchase card and travel card programs are subject 
to monthly reviews and reconciliations to identify potential misuse or 
abuse. HUD and Labor reported that based on their recovery audit 
results, a recovery auditing program was not cost-beneficial or 
necessary, similar to what they reported for fiscal year 2005. 
Specifically, in fiscal year 2006, HUD reported that its recovery audit 
contractor had determined that procedures and systems in place provide 
strong controls for processing contract payments. Labor reported that 
from its statistical sample of 50 transactions, no improper payments 
were found, and therefore recovery audit efforts were not necessary. In 
addition, we noted that of the 18 agencies reporting for fiscal year 
2006, 3 agencies had conducted in-house recovery audits, 8 agencies 
reported they contracted out their recovery audit services, another 6 
agencies reported using both in-house and recovery audit contractors to 
perform recovery auditing, and the remaining 1 agency was silent. 

Concluding Observations: 

In closing, we recognize that measuring improper payments and designing 
and implementing actions to reduce them are not simple tasks and will 
not be easily accomplished. Further, while internal control should be 
maintained as the front-line defense against improper payments, 
recovery auditing holds promise as a cost-effective means of 
identifying contractor overpayments. 

Given today's budgetary pressures and the American public's increasing 
demands for accountability over taxpayer funds, oversight hearings such 
as this one today and the continuing leadership of OMB under the PMA, 
help keep agencies focused on the goals of IPIA and being accountable 
for results. Preventing, identifying, and recovering improper payments 
in that order are what is needed across government. Fulfilling the 
requirements of IPIA will require sustained attention to implementation 
and oversight to monitor whether desired results are being achieved. 

Mr. Chairman, this concludes my statement. I would be pleased to 
respond to any questions that you or other members of the subcommittee 
may have. 

Contact and Acknowledgments: 

For more information regarding this testimony, please contact McCoy 
Williams, Director, Financial Management and Assurance, at (202) 512- 
9095 or by e-mail at williamsm1@gao.gov. Contact points for our Offices 
of Congressional Relations and Public Affairs may be found on the last 
page of this testimony. Individuals making key contributions to this 
testimony included Carla Lewis, Assistant Director; Francine 
DelVecchio; Christina Quattrociocchi; Heather Rasmussen; Donell Ries; 
and Viny Talwar. 

[End of section] 

Appendix I: Agencies and Related Programs Included in Our Review of 
Fiscal Year 2006 Performance and Accountability Reports and Annual 
Reports: 

Table 5: 

1; 
department or agency: Agency for International Development; 
1; 
Program or activity: Cash Transfers. 

1; 
Department or agency: Agency for International Development; 
2; 
Program or activity: Cooperative Agreements, Grants, and Contracts. 

2; 
Department or agency: Department of Agriculture; 
3; 
Program or activity: Child and Adult Care Food Program. 

2; 
Department or agency: Department of Agriculture; 
4; 
Program or activity: Conservation Reserve Program. 

2; 
Department or agency: Department of Agriculture; 
5; 
Program or activity: Department or agency: Direct and Counter-Cyclical 
Payments. 

2; 
Department or agency: Department of Agriculture; 
6; 
Program or activity: Department or agency: Disaster Programs. 

2; 
Department or agency: Department of Agriculture; 
7; 
Program or activity: Department or agency: Farm Security and Rural 
Investment. 

2; 
Department or agency: Department of Agriculture; 
8; 
Program or activity: Department or agency: Federal Crop Insurance 
Corporation. 

2; 
Department or agency: Department of Agriculture; 
9; 
Program or activity: Department or agency: Food Stamp Program. 

2; 
Department or agency: Department of Agriculture; 
10; 
Program or activity: Department or agency: Loan Deficiency Payments. 

2; 
Department or agency: Department of Agriculture; 
11; 
Program or activity: Department or agency: Marketing Assistance Loan 
Program. 

2; 
Department or agency: Department of Agriculture; 
12; 
Program or activity: Department or agency: Milk Income Loss Contract 
Program. 

2; 
Department or agency: Department of Agriculture; 
13; 
Program or activity: Department or agency: National School Lunch and 
School Breakfast Programs (previously School Programs). 

2; 
Department or agency: Department of Agriculture; 
14; 
Program or activity: Department or agency: Noninsured Assistance 
Program. 

2; 
Department or agency: Department of Agriculture; 
15; 
Program or activity: Department or agency: Rental Assistance Program. 

2; 
Department or agency: Department of Agriculture; 
16; 
Program or activity: Wildland Fire Suppression Management. 

2; 
Department or agency: Department of Agriculture; 
17; 
Program or activity: Women, Infants, and Children. 

3; 
Department or agency: Department of Commerce; 
18; 
Program or activity: All programs and activities. 

4; 
Department or agency: Department of Defense; 
19; 
Program or activity: Civilian Pay. 

4; 
Department or agency: Department of Defense; 
20; 
Program or activity: Commercial Pay. 

4; 
Department or agency: Department of Defense; 
21; 
Program or activity: Military Health Benefits. 

4; 
Department or agency: Department of Defense; 
22; 
Program or activity: Military Pay. 

4; 
Department or agency: Department of Defense; 
23; 
Program or activity: Military Retirement Fund. 

4; 
Department or agency: Department of Defense; 
24; 
Program or activity: Travel Pay. 

5; 
Department or agency: Department of Education; 
25; 
Program or activity: Student Financial Assistance--Federal Family 
Education Loan. 

