Improper Payments Elimination and Recovery Act of 2010
PL 111-204 (S.1508), enacted 07/22/2010

124 STAT. 2224 
PUBLIC LAW 111–204—JULY 22, 2010 
Public Law 111–204 
111th Congress 
An Act 
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. 
Be it enacted by the Senate and House of Representatives of 
the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Improper Payments Elimination 
and Recovery Act of 2010’’. 
SEC. 2. IMPROPER PAYMENTS ELIMINATION AND RECOVERY. 
(a) SUSCEPTIBLE PROGRAMS AND ACTIVITIES.—Section 2 of the 
Improper Payments Information Act of 2002 (31 U.S.C. 3321 note) 
is amended by striking subsection (a) and inserting the following: 
‘‘(a) IDENTIFICATION OF SUSCEPTIBLE PROGRAMS AND ACTIVI-
TIES.— 
‘‘(1) IN GENERAL.—The head of each agency shall, in accord-
ance with guidance prescribed by the Director of the Office 
of Management and Budget, periodically review all programs 
and activities that the relevant agency head administers and 
identify all programs and activities that may be susceptible 
to significant improper payments. 
‘‘(2) FREQUENCY.—Reviews under paragraph (1) shall be 
performed for each program and activity that the relevant 
agency head administers during the year after which the 
Improper Payments Elimination and Recovery Act of 2010 is 
enacted and at least once every 3 fiscal years thereafter. For 
those agencies already performing a risk assessment every 
3 years, agencies may apply to the Director of the Office of 
Management and Budget for a waiver from the requirement 
of the preceding sentence and continue their 3-year risk assess-
ment cycle. 
‘‘(3) RISK ASSESSMENTS.— 
‘‘(A) DEFINITION.—In this subsection the term ‘signifi-
cant’ means— 
‘‘(i) except as provided under clause (ii), that 
improper payments in the program or activity in the 
preceding fiscal year may have exceeded— 
‘‘(I) $10,000,000 of all program or activity pay-
ments made during that fiscal year reported and 
2.5 percent of program outlays; or 
‘‘(II) $100,000,000; and 
‘‘(ii) with respect to fiscal years following Sep-
tember 30th of a fiscal year beginning before fiscal 
year 2013 as determined by the Office of Management 
Deadline. 
Guidelines. 
31 USC 3301 
note. 
Improper 
Payments 
Elimination and 
Recovery Act of 
2010. 
July 22, 2010 
[S. 1508] 
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124 STAT. 2225 
PUBLIC LAW 111–204—JULY 22, 2010 
and Budget, that improper payments in the program 
or activity in the preceding fiscal year may have 
exceeded— 
‘‘(I) $10,000,000 of all program or activity pay-
ments made during that fiscal year reported and 
1.5 percent of program outlays; or 
‘‘(II) $100,000,000. 
‘‘(B) SCOPE.—In conducting the reviews under para-
graph (1), the head of each agency shall take into account 
those risk factors that are likely to contribute to a suscepti-
bility to significant improper payments, such as— 
‘‘(i) whether the program or activity reviewed is 
new to the agency; 
‘‘(ii) the complexity of the program or activity 
reviewed; 
‘‘(iii) the volume of payments made through the 
program or activity reviewed; 
‘‘(iv) whether payments or payment eligibility 
decisions are made outside of the agency, such as by 
a State or local government; 
‘‘(v) recent major changes in program funding, 
authorities, practices, or procedures; 
‘‘(vi) the level, experience, and quality of training 
for personnel responsible for making program eligi-
bility determinations or certifying that payments are 
accurate; and 
‘‘(vii) significant deficiencies in the audit report 
of the agency or other relevant management findings 
that might hinder accurate payment certification.’’. 
(b) ESTIMATION
OF IMPROPER PAYMENTS.—Section 2 of the 
Improper Payments Information Act of 2002 (31 U.S.C. 3321 note) 
is amended by striking subsection (b) and inserting the following: 
‘‘(b) ESTIMATION OF IMPROPER PAYMENTS.—With respect to each 
program and activity identified under subsection (a), the head of 
the relevant agency shall— 
‘‘(1) produce a statistically valid estimate, or an estimate 
that is otherwise appropriate using a methodology approved 
by the Director of the Office of Management and Budget, of 
the improper payments made by each program and activity; 
and 
‘‘(2) include those estimates in the accompanying materials 
to the annual financial statement of the agency required under 
section 3515 of title 31, United States Code, or similar provision 
of law and applicable guidance of the Office of Management 
and Budget.’’. 
