U.S. House of Representatives 

Committee on Oversight and Government Reform 

114th Congress 

   

The Improper Payments Elimination and Recovery Act: 

An Analysis of Five Years of Data 

Staff Report 

Hon. Jason Chaffetz, Chairman 

Committee on Oversight and Government Reform 

Hon. Mark Meadows, Chairman 

Subcommittee on Government Operations 

October 2016 

   
Page | 1 

Table of Contents 

Executive Summary ....................................................................................................................................... 3 

Improper Payments Laws ............................................................................................................................. 4 

IPERA Requirements ................................................................................................................................. 4 

High Priority Programs .............................................................................................................................. 7 

Five Years of IPERA Compliance & Reporting ............................................................................................... 8 

Five Years of Improper Payments Estimates .............................................................................................. 10 

IPERA Compliance in FY 2015 ..................................................................................................................... 11 

Effective Estimates:  Why VA’s Abysmal Improper Payment Rates Represent Progress ........................... 13 

Increased Access to Reliable and Accurate Data is Needed to Combat Improper Payments .................... 14 

Recommendations ...................................................................................................................................... 16 

Summaries of Agency IPERA Reports .......................................................................................................... 18 

Department of Agriculture .................................................................................................................. 19 

Department of Commerce .................................................................................................................. 22 

Department of Defense ...................................................................................................................... 24 

Department of Education ................................................................................................................... 27 

Department of Energy ........................................................................................................................ 30 

Department of Health and Human Services ....................................................................................... 32 

Department of Homeland Security ..................................................................................................... 36 

Department of Housing and Urban Development .............................................................................. 39 

Department of Interior ....................................................................................................................... 43 

Department of Justice ......................................................................................................................... 45 

Department of Labor .......................................................................................................................... 47 

Department of State ........................................................................................................................... 50 

Department of Transportation ........................................................................................................... 52 

Department of Treasury...................................................................................................................... 55 

Department of Veterans Affairs .......................................................................................................... 57 

Environmental Protection Agency ...................................................................................................... 60 

General Services Administration ......................................................................................................... 62 

National Aeronautics and Space Administration ................................................................................ 65 

National Science Foundation .............................................................................................................. 67 

Nuclear Regulatory Commission ......................................................................................................... 70 
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Office of Personnel Management ....................................................................................................... 72 

Small Business Administration ............................................................................................................ 75 

Social Security Administration ............................................................................................................ 78 

United States Agency for International Development ........................................................................ 80
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Executive Summary

Ineffective financial management plagues the federal government. The Improper 

Payments Elimination and Recovery Act of 2010 (IPERA), which expanded the use of data to 

identify and control improper payments, makes the scope of the problem clear. This report 

examines federal improper payments after five years of IPERA reporting. 

Improper payments are “any payment that should not have been 

made or that was made in an incorrect amount” which includes “any 

payment to an ineligible recipient, any payment for an ineligible good or 

service, any duplicate payment, any payment for a good or service not 

received (except for such payments where authorized by law), and any 

payment that does not account for credit for applicable discounts.”1 

This definition includes payments in excess of the amount that 

should have been properly paid and payments that were less than the 

amounts that should have been properly paid. 

With five years’ worth of IPERA data now available, excessive 

improper payments costing taxpayers billions of dollars every year is clearly evident.2

 

The federal government reported nearly $600 billion in improper

payments in the past five years.3 In FY 2015, the federal government 

reached a record number of improper payments, reporting $137 billion in 

improper payments government-wide.4

 More than 90 percent of 

improper payments were overpayments in FY 2015.5

 

In addition to reaching a record number of improper payments, in 

FY 2015 the federal government set another improper payments record – 

the record for the least number of agencies in compliance with IPERA. 

IPERA requires agencies to look for improper payments and assess 

whether programs are at risk of significant improper payments. 

Agencies must produce a statistically valid estimate of improper 

payments and conduct other analyses to reduce and recover improper 

payments. To ensure that agencies are making a good faith effort, 

Inspectors General (IG) are required to review their work. 

                                                            

1

 Improper Payments Elimination and Recovery Act of 2010, Pub L. No. 111–204. 2 Id.

3

 Gov’t Accountability Office, Improper Payments: Improvements Needed in Addressing Compliance Issues by 

CFO Act Agencies (June 2016); Garrett Hatch, Cong. Research Serv., Improper Payments and Recovery Audits: 

Legislation, Implementation and Analysis (Oct. 13. 2013). 

4

 Gov’t Accountability Office, Improper Payments: Improvements Needed in Addressing Compliance Issues by 

CFO Act Agencies (June 2016). 5

 OMB, Paymentaccuracy.gov, Overpayments vs. Underpayments (FY 2015), available at

https://paymentaccuracy.gov/govt-wide-over-under-payments (graph shows $126 billion in overpayments and $11 

billion in underpayments).  

Improper 

Payment means 

any payment that 

should not have 

been made or was 

made in an 

incorrect amount. 

The federal 

government has 

made nearly $600 

billion improper 

payments in the 

past five years.  
Page | 4 

In five years of reporting, nine of the 24 Chief Financial Officer (CFO) Act agencies have 

never complied with IPERA requirements (see page 8-10). In 2015, 16 CFO Act agencies were 

not compliant – the highest number of non-compliance in the past five years (see page 8-10). 

Just five agencies, all of which have never complied with IPERA, are responsible for 85 percent 

of the improper payments over the past five years (see page 10). The Department of Health and 

Human Services (HHS), one of the agencies with five years of noncompliance, has reported 

more than $363 billion in improper payments over five years (see page 10-11). 

This report makes six recommendations to address noncompliance and improve improper 

payment rates (see page 15-17). The report also briefly discusses legal requirements and 

compliance with IPERA requirements (pages 4 -8), highlights the Department of Veterans 

Affairs as a case study of the importance of accurate estimates (pages 13-14), and discusses the 

need for additional data sources (pages 14-15). Each of the 24 Chief Financial Officer (CFO) 

Act agencies’ FY 2015 IG IPERA reports are summarized to provide agency specific 

perspectives of improper payments. 

Improper Payments Laws  

The first modern law to address improper payments was 

the Improper Payment Information Act of 2002 (IPIA).6 IPIA 

requires all agencies to identify programs susceptible to 

significant improper payments, submit an estimated amount of 

improper payments to Congress, and report on actions to 

address improper payments. In FY 2001, before agencies began 

reporting under IPIA, agencies reported improper payment 

estimates of about $20 billion.7 In the first year of IPIA 

reporting, FY 2004, the government-wide estimate reached $45 

billion, but agencies had not yet included all of their risksusceptible programs.8

IPERA Requirements  

In 2010, IPERA expanded upon IPIA to require agencies to conduct more thorough 

improper payment reviews. The most significant changes IPERA made to IPIA involve more 

detailed requirements for reporting and estimates. Under IPERA, agencies are required to 

produce a statistically valid estimate, identify causes of improper payments, report to Congress 

on what additional resources are needed to correct the root causes, and report on actions to 

recover improper payments. 

                                                            

6 Improper Payment Information Act of 2002, Pub. L. No. 107-300. 7

 Gov’t Accountability Office, Improper Payments: Improvements Needed in Addressing Compliance Issues by 

CFO Act Agencies (June 2016). 

8 Id.

Six IG Compliance Factors:  

(1)Agency Financial Report 

(2)Risk Assessments 

(3)Publish Estimates  

(4)Corrective Action Plans 

(5)Reduction Targets 

(6)<10% Rate 
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Agencies report compliance with IPERA as part of their annual agency financial reports 

(AFR).9

 

Inspectors General Review 

Inspectors General are required to annually review agency improper payment reporting 

and determine whether agencies have complied with IPERA requirements. Agencies are IPERA 

compliant if they meet the following six requirements: 

(1) Publish an annual financial report (AFR) and post the report online, 

(2) Conduct program specific risk assessments, 

(3) Publish improper payment estimates for all programs identified as at risk of significant 

improper payments, 

(4) Publish programmatic corrective action plans, 

(5) Publish and meets improper payment reduction targets, and 

(6) Reports improper payment rates of less than 10 percent for each program. 

Risk Assessments 

 IPERA requires agencies to review all programs and activities at the agency for 

susceptibility to significant improper payments at least once every three years. OMB requires 

agencies to consider nine minimum risk factors: 10 

(1) Whether the program or activity is new to the agency, 

(2) The complexity of the program or activity reviewed, particularly with respect to 

determining correct payment amounts, 

(3) Volume of payments made annually, 

(4) Whether payments or eligibility decisions are made outside of the agency, 

(5) Recent major changes in program funding, authorities, practices or procedures, 

(6) The level, experience, and quality of training for personnel responsible for making 

program eligibility determinations or certifying that payments are accurate, 

(7) Inherent risks of improper payments due to the nature of agency programs or operations, 

                                                            

9

 31 U.S.C. § 3515.   10 Office of Management and Budget, OMB Circular A-123, Appendix C Requirements for Effective Estimation and 

Remediation of Improper Payments (Oct. 20, 2014) available at:

https://www.whitehouse.gov/sites/default/files/omb/memoranda/2015/m-15-02.pdf. 
Page | 6 

(8) Significant deficiencies in the audit reports of the agency, and 

(9) Results of prior improper payment work. 

OMB describes the risk assessment as “systematic” and requires agencies to maintain 

appropriate documentation.11 Agencies are permitted to use both a quantitative method based on 

a statistical sample or a qualitative method such as a risk assessment questionnaire.12 

Susceptible of Significant Improper Payments 

 The “susceptible of significant improper payments” designation is important. A 

significant designation means the agency must: (1) produce and publish a statistically valid 

estimate or estimate that is otherwise approved by OMB, (2) report a detailed corrective actions 

plan, (3) report on all actions the agency is taking to recover improper payments, and (4) conduct 

recovery audits. 

A program is considered susceptible of significant improper payments if (1) the program 

has potentially $10 million in improper payments and a rate of at least 1.5 percent, or (2) has 

potentially $100 million in improper payments. Programs that do not meet those requirements 

may also be designated significant at the discretion of OMB. A program is also significant if it 

receives any funding from the Hurricane Sandy Disaster Relief Appropriations Act.13

Relief from Reporting 

If an agency reports improper payments below the “significant” threshold for two 

consecutive years for a program, the agency may request relief from IPERA reporting for that 

program, meaning the agency would not be required to report improper payment estimates and 

other report requirements for the program. OMB will review the agency’s request against the 

following five criteria: 

(1) Whether the measuring and reporting of improper payments is a heavy burden, 

(2) Whether there are legislative requirements or recent changes that affect the program’s 

ability to estimate and report improper payments, 

(3) Whether any audit findings indicate reasons to continue reporting, 

(4) Whether the agency has appropriate controls, policies or corrective actions to mitigate the 

risk of fraud and errors, and 

(5) Whether there are any other key factors that should be considered.14 

                                                            

11 Id. 12 Id.

13 Improper Payments Elimination and Recovery Act of 2010, Pub L. No. 111–204. 14 Office of Management and Budget, OMB Circular A-123, Appendix C (Revised), April 14, 2011, at 

http://www.whitehouse.gov/sites/default/files/omb/memoranda/2011/m11-16.pdf. 
Page | 7 

An agency must return to conduct a new risk assessment if any of the following occur: 

(1) significant legislative or programmatic changes, (2) significant funding increase, or (3) any 

change that would result in potential program impact. 

