GAO-24-107482: Improper Payments: Key Concepts and Information on Programs with High Rates or Lacking Estimates
Summary
GAO-24-107482, Improper Payments: Key Concepts and Information on Programs with High Rates or Lacking Estimates, a Government Accountability Office Q&A report to the Subcommittee on Legislative Branch, Committee on Appropriations, House of Representatives, dated June 27, 2024. It is GAO's sixth quarterly report under House Report 117-389 and sets out requirements and key concepts for identifying, estimating and reporting improper payments under the Payment Integrity Information Act of 2019. It states that agencies reported estimated improper payment rates of 10 percent or higher for 16 of the 71 programs with fiscal year 2023 estimates. Agencies did not develop and report fiscal year 2023 estimates as required for nine risk-susceptible programs.
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U.S. Government Accountability Office
Improper Payments: Key Concepts and
Information on Programs with High Rates or
Lacking Estimates
GAO-24-107482
Q&A Report to the Subcommittee on Legislative Branch, Committee on Appropriations,
House of Representatives
June 27, 2024
Why This Matters Improper payments are a long-standing and significant problem in the federal
government. Since fiscal year 2003, federal executive agencies (referred to in
this report as agencies) have reported cumulative improper payment estimates of
about $2.7 trillion, including $236 billion for fiscal year 2023. The Payment
Integrity Information Act of 2019 (PIIA) requires agencies to manage improper
payments by, among other things, identifying risks, taking corrective actions, and
estimating and reporting on improper payments in programs and activities
(referred to in this report as programs per Office of Management and Budget
(OMB) guidance) they administer. Understanding the requirements and related
key concepts is important to more effectively managing improper payments.
Estimating improper payments is a key step in helping agencies identify root
causes and develop effective corrective actions. Agencies that fail to properly
develop estimates for risk-susceptible programs as required may not be able to
determine the extent to which improper payments occur. Further, without these
estimates, agencies may not be able to assess whether corrective actions are
leading to reductions in improper payments.
House Report 117-389, which accompanied the Legislative Branch
Appropriations Act, 2023 (Pub. L. No. 117-328, Div. I, 136 Stat. 4913), includes a
provision for GAO to provide quarterly reports on improper payments. This is our
sixth such report. This report provides information related to requirements,
standards, and guidance on identifying, estimating, and reporting improper
payments. Additionally, we discuss programs for which agencies reported fiscal
year 2023 estimated improper payment rates of 10 percent or higher, as well as
those for which agencies failed to report fiscal year 2023 estimates as required.
Key Takeaways • Agencies are required to report improper payment estimates for those
programs they have identified as risk-susceptible. Reliable estimates are
helpful for understanding and addressing financial vulnerabilities and for
assessing the effectiveness of corrective actions. The causes of improper
payments can range from unintentional administrative errors to the willful
misrepresentation inherent in fraud.
• Agencies reported estimated improper payment rates of 10 percent or higher
for 16 of the 71 programs with reported estimates for fiscal year 2023. The
reported rates for 10 of these programs have exceeded 10 percent for at
least 2 consecutive years.
• Agencies did not develop and report fiscal year 2023 improper payment
estimates as required for nine risk-susceptible programs. These agencies
Page 1 GAO-24-107482 Improper Payments
cited various reasons for this, including statutory limitations, suspension of
certain reviews during the COVID-19 pandemic, and lack of supporting
documentation.
What are improper Payments that should not have been made or that were made in an incorrect
payments? amount (including overpayments and underpayments) under statutory,
contractual, administrative, or other legally applicable requirements are
considered improper. They include any payment to an ineligible recipient, any
payment for an ineligible good or service, any duplicate payment, any payment
for a good or service not received (except where authorized by law), and any
payment that does not account for credit for applicable discounts. 1 Executive
branch agencies also treat any payment that cannot be determined to be proper,
due to lacking or insufficient documentation, as improper. 2
Under PIIA, agencies are required to review all programs that annually spend
more than $10 million, and to develop and report improper payment estimates for
those that may be susceptible to significant improper payments. OMB provides
guidance for agencies to use when identifying the types of improper payments. 3
According to this guidance
• overpayments are payments in excess of what is due, and for which the
excess amount, in theory, should or could be recovered; 4
• underpayments are those in which recipients did not receive the funds they
were due;
• unknown payments are those that an agency cannot determine to be either
proper or improper because of insufficient or lack of documentation; and
• technically improper payments are those in which recipients received the
correct amount of funds they were due, but the payment failed to meet all
regulatory or statutory requirements or both.
Figure 1 provides a breakdown of agencies’ fiscal year 2023 reported improper
payment estimates by type.
Figure 1: Agency-Reported Fiscal Year 2023 Improper Payment Estimates by Type (Totaling
$235.8 Billion)
Note: Office of Management and Budget guidance defines unknown payments as those that an agency cannot
determine to be either proper or improper because of insufficient or lack of documentation.
It should be noted that the fiscal year 2023 improper payment estimates do not
include certain programs that agencies have determined are susceptible to
significant improper payments. As a result, the government-wide total potentially
Page 2 GAO-24-107482 Improper Payments
does not represent the full extent of improper payments. For example, the $236
billion total does not include the Department of Health and Human Services’
(HHS) Temporary Assistance for Needy Families (TANF) program. HHS reported
that it does not have the authority to obtain the information it needs to estimate or
report improper payment amounts for this program. In April 2022, we
recommended that Congress consider providing HHS the authority to require
states to report the data the agency needs to estimate and report on improper
payments for TANF. 5 As of June 2024, Congress has not acted on this
recommendation.
