U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

1 

59–010 

" ! SENATE 

114TH CONGRESS

2d Session 

REPORT

2016

114–229 

Calendar No. 391 

FRAUD REDUCTION AND DATA ANALYTICS 

ACT OF 2015 

R E P O R T 

OF THE

COMMITTEE ON HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

TO ACCOMPANY

S. 2133 

TO IMPROVE FEDERAL AGENCY FINANCIAL AND ADMINISTRATIVE 

CONTROLS AND PROCEDURES TO ASSESS AND MITIGATE FRAUD 

RISKS AND TO IMPROVE FEDERAL AGENCIES’ DEVELOPMENT 

AND USE OF DATA ANALYTICS FOR THE PURPOSE OF 

IDENTIFYING, PREVENTING, AND RESPONDING TO FRAUD, 

INCLUDING IMPROPER PAYMENTS 

MARCH 15, 2016.—Ordered to be printed 


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(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

RON JOHNSON, Wisconsin, Chairman 

JOHN MCCAIN, Arizona 

ROB PORTMAN, Ohio 

RAND PAUL, Kentucky 

JAMES LANKFORD, Oklahoma 

MICHAEL B. ENZI, Wyoming 

KELLY AYOTTE, New Hampshire 

JONI ERNST, Iowa 

BEN SASSE, Nebraska 

THOMAS R. CARPER, Delaware 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

TAMMY BALDWIN, Wisconsin 

HEIDI HEITKAMP, North Dakota 

CORY A. BOOKER, New Jersey 

GARY C. PETERS, Michigan 

CHRISTOPHER R. HIXON, Staff Director 

GABRIELLE D’ADAMO SINGER, Chief Counsel 

PATRICK J. BAILEY, Chief Counsel for Governmental Affairs 

JENNIFER L. SCHAEFFER, Professional Staff Member 

GABRIELLE A. BATKIN, Minority Staff Director 

JOHN P. KILVINGTON, Minority Deputy Staff Director 

MARY BETH SCHULTZ, Minority Chief Counsel 

KATHERINE C. SYBENGA, Minority Chief Counsel for Governmental Affairs 

LAURA W. KILBRIDE, Chief Clerk 


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Calendar No. 391 

114TH CONGRESS REPORT " ! SENATE 2d Session 114–229 

FRAUD REDUCTION AND DATA ANALYTICS ACT OF 2015 

MARCH 15, 2016.—Ordered to be printed 

Mr. JOHNSON, from the Committee on Homeland Security and 

Governmental Affairs, submitted the following 

R E P O R T 

[To accompany S. 2133] 

The Committee on Homeland Security and Governmental Affairs, 

to which was referred the bill (S. 2133) to improve Federal agency 

financial and administrative controls and procedures to assess and 

mitigate fraud risks, and to improve Federal agencies’ development 

and use of data analytics for the purpose of identifying, preventing, 

and responding to fraud, including improper payments, having considered the same, reports favorably thereon without amendment 

and recommends that the bill do pass. 

CONTENTS 

Page 

I. Purpose and Summary .................................................................................. 1 

II. Background and Need for the Legislation ................................................... 2 

III. Legislative History ......................................................................................... 3 

IV. Section-by-Section Analysis .......................................................................... 4 

V. Evaluation of Regulatory Impact .................................................................. 4 

VI. Congressional Budget Office Cost Estimate ................................................ 5 

VII. Changes in Existing Law Made by the Bill, as Reported ........................... 6 

I. PURPOSE AND SUMMARY

S. 2133, the Fraud Reduction and Data Analytics Act of 2015, 

seeks to strengthen Federal anti-fraud controls by implementing 

agency guidelines set by the Director of the Office of Management 

and Budget (OMB) with input from the Governmental Accountability Office (GAO) on risk-based fraud prevention techniques, increasing reporting on agency fraud reduction strategies to Congress, and facilitating the creation of a Federal interagency library 

of data analytics and data sets used to prevent fraud and improper 

payments. 


