Department of Commerce
Improper Payments Website
The Improper Payments Information Act (IPIA) of 2002 (Public Law 107-300), as amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010 (Public Law 111-204) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (Public Law 112-248), requires agencies to periodically review all programs and activities and identify those that may be susceptible to significant improper payments, take multiple actions when programs and activities are identified as susceptible to significant improper payments, and annually report information on their improper payments monitoring and minimization efforts. Office of Management and Budget (OMB) Circular A-123, Appendix C, Requirements for Effective Measurement and Remediation of Improper Payments, provides guidance to agencies to comply with IPIA, as amended, and for agency improper payments efforts. 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. The Department has not itself identified any programs or activities susceptible to significant improper payments nor any significant problems with improper payments.
On January 29, 2013, the President signed into law the Disaster Relief Appropriations Act (Act), which provides a total of $50.5 billion in aid for Hurricane Sandy disaster victims and their communities. The National Oceanic and Atmospheric Administration (NOAA) received $326 million of funds under the Act for Hurricane Sandy recovery and other disaster-related activities. Pursuant to OMB Memorandum M-13-07, Accountability for Funds Provided by the Disaster Relief Appropriations Act, the Department in March 2013 submitted its final plan for accountability, internal controls, and other requirements, for funds provided to NOAA by the Act. The Act sets forth that programs and activities receiving funds under the Act shall be deemed to be susceptible to significant improper payments for the purposes of requirements under IPIA of 2002, as amended, and are required to calculate and report an improper payments estimate for the FY 2014 reporting period, to the extent possible. The Department will develop and submit to OMB for its approval a sampling methodology plan for funds received under the Act by NOAA, which, when carried out, will result in a NOAA improper payments estimate that will be reported for the FY 2014 reporting period.
The Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and the Department’s commitment to continuous improvement in the overall disbursement management process remains very strong. Each of the Department’s payment offices has implemented procedures to detect and prevent improper payments. For FY 2014 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.
Executive Order 13520, Reducing Improper Payments, was issued on November 20, 2009, to help federal agencies reduce and prevent improper payments through increased transparency and improved agency accountability. The Executive Order requires that, along with other requirements, federal agencies with high-priority or risk-susceptible programs (for purposes of improper payments) name accountable officers for improper payments; monitor any such programs; establish goals for reducing improper payments; and report high-dollar improper payments. The Department established, as required, a prominently displayed link on its home page to internet-based resources on addressing improper payments, and also provides a web link to Treasury’s improper payments web site (see PaymentAccuracy.gov website information below).
The Office of Management and Budget (OMB) issued implementation guidance for the Executive Order by updating OMB Circular A-123, Management’s Responsibility for Internal Control, Appendix C, Part III, Requirements for Implementing Executive Order 13520: Reducing Improper Payments. In accordance with OMB implementation guidance, agencies should track improper payments identified and recovered through various agency endeavors. As appropriate, agencies should identify improper payments identified and recovered through:
- Statistical samples under IPIA (i.e., improper payments identified in the sample to calculate a program’s annual error measurement);
- Agency post-payment reviews (i.e., normal agency post-payment reviews to determine the accuracy of payments or other activities designed to identify improper payments);
- Payment recapture audits;
- Inspector General reviews (i.e., investigations into improper payments or fraud);
- Single Audit reports (i.e., results from Single Audit reviews);
- Self-reported overpayments (i.e., a recipient notifies an agency that their payment was incorrect, and the recipient returns the overpayment); and
- Reports from the public (i.e., reports of improper payments submitted through online websites, telephone hotlines or other methods).
Department of Commerce Improper Payments Monitoring/Minimization Efforts
Review of Internal Controls over Disbursement Processes:
The Department annually conducts an assessment of the effectiveness of internal control over financial reporting, in compliance with OMB Circular A-123, Management’s Responsibility for Internal Control. Furthermore, every three years, the assessment includes a review of internal controls over disbursement processes. The most recent review performed indicated that internal controls over disbursement processes were sound.
Improper Payments Risk Assessments:
Each of the Department’s bureaus/reporting entities periodically completes or updates, over a one to three-year period (depending on the size of the entity), improper payments risk assessments covering all of its programs/activities as required by OMB Circular A-123, Appendix C. These improper payments risk assessments of the entity’s programs/activities also include assessments of the control, procurement, and grants management environments. The improper payments program/activity risk assessments performed thus far revealed no program or activity susceptible to significant improper payments.
The results of Departmental assessments revealed no risk-susceptible programs/activities, and demonstrated that, overall, the Department has strong internal controls over disbursement processes, the amount of improper payments by the Department is immaterial, and the risk of significant improper payments is low.
Quarterly Improper Payments Reporting:
The Department has not identified any significant problems with improper payments; however, the Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and its commitment to continuous improvement in disbursement management processes remains very strong. The Department’s CFO has responsibility for establishing policies and procedures for assessing Departmental and program risks of improper payments, taking actions to reduce those payments, and reporting the results of the actions to Departmental management for oversight and other actions as deemed appropriate. The CFO has designated the Deputy CFO to oversee initiatives related to reducing improper payments within the Department, and to work closely with the bureau CFOs in this area.
