Agencies can’t always tell who’s dead and who’s not, so benefit checks keep coming

The U.S. government has a problem with dead people. For one thing, it pays them way too much money.

In the past few years, Social Security paid $133 million to beneficiaries who were deceased. The federal employee retirement system paid more than $400 million to retirees who had passed away. And an aid program spent $3.9 million in federal money to pay heating and air-conditioning bills for more than 11,000 of the dead.

These mistakes are part of a surprising glitch at the heart of the federal bureaucracy. Because of a jury-rigged and outdated system meant to track deaths, the government has trouble determining exactly which Americans are deceased.

As a result, Washington is bedeviled by both the living dead and the dead living.

The task of tracking deaths for the federal bureaucracy is an enormous one; about 2.5 million Americans die each year. Federal officials say the vast majority of these cases are handled correctly: The death is recorded. Government money is no longer sent to that person.

But not always. In fact, glitches in the system have paid more than $700 million to the dead, according to government audits performed since 2008.

The trouble with dead people often begins with something called the Death Master File, which is kept by the Social Security Administration. Every day new reports are added, provided by relatives, funeral homes and the state agencies that issue official death certificates.

The list contains 90 million reports.

The problem is that not all of them are correct.

Now, after years of inattention, President Obama and two senators have laid out ideas to improve the system. In his 2014 budget, Obama requested $22 million to improve the death reports that come in from states by upgrading their systems to transmit faster and more accurate data.

In the Senate, Carper and Sen. Tom Coburn (R-Okla.) have written a bill that would require all federal agencies to check the Death Master File before paying benefits. It would also give all agencies access to the full file, not just the partial one. And it would require new efforts to make sure the data in the file are accurate.

-David A. Fahrenthold, WashingtonPost.comREAD MORE...

Government charge card abuse a firing offense under new OMB guidelines

Federal employees who make illegal or improper purchases with government charge cards could face dismissal under new guidelines from the Office of Management and Budget.

In a memo to the heads of agencies, OMB Director Sylvia Burwell laid out new steps to curb charge-card violations as part of the implementation of the 2012 Government Charge Card Abuse Prevention Act.

The law, approved by Congress and signed by President Barack Obama last fall, ordered agencies to firm up internal safeguards for identifying and stopping unauthorized purchases.

By Sept. 30, agencies need to certify to OMB that they have internal controls in place, according to the memo. Agencies are expected to develop specific penalties for employees who violate charge card policies. Employees who make "illegal, improper or erroneous" purchases with government cards should face disciplinary actions, including dismissal, the memo stated.

Burwell has tasked agency human resources and charge card management officials with developing the proper penalties for violations.

OMB's guidelines also instruct agencies to report government charge card violations at least twice a year. The new reporting requirements go into effect this year for agencies that spend more than $10 million annually on charge cards. The semi-annual reports will have to detail all purchase card violations as well as the disciplinary actions taken. The first report is due Jan. 31.

The 2012 law also instructed agency inspectors general to conduct periodic risk assessments on the use of agency charge cards. Agency IGs are now required to compile an annual status report on charge card audit recommendations.

-Jack Moore, FederalNewsRadio.com
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Largest USDA overpayments go toward farm subsidies, report says

The Department of Agriculture doled out more than $20 million in excess financial assistance last year, with the largest overpayments coming in the form of farm subsidies for crop insurance.

In a report released this week, the USDA inspector general said the agency spent nearly $15 million on undue payouts through the Federal Crop Insurance Corporation while issuing no major overpayments for nutrition assistance, including the Supplemental Nutrition Assistance Program — formerly known as food stamps.

Overpayments are defined as payouts that rise at least 50 percent higher than the correct amount while totaling at least $5,000 per individual or $25,000 per organization, according to the analysis.

The watchdog analysis, released Wednesday, focused on the USDA’s compliance with reporting requirements under an executive order President Obama issued in 2009 to reduce high-dollar overpayments.

