Recovery Auditing

Legislation passed in 2002 requires agencies that enter into contracts worth more than $500 million in a FY to complete a cost-effective program for identifying errors made in paying contractors and recovering any improper payments.  For FY 2013's audit, we performed a sample review of $7,633 million (out of $7,911 million total) administrative payments.  As shown in the chart below, we identified 0.06 percent ($4.202 million) of administrative payments as improper and collected 63 percent ($2.659 million) in FY 2013. This validated the agency's current processes for prevention, detection, and collection of improper payments.

FY 2013 Payment Recapture Audit Reporting
Administrative Payments
(dollars in millions)
Type of Payment Payroll and Benefits ¹ Vendor and Travel
Amount Subject to Review for Current Year (CY) Reporting $6,282 $1,629
Actual Amount Reviewed and Reported CY $6,282 $1,351
Amount Identified for Recovery CY $3.346 $0.856
Amount Recovered CY $1.831 $0.828
Percent of Amount Recovered out of Amount Identified CY 55% 97%
Amount Outstanding CY $1.515 $0.028
Percent of Amount Outstanding out of Amount Identified CY 45% 3%
Amount Determined Not to be collectable CY $0.429 $0.001
Percent of Amount Determined Not to be Collectable out of Amount Identified CY 13% 0.1%
Amounts Identified for Recovery Prior Years (PY) $10.308 $13.087
Amounts Recovered PYs $4.726 $12.783
Cumulative Amounts Identified for Recovery (CY + PYs) $13.654 $13.944
Cumulative Amounts Recovered (CY + PYs) $6.557 $13.652
Cumulative Amounts Outstanding (CY + PYs) $7.097 $0.031
Cumulative Amounts Determined Not to be Collectable (CY + PYs) $2.179 $0.261
Notes:
  1. The payroll and benefits amounts include overpayments from current and separated employees.  The amounts for current employees include overpayments that we identified in FY 2013 but could have occurred in a prior year.
  2. Cumulative Amounts Recovered (CY + PYs) for Vendor and Travel includes $0.040 million of amounts recovered in the current year for amounts identified in prior years.
  3. Cumulative Amounts Determined Not to be Collectible (CY + PYs) for Vendor and Travel includes $0.260 million of amounts determined not to be collectible in the current year for amounts identified in prior years
  4. We may compromise, suspend, or terminate collection activity in accordance with the authority granted by the United States Code and the Federal Claims Collection Standards based on the following criteria:
    • The cost of collection does not justify the enforced collection of the full amount;
    • The debtor is unable to repay the debt considering age and health, present and potential income, and availability of assets realized;
    • The debt has been discharged in bankruptcy; or
    • The debtor has requested a waiver or review of the debt and the agency determines that such request is credible.
  5. There may be slight variances in the dollar amounts and percentages due to rounding of the source data.
 

We achieve these results by maintaining our commitment to not only identify and recover improper payments, but to avoid them as well. A memorandum from President Obama (Presidential Memorandum Regarding Finding and Recapturing Improper Payments, issued on March 10, 2010) speaks to these efforts, challenging agencies to continue working along the path toward developing stronger practices. Furthermore, on July 22, 2010, President Obama strengthened this challenge by signing the Improper Payments Elimination and Recovery Act (IPERA) into law, which:

  • Amends the Improper Payments Information Act of 2002 (IPIA);
  • Requires agency heads to conduct recovery audits for agency programs that expend $1 million or more annually, if such audits would be cost-effective;
  • Reinforces many of the initiatives we are currently implementing to address improper payments; and
  • Further increases our transparency, accountability, and reporting for improper payments from the existing requirements of the IPIA and Executive Order 13520.

We support this legislation and began reporting on the IPERA legislative requirements in the FY 2011 Performance and Accountability Report.