Issuance of Revised Parts I and II to Appendix C of OMB Circular A-123

June 30, 2011 § Leave a comment

On April 14, 2011, the Office of Management and Budget (OMB) issued government-wide guidance on the Improper Payments Elimination and Recovery Act (IPERA) in OMB Memorandum M-11-16: Issuance of Revised Parts I and II to Appendix C of OMB Circular A-123. The guidance is the latest in a plethora of initiatives aimed at reducing improper payments made by the federal government. In fiscal year (FY) 2010 alone, the government released an estimated $125 billion in improper payments.

Previous guidance on improper payments required agencies to determine which payments may be at risk for improper disbursement and report out annual estimates of each agency’s improper payments. Part I of this latest guidance outlines the procedure each agency should follow to determine annual improper payment rates. The procedure is a multi-step process in which agencies review all programs and activities to identify those that may be susceptible to “significant” improper payments; obtain a statistically valid estimate of the amount of improper payments for programs and activities annually; institute a plan for reduction of those payments; and report out results.

The guidance goes into further detail to aid agencies in implementing this process. The answer to questions such as when agencies should conduct risk assessments or what payments should be included in the annual estimation of improper payments are answered in detail throughout the guidance. Agencies are also given an opportunity to use alternative sampling and measurement approaches than those outlined in the guidance, but they can only do so after obtaining OMB approval.

The second half of Part I focuses on payment recapture audits for programs and activities with expenditures of one million dollars or more. This is a significant broadening of past requirements that set the threshold at $500 million. The guidance clarifies key decisions agencies will face in implementing their own audit programs.

The final part of the guidance, Part II, focuses on complying with the requirements for reducing improper payments.  It identifies the responsibilities of the Inspectors General (IG), including identifying what each IG should review to determine if an agency is in compliance. It also includes agency responsibilities related to compliance, including reporting requirements for corrective measures when non-compliance occurs.

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