Frequently Asked Questions
What is an Improper Payment?
Improper payments occur when either:
- Federal funds go to the wrong recipient,
- the recipient receives the incorrect amount of funds (either an underpayment or overpayment),
- documentation is not available during review to discern that a payment was proper, or
- the recipient uses Federal funds in an improper manner.
The term "improper payment" are payments made by the government to the wrong person, in the wrong amount, or for the wrong reason. Although not all improper payments are fraud, and not all improper payments represent a loss to the government, all improper payments degrade the integrity of government programs and compromise citizens' trust in government. The definition is found in the Improper Payments Elimination and Recovery Act of 2010 (P.L. 111-204) and the Office of Management and Budget Circular A-123, Appendix C (OMB M-18-20) .
Why is resolving the problem of Improper Payments important?
Simply put, the American citizens deserve to know that their hard earned tax dollars are being spent as efficiently and effectively as possible by the Federal government. Although not all improper payments are fraud, and not all improper payments represent a loss to the government, all improper payments degrade the integrity of government programs and compromise citizens' trust in government.
Under the direction of the Office of Management and Budget (OMB), agencies have identified the programs that are susceptible to significant improper payments, and measured, or are putting in place measurement plans, to determine the estimated amount of improper payments. By identifying and measuring the problem, and determining the root causes of error, the government is able to focus its resources so that corrective action plans can be thoughtfully developed and successfully carried out.
What causes Improper Payments?
An improper payment can happen for a number of reasons. Knowing the causes of the error is the essential first step in reducing or eliminating the improper payment. By understanding the causes of improper payments, agencies can better implement policies and procedures to reduce errors without negatively impacting the people who should be receiving payments from the government.
OMB developed improper payment categories to create a useful way to break out causes for each agency. These categories are:
(1) Program Design or Structural Issue: A situation in which improper payments are the result of the design of the program or a structural issue. For example, a scenario in which a program has a statutory (or regulatory) requirement to pay benefits when due, regardless of whether or not all the information has been received to confirm payment accuracy.
(2) Inability to Authenticate Eligibility: Inability to Access Data: A situation in which an improper payment is made because the agency is unable to access data needed to authenticate an eligibility criteria.
(3) Inability to Authenticate Eligibility: Data Needed Does not Exist: A situation in which an improper payment is made because the agency is unable to authenticate eligibility criteria because no database exists to check against.
Failure to Verify Data: A situation where the agency (Federal, State, or local), or another party administering Federal dollars, fails to verify appropriate data to determine whether or not a recipient should be receiving a payment, even though such data exist in government or third-party databases. For reporting purposes, the kind of data in question would include, but are not limited to, the following sub-categories:
(4) Failure to Verify Death Data
(5) Failure to Verify Financial Data
(6) Failure to Verify Excluded Party Data
(7) Failure to Verify Prisoner Data
(8) Failure to Verify Other Eligibility Data
Administrative or Process Errors: Errors caused by incorrect data entry, classifying, or processing of applications or payments. These types of errors can be made by the following sub-categories:
(9) Federal Agency
(10) State or Local Agency
(11) Other Party -for example, a participating lender, or any other type of organization
(12) Medical Necessity: A situation in which a medical provider delivers a service or item that does not meet coverage requirements for medical necessity.
(13) Insufficient Documentation to Determine: A situation where there is a lack of supporting documentation necessary to verify the accuracy of a payment identified in the improper payment testing sample.
(14) Other Reason: If none of the above categories apply, agencies may include any other reasons for the improper payment.
Are all Improper Payments fraud?
No. Contrary to common perception, not all improper payments are fraud (i.e., an intentional misuse of funds). In fact, the vast majority of improper payments are due to unintentional errors. For example, an error may occur because a program does not have documentation to support a beneficiary's eligibility for a benefit, or an eligible beneficiary receives a payment that is too high-or too low-due to a data entry mistake.
How does someone report suspected incidents of fraud, waste and abuse related to improper payments?
