II 

111TH CONGRESS 

1ST SESSION S. 1508 

To amend the Improper Payments Information Act of 2002 (31 U.S.C. 

3321 note) in order to prevent the loss of billions in taxpayer dollars. 

IN THE SENATE OF THE UNITED STATES 

JULY 23, 2009 

Mr. CARPER (for himself, Mr. COBURN, Mrs. MCCASKILL, Ms. COLLINS, and 

Mr. MCCAIN) introduced the following bill; which was read twice and referred to the Committee on Homeland Security and Governmental Affairs 

A BILL 

To amend the Improper Payments Information Act of 2002 

(31 U.S.C. 3321 note) in order to prevent the loss of 

billions in taxpayer dollars. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Improper Payments 

5 Elimination and Recovery Act of 2009’’. 

6 SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOV7 ERY. 

8 (a) SUSCEPTIBLE PROGRAMS AND ACTIVITIES.—Sec9 tion 2 of the Improper Payments Information Act of 2002 


srobinson on DSKHWCL6B1PROD with BILLS
2 

•S 1508 IS

1 (31 U.S.C. 3321 note) is amended by striking subsection 

2 (a) and inserting the following: 

3 ‘‘(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS

4 AND ACTIVITIES.— 

5 ‘‘(1) IN GENERAL.—The head of each agency 

6 shall, in accordance with guidance prescribed by the 

7 Director of the Office of Management and Budget, 

8 periodically review all programs and activities that 

9 the relevant agency head administers and identify all 

10 programs and activities that may be susceptible to 

11 significant improper payments. 

12 ‘‘(2) FREQUENCY.—Reviews under paragraph 

13 (1) shall be performed for each program and activity 

14 that the relevant agency head administers during the 

15 year after which the Improper Payments Elimi16 nation and Recovery Act of 2009 is enacted and at 

17 least once every 3 fiscal years thereafter. 

18 ‘‘(3) RISK ASSESSMENTS.— 

19 ‘‘(A) DEFINITION.—In this subsection the 

20 term ‘significant’ means— 

21 ‘‘(i) except as provided under clause 

22 (ii), that improper payments in the pro23 gram or activity in the preceding fiscal 

24 year may have exceeded— 


srobinson on DSKHWCL6B1PROD with BILLS
3 

•S 1508 IS

1 ‘‘(I) $10,000,000 of all program 

2 or activity payments made during that 

3 fiscal year reported and 2.5 percent of 

4 program outlays; or 

5 ‘‘(II) $100,000,000; and 

6 ‘‘(ii) with respect to fiscal years fol7 lowing September 30th of a fiscal year be8 ginning before fiscal year 2013 as deter9 mined by the Office of Management and 

10 Budget, that improper payments in the 

11 program or activity in the preceding fiscal 

12 year may have exceeded— 

13 ‘‘(I) $10,000,000 of all program 

14 or activity payments made during that 

15 fiscal year reported and 1.5 percent of 

16 program outlays; or 

17 ‘‘(II) $100,000,000. 

18 ‘‘(B) SCOPE.—In conducting the reviews 

19 under paragraph (1), the head of each agency 

20 shall take into account those risk factors that 

21 are likely to contribute to a susceptibility to sig22 nificant improper payments, such as— 

23 ‘‘(i) whether the program or activity 

24 reviewed is new to the agency; 


srobinson on DSKHWCL6B1PROD with BILLS
4 

•S 1508 IS

1 ‘‘(ii) the complexity of the program or 

2 activity reviewed; 

3 ‘‘(iii) the volume of payments made 

4 through the program or activity reviewed; 

5 ‘‘(iv) whether payments or payment 

6 eligibility decisions are made outside of the 

7 agency, such as by a State or local govern8 ment; 

9 ‘‘(v) recent major changes in program 

10 funding, authorities, practices, or proce11 dures; 

12 ‘‘(vi) the level and quality of training 

13 for personnel responsible for making pro14 gram eligibility determinations or certi15 fying that payments are accurate; and 

16 ‘‘(vii) significant deficiencies in the 

17 audit report of the agency or other rel18 evant management findings that might 

19 hinder accurate payment certification.’’. 

