Inspectors General: USDA Office of Inspector General Resources, Accomplishments, Coverage, and Quality
Published: 2013-03-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The USDA OIG plays a critical role in addressing issues of economy, efficiency, and potential fraud involving scarce taxpayer dollars allocated to USDA.
GAO was asked to review a number of issues related to the OIG's operations in comparison to other cabinet-level OIGs. The objectives of this report were to provide information on the USDA OIG's (1) budget and staffing levels, (2) reported accomplishments, (3) reported oversight coverage, (4) reported quality of work, and (5) oversight of USDA's reported causes of estimated improper payments. To address these objectives, GAO obtained information over the 3-year period covering fiscal years 2009 through 2011 on the OIG's budget and staff levels and the reported monetary and nonmonetary accomplishments from this work. GAO obtained similar information reported by the OIGs in all cabinet-level departments. In addition, GAO summarized information on the USDA OIG's oversight coverage reported by audits and investigations, and the quality of the OIG's work as reported by peer reviews performed by other OIGs. Also, GAO obtained information on the OIG's audit of USDA's reporting on improper payments.
section_title: What GAO Found
paragraphs: During the 3-year period from fiscal year 2009 through 2011, the U.S. Department of Agriculture (USDA) Office of Inspector General's (OIG) total budgetary resources decreased by about 8 percent. In contrast, the total budgetary resources for all other cabinet-level OIGs increased by approximately 6 percent over the 3-year period. The USDA OIG's authorized full-time equivalent staff (FTE) increased by 11 percent, from 550 to 608, while all other cabinet-level OIGs had a combined increase in authorized FTEs of about 14 percent during the same 3-year period.
The USDA OIG had an estimated average return on investment for each budgetary resource dollar received of $13.96 during the 3-year period compared to the other cabinet-level OIGs' average return of $12.63, based on the potential savings from monetary accomplishments reported by audits and investigations. Most of the USDA OIG's return was the result of approximately $4 billion in potential savings resulting from a fiscal year 2011 audit of funds from the American Recovery and Reinvestment Act of 2009 for USDA programs.
During the 3-year period the USDA OIG issued 212 audit reports and completed 878 investigations that provided oversight coverage for each of USDA's seven mission areas, high-risk areas identified by GAO, and the management challenges identified by the OIG.
With respect to quality, the OIG received peer reviews of its audit and investigative quality from external OIGs, which concluded that the OIG had controls in place to ensure that its audits were performed in accordance with professional auditing standards, and that the OIG's investigations followed applicable professional standards.
The OIG's audit of USDA's compliance with reporting requirements for improper payments included a review of the reported root causes. The audit concluded that because of the lack of clear instructions, USDA's component agencies did not consistently categorize the root causes of improper payments. As a result, the OIG concluded that USDA's reporting of the causes of the improper payments was not accurate. The OIG made recommendations, and USDA agreed to implement a second-party review process to help ensure accuracy, implement controls to ensure consistent categorizing of causes, and update guidance for determining the causes.
section_title: What GAO Recommends
paragraphs: GAO is not making specific recommendations in this report. The USDA Inspector General commented that the draft of this report provided an objective and comprehensive review of the OIG.

section_title: Letter
paragraphs: You raised questions regarding whether recent changes in funding  provided to the U.S. Department of Agriculture (USDA) Office of Inspector  General (OIG) may adversely affect the OIG’s staffing levels and its ability  to carry out its mission operations. This letter responds to your request for  GAO to provide information on the efforts of the USDA OIG to provide  oversight of the department’s programs and activities during the most  recent 3-year period for which data are available. Specifically, this report  provides information on the USDA OIG’s (1) budgets and staffing  resources for fiscal years 2009 through 2011 in comparison with other  cabinet-level OIGs; (2) reported monetary accomplishments for fiscal  years 2009 through 2011 in comparison with other cabinet-level OIGs and  the USDA OIG’s reported nonmonetary accomplishments; (3) reported  audit and investigative coverage of USDA’s offices, programs, and  operations for fiscal years 2009 through 2011; (4) quality of work based  on recent external and internal reviews; and (5) reporting on the causes  of improper payments identified by USDA.