What causes improper The causes of improper payments can range from unintentional administrative
payments? errors to fraud. An error could include a situation where an agency failed to
obtain a required signature in a contract prior to payment. While the payment
may have been made to the right recipient for the right amount, the payment
would be improper because the agency failed to follow the applicable statute or
regulation requiring the signature. In the case of fraud, the recipient engages in
intentional misrepresentation to obtain the payment. For example, an individual
may use a fake or stolen identity to apply for and receive unemployment benefits.
In this case, the recipient is ineligible, and any payments received would be
improper as a result.
PIIA requires agencies to describe the causes of improper payments in programs
for which they report estimates. For fiscal year 2023, OMB provided guidance for
agencies to identify causes of improper payments using the following categories:
overpayments either within or outside agency control, underpayments, unknown
payments, and technically improper payments. 6
In the case of overpayments, OMB instructs agencies to identify whether the
cause was something within or outside the agency’s control. An example of an
overpayment within an agency’s control is one resulting from an agency’s failure
to follow its own guidance. An example of an overpayment outside an agency’s
control is one resulting from an agency’s inability to access the information it
needs to validate payment accuracy.
Under PIIA, if during an improper payment review an agency is unable to
determine whether a payment was proper because of lacking or insufficient
information, it must treat the payment as improper. 7 OMB guidance refers to such
payments as unknown payments. An unknown payment could include a situation
in which an agency is required to verify income prior to issuing a payment to a
beneficiary. The agency improper payment reviewer may lack updated income
information or pay stubs from the beneficiary and may have no other way to
verify whether a change in income affecting eligibility has occurred. In this case,
the beneficiary may still be qualified to receive benefits, but the agency does not
have the necessary documentation to verify it.
Table 1 presents the improper payment estimates categorized by cause, as
reported by agencies for the 71 programs with fiscal year 2023 estimates.
Page 3 GAO-24-107482 Improper Payments
Table 1: Agency-Reported Improper Payment Causes and Estimates for Fiscal Year 2023
Amount Percentage
(dollars in of all
Payment type Cause category millions) estimatesa
Overpayments Data/information needed to validate payment 31 0b
within agency accuracy prior to making payment does not exist
control Inability to access data/information needed to 95 0b
validate payment accuracy prior to making payment
Failure to access data/information needed to 30,179 13
validate payment accuracy prior to making payment
Overpayments Inability to access data/information needed to 14,749 6
outside agency validate payment accuracy prior to making payment
control
Data/information needed to validate payment 22,954 10
accuracy prior to making payment does not exist
Failure to access data/information needed to 107,045 45
validate payment accuracy prior to making payment
Underpayments Data/information needed to validate payment 331 0b
accuracy prior to making payment does not exist
Inability to access data/information needed to 485 0b
validate payment accuracy prior to making payment
Failure to access data/information needed to 10,724 5
validate payment accuracy prior to making payment
Unknown Insufficient or lack of documentation from vendor or 464 0b
payments provider
Unknown payment caused by scenario not 557 0b
previously specified
Insufficient or lack of documentation from states 21,757 9
Insufficient or lack of documentation for eligibility by 21,818 9
applicants
Technically Office of Management and Budget guidance does 4,586 2
improper not include cause category for technically improper
payments payments
Source: GAO analysis of Office of Management and Budget PaymentAccuracy.gov data. | GAO-24-107482
Note: Percentage column does not sum to 100 percent due to rounding. Payment type and cause category are
defined by the Office of Management and Budget in guidance (M-21-19) provided to agencies on reporting
improper payments. For fiscal year 2023, OMB instructed agencies to identify a cause category for the payment
using the following: Unable to Determine whether Proper or Improper, Data/Information Needed Does Not Exist,
Inability to Access Data/Information, or Failure to Access Data/Information.
a
The percentage of all estimates is based on the total of improper and unknown payment estimates on
PaymentAccuracy.gov.
Numbers shown as 0 due to rounding.
b
How do agencies Agencies generally estimate a program’s improper payments by selecting a
estimate improper sample of payments and reviewing them to determine whether they were proper.
payments? Agencies typically then use the results of their analysis of this sample to
statistically project, or estimate, the improper payment rate for the program.
PIIA requires that agencies produce a statistically valid estimate or an estimate
that is otherwise appropriate using an OMB-approved methodology. 8 According
to OMB guidance, a statistically valid estimate is a point estimate (a single value)
within a confidence interval (a range of possible values). 9 Agencies reported that
they met the requirements for statistically valid estimates for 65 of the 71
programs with reported estimates for fiscal year 2023.
Sampling time frames are important for interpreting improper payment estimates.
Estimates derived from old data may not reflect the effects of recent program
changes or corrective actions. 10 For example, according to HHS, states were
Page 4 GAO-24-107482 Improper Payments
given certain flexibilities during COVID-19 that affected Medicaid improper
payment reviews. Flexibilities included suspending eligibility determinations and
reducing requirements for provider enrollment revalidations. HHS cited these
flexibilities as a reason for the decrease in Medicaid estimated improper
payments reported for fiscal year 2023 compared to fiscal year 2022. 11 To
calculate the Medicaid estimate, HHS computes an annual rolling average of
improper payment rates across all states based on a 3-year rotation cycle of 17
states each year. While COVID-19 flexibilities expired in fiscal year 2023, they
will continue to impact the Medicaid estimates until fiscal year 2025 because the
estimate is based on a 3-year rolling average.
Some estimates, including those for Medicaid, are based on processes that
agencies have designed specifically for estimating improper payments. In other
cases agencies leverage existing quality assurance or other processes to
estimate improper payments in programs. For example, the Department of the
Treasury uses the Internal Revenue Service’s National Research Program to
estimate Earned Income Tax Credit improper payments. The program conducts
detailed audits of a statistically representative sample of taxpayers to estimate
compliance with individual income tax provisions.
