U.S. COMMODITY FUTURES TRADING COMMISSION 

Three Lafayette Centre 


1155 21st Street, NW, Washington, DC 20581 


Telephone: (202) 418-5110 


Facsimile: (202) 418-5522 


June 18, 2015 

The Honorable Timothy G. Massad 

Commodity Futures Trading Commission 

Three Lafayette Centre 

11552l 51 St.,NW 

Washington, DC 20581 

Dear Chairman Massad: 

My Office has concluded a review ofthe Commodity Futures Trading Commission's (CFTC) 

compliance with the Improper Payments Act1 for Fiscal Year (FY) 2014, and nothing came to 

our attention that would indicate that the CFTC did not comply with its requirements. 

The Improper Payments Act, as amended, directs each agency Inspector General to review 

agency findings regarding all levels of improper payments and submit a report of its findings to 

the head of the agency, select Congressional committees, and the Comptroller General. 2 Most 

recently, on January 10, 2013, President Obama signed into law the Improper Payments 

Elimination and Recovery Improvement Act of2012 (IPERIA), further amending the Improper 

Payments Act.3 The Office ofManagement and Budget (OMB) issued guidance documents 

detailing agency requirements for implementing the Act, which are discussed below.4 

Under the Act, an improper payment is "any payment that should not have been made or that was 

made in an incorrect amount ... under statutory, contractual, administrative, or other legally 

applicable requirements."5 As ofIPERIA's implementation in 2013, this includes not only 

1 Improper Payments Information Act of2002 (Improper Payments Act or the Act), Pub. L. No. 107-300, 116 Stat. 

2350 (2002)(codified at 31 U.S.C. § 3321 note (2015)). 

2 OFFICE OF MGMT. & BUDGET, EXEC. OFFICE OF THE PRESIDENT, M-15-02, APPENDIX C TO CIRCULAR No. A-123, 

REQUIREMENTS FOR EFFECTIVE ESTIMATION AND REMEDIATION OF IMPROPER PAYMENTS [OMB M-15-02], *6, *16, 

*40 (2014) (noting that agencies must include improper payment information in their Annual Financial Report 

(AFR), that agency Inspectors General must review "agency improper payment reporting in the agency's AFR," and 

listing the required recipients of the Inspector General's report). Agencies have reporting requirements not only for 

programs that meet the statutory threshold for being susceptible to significant improper payments, as described infra 

note 7, but for programs in which any improper payments were identified. See id. at *16 (detailing the less 

extensive reporting requirements for improper payment estimates that do not result in a program being classified as 

susceptible to significant improper payments). 3 Improper Payments Elimination and Recovery Improvement Act of2012, Pub. L. No. 112-248, 126 Stat. 2390 

(2013). The Improper Payments Act was earlier amended by the Improper Payments Elimination and Recovery Act 

of2010 (IPERA), Pub. L. No. 111-204, 124 Stat. 2224 (2010). 

4 See generally, e.g, OMB M-15-02, supra note 2 (discussing IPERIA's implementation); OFFICE OF MGMT. & 

BUDGET, EXEC. OFFICE OF THE PRESIDENT, M-11-16, ISSUANCE OF REVISED PARTS I AND II TO APPENDIX C OF OMB 

CIRCULAR A-123 [OMB M-11-16] (2011) (discussing IPERA 's implementation). 

s 31 U.S.C. § 3321 note (g)(2)(A); see also OMB M-15-02, supra note 2, at *7 (explaining what an improper 

payment is under the Act). 
payments made to non-Federal recipients, but to Federal employees as well.6 Agencies must 

review all programs and activities annually to determine whether any are "susceptible to 

significant improper payments" under the terms ofthe statute. 7 

In accordance with OMB guidance, the agency's Inspector General is expected to review the 

agency's Annual Financial Report (AFR) and assess the agency's compliance with the Improper 

Payments Act. Accordingly, the Office ofthe Inspector General conducted a review ofthe 

Commodity Futures Trading Commission (CFTC) compliance with the Improper Payments Act 

for Fiscal Year (FY) 2014. Our review was carried out in a reasonable and prudent manner and 

in accordance with OMB Circular Nos. A-123 (M-15-02)8 and A-136.9 

Our scope included reviewing the CFTC Accounting Officer's attestation to the absence of any 

improper payments at CFTC during FY 2014, a review of CFTC's Annual Financial Reportincluding the independent auditors report ofthe CFTC's FY 2014 financial statements, and the 

financial statements for the CFTC Customer Protection Fund for FY 2014. We also reviewed the 

CFTC database ofpayments during FY 2014 which contained approximately 7,032 transactions 

and $79 million in non-payroll payments to vendors, individuals, and external entities. 

Additionally, we reviewed payroll transactions for FY 2014. For payroll during FY 2014 there 

were 1,621,764 transactions and over $125 million in outlays. 

In order to identify potential improper payments we established several database queries which 

the Office of Financial Management (OFM) used to generate reports indicating no improper 

payments were made during FY 2014. OFM informed us, and we reviewed documentation 

indicating, that payments were checked to the government-wide "Do Not Pay"10 list and no 

exceptions were found. We also reviewed the Agency Financial Report for FY2014 and found 

that the agency determined "that none of its programs and activities are susceptible to significant 

improper payments at or above the threshold levels set by OMB," 11 and we agree. The agency's 

report did cite compliance with standards applicable prior to FY2014, rather than the updated 

standards found in !PERIA and OMB M-15-02. However, our review concluded that the agency 

was also in compliance with currently applicable standards because none ofthe programs would 

have exceeded the lower 1.5 percent threshold to be classified as susceptible to significant 

improper payments. 12 

6 OMB M-15-02, supra note 2, at *8 (noting that payments to employees include "salary, locality pay, travel pay, 


and other payments"). 
 7 See OMB M-15-02, supra note 2, at *9 (defining significant improper payments as "gross annual improper 


payments ... in the program exceeding (I) both 1.5 percent ofprogram outlays and $10,000,000 of all program or 


activity payments [that fiscal year] or (2) $100,000,000 (regardless ofthe improper payment percentage oftotal 


rrogram outlays)."). 


Dated October 20, 2014. 

9 Dated September 18, 2014. 

10 See OMB M-15-02, supra note 2, at *44 (listing reference to the Treasury Department's Do Not Pay Program as a 

control activity agencies should use to identify improper payments). 11 See Commodity Futures Trading Commission Agency Financial Report Fiscal Year 2014 page 90, available at 

http://www.cftc.gov/ucm/groups/public/@aboutcftc/documents/file/2014afr.pdf. 12 In addition, the agency's review already addressed all payment programs, including employee pay and benefits. 

Thus, its review also addressed the expanded scope of applicable payment programs or activities under IPERIA. 

2 

Therefore, during the OIG's review. nothing came to our attention that would indicate that the 

CFTC did not comply with Improper Payment Act requirements. We will coordinate with the 

agency to ensure it properly implements and cites the updated standards going forward. 

A. Roy Lavik 

Inspector Genera 

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 Affa irs; 


The Honorable Jason Chaffetz, Chairman 


House Committee on Oversight and 


Government Reform; 


The Honorable Elij ah Cummings, 


Ranking Member 


House Committee on Oversight and 


Government Reform; 


Mr. Gene L. Dodaro 


Comptroller General of the United States, 


United States Government Accountabi lity 


Office 


Mr. David Mader 


Controller ofthe Office ofFederal Financ ia l 


Management, 


Office of Management and Budget. 


Ms. Mary Jean Buhler 


Chief Financial Officer 


Commodity Futures Trading Commission 


3