In FY 2022, federal agencies made an estimated $247 billion in payment errors—payments that either should not have been made or were made in the incorrect amount. Programs with estimated overpayments of at least $100 million receive additional review.
This Q&A report—the third in a series of quarterly reports—examines this process and more.
The Office of Management and Budget collects information on such programs with overpayments and publishes it in quarterly "scorecards." This information can help Inspectors General reduce overpayments. We recommended that OMB review IG reports and collaborate with IGs when revising the scorecards.
This Fast Facts was updated to correct an error in the first sentence.
What GAO Found
The Office of Management and Budget (OMB) requires agencies with high-priority programs to provide certain information quarterly, including actions agencies have planned and taken to mitigate root causes of monetary-loss improper payments in such programs. OMB publishes this information in a payment-integrity scorecard, also known as a high-priority program scorecard, on PaymentAccuracy.gov. OMB updated the fiscal year 2023 second-quarter scorecard to provide its users with additional context and detail regarding what agencies are doing to manage and mitigate improper payments.
For programs OMB designated as high priority, scorecards contain key information that is important for both OMB and inspectors general (IG) in overseeing efforts to address improper payments. OMB staff told GAO that they rely on the work of the relevant IGs to identify deficiencies and trends in agency compliance with OMB guidance on improper payments. OMB's guidance, consistent with Payment Integrity Information Act of 2019 (PIIA), states that IGs have the key responsibilities for reviewing their respective agencies' scorecards.
Because both OMB and IGs rely on the information that each provides the other, their collaboration is imperative. OMB receives copies of IGs' annual reports on agency compliance with PIIA criteria and related OMB guidance. These reports include information on high-priority programs. However, OMB does not review the reports to identify issues that may warrant revision to the scorecard's format and content, and OMB does not document and communicate to IGs its consideration of any such issues noted in the reports. These steps can increase collaboration between OMB and IGs of agencies with high-priority programs.
The laws and guidance GAO reviewed, including PIIA, the Chief Financial Officers (CFO) Act of 1990, and OMB Circular No. A-123, Appendix C (M-21-19), generally do not define specific roles and responsibilities CFOs must perform in managing their agencies' efforts to detect and prevent improper payments. Instead, GAO found that these authorities directed requirements to the head of each agency. Based on responses to GAO's survey, CFOs at CFO Act agencies view their role to include some level of responsibility for tasks related to managing improper payments. GAO's prior matters to Congress recommended clarification of CFO roles and responsibilities. If implemented, they could increase accountability and help to ensure that CFOs continue to view reducing improper payments as a responsibility that is within their authority to manage.
While federal agencies, OMB, and Congress have made efforts in recent years to improve payment integrity, additional opportunities remain to reduce improper payments. As of August 2023, of the 18 agencies that reported improper payment estimates in fiscal year 2022, eight had open GAO priority recommendations related to improper payments. In addition, 42 of GAO's 59 priority recommendations related to improper payments remained open, and one of three priority recommendations to OMB was closed. Further, there are 21 open GAO matters for congressional consideration to improve federal financial management.
Why GAO Did This Study
The reported government-wide estimates of improper payments—those that should not have been made or were made in incorrect amounts, including overpayments and underpayments—totaled about $247 billion for fiscal year 2022. Improper payments continue to be a significant problem in the federal government.
House Report 117-389, which accompanied the Legislative Branch Appropriations Act, 2023, includes a provision for GAO to provide quarterly reports on its ongoing oversight of improper payments. In its June 2023 second quarterly report, GAO reported that agencies had reductions in estimated improper payment rates for several programs. While efforts have been made in recent years, more work remains to be done to improve payment integrity.
This third quarterly report provides information on OMB's high-priority program scorecards and opportunities for improvements that GAO previously identified in matters for Congress and priority recommendations to agencies, among other objectives. GAO reviewed the information reported in the scorecard and recent open matters for congressional consideration and priority recommendations to agencies related to improper payments.
GAO is recommending that OMB, prior to updating the scorecard information and relevant guidance to agencies, or at least on an annual basis, (1) review the reports on compliance with the applicable Payment Integrity Information Act of 2019 criteria from the IGs of agencies with high-priority programs, and (2) document and communicate to IGs any considerations of their reported issues that may warrant revisions to the scorecard's format and content.
Recommendations for Executive Action
|Office of Management and Budget||The Director of OMB, prior to updating the scorecard information and relevant guidance to agencies, or at least on an annual basis, should (1) review the reports on compliance with the applicable Payment Integrity Information Act of 2019 criteria from the IGs of agencies with high-priority programs, and (2) document and communicate to IGs any considerations of their reported issues that may warrant revisions to the scorecard's format and content. (Recommendation 1)||