Department of Health and Human Services

Office of Inspector General -- AUDIT

"Compliance with the Prompt Payment Act by the National Institutes of Health," (A-15-94-00032)

July 15, 1996

Complete Text of Report is available in PDF format (1.8 mb). Copies can also be obtained by contacting the Office of Public Affairs at 202-619-1343.

EXECUTIVE SUMMARY:

This report provides the results of our review of Compliance with the Prompt Payment Act (Act) by the National Institutes of Health (NIH). The audit objectives were to determine whether NIH pays bills on-time, remits interest penalties when payments are made late, and takes discounts that are advantageous to the Government; accurately reports payments and progress made with respect to complying with the Act; and assesses the reliability of its payment process.

We found that the NIH made late payments for 20 percent of the 657,058 invoices in Fiscal Year (FY) 1994 that were subject to the Act. It incurred interest penalties of $242,221. This occurred because quality controls in the NIH payment process needs to be streamlined.

We recommended that NIH improve quality controls in its payment process to:

• require that invoices be processed within the established OMB time frames and date stamped in an office other than the Accounts Payable Section; and that the payment system automatically authorizes payment after the purchase order, invoice, and report of receipt of goods are reconciled;
  
• computing interest penalties through the payment date as required by the Act; and
  
• recording and making discount determinations automatically by electronically comparing discount terms with the Department of Treasury's Current Value of Funds.

We also recommended that NIH routinely assess the reliability of its payment process as required by the Act. The NIH generally agreed with our recommendations.