This website also provides information on where the public can report suspected incidents of fraud, waste, and abuse by an entity receiving Federal funds that have led or may lead to improper payments by the Federal Government. The link for reporting fraud, waste and abuse is located at the top of every paymentaccuracy.gov page.
Do all Improper Payments Represent a Monetary Loss to the Government?
No. Another prevalent misunderstanding is that all improper payments are a loss to the government, but that is not always the case.
Also, many of the overpayments are payments that may have been proper, but were labeled improper due to a lack of documentation confirming payment accuracy.
How does a Federal agency measure its improper payments?
For all Federal programs identified as susceptible to risk, the responsible Federal agencies obtain a statistically valid estimate of the annual amount of improper payments in those programs. OMB Guidance (Circular A-123 Appendix C) describes acceptable statistical sampling methodology in Part I.A.9, Step 2 and in Part I.A.14.
What are Federal agencies doing to prevent and recover improper payments?
The key to reducing instances of improper payments is to prevent the improper payment before it occurs. To do this agencies must 1) properly identify the root cause of the improper payment, 2) implement effective mitigation strategies to address the root cause and 3) regularly assess their effectiveness, refining them as necessary.
Two key pieces of legislation that support this effort are the Improper Payments Elimination and Recovery Act of 2010 (P.L. 111-204) and the Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) (P.L. 112-248). These laws require agencies to have a cost-effective program of internal control to prevent, detect, and recover overpayments by implementing policies and directing activities that review and verify payments before they go out the door.
Agencies implement internal control programs to prevent and detect improper payments. To address programs deemed susceptible to improper payments, agencies develop and implement Corrective Action Plans (CAP's) used to set realistic targets and outline a timetable to achieve scheduled targets. These CAPS can take many forms. Agencies may identify a need to better train their own staff on how to administer a program or realize that regulations or guidance to the public need to be revised to make requirements more easily understood. CAPs are typically reviewed annually to ensure plans focus on the root causes of the errors, thus making it more likely that targets are met. If targets are not met, the agency may develop new strategies, adjust staffing and other resources, and possibly revise targets.
Some agencies also look to strengthen program integrity throughout the organization, extending accountability to senior executives and program officials. Beginning with senior leadership and cascading down, performance plans are tied to agency strategic goals related to strengthening program integrity, protecting taxpayer resources, and reducing improper payments. In some instances, senior executives and program officials are evaluated as part of their semi-annual and annual performance evaluations on their progress toward achieving these goals.
To support agencies' efforts to reduce improper payments, the Department of Treasury's Fiscal Service - the primary disburser of payments to individuals and vendors on behalf of federal agencies - established the "Do Not Pay" portal to help federal agencies reduce improper payments. The portal helps identify ineligible recipients by verifying eligibility of a vendor, grantee, loan recipient, or beneficiary prior to award; and re-verifying eligibility before, during, and after payments are made. The Portal's mission is to protect the integrity of the government's payment process by assisting agencies in mitigating and eliminating improper payments in a cost-effective manner while safeguarding the privacy of individuals.
While recovering improper payment contract dollars is relatively straightforward with a buyer-seller relationship, this is not true for all types of payments. Federal payments are often made through "one-way" arrangements such as grants, benefits, and loans. In these instances, the comparably low recovery rate inherent to the payment type makes the use of payment recovery audits fail the cost-effectiveness test. Pre-payment efforts to increase data verification and validation are more effective. Research has shown that payment recovery audits are primarily effective for contract payments.
Do Programs Administered by the States Make Improper Payments?
Yes. In general, state-administered programs are partially or fully funded by the Federal Government, but each state sets its own guidelines regarding eligibility and services. Just like Federally-administered programs, state-administered programs also make improper payments.
What is the purpose of this website?
As required by Executive Order 13520 (codified in 31 USC 3321) dated November 20, 2009, Reducing Improper Payments, the U.S. Department of the Treasury, in coordination with the U.S. Department of Justice and Office of Management and Budget, established this website to create a centralized location to publish information about improper payments made to individuals, organizations, and contractors. This website also provides a centralized place where the public can report suspected incidents of fraud, waste, and abuse. The link for reporting fraud, waste and abuse is located at the top of every paymentaccuracy.stage.max.gov page.