(c) REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS.— 
Section 2 of the Improper Payments Information Act of 2002 (31 
U.S.C. 3321 note) is amended by striking subsection (c) and 
inserting the following: 
‘‘(c) REPORTS ON ACTIONS TO REDUCE IMPROPER PAYMENTS.— 
With respect to any program or activity of an agency with estimated 
improper payments under subsection (b), the head of the agency 
shall provide with the estimate under subsection (b) a report on 
what actions the agency is taking to reduce improper payments, 
including— 
‘‘(1) a description of the causes of the improper payments, 
actions planned or taken to correct those causes, and the 
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124 STAT. 2226 
PUBLIC LAW 111–204—JULY 22, 2010 
planned or actual completion date of the actions taken to 
address those causes; 
‘‘(2) in order to reduce improper payments to a level below 
which further expenditures to reduce improper payments would 
cost more than the amount such expenditures would save in 
prevented or recovered improper payments, a statement of 
whether the agency has what is needed with respect to— 
‘‘(A) internal controls; 
‘‘(B) human capital; and 
‘‘(C) information systems and other infrastructure; 
‘‘(3) if the agency does not have sufficient resources to 
establish and maintain effective internal controls under para-
graph (2)(A), a description of the resources the agency has 
requested in its budget submission to establish and maintain 
such internal controls; 
‘‘(4) program-specific and activity-specific improper pay-
ments reduction targets that have been approved by the 
Director of the Office of Management and Budget; and 
‘‘(5) a description of the steps the agency has taken to 
ensure that agency managers, programs, and, where appro-
priate, States and localities are held accountable through 
annual performance appraisal criteria for— 
‘‘(A) meeting applicable improper payments reduction 
targets; and 
‘‘(B) establishing and maintaining sufficient internal 
controls, including an appropriate control environment, 
that effectively— 
‘‘(i) prevent improper payments from being made; 
and 
‘‘(ii) promptly detect and recover improper pay-
ments that are made.’’. 
(d) REPORTS ON ACTIONS TO RECOVER IMPROPER PAYMENTS.— 
Section 2 of the Improper Payments Information Act of 2002 (31 
U.S.C. 3321 note) is amended— 
(1) by striking subsection (e); 
(2) by redesignating subsections (d) and (f) as subsections 
(f) and (g), respectively; and 
(3) by inserting after subsection (c) the following: 
‘‘(d) REPORTS ON ACTIONS TO RECOVER IMPROPER PAYMENTS.— 
With respect to any improper payments identified in recovery audits 
conducted under section 2(h) of the Improper Payments Elimination 
and Recovery Act of 2010 (31 U.S.C. 3321 note), the head of the 
agency shall provide with the estimate under subsection (b) a report 
on all actions the agency is taking to recover improper payments, 
including— 
‘‘(1) a discussion of the methods used by the agency to 
recover overpayments; 
‘‘(2) the amounts recovered, outstanding, and determined 
to not be collectable, including the percent such amounts rep-
resent of the total overpayments of the agency; 
‘‘(3) if a determination has been made that certain overpay-
ments are not collectable, a justification of that determination; 
‘‘(4) an aging schedule of the amounts outstanding; 
‘‘(5) a summary of how recovered amounts have been dis-
posed of; 
‘‘(6) a discussion of any conditions giving rise to improper 
payments and how those conditions are being resolved; and 
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124 STAT. 2227 
PUBLIC LAW 111–204—JULY 22, 2010 
‘‘(7) if the agency has determined under section 2(h) of 
the Improper Payments Elimination and Recovery Act of 2010 
(31 U.S.C. 3321 note) that performing recovery audits for any 
applicable program or activity is not cost-effective, a justifica-
tion for that determination. 
‘‘(e) GOVERNMENTWIDE REPORTING OF IMPROPER PAYMENTS AND 
ACTIONS TO RECOVER IMPROPER PAYMENTS.— 
‘‘(1) REPORT.—Each fiscal year the Director of the Office 
of Management and Budget shall submit a report with respect 
to the preceding fiscal year on actions agencies have taken 
to report information regarding improper payments and actions 
to recover improper overpayments to— 
‘‘(A) the Committee on Homeland Security and Govern-
mental Affairs of the Senate; and 
‘‘(B) the Committee on Oversight and Government 
Reform of the House of Representatives. 