In FY 2013, the Department continued its reporting procedures that required quarterly reporting to the Department by its bureaus on any improper payments, identifying the nature and magnitude of any improper payments along with any necessary control enhancements to prevent further occurrences of the types of improper payments identified. The Department’s analysis of the data collected from the bureaus shows that Department-wide improper payments were at or below one-tenth of one percent in FY 2013 and FY 2012. The bureau CFOs are accountable for internal controls over improper payments, and for monitoring and minimizing improper payments. For FY 2014 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.
Payment Recapture Audits:
In conformity with IPIA of 2002, the Department has been performing, since 2005, payment recapture audits of closed contracts/obligations for many of the Department’s bureaus/reporting entities, on a rotational basis. The payment recapture audits were performed by a contractor or by the Department’s Office of Financial Management. Payment recapture audits of contracts/obligations on a rotational basis will continue to be performed. Effective FY 2012, the scope of payment recapture audits of contracts/obligations has been expanded to additionally include contracts/obligations for which the period of performance ended and last payment was made, but for which the closeout process has not yet been completed.
As a result of the Department’s implementation of additional requirements under IPERA of 2010, payment recapture auditing is additionally performed, effective FY 2011, for the Department’s grants and other cooperative agreements (i.e. financial assistance). Per OMB’s IPERA implementation guidance, intragovernmental transactions, and payments to employees, are not required to be reviewed.
For payment recapture audits of contracts/obligations, and of grants and other cooperative agreements, the auditor analyzes the reasons why any payment errors occurred, and develops, presents, and documents any recommendations for cost-effective controls to prevent improper payments in the future; and, for enhancing the applicable bureau processes.
Post-Payment Reviews and Other Procedures Performed:
The Department has extensive improper payments monitoring and minimization efforts in place beyond payment recapture audits, including the identification of improper payments through bureau post-payment reviews, OIG audits or reviews, Single Audit Act audits of grants/cooperative agreements, other grants/cooperative agreements audits, contract closeout reviews, grants/cooperative agreements closeout reviews, other audits or reviews, and Departmental annual reviews of sample disbursements.
The Department has ensured that internal controls, manual as well as financial systems, relating to payments are in place throughout the Department, and has reviewed all financial statement audit findings/comments and results of any other payment reviews for indications of breaches of disbursement controls. None of these audit findings/comments or reviews have uncovered any significant problems with improper payments or the internal controls that surround disbursements.
In 2013, the Department conducted a sampling process to draw and review random samples of disbursements from a Department-wide universe of disbursements. Grants and other cooperative agreements, travel payments, bankcards/purchase cards, all procurement vehicles with other federal agencies, government bills of lading, and gifts and bequests were excluded from review. Each selected sample item was then subjected to a review of invoices and supporting documentation to determine that the disbursement was accurate, made only once, and that the correct vendor was compensated. The results of the Department’s review did not reveal any improper payments. The same results were achieved following a similar review in 2012.
Additional information on the Department’s improper payments efforts may be found in the Department’s FY 2013 Agency Financial Report, Appendix C, Improper Payments Information Act (IPIA) of 2002, As Amended, Reporting Details, at the following web link:
Office of Inspector General Improper Payments Efforts
The Department’s Office of Inspector General (OIG) keeps the Department accountable for its use of federal funds by conducting audits, evaluations, and investigations of Commerce activities. The OIG presents findings of their audits and evaluations to Departmental operating officials and agency heads for their review and comment before they release the information to the public in a final report. Included among the various types of audits that the OIG conducts are audits related to fraud, waste and abuse, improper payments, and American Recovery and Reinvestment Act of 2009 spending.
For more information about the OIG’s reports and activities, the following web link is provided: http://www.oig.doc.gov/Pages/default.aspx.
The OIG Hotline: Report Fraud, Waste, Abuse, and Whistleblower Reprisal:
If you know of fraud, waste, abuse, or mismanagement in Department of Commerce programs and operations, report it to the OIG Hotline. This includes alleged/suspected wrongdoing by Department of Commerce employees, contractors, grantees, recipients of financial assistance, and others involved in the Department's programs and operations; and if you suspect that you have been retaliated against for whistleblowing. The OIG’s Report Fraud, Waste, Abuse, and Whistleblower Reprisal Hotline website is located at the following web link: http://www.oig.doc.gov/Pages/Hotline.aspx.
Executive Order 13520, Reducing Improper Payments, established a requirement for a central website that will contain current and historical improper payments information. The Department of the Treasury, in coordination with the Department of Justice and the Office of Management and Budget, established the http://www.PaymentAccuracy.gov web site to create a centralized location to publish information about improper payments made to individuals, organizations, and contractors. This web site also provides a centralized place where suspected incidents of fraud, waste, and abuse can be reported, and contains information about 1) current and historical rates and amounts of improper payments; 2) why improper payments occur; and 3) what agencies are doing to reduce and recapture improper payments. The website also contains extensive information, guidance, and links to other useful resources for addressing improper payments.