Is an improper payment No. While all fraudulent payments are considered improper, not all improper
estimate an estimate of payments are due to fraud. For example, payments may be determined to be
fraud? improper due to error or lack of documentation. Fraud-related improper
payments, however, involve individuals or entities intentionally or knowingly
providing false information. 12
While improper payments could suggest that a program may be vulnerable to
fraud, PIIA improper payment estimates are not intended to reflect the extent of
fraud in a program. OMB guidance M-21-19 identifies two distinct categories of
monetary loss improper payments (overpayments)—those that are intentional
and those that are unintentional. Intentional improper payments are more
commonly referred to as financial fraud and are overpayments that occur based
on willful misrepresentation. Unintentional improper payments are overpayments
that are accidental in nature because at the time of the payment the program is
unaware that the payment is an overpayment, and the recipient has also not
purposefully falsified information for gain.
OMB guidance M-21-19 states that agencies may only report their improper
payments as intentional after the amount is determined to be fraudulent through
the adjudication process. The guidance further states that agencies’
methodologies for estimating improper payments do not need to be designed to
measure financial fraud.
In April 2024, we estimated that the government loses $233 billion to $521 billion
annually in fraud based on data from fiscal years 2018 through 2022. 13 Our
estimate of fraud and improper payments estimates differ in two key ways:
• The scope of programs included in the estimate. Our April 2024 estimate
of fraud reflects fraud loss associated with direct federal spending in
programs and operations government-wide. By contrast, improper payment
estimates are required only for programs that agencies have determined are
susceptible to significant improper payments. For fiscal year 2023, 14
agencies reported improper payment estimates for 71 programs that totaled
about $236 billion.
• The estimation methodology used. We based our April 2024 fraud
estimate on both adjudicated and potential fraud, which we extrapolated to
determine the probable range of undetected fraud. We developed this
approach to help account for the uncertainties associated with fraud
Page 5 GAO-24-107482 Improper Payments
determination. Conversely, improper payment estimates are based on
reviews of a statistically valid sample of payments. While the reviews can be
rigorous, they are not designed to identify fraud, particularly schemes that
cannot be easily detected. For example, improper payment reviews include
checking whether certain documentation is present, but they are not designed
to identify falsified documentation.
Why are improper Reliable improper payment estimates are helpful for understanding and
payment estimates addressing financial vulnerabilities, as well as assessing the effectiveness of
useful? corrective actions. From an internal control perspective, improper payment
estimation is an example of a separate evaluation that helps program
managers—and the federal government—understand the scope of the problem
and measure the effectiveness of internal controls in addressing improper
payment risks. 14 Through the estimation process, agencies establish the baseline
against which progress—in the form of reductions in future estimates—is
assessed.
Estimating improper payments is especially important for emergency assistance
programs, where the risk of improper payments is higher. GAO’s Framework for
Managing Improper Payments in Emergency Assistance Programs states that
agencies should ensure that the estimate’s methodology incorporates such risk
factors as whether the program is new or has received increased funding,
whether there are time constraints for spending, and whether changes were
made to existing program eligibility rules. 15
What responsibilities Under PIIA, an agency is required to report an annual estimate when the
do agencies have to agency’s risk assessment determines that a program may be susceptible to
report their improper significant improper payments. PIIA defines significant improper payments as
payment estimates? those that, in the preceding fiscal year, may have exceeded either (1) $100
million or (2) $10 million plus 1.5 percent of the total amount of program outlays.
PIIA requires agencies to conduct improper payment risk assessments for each
of their programs at least once every 3 fiscal years.
Under OMB guidance, agencies should complete improper payment risk
assessments on programs after the first 12 months of operation. Programs that
are determined to be susceptible to significant improper payments must develop
and report improper payment estimates, including root causes and corrective
actions. OMB advises agencies to begin reporting such information in the year
following the fiscal year in which the initial risk assessment determination was
made.
At times, Congress has required estimates for certain programs. For example,
the supplemental appropriations acts that provided disaster relief following the
2017 hurricanes and California wildfires required agencies to deem all programs
that received these funds and expended more than $10 million in any one fiscal
year susceptible to significant improper payments. Agencies were therefore
automatically required to report improper payment estimates for these programs,
without needing to conduct a risk assessment first.
We have made numerous recommendations to Congress to help reduce
improper payments government-wide. For example, in March 2022, we
recommended 10 matters for congressional consideration to enhance
transparency and accountability of federal spending. 16 These matters included
designating all new federal programs making more than $100 million in payments
in any one fiscal year as susceptible to improper payments and establishing a
permanent data analytics center of excellence to aid the oversight community in
Page 6 GAO-24-107482 Improper Payments
identifying improper payments and fraud. As of June 2024, these 10 matters
remain open.
Are improper payment No. While PIIA requires agencies to include improper payment estimates in the
estimates part of materials accompanying their financial statements, these materials are outside
agencies’ audited the scope of the financial statement audit opinion. 17
financial statements? Agency inspectors general (IG) review improper payment estimates as part of
their annual reports on their respective agencies’ compliance with applicable PIIA
criteria. Per OMB guidance, the compliance reports are due within 180 days
following publication of an agency’s financial statements.
PIIA requires the Council of the Inspectors General on Integrity and Efficiency
(CIGIE) to develop guidance specifying procedures for IG’s compliance
determinations. PIIA requires that this guidance include a requirement that IGs
evaluate the accuracy of improper payment rate estimates for risk-susceptible
programs and whether the sampling and estimation plan used is appropriate for
the program. For example, CIGIE’s guidance states that when determining
compliance, IGs should evaluate whether the program improper payment rate
estimates are accurate. 18 This might include sampling and testing an agency’s
documentation to determine whether the information is suitable for developing a
statistical estimate. It might also include ensuring that mathematical formulas are
correct and that an appropriate statistical process was used.