‘‘(2) CONTENTS.—Each report under this subsection shall 
include— 
‘‘(A) a summary of the reports of each agency on 
improper payments and recovery actions submitted under 
this section; 
‘‘(B) an identification of the compliance status of each 
agency to which this Act applies; 
‘‘(C) governmentwide improper payment reduction tar-
gets; and 
‘‘(D) a discussion of progress made towards meeting 
governmentwide improper payment reduction targets.’’. 
(e) DEFINITIONS.—Section 2 of the Improper Payments Informa-
tion Act of 2002 (31 U.S.C. 3321 note) is amended by striking 
subsections (f) (as redesignated by this section) and inserting the 
following: 
‘‘(f) DEFINITIONS.—In this section: 
‘‘(1) AGENCY.—The term ‘agency’ means an executive 
agency, as that term is defined in section 102 of title 31, 
United States Code. 
‘‘(2) IMPROPER PAYMENT.—The term ‘improper payment’— 
‘‘(A) means any payment that should not have been 
made or that was made in an incorrect amount (including 
overpayments 
and 
underpayments) 
under 
statutory, 
contractual, administrative, or other legally applicable 
requirements; and 
‘‘(B) includes any payment to an ineligible recipient, 
any payment for an ineligible good or service, any duplicate 
payment, any payment for a good or service not received 
(except for such payments where authorized by law), and 
any payment that does not account for credit for applicable 
discounts. 
‘‘(3) PAYMENT.—The term ‘payment’ means any transfer 
or commitment for future transfer of Federal funds such as 
cash, securities, loans, loan guarantees, and insurance subsidies 
to any non-Federal person or entity, that is made by a Federal 
agency, a Federal contractor, a Federal grantee, or a govern-
mental or other organization administering a Federal program 
or activity. 
‘‘(4) PAYMENT FOR AN INELIGIBLE GOOD OR SERVICE.—The 
term ‘payment for an ineligible good or service’ shall include 
a payment for any good or service that is rejected under any 
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124 STAT. 2228 
PUBLIC LAW 111–204—JULY 22, 2010 
provision of any contract, grant, lease, cooperative agreement, 
or any other funding mechanism.’’. 
(f) GUIDANCE BY THE OFFICE OF MANAGEMENT AND BUDGET.— 
Section 2 of the Improper Payments Information Act of 2002 (31 
U.S.C. 3321 note) is amended by striking subsection (g) (as redesig-
nated by this section) and inserting the following: 
‘‘(g) GUIDANCE BY THE OFFICE OF MANAGEMENT AND BUDGET.— 
‘‘(1) IN GENERAL.—Not later than 6 months after the date 
of enactment of the Improper Payments Elimination and 
Recovery Act of 2010, the Director of the Office of Management 
and Budget shall prescribe guidance for agencies to implement 
the requirements of this section. The guidance shall not include 
any exemptions to such requirements not specifically authorized 
by this section. 
‘‘(2) CONTENTS.—The guidance under paragraph (1) shall 
prescribe— 
‘‘(A) the form of the reports on actions to reduce 
improper payments, recovery actions, and governmentwide 
reporting; and 
‘‘(B) strategies for addressing risks and establishing 
appropriate prepayment and postpayment internal con-
trols.’’. 
(g) DETERMINATIONS OF AGENCY READINESS FOR OPINION ON 
INTERNAL CONTROL.—Not later than 1 year after the date of enact-
ment of this Act, the Director of the Office of Management and 
Budget shall develop— 
(1) specific criteria as to when an agency should initially 
be required to obtain an opinion on internal control over 
improper payments; and 
(2) criteria for an agency that has demonstrated a sta-
bilized, effective system of internal control over improper pay-
ments, whereby the agency would qualify for a multiyear cycle 
for obtaining an audit opinion on internal control over improper 
payments, rather than an annual cycle. 
(h) RECOVERY AUDITS.— 
(1) DEFINITION.—In this subsection, the term ‘‘agency’’ has 
the meaning given under section 2(f) of the Improper Payments 
Information Act of 2002 (31 U.S.C. 3321 note) as redesignated 
by this Act. 
(2) IN GENERAL.— 
(A) CONDUCT OF AUDITS.—Except as provided under 
paragraph (4) and if not prohibited under any other provi-
sion of law, the head of each agency shall conduct recovery 
audits with respect to each program and activity of the 
agency that expends $1,000,000 or more annually if con-
ducting such audits would be cost-effective. 
