U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

U.S. Chemical Safety and 

Hazard Investigation Board 

Did Not Comply With the 

Do Not Pay Requirements 

for Improper Payments 

Report No. 14-P-0172 April 10, 2014 

Scan this mobile 

code to learn more 

about the EPA OIG. 
 

 

Report Contributors: Cara Lindsey 

 Gloria Taylor-Upshaw 

 Michael Davis 

Abbreviations 

BFS Bureau of the Fiscal Service 

CSB U.S. Chemical Safety and Hazard Investigation Board 

FY Fiscal year 

IBC Interior Business Center 

IPERA Improper Payments Elimination and Recovery Act 

IPERIA Improper Payments Elimination and Recovery Improvement Act 

IPIA Improper Payments Information Act 

OIG Office of Inspector General 

OMB Office of Management and Budget 

PAR Performance and Accountability Report 

Hotline Suggestions for Audits or Evaluations 

To report fraud, waste or abuse, contact us To make suggestions for audits or evaluations, 

through one of the following methods: contact us through one of the following methods: 

email: OIG_Hotline@epa.gov email: OIG_WEBCOMMENTS@epa.gov 

phone: 1-888-546-8740 phone: 1-202-566-2391 

fax: 1-202-566-2599 fax: 1-202-566-2599 

online: http://www.epa.gov/oig/hotline.htm online: http://www.epa.gov/oig/contact.html#Full_Info 

write:	 EPA Inspector General Hotline write: EPA Inspector General 

1200 Pennsylvania Avenue, NW 1200 Pennsylvania Avenue, NW 

Mailcode 2431T Mailcode 2410T 

Washington, DC 20460
 Washington, DC 20460 
 

 

 

 

U.S. Environmental Protection Agency 14-P-0172 

Office of Inspector General April 10, 2014 

At a Glance 

Why We Did This Review 

Office of Management and 

Budget guidance requires 

agencies to report on improper 

payments and Inspectors 

General to review agency 

reporting for compliance. The 

Improper Payments Information 

Act of 2002 was created to 

provide estimates and reports 

of improper payments. The 

Improper Payments Elimination 

and Recovery Act of 2010 

specified agency and Inspector 

General responsibilities. The 

Improper Payments Elimination 

and Recovery Improvement Act 

(IPERIA) of 2012 intensifies 

efforts to identify, prevent and 

recover improper payments. 

As the Inspector General for 

the U.S. Chemical Safety and 

Hazard Investigation Board 

(CSB), the U.S. Environmental 

Protection Agency’s Office of 

Inspector General undertook 

this audit of CSB’s compliance 

with the three reporting 

requirements for improper 

payments. 

This report addresses the 

following CSB goal: 

 Preserve the public trust by 

maintaining and improving 

organizational excellence. 

For further information, 

contact our public affairs office 

at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2014/ 

20140410-14-P-0172.pdf 

U.S. Chemical Safety and Hazard Investigation Board 

Did Not Comply With the Do Not Pay Requirements 

for Improper Payments 

What We Found 

CSB is not compliant with the IPERIA of 2012 Risk of improper Section 5(a)(1) reporting requirement to review payments is increased prepayment and pre-award procedures and ensure because CSB did not 

that a thorough review of available databases occurs implement the 

to prevent improper payments before the release of preventative measures 

any federal funds. Specifically, CSB does not use the required by IPERIA. 

Do Not Pay portal and does not have any provisions 

for testing its payroll and benefits prepayments. In response to our draft report, 

CSB informed us they have established access to the Do Not Pay portal. 

CSB is compliant with the remaining reporting requirements. As required, 

CSB has published its Performance and Accountability Report and financial 

statements on its website. We determined that CSB programs do not meet the 

minimum dollar threshold that would require CSB to perform a risk assessment of 

its programs and activities that are susceptible to significant improper payments. 

CSB performed an analysis justifying that it would not be cost effective to perform 

a recovery audit on CSB’s programs and activities for which it expends $1 million 

or more annually. 

In our analysis of CSB’s reporting and performance to prevent, reduce and 

recapture improper payments, we found that CSB needs to improve its controls 

over testing improper payments. CSB considers improper payments a low risk 

item and relies on the Department of the Treasury’s Bureau of the Fiscal Service 

to test payments for correctness. CSB receives and reviews the Bureau of the 

Fiscal Service’s limited testing of improper payments but does not track actual 

improper payments or document its review of the Bureau of the Fiscal Service’s 

testing. 

 Recommendations and Corrective Actions 

We recommend that the CSB Chairperson: 

1. Establish access to the Do Not Pay portal and use that portal. 

2. Ensure CSB’s payroll benefits go through the portal to comply with 

IPERIA of 2012. Also, track and document reviews of improper 

payments to help prevent or eliminate future improper payments. 

3. Document its analysis of the Bureau of the Fiscal Service’s reports on its 

testing and ensure increased testing is implemented to reduce the risk 

that some improper payments go undetected. 