20 (b) ESTIMATION OF IMPROPER PAYMENTS.—Section 

21 2 of the Improper Payments Information Act of 2002 (31 

22 U.S.C. 3321 note) is amended by striking subsection (b) 

23 and inserting the following: 


srobinson on DSKHWCL6B1PROD with BILLS
5 

•S 1508 IS

1 ‘‘(b) ESTIMATION OF IMPROPER PAYMENTS.—With 

2 respect to each program and activity identified under sub3 section (a), the head of the relevant agency shall— 

4 ‘‘(1) produce a statistically valid or otherwise 

5 appropriate estimate of the improper payments 

6 made by each program and activity; and 

7 ‘‘(2) include those estimates in the accom8 panying materials to the annual financial statement 

9 of the agency required under section 3515 of title 

10 31, United States Code, or similar provision of law 

11 and applicable guidance of the Office of Manage12 ment and Budget.’’. 

13 (c) REPORTS ON ACTIONS TO REDUCE IMPROPER

14 PAYMENTS.—Section 2 of the Improper Payments Infor15 mation Act of 2002 (31 U.S.C. 3321 note) is amended 

16 by striking subsection (c) and inserting the following: 

17 ‘‘(c) REPORTS ON ACTIONS TO REDUCE IMPROPER

18 PAYMENTS.—With respect to any program or activity of 

19 an agency with estimated improper payments under sub20 section (b), the head of the agency shall provide with the 

21 estimate under subsection (b) a report on what actions 

22 the agency is taking to reduce improper payments, includ23 ing— 

24 ‘‘(1) a description of the causes of the improper 

25 payments, actions planned or taken to correct those 


srobinson on DSKHWCL6B1PROD with BILLS
6 

•S 1508 IS

1 causes, and the planned or actual completion date of 

2 the actions taken to address those causes; 

3 ‘‘(2) in order to reduce improper payments to 

4 a level below which further expenditures to reduce 

5 improper payments would cost more than the 

6 amount such expenditures would save in prevented 

7 or recovered improper payments, a statement of 

8 whether the agency has what is needed with respect 

9 to— 

10 ‘‘(A) internal controls; 

11 ‘‘(B) human capital; and 

12 ‘‘(C) information systems and other infra13 structure; 

14 ‘‘(3) if the agency does not have sufficient re15 sources to establish and maintain effective internal 

16 controls under paragraph (2)(A), a description of 

17 the resources the agency has requested in its budget 

18 submission to establish and maintain such internal 

19 controls; 

20 ‘‘(4) program-specific and activity-specific im21 proper payments reduction targets that have been 

22 approved by the Director of the Office of Manage23 ment and Budget; and 

24 ‘‘(5) a description of the steps the agency has 

25 taken to ensure that agency managers, programs, 


srobinson on DSKHWCL6B1PROD with BILLS
7 

•S 1508 IS

1 and, where appropriate, States and localities are 

2 held accountable through annual performance ap3 praisal criteria for— 

4 ‘‘(A) meeting applicable improper pay5 ments reduction targets; and 

6 ‘‘(B) establishing and maintaining suffi7 cient internal controls, including an appropriate 

8 control environment, that effectively— 

9 ‘‘(i) prevent improper payments from 

10 being made; and 

11 ‘‘(ii) promptly detect and recover im12 proper payments that are made.’’. 

13 (d) REPORTS ON ACTIONS TO RECOVER IMPROPER

14 PAYMENTS.—Section 2 of the Improper Payments Infor15 mation Act of 2002 (31 U.S.C. 3321 note) is amended— 

16 (1) by striking subsection (e); 

17 (2) by redesignating subsections (d) and (f) as 

18 subsections (f) and (g), respectively; and 

19 (3) by inserting after subsection (c) the fol20 lowing: 

21 ‘‘(d) REPORTS ON ACTIONS TO RECOVER IMPROPER

22 PAYMENTS.—With respect to any improper payments 

23 identified in recovery audits conducted under section 2(h) 

