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Improper Payments Information Act (IPIA) of 2002

 

Narrative Summary of Implementation Efforts for FY 2005

The Department has not identified any significant problems with erroneous payments; however, it recognizes the importance of maintaining adequate internal controls to ensure proper payments, and its 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 bureaus:

  • Prepayment and post payment audit analyses are performed.
  • Controlled/limited access to the 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 the financial system provides reasonable assurance against overpayment or erroneous payments.
  • Edit reports are programmed to identify potential items that may result in improper or duplicate payments.
  • 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 system—relating to payments are in place throughout the Department, and has reviewed all financial statement audit findings and results of other payment reviews for indications of a breach of those controls. None of these reviews or audits has uncovered any problems with erroneous payments or the internal controls that surround disbursements.

In FY 2005, the Department continued its reporting procedures that required quarterly reporting to the Department by its bureaus on any erroneous payments, identifying the nature and magnitude of the erroneous payment, along with any necessary control enhancements to prevent further occurrence of the type of erroneous payments identified. Our analysis of the data collected from the bureaus shows that Department-wide erroneous payments were below one tenth of one percent in FY 2005, as was the case in FY 2004. As a separate effort during FY 2005, the Office of Financial Management conducted a systematic sampling process to draw and review random samples of disbursements from the Department-wide universe of FY 2005 disbursements. Results of the test revealed no significant erroneous payments or internal control deficiencies. The same results were achieved following a similar test in FY 2004. Also, in FY 2005, the Department received the results of an Office of Inspector General’s (OIG) audit involving a comprehensive review of disbursements for improper payments at the Department’s largest payment office. Results of this audit revealed no significant erroneous payments or internal control deficiencies. Overall, our assessments demonstrate that the Department has strong internal controls over the disbursement process, the amounts of erroneous payments in the Department are immaterial, and the risk of erroneous payments is low.

During FY 2005, in compliance with Section 831 of the Defense Authorization Act of 2002 (P.L. 107-107, Title VIII, Subtitle D, Sec. 831; 31 USC 3561-3567), which requires federal agencies to identify and recover overpayments to contractors due to payment errors, the Department contracted with a private vendor to perform recovery auditing. The audit included thorough reviews of sample invoices from two of the Department’s largest payment offices, and an independent confirmation of open items with key vendors. Results of the audit and confirmation efforts revealed no significant improper payments or internal control deficiencies.

For FY 2006 and beyond, the Department will continue its efforts to ensure the integrity of its programs’ payments.

 


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