Payment Recapture Audits 

Under IPERA, agencies are required to conduct recovery audits, which are also known as 

payment recapture audits, to identify improper payments that can be recovered by the agency. 

According to OMB, a recapture audit is “not an audit in the traditional sense. Rather it is a 

detective and corrective control activity designed to identify and recapture overpayments, and, as 

such, is a management function and responsibility.”15 

Agencies are responsible for ensuring payment recapture audit activities are cost 

effective. IPERA provides for agencies to use contractors to conduct the audits. 

High Priority Programs  

IPIA was amended for the second time in 2012 by the Improper Payments Elimination 

and Recovery Improvements Act (IPERIA).16 IPERIA codified Executive Order 13520’s 

requirement for the Office of Management and Budget to identify “high-priority” programs 

which require greater oversight due to high dollar values and high rates of improper payments, or 

programs at a higher risk of improper payments.17 In Circular A-123, Appendix C, OMB 

defined high priority programs as susceptible for significant improper payments and reporting 

above $750 million improper payments a year.18 Agencies are required to further report on 

improper payments for each program, including what actions the agency has taken or plans to 

take to recover improper payments. In FY 2015, OPM designated the following programs as 

high priority:19 

1. Medicare Fee-For-Service (Department of Health and Human Services (HHS)) 

2. Medicaid (HHS) 

3. Medicare Part C (HHS) 

4. Medicare Part D (HHS) 

5. Earned Income Tax Credit (Department of the Treasury) 

                                                            

15 Office of Management and Budget, OMB Circular A-123, Appendix C Requirements for Effective Estimation and 

Remediation of Improper Payments (Oct. 20, 2014) available at

https://www.whitehouse.gov/sites/default/files/omb/memoranda/2015/m-15-02.pdf. 

16 Improper Payments Elimination and Recovery Improvements Act of 2012, Pub. L. No. 112 – 248. 

17 Office of Management and Budget, OMB Circular A-123, Appendix C Requirements for Effective Estimation and 

Remediation of Improper Payments (Oct. 20, 2014) available at

https://www.whitehouse.gov/sites/default/files/omb/memoranda/2015/m-15-02.pdf. 

18 Id.

19 Email from Office of Management and Budget staff to Com. on Oversight and Gov’t Reform staff (June 27, 2016 

7:27 P.M EST). 
Page | 8 

6. Retirement, Survivors, and Disability Insurance (Social Security Administration (SSA)) 

7. Supplemental Security Income (SSA) 

8. Supplemental Nutrition Assistance Program (Department of Agriculture (USDA)) 

9. National School Lunch Program (USDA) 

10. National School Breakfast Program (USDA) 

11. Federal Crop Insurance Program (USDA) 

12. VA Community Care [Formerly: Non-VA Care Medical] (Department of Veterans 

Affairs (VA)) 

13. Compensation (VA) 

14. Purchased Long Term Services and Supports (VA) 

15. William D. Ford Federal Direct Loan Program (Department of Education (ED)) 

16. Pell Grants (ED) 

17. Unemployment Insurance (Department of Labor (DOL)) 

18. Public Housing / Rental Assistance (Department of Housing and Urban Development 

(HUD)) 

19. 7(a) Guaranty Approvals (Small Business Administration (SBA)) 

Five Years of IPERA Compliance & Reporting  

Over the course of five federal fiscal years, the agencies have persistently struggled with 

compliance. FY 2015 was the least compliant year yet—sixteen agencies did not comply 

with IPERA requirements. Nine agencies have never complied with IPERA requirements. 

24 CFO Act Agencies  FY11  FY12  FY13  FY14  FY15  # of Years 

Not 

Compliant

USDA         5 

Dept. Commerce        0 
Page | 9 

Dept. Defense       4 

Dept. Education          2 

Dept. Energy       1 

Dept. Health and Human Services        5 

Dept. Homeland Security        5 

Dept. Housing and Urban 

Development          3 

Dept. Interior          3 

Dept. Justice        0 

Dept. Labor        5 

Dept. State       1 

Dept. Transportation        5 

Dept. Treasury        5 

Dept. Veterans Affairs        5 

EPA      2 

GSA          2 

NASA       1 

National Science Foundation   NR*  3 

Nuclear Regulatory Commission        0 

Office of Personnel Management       2 

Small Business Administration        5 
Page | 10 

Social Security Administration        5 

U.S. Agency for International 

Development        0 

Total Not Compliant   14  12  11  15  16 

* In FY 2013, NSF did not publish improper payment data in its fiscal year 2013 report. 

Five Years of Improper Payments Estimates  

 

Most agencies have reported more than a billion dollars in improper payments over the 

past five years. The amount reported by the Department of Health and Human Services—

more than $363 billion in improper payments over five years—is significantly higher than 

any other agency. Other agencies with significant improper payments in the past five years 

include the Department of Treasury ($75.5 billion), the Social Security Administration ($39 

billion), the Department of Labor ($38 billion), and the Department of Agriculture ($30 billion). 

These five agencies account for 85 percent of improper payments over the last five years. 

24 CFO Act Agencies  FY11  FY12  FY13  FY14  FY15  Five Years of 

Improper 

Payments 

Estimates  

USDA  $5,428 $5,507 $6,160 $6,924 $6,339  $30,358

Dept. Commerce $0 $0 $0 $0 $0  $0

Dept. Defense $915 $882 $1,065 $992 $1,256  $5,109

Dept. Education $1,257 $857 $1,843 $2,249 $1,866  $8,073

Dept. Energy $17 $13 $22 $20 $22  $94

Dept. Health and Human 

Services $65,563 $64,771 $65,289 $78,383 $89,775  $363,781

Dept. Homeland Security $222 $203 $178 $269 $217  $1,089

Dept. Housing and Urban 

Development $959 $1,230 $1,324 $1,030 $1,300  $5,842

Dept. Interior $0 $0 $0 $0 $0  $0
Page | 11 

Dept. Justice $0 $0 $0 $0 $0  $0

Dept. Labor $13,709 $9,727 $6,230 $5,685 $3,638  $38,990

Dept. State $0 $0 $0 $0 $0  $0

Dept. Transportation $485 $158 $159 $311 $491  $1,604

Dept. Treasury $15,200 $12,600 $14,450 $17,650 $15,600  $75,500

Dept. Veterans Affairs $2,067 $792 $1,070 $1,580 $5,000  $10,486

EPA $14 $78 $71 $18 $4  $185

GSA n/a n/a $64 $44 $9  $117

NASA $0 $0 $0 $0 $0  $0

National Science Foundation  $0 $0 $0 $0 $0  $0

Nuclear Regulatory 

Commission $0 $0 $0 $0 $0  $0

Office of Personnel 

Management  $399 $484 $352 $408 $373  $2,016

Small Business 

Administration $137 $484 $694 $748 $1,054  $3,118

Social Security Administration $9,081 $7062 $6,783 $8,050 $9,802  $40,778

U.S. Agency for International 

Development $27 $8 $6 $1 $0  $42

The above chart is a compilation of data obtained from each of the agencies’ annual financial reports from fiscal 

years 2011 through 2015. (numbers in millions) 

IPERA Compliance in FY 2015  

 

In FY 2015, only eight agencies were compliant with all six IPERA requirements 

(Department of Commerce, Department of Justice, Department of State, EPA, NASA, National 

Science Foundation, Nuclear Regulatory Commission, and U.S. Agency for International 

Development). Of the six IPERA requirements, agencies most often failed to meet the IPERA 

requirement to reach their improper payment reduction goals. The second least met requirement 

was the requirement to reduce improper payment rates below ten percent. 
Page | 12 

24 CFO Act 

Agencies 

IP 

Reduction 

Goal 

< 10 % 

IP rate 

AFR 

Reporting

Risk 

Assessments

Estimates 

Published 

Corrective 

Action 

Plans 

Total 

USDA          3/6 

Dept. Commerce         N/A  5/5 

Dept. Defense          5/6 

Dept. Education          5/6 

Dept. Energy N/A  N/A      N/A  N/A  2/2 

Dept. Health and 

Human Services          1/6 

Dept. Homeland 

Security          5/6 

Dept. Housing 

and Urban 

Development

        4/6 

Dept. Interior         4/6 

Dept. Justice N/A         N/A  4/4 

Dept. Labor            4/6 

Dept. State N/A  N/A  N/A      N/A  2/2 

Dept. 

Transportation      4/6 

Dept. Treasury          3/6 

Dept. Veterans 

Affairs            4/6 

EPA         N/A  5/5 

GSA       5/6 
Page | 13 

NASA         N/A  5/5 

National Science 

Foundation 

N/A  N/A      N/A  N/A  2/2 

Nuclear 

Regulatory 

Commission

N/A       N/A  N/A  3/3 

Office of 

Personnel 

Management 

        4/6 

Small Business 

Administration            4/6 

Social Security 

Administration          5/6 

U.S. Agency for 

International 

Development

N/A  N/A      N/A  N/A  2/2 

Total Not 

Compliant  

11/18  8/20  5/23  3/24  5/20  3/15  16/24 

Effective Estimates:  Why VA’s Abysmal Improper Payment Rates 

Represent Progress  

In the FY 2015 AFR, the VA reported improper payments rates previously unheard of in 

IPERA reporting. Two programs—VA Community Care and Purchased Long Term 

Services and Support (PLTSS) —reported rates above 50 percent, 55 percent and 59 

percent respectively.20 In the previous year, the same programs both reported rates below ten 

percent.21 These rates are alarmingly high; however, the rates also show IPERA is effectively 

identifying programs that are making improper payments. 

The VA IG found the dramatic increase in the rate is not a reflection of any increased 

problems at VA, rather it “occurred primarily because [the Veterans Health Administration] 

improved its sample evaluation procedures in FY 2015, which resulted in more improper 

                                                            

20 OIG, VA, Review of VA’s Compliance with the Improper Payments Elimination and Recovery Act for FY 2015

(May 12, 2016). 

21 Id.
Page | 14 

payments being identified.”22 That is to say, the improper payments have been there all along 

and it was not until this year that the VA found the errors. 

The VA began looking at whether the contracts that supported the payments were valid 

and compliant with the Federal Acquisition Regulation (FAR) and other legal authorities.23 In 

doing so, VA found a high rate of noncompliance.24 According to the IG, “Without FARcompliant contracts, and in the absence of other legal authorities, VA may not be able to 

demonstrate that it has obtained the best value product or service on a timely basis while 

maintaining the public’s trust and fulfilling public policy objectives.”25 

By conducting a more thorough estimation process, the VA now has the information 

necessary to fix these errors. In the AFR, the VA promised to stop “inconsistent compliance 

with laws and regulations and reduce the improper payment rate through legislative proposals 

and business process re-engineering in FY 2016.”26 The corrective action plans in the AFR, 

another IPERA reporting requirement, provide details on how VA will keep this promise. 

