Office of the Inspector General

Commodity Futures Trading Commission 

FY 2015 Compliance with the Improper Payments 

Elimination and Recovery Improvement Act 
EXECUTIVE SUMMARY 

For the fiscal year ended September 30, 2015, the Office of the Inspector General (OIG) 

audited the Commodity Futures Trading Commission’s (CFTC) compliance with: 

	 Office of Management and Budget (OMB) Circular A-136, Financial Reporting 

Requirements as they relate to the Improper Payments Elimination and Recovery 

Improvement Act of 2012 (IPERIA); and 

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

Appendix C, Requirements for Effective Estimation and Remediation of 

Improper Payments. 

Management is responsible for the agency's compliance with these requirements. OIG’s 

responsibility is to express an opinion on the agency’s compliance with these 

requirements. 

In our opinion, the CFTC complied, in all material respects, with the aforementioned 

requirements for the fiscal year ended September 30, 2015 and its improper payment 

assertion for reporting made in their respective agency financial report is fairly stated. 

Our audit was conducted in accordance with the standards contained in Government 

Accountability Office’s Government Auditing Standards. We believe that our audit 

provides a reasonable basis for our opinion. 

A. Roy Lavik 

Inspector General 
     

 

 

 

U.S. COMMODITY FUTURES TRADING COMMISSION 

OFFICE OF INSPECTOR GENERAL 

Three Lafayette Centre 

1155 21st Street, NW, Washington, DC 20581 

Telephone: (202) 418-5000 

Facsimile: (202) 418-5522 

TO: Timothy G. Massad, Chairman 

Sharon Y. Bowen, Commissioner 

J. Christopher Giancarlo, Commissioner 

FROM: Miguel A. Castillo, CPA, CRMA 

Assistant Inspector General for Auditing 

DATE: May 16, 2016 

SUBJECT: Audit of Commodity Futures Trading Commission Compliance with the 

Improper Payments Elimination and Recovery Improvement Act of 2012 

Introduction 

The Office of Management and Budget guidance provided in Circular A-136, Financial 

Reporting Requirements, and Appendix C of Circular A-123, Management’s 

Responsibility for Internal Control, require agencies to report detailed information on 

their efforts to eliminate improper payments. The Improper Payments Elimination & 

Recovery Improvement Act (IPERIA) of 20121 requires agencies to include all identified 

improper payments in the reported estimate, regardless of whether the improper 

payment has been or is being recovered (among other requirements). An improper 

payment is any payment that should not have been made or that was made in an 

incorrect amount or with insufficient documentation, such as: 

 Incorrect amounts paid to eligible recipients, 

 Payments made to ineligible recipients, 

 Payments for goods or services not received, 

 Duplicate payments, and 

 Payments with insufficient or no supporting documentation.2 

CFTC Improper Payments Assertions 

In its FY 2015 Agency Financial Report3 (AFR), the CFTC asserted that it does not 

administer grant, benefit or loan programs. CFTC’s most significant expenses are 

payroll and benefits for its employees, which are administered by the U.S. Department 

of Agriculture’s National Finance Center and the Office of Personnel Management. 

1

 Improper Payments Elimination and Recovery Improvement Act of 2012, Pub. L. No. 112-248, 126 Stat. 2390 

(2013). 

2 https://paymentaccuracy.gov/about-improper-payments. 3 See page 108. 

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CFTC’s most significant non-payroll expenses are its payments to vendors for goods and 

services used during the course of normal operations. Based on the results of 

transaction testing applied to a sample of FY 2015 vendor payments, consideration of 

risk factors, and reliance on the internal controls in place over the payment and 

disbursement processes, the CFTC has determined that none of its programs and 

activities are susceptible to significant improper payments at or above the threshold 

levels set by OMB. 

The CFTC also asserted that implementing a payment recapture audit program for 

contract payments is not cost effective and notified OMB of this determination in 

September 2015. In making this determination, the CFTC considered its low improper 

payment rate based on testing conducted over the past three years and determined that 

benefits or recaptured amounts associated with implementing and overseeing the 

program would not exceed the costs. 