subsections: section_title: Scope and Methodology
paragraphs: We used OIG data from fiscal years 2009 through 2011 because these  were the most recent 3 fiscal years for which data were available as of  the beginning of our engagement. To accumulate comparative  information on budget and staffing resources, we obtained the total  budgetary resources and staffing levels for the USDA OIG and for all  other OIGs in the cabinet-level departments from the Office of  Management and Budget (OMB) for the same 3-year period from fiscal  year 2009 through 2011.
To provide comparative information on results and accomplishments, we  obtained the monetary accomplishments reported by the USDA OIG and  the other cabinet-level OIGs in their semiannual reports for our 3-year  period. We compared the reported dollar value of accomplishments to the  total budgetary resources of each OIG to determine each OIG’s return-  on-investment for each budgetary resources dollar. In addition, we  summarized selected audit and investigative accomplishments reported  by the USDA OIG in semiannual reports over the same 3-year period. We  also obtained the performance targets and results measured by the OIG  to determine its own success in providing audits and investigations.
With respect to USDA OIG oversight coverage, we compared data on its  audit and investigative results over our 3-year period with the American  Recovery and Reinvestment Act of 2009 (Recovery Act) issues, its seven  mission areas, areas of high risk, and areas designated as management  challenges. Specifically, we used the seven mission areas identified by  USDA, the high-risk areas reported by us, and the management  challenges reported by USDA in its annual performance and  accountability reports (PAR). We then compared the accomplishments,  including the number of audits, reported by the USDA OIG in semiannual  reports over the 3-year period to USDA’s mission areas, high-risk areas,  and management challenges to provide perspective on the extent and  nature of the OIG’s oversight coverage.
To provide information on the reported quality of the OIG’s oversight, we  obtained the results of the most recent external peer reviews of audit and  investigative quality, and the results of the internal quality assessment  reviews performed by the USDA OIG of its own operations for audits,  investigations, and administrative activities for fiscal years 2009 through  2011. In addition, we obtained information on the OIG’s quality assurance  as part of its planning process for conducting audits and investigations,  and on the performance measures used by the OIG to help ensure quality  audits and investigations.
We also obtained information on the results of the OIG’s audit of USDA’s  compliance with reporting requirements under The Improper Payments  Elimination and Recovery Act of 2010 (IPERA 2010), including  requirements for reporting on the causes of the agency’s improper  payments.
We interviewed OIG officials at USDA headquarters responsible for  planning, directing, and managing the OIG’s operations to obtain  information on resources, accomplishments, coverage and quality. We  relied on the results of the OIG’s peer reviews of audit and investigative  quality to provide reasonable assurance of the reliability of the information  in OIG reports. For information on the OIG’s audit of improper payments,  we interviewed staff members and reviewed the OIG’s work papers to  obtain supporting documentation for the conclusions and  recommendations regarding USDA’s reported root causes of improper  payments. On the basis of these steps, we determined that the data were  sufficiently reliable for the purposes of our review.
We conducted our work from June 2012 to March 2013 in accordance with  all sections of GAO’s Quality Assurance Framework that were relevant to  our objectives. The framework requires that we plan and perform the  engagement to obtain sufficient and appropriate evidence to meet our  stated objectives and to discuss any limitations in our work. We believe that  the information and data obtained, and the analysis conducted, provide a  reasonable basis for any findings and conclusions in this report.
