March 13, 2013 —
What We Did
We determined whether the DoD complied with Public Law 107-300, “Improper Payments Information Act of 2002,” November 26, 2002, as amended by Public Law 111-204, “Improper Payments Elimination and Recovery Act of 2010,” July 22, 2010 (IPERA). We reviewed the DoD reporting in the “FY 2012 Agency Financial Report” (AFR), Addendum A, “Other Accompanying Information.”
What We Found
The Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD (USD[C]/CFO) published the FY 2012 AFR showing that the DoD met five of the six requirements of the IPERA. Specifically, the DoD:
- published an AFR,
- conducted program specific risk assessments;
- published improper payment estimates;
- published corrective action plans; and
- reported improper pay rates of less than 10 percent.
The DoD did not meet the established reduction target for one of its eight payment programs, Defense Finance and Accounting Service (DFAS) Travel Pay.
The USD(C)/CFO set a FY 2012 reduction target for DFAS Travel Pay at 3.27 percent in the DoD FY 2011 AFR. However, the actual improper payments reported in the DoD FY 2012 AFR for DFAS Travel Pay were 5 percent of total outlays, or $419.3 million. This occurred because authorizing officials’ reviews of travel vouchers were not adequate to prevent improper payments. As a result, improper payments increased in travel, and the DoD did not achieve the improper payment reductions intended in IPERA for DFAS Travel Pay or fully comply with IPERA in FY 2012.
The USD(C)/CFO made other program improvements during FY 2012; including using statistical sampling of contract and vendor payments, as well as reviewing additional military health benefit programs that had previously not been included in IPERA reviews. However, other challenges remained, including $12.3 billion in outlays that were not reviewed for improper payments but should have been. As a result, the USD(C)/CFO did not provide accurate improper payment estimates.
What We Recommend
We recommend that the Under Secretary of Defense (Comptroller)/Chief Financial Officer:
- work with Military Departments and Defense Agencies to develop metrics and quality assurance goals as well as programmatic corrective action plans for authorizing/certifying officials who certify vouchers that result in an improper payment, including holding those officials financially liable where appropriate;
- and submit a remediation plan as required by IPERA.
Management Comments and Our Response
The Deputy Chief Financial Officer provided comments in response to this report. Management comments were responsive to the recommendations.
This report is a result of Project No. D2013-D000DC-0034.000.