CSB concurred with our first recommendation and partially agreed with our third 

recommendation. We are working to resolve our second recommendation. 

CSB’s entire response is included as appendix A. 
 

 

 

 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENE 

April 10, 2014 

The Honorable Rafael Moure-Eraso, Ph.D. 

Chairperson and Chief Executive Officer 

U.S. Chemical Safety and Hazard Investigation Board 

2175 K Street, NW, Suite 400 

Washington, D.C. 20037-1809 

Dear Dr. Moure-Eraso: 

This is our report on an audit conducted by the Office of Inspector General (OIG) of the 

U.S. Environmental Protection Agency. This report represents our final position on our review of the 

reporting of improper payments by the U.S. Chemical Safety and Hazard Investigation Board (CSB). 

The report contains findings that describe the issues the OIG has identified and corrective actions the 

OIG recommends. This report represents the opinion of the OIG and does not necessarily represent the 

final CSB position. CSB managers will make the final determinations on matters in this report. 

The Improper Payments Elimination and Recovery Act and Office of Management and Budget guidance 

require the Inspector General to distribute this report to the following individuals and organizations: 

 Office of Management and Budget. 

 Senate Homeland Security and Government Affairs Committee. 

 House Committee on Oversight and Government Reform. 

 U.S. Comptroller General. 

We are providing the report to those individuals and organizations under a separate transmittal letter. 

In responding to the draft report, CSB concurred with recommendation 1, did not concur with 

recommendation 2, and partially concurred with recommendation 3. Although CSB agreed with some of 

the recommendations, it did not provide corrective actions for addressing the recommendations. We will 

post this report to our website at http://www.epa.gov/oig. 

If you or your staff have any questions regarding this report, please contact Kevin Christensen, 

acting Assistant Inspector General for Audit, at (202) 566-0565 or christensen.kevin@epa.gov; 

or Michael Davis, Director, at (513) 487-2363 or davis.michaeld@epa.gov. 

Sincerely, 

Arthur A. Elkins Jr. 
 

 

 

 

 

 

 

 

U.S. Chemical Safety and Hazard Investigation Board 14-P-0172 

Did Not Comply With the Do Not Pay Requirements 

for Improper Payments 

Table of Contents 

Purpose........................................................................................................................ 1
 

Background ................................................................................................................. 1
 

Scope and Methodology............................................................................................. 3
 

Results of Review ....................................................................................................... 3
 

CSB Is Not Compliant With the Do Not Pay Initiative Requirement 

 for Improper Payments .............................................................................. 4
 

CSB Complies With PAR and Financial Statement Requirement 

CSB Programs Do Not Meet Risk Assessment Threshold Requirement 

for Improper Payments .............................................................................. 5 

 for Improper Payments .............................................................................. 6
 

Recovery Audits Are Not Cost Effective for CSB Improper Payments ................. 6 

CSB Needs to Document Its Review of BFS Testing .......................................... 7 

Recommendations...................................................................................................... 8 

CSB Response and OIG Evaluation .......................................................................... 8
 

Status of Recommendations and Potential Monetary Benefits.............................. 10
 

Appendices 

A CSB Response to Draft Report ......................................................................... 11 

B Distribution ......................................................................................................... 16 
 

 

 

Purpose 

The Improper Payments Elimination and Recovery Improvement Act of 2012 

(IPERIA) was signed into law on January 10, 2013, amending the Improper 

Payments Information Act (IPIA) of 2002 and the Improper Payments 

Elimination and Recovery Act (IPERA) of 2010. IPERA became law on July 22, 

2010.1

 On April 14, 2011, the Office of Management and Budget (OMB) issued 

governmentwide guidance for implementation.2

 The guidance updated the 

requirements for measuring and remediating improper payments. The OMB 

guidance requires agencies to report on improper payments and requires 

Inspectors General to review agency reporting. The U.S. Environmental 

Protection Agency’s Office of Inspector General (OIG) is the Inspector General 

for the U.S. Chemical Safety and Hazard Investigation Board (CSB). Our 

objective was to determine whether CSB complies with IPIA of 2002, IPERA of 

2010 and IPERIA of 2012. 

Background 

Each fiscal year, agency Inspectors General are required to determine whether the 

agency complies with improper payment requirements as noted in IPIA of 2002, 

IPERA of 2010 and IPERIA of 2012. Compliance means that the agency has done 

the following (if required): 

	 Published a Performance and Accountability Report (PAR) for the most 

recent fiscal year and posted it on the agency website along with its annual 

financial statements. 

	 Identified programs and activities that are susceptible to significant 

improper payments—defined as gross improper payments exceeding 

2.5 percent of program outlays and $10 million of all program or activity 

payments made during the fiscal year reported, or $100 million—and 

conducted a specific risk assessment for each identified program. 

	 Determined the cost effectiveness of conducting recovery audits on each 

program and activity of the agency that expends $1 million or more 

annually. 

