Fast Facts

Improper payments—those made by the federal government to the wrong person, in the wrong amount, or for the wrong reason—are a significant problem. In fiscal year 2019, government-wide improper payment estimates totaled about $175 billion.

The law requires certain agencies to develop and monitor ways to reduce improper payments and take corrective actions to target their root causes. However, 2 agencies we reviewed did not develop corrective actions that corresponded to the root causes they identified. Further, most agencies did not measure the effectiveness of their actions.

We made 7 recommendations to address these issues.

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Highlights

What GAO Found

Five out of six agencies used their improper payment estimation results to identify the root causes for the eight programs GAO reviewed. However, the Department of the Treasury (Treasury) used 2006 through 2008 taxpayer data to identify root causes of fiscal year 2018 Earned Income Tax Credit (EITC) improper payments. Without timely data on the true root causes of EITC improper payments, Treasury will lack quality information needed to develop appropriate corrective actions to reduce them.

In addition, only one agency we reviewed—the Department of Veterans Affairs (VA)—adhered to relevant Improper Payments Information Act of 2002, as amended (IPIA), requirements and Office of Management and Budget (OMB) guidance. The Department of Agriculture (USDA) and Treasury did not develop agency corrective action plans corresponding to the identified root causes of improper payments for the Supplemental Nutrition Assistance Program (SNAP) and EITC, respectively. In addition, the remaining three agencies did not have processes in place to either establish planned completion dates, monitor progress, or measure the effectiveness of their corrective actions in reducing improper payments.

Agency Monitoring and Evaluation of Corrective Action Plans for Selected Programs

Program

Did agency establish planned completion dates?

Did agency annually monitor progress?

Did agency annually measure effectiveness?

Supplemental Nutrition Assistance Program

N/A

N/A

N/A

Direct Loan

Pell Grant

Children's Health Insurance Programa

Earned Income Tax Credit

N/A

N/A

N/A

Prosthetic and Sensory Aids Service

Old Age, Survivors, and Disability Insuranceb

Supplemental Security Incomeb

Legend: ✓= yes; ✗= no; N/A = not applicable as agency did not develop corrective actions corresponding to identified root causes of improper payments for the selected programs.

Source: GAO analysis of agencies' corrective action plans and processes. | GAO-20-366

aThe Department of Health and Human Services (HHS) did not have documented procedures for its corrective action plan process.

bSubsequent to our review, the Social Security Administration (SSA) implemented new procedures, including directives to establish planned completion dates and monitor progress.

Unless agencies develop corrective action plans that correspond to root causes of improper payments and implement processes to monitor progress and measure their effectiveness, their ability to ensure that their efforts will reduce improper payments will be limited

Why GAO Did This Study

Improper payments, estimated at almost $175 billion for fiscal year 2019, are a significant problem in the federal government. IPIA and OMB guidance directs agencies to analyze the root causes of improper payments and develop corrective actions to reduce improper payments. This report examines (1) actions that agencies took to identify root causes of improper payments for selected programs, (2) the extent to which their corrective action plans correspond to identified root causes, and (3) the extent to which they monitored progress and evaluated the effectiveness of corrective actions.

GAO analyzed corrective action plans reported in fiscal year 2018 for the following eight programs: Department of Education's Direct Loan and Pell Grant; HHS's Children's Health Insurance Program; SSA's Old Age, Survivors, and Disability Insurance and Supplemental Security Income; Treasury's EITC; USDA's SNAP; and VA's Prosthetic and Sensory Aids Service. GAO selected these programs based, in part, on those programs with at least $1 billion in fiscal year 2018 improper payment estimates.

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Recommendations

GAO is making seven recommendations: one each to Education, HHS, and SSA and two each to USDA and Treasury to improve their processes for addressing root causes of improper payments and measure their effectiveness. In their responses, SSA agreed, USDA generally agreed, Education and Treasury neither agreed nor disagreed, and HHS disagreed with GAO's respective recommendation(s). GAO clarified four recommendations and continues to believe all the recommendations are valid.