This is exactly how IPERA is supposed to work. When agencies and IGs take their 

obligations seriously, agencies produce good faith estimates that allow problems and errors to be 

identified. The requirement of corrective action plans ensures that agencies immediately start to 

think about how to fix the problems they have identified. The IG’s required compliance review 

helps the public and Congress understand the agency’s efforts and progress toward remediating 

the improper payments. As the VA IG stated in its compliance review, VA “not only reported 

more accurate improper payment information but established a baseline from which to measure 

future progress in addressing VA’s compliance with laws and regulations.”27 

Increased Access to Reliable and Accurate Data is Needed to Combat 

Improper Payments  

Access to and availability of reliable data is a substantial hurdle to preventing and 

resolving improper payments.28 On Thursday September 22, 2016, the Committee on Oversight 

and Government Reform Subcommittee on Government Operations held a hearing titled 

“Examining Billion Dollar Waste Through Improper Payments,” during which executive branch 

witnesses discussed both successes in improving improper payments through increased access to 

data, as well as the need for further data access. 

                                                            

22 Id.

23 Id. 24 Id.

25 Id.

26 VA, 2015 Agency Financial Report (Nov. 16, 2015). 

27 OIG, VA, Review of VA’s Compliance with the Improper Payments Elimination and Recovery Act for FY 2015

(May 12, 2016).

28 MITRE, Government-wide Payment Integrity: New Approaches and Solutions Needed (Feb. 2016), available at:

https://www.mitre.org/sites/default/files/publications/16-0123-government-wide-payment-integrity-newapproaches-solutions.pdf. 
Page | 15 

During the hearing, agencies reported that improved access to data has produced positive 

results. David Mader, Controller for the Office of Federal Financial Management of the Office 

of Management and Budget (OMB), explained that the Unemployment Insurance Program had 

decreased improper payments by $2 billion by using an enhanced National Directory of New 

Hires cross-match.29 Assistant Deputy Commissioner of the Office of Retirement and Disability 

Policy at SSA, Marianna LaCanfora, extolled the value of data by highlighting the increased 

authority SSA received under the Bipartisan Budget Act: 

And thank you to the Congress for giving us the Bipartisan Budget Act. 

One of the most powerful provisions in there is our ability to use third party 

payroll data so that we do not need to rely on IRS data, which oftentimes 

comes very late in the process. We can get timely wage data from payroll 

providers, and we are working to implement that now. So moving from self 

reporting to data is where we think we're going to get a tremendous payoff 

in improper payment prevention going forward.30

However, data accessibility continues to be a hurdle for many agencies. Jeff Schramek, 

Assistant Commissioner for the Bureau of Debt Management Services at the Department of 

Treasury, explained that the Do Not Pay Center needs additional data sources: 

In addition, the President's fiscal year 2017 budget contains two proposals 

that would expand Do Not Pay's data sources. Specifically, one proposal 

would amend the Social Security Act to provide do not pay access to the 

full debt file. A second proposal would allow programs to access the 

National Directory of New Hires through Do Not Pay, if those programs are 

already authorized to use the data.31 

The hearing also explored how Congress needs improved access to data to conduct 

effective oversight and legislative responsibilities. In 2010, IPERA included several reporting 

requirements for OMB on government-wide improper payments.32 At the time, OMB 

established paymentaccuracy.gov, a website intended to provide information about improper 

payments and to meet the reporting requirements in the law.33 However, the website fails to 

provide much of the information required in the law. During the hearing Mr. Mader committed 

to working to update the website to meet the requirements in the law and the needs of 

Congress.34 

                                                            

29 Examining Billion Dollar Wates Through Improper Payments: Hearing Before the H. Comm. on Oversight and 

Gov’t Reform Subcomm. on Gov’t Operations, 114th Cong. (Sept. 22, 2016). 30 Id. 31 Id. 32 Improper Payments Elimination and Recovery Act of 2010, Pub L. No. 111–204. 33 Examining Billion Dollar Wates Through Improper Payments: Hearing Before the H. Comm. on Oversight and 

Gov’t Reform Subcomm. on Gov’t Operations, 114th Cong. (Sept. 22, 2016). 34 Id.
Page | 16 

Recommendations   

(1) Agencies must use reliable data and processes to ensure that improper payment 

estimates are accurate and complete. 

Accurate and complete estimates are the first step in resolving the improper payment problem. 

As shown by the VA’s improper payment estimates in FY 2015, the government-wide total of 

improper payments may be far more than the $137 billion reported. Several IGs report that 

agencies can do more to improve the accuracy of their estimates. The DOD IG, as an example, 

found that DOD’s improper payment estimates were based on unreliable data and that DOD 

failed to assess billions of dollars of disbursed funds for improper payments (See pages 23-25). 

Every agency needs to use reliable data and conduct thorough assessments to ensure the agency 

reports accurate estimates. 

(2) Agencies must resolve outstanding IG recommendations. 

Each year every agency receives a review of its improper payment efforts from its IG, including 

recommendations that may assist the agency in resolving improper payments. However, some 

agencies have recommendations from IGs that have gone multiple years without being 

addressed. Agencies should review the IG reports and address all unaddressed 

recommendations. 

(3) Nine agencies must comply with the law. 

The following nine agencies have failed to meet IPERA requirements over the last five years: 

USDA, HHS, DHS, Labor, Transportation, Treasury, VA, SBA, and SSA. In total, these 

agencies account for 90 percent of federal improper payments. Congress should work with these 

agencies to identify the problems that prevent the agencies from meeting their obligations under 

IPERA and develop a five-year plan to resolve any critical challenges. 

(4) Eleven agencies must comply with requirements to set and meet reduction targets. 

In FY 2015, 18 CFO Act agencies were required to meet improper payment reduction goals. 

Only seven agencies meet their goals. The 11 agencies (USDA, DOD, Education, HHS, DHS, 

Interior, Labor, Transportation, VA, SBA, SSA) that failed to meet their goals should identify 

the root causes of the failure to meet those goals and work with the Office of Management and 

Budget to improve reduction goals in future years. 

(5) The Do Not Pay Initiative must continue to expand access to data. 

While Do Not Pay appears to be meeting the requirements in law to provide access to all 

statutorily required datasets, Do Not Pay provides very little beyond the statutory minimum. As 
Page | 17 

increased access to data is shown to improve improper payment rates, Do Not Pay provide all 

agencies an opportunity to access as much reliable, accurate, and useful data as possible. 

(6) OMB must improve government-wide reporting on improper payments. 

OMB has failed to meet statutory reporting requirements since IPERA was enacted in 2010. 

Now that OMB is aware of the noncompliance, OMB has committed to resolving deficiencies in 

reporting by improving paymentaccuracy.gov. In the process of making those improvements, 

OMB should strive, not only to meet the letter of the law, but to truly make all improper payment 

data available in an easy to use format. OMB should consider data standardization and how it 

may improve reporting, increase efficiency, and expand understanding of improper payment 

data.    
Page | 18 

Summaries of Agency IPERA Reports
Page | 19 

Department of Agriculture 

Improper Payments Report FY 2015 

Highlights

FY 2015 Estimate: $6.3 Billion 

FY 2015 Rate: 5.7 percent 

 For five consecutive years, the Department of Agriculture (USDA) has been non-compliant 

with IPERA. 

 In FY 2015, USDA failed to meet three requirements: 

o USDA did not meet improper payment reduction goals. 

o USDA did not reduce improper payments to below ten percent. 

o USDA did not publish its improper payment estimate. 

 In FY 2015, USDA reported 18 programs as at-risk of significant improper payments. Four 

USDA programs reported improper payments over $750 million, or more than ten percent of 

all payments: 

1. Supplemental Nutrition Assistance Program $2.56B 3.7%

2. National School Lunch Program $1.77B 15.7%

3. School Breakfast Program $875M 23.0%

4. Farm Security and Rural Investment Act Programs $468 M 22.0%

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Not Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Not Met 

Programmatic Corrective Action Plans Met 
Page | 20 

Total 3/6 

Programs with Risk of Significant Improper Payments with Rate and Amount 

USDA Program IP Estimate Error 

Rate

1. Supplemental Nutrition Assistance Program (SNAP) $2.56B 3.66%

2. National School Lunch Program $1.77B 15.66%

3. School Breakfast Program $875M 22.95%

4. Child and Adult Care Food Program $7.8M 0.84%

5. Special Supplemental Nutrition Program for Women, Infants, 

and Children 

$210 M 4.65%

6. Federal Crop Insurance Corporation $302.15 M 2.20%

7. Livestock Forage Disaster Program (LFP) $104 M 3.10%

8. Loan Deficiency Payments Program (LDP) n/a n/a

9. Livestock Indemnity Program $4 M 6.36%

10. Supplemental Revenue Assistance Program (SURE) $3 M 9.90%

11. Noninsured Assistance Program (NAP) $12.8 M 7.36%

12. Hurricane Sandy – Emergency Conservation Program $2,000 0.5%

13. Hurricane Sandy – Emergency Forest Restoration Program $5,000 1.67%

14. Rental Assistance Program $16.2M 1.41%

15. Farm Security and Rural Investment Act Programs (FSRIP) $468 M 22.04%

16. Hurricane Sandy – Emergency Watershed Protection Program n/a 0.0%

17. Hurricane Sandy – Emergency Forest Restoration Program n/a 0.0%

18. Hurricane Sandy – Capital Improvement and Maintenance $0M 0.06%
Page | 21 

FY 2015 IG Findings 

 USDA’s overall improper payment rate has trended upward since FY 2011, largely due to a 

spike in the improper payment rate at Farm Security and Rural Investment Act Programs 

(FSRIP) in recent years. Some of the increase is due to improvements in FSRIP’s improper 

payment sampling reviews, but most were related to eligibility issues because entity 

participants did not register for the System for Award Management (SAM), as required. 

 Since 2009, USDA has spent $2.4 million to conduct feasibility studies to develop a 

dependable method of estimating improper payments for the Child and Adult Care Food 

Program, but the program continues to report only partial estimates. 

 USDA used insufficient sampling methods to report improper payment estimates in the 

Federal Crop Insurance Corporation program (FCIC). 

 OMB approved USDA’s request to return two previously determined high-risk programs to 

USDA’s three-year risk assessment cycle because improper payment estimates for those 

programs remained below the improper payment reporting thresholds for two or more 

consecutive years. 

IG Recommendations 

1. USDA should submit to Congress proposed statutory changes to bring FSRIP into 

compliance. 

2. USDA should submit a plan to Congress and OMB describing the actions that the agency will 

take to make the following programs compliant: LFP, SURE, NAP, and SNAP. 

Sources 

OIG, USDA, USDA’s Fiscal Year 2015 Compliance with Improper Payment Requirements (May 

2016). 

USDA, Agency Financial Report: Creating a USDA for the 21st Century (Feb. 12, 2016). 
Page | 22 

Department of Commerce 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $0.00 

FY 2015 Rate: 0 percent 

 The Department of Commerce (DOC) has complied with IPERA for five consecutive years. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans N/A 

Total 5/5 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DOC Program IP Estimate Error 

Rate

1. National Oceanic and Atmospheric Administration (NOAA) 

Hurricane Sandy Funding 

$0 0%

FY 2015 IG Findings 

 DOC’s annual financial report did not include approximately $25 million in amounts paid 

without proper documentation identified in OIG audit reports issued during FY 2015. DOC 

is still reviewing the $25 million more than a year later and as a result may have under 

reported improper payments. 
Page | 23 

IG Recommendations 

1. DOC should develop control procedures to ensure that the evaluation of unsupported costs 

identified in OIG reports and the final determination of the propriety of these payments are 

made within a reasonable timeframe. 