OIG Opinion 

OMB Guidance A-123, Appendix C, established an agency’s improper payment reporting 

threshold as annual erroneous payments exceeding both 2.5 percent of program 

payments and $10 million. CFTC’s assertion that none of its programs [payroll and 

vendor payments] are susceptible to significant improper payments at or above the 

threshold levels set by OMB is in our opinion fairly stated. Based on independent tests 

conducted by the agency’s public accountants, Treasury’s Do Not Pay (DNP) Business 

Center,4 and OIG auditors, the CFTC complied, in all material respects, with the 

aforementioned improper payment reporting requirements for the fiscal year ended 

September 30, 2015. 

Objective, Scope, Methodology 

The OIG conducted an audit to determine CFTC’s compliance with improper payment 

requirements, as set forth in OMB Circular A-123, Appendix C; and OMB Circular A-136 

for the fiscal year ended September 30, 2015. 

To meet our objective, we gained an understanding of component-level controls through 

inquiry procedures and reviewed documentation supporting the information published 

in CFTC’s FY 2015 Agency Financial Report. In addition, we reviewed work papers of 

the agency’s public accountants and the improper payment report of Treasury’s Do Not 

Pay (DNP) Business Center. The independent auditors’ work papers did not identify 

instances of improper payments. The Do Not Pay (DNP) Business Center identified 

high-risk vendor records which the CFTC deactivated thereby decreasing the likelihood 

of improper payments to deceased individuals. The DNP business center also did not 

identify instances of improper payments. 

4 https://www.fiscal.treasury.gov/fsprograms/fs_donotpaybc.htm. 

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Further, we independently conducted anomaly testing of FY 2015 payroll and vendor 

payments. Specifically, we analyzed payroll transactions by object class and made 

inquiries of potential anomalies. In addition, we compared payroll records to building 

scans to verify the existence of employees in the Washington, DC office. 

For vendor payments, we searched for anomalies by vendor. For this test, an anomaly 

was defined as an extreme value outside of a normal distribution. The sum of all 

potential anomalies did not meet the OMB reporting threshold. 

Our audit was conducted in accordance with the standards contained in Government 

Accountability Office’s Government Auditing Standards. We relied on payroll data 

extracted from the National Financial Center and vendor payment data recorded in the 

agency’s general ledger. The agency’s independent accountant report and work papers 

did not express deficiencies associated with payroll and vendor payments and as such 

we believe the data used to support our conclusion is reliable. 

We provided a draft copy of the report to management for comments. Management 

concurred with the report. (See Appendix A) 

We appreciate the courtesies provided by CFTC staff. If you any questions, please 

contact me at (202) 418-5084 or Timothy Peoples, lead auditor, at (202) 418-5439. 

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cc: 

The Honorable Ron Johnson, Chairman, 

Senate Committee on Homeland 

Security and Governmental Affairs; 

The Honorable Thomas R. Carper, Ranking Member 

Senate Committee on Homeland Security 

and Governmental Affairs; 

The Honorable Jason Chaffetz, Chairman 

House Committee on Oversight and 

Government Reform; 

The Honorable Elijah Cummings, Ranking Member 

House Committee on Oversight and 

Government Reform; 

Mr. Gene L. Dodaro 

Comptroller General of the United States, 

United States Government Accountability Office 

Mr. David Mader 

Controller of the Office of Federal Financial Management, 

Office of Management and Budget. 

Anthony Thompson, Executive Director, 

Commodity Futures Trading Commission 

Mary Jean Buhler 

Chief Financial Officer 

Commodity Futures Trading Commission 

Judith Ringle, Deputy Inspector General and Chief Counsel, 

Commodity Futures Trading Commission 

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U.S. COMMODITY FUTURES TRADING COMMISSION 


Three Lafayette Centre 


1155 21st Street, NW, Washington, DC 20581 


Telephone: (202) 418-5000 


Facsimile: (202) 418-5521 


www.cftc.gov 

TO: Miguel A. Castillo 

Assistant Inspector General for Audits 

FROM: Mary Jean 

Chief FinanciaWfff~;pl"/

Buhler~~A-t~­ / 

DATE: May 13, 2016 

SUBJECT: Management's Response to OIG Improper Payments Elimination and Recovery Act 

(IPERA) compliance 

Thank you for the opportunity to comment on the Office ofthe Inspector General's (OIG) report, FY2015 

Compliance with the Improper Payments Elimination and Recovery Improvement Act (!PERA). We 

appreciate the positive communications we have had with the OIG during this compliance audit. 

CFTC Management has reviewed the rep01i and concurs with the findings as stated. 

Thank you