We obtained comments on a draft of this report from the USDA Inspector  General, which are reprinted in appendix II. We also received technical  comments, which we have incorporated as appropriate.
section_title: Background
paragraphs: The USDA OIG was administratively established in 1962 and statutorily  established by the Inspector General Act of 1978, as amended, (IG Act)  to provide independent audits and investigations of USDA’s programs  and operations; promote integrity, efficiency, and effectiveness; and  detect and prevent fraud, waste, abuse, and mismanagement. The OIG’s  audits examine the economy and efficiency of USDA programs and  operations, including program results, compliance with applicable laws  and regulations, and fair presentation of financial reports. The USDA OIG  is a member of the Council of the Inspectors General on Integrity and  Efficiency (CIGIE), which was established by the Inspector General  Reform Act of 2008 to address integrity, economy, and effectiveness  issues that transcend individual government agencies; and to increase  the professionalism and effectiveness of personnel in the OIGs.
USDA is organized by seven mission areas, which are collections of  agencies that work together to achieve strategic goals. (See app. I.)  These mission areas provide leadership on addressing food, agricultural,  and environmental issues; developing agricultural markets; fighting  hunger and malnutrition; encouraging rural development; conserving  natural resources; performing agricultural research; and ensuring  standards of food quality through safeguards and inspections. In fiscal  year 2011, USDA had about 100,000 employees and delivered public  services through its more than 300 programs worldwide. USDA’s mission  areas and administrative offices accounted for USDA’s total budgetary  resources of approximately $182 billion in fiscal year 2011.
OIG audits are required to be performed in accordance with Government  Auditing Standards provided by the Comptroller General, which  incorporate the professional standards set by the American Institute of  Certified Public Accountants. While the majority of audit work is  performed by OIG staff, the OIG also contracts with certified public  accountants for some work and oversees the quality of work done by  auditors under contract to other USDA agencies.
The OIG’s investigations address criminal activities that affect the health  and safety of the public as well as the integrity of USDA programs, such  as meat-packers that knowingly sell hazardous food products and  individuals who tamper with food regulated by USDA. In addition, the  OIG’s investigators provide an emergency law enforcement response to  USDA-declared emergencies and suspected incidents of terrorism  affecting USDA-regulated industries, as well as USDA programs,  operations, personnel, and installations, in coordination with federal,  state, and local law enforcement agencies, as appropriate.
The OIG’s oversight of USDA’s programs and mission areas is guided by  a strategic plan that establishes five goals aligned with the goals of the  department. These goals are to (1) strengthen USDA’s ability to  implement safety and security measures to protect the public health and  agricultural and department resources, (2) reduce program vulnerabilities  and strengthen program integrity in the delivery of benefits to individuals,  (3) support USDA in implementing its management improvement  initiatives, (4) increase the efficiency and effectiveness with which USDA  manages and exercises stewardship over natural resources, and   (5) strive for a highly qualified diverse workforce with the tools and  training necessary to continuously enhance the OIG’s ability to fulfill its  mission.
The OIG publishes an annual performance plan that sets specific targets  for each of its performance measures for the coming fiscal year; lays out  the audit, investigation, inspection, and management priorities for the  year; and where appropriate, discusses the specific projects that will be  performed and expected initiation dates. OIG investigative officials have  stated that the majority of the OIG’s investigative efforts are reactive.  However, in an effort to be proactive, the investigative office solicits input  from special agents in charge in the field and headquarters to identify  trends, areas of interest, and ways to best allocate resources for  achieving the OIG’s strategic goals. Investigation’s highest priorities are  (1) the health and safety of the American public and USDA employees,  (2) agricultural terrorism threats, and (3) the nation’s food supply.
In addition, much of the OIG’s work is directed by legislative mandates,  such as the Recovery Act, which provided USDA about $28 billion in  funding involving a number of programs and increased the OIG’s  oversight responsibilities. The OIG’s annual audit plans for fiscal years  2009 through 2011 were primarily directed at supporting the OIG’s  strategic plan, with the OIG’s plans for fiscal years 2010 and 2011  including Recovery Act responsibilities.