2. DOC should ensure that the AFR fully describes all required aspects of the Department’s 

payment recapture audit efforts. 

Sources 

OIG, Dept. Commerce, FY 2015 Compliance with Improper Payment Requirements (May 11, 

2016). 

Dept. Commerce, Agency Financial Report Fiscal Year 2015 (Nov. 13, 2015). 
Page | 24 

Department of Defense 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $1.26 Billion 

FY 2015 Rate: 2.2 percent 

 In FY 2015, the Department of Defense (DOD) has been non-compliant with IPERA. DOD 

has been non-compliant for four of the past five years. 

 In FY 2015, DOD did not meet the improper payments reduction target. 

 DOD did not assess $327 billion in disbursed obligations for risk of improper payments. 

 The IG found DOD’s improper payment data and estimates are unreliable. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 5/6 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DOD Program IP Estimate Error 

Rate

1. Military Health Benefits $157.67 M 0.8%

2. Military Pay $242.9 M 0.23%
Page | 25 

3. Civilian Pay $57.2 M 0.10%

4. Military Retirement $20.8 M 0.04%

5. Department of Defense Travel Pay $521.47 M 7.9%

6. Defense Finance and Accounting Service Commercial Pay $256 M 0.09%

7. US Army Corps of Engineers Commercial $0 0%

8. US Army Corps of Engineers Travel Pay $0.04 M 0.02%

9. Navy Enterprise Resource Planning Commercial Pay $0 0%

FY 2015 IG Findings 

 DOD was unable to verify that approximately $327 billion in disbursed obligations were 

assessed for risk of improper payments. DOD reported in the FY 2015 Agency Financial 

Report (AFR) that it disbursed $887.8 billion in budgetary resources, but only reviewed 

$560.8 billion. 

 DOD excluded required information for the four payment programs that exceeded statutory 

thresholds for significant improper payments: Military Health Benefits, Military Pay, DOD 

Travel Pay, and Defense Finance and Accounting Service Commercial Pay. 

 DOD did not include an assessment of the status of internal controls for Military Pay, DOD 

Travel Pay, and Defense Finance and Accounting Service (DFAS) Commercial Pay. 

 DOD could not provide assurance that its improper payment estimate was based on accurate 

and complete data. 

 DOD did not adhere to federal guidance when reporting the results of IPERA sampling. 

 The IG identified deficiencies in the reliability of the data used to calculate the improper 

payment rates and opportunities to improve the precision of the estimates. 

IG Recommendations 

1. DOD should ensure future AFRs contain all required reporting information. 

2. DOD should determine the source of all disbursed obligations not reviewed for improper 

payments and whether they are subject to improper payment reporting requirements. 

3. DOD should coordinate with its agency components to develop sample designs that are 

stratified by an appropriate variable for each program that currently uses a simple random 

sample design. 
Page | 26 

4. DOD should coordinate with OMB and DFAS to review the DOD Travel Pay program and 

determine reauthorization proposals or proposed statutory changes that are necessary to bring 

the program into compliance, and submit a report to Congress as required. 

Sources 

OIG, DOD, DOD Met most Requirements of the Improper Payments Elimination and Recovery 

Act in FY 2015, but Improper Payment Estimates Were Unreliable (May 3, 2016). 

DOD, Agency Financial Report Fiscal Year 2015 (2015). 
Page | 27 

Department of Education 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $1.87 Billion 

FY 2015 Rate: 1.3 percent 

 In FY 2015, the Department of Education (ED) was non-compliant with IPERA. 

 In FY 2015 ED failed to meet one requirement: 

o ED did not meet improper payment reduction goals. 

 ED ’s methodology is flawed, which led to inaccurate and unreliable estimates. 

 In FY 2015, ED reported three programs susceptible of significant improper payments. One 

ED program reported improper payments over $750 million, or more than ten percent of 

payments: 

1. Federal Direct Loan Program 

 

$1.3 B 1.3%

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 5/6 

 
Page | 28 

Programs with Risk of Significant Improper Payments with Rate and Amount 

ED Program IP Estimate Error 

Rate

1. Federal Direct Loan Program $1.3 B 1.3%

2. Pell Grants $562 M 1.9%

3. Title I, Part A of the Elementary and Secondary Education Act $19.95 M 0.13%

FY 2015 IG Findings 

 ED’s improper payment methodologies for the Federal Pell Grant (Pell) and Direct Loan 

programs were flawed. 

o Estimation methodologies did not include all program reviews that could identify 

improper payments and excluded sources of improper payments. 

o Estimation methodologies could be significantly influenced by a single program review. 

 ED did not meet reduction targets for the Federal Direct Loan program. 

 ED needs to improve the accuracy and reliability of its improper payments estimates. 

 OMB granted the Federal Family Education Loan program relief from reporting on August 4, 

2015. 

IG Recommendations 

1. ED should analyze all available sources that identified improper payments for root causes 

and evaluate existing controls to determine whether additional controls can be implemented, 

intensified, or expanded to reduce or prevent improper payments. 

2. If OMB determines additional funding is needed to help ED become compliant with IPERA, 

ED should take the necessary steps to implement OMB’s recommendation. 

3. ED should revise the improper payment estimation methodologies to include all improper 

payments in the calculation of the improper payment estimates. 

4. ED should revise the improper payment estimation methodologies to mitigate the potential 

for volatility that a single program review can have on the estimate. 
Page | 29 

5. ED should disclose in its annual reporting how the methodologies are sensitive to a single 

observation (such as student or school), either by providing examples or noting how results 

are weighted in arriving at the final improper payment estimates. 

6. ED should revise the improper payment estimation methodologies to account for the program 

reviews that do not reach the program review report stage in time for inclusion in that fiscal 

year’s estimated improper payment rates. 

7. ED should publish the FY 2015 recalculated improper payment rates, notify OMB and 

Congress of any changes, and explain the basis for the revisions in the FY 2016 AFR. 

8. ED should develop, implement, and monitor the effectiveness of internal controls for (1) the 

contractor’s calculation of the improper payment estimates and (2) the Department’s 

oversight and review of the work provided by the contractor. 

9. ED should develop, implement and monitor the effectiveness of internal controls to ensure 

that all applicable program reviews issued prior to the documentation acceptance date are 

included in the improper payment estimates. 

Sources 

OIG, Dept. Education, U.S. Department of Education’s Compliance with Improper Payment 

Reporting Requirements for Fiscal Year 2015 (May 2016). 

Dept. Education, FY 215 Agency Financial Report (Nov. 13, 2015). 
Page | 30 

Department of Energy 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $22.45 Million 

FY 2015 Rate: 0.06 percent 

 In FY 2015, the Department of Energy (Energy) complied with IPERA. In five years, 

Energy has been non-compliant once. 

 Energy does not have any programs susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal N/A 

< 10% Rate N/A 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates N/A 

Programmatic Corrective Action Plans N/A 

Total 2/2 

Selected FY 2015 IG Findings 

 Energy has not yet completed a recommendation from the Government Accountability 

Office’s December 2014 report “DOE’s Risk Assessments Should be Strengthened,” to 

provide additional information regarding the amount and the extent to which improper 

payments could be occurring. 

IG Recommendations 

None provided. 
Page | 31 

Sources 

KPMG, Performance Audit of the Department of Energy’s Improper Payment Report in the FY 

2015 Agency Financial Report, Prepared for Dept. Energy (April 6, 2016). 

Dept. Energy, Fiscal Year 2015 Agency Financial Report (Nov. 16, 2015). 
Page | 32 

Department of Health and Human Services 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $89.8 Billion 

FY 2015 Rate: 10.2 percent 

 The Department of Health and Human Services (HHS) has been non-compliant with IPERA 

for the past five consecutive years. 

 In FY 2015, HHS failed to meet five of the six requirements: 

o HHS did not meet improper payment reduction goals. 

o HHS did not reduce improper payment rates below ten percent. 

o HHS did not adequately conduct risk assessments. 

o HHS did not publish improper payment estimates. 

o HHS did not report corrective action plans. 

 In FY 2015, HHS reported eight programs as at-risk of significant improper payments. Four 

HHS programs reported improper payments over $750 million, or more than ten percent of 

payments: 

1. Medicare Fee-for-Service $43.325B 12.1%

2. Medicare Part C $14.1 B 9.5%

3. Medicare Prescription Drug Benefit (Part D) $2.2 B 3.6%

4. Medicaid $29.1 B 9.8%

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Not Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Not Met 

Publish Estimates Not Met 
Page | 33 

Programmatic Corrective Action Plans Not Met 

Total 1/6 

Programs with Risk of Significant Improper Payments with Rate and Amount 

HHS Program IP Estimate Error 

Rate

1. Medicare Fee-for-Service $43.325B 12.1%

2. Medicare Advantage (Part C) $14.1 B 9.5%

3. Medicare Prescription Drug Benefit (Part D) $2.2 B 3.6%

4. Medicaid $29.1 B 9.8%

5. Children’s Health Insurance Program (CHIP) $632 M 6.8%

6. Temporary Aid for Needy Families (TANF) n/a n/a

7. Foster Care $30.7 M 3.7%

8. Child Care $311.1 M 5.7%

FY 2015 IG Findings 

 HHS did not calculate or report an improper payment estimate for TANF because it is a stateadministered program and statutory limitations prohibit HHS from requiring states to 

participate in a TANF improper payment measurement. OMB, however, has designated 

TANF as a federal program susceptible to significant improper payments. Accordingly, HHS 

should have estimated and reported improper payments for TANF. 

 HHS did not perform risk assessments of payments to employees and charge card payments, 

nor did it properly identify programs for improper payment risk assessment 

 Statistical mistakes led to inaccurate confidence intervals for the Foster Care program. 

 Medicare Fee-for-Service’s error rate exceeded ten percent due to insufficient documentation 

and medical necessity errors. 

 Medicare Advantage missed its target rate mainly due to insufficient documentation by third 

parties. Medicaid and CHIP did not achieve their target rates due to administrative errors 

made by state and local agencies. 
Page | 34 

 The Medicare Advantage (Part C) program had no recovery audit amounts reported in FY 

2015. 

 HHS has not fully addressed recommendations from the prior years’ OIG Performance 

Audits related to improper payments, including the need to provide an improper payment 

estimate and corrective action plan for TANF, meet certain improper payment rate reduction 

targets, and reduce improper payment error rates to below 10 percent. 

IG Recommendations 

1. HHS failed to publish improper payment estimates for TANF. HHS should continue to work 

with OMB to implement one of the potential alternative approaches to reporting on TANF 

improper payments in FY 2016 and publish corrective action plans for TANF. 

2. HHS should perform risk assessments for employee pay and charge cards and report findings 

in the FY 2016 AFR. HHS did not perform a risk assessment for this area, nor did it receive 

a waiver from OMB. 

3. Because programs were not properly identified for the risk assessment, HHS should provide 

formal guidance on identifying programs and incorporate this guidance in its overall 

improper payment risk assessment methodology. 

4. HHS and Administration for Children and Families (ACF) should continue working with the 

states to (1) provide technical assistance and training related to policy updates and (2) 

support Child Care and Development Fund programs in reaching reduction goal targets 

through implementing corrective action plans at the state level, if appropriate. 

5. Update the estimation method for the standard error of the estimated improper payments at 

the state level to reflect that a ratio estimate has been used to estimate the improper payments 

at the state level. 