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1GOV’T ACCOUNTABILITY OFFICE, GAO–15–593SP, A FRAMEWORK FOR MANAGING FRAUD RISKS

IN FEDERAL PROGRAMS 47 (July 2015), available at http://www.gao.gov/assets/680/671664.pdf. 2GOV’T ACCOUNTABILITY OFFICE, GAO–16–357R, FINANCIAL AUDIT: U.S. GOVERNMENT’S FIS- CAL YEARS 2015 AND 2014 CONSOLIDATED FINANCIAL STATEMENTS 32 (Feb. 2016), available at 

http://www.gao.gov/assets/680/675425.pdf. 3 Risky Business: Examining GAO’s 2015 List of High Risk Government Programs: Hearing Before the S. Comm. on Homeland Sec. & Governmental Affairs, 114th Cong. (2015), available at 

http://www.hsgac.senate.gov/hearings/risky-business-examining-gaos-2015-list-of-high-risk-government-programs; GOV’T ACCOUNTABILITY OFFICE, GAO–15–371T, GAO’S 2015 HIGH-RISK SE- RIES: AN UPDATE 7 (Feb. 2015), available at http://www.gao.gov/assets/670/668419.pdf. 4 Improving the Efficiency, Effectiveness, and Independence of Inspectors General: Hearing Before the S. Comm. on Homeland Sec. & Governmental Affairs 2, 114th Cong. (2015) (statement 

of Patrick P. O’Carroll, Jr., Inspector General, Social Security Administration), available at 

http://www.hsgac.senate.gov/hearings/improving-the-efficiency-effectiveness-and-independenceof-inspectors-general. 5 Id. 

6GOV’T ACCOUNTABILITY OFFICE, GAO–14–704G, STANDARDS FOR INTERNAL CONTROL IN THE

FEDERAL GOVERNMENT 5 (Sept. 2014), available at http://www.gao.gov/assets/670/665712.pdf. 

II. BACKGROUND AND THE NEED FOR LEGISLATION

Fraud in the Federal Government is a serious problem that 

wastes taxpayer dollars, prevents Federal programs from carrying 

out their intended purpose and serving target populations, and creates potential national security risks. Congress and Federal agencies have been working to combat fraud and reduce improper payments by creating policies and legislation that will give agencies 

the tools that they need to target and prevent fraud. In 2014, Federal agencies reported an estimated $124.7 billion in improper payments, which includes payments made because of waste, fraud, and 

abuse.1 According to GAO, the improper payment amount was 

$136.9 billion in 2015.2

This Committee has a history of conducting oversight of the 

fraudulent and wasteful use of taxpayer dollars, including holding 

hearings on improper payments in both the 113th and 114th Congress. For example, on February 11, 2015, the Committee held a 

hearing titled Risky Business: Examining GAO’s 2015 List of High 

Risk Government Programs. The hearing examined government 

functions identified by the GAO as a high risk to taxpayers, including fraudulent income tax returns due to identity fraud, which led 

to $5.8 billion in improper payments in 2013.3

In another February 2015 hearing looking at the work of Federal 

inspectors general, the Social Security Administration’s (SSA) Inspector General testified that in fiscal year 2013, SSA reported $3 

billion in improper payments in its Old Age, Survivors, and Disability programs, and $5.1 billion in improper payments in the 

Supplemental Security Income program.4 The Inspector General 

was quick to point out that these aggregate numbers do not include 

fraud that the agency has not detected, meaning it represents only 

a portion of the full amount of improper payments made, and highlighting the importance of detecting fraud.5

To help Federal agencies reduce fraud, in 2014, GAO updated 

their Standards for Internal Control in the Federal Government 

(the ‘‘Green Book’’) which provides the overall framework for establishing and maintaining an effective internal control system. According to GAO, internal controls are the organizational processes 

which agencies use to comply with applicable laws and regulations 

and report accurately on their operations.6 The new Green Book, 

which became effective at the beginning of fiscal year 2016, sets 

the standards for internal controls in Federal agencies and requires 


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7 Id at 34. 8GOV’T ACCOUNTABILITY OFFICE, GAO–15–593SP, A FRAMEWORK FOR MANAGING FRAUD

RISKS IN FEDERAL PROGRAMS (July 2015), available at http://www.gao.gov/assets/680/ 

671664.pdf. 9 Id. at 1. 10 Id. at 6. 11 Id. 