(B) PROCEDURES.—In conducting recovery audits under 
this subsection, the head of an agency— 
(i) shall give priority to the most recent payments 
and to payments made in any program or programs 
identified as susceptible to significant improper pay-
ments under section 2(a) of the Improper Payments 
Information Act of 2002 (31 U.S.C. 3321 note); 
(ii) shall implement this subsection in a manner 
designed to ensure the greatest financial benefit to 
the Government; and 
31 USC 3321 
note. 
Deadline. 
Criteria. 
31 USC 3321 
note. 
Deadline. 
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124 STAT. 2229 
PUBLIC LAW 111–204—JULY 22, 2010 
(iii) may conduct recovery audits directly, by using 
other departments and agencies of the United States, 
or by procuring performance of recovery audits by pri-
vate sector sources by contract (subject to the avail-
ability of appropriations), or by any combination 
thereof. 
(C) RECOVERY
AUDIT
CONTRACTS.—With respect to 
recovery audits procured by an agency by contract— 
(i) subject to subparagraph (B)(iii), and except to 
the extent such actions are outside the agency’s 
authority, as defined by section 605(a) of the Contract 
Disputes Act of 1978 (41 U.S.C. 605(a)), the head of 
the agency may authorize the contractor to notify enti-
ties (including persons) of potential overpayments 
made to such entities, respond to questions concerning 
potential overpayments, and take other administrative 
actions with respect to overpayment claims made or 
to be made by the agency; and 
(ii) such contractor shall have no authority to make 
final determinations relating to whether any overpay-
ment occurred and whether to compromise, settle, or 
terminate overpayment claims. 
(D) CONTRACT TERMS AND CONDITIONS.— 
(i) IN GENERAL.—The agency shall include in each 
contract for procurement of performance of a recovery 
audit a requirement that the contractor shall— 
(I) provide to the agency periodic reports on 
conditions giving rise to overpayments identified 
by the contractor and any recommendations on 
how to mitigate such conditions; 
(II) notify the agency of any overpayments 
identified by the contractor pertaining to the 
agency or to any other agency or agencies that 
are beyond the scope of the contract; and 
(III) report to the agency credible evidence 
of fraud or vulnerabilities to fraud, and conduct 
appropriate training of personnel of the contractor 
on identification of fraud. 
(ii) REPORTS ON ACTIONS TAKEN.—Not later than 
November 1 of each year, each agency shall submit 
a report on actions taken by the agency during the 
preceding fiscal year to address the recommendations 
described under clause (i)(I) to— 
(I) the Office of Management and Budget; and 
(II) Congress. 
(E) AGENCY
ACTION
FOLLOWING
NOTIFICATION.—An 
agency shall take prompt and appropriate action in 
response to a report or notification by a contractor under 
subparagraph (D)(i)(I) or (II), to collect overpayments and 
shall forward to other agencies any information that applies 
to such agencies. 
(3) DISPOSITION OF AMOUNTS RECOVERED.— 
(A) IN GENERAL.—Amounts collected by agencies each 
fiscal year through recovery audits conducted under this 
subsection shall be treated in accordance with this para-
graph. The agency head shall determine the distribution 
of collected amounts, less amounts needed to fulfill the 
Determination. 
Notification. 
Reports. 
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124 STAT. 2230 
PUBLIC LAW 111–204—JULY 22, 2010 
purposes of section 3562(a) of title 31, United States Code, 
in accordance with subparagraphs (B), (C), and (D). 
(B) USE
FOR
FINANCIAL
MANAGEMENT
IMPROVEMENT 
PROGRAM.—Not more than 25 percent of the amounts col-
lected by an agency through recovery audits— 
(i) shall be available to the head of the agency 
to carry out the financial management improvement 
program of the agency under paragraph (4); 
(ii) may be credited, if applicable, for that purpose 
by the head of an agency to any agency appropriations 
and funds that are available for obligation at the time 
of collection; and 
(iii) shall be used to supplement and not supplant 
any other amounts available for that purpose and shall 
remain available until expended. 