6. Review descriptions of the Foster Care improper payment calculation within its HHS Agency 

Financial Report to ensure the process and amount for determining precision is representative 

of the process being utilized. 

7. Focus on the root causes for Medicare fee-for-service’s improper error rate percentage and 

evaluate critical and feasible action steps to decrease the improper error rate percentage 

below 10 percent. 

8. Take action throughout the fiscal year to achieve its established improper payment target 

rates, particularly within CMS. (Communicate documentation requirements, monitor 

adherence to such requirements throughout the year, work with the states to bring their 

respective systems into compliance.) 
Page | 35 

9. HHS should continue to take steps to implement a Medicare Advantage (Part C) Recovery 

Audit Contractor (RAC) program and finalize the award in a timely manner with the 

intention to perform RAC audits in FY 2017. 

Sources 

OIG, Dept. Health and Human Services, U.S. Department of Health and Human Services Met 

Many Requirements of the Improper Payments Information Act of 2002 but Did Not Fully 

Comply for Fiscal Year 2015 (May 2016). 

Dept. Health and Human Services, Fiscal Year 2015 Agency Financial Report (Nov. 13, 2015). 
Page | 36 

Department of Homeland Security 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $217.4 Million 

FY 2015 Rate: 1.9 percent 

 The Department of Homeland Security (DHS) has been non-compliant with IPERA for the 

past five consecutive years. 

 In FY 2015, DHS failed to meet one requirement: 

o DHS did not meet improper payment reduction goals. 

 In FY 2015, DHS reported nineteen programs as at-risk of significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 5/6 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DHS Program IP Estimate Error 

Rate

1. Customs and Border Protection Refund and Drawback $3.88 M 0.24%
Page | 37 

2. Customs and Border Protection Administratively 

Uncontrollable Overtime 

$0.84 M 0.25%

3. Hurricane Sandy – Customs and Border Protection Payments $0.0007 M 0.14%

4. Hurricane Sandy – Domestic Nuclear Detection Office 

Systems Acquisition 

$0 0%

5. Assistance to Firefighters Grant Program $1.44 M 0.64%

6. Flood Hazard Mapping and Risk Analysis Program $10.92 M 8.33%

7. Hurricane Sandy - Hazard Mitigation Payments $0 0%

8. Homeland Security Grant Program $17.96 M 1.2%

9. Hurricane Sandy - Individuals and Household Program 1.68 M 7.01%

10. National Flood Insurance Program $1.47 M 0.16%

11. Port Security Grant Program $2.02 M 0.67%

12. Hurricane Sandy – Federal Emergency Management Agency 

Public Assistance Program 

$5.1 M 0.48%

13. Transit Security Grant Program $3.12 M 0.88%

14. Hurricane Sandy – Federal Emergency Management Agency 

Vendor Pay 

$54.99 M 7.5%

15. Enforcement and Removal Operations $61.93 M 4.06%

16. Hurricane Sandy – Federal Protective Service Payments $0 0%

17. Hurricane Sandy – Inspector General Payments $0 0%

18. Hurricane Sandy – Science and Technology Research and 

Development 

$0 0%

19. Hurricane Sandy – Coast Guard Acquisition/Constructions 

and Improvements, Operating Expenditures, and Expenditure, 

Collections, and Reimbursements 

$0.57 M 1.44%

FY 2015 IG Findings 

 DHS did not perform oversight of the components’ improper payment testing and reporting. 

Specifically, it did not properly document its review of the components’ risk assessments. 
Page | 38 

IG Recommendations 

1. DHS should ensure that the Risk Management and Assurance Division strengthens its 

oversight to ensure proper documentation of its review of components’ risk assessments. 

2. DHS should ensure that the Risk Management and Assurance Division confirms its review 

and approval of the component risk assessments in a timely manner. 

3. DHS should ensure that the Risk Management and Assurance Division has adequate 

personnel to ensure compliance with IPERA requirements. 

4. DHS should ensure that the Risk Management and Assurance Division clearly designates 

contract deliverables for the risk assessment reviews. 

5. DHS should ensure that the Risk Management and Assurance Division follows the OMB’s 

requirement for agencies not compliant with IPERA and focus resources on corrective action 

that will help meet the OMB-approved reduction targets. 

Sources 

OIG, Dept. Homeland Security, Department of Homeland Security’s FY 2015 Compliance with 

Improper Payments Elimination and Recovery Act of 2010 (May 11, 2016). 

Dept. Homeland Security, Agency Financial Report Fiscal Year 2015 (Nov. 13, 2015). 
Page | 39 

Department of Housing and Urban Development 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $1.3 Billion 

FY 2015 Rate: 3.87 percent 

 The Department of Housing and Urban Development (HUD) has been non-compliant with 

the Improper Payments Elimination and Recovery Act for three consecutive years. 

 In FY 2015, HUD failed to meet two requirements: 

o HUD did not conduct an annual risk assessment in accordance with the OMB guidance. 

o HUD failed to meet its annual improper payment reduction target. 

 In FY 2015 HUD reported two programs at risk of improper payments. One program 

reported improper payments above $750 million. 

1. Rental Housing Assistance Programs (RHAP) $1.3 B 4.0% 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Not Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

Programs with Risk of Significant Improper Payments with Rate and Amount 
Page | 40 

HUD Program IP Estimate Error Rate

1. Rental Housing Assistance Programs (RHAP) $1.3 B 4.0%

2. Hurricane Sandy Related Funding $18.81 M 1.15%

FY 2015 IG Findings 

 Noted some issues concerning (1) the completeness and accuracy of HUD’s improper 

payment data reporting, including payment recapture audit plans, and (2) the reasonableness 

of HUD’s improper payment estimate for its Rental Housing Assistance Programs. 

 As of the end of FY 2015, ten previous audit recommendations remained open. 

 HUD did not (1) maintain adequate documentation to support its conclusion that certain 

programs and activities should be excluded from its payment recapture audit plan, (2) 

provide OMB and us a complete cost-benefit analysis and justification, and (3) disclose the 

cost-benefit analysis and justification for all programs excluded from the payment recapture 

audit plan in the AFR. All of these actions are required under OMB Circular A-123, 

appendix C. 

 A billing error used to estimate improper payments for RHAP was not adjusted appropriately 

to reflect the billing error for fiscal year 2014, which was reported in the fiscal year 2015 

AFR. In addition, the combined RHAP improper payment rate could be masking significant 

improper payment rates for one or more RHAP components. 

 HUD did not fully comply with reporting requirements. Specifically, it did not comply with 

OMB requirements, accurately categorize its improper payment estimates, or identify or 

report high-dollar overpayments. 

IG Recommendations 

1. HUD should revise its risk assessment process to ensure that all HUD programs are (1) 

initially risk-assessed for improper payments or request a waiver from OMB, and if programs 

are determined to be low risk, reassess them on a 3-year cycle; and (2) risk assessed against 

all of the required risk factors. 

2. HUD should establish policies and procedures to ensure that adequate documentation of the 

risk assessment process is maintained to facilitate an independent third-party’s review of 

OCFO’s compliance OMB requirements for risk assessments. 
Page | 41 

3. HUD should reassess the susceptibility of the FHA single family claims program to 

significant improper payments using a quantitative assessment method and provide the 

results and all of the supporting documentation to OIG for review. 

4. HUD should revise its risk assessment process to (1) ensure that all FHA programs are 

assessed for significant improper payments or request a waiver from OMB; (2) establish a 3-

year cycle to reassess all low-risk programs; and (3) ensure that consideration of all of the 

required risk factors is clearly documented. 

5. HUD should develop, document, and implement formal policies and procedures to ensure 

that (1) all programs or activities that expend $1 million or more annually for each program 

office identified are included in either the program office’s payment recapture audit plan or 

provide a justification and analysis showing why a payment recapture audit would not be cost 

effective for that program or activity and (2) justifications and analyses showing why a 

payment recapture audit would not be cost effective are maintained and adequately described 

in the AFR.. 

6. HUD should revisit the existing recovery audit plan and update it as needed to ensure that all 

programs and activities that expended more than $1 million annually were included in the 

recovery audit plan or excluded from the recovery audit plan and maintain the corresponding 

cost-benefit analyses supporting their exclusion. 

7. HUD should resubmit the justifications for why a payment recapture audit would not be cost 

effective for each program that expended over $1 million or more to OMB and OIG for 

programs that were not already identified under a separate recovery audit plan. 

8. HUD should adequately disclose in the AFR a complete list of all programs that were 

excluded from the payment recapture audit plan, along with HUD’s justification and analysis 

for their exclusion. 

9. HUD should develop and document a methodology for adjusting the billing error for factors 

that may change the billing error previously reported if a billing study is not performed 

annually. 

10. HUD should ensure that the description of corrective actions in the AFR include an 

explanation of how the corrective actions address the root causes of problems. 

11. HUD should amend its IPERA requirements checklist to ensure the descriptions of corrective 

actions include an explanation of how corrective actions address root causes. 

12. HUD should establish and implement procedures to ensure that the required information 

specified in its AFR Requirements Checklist is adequately and specifically addressed and is 

included in the published AFR. 

13. HUD should establish and implement a process to identify high-dollar overpayments and 

report them quarterly to OMB and us or submit a written request to OMB for an alternative 

reporting structure. 
Page | 42 

Sources 

OIG, HUD, Compliance with the Improper Payments Elimination and Recovery Act (May 13, 

2016) 

HUD, Agency Financial Report Fiscal Year 2015 (Nov. 23, 2015). 
Page | 43 

Department of Interior 

Improper Payments Report FY 2015 

Highlights 

The Department of Interior did not report an improper payment estimate for FY 2015. 

The DOI IG reported that FY 2015 and FY 2014 estimates “were not based on a valid statistical 

sample and appear too low for high-risk disaster relief program expenditures.” 

 The Department of Interior (Interior) has been non-compliant with IPERA for the past three 

consecutive years. 

 In FY 2015, Interior failed to meet two requirements: 

o Interior failed to complete the required risk assessments. 

o Interior did not publish improper payment estimates. 

 In FY 2015, Interior reported one program susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Not Met 

Publish Estimates Not Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

 
Page | 44 

Programs with Risk of Significant Improper Payments with Rate and Amount 

Interior Program IP Estimate Error 

Rate

1. Hurricane Sandy Disaster Relief Act Program $0 0%

FY 2015 IG Findings 

 Interior did not conduct its triennial risk assessment as required by IPERA. 

 Interior did not report a valid improper payment rate. 

 The improper payment rates that Interior reported were not based on a valid statistical sample 

and appear too low for high-risk disaster-relief program expenditures. 

 Interior did not have a Department-wide standardized statistical sampling and estimation plan 

that was prepared by a trained statistician and approved by OMB as required. 

IG Recommendations 

1. Interior should perform a risk assessment of all programs for its FY 2016 IPERA reporting. 

2. Interior should establish a department-wide sampling methodology prepared by a trained 

statistician, as required. The methodology should be sufficient to produce a valid and 

consistent sample of disaster-relief transactions in order to project a valid estimated improper 

payment rate. 

3. Interior should validate all sampling results to ensure that a valid rate is obtained before 

reporting in the Agency Financial Report. 