	 Conducted a review of its prepayment and pre-award procedures, and 

reviewed available databases with relevant information before the release 

of any federal funds. 

If an agency does not meet one or more of these requirements, it is not compliant. 

Inspectors General are required to evaluate (1) the accuracy and completeness of 

agency reporting; and (2) agency performance in preventing, reducing and 

recapturing improper payments. Inspectors General should include any 

1

 OMB April 14, 2011, Memorandum M-11-16 revised OMB Circular A-123 Parts I and II. 

2

 OMB Memorandum M-11-16, Issuance of Revised Parts I and II to Appendix C of OMB Circular A-123, issued 

April 14, 2011. The term “IPIA” implies “IPIA, as amended by IPERA,” but the authorizing legislation is still 

named IPIA. 

14-P-0172 1 
 

 

 

recommendations to improve the agency’s performance in reducing improper 

payments. 

IPERA of 2010 requires that each agency periodically review and identify all 

programs and activities that may be susceptible to significant improper payments. 

According to OMB, the act significantly increased requirements for payment 

recapture efforts by expanding the types of payments that could be reviewed. It 

also lowered, to $1 million, the threshold of annual outlays for each program and 

activity for which agencies are required to conduct recovery audits if conducting 

such audits would be cost effective. IPERA also defines an improper payment, in 

relevant part, as any payment that should not have been made or that was made in 

an incorrect amount; any payment to an ineligible recipient, for an ineligible good 

or service, a duplicate payment, or payment for a good or service not received; or 

a payment that does not account for credit for applicable discounts. 

OMB Memorandum M-11-16 expanded the improper payment definition to 

include payments without sufficient documentation. Under OMB Memorandum 

M-11-04,3 agencies are to report on improper contract payments: 

 Voluntarily returned by contractors. 

 Used to offset future payments. 

 Identified and returned to the agency through OIG efforts, such as audits, 

reviews or tips from the public. 

 Identified and recovered through management post payment reviews and 

close-out. 

IPERIA of 2012 requires agencies, as part of the Do Not Pay Initiative, to review 

their prepayment and pre-award procedures, and review available databases (data 

sources within the Do Not Pay portal) with relevant information before the release 

of any federal funds. IPERIA also requires OMB to provide guidance to agencies 

to include all improper payments in their estimates, including those payments 

recovered or in the process of being recovered, and includes payments to 

employees in their estimates. 

CSB has two interagency agreements with the following organizations that handle 

CSB’s financial transactions as well as its payroll and processing procedures: 

	 Department of the Treasury’s Bureau of the Fiscal Service (BFS), 

Administrative Resource Center: CSB has continued its interagency 

agreement with BFS to process financial transactions, make administrative 

payments and prepare various financial reports. As part of that agreement, 

3

 OMB Memorandum M-11-04, Increasing Efforts to Recapture Improper Payments by Intensifying and Expanding 

Payment Recapture Audits, issued November 16, 2010, serves as interim guidance for the broader program of 

payment recapture audits established under IPERA. IPERA provides guidance on expanding the types of payments 

that can be reviewed and lowering the threshold of annual outlays that requires agencies to conduct payment 

recapture audit programs. 

14-P-0172 2 
 

CSB relies on BFS to perform all the necessary testing required for 

identifying any possible improper payments. 

	 Department of the Interior’s Interior Business Center (IBC), formerly the 

National Business Center: CSB’s interagency agreement with IBC is to 

provide an array of payroll and personnel processing applications and 

services, and human resources and human capital services. 

Scope and Methodology 

We conducted this compliance audit from December 2013 to February 2014 in 

accordance with generally accepted government auditing standards, issued by the 

Comptroller General of the United States. Those standards require that we plan 

and perform the audit to obtain sufficient, appropriate evidence to provide a 

reasonable basis for our findings and conclusions based on our audit objective. 

We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objective. 

To determine whether the CSB is compliant with the improper payment 

requirements, we reviewed the CSB’s fiscal year (FY) 2013 PAR and 

accompanying materials. We interviewed CSB to gain an understanding of what 

actions CSB took to comply with the requirements. We reviewed the CSB’s 

interagency agreements with BFS and IBC to obtain a better understanding of the 

division of financial responsibilities between the agencies regarding improper 

payments. We held discussions, exchanged emails, and requested information 

from BFS and IBC staff. We also reviewed CSB’s implementation of our prior 

year audit recommendation concerning receiving and reviewing the results of 

BFS’s testing for CSB’s improper payments on a semiannual basis. 

Results of Review 

CSB is not compliant with the IPERIA of 2012 Section 5(a)(1) reporting 

requirement to review prepayment and pre-award procedures and ensure that a 

thorough review of available databases with relevant information on eligibility 

occurs to determine program and award eligibility and prevent improper payments 

before the release of any federal funds. Specifically, CSB does not use the Do Not 

Pay portal, and does not have any provisions for testing its payroll and benefits 

prepayments. In response to our draft report, CSB stated it has established access 

to the Do Not Pay portal. 