What responsibilities Under PIIA, in each year an agency is found noncompliant with the applicable
do agencies have if criteria, it must submit to the appropriate authorizing and appropriations
found noncompliant committees of Congress a plan describing the actions it will take to come into
with PIIA criteria? compliance (see table 2). Additional reporting requirements take effect if an
agency is found noncompliant with the criteria for the same program for
consecutive years. These requirements are the same regardless of the reason
for noncompliance (e.g., the agency failed to conduct risk assessments). OMB
directs agencies to report plans describing actions they will take to come into
compliance on PaymentAccuracy.gov. This U.S. government website is
managed by OMB and provides current and historical improper payment data.
Page 7 GAO-24-107482 Improper Payments
Table 2: Reporting Requirements for Agencies Found Noncompliant with Payment Integrity
Information Act of 2019 Criteria
Years of
noncompliance Requirement
For each year of Agency shall submit to appropriate authorizing and appropriations
noncompliance, committees a plan describing the actions that the agency will take to come
including year 1 into compliance, including
• measurable milestones to be accomplished to achieve compliance for
each program;
• designation of a senior agency official who shall be accountable for
agency progress in coming into compliance for each program; and
• establishment of an accountability mechanism, such as a performance
agreement, with appropriate incentives and consequences tied to the
success of the senior agency official in leading the efforts of the agency
to come into compliance for each program.
2 consecutive Agency shall provide to the Office of Management and Budget (OMB)
additional program integrity proposals and work with OMB to obligate
additional funding, if needed, to intensify compliance efforts.
3 consecutive Within 30 days of the noncompliance determination, agency shall submit to
appropriate authorizing and appropriations committees, OMB, and the
Comptroller General of the United States
• reauthorization proposals for each program that has not been in
compliance for 3 or more consecutive fiscal years and
• proposed statutory changes needed to bring the program into
compliance or
• if the agency determines the above actions will not bring the program
into compliance, a description of the actions the agency is taking to
come into compliance and timeline for when compliance will be
achieved.
4+ consecutive Within 30 days of the noncompliance determination, agency shall submit to
appropriate authorizing and appropriations committees, and OMB
• the activities taken to comply with the requirements for 1, 2, 3, or 4+
years of noncompliance;
• a description of any requirements that were fulfilled for 1, 2, 3, or 4+
consecutive years of noncompliance that are still relevant and being
pursued as a means to bring the program into compliance and prevent
and reduce improper payments;
• a description of any new corrective actions; and
• a timeline for when the program will achieve compliance based on the
actions described within the report.
Source: Payment Integrity Information Act of 2019 and OMB M-21-19. | GAO-24-107482
Following enactment of PIIA in fiscal year 2020, OMB instructed agencies to
report for that year under the prior law and under PIIA beginning in fiscal year
2021. In fiscal year 2024, IGs will issue their third compliance reports since
agencies began reporting under PIIA.
How many programs Sixteen programs reported estimated improper payment rates of 10 percent or
reported improper higher for fiscal year 2023 (see table 3).
payment rates of 10
percent or higher?
Page 8 GAO-24-107482 Improper Payments
Table 3: Agency-Reported Improper Payment Estimates and Rates for Programs with Rates
10 Percent or Higher for Fiscal Year 2023
Improper
Program payment Improper
outlays estimate payment
(dollars in (dollars in rate
Agency Program millions) millions) (percent)
Corporation for Senior Companion Program 34.4 5.4 15.6
National and
Community Service
Department of Farm Service Agency – 85.1 34.4 40.4
Agriculture Emergency Conservation
Program – Disasters
Farm Service Agency – Livestock 1,233.6 168.6 13.7
Forage Disaster Program
Farm Service Agency – 239.9 25.1 10.5
Noninsured Crop Disaster
Assistance Program
Food and Nutrition Services – 75,987.0 8,773.1 11.6
Supplemental Nutrition
Assistance Program
Department of Centers for Medicare & Medicaid 16,670.3 2,135.6 12.8
Health and Human Services – Children’s Health
Services Insurance Program
Department of Labor Employment & Training 28,149.3 4,635.7 16.5
Administration – Federal State
Unemployment Insurance
Employment & Training 121,202.9 43,551.1 35.9
Administration – Unemployment
Insurance – Federal Pandemic
Unemployment Assistance
Department of the Internal Revenue Service – 3,771.6 546.1 14.5
Treasury Additional Child Tax Credit
Internal Revenue Service – 5,220.9 1,651.4 31.6
American Opportunity Tax Credit
Internal Revenue Service – 65,375.3 21,881.1 33.5
Earned Income Tax Credit
Internal Revenue Service – 3,679.6 958.2 26.0
Premium Tax Credit
Department of Pension 3,862.3 419.3 10.9
Veterans Affairs Purchased Long Term Services 3,662.3 1,418.0 38.7
and Supports
Small Business Paycheck Protection Program – 46,281.0 18,738.3 40.5
Administration Loan Forgiveness
Paycheck Protection Program – 8,274.2 4,066.5 49.2
Loan Guarantee Purchases
Source: GAO analysis of Office of Management and Budget PaymentAccuracy.gov data. | GAO-24-107482
Note: Improper payment estimates and rates displayed in the table include both improper and unknown
payments as reported on PaymentAccuracy.gov. Executive agency estimates of improper payments also treat
as improper any payments whose propriety cannot be determined due to lacking or insufficient documentation.
Agencies report payment integrity information in their annual agency financial reports or performance and
accountability reports and on PaymentAccuracy.gov. Consult these sources for additional agency-reported
information, including estimated improper and unknown payment amounts and rates, root causes, and
corrective actions.
