Posthearing Questions Related to Agencies Meeting the Requirements of the Improper Payments Information Act of 2002
GAO-06-1067R, Sep 6, 2006
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On March 9, 2006, we testified before Congress at a hearing entitled, "Reporting Improper Payments: A Report Card on Agencies' Progress." At the hearing, we discussed our findings on federal agencies' challenges in meeting the requirements of the Improper Payments Information Act (IPIA) of 2002 based on our review of agencies' fiscal year 2005 performance and accountability reports (PAR) and annual reports. We were asked to provide answers to the following follow-up questions relating to our March 9, 2006, testimony: (1) What concerns does GAO have regarding not only DHS' inability to comply with the Improper Payments Information Act; but on a greater scale with their overall financial management? (2) About which Agencies that reported in their fiscal year 2005 Performance and Accountability Report that they had no programs susceptible to significant improper payments does GAO have concerns about? (3) Should "unavoidable overpayment" statistics at the Social Security Administration (SSA) be reported to the Office of Management and Budget, and if so why would this be important, and how could the Social Security Administration implement such a process? (4) What concerns does GAO have with the Agency for International Development's (USAID) reporting on improper payments? (5) Does GAO have any concerns with the rest of these agencies and their failure to report improper payment information? (6) has GAO done any analysis of the President's proposals, and if so, what is the GAO's assessment? (7) Has GAO made any recommendations regarding the administration and financial controls in the EITC program? (8) How can the Department of Labor's successes be carried over to other agencies? and (9) Is GAO concerned that CDBG's outlays are $5.4 billion, and not only are they not reporting, they have claimed that they are in compliance?
The Department of Homeland Security (DHS) continues to face challenges in meeting the requirements of IPIA as well as experience significant financial management weaknesses. For fiscal year 2005, DHS received a disclaimer of opinion on its fiscal year 2005 balance sheet and fiscal year 2004 consolidated financial statements, primarily due to financial reporting problems. While we provided data on the above agencies' implementation efforts to annually review all programs and activities as required under IPIA, we have not analyzed their methodologies for conducting risk assessments to identify those programs and activities susceptible to significant improper payments. That said, noncompliance issues related to IPIA and agencies' existing financial management challenges raise questions regarding these agencies' assertions that they had no programs susceptible to significant improper payments. As we testified at the March 9 hearing, auditors for DHS and Justice cited agency noncompliance with IPIA, primarily caused by inadequate risk assessments. Currently, SSA does not track or publicly report on these types of payments. In addition, OMB has reported that it is not aware of other agencies that are similarly legislatively mandated to make these types of payments nor does OMB require governmentwide reporting of these types of payments. Because agencies are not currently required to track, monitor, and report these types of payments on a governmentwide basis, the magnitude of this issue is unknown. We found no assertions from USAID that it had assessed all programs and activities for susceptibility to significant improper payments. USAID only reported that it continues to monitor all its programs and payment activities. Because USAID's PAR lacks details about the monitoring activities it reportedly performed, we are uncertain as to whether this meets the above requirement to perform a risk assessment. Any agencies' failure to report improper payment information as required by the act is of great concern. Public reporting helps establish accountability as well as expectations for improvements. This includes holding agencies accountable for achieving target rates or otherwise implementing specifically planned actions. Annually identifying, estimating, and publicly reporting progress made to reduce improper payments enables agencies and others with oversight and monitoring responsibilities to measure this progress and determine whether further action is needed to minimize future improper payments. To date, we have not performed an analysis or an assessment of the President's legislative proposals as they relate to the Earned Income Tax Credit (EITC) program. There are several key initiatives that federal agencies with state-administered programs should employ to fulfill the requirements of IPIA, such as establishing a culture of accountability, developing a system to collect program information at the state level for estimating improper payments, and monitoring program performance to determine if desired program outcomes have been achieved. The Department of Housing and Urban Development's Office of the Inspector General (HUD OIG) reported that its office has recovered over $120 million in program funds, identified over $100 million in questioned costs, indicted 159 individuals, initiated administrative actions against 143 individuals, and took 5 civil actions and 39 personnel actions. As evident by the HUD OIG's reviews, the CDBG program may be at risk of making improper payments.