DOC FY 2006 PAR - Improper Payments Information Act (IPIA) of 2002

IPIA 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. A review of all programs and activities that the 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 the 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. The following are some examples of the internal control procedures used by the payment offices:

Prepayment and post-payment audit analyses are performed;
Controlled/limited access to financial system screens, and approval authority for changes to information in the vendor table have been implemented to prevent unauthorized diversion of funds;
Funds control in financial systems provides reasonable assurance against overpayments or improper payments;
Edit reports in financial systems are programmed to identify potential items that may result in improper or duplicate payments; and
All documents submitted for payment are required to have previously gone through an approval process at several levels including initial request, subsequent budget approval, voucher examination, and electronic certification system review.

The Department has ensured that internal controls, manual, as well as financial system, relating to payments are in place throughout the Department, and has reviewed all financial statement audit findings/comments and results of other payment reviews for indications of breaches of disbursement controls. None of these audit findings/comments or reviews have uncovered any problems with improper payments or the internal controls that surround disbursements.

The Department continued its reporting procedures that required quarterly reporting to the Department, by the payment offices, on any improper payments, identifying the nature and magnitude of the improper payments along with any necessary control enhancements to prevent further occurrences of the type of improper payments identified. The Department’s analysis of the data collected from the payment offices shows that Department-wide improper payments were below one tenth of one percent in FY 2006, as was the case in FY 2005. As a separate effort during FY 2006, the Department conducted a systematic sampling process to draw and review random samples of disbursements from the Department-wide universe of FY 2006 disbursements, covering the period from October 1, 2005 through June 30, 2006. Results of the test revealed no significant improper payments or internal control deficiencies. The same results were achieved following a similar test in FY 2005. Overall, the Department’s assessments demonstrate that the Department has strong internal controls over the disbursement processes, the amounts of improper payments in the Department are immaterial, and the risk of improper payments is low.

For FY 2007 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.