The Department of Agriculture reported 239 overpayments worth a combined $20.3 million during the 2012 fiscal year, compared to 143 payouts totaling $11.7 million during the previous cycle, according to the review.

Excess payments through the Federal Crop Insurance Corporation averaged excesses of $209,000 per payout. The next highest amount came from a wildland firefighting program that sent out overpayments of $58,000 apiece on average.

The inspector general said the USDA could decrease its overpayments through better control over bookkeeping and stricter adherence to reporting guidelines, including the deadlines for producing quarterly numbers.

The Agriculture Department said in its response that “agencies misinterpreted or deviated from the requirement of the Office of Management and Budget and the [Office of the Chief Financial Officer].” The agency said its CFO would issue a memo directing each department to certify that its reporting processes comply with the established standards.

-Josh Hicks, WashingtonPost.com

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Executive Memo M-11-16: Issuance of Revised Parts I and II to Appendix C of OMB Circular A-123

April 14,2011

M-11-16

MEMORANDUM FOR THE HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES

FROM: JacobJ. Lew, Director, OMB

SUBJECT: Issuance of Revised Parts I and II to Appendix C ofOMB Circular A-123

Each year, the -Federal Government wastes billions of taxpayer dollars on improper payments to individuals, organizations, and contractors. These are payments made in the wrong amount, to the wrong entity, or for the wrong reason. Despite efforts to reduce improper payments, agencies reported an estimated $125 billion in improper payments for Fiscal Year 2010. Whether these payments resulted from inadequate recordkeeping, inaccurate eligibility determinations, inadvertent processing errors, the lack of timely and reliable information to confirm payment accuracy, or fraud, the amount of improper payments is simply unacceptable.

On July 22, 2010, the President signed into law the Improper Payments Elimination and Recovery Act (IPERA; Pub.L. 111-204). IPERA amended the Improper Payments Information Act of 2002 (IPIA; Pub. L. 107-300) and generally repealed the Recovery Auditing Act (Section 831, Defense Authorization Act, for FY 2002; Pub.L. 107-107). IPERA directed the Office of Management and Budget (OMB) to issue implementing guidance to agencies.

OMB is now issuing the attached government-wide guidance on the implementation of IPERA. This guidance is contained in Parts I and II to Appendix C ofOMB Circular A-I23, Management's Responsibility for Internal Controls'.

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Government errors could mean big problems for contractors

Government errors could mean big problems for contractors

Contractors could face suspension, debarment or financial penalties if they fail to return and report an improper payment made by the government…even if the improper payment is the government’s fault.

That’s what an executive order meant to curb the government’s rate of erroneous payments will say, Peter Orszag, Office of Management and Budget director, told reporters during a Nov. 17 briefing on the value of improper payments made by the government in 2009.

In addition to penalizing contractors that fail to return improper payments, the pending executive order will curb improper payments by demanding agencies:

• Establish a Web site to disclose and track the total amount of improper payments on a program. The Web site will include error rates by agency and program, and an email address for the public to report suspected waste, fraud and abuse.
• Report on errors more than once a year (the current practice).
  Designate a Senate-confirmed official to be accountable for meeting improper payment reduction targets. If the agency misses targets two years in a row, the agency’s head, chief financial officer and inspector general must give OMB a plan describing why the agency failed to meet its goals and what it will do to meet targets going forward.
• Employ new management techniques, such as forensic auditing, to detect and prevent improper payments.
• Share data with other agencies about entities or individuals that received improper payments because they weren’t eligible for the benefits. This will prevent that entity or person from receiving improper payments from other programs.
• Establish plans to reduce program errors that do not interfere with payments to legitimate beneficiaries.
• Create incentives for states, agencies, and recipients to report payment errors.