24 of the Improper Payments Elimination and Recovery Act 

25 of 2009 (31 U.S.C. 3321 note), the head of the agency 


srobinson on DSKHWCL6B1PROD with BILLS
8 

•S 1508 IS

1 shall provide with the estimate under subsection (b) a re2 port on all actions the agency is taking to recover im3 proper payments, including— 

4 ‘‘(1) a discussion of the methods used by the 

5 agency to recover overpayments; 

6 ‘‘(2) the amounts recovered, outstanding, and 

7 determined to not be collectable, including the per8 cent such amounts represent of the total overpay9 ments of the agency; 

10 ‘‘(3) if a determination has been made that cer11 tain overpayments are not collectable, a justification 

12 for that determination; 

13 ‘‘(4) an aging schedule of the amounts out14 standing; 

15 ‘‘(5) a summary of how recovered amounts have 

16 been disposed of; 

17 ‘‘(6) a discussion of any conditions giving rise 

18 to improper payments and how those conditions are 

19 being resolved; and 

20 ‘‘(7) if the agency has determined under section 

21 2(h) of the Improper Payments Elimination and Re22 covery Act of 2009 (31 U.S.C. 3321 note) that per23 forming recovery audits for any applicable program 

24 or activity is not cost effective, a justification for 

25 that determination. 


srobinson on DSKHWCL6B1PROD with BILLS
9 

•S 1508 IS

1 ‘‘(e) GOVERNMENTWIDE REPORTING OF IMPROPER

2 PAYMENTS AND ACTIONS TO RECOVER IMPROPER PAY3 MENTS.— 

4 ‘‘(1) REPORT.—Each fiscal year the Director of 

5 the Office of Management and Budget shall submit 

6 a report with respect to the preceding fiscal year on 

7 actions agencies have taken to report information re8 garding improper payments and actions to recover 

9 improper payments to— 

10 ‘‘(A) the Committee on Homeland Security 

11 and Governmental Affairs of the Senate; 

12 ‘‘(B) the Committee on Oversight and Gov13 ernment Reform of the House of Representa14 tives; and 

15 ‘‘(C) the Comptroller General. 

16 ‘‘(2) CONTENTS.—Each report under this sub17 section shall include— 

18 ‘‘(A) a summary of the reports of each 

19 agency on improper payments and recovery ac20 tions submitted under this section; 

21 ‘‘(B) an identification of the compliance 

22 status of each agency to which this Act applies; 

23 ‘‘(C) governmentwide improper payment 

24 reduction targets; and 


srobinson on DSKHWCL6B1PROD with BILLS
10 

•S 1508 IS

1 ‘‘(D) a discussion of progress made to2 wards meeting governmentwide improper pay3 ment reduction targets.’’. 

4 (e) DEFINITIONS.—Section 2 of the Improper Pay5 ment Information Act of 2002 (31 U.S.C. 3321 note) is 

6 amended by striking subsections (f) (as redesignated by 

7 this section) and inserting the following: 

8 ‘‘(f) DEFINITIONS.—In this section: 

9 ‘‘(1) AGENCY.—The term ‘agency’ means an 

10 executive agency, as that term is defined in section 

11 102 of title 31, United States Code. 

12 ‘‘(2) IMPROPER PAYMENT.—The term ‘im13 proper payment’— 

14 ‘‘(A) means any payment that should not 

15 have been made or that was made in an incor16 rect amount (including overpayments and un17 derpayments) under statutory, contractual, ad18 ministrative, or other legally applicable require19 ments; and 

20 ‘‘(B) includes any payment to an ineligible 

21 recipient, any payment for an ineligible good or 

22 service, any duplicate payment, any payment 

23 for a good or service not received (except for 

24 such payments where authorized by law), and 


srobinson on DSKHWCL6B1PROD with BILLS
11 

•S 1508 IS

1 any payment that does not account for credit 

2 for applicable discounts. 

3 ‘‘(3) PAYMENT.—The term ‘payment’ means 

4 any transfer or commitment for future transfer of 

5 Federal funds such as cash, securities, loans, loan 

6 guarantees, and insurance subsidies to any non-Fed7 eral person or entity, that is made by a Federal 

8 agency, a Federal contractor, a Federal grantee, or 

9 a governmental or other organization administering 

10 a Federal program or activity. 