Page 9 GAO-24-107482 Improper Payments
How many programs Ten of the 16 programs that reported improper payment rates of 10 percent or
have reported improper higher in fiscal year 2023 have done so for consecutive years. Two of these
payment rates of 10 programs reported rates of 10 percent or higher for 2 consecutive years, and
percent or higher for eight programs have done so for 3 consecutive years, or since PIIA was enacted.
Table 4 shows estimated improper payment rates reported by agencies for the
consecutive fiscal
last 3 fiscal years for programs with reported estimates of 10 percent or higher
years? for fiscal year 2023.
Table 4: Estimated Improper Payment Rates Reported for Fiscal Years 2021 through 2023 for
Programs Reporting Rates of 10 Percent or Higher for Fiscal Year 2023
Fiscal year estimated
improper payment rate
(percent)
Agency Program 2023 2022 2021
Corporation for National Senior Companion Program 15.6 26.2 20.4
and Community Service
Department of Farm Service Agency – Emergency 40.4 29.2 13.5
Agriculture Conservation Program – Disasters
Farm Service Agency – Livestock 13.7 9.3 8.0
Forage Disaster Program
Farm Service Agency – Noninsured 10.5 9.5 12.3
Crop Disaster Assistance Program
Food and Nutrition Services – 11.6 NR NR
Supplemental Nutrition Assistance
Program
Department of Health Centers for Medicare & Medicaid 12.8 26.8 31.8
and Human Services Services – Children’s Health Insurance
Program
Department of Labor Employment & Training Administration 16.5 22.2 18.9
– Federal State Unemployment
Insurance
Employment & Training Administration 35.9 NR NR
– Unemployment Insurance – Federal
Pandemic Unemployment Assistance
Department of the Internal Revenue Service – Additional 14.5 15.8 13.3
Treasury Child Tax Credit
Internal Revenue Service – American 31.6 36.1 26.3
Opportunity Tax Credit
Internal Revenue Service – Earned 33.5 31.6 27.8
Income Tax Credit
Internal Revenue Service – Premium 26.0 27.4 NR
Tax Credit
Department of Veterans Pension 10.9 11.7 7.8
Affairs Purchased Long Term Services and 38.7 47.5 72.8
Supports
Small Business Paycheck Protection Program – Loan 40.5 NR NR
Administration Forgiveness
Paycheck Protection Program – Loan 49.2 NR NR
Guarantee Purchases
Legend: NR = Not reported. A designation of NR may be due to a program’s lack of reporting requirement for
that fiscal year, not failure to report.
Source: GAO analysis of Office of Management and Budget PaymentAccuracy.gov data. | GAO-24-107482
Note: Improper payment rates displayed in the table include both improper and unknown payments as reported
on PaymentAccuracy.gov. Executive agency estimates of improper payments also treat as improper any
payments whose propriety cannot be determined due to lacking or insufficient documentation. Agencies report
payment integrity information in their annual agency financial reports or performance and accountability reports
and on PaymentAccuracy.gov. Consult these sources for additional agency-reported information, including
estimated improper and unknown payment amounts and rates, root causes, and corrective actions.
Page 10 GAO-24-107482 Improper Payments
What were the reported According to agencies that reported improper payment rates of 10 percent or
types and causes of higher for fiscal year 2023, most of these payments were either overpayments,
improper payments for technically improper payments, or unknown payments. Agencies reported a
programs with rates of variety of causes, including being unable to verify recipient eligibility and
insufficient supporting documentation to identify a payment as proper (see table
10 percent or higher?
5).
Table 5: Most Common Types of Improper Payments Reported in Programs with Estimated Improper Payment Rates of 10
Percent or Higher for Fiscal Year 2023
Most common type
of improper
Agency and program paymentsa Cause
Corporation for National and Unknown payments Unable to prove if payment is proper or improper due to missing
Community Service: Senior documentation
Companion Program
Department of Agriculture: Farm Overpayments (within Certain program documentation not approved and filed prior to payment
Service Agency – Emergency the agency’s control) approval
Conservation Program – Disasters
Department of Agriculture: Farm Technically improper Approving officials did not follow program requirements to have
Service Agency – Livestock Forage payments essential documents filed prior to payment
Disaster Program
Department of Agriculture: Farm Technically improper Essential documents not approved, late-filing procedures not followed,
Service Agency – Noninsured Crop payments and information missing from file
Disaster Assistance Program
Department of Agriculture: Food Overpayments State eligibility determinations and state errors in providing benefits to
and Nutrition Services – (outside the agency’s recipients
Supplemental Nutrition Assistance control)
Program
Department of Health and Human Overpayments Recipient eligibility not verified and claims not properly adjudicated
Services: Centers for Medicare & (outside the agency’s
Medicaid Services – Children’s control)
Health Insurance Program
Department of Labor: Employment Overpayments Federal law requires states to make payments until an official
& Training Administration – Federal (outside the agency’s determination has been made that payments are no longer due; as a
State Unemployment Insurance control) result, payments may later be determined as improper as new
information is obtained
Department of Labor: Employment Overpayments (within Overpayments: state agencies inadequately used functions to verify
& Training Administration – the agency’s control) applicant eligibility for unemployment benefits
Unemployment Insurance – Federal and unknown Unknown payments: payment accuracy assessments unable to conduct
Pandemic Unemployment payments full review due to unavailable or insufficient information
Assistance
Department of the Treasury: Overpayments Regulatory structure of program lacks preapproval process and relies
Internal Revenue Service – (outside the agency’s on taxpayer self-certification
Additional Child Tax Credit, control)
American Opportunity Tax Credit,
Earned Income Tax Credit, Premium
Tax Credit
Department of Veterans Affairs: Overpayments (within Beneficiaries did not timely report changes in Social Security income
Pension the agency’s control)
Department of Veterans Affairs: Technically improper Contract orders for care through Community Nursing Home program
Purchased Long Term Services and payments were placed without proper authority
Supports
Small Business Administration: Unknown payments Insufficient supporting documentation
Paycheck Protection Program –
Loan Forgiveness
Small Business Administration: Unknown payments Insufficient supporting documentation
Paycheck Protection Program –
Loan Guaranty Purchases
Source: GAO analysis of Office of Management and Budget PaymentAccuracy.gov data. | GAO-24-107482
Page 11 GAO-24-107482 Improper Payments
The Office of Management and Budget provides guidance for agencies to report improper payments using these categories.
