DOD Financial Management: Significant Improvements Needed in Efforts to Address Improper Payment Requirements

Abstract : DOD reported $1.1 billion in improper payments for fiscal year 2011, which marked the eighth year of implementation of IPIA, as well as the first year of implementation of IPERA. IPIA required executive branch agencies to annually identify programs and activities susceptible to significant improper payments, estimate the amount of improper payments for such programs and activities, and report these estimates along with actions taken to reduce them. IPERA amended IPIA and expanded requirements for recovering overpayments across a broad range of federal programs. GAO was asked to review the progress DOD has made to identify, estimate, and reduce improper payments. GAO s objective was to review the extent to which DOD has implemented key provisions of IPIA, IPERA, and OMB guidance. GAO reviewed improper payment requirements; analyzed agency financial reports, internal guidance and plans, and sampling methodologies; and interviewed cognizant officials. The scope for this engagement was DOD s reported improper payment information for fiscal year 2011 and DOD s plans and actions to estimate commercial pay improper payments for fiscal year 2012. GAO is making 10 recommendations to improve DOD s processes to identify, estimate, reduce, recover, and report on improper payments. DOD concurred with 9 and partially concurred with 1 of the recommendations and described its plans to address them.