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Highlights

Pursuant to a congressional request, GAO provided information on improper payments in light of the projected future growth of federal expenditures, focusing on the: (1) amounts reported by agencies as improper payments in their fiscal year (FY) 1998 financial statements prepared pursuant to the Chief Financial Officers (FO) Act of 1990; (2) types of federal programs at risk of disbursing improper payments; (3) reported causes of improper payments across the federal government; and (4) extent to which agencies are addressing improper payments in their performance plans under the Government Performance and Results Act of 1993.

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Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Office of Management and Budget To assist agencies in estimating and managing improper payments, the Director, OMB, through the Deputy Director for Management and OMB's Office of Federal Financial Management, within the framework of the CFO and Results Acts, should develop and issue guidance to executive agencies to assist them in: (1) developing and implementing a methodology for annually estimating and reporting improper payments for major federal programs; and (2) developing goals and strategies to address improper payments in their annual performance plans.
Closed - Implemented
The Office of Management and Budget (OMB) has revised Circular No. A-11 to require agencies to submit, with their initial budget submission, erroneous payment data, assessments of current agency efforts to minimize erroneous payments, and additional actions the agency could take to prevent erroneous payments and to correct erroneous payments made. For example, the Circular requires agencies to submit data on (1) estimated erroneous payment rates projected for fiscal year 2001, (2) actual error rates for fiscal years 1999 and 2000, if available, and (3) target rates (goals) for fiscal years 2002 and 2003.
Office of Management and Budget To assist agencies in estimating and managing improper payments, the Director, OMB, through the Deputy Director for Management and OMB's Office of Federal Financial Management, within the framework of the CFO and Results Acts, should require agencies to: (1) include a description of steps being taken to address improper payments in their strategic and annual performance plans when the level of improper payments is mission critical; and (2) consult with congressional oversight committees, as appropriate, on the projected target levels and goals for estimating and reducing improper payments, as presented in the agencies' annual performance plan.
Closed - Implemented
As a result of the Improper Payments Information Act of 2002, OMB has issued guidance to all federal agencies requiring that they review all of their programs and activities for improper payments, estimate the amounts of improper payments in their programs and activities, and publicly report on the causes of improper payments identified, the effectiveness of actions taken to resolve them, and target rates for reducing improper payments. OMB is also meeting with officials in the federal agencies and congressional staff to discuss barriers to actions to reduce improper payments and plans to continue with these meetings.

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