Additional mandates include requirements under IPERA 2010, and for the  USDA OIG to provide oversight of USDA’s annual financial statements  under the Chief Financial Officers Act of 1990 (CFO Act) and of  information security under the Federal Information Security Management  Act of 2002 (FISMA).
section_title: Level of USDA OIG Budget and Staffing Resources Compared with Other Cabinet- Level OIGs
subsections: section_title: Budgetary Resources
paragraphs: The USDA OIG had total budgetary resources of about $110 million in  fiscal year 2011. In comparison with other cabinet-level OIGs for the  same fiscal year, the USDA OIG’s budgetary funding was less than eight  other OIGs and greater than seven. (See table 1.) However, the USDA  OIG had the largest decrease in total budgetary resources and was one  of three OIGs that had a decrease from fiscal year 2009 to fiscal year  2011. Specifically, the USDA OIG’s total budgetary resources decreased  from about $120 million in fiscal year 2009, to approximately $110 million  in fiscal year 2011, or about 8 percent. The other cabinet-level OIGs  combined had an increase of about 6 percent in total budgetary resources  during the same period.
The USDA OIG had budget authority for 608 full-time equivalent staff  (FTE) during fiscal year 2011. Six other OIGs had more FTEs and nine  had fewer for the same fiscal year. (See table 2.) The USDA OIG had an  11 percent increase in the number of FTEs from fiscal year 2009 to fiscal  year 2011, compared to an overall increase of 14 percent for all other  cabinet-level OIGs during the same 3-year period. USDA OIG officials  reported that they were unable to staff all of the authorized FTEs and had  43 unfilled positions at the end of fiscal year 2011 because of budgetary  constraints.
section_title: USDA OIG’s Reported Monetary and Nonmonetary Accomplishments
paragraphs: The OIGs established by the IG Act, including the USDA OIG, are  required to report specific monetary accomplishments in semiannual  reports to the Congress. As required, the USDA OIG’s semiannual  reports for fiscal years 2009 through 2011 included the questioned costs,  unsupported costs, and funds that could be put to better use identified by  audits, and the monetary fines, fees, and court-ordered restitutions  resulting from investigations. In addition to monetary accomplishments,  the OIG measures the extent to which its work focuses on the key issues  under its goals by tracking nonmonetary outcomes of audits and  investigations.
subsections: section_title: USDA OIG’s Reported Monetary Accomplishments Compared to Other Cabinet-Level OIGs
paragraphs: The USDA OIG reported total monetary accomplishments from audits and  investigations of approximately $4.9 billion over fiscal years 2009 through  2011. (See table 3.) As a ratio of the OIG’s total budgetary resources over  the same 3-year period, the USDA OIG’s estimated average return-on- investment for each budget dollar is about $13.96. The USDA OIG had a  wide range of return-on-investment over this 3-year period from $1.70 in  fiscal year 2010 to $39.40 in fiscal year 2011. The significant increase of  monetary accomplishments reported for fiscal year 2011 was due to an  OIG audit of Recovery Act funds included in single family housing  guaranteed loans by USDA’s Rural Housing Service. The OIG’s report  concluded that loans with a total value of $4.16 billion were made to  ineligible borrowers. This amount was included in the OIG’s reported  questioned costs for fiscal year 2011.
By comparison, the estimated 3-year average return-on-investment for all  other cabinet-level OIGs combined was $12.63. (See table 4.) The USDA  OIG’s estimated average return of $13.96 was somewhat higher for this  period. However, while the USDA OIG had a greater return-on-investment  than the estimated average return for the other OIGs for fiscal year 2011,  for fiscal years 2009 and 2010 the USDA OIG’s estimated return was  lower than the combined estimated average return of the other cabinet- level OIGs for those same years. USDA OIG officials explained that  monetary accomplishments for Recovery Act efforts were mostly reported  in fiscal year 2011 and that their efforts in fiscal years 2009 and 2010  focused on audits to ensure that internal controls and procedures were in  place for USDA to properly receive and distribute Recovery Act funds. In  addition, the OIG provides audits of food safety and protection for land  and water resources. According to OIG officials, while important to  USDA’s mission and the welfare of the general public, these audits do not  generally result in significant monetary accomplishments.