What information is included in this website?
This website includes current and historical information about improper payments made under Federal programs that have been determined to be susceptible to significant improper payments based on assessments of all government programs. As required by Executive Order 13520, agencies with high-priority programs provide the following information for the website:
- Semi-Annual or quarterly actions for reduction improper payments
- Rates and amounts of improper payments, including causes of improper payments;
- Targets for reducing improper payments.
Some of the data for these requirements are not immediately available, but are anticipated for publication in the future.
What is the source of the information contained on the website?
The Improper Payments Elimination and Recovery Act of 2010 and Appendix C to Circular No. A-123, Requirements for Payment Integrity improvement require Federal agencies to report information related to improper payments. The information included on this website has been reported by agencies to the Office of Management and Budget.
What is a fiscal year? What is a fiscal reporting year?
The Federal Government uses a defined 12-month period for its own accounting purposes which is known as a financial or fiscal year (FY). The Federal fiscal year begins on October 1 and ends on September 30 of the following calendar year. While most of the data reported on this site is measured and reported by fiscal year, a few programs may collect data by calendar year or other year-long period, depending on the program's requirements or data availability. In these cases, we have used the term fiscal reporting year to best describe the time period in which the most current information was reported. For more detail by program, refer to the annual Performance and Accountability Reports or Agency Financial Report /Annual Performance Report, which are available on the agency's website or the CFO Council's site. There is also a link to these reports on this site on our Resources page under Agency Financial Reports.
Can I download data?
Improper payments data can be downloaded from this site. Please see our Resources page under Data and Payment Accuracy Dataset.
I can't find a specific program or agency? Is their data available?
Agencies with programs susceptible to significant improper payments are required to report information about improper payments. Each agency reports improper payments in their annual Performance and Accountability Report or Agency Financial Report which may be found on the Resources page under section under Links to Agency Financial Reports.
Why is a Federal program deemed susceptible to significant Improper Payments?
Generally, a program is deemed susceptible to significant improper payments if the program has improper payments greater than $10 million and over 1.5 percent of all payments made under that program, or if the program has more than $100 million in estimated improper payments. The criteria for determining when a program is susceptible to significant improper payments are found in the OMB Guidance (Circular A-123 Appendix C) .
Are programs that are identified as susceptible to significant improper payments, and that annually report improper payment estimates, permanently subject to improper payments reporting requirements?
No. If an agency's program is currently estimating and reporting improper payments, but has documented a minimum of two consecutive years of improper payments that are below the statutory thresholds described in OMB Circular A-123, Appendix C the agency may request relief from the annual reporting requirements for this program or activity. The request for approval must be submitted to OMB no later than March 31, 2019 in the fiscal year for which the agency is requesting to halt reporting (e.g., a request to halt reporting for a program beginning with the FY 2018 reporting cycle must be submitted by March 31, 2019).
OMB will review the request and take into account the following criteria:
Burden-does measuring and reporting improper payments lead to a heavy burden (e.g., in terms of funding, program staff hours, etc.)?
Legislative considerations-are there any legislative requirements or recent changes that affect the program's ability or inability to estimate and report improper payments?
Audit findings-are there any audit findings (i.e., by the Inspector General or GAO) that point to reasons why the program might want to continue measuring and reporting improper payments?
Ongoing risk mitigation strategies-are there any appropriate controls, policies, or corrective actions that have been put in place to mitigate the risk of fraud and error in the program?
OIG Concurrence - does the agency's Office of Inspector General concur with the agency's request for relief? If the agency's Office of Inspector General does not concur with the agency request, what are the reasons why the program should still be considered susceptible to significant improper payment?
Other considerations-are there any other key factors that should be considered in deciding whether or not to grant relief from measuring and reporting improper payments?
What agencies/programs have been granted relief from reporting?