5; 
Department or agency: Department of Education; 
26; 
Program or activity: Student Financial Assistance--Pell Grants. 

5; 
Department or agency: Department of Education; 
27; 
Program or activity: Title I. 

6; 
Department or agency: Department of Energy; 
28; 
Program or activity: Payment programs. 

7; 
Department or agency: Environmental Protection Agency; 
29; 
Program or activity: Clean Water State Revolving Funds. 

7; 
Department or agency: Environmental Protection Agency; 
30; 
Program or activity: Drinking Water State Revolving Funds. 

8; 
Department or agency: Export-Import Bank of the United States; 
31; 
Program or activity: All programs and activities. 

9; 
Department or agency: Farm Credit System Insurance Corporation[A]; 
32; 
Program or activity: All programs and activities. 

10; 
Department or agency: Federal Communications Commission; 
33; 
Program or activity: High Cost Support Program. 

10; 
Department or agency: Federal Communications Commission; 
34; 
Program or activity: Universal Service Fund's Schools and Libraries. 

11; 
Department or agency: Federal Deposit Insurance Corporation; 
35; 
Program or activity: All programs and activities. 

12; 
Department or agency: Federal Trade Commission; 
36; 
Program or activity: All programs and activities. 

13; 
Department or agency: General Services Administration; 
37; 
Program or activity: All programs and activities. 

14; 
Department or agency: Department of Health and Human Services; 
38; 
Program or activity: Child Care and Development Fund. 

14; 
Department or agency: Department of Health and Human Services; 
39; 
Program or activity: Foster Care--Title IV-E. 

14; 
Department or agency: Department of Health and Human Services; 
40; 
Program or activity: Head Start. 

14; 
Department or agency: Department of Health and Human Services; 
41; 
Program or activity: Medicaid. 

14; 
Department or agency: Department of Health and Human Services; 
42; 
Program or activity: Medicare Advantage. 

14; 
Department or agency: Department of Health and Human Services; 
43; 
Program or activity: Medicare Fee-for-Service. 

14; 
Department or agency: Department of Health and Human Services; 
44; 
Program or activity: Medicare Prescription Drug Benefit. 

14; 
Department or agency: Department of Health and Human Services; 
45; 
Program or activity: State Children's Insurance Program. 

14; 
Department or agency: Department of Health and Human Services; 
46; 
Program or activity: Temporary Assistance for Needy Families. 

15; 
Department or agency: Department of Homeland Security; 
47; 
Program or activity: Individuals and Households Program. 

15; 
Department or agency: Department of Homeland Security; 
48; 
Program or activity: Vendor Payments. 

16; 
Department or agency: Department of Housing and Urban Development; 
49; 
Program or activity: Community Development Block Grant. 

16; 
Department or agency: Department of Housing and Urban Development; 
50; 
Program or activity: Federal Housing Administration's Single Family 
Acquired Asset Management System. 

16; 
Department or agency: Department of Housing and Urban Development; 
51; 
Program or activity: Low Income Public Housing. 

16; 
Department or agency: Department of Housing and Urban Development; 
52; 
Program or activity: Public Housing Capital Fund. 

16; 
Department or agency: Department of Housing and Urban Development; 
53; 
Program or activity: Section 8--Project Based. 

16; 
Department or agency: Department of Housing and Urban Development; 
54; 
Program or activity: Section 8-- Tenant Based. 

17; 
Department or agency: Department of the Interior; 
55; 
Program or activity: All programs and activities. 

18; 
Department or agency: Department of Justice; 
56; 
Program or activity: All programs and activities. 

19; 
Department or agency: Department of Labor; 
57; 
Program or activity: Federal Employees' Compensation Act. 

19; 
Department or agency: Department of Labor; 
58; 
Program or activity: Unemployment Insurance. 

19; 
Department or agency: Department of Labor; 
59; 
Program or activity: Workforce Investment Act. 

20; 
Department or agency: National Aeronautics and Space Administration; 
60; 
Program or activity: All programs and activities. 

21; 
Department or agency: National Archives and Records Administration; 
61; 
Program or activity: All programs and activities. 

22; 
Department or agency: National Credit Union Administration[A]; 
62; 
Program or activity: All programs and activities. 

23; 
Department or agency: National Science Foundation; 
63; 
Program or activity: Research and Education Grants and Cooperative 
Agreements. 

24; 
Department or agency: National Transportation Safety Board; 
64; 
Program or activity: All programs and activities. 

25; 
Department or agency: Nuclear Regulatory Commission; 
65; 
Program or activity: All programs and activities. 

26; 
Department or agency: Office of Personnel Management; 
66; 
Program or activity: Federal Employees Group Life Insurance. 

26; 
Department or agency: Office of Personnel Management; 
67; 
Program or activity: Federal Employees Health Benefits Program. 

26; 
Department or agency: Office of Personnel Management; 
68; 
Program or activity: Retirement Program (Civil Service Retirement 
System and Federal Employees Retirement System). 

27; 
Department or agency: Pension Benefit Guaranty Corporation; 
69; 
Program or activity: All programs and activities. 

28; 
Department or agency: U.S. Postal Service; 
70; 
Program or activity: All programs and activities. 

29; 
Department or agency: Railroad Retirement Board; 
71; 
Program or activity: Railroad Unemployment Insurance Benefits. 