The OIG reported that it relied on several key metrics to measure its  completion of targets for nonmonetary accomplishments, which include  the percentage of (1) direct OIG resources dedicated to critical risk and  high-impact work; (2) audit recommendations that resulted in  management decisions within 1 year; (3) audits initiated that reported  findings and recommendations to the auditee within established and  agreed-to time frames; (4) closed investigations that resulted in a referral  for action to the Department of Justice, state or local law enforcement  officials, or the relevant administrative authority; and (5) closed  investigations that resulted in an indictment, conviction, civil suit or  settlement, judgment, administrative action, or monetary result. (See table  5.) Additional targets are indirectly related to the outcomes of audits and  investigations and include 15 related to timeliness, such as whether  information technology staff members make an initial response to help  desk requests within 2 hours or less; 6 related to the completion of  Recovery Act work; 1 related to positive employee satisfaction rates  reported in staff surveys; 1 related to survey results indicating that new  employees find the orientation session useful to them as they begin their  new jobs; and 1 related to positive evaluation scores on OIG internal  training course evaluations.
section_title: USDA OIG’s Reported Coverage of Recovery Act Issues, USDA’s Mission Areas, High- Risk Areas, and Management Challenges
paragraphs: The OIG reported issuing 212 audit reports during the 3-year period with  58 audits in 2009, 89 audits in 2010, and 65 audits in 2011. Of the 212  audit reports issued, 95, or about 45 percent, addressed mandated  coverage of Recovery Act issues. (See table 6.) Additional mandated  audits; audits requested by USDA, the Congress, and other agencies;  and audits of funding for natural disaster relief totaled 77, or about 36  percent of the OIG’s audits. The OIG performed 40 audits, or about 19  percent, that addressed programs identified by the OIG’s strategic  planning process for self-initiated audits.
In fiscal year 2009, the USDA OIG received additional funding of $22.5  million to be available through fiscal year 2013 for the oversight of the  Recovery Act funds provided for USDA’s programs. The OIG’s Recovery  Act audit efforts included mandates for OIG audits to determine whether  (1) the implementation of USDA recovery-related programs was timely  and effective; (2) proper internal control procedures were established; (3)  program participants met eligibility guidelines; (4) participants complied  with program requirements; (5) agencies established effective compliance  operations; and (6) funds were awarded and distributed in a prompt, fair,  and reasonable manner. These audits involved reviews of farm loans,  watershed programs, supplemental nutrition assistance, wildland fire  management, capital improvements and maintenance, and rural housing  and development programs.
Also, during the 3-year period, the OIG addressed USDA’s seven mission  areas with nearly 200 audits, some of which addressed multiple areas,  and through additional audits of USDA’s financial statements required by  the CFO Act, and information technology security audits required by  FISMA. Almost half of the OIG’s audits were in the mission areas of  Natural Resources and Environment and Rural Development. (See fig. 1.)  Specifically, the OIG issued a total of 102 audit products in these two  mission areas, which included reviews of the efficiency and effectiveness  of management and program operations during the 3-year period. These  USDA missions received a relatively large number of audits as a result of  the OIG’s emphasis on the Recovery Act funds associated with their  programs.
The USDA OIG reported investigations within each mission area and the  identification of fraud within USDA’s programs, prosecutions where  warranted, and agency administrative action where necessary. The OIG  reported completing a total of 878 investigative cases during the 3-year  period with 292 investigations in fiscal year 2009, 247 in fiscal year 2010,  and 339 in fiscal year 2011. In addition, during this 3-year period, the  OIG’s investigative activities resulted in 1,587 convictions. Most of these  convictions were the result of investigations in Food, Nutrition, and  Consumer Services (FNCS)—USDA’s largest mission area in terms of  total budgetary resources—with 706 convictions, mostly related to  charges of fraud in the Supplemental Nutrition Assistance Program.  Investigations of the Marketing and Regulatory Programs mission area  resulted in 668 convictions, which, when combined with those in FNCS,  accounted for about 86 percent of all convictions during the 3-year period.  (See fig. 2.)