Federal managers to ‘‘consider the potential for fraud when identifying, analyzing, and responding to risks.’’ 7

Additionally, GAO published the Fraud Risk Management 

Framework (the Framework) in July 2015 to help Federal managers adjust to a risk-based approach to combat fraud.8 The 

Framework emphasizes fraud prevention and recommends control 

activities Federal managers can implement to prevent, detect, and 

respond to fraud. It was created with input from Offices of Inspector General (OIG), national audit institutions from other countries, 

the World Bank, the Organization for Economic Co-operation and 

Development, as well as anti-fraud experts representing private 

companies, state and local audit associations, and nonprofit entities.9 The Framework recommends that agencies create an organizational culture that emphasizes fraud risk management, plan regular risks assessments tailored to each program, design anti-fraud 

strategies that include cooperation with program stakeholders, and 

design methods to measure fraud reduction outcomes, among other 

recommendations.10

The Fraud Reduction and Data Analytics Act of 2015 seeks to 

utilize the GAO Framework by codifying these new standards and 

directing OMB to use the Framework to create guidelines for agencies to establish controls to identify and assess fraud risks and to 

design and implement control activities to prevent, detect, and respond to fraud. Agencies will then be required to report to Congress on their implementation of the new fraud reduction strategies, as well as identify their risks and vulnerabilities to fraud. 

These reports will help Congress monitor the progress made by 

agencies in addressing and reducing fraud risk, including the success or failures of the guidelines created by OMB as a result of this 

bill. 

Finally, to give Federal agencies the technical tools they need to 

better analyze fraud risk, the bill establishes a working group 

tasked with establishing a plan for the creation of a Federal interagency library of data analytics and data sets to facilitate the detection of fraud and the recovery of improper payments. The working group is comprised of the Controller of OMB as chairperson 

and the Chief Financial Officer (CFO) of each agency. This information will allow agencies to coordinate in their fraud detection 

and improve their ability to use data analytics to monitor databases for potential improper payments, a recommendation included 

in GAO’s Framework for reducing fraud risk.11

III. LEGISLATIVE HISTORY

S. 2133, the Fraud Reduction and Data Analytics Act of 2015, 

was introduced October 5, 2015, by Senators Tom Carper, Thom 

Tillis, Claire McCaskill, Ron Johnson, and Tammy Baldwin. The 

bill was referred to the Committee on Homeland Security and Governmental Affairs. 


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The Committee considered S. 2133 at a business meeting on October 7, 2015. The Committee ordered the bill reported favorably 

by voice vote without amendment. Members present for the vote on 

the bill were Senators Johnson, Portman, Lankford, Enzi, Ernst, 

Sasse, Carper, McCaskill, Baldwin, Heitkamp, and Booker. 

IV. SECTION-BY-SECTION ANALYSIS OF THE BILL, AS REPORTED

Section 1. Short title 

This section establishes the short title of the bill as the ‘‘Fraud 

Reduction and Data Analytics Act of 2015.’’ 

Section 2. Definitions 

This section defines the terms ‘‘agency’’ and ‘‘improper payment.’’ 

Section 3. Establishment of financial and administrative controls 

relating to fraud and improper payments 

This section directs the Director of OMB to create guidelines for 

agencies to establish controls to identify fraud risks and to design 

and implement control activities to respond to fraud, which should 

specifically incorporate practices identified in the GAO Framework, 

and states that the Director of OMB should work with the United 

States Comptroller General to modify the guidelines as necessary. 

This section specifies that agencies should be using a risk-based 

approach to design controls to prevent fraud and that control activities should mitigate identified fraud risks. The section also 

states that agencies should be collecting data to detect and monitor 

fraud, and using that data to perfect their fraud prevention techniques, as well as using the results of audits and investigations to 

improve their fraud detection and response. 