29; 
Department or agency: Railroad Retirement Board; 
72; 
Program or activity: Retirement and Survivors Benefits. 

30; 
Department or agency: Securities and Exchange Commission; 
73; 
Program or activity: All programs and activities. 

31; 
Department or agency: Small Business Administration; 
74; 
Program or activity: 504 Certified Development Companies. 

31; 
Department or agency: Small Business Administration; 
75; 
Program or activity: 7(a) Business Loan Program. 

31; 
Department or agency: Small Business Administration; 
76; 
Program or activity: Disaster Assistance. 

31; 
Department or agency: Small Business Administration; 
77; 
Program or activity: Small Business Investment Companies. 

32; 
Department or agency: Smithsonian Institution; 
78; 
Program or activity: All programs and activities. 

33; 
Department or agency: Social Security Administration; 
79; 
Program or activity: Old Age and Survivors' Insurance. 

33; 
Department or agency: Social Security Administration; 
80; 
Program or activity: Disability Insurance. 

33; 
Department or agency: Social Security Administration; 
81; 
Program or activity: 34: Supplemental Security Income Program. 

34; 
Department or agency: Department of State; 
82; 
Program or activity: International Information Program--U.S. Speaker 
Specialist Program. 

34; 
Department or agency: Department of State; 
83; 
Program or activity: International Narcotic and Law Enforcement 
Affairs--Narcotics Program. 

34; 
Department or agency: Department of State; 
84; 
Program or activity: Structures and Equipment. 

34; 
Department or agency: Department of State; 
85; 
Program or activity: Vendor payments. 

35; 
Department or agency: Tennessee Valley Authority; 
86; 
Program or activity: Payment programs. 

36; 
Department or agency: Department of Transportation; 
87; 
Program or activity: Airport Improvement Program. 

36; 
Department or agency: Department of Transportation; 
88; 
Program or activity: Federal Transit--Capital Investment Grants. 

36; 
Department or agency: Department of Transportation; 
89; 
Program or activity: Federal Transit--Formula Grants. 

36; 
Department or agency: Department of Transportation; 
90; 
Program or activity: Highway Planning and Construction. 

37; 
Department or agency: Department of the Treasury; 
91; 
Program or activity: Earned Income Tax Credit. 

38; 
Department or agency: Department of Veterans Affairs; 
92; 
Program or activity: Compensation. 

38; 
Department or agency: Department of Veterans Affairs; 
93; 
Program or activity: Dependency and Indemnity Compensation. 

38; 
Department or agency: Department of Veterans Affairs; 
94; Program or activity: Education programs. 

38; 
Department or agency: Department of Veterans Affairs; 
95; 
Program or activity: Department or agency: Insurance programs. 

38; 
Department or agency: Department of Veterans Affairs; 
96; 
Program or activity: Loan Guaranty. 

38; 
Department or agency: Department of Veterans Affairs; 
97; 
Program or activity: Pension. 

38; 
Department or agency: Department of Veterans Affairs; 
98; 
Program or activity: Vocational Rehabilitation. 

Sources: GAO's analysis of cited agencies' fiscal year 2006 performance 
and accountability reports and annual reports. 

[A] Agency PAR or annual report was not available as of the end of 
fieldwork. 

[End of table] 

[End of section] 

Appendix II: Improper Payment Estimates Reported in Agency Fiscal Year 
2005 and 2006 Performance and Accountability Reports or Annual Reports: 

(Continued From Previous Page) 

1; 
Department or agency: Agency for International Development; 
1; Program or activity: Cash Transfers; 
2005 Total estimate: (dollars in millions): 0.9[A]; 
2005 Error rate: (percent): 0.1[A]; 
2006 Total estimate: (dollars in millions): 7.0; 
2006 Error rate: (percent): 0.8. 

2; 
Program or activity: Cooperative Agreements, Grants, and Contracts; 
2005 Total estimate: (dollars in millions): 0.2[A]; 
2005 Error rate: (percent): 0.0[A, B]; 
2006 Total estimate: (dollars in millions): 15.1; 
2006 Error rate: (percent): 0.2. 

2; 
Department or agency: Department of Agriculture; 
3; 
Program or activity: Child and Adult Care Food Program; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 16.0; 
2006 Error rate: (percent): 1.8. 

4; 
Program or activity: Conservation Reserve Program; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 64.0; 
2006 Error rate: (percent): 3.5. 

5; 
Program or activity: Direct and Counter-Cyclical Payments; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 424.0; 
2006 Error rate: (percent): 5.0. 

6; 
Program or activity: Disaster Programs; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 291.0; 
2006 Error rate: (percent): 12.3. 

7; 
Program or activity: Farm Security and Rural Investment; 
2005 Total estimate: (dollars in millions): 16.0; 
2005 Error rate: (percent): 1.6; 
2006 Total estimate: (dollars in millions): 3.0; 
2006 Error rate: (percent): 0.2. 

8; 
Program or activity: Federal Crop Insurance Corporation; 
2005 Total estimate: (dollars in millions): 28.0; 
2005 Error rate: (percent): 0.9; 
2006 Total estimate: (dollars in millions): 62.0; 
2006 Error rate: (percent): 1.9. 

9; 
Program or activity: Food Stamp Program; 
2005 Total estimate: (dollars in millions): 1,432.0; 
2005 Error rate: (percent): 5.9; 
2006 Total estimate: (dollars in millions): 1,645.0; 
2006 Error rate: (percent): 5.8. 