11 ‘‘(4) PAYMENT FOR AN INELIGIBLE GOOD OR

12 SERVICE.—The term ‘payment for an ineligible good 

13 or service’ shall include a payment for any good or 

14 service that is rejected under any provision of any 

15 contract, grant, lease, cooperative agreement, or any 

16 other procurement mechanism.’’. 

17 (f) GUIDANCE BY THE OFFICE OF MANAGEMENT

18 AND BUDGET.—Section 2 of the Improper Payments In19 formation Act of 2002 (31 U.S.C. 3321 note) is amended 

20 by striking subsection (g) (as redesignated by this section) 

21 and inserting the following: 

22 ‘‘(g) GUIDANCE BY THE OFFICE OF MANAGEMENT

23 AND BUDGET.— 

24 ‘‘(1) IN GENERAL.—Not later than 6 months 

25 after the date of enactment of the Improper PayVerDate Nov 24 2008 21:52 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\S1508.IS S1508

srobinson on DSKHWCL6B1PROD with BILLS
12 

•S 1508 IS

1 ments Elimination and Recovery Act of 2009, the 

2 Director of the Office of Management and Budget 

3 shall prescribe guidance for agencies to implement 

4 the requirements of this section. The guidance shall 

5 not include any exemptions to such requirements not 

6 specifically authorized by this section. 

7 ‘‘(2) CONTENTS.—The guidance under para8 graph (1) shall prescribe— 

9 ‘‘(A) the form of the reports on actions to 

10 reduce improper payments, recovery actions, 

11 and governmentwide reporting; and 

12 ‘‘(B) strategies for addressing risks and 

13 establishing appropriate prepayment and 

14 postpayment internal controls.’’. 

15 (g) DETERMINATION OF AGENCY READINESS FOR

16 OPINION ON INTERNAL CONTROL.—Not later than 1 year 

17 after the date of enactment of this Act, the Director of 

18 the Office of Management and Budget shall develop— 

19 (1) specific criteria as to when an agency 

20 should initially be required to obtain an opinion on 

21 internal control over financial reporting; and 

22 (2) criteria for an agency that has dem23 onstrated a stabilized, effective system of internal 

24 control over financial reporting, whereby the agency 

25 would qualify for a multiyear cycle for obtaining an 


srobinson on DSKHWCL6B1PROD with BILLS
13 

•S 1508 IS

1 audit opinion on internal control over financial re2 porting, rather than an annual cycle. 

3 (h) RECOVERY AUDITS.— 

4 (1) DEFINITION.—In this subsection, the term 

5 ‘‘agency’’ has the meaning given under section 2(f) 

6 of the Improper Payments Information Act of 2002 

7 (31 U.S.C. 3321 note) as redesignated by this Act. 

8 (2) IN GENERAL.— 

9 (A) CONDUCT OF AUDITS.—Except as pro10 vided under paragraph (4) and if not prohibited 

11 under any other provision of law, the head of 

12 each agency shall conduct recovery audits with 

13 respect to each program and activity of the 

14 agency that expends $1,000,000 or more annu15 ally if conducting such audits would be cost-ef16 fective. 

17 (B) PROCEDURES.—In conducting recovery 

18 audits under this subsection, the head of an 

19 agency— 

20 (i) shall give priority to the most re21 cent payments and to payments made in 

22 any program or programs identified as sus23 ceptible to significant improper payments 

24 under section 2(a) of the Improper PayVerDate Nov 24 2008 21:52 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\S1508.IS S1508

srobinson on DSKHWCL6B1PROD with BILLS
14 

•S 1508 IS

1 ments Information Act of 2002 (31 U.S.C. 

2 3321 note); 

3 (ii) shall implement this subsection in 

4 a manner designed to ensure the greatest 

5 financial benefit to the Government; and 

6 (iii) may conduct recovery audits di7 rectly, by procuring performance of recov8 ery audits by contract (subject to the avail9 ability of appropriations), or by any com10 bination thereof. 