Recommendations for Executive Action

Agency Affected Recommendation Status
Food and Nutrition Service The Administrator of FNS should develop and implement a process, documented in policies and procedures, to analyze SNAP state-level root causes to identify potential similarities among the states and develop and implement SNAP agency-level corrective actions, if appropriate, to help address them. (Recommendation 1)
Open
The US Department of Agriculture (USDA) generally agreed with the recommendation. In its letter to GAO dated December 7, 2020, USDA's Food and Nutrition Service (FNS) stated that it currently analyzes the Supplemental Nutrition Assistance Program (SNAP) state-level root causes, provides states with extensive technical assistance, and has included SNAP agency-level corrective actions in the agency's fiscal year 2020 priority plan. To ensure consistency and proper documentation, FNS stated that it will establish a national standard operating procedure of SNAP state-level root cases to identify potential similarities among the states in order to develop and implement SNAP agency-level corrective actions, if appropriate. The estimated completion date for this action is May 31, 2021. We will continue to monitor agency's actions to address this recommendation.
Department of Agriculture
Priority Rec.
This is a priority recommendation.
The Secretary of Agriculture should revise USDA's procedures to include processes for monitoring the progress and measuring the effectiveness of improper payment corrective actions. The process for measuring the effectiveness of corrective actions should clearly demonstrate the effect USDA's corrective actions have on reducing improper payments. (Recommendation 2)
Closed - Implemented
The US Department of Agriculture (USDA) generally agreed with the recommendation. In its letter to GAO dated December 7, 2020, USDA stated that its Office of the Chief Financial Officer (OCFO) would revise USDA's procedures for monitoring the progress and measuring the effectiveness of improper payment corrective actions for the fiscal year 2021 reporting year. In September and October 2021, USDA provided us several documents to demonstrate OCFO's commitment to improving USDA's processes and satisfying our recommendation. For example, USDA revised its standard operating procedures (SOP) for fiscal year 2021, which includes steps for USDA staff to ensure that the root causes, sub-root causes, amounts associated with the root causes and the corrective action selected match. In addition, USDA has a fiscal year 2021 Corrective Action Plan Template (Worksheet), which directs USDA staff to select from a drop-down menu to identify the root causes, sub root causes, and corrective action to take, as well as, to provide as much detail as possible for each root cause since this worksheet has no character limits. This information includes, among other items, a summary of how the agency will implement the corrective action selected from the drop down menu, a description of the anticipated impact of the action on the root cause, a status update of the corrective action, a description of how progress of the corrective action will be evaluated, and the actual or estimated completion date. Further, USDA updated its Phase 2 High Risk Reporting Template & Corrective Action Plan Guidance (Guidance), issue date October 2021, which now includes a section for programs to measure the overall effectiveness of a corrective action plan on an annual basis. Based on our review of the documentation provided by USDA, including the revised SOP and Worksheet and Guidance, we believe USDA's revised processes for monitoring the progress and measuring the effectiveness of improper payment corrective actions clearly demonstrate USDA's efforts to reducing improper payments. We believe USDA has taken sufficient corrective actions which addressed the recommendation. Therefore, we are closing this recommendation as implemented.
Office of the Secretary The Secretary of Education should revise and document Education's process for measuring the effectiveness of its corrective actions based on its new statistical estimation methodology for Direct Loan and Pell Grant improper payments. This process should clearly demonstrate the effect Education's corrective actions have on reducing improper payments. (Recommendation 3)
Open
The Department of Education (Education) neither agreed nor disagreed with this recommendation. In July 2021, Education stated that the Federal Student Aid's Finance Directorate will revise and document Federal Student Aid's process for measuring the effectiveness of its improper payment corrective actions on reducing improper payments taking into account the new statistical improper payment estimation methodology. The estimated completion date for this action is November 15, 2021. We will continue to monitor agency's actions to address this recommendation.
Office of the Secretary The Secretary of Health and Human Services should document in policies and procedures HHS's improper payment corrective action plan process. As part of these procedures, HHS should include processes for (1) establishing planned completion dates, (2) monitoring the progress of implementing corrective actions, and (3) measuring the effectiveness of improper payment corrective actions. The process for measuring the effectiveness of corrective actions should clearly demonstrate the effect HHS's corrective actions have on reducing improper payments. (Recommendation 4)
Open
The Department of Health and Human Services (HHS) disagreed with this recommendation. In commenting on our draft report, HHS elaborated on the improper payment corrective action plan process that is called for in the Office of Management and Budget (OMB) guidance. HHS stated that OMB guidance provides agencies the flexibility to measure the effectiveness of corrective actions and believes that this flexibility is vital to its oversight processes to reduce improper payments. In November 2020, HHS stated that they continue to disagree with the recommendation. Subsequently, in fiscal year 2021, we have sent requests for a status update to the agency and are currently waiting for a response. We will continue to monitor agency's actions to address this recommendation.