Reducing Improper Payments

Wednesday, November 18th, 2009 at 10:25 am
Peter R. Orszag, Director, OMB

Each year, taxpayers lose billions of dollars in wasteful improper payments by the federal government to individuals, organizations, and contractors. "Improper payments" is an umbrella term that covers a number of financial transactions — overpayments to individuals or firms is one example; benefit payments to ineligible program participants is another. In 2008, improper payments totaled $72 billion; in 2009, they totaled $98 billion — an increase driven by improved detection and the significant increase in federal outlays associated with the economic downturn. These errors and mistakes are unacceptable. Taxpayers deserve to know that their dollars are being spent wisely and effectively.

In response, the President, over the next week, will sign an executive order to rein in these improper payments so that the right people receive the right payment for the right reason. The response revolves around three categories of action: boosting transparency, holding agencies accountable, and creating strong incentives for compliance. In addition to the Executive Order, Congress is making efforts to reduce fraud, waste, and abuse through improper payments. We look forward to continuing to work with Congress, including Senators Carper and McCaskill and Congressman Patrick Murphy, on this important issue.

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Bill to reduce improper payments reintroduced (7/24/09) -- www.GovernmentExecutive.com

"A Delaware senator has reintroduced a bill that could help identify and recover billions of dollars in improper payments made by the government.

On Thursday, Democratic Sen. Tom Carper once again put forward the Improper Payments Elimination and Recovery Act. The bill would require greater oversight of improper payments and penalize agencies that consistently fail to fix accounting mistakes."

As chairman of the Senate Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, Carper has held more than a half-dozen hearings on reducing improper payments.

The senator introduced a nearly identical bill last year, but the Congressional Budget Office found that some highly technical language in the legislation, since corrected, caused the price tag to rise considerably, according to a Democratic committee staffer.

Carper's bill stems from a report issued in April by the Government Accountability Office that found an estimated $72 billion in federal improper payments in fiscal year 2008 -- or roughly 4 percent of the $1.8 trillion of documented outlays for those related programs. The watchdog discovered that the figure should actually be higher, but some programs were not adequately tracked.

Specifically, Carper's bill, which is co-sponsored by Sens. Tom Coburn, R-Okla.; Susan Collins, R-Maine; John McCain, R-Ariz., and Claire McCaskill, D-Mo., would amend the 2002 Improper Payments Information Act by lowering the threshold for which agencies must report improper payments.

The act currently requires agencies to report annually to Congress when they issue at least $10 million in improper payments and when that figure accounts for 2.5 percent of that program's annual outlays. But that provision allows many extremely large programs with tens of millions in improper payments to avoid scrutiny, a committee staffer said.

Carper's bill would require any program with $100 million in improper payments -- no matter the percentage of the program's outlays -- to report those payments to Congress. By 2013, the act would be revised to lower the percentage threshold to 1.5 percent.

AGA Partnership Releases Comparison of Single Audit Act and Improper Payments Information Act

A paper just approved by AGA's Partnership for Intergovernmental Management and Accountability (Partnership) helps bridge the knowledge gap between management and auditors. The paper compares the Single Audit Act Amendments of 1996 (SAA) and the Improper Payments Information Act of 2002 (IPIA) from a number of perspectives, including: area of coverage; scope; extent of testing; reporting of results; basis of testing; the treatment of overpayments and underpayments; time frames and the rotation of program testing. The paper was completed by a special work group created by the Partnership. The Leveraging the Single Audit/Strategies for Reducing Improper Payments Work Group was created by the Partnership under its charge from AGA's National Executive Committee to open the lines of communication among governments. Chaired by George Strudgeon of the Virginia Office of Public Accounts, the work group is comprised of financial professionals from the federal, state and local levels of government. The report is available online.

