Objective
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” (IPERA), July 22, 2010. The audit was required by the 2010 Act.
Finding
The Under Secretary of Defense (Comptroller)/ Chief Financial Officer, DoD (USD(C)/CFO), published the DoD FY 2015 Agency Financial Report (AFR) showing that DoD met five of the six requirements of IPERA; however, we determined that the improper payment estimates were not reliable. Specifically, DoD:
- published an AFR;
- conducted program‑specific risk assessments;
- published corrective action plans; however, DoD excluded required information for four payment programs;
- published improper payment estimates; however, DoD could not ensure that all required payments were reviewed, which resulted in unreliable estimates and rates; and
- reported improper payment rates of less than 10 percent.
DoD did not meet the requirement to achieve the reduction target for one of the eight payment programs with established targets, and therefore did not comply with IPERA in FY 2015. Specifically, DoD did not meet the reduction target for the DoD Travel Pay program for the fourth consecutive year. According to the DoD FY 2015 AFR, DoD Travel Pay errors occurred because of administrative errors, traveler input errors, and inadequate reviews by approving officials. As a result of the DoD Travel Pay program errors, DoD did not achieve the improper payment reductions intended in IPERA for the DoD Travel Pay program.
Recommendations
We recommend the USD(C)/CFO:
- Coordinate with the reporting activities to ensure future AFRs contain all required improper payment reporting information.
- Determine the source of all disbursed obligations not reviewed for improper payments and whether those disbursements are subject to improper payment reporting requirements.
- Coordinate with DoD components to develop sample designs that are stratified by an appropriate variable for each DoD payment program that currently uses a simple random sample design.
- Coordinate with the Directors of the Office of Management and Budget and the Defense Finance and Accounting Service to review the DoD Travel Pay program and determine reauthorization proposals or proposed statutory changes that are necessary to bring the mandatory program into compliance, and submit a report to Congress as required by Public Law 111-204.
Management Comments and Our Response
The Deputy Chief Financial Officer, responding for the USD(C)/CFO, agreed with all recommendations and addressed all specifics of the recommendations. No further comments are required.
This report is a result of Project No. D2016-D000CJ-0039.000.