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IMPROPER PAYMENT QUESTIONS
1. OMB's Improper Payments Information Act guidance issued on May 21, 2003, called for all agencies covered by Section 57 of OMB Circular A-11 to continue reporting improper payment information as required in previous years. Please describe whether or not the agencies covered by Section 57 provided to OMB all of the information required by Section 57 for the past three-year period.
a. For each agency identified, please summarize the information provided to OMB, including the amounts of improper payments, causes and results of corrective action(s), if any.
b. Please identify each agency covered by Section 57 that did not provide OMB with all the required information and each program for which the information was not provided. Please describe the nature of each reporting deficiency, and any action(s) OMB took to correct the deficiency.
2. The Improper Payments Information Act requires agencies to report improper payments to Congress each year. When these payments are estimated to exceed $10 million or more in any program or activity, agencies are required to report additional information as well. However, OMB guidance modifies this reporting requirement by adding an additional requirement: that improper payments exceed both 2.5 percent and $10 million.
a. Please explain in detail OMB's justification for imposing the 2.5 percent standard.
b. Please list the agencies and programs that have previously reported improper payments under Section 57 of Circular A-II that would not meet the two-prong OMB guidance standard, in other words how much of the previously reported improper payments exceed the $10 million threshold, but not the 2.5 percent threshold?
3. Please explain why 2.5 percent of program spending on improper payments is a reasonable threshold for additional reporting requirements, especially given that much smaller percentages could amount to hundreds of millions or billions of dollars in improper payments in programs such as Medicare or SSA's OASI and DI programs?
4. GAO has reported that the principal cause of improper payments is a breakdown in systems of internal controls. The Federal Manager's Financial Integrity Act (FMFIA) has required annual executive agency reviews and reporting on internal controls since about 1984. OMB was heavily involved in FMFIA's implementation across the government. Why is it that the problems that cause improper payments weren't previously identified and corrected? Are agencies taking their FMFIA review and reporting responsibilities seriously?
5. What is OMB doing to ensure that federal agencies take proactive measures to improve weak internal controls and implement safeguards to ensure against improper payments?
SSA-Specific Issues
1. OMB provided SSA with supplemental guidance on improper payments reporting that establishes a distinction between "avoidable" and "unavoidable" payments – terms that have not been part of the general improper payment lexicon. Why did OMB decide to adopt this distinction in this context?
2. For items considered to be "unavoidable", we understand that OMB guidance would not require agencies to report that information to the Congress under the Improper Payments Information Act. Is our understanding correct? Would so-called "unavoidable" improper payment statistics be collected at all? Would they be reported to OMB?
3. What dollar impact does the introduction of this avoidable/unavoidable distinction have on the amounts of improper payments reported by SSA for 2003? What would the improper payment rate or amount be for SSA for 2003 under 2002 improper payment definitions?
4. If statutory or regulatory provisions require agencies to make payments that the agency otherwise would consider improper, why shouldn't an agency communicate this to the Congress so that the Congress can consider appropriate legislative solutions?
5. Is SSA the only agency where "unavoidable" and "avoidable" improper payment distinctions arise? If not, which other agencies have raised these issues and what has OMB's response to them been?
6. Another area classified as "unavoidable" is payment made for Title II based on earnings estimates because of program design requirements. Again, why should this information not be reported, tracked, and updated to identify agency actions to recover improperly paid amounts and identify the status of corrective actions?
7. Why shouldn't "Undetected Error" amounts be reported since it appears that they would represent amounts that were paid that should not have been paid – are these not improper payments?
8. OMB's SSA-specific guidance for the category "Undetected Error" concluded that OASI, DI, and SSI should not include estimates of these amounts as improper payments unless SSA had evidence that a specific type of erroneous payment was made. Wouldn't the statistical sampling you require in other guidance provide the estimates of these payments? If so, why not report the results?