Key Issues > Duplication & Cost Savings > GAO's Action Tracker > Government-wide Improper Payments (2011-46)
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General Government: Government-wide Improper Payments (2011-46)

Efforts to address government-wide improper payments could result in significant cost savings.

Action:

Until the federal government has implemented effective processes to determine the full extent to which improper payments occur and to reasonably ensure that appropriate actions are taken across entities and programs to effectively recover and reduce improper payments, the federal government will not have reasonable assurance that the use of taxpayer funds is adequately safeguarded.

Progress:

As of March 2019, the federal government had taken steps to estimate improper payments for susceptible programs and to recover overpayments. However, consistent with GAO’s March 2011 suggested action, further efforts are needed to help ensure that all risk-susceptible programs are included, estimates are reliable, and improper payments are reduced. Under the Improper Payments Information Act of 2002, as amended, executive agencies are required to determine whether any of their programs and activities are susceptible to significant improper payments and annually estimate and report the amount of improper payments in any susceptible programs and activities. Federal entities have taken steps to implement these requirements.

For fiscal year 2018, OMB reported federal entity recoveries of overpayments of about $20 billion. Based on federal entity reported data, federal entity improper payment estimates totaled about $151 billion for fiscal year 2018, an increase of about $10 billion from the prior year total of about $141 billion. Federal entities reported estimates of improper payments of more than $1 billion for 16 risk-susceptible programs and activities for fiscal year 2018. In addition, federal entities reported estimated improper payment rates of 10 percent or greater for 20 risk-susceptible programs and activities, accounting for about 25 percent of the government-wide total of reported improper payment estimates.

In their most recent annual reports, various inspectors general reported deficiencies at their respective federal entities for fiscal year 2017 related to compliance with the criteria in Section 3 of the Improper Payments Elimination and Recovery Act of 2010. These deficiencies included risk-susceptible programs that did not report improper payment estimates, estimation methodologies that may not produce reliable estimates, and risk assessments that may not accurately assess the risk of improper payment. Six federal entities did not report fiscal year 2018 estimated improper payment amounts for 10 risk-susceptible programs. Federal entities’ top management needs to provide greater attention to ensure compliance with the provisions of these laws and related guidance, especially the issues identified in the inspector general reports, to help reduce improper payments and ensure that federal funds are used efficiently and for their intended purposes.

The federal government continues efforts to reduce improper payments. In March 2018, the administration released the President’s Management Agenda, which includes a series of cross-agency priority (CAP) goals. CAP Goal 9, “Getting Payments Right,” aims to improve the efficiencies of government programs by focusing on getting government payments right the first time they are made and reducing the costs associated with incorrect payments, with a focus on reducing monetary loss to taxpayers. OMB also collaborated with the Chief Financial Officers Council on the release of an Anti-Fraud Playbook in October 2018 to provide best practices and fraud prevention techniques to help reduce improper payments due to fraud. In addition, in June 2018 OMB issued revised Circular A-123 Appendix C, Requirements for Payment Integrity Improvement. The revision includes a discussion of how agencies should effectively use the Do Not Pay working system to complement existing data matching processes, which addresses an October 2016 GAO recommendation. GAO found that 10 agencies it reviewed used the Do Not Pay working system in limited ways, in part because of a lack of clear OMB strategy and guidance. The commitment and attention of agency top management to the working system’s utilization will be important to its success as one tool to help reduce improper payments.

To determine the full extent of improper payments government-wide and to more effectively recover and reduce them, continued agency attention is needed to (1) identify programs susceptible to improper payments, (2) develop reliable improper payment estimation methodologies for those programs identified as risk-susceptible, (3) report on improper payments as required, and (4) implement effective corrective actions based on root cause analysis. Absent such continued efforts, the federal government cannot be assured that taxpayer funds are adequately safeguarded.

Implementing Entity:

Office of Management and Budget

Action:

The level of importance the agencies and administration place on the efforts to implement the requirements established by the Improper Payments Elimination and Recovery Act of 2010; Executive Order 13520, Reducing Improper Payments; and other guidance will be a key factor in determining their overall effectiveness in reducing improper payments and ensuring that federal funds are used efficiently and for their intended purposes.

Progress:

GAO is assessing this action as part of Action 1 of this area.

Implementing Entity:

Office of Management and Budget

Action:

The Director of the Office of Management and Budget should develop guidance on how agencies test to identify improper payments, such as using a risk-based approach to help ensure that key risks of improper payments, such as eligibility, are addressed through testing processes. Without such guidance, there is increased risk that agencies’ processes for estimating improper payments will not reflect key risks of improper payments in their programs, calling into question the estimates and their usefulness for developing effective corrective actions.

Progress:

Pending

Implementing Entity:

Office of Management and Budget

Action:

The Director of the Office of Management and Budget (OMB) should develop guidance clarifying the appropriate treatment of nonresponse cases during improper payment testing.

Progress:

Pending

Implementing Entity:

Office of Management and Budget
  • portrait of
    • Beryl H Davis
    • Director, Financial Management and Assurance
    • davisbh@gao.gov
    • (202) 512-2623