**GAO-08-819R**                      Published: Jun 20, 2008. Publicly Released: Jun 20, 2008.                  

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## Highlights

On January 31, 2008, we testified before Congress' subcommittee at a hearing entitled, "Eliminating Agency Payment Errors." At the hearing, we discussed federal agencies' progress in addressing key requirements of the Improper Payments Information Act of 2002 (IPIA) and Section 831 of the National Defense Authorization Act for Fiscal Year 2002, commonly known as the Recovery Auditing Act. Our review and testimony focused on (1) progress made in agencies' implementation and reporting under IPIA for fiscal year 2007, (2) remaining challenges with IPIA implementation, and (3) agencies' efforts to report recovery auditing information. This report responds to your March 13, 2008, request to provide answers to follow-up questions relating to our January 31, 2008, testimony. (1) What kinds of changes should be made to the Single Audit Act, which already requires recipients to have proper systems of internal control to ensure front-end compliance with Federal requirements that would assist in identification and reduction of improper payments? The FY 2007 Audit Report on the Consolidated Financial Statement indicates that the Federal government's inability to determine the extent to which improper payments occur is one of the major government-wide material weaknesses that led to GAO's adverse opinion on internal control. (2) Did this compliance issue translate to reportable conditions or limitations in opinions on financial statements at the individual departments? Are CFO Act financial statement internal control and substantive audit tests of disbursements as stringent as they need to be? The expansion of government-wide systems for third party data matches across government programs sounds like an important program integrity improvement and potential cost savings initiative. (3) How can we ensure that all agencies across government are pursuing automated data checks across agencies and programs whose data they are reliant upon wherever this makes sense? How can we provide access to necessary data across government to improve program integrity over payments without requiring new authority on a case by case basis? The role of the certifying officers at disbursing agencies provides the last line of defense in preventing many improper payments. Under Treasury regulation, certifying officers at disbursing agencies must certify that payments are legal, proper, and correct at disbursement. (4) Are these personnel provided the necessary tools to perform their jobs including proper training and authority? Are they ever pressured to release questionable payments to maintain productivity levels and thus sacrificing quality for quantity due to competing agency demands? What can Congress and Office of Management and Budget (OMB) do to strengthen their role across government? (5) Is agency management doing enough to hold people accountable for program integrity? Is success in setting improper payments reduction targets and meeting those targets a factor in managers' performance evaluations or pay and bonus determinations? Should we have government-wide performance standards for proper payment goals and expectations? Are agencies being aggressive enough with their reduction targets? There has been some debate in the subcommittee about whether the reporting threshold in the Improper Payments Information Act should be lower. (6) Can GAO explain for Congress what you do to ensure that programs that are not reporting improper payments are still doing all they can to improve program integrity?

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## Topics

Auditing and Financial Management

AccountabilityAudit reportsBudget obligationsData integrityErroneous paymentsFederal agenciesFinancial managementFinancial statement auditsFinancial statementsFiscal policiesInternal auditsInternal controlsNoncompliancePaymentsProgram abusesProgram managementQuestionable paymentsReporting requirements