(C) USE FOR ORIGINAL PURPOSE.—Not more than 25 
percent of the amounts collected by an agency— 
(i) shall be credited to the appropriation or fund, 
if any, available for obligation at the time of collection 
for the same general purposes as the appropriation 
or fund from which the overpayment was made; 
(ii) shall remain available for the same period and 
purposes as the appropriation or fund to which cred-
ited; and 
(iii) if the appropriation from which the overpay-
ment was made has expired, shall be newly available 
for the same time period as the funds were originally 
available for obligation, except that any amounts that 
are recovered more than five fiscal years from the 
last fiscal year in which the funds were available for 
obligation shall be deposited in the Treasury as mis-
cellaneous receipts, except that in the case of recoveries 
of overpayments that are made from trust or special 
fund accounts, such amounts shall revert to those 
accounts. 
(D) USE
FOR
INSPECTOR
GENERAL
ACTIVITIES.—Not 
more than 5 percent of the amounts collected by an agency 
shall be available to the Inspector General of that agency— 
(i) for— 
(I) the Inspector General to carry out this 
Act; or 
(II) any other activities of the Inspector Gen-
eral relating to investigating improper payments 
or auditing internal controls associated with pay-
ments; and 
(ii) shall remain available for the same period and 
purposes as the appropriation or fund to which cred-
ited. 
(E) REMAINDER.—Amounts collected that are not 
applied in accordance with subparagraph (A), (B), (C), or 
(D) shall be deposited in the Treasury as miscellaneous 
receipts, except that in the case of recoveries of overpay-
ments that are made from trust or special fund accounts, 
such amounts shall revert to those accounts. 
(F) DISCRETIONARY
AMOUNTS.—This paragraph shall 
apply only to recoveries of overpayments that are made 
from discretionary appropriations (as that term is defined 
Applicability. 
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124 STAT. 2231 
PUBLIC LAW 111–204—JULY 22, 2010 
by paragraph 7 of section 250 of the Balanced Budget 
and Emergency Deficit Control Act of 1985) and shall not 
apply to recoveries of overpayments that are made from 
discretionary amounts that were appropriated prior to 
enactment of this Act. 
(G) APPLICATION.—This paragraph shall not apply to 
recoveries of overpayments if the appropriation from which 
the overpayment was made has not expired. 
(4) FINANCIAL MANAGEMENT IMPROVEMENT PROGRAM.— 
(A) REQUIREMENT.—The head of each agency shall con-
duct a financial management improvement program, con-
sistent with rules prescribed by the Director of the Office 
of Management and Budget. 
(B) PROGRAM FEATURES.—In conducting the program, 
the head of the agency— 
(i) shall, as the first priority of the program, 
address problems that contribute directly to agency 
improper payments; and 
(ii) may seek to reduce errors and waste in other 
agency programs and operations. 
(5) PRIVACY
PROTECTIONS.—Any nongovernmental entity 
that, in the course of recovery auditing or recovery activity 
under this subsection, obtains information that identifies an 
individual or with respect to which there is a reasonable basis 
to believe that the information can be used to identify an 
individual, may not disclose the information for any purpose 
other than such recovery auditing or recovery activity and 
governmental oversight of such activity, unless disclosure for 
that other purpose is authorized by the individual to the execu-
tive agency that contracted for the performance of the recovery 
auditing or recovery activity. 
(6) OTHER RECOVERY AUDIT REQUIREMENTS.— 
(A) IN GENERAL.—(i) Except as provided in clause (ii), 
subchapter VI of chapter 35 of title 31, United States 
Code, is repealed. 
(ii) Section 3562(a) of title 31, United States Code, 
shall continue in effect, except that references in such 
section 3562(a) to programs carried out under section 3561 
of such title, shall be interpreted to mean programs carried 
out under section 2(h) of this Act. 
(B) TECHNICAL AND CONFORMING AMENDMENTS.— 
(i) TABLE OF SECTIONS.—The table of sections for 
chapter 35 of title 31, United States Code, is amended 
by striking the matter relating to subchapter VI. 
(ii) DEFINITION.—Section 3501 of title 31, United 
States Code, is amended by striking ‘‘and subchapter 
VI of this title’’. 
(iii) 
HOMELAND
SECURITY
GRANTS.—Section 
2022(a)(6) of the Homeland Security Act of 2002 (6 
U.S.C. 612(a)(6)) is amended by striking ‘‘(as that term 
is defined by the Director of the Office of Management 
and Budget under section 3561 of title 31, United 
States Code)’’ and inserting ‘‘under section 2(h) of the 
Improper Payments Elimination and Recovery Act of 
2010 (31 U.S.C. 3321 note)’’. 