10; 
Program or activity: Loan Deficiency Payments; 
2005 Total estimate: (dollars in millions): 5.0; 
2005 Error rate: (percent): 1.0; 
2006 Total estimate: (dollars in millions): 443.0; 
2006 Error rate: (percent): 9.3. 

11; 
Program or activity: Marketing Assistance Loan Program (previously 
Commodity Loan Programs); 
2005 Total estimate: (dollars in millions): 45.0; 
2005 Error rate: (percent): 0.7; 
2006 Total estimate: (dollars in millions): 1,611.0; 
2006 Error rate: (percent): 20.3. 

12; 
Program or activity: Milk Income Loss Contract Program; 
2005 Total estimate: (dollars in millions): 0.2; 
2005 Error rate: (percent): 0.1; 
2006 Total estimate: (dollars in millions): 0.0[C]; 
2006 Error rate: (percent): 0.0[C]. 

13; 
Program or activity: National School Lunch and School Breakfast 
Programs (previously School Programs)[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

14; 
Program or activity: Noninsured Assistance Program; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 25.0; 
2006 Error rate: (percent): 22.9. 

15; 
Program or activity: Rental Assistance Program; 
2005 Total estimate: (dollars in millions): 27.0; 
2005 Error rate: (percent): 3.2; 
2006 Total estimate: (dollars in millions): 22.0; 
2006 Error rate: (percent): 3.5. 

16; 
Program or activity: Wildland Fire Suppression Management; 
2005 Total estimate: (dollars in millions): 18.0[A]; 
2005 Error rate: (percent): 3.7[A]; 
2006 Total estimate: (dollars in millions): 7.0; 
2006 Error rate: (percent): 2.5. 

17; 
Program or activity: Women, Infants, and Children; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 21.0; 
2006 Error rate: (percent): 0.6. 

3; 
Department or agency: Department of Commerce; 
18; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

4; 
Department or agency: Department of Defense; 
19; 
Program or activity: Civilian Pay; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 62.8; 
2006 Error rate: (percent): 0.1. 

20; 
Program or activity: Commercial Pay; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 550.0; 
2006 Error rate: (percent): 0.2. 

21; 
Program or activity: Military Health Benefits; 
2005 Total estimate: (dollars in millions): 87.8[A]; 
2005 Error rate: (percent): 1.2[A]; 
2006 Total estimate: (dollars in millions): 140.0; 
2006 Error rate: (percent): 2.0. 

22; 
Program or activity: Military Pay; 
2005 Total estimate: (dollars in millions): 432.0; 
2005 Error rate: (percent): 0.6; 
2006 Total estimate: (dollars in millions): 65.9; 
2006 Error rate: (percent): 0.1. 

23; 
Program or activity: Military Retirement Fund; 
2005 Total estimate: (dollars in millions): 49.3; 
2005 Error rate: (percent): 0.1; 
2006 Total estimate: (dollars in millions): 48.8; 
2006 Error rate: (percent): 0.1. 

24; 
Program or activity: Travel Pay; 
2005 Total estimate: (dollars in millions): 0.0[C]; 
2005 Error rate: (percent): 0.0[C]; 
2006 Total estimate: (dollars in millions): 8.0; 
2006 Error rate: (percent): 1.0. 

5; 
Department or agency: Department of Education; 
25; 
Program or activity: Student Financial Assistance--Federal Family 
Education Loan; 
2005 Total estimate: (dollars in millions): 190.0[A]; 
2005 Error rate: (percent): 2.2[A]; 
2006 Total estimate: (dollars in millions): 401.0; 
2006 Error rate: (percent): 2.2. 

26; 
Program or activity: Student Financial Assistance--Pell Grants; 
2005 Total estimate: (dollars in millions): 444.0[A]; 
2005 Error rate: (percent): 3.5[A]; 
2006 Total estimate: (dollars in millions): 422.0; 
2006 Error rate: (percent): 3.5. 

27; 
Program or activity: Title I; 
2005 Total estimate: (dollars in millions): 149.0; 
2005 Error rate: (percent): 1.2; 
2006 Total estimate: (dollars in millions): 25.2; 
2006 Error rate: (percent): 0.2. 

6; 
Department or agency: Department of Energy; 
28; 
Program or activity: Payment programs; 
2005 Total estimate: (dollars in millions): 14.5; 
2005 Error rate: (percent): 0.1; 
2006 Total estimate: (dollars in millions): 18.4; 
2006 Error rate: (percent): 0.1. 

7; 
Department or agency: Environmental Protection Agency; 
29; 
Program or activity: Clean Water State Revolving Funds; 
2005 Total estimate: (dollars in millions): 3.0[A]; 
2005 Error rate: (percent): 0.1[A]; 
2006 Total estimate: (dollars in millions): 3.5; 
2006 Error rate: (percent): 0.2. 

30; 
Program or activity: Drinking Water State Revolving Funds; 
2005 Total estimate: (dollars in millions): 0.0[F]; 
2005 Error rate: (percent): 0.0[F]; 
2006 Total estimate: (dollars in millions): 0.0[F]; 
2006 Error rate: (percent): 0.0[F]. 

