Improper Payments Information Act (IPIA) Reporting
Congress has enacted several provisions of law aimed at improving the integrity of the government’s payments and the efficiency of its programs and activities, including the Improper Payments Information Act (IPIA) of 2002 (Public Law No. 107-300). An improper payment is any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, and administrative or other legally applicable requirements. Incorrect amounts are overpayments and underpayments (including inappropriate denials of payment or service). An improper payment includes any payment that was made to an ineligible recipient or for an ineligible service, duplicate payments, payments for services not received, and payments that are for the incorrect amount.
Summarized below are the Agency’s IPIA accomplishments and future plans for identifying improper payments in accordance with the IPIA and Appendix C (Requirements for Effective Measurement and Remediation of Improper Payments) to OMB Circular A-123, Management Accountability and Control.
Summary of FY 2006 Accomplishments
During FY 2006, the Agency strengthened existing efforts in meeting the President’s goal to eliminate improper payments.
USAID reassessed the risk assessment and the full inventory of all programs that were previously identified and reported to OMB in 2004. As in 2004, USAID’s 2006 risk assessment and in-depth review concluded that all of its programs are at a low risk for improper payment and the error rate continues to decline and is far below the OMB guidance thresholds.
However, the Agency felt it was still necessary to conduct various levels of internal improper payment reviews and samplings for all USAID programs and payment activities throughout the year and, in fact, identified two payment activities that warranted further scrutiny. The Agency focused its in-depth review and samplings on USAID’s contracts, grants, and cooperative agreements as well as the cash disbursements program activities since they represent 77 percent of USAID’s total 2006 outlays. Additionally, all new programs, high profile programs, and high dollar programs were considered as risk-susceptible programs and subject to further analysis, review, and recovery.
The Agency developed various reports and data mining tools to review its payment activities for erroneous payments processed through the accounting system, Phoenix. Currently, all payment activities are subject to a series of monthly internal reviews by CFO staff who analyze and compare data outputs/reports, cross-reference and compare this data to ensure that payment data is accurate, and monitor the improper payment rate on an ongoing basis. The sampling of the financial systems review includes setting report parameters to identify all potential duplicate payments by vendor, invoice number, and dollar value. Each potential improper payment that is identified is investigated regardless of the dollar value. The monthly reports reviewed include the Phoenix Disbursement, Metric Tracking System (MTS) Indicator, Schedule of Disbursements and Credits (SF1098), Cash Management and Payment Metric, and the Penalty Interest reports.
Future Plans
A major milestone was accomplished in August 2006 with the completion of the overseas rollout of Phoenix. Now that the Office of the CFO has the capability to access and monitor USAID’s payment activities worldwide in Phoenix, future IPIA review efforts of worldwide payment activities will be more streamlined, yielding enhanced effectiveness, efficiency, and results.
During 2006, the Office of the CFO explored the feasibility of using various professional recovery auditor services to assist in the identification and recovery of potential erroneous payments, and engaged the services of Horn & Associates, Inc., Recovery Auditors. The contract is in place and several of the security clearances have been completed. It is anticipated that the recovery auditors will be on board in November 2006. The Agency embraces the opportunity and looks forward to working closely with the recovery auditors in identifying risk susceptible programs and recovering potential improper payments.
The prospects for additional and significant improper payment reductions in the coming years are promising due to the innovative tools and controls that are now in place.
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