CSB is compliant with the remaining reporting requirements, which requires all 

agencies to review periodically all programs and activities that may be susceptible 

to significant improper payments. As required, CSB has published its PAR and 

financial statements on its website. We determined that CSB programs do not 

meet the minimum dollar threshold that would require CSB to perform a risk 

assessment of its programs and activities susceptible to significant improper 

payments. CSB performed an analysis justifying that it would not be cost 

14-P-0172 3 
 

effective to perform a recovery audit on CSB’s programs and activities for which 

it expends $1 million or more annually. 

In our analysis of CSB’s reporting and performance to prevent, reduce and 

recapture improper payments, we found that CSB needs to improve its controls 

over testing improper payments. CSB considers improper payments a low risk 

item and relies on BFS to test payments for correctness. CSB receives BFS’s 

quarterly reports and stated that it reviews but does not document its review of 

BFS’s improper payment testing. 

CSB Is Not Compliant With the Do Not Pay Initiative Requirement for 

Improper Payments 

CSB has not established access to the Do Not Pay portal, and its interagency 

agreement with IBC did not have any provisions for testing payroll and benefits 

prepayments. IPERIA of 2012 requires the use of the Do Not Pay portal before 

issuing any payments and awards. To comply with IPERIA and prevent improper 

payments in the future, CSB needs to get access to the Do Not Pay portal and 

ensure its payroll and benefits go through the portal prior to the release of federal 

funds. In response to our draft report, CSB stated they have established access to 

the Do Not Pay portal. 

CSB stated that it began the implementation of the Do Not Pay portal requirement 

in December 2013 and currently its contracting officers ensure potential vendors 

are eligible for payments by searching the System for Award Management prior 

to award. The System for Award Management is the official government system 

that consolidates the governmentwide acquisition and award support systems into 

one new system to make the process of doing business with the government more 

efficient. It consolidates nine systems, which includes the Contractor Performance 

Assessment Reporting System and Excluded Parties List System. 

From our review of CSB’s interagency agreement with IBC, we found that it did 

not have any provisions for testing CSB’s payroll and benefits prepayments. 

CSB believes that IBC has Do Not Pay checks in its processes prior to payroll 

payments. However, CSB had not received confirmation from IBC of its portal 

usage prior to our report. IBC told us that it does not test CSB’s payroll for 

improper payments and specifically stated, “[s]ince the [i]mproper [p]ayment 

reviews are to be performed at the agency's program level, there is no improper 

payment review performed at the IBC related to payroll processing.” 

IPERIA of 2012 Section 5(a)(1) requires each agency to review prepayment and 

pre-award procedures and ensure that a thorough review of available databases 

with relevant information on eligibility occurs to determine program or award 

eligibility and prevent improper payments before the release of any federal funds. 

CSB informed us that its payroll system has many controls prior to timesheets 

going to IBC for payment. Also, CSB stated it performs post payment reviews by 

14-P-0172 4 
 

comparing the data to the operating budget, and when it sees that an employee 

received an incorrect payment it notifies IBC so that a collection or additional 

payment can be set up for the employee. However, CSB could not confirm that 

IBC used the Do Not Pay portal to perform any prepayment testing of its payroll 

and benefit payments. We believe CSB needs to establish access to the Do Not 

Pay portal and ensure its payroll and benefits go through the portal to help prevent 

and eliminate the need to create disbursements or accounts receivables. In 

addition, CSB needs to track and document reviews of improper payments to 

support its estimates and improve its controls. By not establishing access to the 

portal and tracking improper payments, CSB may not be aware of the significance 

of its improper payments. 

In response to our draft report, CSB stated they have now established access to 

the Do Not Pay portal. CSB stated that according to OMB, their payroll and 

benefit payments comply with IPERIA. Also, they stated that a formal tracking of 

improper payments is not an efficient or effect manner to address the infrequent 

problems CSB has experienced. We agree that BFS utilizes the Do Not Pay 

portal; however, no one at IBC has confirmed its compliance with Do Not Pay 

requirements. Furthermore, if payments are not tracked, there is no device to 

show that improper payments are infrequent. 

CSB Complies With PAR and Financial Statement Requirement for 

Improper Payments 

IPERA of 2010 requires all agencies to publish and post on their website the PAR 

for their most recent fiscal year. The PAR, as described by OMB Circular A-11, 

Section 200.21, is an annual report of agency performance. The report contains 

the agency’s audited financial statements and information on efforts to achieve 

goals during the past fiscal year. 

In its FY 2013 PAR, CSB stated: 

[t]he CSB has not identified any significant risk with improper 

payments. However, we recognize the importance of maintaining 

adequate internal controls to ensure proper payments, and our 

commitment to the continuous improvement in the overall 

disbursement management process remains strong. In FY 2013, the 

CSB continued our agreement with the Bureau of the Fiscal Service 

(BFS) to process financial transactions, make administrative 

payments, and prepare various financial reports. This agreement 

promotes the accuracy of our financial records and payments. 