11 (C) RECOVERY AUDIT CONTRACTS.—With 

12 respect to recovery audits procured by an agen13 cy by contract— 

14 (i) subject to subparagraph (B)(iii), 

15 the head of the agency may authorize the 

16 contractor to notify entities (including per17 sons) of potential overpayments made to 

18 such entities, respond to questions con19 cerning potential overpayments, and take 

20 other administrative actions with respect to 

21 overpayment claims made or to be made by 

22 the agency; and 

23 (ii) such contractor shall have no au24 thority to make final determinations relat25 ing to whether any overpayment occurred 


srobinson on DSKHWCL6B1PROD with BILLS
15 

•S 1508 IS

1 and whether to compromise, settle, or ter2 minate overpayment claims. 

3 (D) CONTRACT TERMS AND CONDITIONS.— 

4 The agency shall include in each contract for 

5 procurement of performance of a recovery audit 

6 a requirement that the contractor shall— 

7 (i) provide to the agency periodic re8 ports on conditions giving rise to overpay9 ments identified by the contractor and any 

10 recommendations on how to mitigate such 

11 conditions; and 

12 (ii) notify the agency of any overpay13 ments identified by the contractor per14 taining to the agency or to any other agen15 cy or agencies that are beyond the scope of 

16 the contract. 

17 (E) AGENCY ACTION FOLLOWING NOTIFI18 CATION.—An agency shall take prompt and ap19 propriate action in response to a report or noti20 fication by a contractor under subparagraph 

21 (D)(ii), to collect overpayments and shall for22 ward to other agencies any information that ap23 plies to such agencies. 

24 (3) DISPOSITION OF AMOUNTS RECOVERED.— 


srobinson on DSKHWCL6B1PROD with BILLS
16 

•S 1508 IS

1 (A) IN GENERAL.—Amounts collected by 

2 agencies each fiscal year through recovery au3 dits conducted under this subsection shall be 

4 treated in accordance with this paragraph. 

5 (B) USE FOR FINANCIAL MANAGEMENT IM6 PROVEMENT PROGRAM.—Not more than 25 per7 cent of the amounts collected by an agency 

8 through recovery audits— 

9 (i) shall be available, subject to appro10 priation, to the head of the agency or the 

11 State or local government administering 

12 the program or activity to carry out the fi13 nancial management improvement program 

14 of the agency under paragraph (4); 

15 (ii) may be credited, if applicable, for 

16 that purpose by the head of an agency to 

17 any agency appropriations and funds that 

18 are available for obligation at the time of 

19 collection; and 

20 (iii) shall be used to supplement and 

21 not supplant any other amounts available 

22 for that purpose and shall remain available 

23 until expended. 


srobinson on DSKHWCL6B1PROD with BILLS
17 

•S 1508 IS

1 (C) USE FOR ORIGINAL PURPOSE.—Not 

2 more than 25 percent of the amounts collected 

3 by an agency— 

4 (i) shall be credited to the appropria5 tion or fund, if any, available for obligation 

6 at the time of collection for the same gen7 eral purposes as the appropriation or fund 

8 from which the overpayment was made; 

9 and 

10 (ii) shall remain available for the 

11 same period and purposes as the appro12 priation or fund to which credited. 

13 (D) USE FOR INSPECTOR GENERAL AC14 TIVITIES.—Not more than 5 percent of the 

15 amounts collected by an agency shall be avail16 able, subject to appropriation, to the Inspector 

17 General of that agency for— 

18 (i) the Inspector General to carry out 

19 this Act; or 

20 (ii) any other activities of the Inspec21 tor General relating to investigating im22 proper payments or auditing internal con23 trols associated with payments. 


srobinson on DSKHWCL6B1PROD with BILLS
18 

•S 1508 IS

1 (E) DEPOSIT OF PROCEEDS.—Funds made 

2 available under subparagraphs (B) and (D) by 

3 appropriations shall be— 

4 (i) deposited into the appropriate pro5 gram integrity accounts of the agency or 

6 the State or local government admin7 istering the program or activity; and 

8 (ii) expended only as authorized in an9 nual appropriations Acts. 

10 (F) REMAINDER.—Amounts collected that 

11 are not applied in accordance with subpara12 graphs (B), (C), or (D) or to meet obligations 

13 to recovery audit contractors shall be deposited 

14 in the Treasury as miscellaneous receipts. 