a
What corrective actions Agencies identified various corrective actions for addressing improper payments
did agencies identify in programs with estimated rates of 10 percent or higher reported for fiscal year
for causes of improper 2023. Some of these included training, technical assistance and guidance to
payments for programs states, and automation. Table 6 summarizes the corrective actions that agencies
reported on PaymentAccuracy.gov for fiscal year 2023.
with rates of 10 percent
or higher?
Table 6: Agency-Identified Corrective Actions for Programs with Reported Estimated Improper Payment Rates of 10 Percent
or Higher for Fiscal Year 2023
Agency and program Agency-identified corrective actions
Corporation for National and A Payment Integrity Corrective Action Plan working group was created in fiscal year 2022
Community Service: Senior Companion to establish corrective actions focused on reducing the agency’s improper payments. The
Program actions include enhanced trainings created in fiscal year 2022.
Department of Agriculture: Farm The agency will ensure that reviews are being completed timely and results are monitored
Service Agency – Emergency and evaluated to ensure that program policies are being followed.
Conservation Program – Disasters
Department of Agriculture: Farm Monthly training will be conducted that will focus on issues identified in improper payment
Service Agency – Livestock Forage testing. Comprehensive program training on the program and payment eligibility will be part
Disaster Program of future training. Additionally, the agency will monitor the program to identify weaknesses.
Department of Agriculture: Farm The agency will emphasize accountability to program administrators in addition to
Service Agency – Noninsured Crop conducting training at state offices, tentatively scheduled for fiscal year 2024.
Disaster Assistance Program
Department of Agriculture: Food and As corrective actions must originate in and be tailored to each state agency’s
Nutrition Services – Supplemental circumstances and particular root causes of payment error, the agency will focus on
Nutrition Assistance Program providing training and equipping state agencies with the knowledge and tools needed to
develop root cause analysis and corrective action plans.
Department of Health and Human The agency works closely with the state agencies to develop corrective action plans.
Services: Centers for Medicare & Additional improper payment mitigation strategies include enhancing training, technical
Medicaid Services – Children’s Health assistance and guidance to states, and sharing provider enrollment data with states.
Insurance Program Additionally, the agency will continue to conduct audits at the state level.
Department of Labor: Employment & The agency will continue to evaluate the effectiveness of unemployment insurance integrity
Training Administration – Federal State strategies, document best practices, and provide guidance and technical assistance to
Unemployment Insurance states to improve unemployment insurance program operations and reduce improper
payments.
Department of Labor: Employment & The agency holds meetings regularly with the Office of Inspector General to discuss
Training Administration – Unemployment emerging unemployment insurance fraud issues and antifraud measures that target high-
Insurance – Federal Pandemic risk areas. Additionally, the agency works with states to provide training and provide
Unemployment Assistance technical assistance.
Department of the Treasury: Internal The agency meets with stakeholders with the goal to increase voluntary taxpayer
Revenue Service – Additional Child Tax compliance and continues to analyze returns claiming each credit and identify
Credit, American Opportunity Tax Credit, improvement opportunities for the next filing season. Additionally, the agency continues to
Earned Income Tax Credit, Premium Tax leverage interagency data sharing to validate taxpayer refunds more accurately.
Credit
Department of Veterans Affairs: Audits will be conducted to ensure that policies and procedures are properly applied in
Pension making accurate pension rate decisions. Additionally, automation will be used for various
processes, such as verifying beneficiary reported income with other agency-reported
income.
Department of Veterans Affairs: Program system updates are being considered to assist in payment eligibility procedures.
Purchased Long Term Services and Additionally, processes are being analyzed to ensure that payments are validated prior to
Supports disbursement.
Small Business Administration: The program will continue to provide training to review staff on topics and issues related to
Paycheck Protection Program – Loan loan forgiveness, such as verification of borrower eligibility.
Forgiveness
Small Business Administration: The program will continue to provide training to review staff on topics and issues related to
Paycheck Protection Program – Loan loan guaranty purchases, such as the review of borrower certifications and supporting
Guaranty Purchases documentation.
Source: GAO analysis of Office of Management and Budget PaymentAccuracy.gov data. | GAO-24-107482
Page 12 GAO-24-107482 Improper Payments
Did agencies report all No. As noted above, PIIA requires an estimate when an agency’s risk
required improper assessment determines that a program may be susceptible to significant
payment estimates? improper payments. Agencies failed to report any improper payment estimates
for nine such programs for fiscal year 2023. Table 7 lists these nine programs
along with the reasons agencies cited for failing to report estimates.
Table 7: Agency-Identified Reasons for Not Reporting Risk-Susceptible Programs’ Improper Payment Estimates as Required
for Fiscal Year 2023
Agency and program Agency-identified reason for not reporting
Department of Agriculture: The program is in the process of developing an improper payment estimate in accordance with a
Food and Nutrition Service – Sample and Estimation Methodology Plan to be approved by the Office of Management and Budget
Summer Food Service (OMB). Data will be collected over a 5-year period that began in mid-2023.
Program
Department of Health and Program reviews were suspended at the onset of the pandemic in fiscal year 2020. Due to this
Human Services: Foster suspension, there is not enough recent data to calculate an improper payment estimate. The agency
Care will resume onsite reviews and report improper payment estimates in fiscal year 2024.
