Department of Commerce Improper Payments Website

Background

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, was enacted to provide for estimates and reports of improper payments by federal agencies. The act requires that federal agencies estimate improper payments and report on actions to reduce them. 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. A review of all programs and activities that the Department of Commerce (Department) administers is required annually to assist in identifying and reporting improper payments. 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 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 2011 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. The Department does not have any high-priority or risk-susceptible programs. 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:

1.      Statistical samples under the IPIA (i.e., improper payments identified in the sample to calculate a program’s annual error measurement);

2.      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);

3.      Payment recapture audits;

4.      Inspector General reviews (i.e., investigations into improper payments or fraud);

5.      Single Audit reports (i.e., results from Single Audit reviews);

6.      Self-reported overpayments (i.e., a recipient notifies an agency that their payment was incorrect, and the recipient returns the overpayment); and

7.      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

Improper payments have not been a significant problem for the Department. The results of Departmental assessments demonstrate 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 improper payments is low.

Improper Payments Risk Assessments:

The Department annually conducts an assessment of the effectiveness of internal control over financial reporting, in compliance with OMB Circular A-123. The FY 2010 assessment included a review of internal controls over disbursement processes, which indicated that current internal controls over disbursement processes are sound. The next review of internal controls over disbursement processes will be performed in FY 2013.

Each of the Department’s bureaus/reporting entities perform, on a continuous basis, 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, Parts I and II, Requirements for Effective Measurement and Remediation of Improper Payments. These improper payments risk assessments of the entity’s programs/activities also include assessments of the corporate control, procurement, and grants management environments. The improper payments program/activity risk assessments performed thus far revealed no risk-susceptible programs/activities. These improper payments risk assessments are continually performed or updated as applicable. 

Quarterly Improper Payments Reporting:

The Department’s Chief Financial Officer (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.

Each quarter, bureaus report 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 two-tenths of one percent in FY 2010, as was the case in FY 2009. The bureau CFOs are accountable for internal controls over improper payments, and for monitoring and minimizing improper payments.

Post-Payment Reviews:

Annually, the Department conducts a sampling process to draw and review random samples of disbursements from a Department-wide universe of disbursements. Each selected sample item is then subjected to a review of original invoices and supporting documentation to determine that the disbursement was accurate, made only once, and that the correct vendor was compensated.

Payment Recapture Audits:

Each year, the Department conducts a payment recapture audit(s) that examines, for one or more bureaus, a sample of vendor invoices for applicable closed contracts/obligations.  The audit includes steps that verify that the invoice is related to the contract; that the invoice was approved by a contracting officer; that the invoice was paid in accordance with the prompt payment act; that discounts, if available, were taken; and that no improper charges were included or paid related to the invoice.

Beginning FY 2011, the Department will also conduct payment recapture audit(s) of its grants and other cooperative agreements (i.e. financial assistance).

Additional information on the Department’s improper payments efforts may be found in the Department’s FY 2010 Performance and Accountability Report, Appendix D, Improper Payments Information Act (IPIA) of 2002, as Amended, Reporting Details, at the following web link:  http://www.osec.doc.gov/bmi/budget/10PARR/4DOCPARAppendices_111510.pdf.

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 Recovery Act spending.

For more information about the OIG 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 the Department of Commerce programs and operations, report it to the OIG Hotline. The OIG Fraud, Waste, Abuse, and Whistleblower Reprisal Hotline website is at the following web link: http://www.oig.doc.gov/Pages/Hotline.aspx.

PaymentAccuracy.gov Website

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 the public can report suspected incidents of fraud, waste, and abuse, 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 recover improper payments.  The website also contains extensive information, guidance, and links to other useful resources for addressing improper payments.