8; 
Department or agency: Export-Import Bank of the United States[G]; 
31; 
Program or activity: All programs and activities ; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

9; 
Department or agency: Farm Credit System Insurance Corporation; 
32; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[G]; 
2005 Error rate: (percent): 0.0[G]; 
2006 Total estimate: (dollars in millions): 0.0[H]; 
2006 Error rate: (percent): 0.0[H]. 

10; 
Department or agency: Federal Communications Commission; 
33; 
Program or activity: High Cost Support Program[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0; 

34; 
Program or activity: Universal Service Fund's Schools and Libraries[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

11; 
Department or agency: Federal Deposit Insurance Corporation[G]; 
35; 
Program or activity: All programs and activities ; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

12; 
Department or agency: Federal Trade Commission; 
36; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[I]; 
2005 Error rate: (percent): 0.0[I]; 
2006 Total estimate: (dollars in millions): 0.0[E]; 
2006 Error rate: (percent): 0.0[E]. 

13; 
Department or agency: General Services Administration; 
37; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

14; 
Department or agency: Department of Health and Human Services; 
38; 
Program or activity: Child Care and Development Fund[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

39; 
Program or activity: Foster Care--Title IV-E; 
2005 Total estimate: (dollars in millions): 152.0[A]; 
2005 Error rate: (percent): 8.6[A]; 
2006 Total estimate: (dollars in millions): 134.0; 
2006 Error rate: (percent): 7.7. 

40; 
Program or activity: Head Start; 
2005 Total estimate: (dollars in millions): 109.0[A]; 
2005 Error rate: (percent): 1.6; 
2006 Total estimate: (dollars in millions): 210.0; 
2006 Error rate: (percent): 3.1. 

41; 
Program or activity: Medicaid[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

42; 
Program or activity: Medicare Advantage[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

43; 
Program or activity: Medicare Fee-for-Service; 
2005 Total estimate: (dollars in millions): 12,100.0; 
2005 Error rate: (percent): 5.2; 
2006 Total estimate: (dollars in millions): 10,800.0; 
2006 Error rate: (percent): 4.4. 

44; 
Program or activity: Medicare Prescription Drug Benefit[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

45; 
Program or activity: State Children's Insurance Program[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

46; 
Program or activity: Temporary Assistance for Needy Families[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

15; 
Department or agency: Department of Homeland Security; 
47; 
Program or activity: Individuals and Households Program; 
2005 Total estimate: (dollars in millions): 397.0[A]; 
2005 Error rate: (percent): 8.6[A]; 
2006 Total estimate: (dollars in millions): 334.0; 
2006 Error rate: (percent): 8.6. 

48; 
Program or activity: Vendor payments; 
2005 Total estimate: (dollars in millions): 494.0[A]; 
2005 Error rate: (percent): 7.4[A]; 
2006 Total estimate: (dollars in millions): 502.0; 
2006 Error rate: (percent): 7.4. 

16; 
Department or agency: Department of Housing and Urban Development; 
49; 
Program or activity: Community Development Block Grant (Entitlement 
Grants, States/Small Cities); 
2005 Total estimate: (dollars in millions): 8.0[A]; 
2005 Error rate: (percent): 0.2[A]; 
2006 Total estimate: (dollars in millions): 4.4; 
2006 Error rate: (percent): 0.1[ ]. 

50; 
Program or activity: Federal Housing Administration's Single Family 
Acquired Asset Management System ; 
2005 Total estimate: (dollars in millions): 2.2; 
2005 Error rate: (percent): 0.6; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

51; 
Program or activity: Low Income Public Housing; 
2005 Total estimate: (dollars in millions): 326.0; 
2005 Error rate: (percent): 5.6; 
2006 Total estimate: (dollars in millions): 378.5; 
2006 Error rate: (percent): 1.4. 

52; 
Program or activity: Public Housing Capital Fund; 
2005 Total estimate: (dollars in millions): 133.5; 
2005 Error rate: (percent): 5.1; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

53; 
Program or activity: Section 8--Project Based; 
2005 Total estimate: (dollars in millions): 324.0; 
2005 Error rate: (percent): 0.0[F]; 
2006 Total estimate: (dollars in millions): 362.6; 
2006 Error rate: (percent): 1.3. 

54; 
Program or activity: Section 8-- Tenant Based; 
2005 Total estimate: (dollars in millions): 551.0; 
2005 Error rate: (percent): 0.0[F]; 
2006 Total estimate: (dollars in millions): 723.2; 
2006 Error rate: (percent): 2.7. 

17; 
Department or agency: Department of the Interior; 
55; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

18; 
Department or agency: Department of Justice; 
56; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

19; 
Department or agency: Department of Labor; 
57; 
Program or activity: Federal Employees' Compensation Act ; 
2005 Total estimate: (dollars in millions): 3.3; 
2005 Error rate: (percent): 0.1; 
2006 Total estimate: (dollars in millions): 0.3; 
2006 Error rate: (percent): 0.0[B]. 

58; 
Program or activity: Unemployment Insurance; 
2005 Total estimate: (dollars in millions): 3,267.0; 
2005 Error rate: (percent): 10.1; 
2006 Total estimate: (dollars in millions): 3,376.0; 
2006 Error rate: (percent): 10.7. 

59; 
Program or activity: Workforce Investment Act; 
2005 Total estimate: (dollars in millions): 7.8[A]; 
2005 Error rate: (percent): 0.2; 
2006 Total estimate: (dollars in millions): 6.4; 
2006 Error rate: (percent): 0.2. 