Based on our audit, we determined that CSB is compliant with this requirement of 

IPERA of 2010. 

14-P-0172 5 
 

CSB Programs Do Not Meet Risk Assessment Threshold 

Requirement for Improper Payments 

IPERA of 2010 requires that agencies conduct a specific risk assessment for each 

identified program and activity that is susceptible to significant improper 

payments—defined as gross improper payments exceeding $10 million in all 

program or activity payments made during the fiscal year reported and 2.5 percent 

of program outlays. IPERA of 2010 Section 2(f)(2) defines an improper payment 

as (A) any payment that should not have been made or that was made in an 

incorrect amount (including overpayments and underpayments) under statutory, 

contractual, administrative, or other legally applicable requirement; and (B) 

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. 

We reviewed the CSB’s FY 2013 payments and determined that CSB does not 

meet the minimum for the risk assessment threshold of $10 million. As a result, 

CSB is not required to perform the risk assessment. CSB’s estimated FY 2013 

payments are $10,547,044 as shown in table 1. 

Table 1: CSB FY 2013 estimated payments from appropriations 

Activity Amount Percentage 

IPERIA payments (includes salaries and benefits) $9,872,046 93.60% 

Interagency and unobligated balance 674,998 6.40% 

Total $10,547,044 100.00% 

Source: OIG analysis of CSB data. 

Recovery Audits Are Not Cost Effective for CSB Improper Payments 

IPERA of 2010 Section 2(h)(2)(A) requires that each agency shall conduct 

recovery audits with respect to each program and activity of the agency that 

expends $1 million or more annually if conducting such audits would be cost 

effective. OMB Memorandum M-11-16, Part I-B, implements the requirements of 

Section 2(h) of IPERA. The OMB memorandum defines a payment recapture 

audit, also known as a recovery audit, as a review and analysis of an agency’s or 

program’s accounting and financial records, supporting documentation, and other 

pertinent information supporting its payments, that is specifically designed to 

identify overpayments. A payment recapture audit program is an agency’s overall 

plan for risk analysis and the performance of payment recapture audits and 

recovery activities. The agency head should determine the most cost-effective 

way to conduct payment recapture activities. These activities should include a 

management improvement program, if appropriate, and a copy of the program 

should be provided to the agency’s Inspector General annually. 

According to OMB, a cost-effective payment recapture audit is one in which the 

benefits (i.e., recaptured amounts) exceed the costs (e.g., staff time and resources, 

14-P-0172 6 
 

 

 

or payments to an audit contractor) associated with implementing and overseeing 

the program. Agencies should consider the following criteria in determining 

whether a payment recapture audit is cost effective: 

 The likelihood that identified overpayments will be recaptured. 

 The likelihood that the expected recoveries will be greater than the costs 

incurred to identify the overpayments. 

In February 2012, CSB provided an analysis to determine the cost effectiveness of 

performing a recovery audit on all activities with annual outlays in excess of 

$1 million. CSB concluded that a recovery audit would not be cost effective and 

notified the OMB. OMB did not reply to CSB on its analysis. 

OMB Memorandum M-11-16, Part IB, requires that agencies make this 

determination on cost effectiveness at least once every 3 years. Since CSB made 

this determination in February 2012, CSB does not have to perform another 

analysis until FY 2015; at such time, CSB should consider including payroll and 

benefits to its analysis. 

CSB Needs to Document Its Review of BFS Testing 

In response to the OIG’s FY 2012 audit report, U.S. Chemical Safety and Hazard 

Investigation Board Complied With Reporting Requirements of the Improper 

Payments Elimination and Recovery Act, Report No. 13-P-0177, dated March 12, 

2013, CSB is receiving quarterly reports from BFS’s testing of payments less than 

$2,500 for improper payments. CSB noted that it reviews the reports upon receipt 

but does not have formal documentation of the results. BFS samples less than 

1 percent of CSB payments under $2,500 and, prior to payment, reviews 

100 percent of all invoices over $2,500 to correct errors. BFS does not provide 

CSB with documented results of the latter testing. 

OMB Circular A-123, Management’s Responsibility for Internal Control, 

Section I, states: 

[m]anagement is responsible for developing and maintaining 

effective internal control. Effective internal control provides 

assurance that significant weaknesses in the design or operation of 

internal control, that could adversely affect the agency’s ability to 

meet its objectives, would be prevented or detected in a timely 

manner. 