The USDA OIG’s audit reports show that coverage was provided of high- risk areas identified by GAO, and management challenges identified by  the OIG for the 3-year period. Since 1990, we have reported on  government operations designated as high risk because of their greater  vulnerabilities to fraud, waste, abuse, and mismanagement. In addition,  the OIGs began the identification of management challenges in 1997 at  the request of congressional members who asked the inspectors general  to identify the most serious management problems in their respective  agencies. This began a yearly process that continues as a result of the  Reports Consolidation Act of 2000. The act requires executive agencies,  including USDA, to include their OIGs’ lists of significant management  challenges along with their efforts to address them in the annual PAR  reports to the President, OMB, and the Congress.
Our reports of government high-risk areas issued in February 2011 and  January 2009, identified three high-risk areas at USDA, which were also  included as management challenges identified by the USDA OIG.  Specifically, both we and the OIG identified the protection of the federal  government’s information systems, strategic human capital issues, and  food safety as both high-risk areas and management challenges. Another  significant management challenge identified by the OIG was USDA’s  internal controls, which received the greatest amount of audit coverage  (addressed by 123 audits). (See table 7.) The OIG’s audits of Recovery  Act funds, which was also a management challenge, addressed internal  controls for Recovery Act funds and accounts for the relatively large  number of internal control audits.
The USDA OIG did not issue any audit reports related to civil rights  issues during the 3-year period. However, we issued a report on civil  rights in fiscal year 2009 along with follow-up testimony on USDA’s  progress in implementing the report’s recommendations. We concluded  that USDA had taken action in response to our report recommendations  on civil rights. Also, the OIG did not issue any audit reports on renewable  energy during fiscal years 2009 through 2011. However, the OIG issued a  report on this management challenge in 2008. Also, in an additional  report on USDA’s management challenges, the OIG concluded that  USDA had taken actions in response to its 2008 report and removed the  management challenge during fiscal year 2011 based on the corrective  actions taken by USDA.
section_title: USDA OIG Audit and Investigative Quality as Reported by External Peer Reviews and Quality Assurance Reviews
paragraphs: The USDA OIG received peer reviews of its audit and investigative quality  during the 3-year period. In addition, the USDA OIG also helps to ensure  compliance with auditing standards, investigative guidelines, and  administrative procedures by periodically conducting its own internal  quality assurance reviews (QAR) throughout its nationwide operations.
subsections: section_title: Audit Quality
paragraphs: Government Auditing Standards requires that each audit organization  performing audits in accordance with these standards must have an  external peer review performed by reviewers independent of the audit  organization being reviewed at least once every 3 years. The USDA OIG  Office of Audit obtained an external peer review by the Department of  Housing and Urban Development’s (HUD) OIG for the 3-year period  ending March 31, 2009. The HUD OIG’s report concluded that the USDA  OIG was able to provide reasonable assurance that controls were in  place to provide audit reports that were in compliance with Government  Auditing Standards.
The OIG also completed five QARs of its audit operations during fiscal  years 2009 through 2011. These reviews are designed to assess whether  the OIG carries out its work in accordance with established USDA OIG  policies and procedures, Government Auditing Standards, applicable  OMB guidance, and appropriate statutory provisions applicable to the  OIG. The QARs made recommendations for improved audit  documentation and the offices reviewed concurred with the  recommendations and took corrective actions.
section_title: Investigative Quality
paragraphs: The USDA OIG undergoes a review of its law enforcement powers used  in its investigative operations. CIGIE has provided guidelines for  external peer reviews of the OIG’s investigative operations, which are to  occur once every 3 years. The peer reviews are intended to provide the  OIG with an independent opinion on the investigative quality control  system, whether the system is in place and operating effectively, and  whether the OIG’s policies and applicable CIGIE standards are being  followed. The OIG Office of Investigations received an external peer  review by the Department of Homeland Security OIG in 2010, which  concluded that the USDA OIG’s system of internal safeguards and  management procedures were in compliance with the quality standards  established by CIGIE and applicable Attorney General guidelines.