Finally this section requires each agency to submit a report on 

their progress toward: enacting the guidelines created by OMB, the 

fraud risk principle in the Green Book, and the OMB Circular A– 

123 with respect to the leading practices for managing fraud risk; 

and identifying risks and vulnerabilities to fraud. Such reports are 

required to be submitted to Congress in the agency’s annual financial report to Congress for each of the three fiscal years following 

the enactment of this bill. 

Section 4. Working group 

This section establishes a working group, comprised of the Controller of OMB as chairperson, and the CFO of each agency. This 

working group will meet quarterly to share best practices in addressing fraud and to establish a plan for the creation of a Federal 

interagency library of data analytics and data sets to facilitate the 

detection of fraud and the recovery of improper payments. 

V. EVALUATION OF REGULATORY IMPACT

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee has considered 

the regulatory impact of this bill and determined that the bill will 

have no regulatory impact within the meaning of the rules. The 

Committee agrees with the Congressional Budget Office’s statement that the bill contains no intergovernmental or private-sector 

mandates as defined in the Unfunded Mandates Reform Act 


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(UMRA) and would impose no costs on state, local, or tribal governments. 

VI. CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

JANUARY 12, 2016. 

Hon. RON JOHNSON, 

Chairman, Committee on Homeland Security and Governmental Affairs, U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 2133, the Fraud Reduction 

and Data Analytics Act of 2015. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Matthew Pickford. 

Sincerely, 

KEITH HALL. 

Enclosure. 

S. 2133—Fraud Reduction and Data Analytics Act of 2015 

S. 2133 would require federal agencies to report on their efforts 

to assess and combat fraud and improper payments in each of the 

next three years. In addition, the legislation would require the Office of Management and Budget (OMB) to set up a working group 

to establish best practices for preventing fraud and improper payments and for sharing analytical information among federal agencies. 

The Federal Managers’ Financial Integrity Act requires agencies 

to establish and maintain internal controls to ensure federal programs operate efficiently, effectively, and in compliance with relevant laws. The Government Accountability Office (GAO) issues financial control standards for the federal government through the 

Standards for Internal Control in the Federal Government (known 

as the Green Book). Additionally, OMB establishes specific requirements for assessing and reporting on financial controls used by the 

federal government. The standards in the most recent Green Book 

include methods for assessing the risk of fraud. 

Based on information from GAO and OMB, CBO expects that implementing the bill would increase the administrative costs of each 

major federal agency by roughly $50,000 annually primarily to prepare reports for the Congress for three years. Because there are 

about 25 major agencies, CBO estimates that implementing S. 2133 

would cost about $4 million over the 2016–2020 period, including 

funds to operate the proposed working group. Such spending would 

be subject to the availability of appropriated funds. 

Under S. 2133, agencies would be required to undertake additional efforts to detect fraud and improper payments that will not 

be undertaken under current law. Such efforts could result in cost 

savings to some agencies, but could also lead to additional costs to 

correct financial systems. CBO has no basis for estimating the 

magnitude of either increases in the recovery of fraudulent payments or costs to correct financial systems. 

Enacting S. 2133 also could affect direct spending by some agencies (such as the Tennessee Valley Authority) because they are authorized to use receipts from the sale of goods, fees, and other collections to cover their operating costs. Therefore, pay-as-you-go proVerDate Sep 11 2014 05:29 Mar 17, 2016 Jkt 059010 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\SR229.XXX SR229

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cedures apply. Because most of those agencies can make adjustments to the amounts collected as operating costs change, CBO estimates that any net changes in direct spending by those agencies 

would not be significant. Enacting the bill would not affect revenues. 

CBO estimates that enacting S. 2133 would not increase net direct spending or on-budget deficits in any of the four consecutive 

10-year periods beginning in 2026. 

S. 2133 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act and would 

not affect the budgets of state, local, or tribal governments. 

The CBO staff contact for this estimate is Matthew Pickford. The 

estimate was approved by H. Samuel Papenfuss, Deputy Assistant 

Director for Budget Analysis. 

VII. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

Because this legislation would not repeal or amend any provision 

of current law, it would make no changes in existing law within the 

meaning of clauses (a) and (b) of paragraph 12 of rule XXVI of the 

Standing Rules of the Senate. 

Æ 


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