Recent GAO Publications

The Government Accountability Office (GAO) recently released the following reports, correspondence and testimonies:

Business Systems Modernization: Internal Revenue Service's Fiscal Year 2009 Expenditure Plan.
GAO-09-281, March 11.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-281
Highlights - http://www.gao.gov/highlights/d09281high.pdf

Troubled Asset Relief Program: Status of Efforts to Address Transparency and Accountability Issues, by Richard J. Hillman, managing director, financial markets and community investment, before the Subcommittee on Domestic Policy, House Committee on Oversight and Government Reform.
GAO-09-474T, March 11.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-474T

Forest Service: Emerging Issues Highlight the Need to Address Persistent Management Challenges, by Robin M. Nazzaro, director, natural resources and environment, before the Subcommittee on Interior, Environment, and Related Agencies, House Committee on Appropriations.
GAO-09-443T, March 11.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-443T

VA Health Care: Challenges in Budget Formulation and Execution, by Randall B. Williamson, director, health care, before the Subcommittee on Military Construction, Veterans Affairs, and Related Agencies, House Committee on Appropriations.
GAO-09-459T, March 12.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-459T
Highlights - http://www.gao.gov/highlights/d09459thigh.pdf

Medicare: Improvements Needed to Address Improper Payments in Home Health.
GAO-09-185, February 27.
http://www.gao.gov/new.items/d09185.pdf

Counterdrug Technology Assessment Center: Clarifying Rationale for the Research and Development Funding Decisions Would Increase Accountability.
GAO-09-339R, March 12.
http://www.gao.gov/new.items/d09339r.pdf

"Challenges Facing the New Administration and the 111th Congress," by Gene L. Dodaro, acting comptroller general of the United States, before the JFMIP 2009 Federal Financial Management Conference, in Washington, D.C.
GAO-09-510CG, March 12, 2009.
http://www.gao.gov/cghome/d09510cg.pdf


Principles of Federal Appropriations Law: Annual Update of the Third Edition
GAO-09-340SP
http://www.gao.gov/special.pubs/appforum2009/d09340sp.pdf
Highlights - http://www.gao.gov/highlights/d09443thigh.pdf


Appropriations Decisions:

B-317878,United States Postal Service Office of Inspector General-
Implementation of Postal Accountability and Enhancement Act Section 603,
Part 2, March 3, 2009
http://www.gao.gov/decisions/appro/317878.pdf

Today's GAO Publication

The Government Accountability Office (GAO) today released the following testimony:

Improper Payments: Status of Agencies' Efforts to Address Improper Payment and Recovery Auditing Requirements, by McCoy Williams, managing director, financial management and assurance, before the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, Senate Committee on Homeland Security and Governmental Affairs.
GAO-08-438T, January 31.
http://www.gao.gov/cgi-bin/getrpt?GAO-08-438T
Highlights - http://www.gao.gov/highlights/d08438thigh.pdf

Bill would press agencies to reduce improper payments

A bill introduced today in the Senate would more strictly enforce a law to identify and collect overpayments to beneficiaries of federal programs such as Social Security, Medicare and unemployment insurance, and introduce new penalties for agencies that do not comply.

The bill, introduced by Sen. Tom Carper, D-Del., chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security, would amend the Improper Payments Information Act of 2002 by levying financial penalties on agencies that do not fully comply with the law.

The act requires agencies to report annually to the Office of Management and Budget the amount of payments issued in error, such as mistakenly or fraudulently paying more than a beneficiary is entitled to or paying individuals who are no longer in a program or are not eligible. The law focuses on at-risk agencies -- those that have issued improper payments totaling 2.5 percent of a program's outlays and $10 million or more in improper payments. OMB audits such agencies.

However, Carper's bill would expand the definition to include an agency that fulfils either of the two conditions. Under the old definition, a $50 billion program with less than $1.25 billion in overpayments would not be considered at risk and therefore not audited, said Sen. Tom Coburn, R-Okla., ranking minority member of the subcommittee.

Carper also would impose penalties for noncompliance. If an inspector general finds that the agency is not reporting its improper payments, the head of the agency has the authority to transfer available funds from any part of the agency to the program to pay for oversight of improper payments. If the IG rules the agency has not complied in a second consecutive year, the head of the agency is required to transfer the funds. If the agency is not in compliance for a third consecutive year, any program not in compliance must transfer 5 percent of its appropriations to the Treasury.

-Gautham Nagesh, GovExec.com
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