20; 
Department or agency: National Aeronautics and Space Administration; 
60; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

21; 
Department or agency: National Archives and Records Administration; 
61; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[I]; 
2005 Error rate: (percent): 0.0[I]; 
2006 Total estimate: (dollars in millions): 0.0[E]; 
2006 Error rate: (percent): 0.0[E]. 

22; 
Department or agency: National Credit Union Administration; 
62; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[G ]; 
2005 Error rate: (percent): 0.0[G]; 
2006 Total estimate: (dollars in millions): 0.0[H]; 
2006 Error rate: (percent): 0.0[H]. 

23; 
Department or agency: National Science Foundation; 
63; 
Program or activity: Research and Education Grants and Cooperative 
Agreements; 
2005 Total estimate: (dollars in millions): 1.1; 
2005 Error rate: (percent): 0.0[B]; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

24; 
Department or agency: National Transportation Safety Board; 
64; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[I]; 
2005 Error rate: (percent): 0.0[I]; 
2006 Total estimate: (dollars in millions): 0.0[G]; 
2006 Error rate: (percent): 0.0[G]. 

25; 
Department or agency: Nuclear Regulatory Commission; 
65; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

26; 
Department or agency: Office of Personnel Management; 
66; 
Program or activity: Federal Employees Group Life Insurance; 
2005 Total estimate: (dollars in millions): 3.4[A]; 
2005 Error rate: (percent): 0.3[A]; 
2006 Total estimate: (dollars in millions): 0.8; 
2006 Error rate: (percent): 0.1. 

67; 
Program or activity: Federal Employees Health Benefits Program;  
2005 Total estimate: (dollars in millions): 196.7[A]; 
2005 Error rate: (percent): 0.7[A ]; 
2006 Total estimate: (dollars in millions): 62.5; 
2006 Error rate: (percent): 0.2. 

68; 
Program or activity: Retirement Program (Civil Service Retirement 
System and Federal Employees Retirement System); 
2005 Total estimate: (dollars in millions): 153.0[A]; 
2005 Error rate: (percent): 0.3[A]; 
2006 Total estimate: (dollars in millions): 253.5; 
2006 Error rate: (percent): 0.4. 

27; 
Department or agency: Pension Benefit Guaranty Corporation; 
69; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0[G]; 
2005 Error rate: (percent): 0.0[G]; 
2006 Total estimate: (dollars in millions): 0.0[E]; 
2006 Error rate: (percent): 0.0[E]. 

28; 
Department or agency: U.S. Postal Service[G]; 
70; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

29; 
Department or agency: Railroad Retirement Board; 
71; 
Program or activity: Railroad Unemployment Insurance Benefits; 
2005 Total estimate: (dollars in millions): 2.6[A]; 
2005 Error rate: (percent): 2.3[A]; 
2006 Total estimate: (dollars in millions): 2.7; 
2006 Error rate: (percent): 2.3. 

72; 
Program or activity: Retirement and Survivors Benefits; 
2005 Total estimate: (dollars in millions): 151.8[A]; 
2005 Error rate: (percent): 1.7[A]; 
2006 Total estimate: (dollars in millions): 157.0; 
2006 Error rate: (percent): 1.7. 

30; 
Department or agency: Securities and Exchange Commission; 
73; 
Program or activity: All programs and activities[E]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

31; 
Department or agency: Small Business Administration; 
74; 
Program or activity: 504 Certified Development Companies[D]; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

75; 
Program or activity: 7(a) Business Loan Program; 
2005 Total estimate: (dollars in millions): 8.7[A]; 
2005 Error rate: (percent): 1.4[A]; 
2006 Total estimate: (dollars in millions): 10.2; 
2006 Error rate: (percent): 1.6. 

76; 
Program or activity: Disaster Assistance; 
2005 Total estimate: (dollars in millions): 1.6; 
2005 Error rate: (percent): 0.1; 
2006 Total estimate: (dollars in millions): 89.4; 
2006 Error rate: (percent): 0.8. 

77; 
Program or activity: Small Business Investment Companies; 
2005 Total estimate: (dollars in millions): 125.0[A]; 
2005 Error rate: (percent): 4.7[A]; 
2006 Total estimate: (dollars in millions): 0.0[C]; 
2006 Error rate: (percent): 0.0[C]. 

32; 
Department or agency: Smithsonian Institution[G]; 
78; 
Program or activity: All programs and activities; 
2005 Total estimate: (dollars in millions): 0.0; 
2005 Error rate: (percent): 0.0; 
2006 Total estimate: (dollars in millions): 0.0; 
2006 Error rate: (percent): 0.0. 

33; 
Department or agency: Social Security Administration; 
79; 
Program or activity: Old Age and Survivors' Insurance; 
2005 Total estimate: (dollars in millions): 3,681.0; 
2005 Error rate: (percent): 0.7; 
2006 Total estimate: (dollars in millions): 3,280.0; 
2006 Error rate: (percent): 0.6. 

80; 
Program or activity: Disability Insurance; 
2005 Total estimate: (dollars in millions): 0.0[F]; 
2005 Error rate: (percent): 0.0[F]; 
2006 Total estimate: (dollars in millions): 0.0[F]; 
2006 Error rate: (percent): 0.0[F]. 

81; 
Program or activity: Supplemental Security Income Program; 
2005 Total estimate: (dollars in millions): 2,910.0; 
2005 Error rate: (percent): 7.7; 
2006 Total estimate: (dollars in millions): 3,028.0; 
2006 Error rate: (percent): 7.8. 