Sources 

Memorandum from OIG, Dept. Interior, U.S. Department of Interior’s Compliance with the 

Improper Payments Elimination and Recovery Act of 2010 in its Fiscal year 2015 “Agency 

Financial Report” (May 2016) 

Dept. Interior, Agency Financial Report FY 2015 (Nov. 13, 2015). 
Page | 45 

Department of Justice 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $0 

FY 2015 Rate: 0 percent 

 In FY 2015, the Department of Justice (DOJ) complied with IPERA. DOJ has complied with 

IPERA for five consecutive years. 

 In FY 2015, DOJ had two program susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal n/a 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans n/a 

Total 4/4 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DOJ Program IP Estimate Error 

Rate

1. Law Enforcement Program (Sandy Relief) $0 0%

2. Prisons and Detention Program (Sandy Relief) $0 0%
Page | 46 

FY 2015 IG Findings 

 DOJ did not find any programs susceptible to significant improper payments, not including 

Hurricane Sandy programs. 

IG Recommendations 

None provided. 

Sources 

OIG, Dept. Justice, Examination of the U.S. Department of Justice’s Fiscal Year 2015 

Compliance under the Improper Payments Elimination and Recovery Act of 2010 (May 2016). 

Dept. Justice, FY 2015 Agency Financial Report (Nov. 12, 2015). 
Page | 47 

Department of Labor 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $3.68 Billion 

FY 2015 Rate: 10.73 percent 

 The Department of Labor (DOL) has been non-compliant with IPERA for the past five 

consecutive years. 

 In FY 2015, DOL failed to meet two requirements: 

o DOL failed to meet improper payment reduction targets. 

o DOL failed to reduce improper payments below ten percent of all payments. 

 DOL has three programs at risk of improper payments. One DOL program reports improper 

payments above $750 million. 

1. Unemployment Insurance (UI): $3.5 B 10.7%

 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Not Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

 
Page | 48 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DOL Program IP Estimate Error 

Rate

1. Unemployment Insurance (UI): $3.5 B 10.7%

2. Federal Employees Compensation Act (FECA) $85.73 M 2.87%

3. Workforce Investment Act grants (WIA) $22.3 M 0.88%

 

FY 2015 IG Findings 

 DOL’s improper payment estimate may not be valid because DOL excludes two categories 

of payments and does not determine and report the full effect of those exclusions in its 

estimates. 

 DOL will conduct the next review for programs at risk of improper payments in FY 2016. 

 DOL has not implemented previous IG recommendations that the IG continues to believe 

would improve compliance with improper payment laws. 

IG Recommendations 

1. DOL should improve the estimation methodology for the FECA program to ensure its 

completeness by including the initial payments made in the first 90 days of compensation and 

compensation payments for non-imaged cases. (May 15, 2015) 

2. DOL should report in the AFR any limitations with the sampling methodology for the FECA 

program. (May 15, 2015) 

3. DOL should identify the improper payment issues identified by fraud investigations and 

estimate the extent to which these issues exist in the payment population. (May 15, 2015) 

4. DOL should consider methods for improving the WIA sampling methodology to provide a 

more complete estimate of improper payments and include information on the limitations of 

the data used in the estimation of WIA overpayment in the AFR. (March 15, 2015) 

5. DOL should develop effective procedures, including seeking legislative authority to conduct 

matches with SSA retirement records, to ensure that claimants who receive SSA retirement 

benefits are identified timely and their FECA benefits are adjusted accordingly. (February 15, 

2012) 
Page | 49 

Sources 

OIG, Dept. Labor, DOL Could Do More to Reduce Improper Payments and Improve Reporting 

(May 16, 2016). 

Dept. Labor, Agency Financial Report Fiscal Year 2015 (Nov. 19, 2015). 
Page | 50 

Department of State 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $0 

FY 2015 Rate: 0 percent 

 In FY2015, the Department of State (State) complied with the IPERA. In the past five years, 

State has been non-compliant once. 

 State did not identify any program as at risk of significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal n/a 

< 10% Rate n/a 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates n/a 

Programmatic Corrective Action Plans n/a 

Total 2/2 

FY 2015 IG Findings 

 State has not implemented its recommendations from the FY2014 audit. 

 By failing to consider additional factors, State may not have identified all programs with 

increased risks of improper payments because of increased funding. 

 State did not disclose the complete amount of improper payments recaptured outside its 

payment recapture audit activities in the Agency Financial Report (AFR). 
Page | 51 

IG Recommendations 

1. State should expand its process to identify programs with significant funding changes to 

consider additional factors that may increase the risk of significant improper payments, 

including, at a minimum, the percentage increase of the change. (2015) 

2. State should develop a method to include amounts of improper payments identified and 

recovered by all State offices and bureaus. 

Sources 

OIG, Dept. State, Audit of Department of State FY 2015 Compliance with Improper Payment 

Requirements (May 2015). 

Dept. State, Fiscal Year 2015 Agency Financial Report: Advancing America’s Interests Through 

Global Leadership and Diplomacy (Nov. 16, 2015). 
Page | 52 

Department of Transportation 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $491 Million 

FY 2015 Rate: 0.81 percent 

 The Department of Transportation (DOT) has been non-compliant with the Improper 

Payments Elimination and Recovery Act for five consecutive years. 

 In FY 2015, DOT failed to meet two requirements: 

o DOT did not meet reduction goals. 

o DOT did not effectively report payments in the Agency Financial Report (AFR). 

 In FY 2015, DOT had eight programs susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Not Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

 
Page | 53 

Programs with Risk of Significant Improper Payments with Rate and Amount 

DOT Program IP Estimate Error 

Rate

1. Federal Aviation Administration (FAA) Airport Improvement 

Program (AIP) 

$1.27 M 0.04%

2. FAA Facilities & Equipment, Disaster Relief Appropriations 

Act (F&E – DRAA) 

$0 0%

3. Federal Highway Administration (FHWA) Highway Planning 

and Construction 

$479.2 M 1.08%

4. Federal Railroad Administration (FRA) Grants to Amtrak $4.24 M 0.31%

5. FRA High-Speed Intercity Passenger Rail (HSIPR) $0.36 M 0.03%

6. Federal Transit Administration (FTA) Formula Grants and 

Passenger Rail Investment and Improvement Act Projects 

$5.09 M 0.05%

7. FTA Emergency Relief Program, Disaster Relief 

Appropriations Act (ERP-DRAA) 

$0.17 M 0.03%

8. Maritime Administration (MARAD) Electronic Invoicing 

System – Ready Reserve Force – Ship Manager Payments 

(RRF) 

$0.69 M 0.25%

FY 2015 IG Findings 

 DOT did not sufficiently test all transactions and inaccurately reported some future outlays. 

 DOT did not meet its improper payment reduction targets for 1 of 8 programs tested. 

IG Recommendations 

1. DOT should publish future year outlays in the AFRs that match the President’s Budget as 

required by OMB A-136. (2016) 

2. DOT should monitor FHWA’s progress on the new corrective actions they initiated to reduce 

the HPC program improper payments and achieve the FY16 reduction target rates. (2016) 

3. DOT should develop a process to provide greater oversight and review of contractors and 

employees that perform improper payment testing to ensure that the work has an audit trail 

and is accurate. (2015) 
Page | 54 

4. DOT should implement procedures to ensure guidance is distributed which increases grantee 

knowledge of documentation required to support a payment as proper. (2015) 

5. DOT should provide specific documentation requirements and greater oversight of 

contractors who perform improper payment testing to ensure they test actual payments and 

verifies that each transaction has an audit trail and proper support. (2014) 

6. DOT should provide specific documentation requirements and greater oversight and review 

of contractors that perform improper payment testing to ensure that the work has an audit 

trail and is accurate. (2013) 

Sources 

OIG, Dept. Transportation, DOT’s Fiscal Year 2015 Improper Payment Report Does Not 

Comply with IPERA Requirements (May 13, 2016). 

Dept. Transportation, Agency Financial Report Fiscal Year 2015 (2015). 
Page | 55 

Department of Treasury 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $15.6 Billion 

FY 2015 Rate: 23.8 percent 

 The Department of Treasury (Treasury) has been non-compliant with IPERA for five 

consecutive years. 

 In FY 2015, Treasury failed to meet several requirements: 

o Treasury did not reduce improper payment rates below ten percent. 

o Treasury did not fully comply with reporting requirements for the AFR. 

o Treasury did not provide a valid assessment in its annual risk assessment process. 

 Treasury had one program identified as being at risk of significant improper payments. 

1. Earned Income Tax Credit (EITC) $15.6 B 23.8%

 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Not Met 

Reporting in the Agency Financial Report Not Met 

Risk Assessment Not Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 3/6 

 
Page | 56 

FY 2015 IG Findings 

 Treasury’s annual risk assessment process did not provide a valid assessment of refundable 

credit improper payments. Additional work is needed to assess the Additional Child Tax 

Credit (ACTC) and the American Opportunity Tax Credit (AOTC). 

o The Treasury Inspector General for Tax Administration (TIGTA) estimated ACTC had 

$5.7 billion, 24.2 percent, in improper payments and AOTC had $1.8 billion, 30.7 

percent, in improper payments. 

o Using TIGTA’s estimates, the IRS should have reported $22.1 billion in improper 

payments. 

 Treasury had computation errors in recapture audit reporting. 

 IRS has submitted a legislative proposal requesting correctable error authority, which would 

allow the IRS to correct simple math errors in tax returns, as part of its fiscal year 2017 

budget submission. 

IG Recommendations 

1. Treasury should update its guidance to clarify the reporting requirements for payment 

recapture audits. 

2. Treasury should strengthen its review and oversight of the data reported by components on 

payment recapture audits to accurately reflect the results of recapture audits. 

3. Treasury and IRS should ensure TIGTA’s recommendations related to the Additional Child 

Tax Credit (ACTC) and American Opportunity Tax Credit (AOTC) improper payments risk 

assessment processes are implemented, and appropriate action is taken to report on and 

reduce improper payments associated with these refundable tax credit programs. 

Sources 

OIG, Dept. Treasury, Treasury Was Not in Compliance with IPERA for Fiscal Year 2015 Due to 

High Improper Payment Rate for the Earned Income Tax Credit Program (May 13, 2016). 

Dept. Treasury, Agency Financial Report Fiscal Year 2015 (Nov. 16, 2015). 
Page | 57 

Department of Veterans Affairs 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $5 Billion 

FY 2015 Rate: 4.39 percent 

 The Department of Veterans Affairs (VA) has been non-compliant with IPERA for the past 

five consecutive years. 

 In FY 2015, the VA failed to meet two requirements: 

o VA did not meet the improper payment reduction target. 

o VA failed to reduce improper payments below ten percent. 

 VA reported 14 programs at risk of significant improper payments. Three programs reported 

improper payments above $750 million, two of which had improper payment rates greater 

than fifty percent. 