15 (G) EXCEPTIONS RELATING TO ENTITLE16 MENT AND TAX CREDIT PROGRAMS.—This 

17 paragraph shall not apply to amounts collected 

18 through recovery audits conducted under this 

19 subsection relating to— 

20 (i) entitlement programs under section 

21 3(9) of the Congressional Budget and Im22 poundment Control Act of 1974 (2 U.S.C. 

23 622(9)); or 

24 (ii) tax credit programs under the In25 ternal Revenue Code of 1986. 


srobinson on DSKHWCL6B1PROD with BILLS
19 

•S 1508 IS

1 (4) FINANCIAL MANAGEMENT IMPROVEMENT

2 PROGRAM.— 

3 (A) REQUIREMENT.—The head of each 

4 agency shall conduct a financial management 

5 improvement program, consistent with rules 

6 prescribed by the Director of the Office of Man7 agement and Budget. 

8 (B) PROGRAM FEATURES.—In conducting 

9 the program, the head of the agency— 

10 (i) shall, as the first priority of the 

11 program, address problems that contribute 

12 directly to agency improper payments; and 

13 (ii) may seek to reduce errors and 

14 waste in other agency programs and oper15 ations. 

16 (5) OTHER RECOVERY AUDIT REQUIRE17 MENTS.— 

18 (A) IN GENERAL.—Subchapter VI of chap19 ter 35 of title 31, United States Code, is re20 pealed. 

21 (B) TECHNICAL AND CONFORMING AMEND22 MENTS.— 

23 (i) TABLE OF SECTIONS.—The table 

24 of sections for chapter 35 of title 31, 


srobinson on DSKHWCL6B1PROD with BILLS
20 

•S 1508 IS

1 United States Code, is amended by strik2 ing the matter relating to subchapter VI. 

3 (ii) DEFINITION.—Section 3501 of 

4 title 31, United States Code, is amended 

5 by striking ‘‘and subchapter VI of this 

6 title’’. 

7 (iii) HOMELAND SECURITY GRANTS.— 

8 Section 2022(a)(6) of the Homeland Secu9 rity Act of 2002 (6 U.S.C. 612(a)(6)) is 

10 amended by striking ‘‘(as that term is de11 fined by the Director of the Office of Man12 agement and Budget under section 3561 of 

13 title 31, United States Code)’’ and insert14 ing ‘‘under section 2(h) of the Improper 

15 Payments Elimination and Recovery Act of 

16 2009 (31 U.S.C. 3321 note)’’. 

17 (6) RULE OF CONSTRUCTION.—Except as pro18 vided under paragraph (5), nothing in this section 

19 shall be construed as terminating or in any way lim20 iting authorities that are otherwise available to agen21 cies under existing provisions of law to recover im22 proper payments and use recovered amounts. 

23 (i) REPORT ON RECOVERY AUDITING.—Not later 

24 than 2 years after the date of the enactment of this Act, 

25 the Chief Financial Officers Council established under secVerDate Nov 24 2008 21:52 Jul 24, 2009 Jkt 079200 PO 00000 Frm 00020 Fmt 6652 Sfmt 6201 E:\BILLS\S1508.IS S1508

srobinson on DSKHWCL6B1PROD with BILLS
21 

•S 1508 IS

1 tion 302 of the Chief Financial Officers Act of 1990 (31 

2 U.S.C. 901 note), in consultation with the Council of In3 spectors General on Integrity and Efficiency established 

4 under section 7 of the Inspector General Reform Act of 

5 2009 (Public Law 110–409) and recovery audit experts, 

6 shall conduct a study of— 

7 (1) the implementation of subsection (h); 

8 (2) the costs and benefits of agency recovery 

9 audit activities, including those under subsection (h), 

10 and including the effectiveness of using the services 

11 of— 

12 (A) private contractors; 

13 (B) agency employees; 

14 (C) cross-servicing from other agencies; or 

15 (D) any combination of the provision of 

16 services described under subparagraphs (A) 

17 through (C); and 

18 (3) submit a report on the results of the study 

19 to— 

20 (A) the Committee on Homeland Security 

21 and Governmental Affairs of the Senate; 

22 (B) the Committee on Oversight and Gov23 ernment Reform of the House of Representa24 tives; and 

25 (C) the Comptroller General. 


srobinson on DSKHWCL6B1PROD with BILLS
22 

•S 1508 IS

1 SEC. 3. COMPLIANCE. 

2 (a) DEFINITIONS.—In this section: 

3 (1) AGENCY.—The term ‘‘agency’’ has the 

4 meaning given under section 2(f) of the Improper 

5 Payments Information Act of 2002 (31 U.S.C. 3321 

6 note) as redesignated by this Act. 

