House tightens reins around improper payments

Legislation now puts puts onus on agencies to review programs susceptible to doling out improper payments

With an eye on the roughly $110 billion in inproper payments agency made in fiscal 2009, the House today passed legislation to toughen federal accounting practices.

The Improper Payments Elimination and Recovery Act (S. 1508), which passed the Senate June 23, would require federal agencies to recover lost  taxpayer dollars through audits and it levies penalties for agencies that fail to comply with accounting regulations. The bill also would strengthen the law pertaining to identifying possible fraud and addressing ongoing errors and vulnerabilities in government payment procedures.

Under the bill, agency officials must review their programs every three years to find those that are susceptible to improper payment. For those programs, officials would have to arrive at an estimate of the payments and include those numbers in financial statements. Getting tougher on agencies, the bill also would require officials  to cite the causes of the improper payments and how the agency intends to redress them.

“Agencies will have to be more aggressive in adopting proven strategies to root out waste, fraud and abuse,” said Sen. Tom Carper (D-Del.), who introduced the bill in the Senate. “Requiring agencies to identify and recover improper payments, we’re giving agencies the tools to prevent wasteful spending from happening in the first place.”

Of related interest:

Agencies' faulty payments make OMB site hit list
OMB on hunt for programs with payment problems 

The bill, which passed the House by voice vote, now goes to the White House for President Barack Obama's signature.

The administration has taken some other steps to cut down on improper payments. Obama issued an executive order in November directing officials to identify the programs wasting the most money because of improper payments.

The administration also launched, a new Web site designed to help reduce improper payments and to solicit ideas from the public. According to the site, federal improper payments were estimated to total $110 billion in fiscal 2009, up from $72 billion in fiscal 2008. The site said the overall improper payment rate for the federal government was 5.65 percent for fiscal 2009.

The Office of Management and Budget has set a goal of reducing that rate to 5.33 percent in fiscal 2010, 4.99 percent in fiscal 2011, and 4.32 percent in fiscal 2012.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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