(7) RULE
OF
CONSTRUCTION.—Except as provided under 
paragraph (5), nothing in this section shall be construed as 
31 USC 3561 
et seq. 
Repeal. 
Regulations. 
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124 STAT. 2232 
PUBLIC LAW 111–204—JULY 22, 2010 
terminating or in any way limiting authorities that are other-
wise available to agencies under existing provisions of law 
to recover improper payments and use recovered amounts. 
(i) REPORT ON RECOVERY AUDITING.—Not later than 2 years 
after the date of the enactment of this Act, the Chief Financial 
Officers Council established under section 302 of the Chief Financial 
Officers Act of 1990 (31 U.S.C. 901 note), in consultation with 
the Council of Inspectors General on Integrity and Efficiency estab-
lished under section 7 of the Inspector General Reform Act of 
2009 (Public Law 110–409) and recovery audit experts, shall conduct 
a study of— 
(1) the implementation of subsection (h); 
(2) the costs and benefits of agency recovery audit activities, 
including— 
(A) those activities under subsection (h); and 
(B) the effectiveness of using the services of— 
(i) private contractors; 
(ii) agency employees; 
(iii) cross-servicing from other agencies; or 
(iv) any combination of the provision of services 
described under clauses (i) through (iii); and 
(3) submit a report on the results of the study to— 
(A) the Committee on Homeland Security and Govern-
mental Affairs of the Senate; 
(B) the Committee on Oversight and Government 
Reform of the House of Representatives; and 
(C) the Comptroller General. 
SEC. 3. COMPLIANCE. 
(a) DEFINITIONS.—In this section: 
(1) AGENCY.—The term ‘‘agency’’ has the meaning given 
under section 2(f) of the Improper Payments Information Act 
of 2002 (31 U.S.C. 3321 note) as redesignated by this Act. 
(2) ANNUAL
FINANCIAL
STATEMENT.—The term ‘‘annual 
financial statement’’ means the annual financial statement 
required under section 3515 of title 31, United States Code, 
or similar provision of law. 
(3) COMPLIANCE.—The term ‘‘compliance’’ means that the 
agency— 
(A) has published an annual financial statement for 
the most recent fiscal year and posted that report and 
any accompanying materials required under guidance of 
the Office of Management and Budget on the agency 
website; 
(B) if required, has conducted a program specific risk 
assessment for each program or activity that conforms 
with section 2(a) the Improper Payments Information Act 
of 2002 (31 U.S.C. 3321 note); and 
(C) if required, publishes improper payments estimates 
for all programs and activities identified under section 
2(b) of the Improper Payments Information Act of 2002 
(31 U.S.C. 3321 note) in the accompanying materials to 
the annual financial statement; 
(D) publishes programmatic corrective action plans pre-
pared under section 2(c) of the Improper Payments 
Information Act of 2002 (31 U.S.C. 3321 note) that the 
31 USC 3321 
note. 
Study. 
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124 STAT. 2233 
PUBLIC LAW 111–204—JULY 22, 2010 
agency may have in the accompanying materials to the 
annual financial statement; 
(E) publishes improper payments reduction targets 
established under section 2(c) of the Improper Payments 
Information Act of 2002 (31 U.S.C. 3321 note) that the 
agency may have in the accompanying materials to the 
annual financial statement for each program assessed to 
be at risk, and is meeting such targets; and 
(F) has reported an improper payment rate of less 
than 10 percent for each program and activity for which 
an estimate was published under section 2(b) of the 
Improper Payments Information Act of 2002 (31 U.S.C. 
3321 note). 
(b) ANNUAL COMPLIANCE REPORT BY INSPECTORS GENERAL OF 
AGENCIES.—Each fiscal year, the Inspector General of each agency 
shall determine whether the agency is in compliance and submit 
a report on that determination to— 
(1) the head of the agency; 
(2) the Committee on Homeland Security and Govern-
mental Affairs of the Senate; 
(3) the Committee on Oversight and Governmental Reform 
of the House of Representatives; and 
(4) the Comptroller General. 
(c) REMEDIATION.— 
(1) NONCOMPLIANCE.— 
(A) IN GENERAL.—If an agency is determined by the 
Inspector General of that agency not to be in compliance 
under subsection (b) in a fiscal year, the head of the agency 
shall submit a plan to Congress describing the actions 
that the agency will take to come into compliance. 