The following programs have met the above listed criteria and have been granted relief from reporting beginning with FY 2018 reporting:
Broadcast Board of Governors - Domestic Payroll
Department of Homeland Security - S&T - Hurricane Sandy Payments
Department of Commerce - Funds Received by NOAA under Disaster Relief Appropriations Act
Environmental Protection Agency - Clean Water State Revolving Fund
Environmental Protection Agency - Drinking Water State Revolving Fund
General Service Administration - Purchase Cards
Railroad Retirement Board - RRA
Railroad Retirement Board - RUIA
Department of Agriculture - FSA Loan Deficiency Payments (LDP)
Department of Veterans Affairs - Disaster Relief Act - Hurricane Sandy
What is an Accountable Official?
Executive Order 13520 requires agencies operating high-priority programs to designate an senior accountable official to be accountable for meeting targets for reducing improper payments associated with each high- priority program, and for overseeing implementation of program integrity efforts. OMB Guidance (Circular A-123 Appendix C) provides additional information about who may serve as an accountable official and the accountable official's roles and responsibilities.
What is an Improper Payment rate?
The improper payment rates of programs susceptible to significant improper payments are reported on this website by program and by fiscal year. The rate is calculated by dividing the estimates improper payment dollars by the total outlays made by a program during the measurement year.
What is an Improper Payment target?
Programs susceptible to improper payments develop annual reduction goals for the program's payment error rates. In addition, Executive Order 13520 requires agencies operating high- priority programs to establish semi-annual (or more frequent) measurements as well as performance/reduction targets for reducing improper payments. OMB Guidance (Circular A-123 Appendix C) provides additional information about agency requirements for establishing supplemental measurements and targets related to improper payments.
What are outlays?
Outlays occur when the government pays its obligations, whether with cash, check or electronic funds transfer. The Office of Management and Budget's Circular A-11 describes "outlay" as a payment to liquidate an obligation, other than the repayment of debt principal. Outlays generally are equal to cash disbursements but also are recorded for cash-equivalent transactions, such as Federal employee salaries and debt instruments. Outlays are the measure of Government spending.
What is "program access" and how is it measured?
The purpose of Executive Order 13520 is to reduce improper payments while continuing to ensure that Federal programs serve their intended beneficiaries. Government efforts to reduce improper payments should not deter eligible beneficiaries from seeking and receiving benefits. "Access measures" are developed by programs to assess items like the rate of participation by eligible beneficiaries, rate of benefits claimed by eligible beneficiaries, availability of program providers, whether eligible individuals are being improperly prevented from accessing program benefits, the ease or difficulty of accessing benefits, or whether eligible beneficiaries who are receiving benefits as a result of agency efforts to reduce errors. Additional information can be found in the OMB Guidance (Circular A-123 Appendix C).
What are semi annual or quarterly actions and why were they created?
Under the Executive Order 13520 Reducing Improper Payments and OMB Circular A-123, Appendix C, agencies with high-priority programs are required to establish measurements for reducing improper payments. The actions are intended to provide information on high-risk areas and report on root causes of errors that agencies can resolve through corrective actions
How is PaymentAccuracy.gov different from USASpending.gov?
What is a payment recapture audit (also known as a recovery audit)?
A payment recapture audit is a review and analysis of the agency's books, supporting documents, and other available information supporting its payments. This review is specifically designed to identify overpayments to contractors that are due to payment errors. It is not an audit in the traditional sense. Rather, it is a control activity designed to assure the integrity of contract payments, and, as such, is a management function and responsibility.
What can the American public do to help?
Taxpayers are able to report suspected incidents of fraud, waste, and abuse that can lead to finding and recovering improper payments, and implementing corrective actions to prevent future improper payments. The link for reporting fraud, waste and abuse is located at the bottom of every paymentaccuracy.gov page.
Federal agencies are committed to providing high-quality improper payments data to the public. With your help we can do better. Please contact us at (202) 395-3993 to notify us of potential issues with the website - including data, website and document links, or other information.