1. Purchased Long Term Services and Support (PLTSS) $875.12 M 59.14%

2. VA Community Care $2.14 B 54.77%

3. Compensation $1.36 B 2.33%

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Not Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 4/6 
Page | 58 

Programs with Risk of Significant Improper Payments with Rate and Amount 

VA Program IP Estimate Error 

Rate

1. Veterans Health Administration (VHA) Beneficiary Travel $50.48 M 6.22%

2. VHA CHAMPVA $38.75 M 3.41%

3. VHA Community Care $2.142 B 54.77%

4. VHA Purchase Long Term Services and Supports $875.12 M 59.14%

5. VHA State Home Per Diem Grants $21.766 M 2.02%

6. VHA Supplies and Materials $32.440 M 1.32%

7. Veterans Benefits Administration (VBA) Compensation $1.361 B 2.33%

8. VBA Pension $264.19 M 4.53%

9. VBA Vocational Rehabilitation and Employment Services 

(VR&E) 

$11.26 M 1.04%

10. VBA Education – Chapter 33 $135.05 M 1.21%

11. VBA Education – Chapter 1606 $1.55 M 1.05%

12. VBA Education – Chapter 1607 $1.5 M 2.23%

13. Disaster Relief Act – Hurricane Sandy $1.558 M 5.71%

14. Payments to Federal Employees (PFE) – Payroll $38.46 M 0.15%

FY 2015 IG Findings 

 VA reported $5 billion worth of improper payments in FY 2015, compared to $1.6 billion in 

FY 2014. 

 The dramatic increase in improper payment rates occurred primarily because VA improved 

its sample evaluation procedures in FY 2015, which resulted in more improper payments 

being identified. 

o VA began verifying whether valid contracts supported the payments and found many 

contracts were not compliant with the Federal Acquisition Regulations (FAR). 
Page | 59 

o Without FAR compliant contracts, VA cannot demonstrate that it obtained the best value. 

 VA underestimated improper payments for the Supplies and Materials program. VA did not 

identify all improper payments in the sample used to estimate the program’s improper 

payments. 

 The VA Community Care and PLTSS programs did not achieve the expected level of 

precision for their improper payment estimates for FY 2015. 

 The Compensation program reported much higher improper payments, which VA attributed 

to improved estimation methodologies, more experienced testers, and additional specialized 

training for testers. 

 Eight programs did not meet reduction targets. 

IG Recommendations 

1. VA should implement the corrective action plan to make procurement practices compliant 

with laws and regulations. 

2. VA should implement steps to achieve reduction targets. 

3. VA should implement additional training for persons who evaluate IPERA samples. 

4. The VA Under Secretary for Health should provide contract expertise to the IPERA review 

team. 

5. VA should develop a solution for correcting the concurrent payment with DOD programs. 

Sources 

OIG, VA, Review of VA’s Compliance with the Improper Payments Elimination and Recovery 

Act for FY 2015 (May 12, 2016). 

VA, 2015 Agency Financial Report (Nov. 16, 2015). 
Page | 60 

Environmental Protection Agency 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $3.74 million 

FY 2015 Rate: 0.14 percent 

 In FY 2015, the Environmental Protection Agency (EPA) complied with IPERA. 

 In FY 2015, the EPA reported three programs susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans N/A 

Total 5/5 

Programs with Risk of Significant Improper Payments with Rate and Amount 

EPA Program IP Estimate Error 

Rate

1. Clean Water State Revolving Fund $1.51 M 0.1%

2. Drinking Water State Revolving Fund $2.23 M 0.19%

3. Hurricane Sandy Programs $4,000 0.03%
Page | 61 

Selected FY 2015 IG Findings 

 EPA did not publish the revised, final AFR until January 2016, which had errors in the 

Improper Payments Compliance section of the AFR, resulting in overstated improper 

payments for the Hurricane Sandy and grants payment streams, and an under-reporting of 

total dollar outlays for the commodities payment stream. 

 EPA limited the scope of the risk assessment for the contracts payment stream to the 

processing of invoices pursuant to appropriations law and the Prompt Payment Act, and to 

determining if the invoice was proper. Risk assessment did not take into consideration the 

programmatic risks associated with contracting or OIG audits or internal reviews conducted 

by the EPA. 

 EPA underreported total dollar outlays, and the number of erroneous payments. 

 Internal controls were not sufficient to identify and correct the human errors made during the 

reporting process. Further, staff did not follow established improper payment reporting 

procedures, 

 EPA limited the scope of the contracts payment stream risk assessment, failing to assess all 

required programs. By limiting the scope of the risk assessment, the EPA is not adequately 

assessing the risk associated with compliance with the terms and conditions of contracts. 

IG Recommendations 

1. EPA should determine the reasons for the delays and errors in the publication of the FY 2015 

AFR, and identify and implement internal controls to prevent these errors and delays. 

2. EPA should amend the standard operating procedure for identifying and reporting improper 

payments for the commodities payment stream, and integrate the entire contracting process 

into the contracting payment process risk assessment. 

3. EPA should finalize the grants payment stream’s draft procedure for improper payment 

reporting, including cost-effective internal controls to produce reliable reports. 

Sources 

OIG, EPA, EPA Complied with Improper Payment Legislation, but Stronger Internal Controls 

are Needed (May 10, 2016). 

EPA, Fiscal Year 2015 Agency Financial Report (Nov. 16, 2015). 

 
Page | 62 

General Services Administration 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $8.92 million 

FY 2015 Rate: 0 percent 

 The General Services Administration (GSA) has been non-compliant with IPERA for two 

consecutive years. 

 GSA did not comply with the requirement to test or report improper payment estimates for 

the Hurricane Sandy Disaster Relief Fund. 

 In FY 2015, GSA reported four programs susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Not Met 

Programmatic Corrective Action Plans Met 

Total 5/6 

 
Page | 63 

Programs with Risk of Significant Improper Payments with Rate and Amount 

GSA Program IP Estimate Error 

Rate

1. Rental of Space $6.9 M 0.12%

2. Building Operations – Utilities $0.04 M 0.01%

3. Purchase Cards $1.98 M 6.55%

4. Hurricane Sandy Fund n/a n/a

FY 2015 IG Findings 

 GSA’s Office of the Chief Financial Officer (OCFO) has constant turnover and may be 

understaffed. This likely contributed to the findings in the IG report. 

 GSA’s vendor payment continuous monitoring is a manual process, while other agencies use 

continuous monitoring software that provides real-time, continuous monitoring and flagging 

of high risk transactions. If GSA adopted such software, it could reduce its improper 

payments, collection costs, and payment recapture auditor commissions. 

 GSA did not test the transactions of Hurricane Sandy Disaster Relief Funds due to the 

immateriality of the amounts ($11,434.00 in obligations and $569,131 in outlays). However, 

OMB guidance requires that agencies measure and report funds received under the Disaster 

Relief Appropriations Act of 2013, regardless of amount. After being notified by the IG, 

GSA tested the four payments and found no improper payments. 

 The IG compared the estimated figures to actual improper payment figures and found that 

actual improper payments far exceeded the estimate. GSA identified FY 2015 Rental of 

Space improper payments of $29.5 million, a figure more than four times greater than 

OCFO’s $6.9 million estimate. 

 GSA switched from a quantitative to a qualitative approach to determine program risk, which 

relies on questionnaires that are vulnerable to inherent bias. Using a quantitative approach, 

as was used in FY 2012, could ensure reliable, objective results. 

IG Recommendations 

1. GSA should implement a process to ensure all required programs are tested and reported for 

improper payments and submit a plan for addressing noncompliance. 
Page | 64 

2. GSA should adopt a quantitative approach or develop an improved qualitative approach to 

increase reliability and objectivity of future risk assessment results. 

3. GSA should ensure timely implementation of payment recapture audit recommendations, 

improve continuous monitoring processes, and identify and correct root causes of improper 

payments. 

4. GSA should implement controls to ensure accurate and reliable reporting. 

5. GSA should implement controls and develop and disseminate guidance for the claims review 

and validation process. 

Sources 

OIG, GSA, GSA Did Not Fully comply with the Improper Payments Acts in FY 2015 (May 11, 

2016). 

GSA, Agency Financial Report Fiscal Year 2015 (Nov. 10, 2015). 
Page | 65 

National Aeronautics and Space Administration 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $0 

FY 2015 Rate: 0 percent 

 In FY 2015, the National Aeronautics and Space Administration (NASA) complied with 

IPERA. In the past five years, NASA was non-compliant once. 

 In FY 2015, NASA found that no programs were at risk of improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans N/A 

Total 5/5 

FY 2015 IG Findings 

 The IG found that overpayments may not be fully reported in the AFR because NASA only 

searched for collected payments. 

 NASA can improve its risk assessment process by adjusting the weighted percentages it 

assigns to risk conditions and incorporating more agency specific risk conditions. 
Page | 66 

IG Recommendations 

1. NASA should revisit the percentages assigned to the risk conditions to better reflect their 

relevance and significance and document the rationale for the percentages assigned. 

2. NASA should incorporate a risk factor that considers the timeliness of incurred cost audits. 

3. NASA should develop written policies and procedures detailing the process for reporting 

overpayments identified and recaptured from sources outside of payment recapture audits. 

At a minimum the policy should include the expectations, roles, and responsibilities of all 

involved parties and clear and descriptive instructions regarding how to identify amounts for 

reporting. 

4. NASA should disseminate the appropriate system query logic to identify potential 

overpayments and train the affected organizations or individuals to execute the query and 

analyze the results. 

5. NASA should obtain management decision letters issued by contracting officers to identify 

potential overpayments and report any overpayments determined to be improper in the AFR 

as overpayments identified from outside of payment recapture audits. 

Sources 

OIG, NASA, NASA’s Compliance with the Improper Payments Information Act for Fiscal Year 

2015 (May 12, 2015). 

NASA, FY 2015 Agency Financial Report (Nov. 13, 2015). 
Page | 67 

National Science Foundation 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $ 0 

FY 2015 Rate: 0 % 

 In FY 2015, the National Science Foundation (NSF) complied with IPERA reporting 

requirements. However, NSF has been non-compliant in two of the last five years. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal N/A 

< 10% Rate N/A 

Reporting in the Agency Financial Report Yes 

Risk Assessment Yes 

Publish Estimates N/A 

Programmatic Corrective Action Plans N/A 

Total 2/2 

FY 2015 IG Findings 

 NSF grant recipients are generally not required to present supporting documentation, such as 

invoices and receipts, in order to receive payments from the agency. 

o As a result, NSF issues approximately $6 billion annually in grant and cooperative 

agreement payments without verification. 

o NSF relies almost completely on the recipients’ systems of internal control to ensure that 

only proper payments are requested and that any improper payments are self-identified 

and corrected by the recipient. 
Page | 68 

 NSF may not have fully explored the agency’s susceptibility to improper payments due to 

significant limitations in its analysis of six of the nine OMB risk factors and its assessment of 

NSF payments to employees. 

 NSF chose to take a qualitative approach to the risk assessment, interviewing employees with 

a questionnaire, instead of a quantitative approach. 

o In some instances, the interviews did not address areas of known risks in sufficient detail 

to provide a systematic risk assessment. 

o It was unclear why some questions and not others were asked. 

o NSF accepted answers at face value and did not obtain supporting information. 

 NSF did not conduct IPERA-specific testing on payroll in FY 2015 or interview NSF’s 

Division of Human Resource Management (HRM), the division responsible for salary and 

benefits process, during the IPERA risk assessment. 

IG Recommendations 

1. NSF should allow sufficient time to conduct a thorough and robust assessment of the 

agency’s susceptibility to improper payments. 

2. NSF should add a quantitative approach to risk assessments to gain insight on how funds are 

used by awardees and assess whether primary and secondary payments were proper. 

3. Document the policies and procedures to be followed during the IPERA risk assessment and 

require staff and contractors to follow these policies and procedures. 