(B) PLAN.—The plan described under subparagraph 
(A) shall include— 
(i) measurable milestones to be accomplished in 
order to achieve compliance for each program or 
activity; 
(ii) the designation of a senior agency official who 
shall be accountable for the progress of the agency 
in coming into compliance for each program or activity; 
and 
(iii) the establishment of an accountability mecha-
nism, such as a performance agreement, with appro-
priate incentives and consequences tied to the success 
of the official designated under clause (ii) in leading 
the efforts of the agency to come into compliance for 
each program and activity. 
(2) NONCOMPLIANCE FOR 2 FISCAL YEARS.— 
(A) IN GENERAL.—If an agency is determined by the 
Inspector General of that agency not to be in compliance 
under subsection (b) for 2 consecutive fiscal years for the 
same program or activity, and the Director of the Office 
of Management and Budget determines that additional 
funding would help the agency come into compliance, the 
head of the agency shall obligate additional funding, in 
an amount determined by the Director, to intensified 
compliance efforts. 
(B) 
FUNDING.—In 
providing 
additional 
funding 
described under subparagraph (A), the head of an agency 
Transfer 
authority. 
Determination. 
Plans. 
Determination. 
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124 STAT. 2234 
PUBLIC LAW 111–204—JULY 22, 2010 
shall use any reprogramming or transfer authority avail-
able to the agency. If after exercising that reprogramming 
or transfer authority additional funding is necessary to 
obligate the full level of funding determined by the Director 
of the Office of Management and Budget under subpara-
graph (A), the agency shall submit a request to Congress 
for additional reprogramming or transfer authority. 
(3) REAUTHORIZATION AND STATUTORY PROPOSALS.—If an 
agency is determined by the Inspector General of that agency 
not to be in compliance under subsection (b) for more than 
3 consecutive fiscal years for the same program or activity, 
the head of the agency shall, not later than 30 days after 
such determination, submit to Congress— 
(A) reauthorization proposals for each program or 
activity that has not been in compliance for 3 or more 
consecutive fiscal years; or 
(B) proposed statutory changes necessary to bring the 
program or activity into compliance. 
(d) COMPLIANCE ENFORCEMENT PILOT PROGRAMS.— 
(1) IN GENERAL.—The Director of the Office of Management 
and Budget may establish 1 or more pilot programs which 
shall test potential accountability mechanisms with appropriate 
incentives and consequences tied to success in ensuring compli-
ance with this Act and eliminating improper payments. 
(2) REPORT.—Not later than 5 years after the date of enact-
ment of this Act, the Director of the Office of Management 
and Budget shall submit a report to Congress on the findings 
associated with any pilot programs conducted under paragraph 
(1). The report shall include any legislative or other rec-
ommendations that the Director determines necessary. 
(e) REPORT
ON CHIEF FINANCIAL OFFICERS ACT
OF 1990.— 
Not later than 1 year after the date of the enactment of this 
Act, the Chief Financial Officers Council established under section 
302 of the Chief Financial Officers Act of 1990 (31 U.S.C. 901 
note) and the Council of Inspectors General on Integrity and Effi-
ciency established under section 7 of the Inspector General Reform 
Act of 2009 (Public Law 110–409), in consultation with a broad 
cross-section of experts and stakeholders in Government accounting 
and financial management shall— 
(1) jointly examine the lessons learned during the first 
20 years of implementing the Chief Financial Officers Act of 
1990 (31 U.S.C. 901) and identify reforms or improvements, 
if any, to the legislative and regulatory compliance framework 
for Federal financial management that will optimize Federal 
agency efforts to— 
(A) publish relevant, timely, and reliable reports on 
Government finances; and 
(B) implement internal controls that mitigate the risk 
for fraud, waste, and error in Government programs; and 
(2) jointly submit a report on the results of the examination 
to— 
(A) the Committee on Homeland Security and Govern-
mental Affairs of the Senate; 
(B) the Committee on Oversight and Government 
Reform of the House of Representatives; and 
Publication. 
Deadline. 
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124 STAT. 2235 
PUBLIC LAW 111–204—JULY 22, 2010 
LEGISLATIVE HISTORY—S. 1508 (H.R. 3393): 
CONGRESSIONAL RECORD, Vol. 156 (2010): 
June 23, considered and passed Senate. 
July 14, considered and passed House. 
DAILY COMPILATION OF PRESIDENTIAL DOCUMENTS (2010): 
July 22, Presidential remarks. 
(C) the Comptroller General. 
Approved July 22, 2010. 
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