We reviewed the reports submitted to CSB and found that BFS randomly tested 

the invoice population of transactions less than $2,500. In FY 2013, BFS sampled 

three transactions totaling $5,215.06 from this invoice population. The population 

contained 326 transactions that totaled $222,534.42. As a result, BFS sampled 

less than 1 percent of CSB’s total transactions—less than $2,500. This amount 

only represents 2.34 percent of the total invoiced amount for CSB. BFS did not 

14-P-0172 7 
 

 

 

find errors in the three sampled transactions. However, the report stated the 

purchase order was “not found” for two of the three sample items. CSB stated it 

has no problem with BFS’s amount of testing because BFS samples for all 

customer agencies. In response to our draft report, CSB stated that “the reports 

CSB currently receives are very simple, with up to three transactions sampled 

each quarter, so documenting CSB’s review [of BFS’s quarterly report] would be 

of negligible value.” BFS has noted that it plans to implement a post-payment 

audit review of 25 percent of all invoices processed per customer. We believe that 

CSB should document its review of BFS’s reports and ensure increased testing is 

implemented to reduce the risk that some improper payments go undetected. By 

not documenting its review or ensuring increased testing is performed, CSB does 

not know whether BFS’s testing is effective and efficient to detect its improper 

payments. In response to our draft report, CSB stated that it plans to review the 

monthly accounts payable reports from the 25-percent testing BFS plans to 

perform of all processed invoices. 

Recommendations 

We recommend that the Chairperson, U.S. Chemical Safety and Hazard 

Investigation Board: 

1.	 Establish access to the Do Not Pay portal and use that portal. 

2.	 Ensure CSB’s payroll and benefits go through the portal to comply with 

IPERIA of 2012. Also, track and document reviews of improper payments 

to help prevent or eliminate future improper payments. 

3.	 Document CSB’s analysis of BFS’s reports on its testing and ensure 

increased testing is implemented to reduce the risk that some improper 

payments go undetected. 

CSB Response and OIG Evaluation 

CSB concurred with recommendation 1 and has established access to the Do Not 

Pay portal. This recommendation has been resolved. 

CSB did not agree with recommendation 2. CSB stated that, according to OMB, 

CSB’s payroll and benefit payments comply with IPERIA and a formal tracking 

of improper payments is not an efficient or effective manner to address the 

infrequent problems. We agree that the Do Not Pay portal is utilized in CSB’s 

interagency agreement with BFS for payroll payments; however, no one at IBC 

has confirmed their compliance with Do Not Pay requirements. If CSB does not 

track its improper payments, there is no evidence to show that CSB improper 

payments are infrequent. We continue to believe that CSB should ensure that 

payroll and benefit payments comply with IPERIA and document reviews of 

improper payments to help manage and track future improper payments. This 

recommendation is considered unresolved. 

14-P-0172 8 
 

CSB partially agreed with recommendation 3. CSB stated that BFS quarterly 

reports are very simple and up to three transactions are sampled each quarter, so 

documenting CSB’s review would be of negligible value. However, CSB stated 

that it plans to document its review of BFS’s monthly accounts payable reports 

from BFS’s planned 25-percent post payment review of all invoices. We agree 

with CSB’s plans to review BFS’s monthly reports once BFS changes its review 

process. Our draft report noted the concerns we had with the testing of three 

transactions for the entire fiscal year and the errors we found in BFS’s report. 

Because CSB did not document its review, we could not determine whether the 

errors we identified were reviewed by CSB. We believe that, due to limited 

testing, improper payments could go undetected. CSB should document the 

analysis of BFS’s reports. This recommendation is considered unresolved. 

CSB’s complete response to our draft report is in appendix A. 

14-P-0172 9 
 

 

 

 

 

 

 

 

 

 

 

Status of Recommendations and 

Potential Monetary Benefits 

POTENTIAL MONETARY 

RECOMMENDATIONS BENEFITS (in $000s) 

Rec. 

No. 

Page 

No. Subject Status1 Action Official 

Planned 

Completion 

Date 

Claimed 

Amount 

Agreed-To 

Amount 

1 

2 

3 

8 

8 

8 

Establish access to the Do Not Pay portal and use 

that portal. 

Ensure CSB’s payroll and benefits go through the 

portal to comply with IPERIA of 2012. Also, track 

and document reviews of improper payments to 

help prevent or eliminate future improper 

payments. 

Document CSB’s analysis of BFS’s reports on its 

testing and ensure increased testing is 

implemented to reduce the risk that some improper 

payments go undetected. 

C 

U 

U 

Chairperson, U.S. Chemical 

Safety and Hazard 

Investigation Board 

Chairperson, U.S. Chemical 

Safety and Hazard 

Investigation Board 

Chairperson, U.S. Chemical 

Safety and Hazard 

Investigation Board 

3/12/14 

O = recommendation is open with agreed-to corrective actions pending 

C = recommendation is closed with all agreed-to actions completed 

U = recommendation is unresolved with resolution efforts in progress 

14-P-0172 10 

1 
 

 

 

                                   

                                        

                                 

               

                                 

                                   

Appendix A 

CSB Response to Draft Report 

U.S. Chemical Safety and 

Hazard Investigation Board 

Rafael Moure-Eraso, Ph.D. 

