# Presentation: 666104

## IMPROPER PAYMENTS
INFORMATION ACT

USDA Financial Management 
Training
May 25, 2004
Dale Theurer, Presenter

- INFORMATION ACT
- USDA Financial Management
- Training
- May 25, 2004
- Dale Theurer, Presenter

## BACKGROUND (1/2)

- The Improper Payments Information Act (IPIA) was passed in November 2002
- Between 2000 and IPIA enactment, agencies reported efforts to reduce erroneous payments through the A-11 process
- Section 57 of A-l l listed approximately 40 programs Government-wide that required reporting

## BACKGROUND (2/2)

- Section 57 programs were chosen due to high dollar (over $2 billion in Governmentwide annual outlays) or high profile
- USDA Section 57 programs include Food Stamp; National School Lunch and Breakfast; Special Supplemental Nutrition for Women, Infants, and Children (WIC); and Commodity Loans
- In their annual budget submission, agencies were required to report an erroneous payment amount, rate, and corrective action plan for each Section 57 program

## CURRENT STATUS

- FY 2004 is the first full year of IPIA implementation based on FY 2003 payments
- OMB issued guidance in May 2003 on how agencies are to comply with IPIA
- Agencies submitted IPIA plans to OMB in December 2003
- OMB provided comments and met with agencies to review plans and set/confirm milestone dates

## OMB GUIDANCE (1/4)

- 	Agencies are required to:
- Compile inventory of all payments/outlays
- 	 – identify all payment streams in every program
- Conduct risk assessments
- 	– identify programs the agencies believe have an error rate of 2.5% _and_ an error amount greater than $10 million

## OMB GUIDANCE (2/4)

- Conduct statistical analysis
- 	– take a sample of payments in those programs identified as high risk for improper payments
- 	– track the statistical sample payments through audit/verification to assess errors
- 	– use information found in sample to extrapolate error rate and amount for program as a whole

## OMB GUIDANCE (3/4)

- Develop corrective action plan
- 	– for the program at high risk with > $10 million in improper payments, develop a plan for addressing/reducing
- Develop baseline and improvement targets – for programs that have correct action plans, agencies must establish reduction targets for future years

## OMB GUIDANCE (4/4)

- Document recovery auditing results
- 	– amounts, uses, corrective action plans
- Report results annually in the Performance and Accountability Report (PAR)

## SECTION 57 PROGRAMS

- No matter the results along the process, Section 57 agencies must:
- Conduct a statistical analysis to develop an annual error rate and amount
- Develop corrective action plan
- Develop baseline/improvement targets
- Report results in the PAR

## ISSUES (1/2)

- The Improper Payment Committee with the CFO Council has established Sub-groups on the following issues:
- PAR Reporting – develop a common Governmentwide reporting format
- Tracking payments beyond the primary recipient – for example, the state may be primary recipient, but the agency must track the payment down to localities or other sub-state recipients

## ISSUES (2/2)

- Burden reduction – leveraging existing audits and/or coordinating verification efforts on entities that receive payment from multiple Federal agencies (e.g. universities)
- Simplified approach to statistical sampling – agencies should take an approach that provides adequate precision, but allows rates to be established/verified annually at minimal cost

## USDA REQUIREMENTS

- Early June 2004 – Government common format will be provided to agencies as soon as available
- June 30, 2004 – agencies submit draft language for the PAR report
- August 27, 2004 – agencies submit final IPIA report for the PAR

## REPORTINGREQUIREMENTS (1/3)

- Estimate of annual amount of erroneous payments
- Discussion of causes, action taken to correct the causes, and results of actions
- Statement of whether agency has the information systems and other infrastructure to reduce erroneous payments

## REPORTINGREQUIREMENTS (2/3)

- Description of resources the agency requested to obtain necessary information systems and infrastructure
- Description of steps taken and plans to take to ensure agency managers are held accountable for reducing and recovering erroneous payments

## REPORTINGREQUIREMENTS (3/3)

- Description of any statutory or regulatory barriers which may limit the corrective actions to reduce erroneous payments
- Target for a future erroneous payment rate that is lower than the agency’s most recent estimated error rate for each program

## CONTACT INFORMATION

- Dale Theurer (202) 720-1167
- 	Dale.Theurer@usda.gov
- Aaron Prose (202) 720-1558
- 	Aaron.Prose@usda.gov