7 (2) ANNUAL FINANCIAL STATEMENT.—The 

8 term ‘‘annual financial statement’’ means the annual 

9 financial statement required under section 3515 of 

10 title 31, United States Code, or similar provision of 

11 law. 

12 (3) COMPLIANCE.—The term ‘‘compliance’’ 

13 means that the agency— 

14 (A) has published an annual financial 

15 statement for the most recent fiscal year and 

16 posted that report and any accompanying mate17 rials required under guidance of the Office of 

18 Management and Budget on the agency 

19 website; 

20 (B) if required, has conducted a program 

21 specific risk assessment for each program or ac22 tivity that conforms with section 2(a) the Im23 proper Payments Information Act of 2002 (31 

24 U.S.C. 3321 note); 

25 (C) if required, publishes improper pay26 ments estimates for all programs and activities 


srobinson on DSKHWCL6B1PROD with BILLS
23 

•S 1508 IS

1 identified under section 2(b) of the Improper 

2 Payments Information Act of 2002 (31 U.S.C. 

3 3321 note) in the accompanying materials to 

4 the annual financial statement; 

5 (D) publishes programmatic corrective ac6 tion plans prepared under section 2(c) of the 

7 Improper Payments Information Act of 2002 

8 (31 U.S.C. 3321 note) that the agency may 

9 have in the accompanying materials to the an10 nual financial statement; 

11 (E) publishes improper payments reduction 

12 targets established under section 2(c) of the 

13 Improper Payments Information Act of 2002 

14 (31 U.S.C. 3321 note) that the agency may 

15 have in the accompanying materials to the an16 nual financial statement for each program as17 sessed to be at risk, and is meeting such tar18 gets; and 

19 (F) has reported an improper payment 

20 rate of less than 10 percent for each program 

21 and activity for which an estimate was pub22 lished under section 2(b) of the Improper Pay23 ments Information Act of 2002 (31 U.S.C. 

24 3321 note). 


srobinson on DSKHWCL6B1PROD with BILLS
24 

•S 1508 IS

1 (b) ANNUAL COMPLIANCE REPORT BY INSPECTORS

2 GENERAL OF AGENCIES.—Each fiscal year, the Inspector 

3 General of each agency shall determine whether the agen4 cy is in compliance and submit a report on that determina5 tion to— 

6 (1) the head of the agency; 

7 (2) the Committee on Homeland Security and 

8 Governmental Affairs of the Senate; 

9 (3) the Committee on Oversight and Govern10 mental Reform of the House of Representatives; and 

11 (4) the Comptroller General. 

12 (c) REMEDIATION.— 

13 (1) NONCOMPLIANCE.— 

14 (A) IN GENERAL.—If an agency is deter15 mined by the Inspector General of that agency 

16 not to be in compliance under subsection (b) in 

17 a fiscal year, the head of the agency shall sub18 mit a plan to Congress describing the actions 

19 that the agency will take to come into compli20 ance. 

21 (B) PLAN.—The plan described under sub22 paragraph (A) shall include— 

23 (i) measurable milestones to be ac24 complished in order to achieve compliance 

25 for each program or activity; 


srobinson on DSKHWCL6B1PROD with BILLS
25 

•S 1508 IS

1 (ii) the designation of a senior agency 

2 official who shall be accountable for the 

3 progress of the agency in coming into com4 pliance for each program or activity; and 

5 (iii) the establishment of an account6 ability mechanism, such as a performance 

7 agreement, with appropriate incentives and 

8 consequences tied to the success of the of9 ficial designated under clause (ii) in lead10 ing the efforts of the agency to come into 

11 compliance for each program and activity. 