4. Discuss all relevant OMB risk factors with the relevant leadership and staff, including a 

cross-section of those responsible for making and managing individual awards, from NSF’s 

Divisions and Offices responsible for the program and activities under IPERA. 

5. NSF should clarify the meaning of inherent risk during staff interviews. 

6. NSF should utilize OIG investigation findings, as well as NSF’s own internal reports, to 

identify risks associated with improper payments. 

7. NSF should include a thorough review of payments to employees in the risk assessment. 

8. NSF should include in the risk assessment a clearly documented crosswalk between any 

leveraged internal control test work and the IPERA risk assessment. 

 
Page | 69 

Sources 

OIG, NSF, National Science Foundation’s Compliance with the Improper Payments Elimination 

and Recovery Act for Fiscal Year 2015 (May 12, 2016). 

NSF, FY 2015 Agency Financial Report (Nov. 16, 2015). 

 
Page | 70 

Nuclear Regulatory Commission 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $0 

FY 2015 Rate: 0 percent 

 The Nuclear Regulatory Commission (NRC) has complied with IPERA for five consecutive 

years. 

 NRC does not have any programs susceptible to significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal N/A 

< 10% Rate Yes 

Reporting in the Agency Financial Report Yes 

Risk Assessment Yes 

Publish Estimates N/A 

Programmatic Corrective Action Plans N/A 

Total 3/3 

FY 2015 IG Findings 

 NRC is in compliance and reporting was accurate and complete. 

 NRC conducts future risk assessments on a triennial basis. The results of the FY 2014 risk 

assessment did not identify any programs that were susceptible to making significant 

improper payments. The next NRC risk assessment will take place in FY 2017. 

 
Page | 71 

IG Recommendations 

None provided. 

Sources 

OIG, NRC, Audit of NRC’s Fiscal Year 2015 Compliance with Improper Payment Laws (April 

29, 2016). 

NRC, Fiscal Year 2015 Summary of Performance and Financial Information (Feb. 1, 2016). 

 
Page | 72 

Office of Personnel Management 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $372.6 Million 

FY 2015 Rate: 0.29 percent 

 In FY 2015, the Office of Personnel Management (OPM) was non-compliant with IPERA. 

This is the second time in the past five years that OPM did not comply with IPERA. 

 In FY 2015, OPM failed to meet two requirements: 

o OPM did not publish improper payment estimates. 

o OPM did not adequately perform risk assessments. 

 In FY 2015, OPM reported two programs susceptible of significant improper payments. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Not Met 

Publish Estimates Not Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

 
Page | 73 

Programs with Risk of Significant Improper Payments with Rate and Amount 

OPM Program IP Estimate Error 

Rate

1. Retirement Services $304.2 M 0.38%

2. Federal Employee Health Benefits $68.43 M 0.14%

Selected FY 2015 IG Findings 

 Two recommendations from the FY2014 audit remain outstanding. 

 OPM did not properly categorize the root causes of the retirement programs improper 

payments. The IG identified three more root causes categories that should have been used. 

 OPM’s risk assessment methodology failed to address all nine required risk factors. 

 OPM’s scoring methodology contained multiple errors, such as duplicate rating scales and 

illogical scoring options. 

 Risk assessments for several programs lacked sufficient documentation to support the results. 

 Information in the AFR was inaccurate according to supporting documentation. 

IG Recommendations 

1. OPM should implement controls to identify and evaluate the root causes of the improper 

payment estimates, to ensure the root causes for the retirement benefits program’s improper 

payments are properly categorized. 

2. OPM should revise the risk assessment methodology to ensure the score point values are 

clearly defined and logical, and ensure that all required risk factors are included in the risk 

assessment tool. 

3. OPM should re-evaluate the risk assessments performed over the Background Investigations, 

Federal Employees’ Group Life Insurance, Vendor Payments, Travel Card, and Payroll 

programs to ensure that programs are not susceptible to significant improper payments. 

4. OPM should strengthen their procedures to ensure that the improper payments information 

reported in OPM’s Agency Financial Report is supported, reviewed, and validated for 

accuracy prior to the information’s inclusion in the AFR. (2015) 
Page | 74 

5. OPM should strengthen its oversight controls over the improper payments data reported in 

the AFR to ensure that it accurately reflects supporting data. (2014) 

6. In the FY 2016 AFR, OPM should correct all of the errors identified in the FY 2015 AFR 

Table 14, Status of Internal Controls. 

Sources 

OIG, OPM, Audit of the U.S. Office of Personnel Management’s Fiscal Year Improper Payments 

Reporting (May 11, 2016). 

OPM, Agency Financial Report Fiscal Year 2015 (Nov. 16, 2015). 
Page | 75 

Small Business Administration 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $1.05 Billion 

FY 2015 Rate: 5.07 percent 

 The Small Business Administration (SBA) has been non-compliant with IPERA reporting 

requirements for five consecutive years. 

 In FY 2051, SBA failed to meet two requirements: 

o SBA did not meet reduction goals. 

o SBA did not reduce all program improper payment rates below 10%. 

 SBA reported nine programs as at risk of significant improper payments. Two programs 

reported improper payments above $750 million, or more than ten percent of payments. 

1. Section 7 (a) Loan Guaranty Approvals $848 M 5.59%

2. Disbursements for Goods and Services $14.3 M 13.52%

 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not met 

< 10% Rate Not met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 4/6 

 
Page | 76 

Programs with Risk of Significant Improper Payments with Rate and Amount 

SBA Program IP Estimate Error 

Rate

1. Section 7(a) Loan Guaranty Purchases $7.91 M 0.9%

2. Section 7(a) Loan Guaranty Approvals $848.08 M 5.59%

3. Section 504 CDC Loan Guaranty Approvals $158.2 M 3.78%

4. Disaster Direct Loan Program $24.6 M 8.13%

5. Disbursements for Goods and Services $14.3 M 13.52%

6. Hurricane Sandy Disaster Relief Grants $130,051 3.02%

7. Hurricane Sandy Disaster Relief Administrative Funds – 

Payroll 

$410,000 0.3%

8. Hurricane Sandy Disaster Relief Administrative Funds – 

Travel 

$12,000 0.12%

9. Hurricane Sandy Disaster Relief Administrative Funds – 

Purchase Cards 

$5,000 1%

FY 2015 IG Findings 

 SBA’s disbursements for goods and services had an improper payment rate that exceeded the 

ten percent threshold. 

 Four SBA programs did not meet their reduction targets: Sections 7(a) and 504 loan guaranty 

approvals, Hurricane Sandy disaster relief grants, and disbursements for goods and services. 

 The primary cause of SBA’s improper payments was insufficient support for the 

reimbursement of lender expenses. 

 SBA needs to improve improper payment controls and processes for Hurricane Sandy 

disaster relief grants and 7(a) loan guaranty purchases—particularly controls responsible for 

ensuring reported improper payment rates are accurate and test plans are complete. 

 SBA plans to submit a plan to Congress describing the actions that SBA will take to address 

its non-compliance with IPERA regarding Sections 7(a) and 504 loan guaranty approvals, 

and Hurricane Sandy disaster relief grants. 
Page | 77 

IG Recommendations 

1. SBA should continue to work with OMB to ensure supplemental measurements to reduce 

improper payments in the 7(a) Loan Guaranty Approvals Program are developed within the 

required timeframe and provided to OMB. (This recommendation has been implemented and 

is therefore considered closed.) 

2. SBA should submit to Congress the following: a) Reauthorization proposals for each 

(discretionary) program or activity that has not been in compliance for three or more 

consecutive fiscal years; or b) Proposed statutory changes necessary to bring the program or 

activity into compliance. 

3. SBA should submit to the Congress and OMB plans for the 504 Loan Program and for the 

Hurricane Sandy Disaster Relief Grants program that includes: a) Measurable milestones for 

becoming compliant with IPERA; b) Designation of an accountable senior agency official; 

and c) The establishment of an accountability mechanism, describing the actions the agency 

will take to become compliant. 

Sources 

OIG, SBA, SBA’s FY 2015 Progress in Reducing Improper Payments (May 13, 2016). 

SBA, Agency Financial Report Fiscal Year 2015: Today’s SBA: Smart, Bold, Accessible (Nov. 

16, 2015). 
Page | 78 

Social Security Administration 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $ 9.8 Billion 

FY 2015 Rate: 0.75 percent 

 The Social Security Administration (SSA) has been non-compliant with the IPERA for the 

past five consecutive years. 

 In FY 2015, SSA failed to meet one requirement: 

o SSA did not meet the reduction targets. 

 In FY 2015, SSA reported two programs as at-risk of significant improper payments, both 

reported improper payments over $ 750 million. 

1. Supplemental Security Income (SSI) $3.6 B 0.4 %

2. Old-Age, Survivors and Disability Insurance (OASDI) $3.5 B 6.2 %

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal Not Met 

< 10% Rate Met 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates Met 

Programmatic Corrective Action Plans Met 

Total 5/6 

 
Page | 79 

FY 2015 IG Findings 

 SSA could not provide all supporting documentation. 

 SSA did not meet reduction targets for SSI or OASDI. 

 

o The OASDI overpayment dollars and rate had increased from the prior year. 

o The leading cause of overpayments were financial accounts and wages. 

o Wage reporting deficiencies increased, despite the implementation of programs designed 

to reduce discrepancies 

 From October 2014 through September 2015, the IG issued 90 reports that identified $4 

billion in questioned costs and $3.5 billion in federal funds that could be put to better use. 

IG Recommendations 

1. SSA should ensure its FY 2016 AFR includes all requirements of applicable improper 

payment reporting guidance. 

2. SSA should annually review its existing corrective actions to determine whether any action 

can be intensified or expanded, resulting in a high-impact, high return on investment in terms 

of reduced or prevented improper payments. 

3. SSA should retain all supporting documentation to assist future reviews. 

Sources 

OIG, SSA, The Social Security Administration’s Compliance with the Improper Payments 

Elimination and Recovery Improvement Act of 2012 in the Fiscal Year 2015 Agency Financial 

Report (May 5, 2016). 

SSA, Agency Financial Report Fiscal Year 2015 (Nov. 9, 2015). 
Page | 80 

United States Agency for International Development 

Improper Payments Report FY 2015 

Highlights 

FY 2015 Estimate: $ 0 

FY 2015 Rate: 0 percent 

 The United States Agency for International Development (USAID) has complied with 

IPERA for five consecutive years. 

Compliance with IPERA Requirements 

IPERA Requirement Compliance 

Reduction Goal n/a 

< 10% Rate n/a 

Reporting in the Agency Financial Report Met 

Risk Assessment Met 

Publish Estimates n/a 

Programmatic Corrective Action Plans n/a 

Total 2/2 

FY 2015 IG Findings 

 OMB granted USAID relief from IPERA reporting on March 19, 2015. 

IG Recommendations 

1. USAID should investigate and resolve the potential funds control violations described in the 

2013 report to determine whether they represent improper payments and/or Anti-Deficiency 

Act violations and report accordingly. (2013) 
Page | 81 

Sources 

OIG, USAID, Audit of USAID’s Fiscal Year 2015 Compliance with the Improper Payments 

Elimination and Recovery Act of 2010 (May 3, 2016). 

USAID, FY 2015 Agency Financial Report: Ending Extreme Poverty in this Generation (Nov. 

16, 2015).