The USDA OIG also conducts QARs of its investigative operations. The  purpose of the OIG QARs for Investigations is to determine if its  investigative offices are operating in accordance with the IG Act, CIGIE’s  Quality Standards for Investigations, and USDA OIG policies and  procedures. The internal QARs for Investigations involve reviews of both  closed case files and internal controls over investigative procedures. The  USDA OIG completed four QARs of its investigative offices during fiscal  years 2009 through 2011. The QARs concluded that the offices reviewed  met professional standards and that corrective actions on  recommendations from prior QARs had been implemented.
section_title: Administrative Quality
paragraphs: In addition, the OIG reported that it performs QARs to determine whether  its offices are in compliance with USDA and OIG administrative policies  and procedures for travel, procurement management, purchase cards,  budgets, time management, and property management. The OIG  completed four administrative QARs and two reviews of internal controls  during fiscal years 2009 through 2011, and made recommendations for  improved administrative procedures over routine expenditures. The  offices reviewed concurred with the recommendations and took corrective  actions.
section_title: OIG Oversight of Improper Payments Reporting
paragraphs: The Improper Payments Information Act of 2002 (IPIA) required executive  branch agencies, including USDA, to conduct an annual review of all  programs and activities to identify those that are susceptible to significant  improper payments, estimate the amount of improper payments for such  programs and activities, and report these estimates along with actions  taken to reduce improper payments for those programs and activities with  estimates exceeding $10 million. IPERA 2010 amended IPIA by  expanding on the previous requirements for identifying, estimating, and  reporting on programs and activities susceptible to significant improper  payments and expanding requirements for recovering overpayments.  Another IPERA 2010 provision calls for the inspectors general, including  the USDA OIG, to annually determine whether their respective agencies  are in compliance with key IPERA 2010 requirements and to report on  their determinations.
OMB issued additional guidance to federal agencies to report, beginning  for fiscal year 2011, the root causes of improper (over and under)  payments for all programs susceptible to significant improper payments.  The guidance defined three categories of root causes for improper  payments: (1) documentation and administrative errors, (2) authentication  and medical necessity errors, and (3) verification errors. Agencies are  required to report the percentage of errors in each category proportional  to the dollar amount of error attributable to that root cause. This  information is covered by part of the OIG’s annual review of USDA’s  improper payments reporting.
The USDA reported in its fiscal year 2011 PAR that 16 of its more than  300 programs were considered vulnerable to significant improper  payments because each had estimated improper payments that were a  material proportion of program outlays. In addition, USDA reported that 2  percent of the errors causing improper payments were due to  documentation and administrative errors, 1 percent were due to  authentication and medical necessity errors, and 97 percent were due to  verification errors. Also, in detailed reporting of errors causing improper  payments, USDA reported that of the approximately $5.4 billion in  improper payments estimated in fiscal year 2011, 0.04 percent (or $2.2  million) were due to incomplete paperwork (documentation) in the  programs reporting significant improper payments.
The OIG’s 2012 audit report on USDA’s fiscal year 2011 compliance with  improper payment reporting requirements concluded, among other things,  that USDA’s component agencies did not consistently assign the  appropriate error category when reporting the causes of improper  payments and that as a result, USDA’s reported amount of improper  payments caused by documentation errors was not accurate. USDA  officials acknowledged that USDA component agencies struggled to  properly categorize the root causes of improper payments into the causal  categories required by OMB. They also concurred with the OIG’s report  recommendations to (1) implement a second-party quality review process  to ensure that improper payment information reported in the PAR is  properly supported, (2) implement controls to ensure that the USDA  agencies consistently and accurately categorize improper payment errors,  and (3) update USDA guidance for determining the cause of an error to  include specific examples related to USDA programs. In addition, USDA  officials stated that they will work with component USDA agency officials  to develop a plan to better understand and consistently categorize the  root causes of USDA’s improper payments. The OIG plans to follow up on  USDA’s actions to better categorize the root causes of improper  payments for future reports.
section_title: Agency Comments
paragraphs: In written comments on a draft of this report, which are reprinted in  appendix II, the USDA Inspector General stated that the report provides  an objective and comprehensive view of the office’s oversight of USDA’s  programs. The Inspector General also provided technical comments,  which we considered and incorporated as appropriate.