Chairperson 

March 12, 2014 

Mr. Michael D. Davis 

Director, Efficiency Audits 

Office of Inspector General 

U.S. Environmental Protection Agency 

Dear Mr. Davis: 

Thank you for the opportunity to review and comment on the draft report on the CSB’s 

compliance with the Improper Payments Elimination and Recovery Improvement Act of 

2012 (IPERIA). We are pleased that you found CSB compliant with most IPERIA requirements, 

but are very concerned about the validity of your draft findings and recommendation regarding 

the Do Not Pay (DNP) system.4

 We are also concerned that your other two recommendations 

have little to no value in reducing or eliminating improper payments. The following is a detailed 

discussion of our concerns, keeping in mind that in fiscal year (FY) 2013 the CSB did not make 

any improper payments, except for four minor instances totaling $2,800,5 that were caused by 

personnel or payroll staff errors that would not have been flagged by any databases in the DNP 

system. 

Preaward Reviews 

As discussed with your staff during the audit, the CSB began “on-boarding” with the Treasury’s 

DNP system in December 2013 so that CSB Contracting Officers will have easy access to the 

portal as appropriate databases become available. However, the only DNP database that CSB 

would use for pre-award reviews is the System for Award Management (SAM), which CSB 

contracting officers have always used directly to ensure vendors were eligible for payment prior 

to making an award. 

4 IPERIA established a Do Not Pay initiative that included multiple resources designed to help agencies confirm that

the right recipient receives the right payment for the right reason at the right time. One resource in this initiative

is the Treasury’s DNP system, which provides a single portal for agencies to review multiple databases as

appropriate to verify eligibility of payments and awards. 5 These improper payments were identified by CSB shortly after they were made, collections were initiated, and

procedures were evaluated to determine if additional controls should be put in place to prevent recurrence in the

future.

14-P-0172 11 
 

 

                           

                    

Further, as an official with the Office of Management and Budget (OMB) who oversees the DNP 

initiative reminded us, the Treasury DNP system is only one aspect of the overall DNP initiative. 

The law provides “each agency shall review as appropriate” the databases. This also means 

checking with the DNP system “as appropriate.” The OMB official informed us that checking 

the information from the SAM database on a pre-award basis is better than checking information 

that is currently available in the Treasury DNP system. 

Use of Shared Service Providers and Prepayment Reviews 

OMB requires use of shared service providers (SSP) to reduce costs while improving efficiencies 

and performance.6

 The CSB uses the Bureau of the Fiscal Service, Administrative Resource 

Center (BFS or ARC) within the Department of the Treasury for financial services, and the 

Interior Business Center (IBC) within the Department of the Interior for personnel and payroll 

services. All payments are made through these providers. As your draft reports, we were not 

able to readily locate an official within IBC to confirm their compliance with DNP requirements. 

Therefore, as we told your staff, we contacted the OMB officials who oversee the DNP initiative 

and provided your staff with an e-mail from OMB confirming: 

. . . the payments for the Chemical Safety and Hazard Investigation Board (CSB) are run 

through the Treasury Do Not Pay System. These include the payments distributed by the 

shared service providers: the INTERIOR BUSINESS CENTER, and the Treasury, 

ADMINISTRATIVE RESOURCE CENTER. 

Upon receipt of your draft, CSB contacted IBC officials who confirmed that IBC is fully 

compliant with federal and state salary payment offset through the Department of the Treasury's 

Offset Program (TOP). In addition, Interior's SSP Federal Personnel Payroll System (FPPS) 

payroll entry and processing, input and output controls have been documented, tested for design 

of control and effectiveness of the control by KPMG LLP through the annual Statement on 

Standards for Attestation Engagements (SSAE) No. 16, Attestation Service Organization Control 

Report. The IBC received unqualified (clean) audit opinions for FPPS for multiple years and no 

outstanding audit findings or recommendations are currently being tracked for mitigation. CSB 

federal salary payments are cross-checked with the Treasury Offset Program via Interior 

payment file submission and any federal or state program debt would be recognized on a 

biweekly payroll cycle. 

Your draft report also asserts that CSB should use the DNP portal to prevent improper payments 

to employees. However, as discussed, salary payments were run through DNP and four 

instances of improper payments were made nonetheless. This is because these improper 

payments were caused by relatively minor payroll processing errors that would have not been 

prevented by using the DNP portal. The following table summarizes descriptions and dollar 

amounts for each. 

6 OMB Memorandum M‐13‐08, Improving Financial Systems through Shared Services, is the latest iteration of

guidance. The basic policy goes back at least 20 years.

14-P-0172 12 
 

 

Description Amount 

In CY 2013 IBC erroneously paid for overtime earned in CY 2012 even 

though the employee reached the annual cap for CY 2012. Per IBC, this was a 

very unusual processing error. To prevent similar errors going forward, CSB 

no longer allows overtime to be submitted on a timecard after the annual cap 

has been reached. 

$ 1,574.62 

The pay rate was incorrect when the employee was hired. This was a clerical 

error by IBC, no further CSB controls appear warranted. 

