May 12, 2015 —
We determined whether DoD complied with Public Law No. 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). The audit was required by Public Law 111-204.
The Under Secretary of Defense (Comptroller/Chief Financial Officer) for DoD (USD[C]/CFO) published the DoD FY 2014 Agency Financial Report showing that DoD met five of the six requirements of the IPERA; however, the improper payment estimates were not reliable. Specifically, DoD:
- published an Annual Financial Report;
- conducted program specific risk assessments;
- published corrective action plans;
- published improper payment estimates;
- and reported improper payment rates of less than 10 percent.
However, DoD could not ensure that all required payments were reviewed, which resulted in unreliable estimates and rates. Furthermore, DoD did not meet the requirement to achieve the reduction target for the DoD Travel Pay program. As a result, DoD did not comply with IPERA in FY 2014.
We recommend that the USD(C)/CFO, coordinate with the Director, Office of Management and Budget (OMB), to review the DoD Travel Pay program and determine reauthorization proposals or proposed statutory changes that are necessary to bring the program into compliance with Public Law 111-204, and, in coordination with DoD Components, develop stratified sample designs for each DoD payment program that currently uses a simple sample design.
We recommend that the Assistant Secretary of the Navy (Financial Management and Comptroller) evaluate Navy commands for risk of improper payments before excluding them from improper payment testing. We also recommend that the Director, Defense Health Agency, subject all payments to improper payment sampling for those contracts identified as at risk for improper payments.
Management Comments and Our Response
The Deputy Chief Financial Officer, responding for the USD(C)/CFO, did not address the specifics of the recommendations to review the DoD Travel Pay Program and to develop stratified sample designs. The Assistant Secretary of the Navy (Financial Management and Comptroller) did not respond because we redirected a recommendation to the Assistant Secretary after we issued the discussion draft. The Deputy Chief Financial Officer, responding for the Director, Defense Health Agency, addressed all specifics of the recommendation to subject all payments to improper payment sampling. We request additional comments from USD(C)/CFO and from the Assistant Secretary of the Navy (Financial Management and Comptroller).
This report is a result of Project No. D2015-D000CJ-0071.000.