Office of the Secretary The Secretary of the Treasury should determine whether Treasury's current improper payment root cause analysis provides sufficiently relevant information that can be used as a basis for proposed corrective actions in reducing EITC improper payments and, if not, update the analysis using more timely data to ensure their reliability for identifying root causes of EITC improper payments. (Recommendation 5)
Closed - Implemented
Treasury neither agreed nor disagreed with this recommendation. In commenting on our draft report, Treasury stated that each year it indicates in its corrective action plan that the Internal Revenue Service (IRS) will continue to work with Treasury to develop legislative proposals that will improve refundable credit compliance and reduce erroneous payments. On July 13, 2021, we received Treasury's Planned Corrective Action status update which indicated that IRS completed an Earned Income Tax Credit (EITC) improper payment root cause analysis in September 2020 based on the most recent detailed 3-year compliance study data from years 2006 through 2008. Also, Treasury indicated that IRS contemplated performing additional studies using more recent data as resources become available but concluded that eligibility requirements have not changed significantly over time and that future compliance analysis of the EITC are included in comprehensive efforts by the IRS National Research Program. Therefore, Treasury believes it has addressed our recommendation. We believe Treasury has met the intent of our recommendation and does not need to do additional studies given that eligibility requirements have not significantly changed for EITC. Therefore, we consider this recommendation closed-implemented.
Office of the Secretary
Priority Rec.
This is a priority recommendation.
The Secretary of the Treasury should update Treasury's strategy for addressing the root causes of EITC improper payments to include (1) coordinating with other agencies to identify potential strategies and data sources that may help in determining EITC eligibility and (2) determining whether legislative changes are needed, and developing proposals as appropriate, to help reduce EITC improper payments, such as those related to the inability to authenticate taxpayer eligibility. (Recommendation 6)
Closed - Implemented
Treasury neither agreed nor disagreed with this recommendation. In commenting on our draft report, Treasury stated that each year it indicates in its corrective action plan that the Internal Revenue Service (IRS) will continue to work with Treasury to develop legislative proposals that will improve refundable credit compliance and reduce erroneous payments. On July 13, 2021, we received Treasury's Planned Corrective Action status update which indicated that IRS worked with Treasury to develop legislative proposals that will improve refundable credit compliance and reduce erroneous payments. In addition, Treasury stated that it considers this recommendation implemented with the approval and execution of the fiscal year 2021 action plan and the submission of the legislative proposals for inclusion in the President's budget in August- September 2020. Treasury provided us a copy of its legislative proposals which we verified includes language related to helping to reduce erroneous payments of the Earned Income Tax Credit (EITC) to ineligible recipients. Finally, Treasury provided us the action plan prepared by IRS that shows IRS's strategy plan for addressing the root causes of EITC improper payments. While the recommendation was for Treasury to update its strategy for addressing EITC issues, we believe that IRS's strategy plan satisfies our recommendation on behalf of Treasury since IRS is an agency within Treasury. Also, in fiscal year 2020, IRS hosted its annual Refundable Credit Summit attended by over fifty stakeholders including representatives from various tax professional industries, federal agencies, consumer advocacy groups, and non-government organizations. The objective of the summit included information sharing related to IRS current compliance and outreach activities, reducing overclaims with respect to refundable credits, and focusing primarily on the Refundable Credits Return Preparer Strategy and paid preparer due diligence requirements. This summit demonstrates that Treasury coordinated with other agencies through IRS to identify potential strategies and data sources that may help in determining EITC eligibility. Therefore, we consider this recommendation closed-implemented.
Social Security Administration
Priority Rec.
This is a priority recommendation.
The Commissioner of SSA should develop and implement a process, documented in policies and procedures, to measure the effectiveness of SSA's corrective actions for OASDI and SSI improper payments. This process should clearly demonstrate the effect SSA's corrective actions have on reducing improper payments. (Recommendation 7)
Open
The Social Security Administration (SSA) agreed with this recommendation. In fiscal year 2020, SSA stated that it will determine the most cost-effective strategies to remediate the underlying causes of payment errors and monitor, measure, and revise the strategies as needed. In August 2021, SSA informed us that it continues to identify and measure the root causes of improper payments. SSA also stated that it was in the process of documenting corrective actions in multiple Improper Payment Alignment Strategies (IPAS). Further, SSA indicated that as it develops the IPASs and conducts a review of SSA's existing stewardship review methodology, SSA will continue to look for innovative ways to glean information to measure the effectiveness of existing corrective actions, where feasible. However, SSA stated that the process of doing so is ongoing and quite arduous due to the challenges in isolating the impact of a single corrective action. To date, SSA indicated that it has published three IPASs where SSA documented its corrective actions for the largest causes of improper payment in the Old Age, Survivors, and Disability Insurance and Supplemental Security Income programs. Further, SSA said it is close to publishing several more IPASs that will document corrective actions. Moreover, SSA stated that it continues discussions with stakeholders to keep measurement of corrective actions in the forefront. Last, SSA stated that it continues to use out-of-the-box approaches to consider measuring effectiveness in new ways. We will continue to monitor agency's actions to address this recommendation.

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