736.08 

The timekeeper submitted multiple incorrect amendments for this employee’s 

timecard, which resulted in establishing the employee debt. The CSB switched 

to WebTA for timecard submission and amendments, which prevents similar 

timekeeper errors. 

440.75 

The locality pay rate was incorrect when the employee received a promotion. 

This was a clerical error by IBC, no further CSB controls appear warranted. 

55.92 

Total $ 2,807.37 

Post-Payment Reviews & Tracking 

Your draft report states that CSB should track and document reviews of improper payments to 

help prevent or eliminate future improper payments. As stated above, the few improper 

payments that were made all related to payroll processing errors. Rather than set up a tracking 

system for these infrequent problems, CSB found it more efficient and effective to evaluate 

errors as they occur to determine if additional controls should be put in place to prevent 

recurrence in the future. 

BFS Testing 

In reviewing your draft it appears that further clarification is needed on BFS’s invoice review 

process. BFS currently performs post-payment tests of a very small sample of all customer 

payments under $2,500 (CSB’s sample was less than 1% of these invoices), but conducts a 

100% pre-payment secondary review of all invoices over $2,500. As we informed your staff, for 

FY 2013, this resulted in BFS performing a 100% pre-payment review of 140 invoices over 

$2,500 which was 29% of all CSB commercial invoices. 

BFS and CSB use the Invoice Processing Platform (IPP) to process commercial invoices, and 

will soon be taking advantage of IPP’s system controls to replace BFS’s manual reviews. As a 

result, all invoices will be paid without any pre-payment secondary review. However, BFS will 

be implementing a post-payment audit review of 25% of all invoices processed per customer, 

and will issue a monthly Accounts Payable report to CSB that will contain the results of the post 

payment audit. 

14-P-0172 13 
 

 

The reports CSB currently receives are very simple, with up to three transactions sampled each 

quarter, so documenting CSB’s review would be of negligible value. However, when BFS stops 

conducting 100% pre-payment secondary reviews of all invoices over $2,500 and shifts to the 

25% post payment review of all invoices, the CSB plans to document its review of the monthly 

reports BFS will issue. 

It is also worth noting that CSB also relies on the annual reviews BFS and IBC receive in 

accordance with the Statement on Standards for Attestation Engagements (SSAE) No. 16, 

Reporting on Controls at a Service Organization to ensure shared service providers controls are 

in place and effective. These reviews give the CSB and other customer agencies independent 

verification that BPD and IBC controls, including disbursement controls, are in place and are 

operating effectively. 

The attached table summarizes CSB’s responses to each recommendation. If you or your staff 

have any questions about this response, please feel free to contact Anna Brown, Audit Liaison, at 

202-261-7639. 

Sincerely, 

Rafael Moure-Eraso, Ph.D. /s/ 

Chairperson 

14-P-0172 14 
 

 

Attachment 

Summary of OIG Recommendation and CSB Response 

OIG Recommendation CSB Response 

1. Establish access to the Do Not Pay portal 

and use that portal. 

Agree. However, it is unclear why the OIG is 

making this recommendation as CSB has 

established access to the DNP Portal, and will 

use that portal as appropriate. 

2. Ensure CSB’s payroll and benefits go Disagree. According to OMB, CSB’s payroll 

through the portal to comply with IPERIA and benefit payments comply with IPERIA. In 

of 2012. Also, track and document reviews addition, formal tracking of improper 

of improper payments to help prevent or payments is not an efficient or effective 

eliminate future improper payments. manner to address the infrequent problems 

CSB has experienced. 

3. Document CSB’s analysis of BFS’s reports Partial Agreement. BFS currently performs 

on its testing and ensure increased testing is post-payment tests of all customer payments 

implemented to reduce the risk that some under $2,500, and as recommended by the OIG 

improper payments go undetected. last year, BFS provides CSB with quarterly 

reports of CSB’s results. These reports are 

very simple; up to three transactions sampled 

each quarter, so documenting CSB’s review 

would be of negligible value. However, when 

BFS stops conducting 100% pre-payment 

secondary reviews of all invoices over $2,500, 

shifting to a 25% post payment review of all 

invoices, the CSB plans to document its review 

of the monthly Accounts Payable reports BFS 

will issue. 

14-P-0172 15 
 

Appendix B 

Distribution 

Chairperson and Chief Executive Officer, U.S. Chemical Safety and Hazard Investigation Board 

Managing Director, U.S. Chemical Safety and Hazard Investigation Board 

Deputy Managing Director, U.S. Chemical Safety and Hazard Investigation Board 

General Counsel, U.S. Chemical Safety and Hazard Investigation Board 

Senior Counselor to the Chair, U.S. Chemical Safety and Hazard Investigation Board 

Finance Director, U.S. Chemical Safety and Hazard Investigation Board 

Communications Manager, U.S. Chemical Safety and Hazard Investigation Board 

Director of Administration, U.S. Chemical Safety and Hazard Investigation Board 

14-P-0172 16