34; 
Department or agency: Department of State; 
82; 
Program or activity: International Information Program--U.S. Speaker 
and Specialist Program; 
2005 Total estimate: (dollars in millions): 1.9; 
2005 Error rate: (percent): 81.2; 
2006 Total estimate: (dollars in millions): 6.7[K]; 
2006 Error rate: (percent): 23.8. 

83; 
Program or activity: International Narcotic and Law Enforcement 
Affairs--Narcotics Program; 
2005 Total estimate: (dollars in millions): 0.6; 
2005 Error rate: (percent): 0.0[B]; 
2006 Total estimate: (dollars in millions): 12.4[K]; 
2006 Error rate: (percent): 4.0. 

84; 
Program or activity: Structures and Equipment; 
2005 Total estimate: (dollars in millions): 0.2; 
2005 Error rate: (percent): 0.0[B]; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

85; 
Program or activity: Vendor payments; 
2005 Total estimate: (dollars in millions): 0.4; 
2005 Error rate: (percent): 0.0[B]; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

35; 
Department or agency: Tennessee Valley Authority; 
86; 
Program or activity: Payment programs; 
2005 Total estimate: (dollars in millions): 36.3; 
2005 Error rate: (percent): 0.5; 
2006 Total estimate: (dollars in millions): 7.5; 
2006 Error rate: (percent): 0.1. 

36; 
Department or agency: Department of Transportation; 
87; 
Program or activity: Airport Improvement Program; 
2005 Total estimate: (dollars in millions): 0.0[L]; 
2005 Error rate: (percent): 0.0[L]; 
2006 Total estimate: (dollars in millions): 0.0[D]; 
2006 Error rate: (percent): 0.0[D]. 

88; 
Program or activity: Federal Transit--Capital Investment Grants; 
2005 Total estimate: (dollars in millions): 0.0[L]; 
2005 Error rate: (percent): 0.0[L]; 
2006 Total estimate: (dollars in millions): 0.0[D]; 
2006 Error rate: (percent): 0.0[D]. 

89; 
Program or activity: Federal Transit--Formula Grants; 
2005 Total estimate: (dollars in millions): 0.0[L]; 
2005 Error rate: (percent): 0.0[L]; 
2006 Total estimate: (dollars in millions): 0.0[D]; 
2006 Error rate: (percent): 0.0[D]. 

90; 
Program or activity: Highway Planning and Construction; 
2005 Total estimate: (dollars in millions): 0.0[L]; 
2005 Error rate: (percent): 0.0[L]; 
2006 Total estimate: (dollars in millions): 30.2; 
2006 Error rate: (percent): 0.2. 

37; 
Department or agency: Department of the Treasury; 
91; 
Program or activity: Earned Income Tax Credit; 
2005 Total estimate: (dollars in millions): 10,500.0; 
2005 Error rate: (percent): 25.5; 
2006 Total estimate: (dollars in millions): 10,700.0; 
2006 Error rate: (percent): 25.5. 

38; 
Department or agency: Department of Veterans Affairs; 
92; 
Program or activity: Compensation; 
2005 Total estimate: (dollars in millions): 306.0[A]; 
2005 Error rate: (percent): 1.1; 
2006 Total estimate: (dollars in millions): 324.6; 
2006 Error rate: (percent): 1.0. 

93; 
Program or activity: Dependency and Indemnity Compensation;  
2005 Total estimate: (dollars in millions): 0.0[F]; 
2005 Error rate: (percent): 0.0[F]; 
2006 Total estimate: (dollars in millions): 0.0[F]; 
2006 Error rate: (percent): 0.0[F]. 

94; 
Program or activity: Education programs; 
2005 Total estimate: (dollars in millions): 32.3[A]; 
2005 Error rate: (percent): 1.2[A]; 
2006 Total estimate: (dollars in millions): 67.2; 
2006 Error rate: (percent): 2.2. 

95; 
Program or activity: Insurance programs; 
2005 Total estimate: (dollars in millions): 0.3; 
2005 Error rate: (percent): 0.0[B]; 
2006 Total estimate: (dollars in millions): 0.0[J]; 
2006 Error rate: (percent): 0.0[J]. 

96; 
Program or activity: Loan Guaranty; 
2005 Total estimate: (dollars in millions): 3.5[A]; 
2005 Error rate: (percent): 0.3[A]; 
2006 Total estimate: (dollars in millions): 0.9; 
2006 Error rate: (percent): 0.1. 

97; 
Program or activity: Pension; 
2005 Total estimate: (dollars in millions): 370.9[A]; 
2005 Error rate: (percent): 10.9[A]; 
2006 Total estimate: (dollars in millions): 370.6; 
2006 Error rate: (percent): 10.7. 

98; 
Program or activity: Vocational Rehabilitation; 
2005 Total estimate: (dollars in millions): 6.2[A]; 
2005 Error rate: (percent): 1.1[A]; 
2006 Total estimate: (dollars in millions): 6.0; 
2006 Error rate: (percent): 1.0. 

Total; 
2005 Total estimate (dollars in millions): $39,310.2; 
2005 Error rate (percent): [Empty]; 
2006 Total estimate (dollars in millions): $41,643.3; 
2006 Error rate (percent): [Empty]. 