We are sending copies of this report to the U.S. Department of  Agriculture’s Inspector General and interested congressional committees.  In addition, this report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff have any questions about this report, please contact me  at (202) 512-2623 or davisbh@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. Major contributors to this report are listed in appendix III.
section_title: Appendix I: USDA’s Mission Areas
paragraphs: The largest U.S. Department of Agriculture (USDA) mission area is Food,  Nutrition, and Consumer Services (FNCS) with a total fiscal year 2011  budget of about $108 billion, or approximately 60 percent of USDA’s total  budgetary resources. (See fig. 3.) The FNCS mission is to manage the  nation’s agricultural resources to help end hunger and improve the health  of the nation. Its component agencies include the Center for Nutrition  Policy and Promotion and the Food and Nutrition Service (FNS), which  administer federal domestic nutrition programs such as the Supplemental  Nutrition Assistance Program (SNAP). Formerly known as the food stamp  program, SNAP provides assistance to families in need and is the  nation’s first line of defense against hunger.
USDA’s second largest mission area is the Farm and Foreign Agricultural  Services (FFAS) mission, with fiscal year 2011 total budgetary resources  of approximately $42.4 billion, or about 23 percent of USDA’s overall  budget. The FFAS mission is responsible for keeping America’s farmers  and ranchers in business through the uncertainties of weather and  markets. Its component agencies include the Farm Service Agency,  Foreign Agricultural Services, and the Risk Management Agency, which  provide commodity, credit, conservation, disaster, and emergency  assistance for the agricultural economy.
The Natural Resources and Environment (NRE) mission received total  fiscal year 2011 budgetary resources of about $13.2 billion, or about 7  percent of USDA’s total budget. Component agencies include the Forest  Service (FS) and the Natural Resources Conservation Service (NRCS),  which participate in the overall NRE mission to help ensure the health of  the land through sustainable management. FS and NRCS work to prevent  damage to natural resources and the environment and promote good land  management.
The Rural Development (RD) mission had total budgetary resources of  about $8.9 billion in fiscal year 2011, or about 5 percent of USDA’s total  budget. The RD mission is to help improve the economy and quality of life  in all of rural America by providing financial programs to support essential  public facilities and services such as water, sewer, electric, and telephone  systems; housing; health clinics; and emergency service facilities. The  RD mission promotes economic development by providing loans to  businesses through banks, credit unions and community-managed  lending pools.
Other USDA mission areas and administrative offices received about   $9.5 billion, or approximately 5 percent of USDA’s total budgetary  resources. These mission areas are Research, Education and Economics  (REE), Marketing and Regulatory Programs (MRP), and the Food and  Safety Inspection Service (FSIS). The REE mission had fiscal year 2011  total budgetary resources of approximately $3.3 billion, and includes  several agencies that are dedicated to creating a safe, sustainable, and  competitive food and fiber system, as well as building strong communities  and families. The MRP mission had fiscal year 2011 total budgetary  resources of about $3.3 billion. This mission facilitates domestic and  international marketing of U.S. agricultural products and ensures the  health and care of animals and plants. The FSIS mission is responsible  for ensuring that the nation’s commercial supply of meat, poultry and egg  products is safe, wholesome, and in properly labeled packages. The FSIS  mission had fiscal year 2011 total budgetary resources of about   $1.2 billion. In addition, USDA’s administrative offices are not mission  specific and received about $1.7 billion in total budgetary resources.  These offices include USDA’s management and executive operations, the  Office of the Chief Economist, and the Office of Inspector General.
section_title: Appendix II: Comments from the USDA Office of Inspector General
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jackson Hufnagle (Assistant  Director), Jacquelyn Hamilton, Taya Tasse, and Clarence Whitt made key  contributions to this report.