12 (2) NONCOMPLIANCE FOR 2 FISCAL YEARS.— 

13 (A) IN GENERAL.—If an agency is deter14 mined by the Inspector General of that agency 

15 not to be in compliance under subsection (b) for 

16 2 consecutive fiscal years for the same program 

17 or activity, and the Director of the Office of 

18 Management and Budget determines that addi19 tional funding would help the agency come into 

20 compliance, the head of the agency shall obli21 gate additional funding, in an amount deter22 mined by the Director, to intensified compliance 

23 efforts. 

24 (B) FUNDING.—In providing additional 

25 funding described under subparagraph (A), the 


srobinson on DSKHWCL6B1PROD with BILLS
26 

•S 1508 IS

1 head of an agency shall use any reprogramming 

2 or transfer authority available to the agency. If 

3 after exercising that reprogramming or transfer 

4 authority additional funding is necessary to ob5 ligate the full level of funding determined by 

6 the Director of the Office of Management and 

7 Budget under subparagraph (A), the agency 

8 shall submit a request to Congress for addi9 tional reprogramming or transfer authority. 

10 (3) REAUTHORIZATION PROPOSALS.—If an 

11 agency is determined by the Inspector General of 

12 that agency not to be in compliance under sub13 section (b) for more than 3 consecutive fiscal years 

14 for the same program or activity, the head of the 

15 agency shall, not later than 30 days after such de16 termination, submit to Congress— 

17 (A) reauthorization proposals for each pro18 gram or activity that has not been in compli19 ance for 3 or more consecutive fiscal years; or 

20 (B) proposed statutory changes necessary 

21 to bring the program or activity into compli22 ance. 

23 (d) COMPLIANCE ENFORCEMENT PILOT PRO24 GRAMS.— 


srobinson on DSKHWCL6B1PROD with BILLS
27 

•S 1508 IS

1 (1) IN GENERAL.—The Director of the Office of 

2 Management and Budget may establish 1 or more 

3 pilot programs which shall test potential account4 ability mechanisms with appropriate incentives and 

5 consequences tied to success in ensuring compliance 

6 with this Act and eliminating improper payments. 

7 (2) REPORT.—Not later than 5 years after the 

8 date of enactment of this Act, the Director of the 

9 Office of Management and Budget shall submit a re10 port to Congress on the findings associated with any 

11 pilot programs conducted under paragraph (1). The 

12 report shall include any legislative or other rec13 ommendations that the Director determines nec14 essary. 

15 (e) REPORT ON CHIEF FINANCIAL OFFICERS ACT OF

16 1990.—Not later than 1 year after the date of the enact17 ment of this Act, the Chief Financial Officers Council es18 tablished under section 302 of the Chief Financial Officers 

19 Act of 1990 (31 U.S.C. 901 note) and the Council of In20 spectors General on Integrity and Efficiency established 

21 under section 7 of the Inspector General Reform Act of 

22 2009 (Public Law 110–409), in consultation with a broad 

23 cross-section of experts and stakeholders in Government 

24 accounting and financial management shall— 


srobinson on DSKHWCL6B1PROD with BILLS
28 

•S 1508 IS

1 (1) jointly examine the lessons learned during 

2 the first 20 years of implementing the Chief Finan3 cial Officers Act of 1990 (31 U.S.C. 901) and iden4 tify any reforms or improvements to the legislative 

5 and regulatory compliance framework for Federal fi6 nancial management that will optimize Federal 

7 agency efforts to— 

8 (A) publish relevant, timely, and reliable 

9 reports on Government finances; and 

10 (B) implement internal controls that miti11 gate the risk for fraud, waste, and error in Gov12 ernment programs; and 

13 (2) submit a report on the results of the exam14 ination to— 

15 (A) the Committee on Homeland Security 

16 and Governmental Affairs of the Senate; 

17 (B) the Committee on Oversight and Gov18 ernment Reform of the House of Representa19 tives; and 

20 (C) the Comptroller General. 

Æ 


srobinson on DSKHWCL6B1PROD with BILLS