Department of Health and The agency continues to not report an improper payment estimate due to statutory limitations that do
Human Services: not require states to provide data needed to develop and report an estimate. In the President’s Budget
Temporary Assistance for request for fiscal years 2024 and 2025, the agency proposed new statutory authority to gather more
Needy Families comprehensive data on the program. According to the agency, if enacted, this proposal will enhance
monitoring of program activities and help establish an improper payment rate.
Department of Homeland According to the agency, the program had obligated over $70.59 billion for COVID-19 public assistance
Security: Federal as of November 2023. Due to the increase in assessment burden to obtain the necessary
Emergency Management documentation in verifying these obligations, improper payment rate reporting to cover fiscal year 2021
Agency Public Assistance – disbursements has been delayed until 2024. The strategic pause affected the program’s ability to
Validate As You Go coordinate the receipt of adequate documentation to fully determine the appropriateness of all fiscal
year 2021 disbursement sample transactions selected for fiscal year 2023.
Department of Housing According to the inspector general’s compliance report, a lack of proper planning and coordination from
and Urban Development: leadership in the program and support offices prevented the agency from addressing the root causes
Project-Based Rental behind the failure to report improper payment estimates. The Office of the Chief Financial Officer
Assistance (OCFO) reported to the inspector general and OMB that it is unable to complete improper payment
testing because (1) it was delayed in implementing a secure platform designed to collect supporting
data and documentation and (2) it had limited staffing resources with the technical knowledge of the
payment cycles. The compliance report also stated that the agency has been unable to test for
improper payments in its largest rental assistance programs for 7 years because it has been
unsuccessful in working with the Offices of Public and Indian Housing, Multifamily Housing Programs,
and the Chief Information Officer to securely collect program files needed to test payments. The OCFO
reported to OMB and the inspector general that it may not be able to produce estimates in these
programs until 2027.
Department of Housing According to the inspector general’s compliance report, a lack of proper planning and coordination from
and Urban Development: leadership in the program and support offices prevented the agency from addressing the root causes
Tenant-Based Rental behind the failure to report improper payment estimates. The OCFO reported to the inspector general
Assistance and OMB that it is unable to complete improper payment testing because (1) it was delayed in
implementing a secure platform designed to collect supporting data and documentation and (2) it had
limited staffing resources with the technical knowledge of the payment cycles. The compliance report
also stated that the agency has been unable to test for improper payments in its largest rental
assistance programs for 7 years because it has been unsuccessful in working with the Offices of Public
and Indian Housing, Multifamily Housing Programs, and the Chief Information Officer to securely collect
program files needed to test payments. The OCFO reported to OMB and the inspector general that it
may not be able to produce estimates in these programs until 2027.
Office of Personnel According to the inspector general’s compliance report, a risk assessment of the program was
Management: Federal conducted in fiscal year 2022 and it was determined that the agency is now required to report an
Employees Health Benefits – improper payment estimate for the program beginning fiscal year 2023. However, an improper payment
Experience Related Carriers estimate was not reported for the program on PaymentAccuracy.gov for fiscal year 2023. According to
the agency, the program has since split between two differentiated activities, which resulted in two new
risk assessments being performed in fiscal year 2023. Based on these risk assessments, one activity
was determined to be risk-susceptible and the other activity was determined to be not risk-susceptible.
As a result, an improper payment estimate was not reported in fiscal year 2023. The agency stated that
it needs time to implement the new improper payment methodology, as health insurance carriers need
to collect the data and report them to the agency.
Page 13 GAO-24-107482 Improper Payments
Agency and program Agency-identified reason for not reporting
Small Business According to the inspector general’s compliance report, in October 2023, OMB requested the agency to
Administration: Restaurant conduct further analysis on the estimation and methodology related to the COVID-19 program to ensure
Revitalization Fund compliance with the Payment Integrity Information Act of 2019 (PIIA). As a result, the program did not
publish payment integrity information in its fiscal year 2023 agency financial report. The agency stated
that it will review and report improper payment data for total programmatic outlays related to the
program and will continue oversight and review efforts of improper payment data reported in the agency
financial report and the annual OMB improper payment data call.
Small Business According to the inspector general’s compliance report, in October 2023, OMB requested the agency to
Administration: Shuttered conduct further analysis on the estimation and methodology related to the COVID-19 program to ensure
Venue Operators Grant compliance with the PIIA. As a result, the program did not publish payment integrity information in its
fiscal year 2023 agency financial report. The agency stated that it will review and report improper
payment data for total programmatic outlays related to the program and will continue oversight and
review efforts of improper payment data reported in the agency financial report and the annual OMB
improper payment data call.
Source: GAO analysis of agency annual report data. | GAO-24-107482
Agency Comments and We provided a draft of this report to the Corporation for National and Community
Our Evaluation Service (CNCS), Department of Agriculture (USDA), Department of Health and
Human Services (HHS), Department of Homeland Security (DHS), Department of
Housing and Urban Development (HUD), Department of Labor (DOL),
Department of the Treasury, Department of Veterans Affairs (VA), OMB, Office of
Personnel Management (OPM), and Small Business Administration (SBA) for
review and comment.
We received written comments from SBA, which are reprinted in appendix I and
summarized below. USDA did not provide comments on the report. CNCS, DHS,
DOL, HUD, OPM, and VA did not have any comments on the report. HHS, OMB,
and Treasury provided technical comments which we incorporated as
appropriate.