Sources: GAO prior report and analysis of cited agencies' fiscal year 
2006 PARs or annual reports. 

[A] Fiscal year 2005 estimates or error rates were updated to the 
revised estimates reported in the fiscal year 2006 PARs or annual 
reports. 

[B] Agency reported error rate was less than one percent or reported 
the error rate rounded to zero for purposes of this testimony. 

[C] Agency did not report an annual improper payment estimate or error 
rate. 

[D] See table 3 of this testimony. 

[E] Agency reported that it had no programs or activities susceptible 
to significant improper payments. 

[F] Agency combined with the program above. 

[G] Agency did not address improper payments or IPIA in its PAR or 
annual report for fiscal year 2005, fiscal year 2006, or both. 

[H] Agency PAR or annual report was not available as of the end of 
fieldwork. 

[I] Fiscal year 2006 was the first year this agency was included in our 
scope of review. 

[J] Agency reported program no longer susceptible to significant 
improper payments. 

[K] We obtained this amount from OMB. 

[L] Agency reported that the annual improper payment amount or error 
rate was zero. 

[End of table] 

FOOTNOTES 

[1] Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002). 

[2] Section 831 of the National Defense Authorization Act for Fiscal 
Year 2002, Pub. L. No. 107-107, div. A, title VIII, § 831, 115 Stat. 
1012, 1186 (Dec. 28, 2001) (codified at 31 U.S.C. §§ 3561-3567). 

[3] IPIA defines improper payments 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 
service, any duplicate payment, payments for services not received, and 
any payment that does not account for credit for applicable discounts. 

[4] OMB Memorandum M-06-23, "Issuance of Appendix C to OMB Circular No. 
A-123" (Aug. 10, 2006). 

[5] OMB's guidance defines significant improper payments as those in 
any particular program that exceed both 2.5 percent of program payments 
and $10 million annually. 

[6] Office of Management and Budget, Improving the Accuracy and 
Integrity of Federal Payments, (Washington, D.C.: Jan. 31, 2007). 

[7] GAO, Improper Payments: Agencies' Fiscal Year 2005 Reporting under 
the Improper Payments Information Act Remains Incomplete, GAO-07-92 
(Washington, D.C.: Nov. 14, 2006) and Financial Management: Challenges 
in Meeting Requirements of the Improper Payments Information Act, GAO-
05-417 (Washington, D.C.: Mar. 31, 2005). 

[8] GAO-07-92 and GAO-05-417. 

[9] GAO-05-417. 

[10] GAO-07-92. 

[11] Department of Agriculture, Office of Inspector General, Memorandum 
for the Secretary, "Management Challenges," September 2, 2005. 

[12] Prior to the governmentwide IPIA reporting requirements beginning 
with fiscal year 2004, former section 57 of OMB Circular No. A-11 
required certain agencies to submit similar information, including 
estimated improper payment target rates, target rates for future 
reductions in these payments, the types and causes of these payments, 
and variances from targets and goals established. In addition, these 
agencies were to provide a description and assessment of the current 
methods for measuring the rate of improper payments and the quality of 
data resulting from these methods. 

[13] The net increase represents newly reported programs for applicable 
years as well as programs that may have reported in one year but not in 
a subsequent fiscal year. 

[14] For fiscal year 2006, OMB reported total improper payments of 
about $41 billion, a difference of $1 billion. The difference is 
primarily attributable to OMB excluding improper payment estimates for 
the Tennessee Valley Authority and agency-reported improper payment 
estimates related to commercial or vendor payments because, according 
to OMB, those estimates are reported in agencies' recovery auditing 
amounts. Rounding differences also exist. 

[15] GAO, Improper Payments: Incomplete Reporting under the Improper 
Payments Information Act Masks the Extent of the Problem, GAO-07-254T 
(Washington, D.C.: Dec. 5, 2006). 

[16] GAO, High-Risk Series: An Update, GAO-07-310 (Washington, D.C.: 
January 2007). 

[17] GAO-05-417 and GAO-07-92, respectively. 

[18] The four agencies include HHS, DHS, DOJ, and NASA. 

[19] GAO, Improper Payments: Federal and State Coordination Needed to 
Report National Improper Payment Estimates on Federal Programs, GAO-06-
347 (Washington, D.C. Apr. 14, 2006). 

[20] 31 U.S.C. §§ 7501-7507. Under the Single Audit Act, as amended, 
and implementing guidance, independent auditors audit state and local 
governments and nonprofit organizations that expend $500,000 or more in 
federal awards to assess, among other things, compliance with laws, 
regulations, and the provisions of contracts or grant agreements 
material to the entities' major federal programs. 

[21] Pub. L. No. 105-220, 112 Stat. 936 (Aug. 7, 1998). 

[22] GAO, Standards for Internal Control in the Federal Government, 
GAO/AIMD-00-21.3.1 (Washington, D.C.: November 1999). 

[23] GAO, Strategies to Manage Improper Payments: Learning From Public 
and Private Sector Organizations, GAO-02-69G (Washington, D.C.: October 
2001). 

[24] A processing year is the calendar year in which tax returns and 
related data are processed. 

[25] During processing year 2006, IRS processed primarily 2005 tax 
returns. 

[26] GAO, Financial Audit: IRS's Fiscal Years 2006 and 2005 Financial 
Statements, GAO-07-136 (Washington, D.C.: Nov. 9, 2006). 

[27] GAO-07-92. 

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