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Department of Commerce Payment Integrity Website

BACKGROUND

Agencies are required to periodically review all programs and activities and identify those that may be susceptible to significant improper payments, take multiple actions when programs and activities are identified as susceptible to significant improper payments, and annually report information on their improper payments monitoring and minimization efforts. The Department has not itself identified any programs or activities susceptible to significant improper payments.

The Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and the Department’s commitment to continuous improvement in the overall disbursement management process remains high. Each of the Department’s payment offices have implemented policies and procedures to detect and prevent improper payments. For FY 2022 and beyond, the Department will continue its efforts to ensure the integrity of its disbursements.

PAYMENT INTEGRITY INFORMATION ACT (PIIA) OF 2019 AND RELATED OMB GUIDANCE

PIIA was signed into law on March 2, 2020 with one intention being to serve as a more comprehensive Public Law for payment integrity legislation.

Office of Management and Budget Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control (July 15, 2016), Appendix C, Requirements for Payment Integrity Improvement (March 5, 2021) contains guidance to federal agencies related to PIIA. 

OMB is currently developing a toolkit document to further assist agencies achieve PIIA compliance and further assist agency Inspector Generals evaluate and report on PIIA compliance.

DEPARTMENT OF COMMERCE PAYMENT INTEGRITY ANNUAL REPORTING

The Department’s FY 2021 Agency Financial Report, Other Information (Unaudited) section, Payment Integrity, at the following web link
https://www.commerce.gov/ofm/publications/agency-financial-reports, refers readers to Departmental Payment Integrity information included at PaymentAccuracy.gov. This website is a centralized location to publish information about U.S. government improper payments made to individuals, organizations, and contractors. This website also provides a centralized place where suspected incidents of fraud, waste, and abuse can be reported, and contains information about (1) current and historical rates and amounts of improper payments; (2) why improper payments occur; and (3) what agencies are doing to reduce and recapture improper payments.

Additionally, PaymentAccuracy.gov contains the Department’s data for overpayments identified in FY 2021 and overpayments verified as recaptured in FY 2021, through all sources. The website also contains information about the results of improper payment statistical sampling and estimation performed in FY 2021, and other Departmental payment integrity and fraud-related information, including information from prior fiscal years.

DEPARTMENT OF COMMERCE KEY PAYMENT INTEGRITY EFFORTS

Improper Payments Risk Assessment Process

The Department annually assesses the effectiveness of internal control over financial reporting, in compliance with OMB Circular A-123, Appendix C. Furthermore, as scheduled, the assessment includes reviews of internal controls over various disbursement processes. The most recent reviews performed indicated that internal controls over various disbursement processes were sound.

Each of the Department’s bureaus/reporting entities periodically completes or updates, over a one to three-year period (depending on the size of the entity), improper payments risk assessments covering all of its programs/activities as required by OMB Circular A-123, Appendix C. These improper payments risk assessments of the entity’s programs/activities also incorporate improper payments risk assessments every three years of the control, procurement, and grants management environments.

Improper Payments and Recaptures of Improper Payments

The Department has extensive payment integrity monitoring, minimization, recapturing, and corrective actions efforts in place, including the identification of improper payments through bureau post-payment reviews, the Department’s Office of Inspector General (OIG) audits or reviews, Single Audit Act audits of grants/cooperative agreements, other grants/cooperative agreements audits or reviews, contract closeout reviews, grants/cooperative agreements closeout reviews, other audits or reviews, and sample reviews of Department-wide sustained disallowed costs.

The Department’s bureaus report improper payments and related recaptures information (recaptures information for improper payments of $10 thousand or more) to the Department’s Office of Financial Management (OFM) on a quarterly basis. OFM then tracks the improper payments of $10 thousand or more that have not been fully recaptured, and periodically throughout the fiscal year requests updates from the responsible bureaus on tracked, unrecaptured improper payments.

OMB Circular A-123, Appendix C provides guidance for agencies to determine if cost-effective payment recapture audits can be performed. The Department had been performing from 2005 through June 2017, primarily with contractor assistance, annual payment recapture audits of contracts/obligations for many of the Department’s bureaus/ reporting entities on a rotational basis. Annual payment recapture auditing was additionally performed by a contractor, effective 2011, for Department-wide grants and other cooperative agreements (i.e., financial assistance). In March 2018, the Department completed a cost/benefit analysis for contracts/obligations and for grants and other cooperative agreements and determined that it was not able to conduct a cost-effective payment recapture audit program (one in which the benefits, including recaptured amounts, exceed the costs) for the above noted categories. The Department continues to periodically evaluate if there are any categories of disbursements for which payment recapture auditing could be or could become cost-effective.

Improper Payments Statistical Sampling and Estimation Process

On February 9, 2018, the President signed into law the Bipartisan Budget Act of 2018, which included supplemental appropriations to many federal agencies for disaster relief purposes. The Economic Development Administration (EDA) was appropriated $600.0 million and the National Oceanic and Atmospheric Administration (NOAA) was appropriated $400.1 million.

For FY 2021, the Department was required to submit statistical sampling and estimation plans to OMB and perform statistically valid sampling for FY 2020 disbursements of the above noted disaster relief funds received by both EDA and NOAA, because the FY 2020 disbursements of these funds for each bureau exceeded $10.0 million. The Department complied with all requirements through the services of a contractor. In FY 2022, the Department will perform the same process for EDA and NOAA FY 2021 disbursements of these funds.

WHAT IS AN IMPROPER PAYMENT?

Excerpt from OMB Circular A-123, Appendix C:

Department of Commerce Note: In below excerpt, “IP” means improper payment; and UP means unknown payment.

I. Payment Types

For purposes of PIIA implementation, all program outlays will fall in one of three possible payment type categories: proper payment; IP; or UP. At a high level, a payment is ‘proper’ if it was made to the right recipient for the right amount, a payment is ‘improper’ if it was made in an incorrect amount or to the wrong recipient, and for instances where an agency is unable to determine whether the payment falls into the proper or improper category that payment should be considered an ‘unknown’ payment. Programs should use reasonableness when deciding which of the three buckets a payment falls into.

A. Types of Improper Payments

All IPs will fall into one of two categories: (1) IPs resulting in a monetary loss or (2) IPs that do not result in a monetary loss. The monetary loss IPs have an overpayment amount that, in theory, should/could be recovered whereas the non-monetary loss IPs do not have any associated transfer of Federal funds that were in excess and therefore cannot be recovered.