In its comments, SBA raised concerns that we report unknown payments as
improper payments. SBA stated that by reporting these payments together, our
report’s improper payment figures are inflated and could mislead the public. We
disagree. Our report’s improper payment figures present information accurately
and in accordance with PIIA. When performing improper payment risk
assessments and estimates under PIIA, executive agencies are required to treat
as improper any payments for which propriety cannot be determined due to
lacking or insufficient documentation. 19 While OMB M-21-19 refers to such
payments as unknown payments and instructs agencies to report the portion of
their improper payment estimates attributable to unknown payments separately,
the above statutory requirements related to risk assessments and estimates
apply to the total estimate. Where appropriate, we indicated in our draft and final
report that improper payment estimates and rates include both improper and
unknown payments as reported by agencies on PaymentAccuracy.gov. Further,
in our report, we identified the portion of total improper payment estimates in
fiscal year 2023 that was attributable to unknown payments (see figure 1 in the
report).
SBA also commented that our report is missing context that explains the
distinction between the different amounts of unknown and improper payments.
SBA noted that approximately 95 percent of the Paycheck Protection Program
(PPP) Loan Forgiveness improper payment estimate was composed of unknown
payments. SBA noted that, for fiscal year 2023, agencies categorized 19 percent
of reported improper payment estimates as unknown payments. SBA stated our
report did not discuss the atypical composition of the PPP Loan Forgiveness
improper payment estimate or include the emergency context that generated this
composition. However, the intent of our audit was to summarize agencies’
reported improper payment estimates and not to provide all payment integrity
Page 14 GAO-24-107482 Improper Payments
information reported by agencies for their programs. Where appropriate, we
indicated readers could consult annual agency financial reports or performance
and accountability reports, as well as PaymentAccuracy.gov, for additional
agency-reported payment integrity information, including information on root
causes and corrective actions. Further, in table 5 of the report, we identified the
most common type of improper payment for each program listed. For SBA’s PPP
program, the most common type was unknown payment due to insufficient
documentation to verify the propriety of the payments.
SBA further commented that the report would have benefitted from a coordinated
response by all agencies through OMB and that SBA was not given enough time
to coordinate with OMB or other agencies. We generally do not facilitate
coordinated responses on behalf of agencies, though OMB may choose to do so
at its discretion. While our audit was conducted over a short period—between
March 2024 and June 2024—agencies were promptly notified of our work.
Specifically, we sent notification letters to the agencies within our scope between
March 28, 2024, and April 4, 2024. 20 These letters included the subject and
source of our work, our objectives, our planned start date, and gave agencies the
opportunity to request an entrance conference.
In its comments, SBA noted its entrance conference was scheduled after the
release of the statement of facts and within a few days of its exit conference. We
sent SBA a notification letter on April 1, 2024. At SBA’s request, we held an
entrance conference on May 10, 2024—a time agreed to by both GAO and SBA.
On account of the short duration of our audit, we held our exit conference the
following week on May 17, 2024.
How GAO Did This To conduct this work, we reviewed relevant federal statutes, standards, and
Study guidance related to managing improper payments, as well as relevant GAO
reports. In addition, we reviewed agencies’ improper payment information for
fiscal years 2021, 2022, and 2023, as reported on OMB’s PaymentAccuracy.gov
website, as well as agency financial reports. We also reviewed PIIA criteria
compliance reports issued by agency IGs. We compiled and reviewed this
information to determine what root causes and corrective actions agencies
identified in programs with reported improper payment rates of 10 percent or
higher and to identify those programs that lacked required estimates for fiscal
year 2023.
The examples of federal requirements, standards, and guidance described in this
report are not intended to present a comprehensive, detailed analysis of all
existing improper payment management requirements, standards, or guidance.
We conducted this performance audit from March 2024 to June 2024 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain sufficient,
appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence
obtained provides a reasonable basis for our findings and conclusions based on
our audit objectives.
List of Addressees The Honorable David Valadao
Chairman
The Honorable Adriano Espaillat
Ranking Member
Subcommittee on Legislative Branch
Committee on Appropriations
House of Representatives
Page 15 GAO-24-107482 Improper Payments
We are sending copies of this report to the appropriate congressional committees
and the Director of the Office of Management and Budget. In addition, the report
is available at no charge on the GAO website at https://www.gao.gov.
GAO Contact For more information, contact: M. Hannah Padilla, Director, Financial
Information Management and Assurance, PadillaH@gao.gov, (202) 512-5683.
Sarah Kaczmarek, Acting Managing Director, Public Affairs,
KaczmarekS@gao.gov, (202) 512-4800.
A. Nicole Clowers, Managing Director, Congressional Relations,
ClowersA@gao.gov, (202) 512-4400.
Staff Acknowledgments: Daniel Flavin (Assistant Director), Christopher
Klemmer (Analyst in Charge), Seth Brewington, Marcia Carlsen, and Jason Kelly.
Connect with GAO on Facebook, Flickr, Twitter, and YouTube. Subscribe to our
RSS Feeds or Email Updates. Listen to our Podcasts.
Visit GAO on the web at https://www.gao.gov.
This work of the United States may include copyrighted material, details at
https://www.gao.gov/copyright.
Page 16 GAO-24-107482 Improper Payments
Appendix I Comments
from the US Small
Business
Administration
Page 17 GAO-24-107482 Improper Payments
Page 18 GAO-24-107482 Improper Payments
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Endnotes
131 U.S.C. § 3351(4).
231 U.S.C. §3352(c)(2).
3Office of Management and Budget, Requirements for Payment Integrity Improvement, Circular No.
A-123, Appendix C, OMB M-21-19 (Washington, D.C.: Mar. 5, 2021). OMB’s PaymentAccuracy.gov
data call for fiscal year 2023 also included guidance for agencies to use when reporting the types of
their estimated improper payments. This guidance was in addition to that provided in OMB M-21-19
on reporting estimates for programs that are identified as susceptible to improper payments.
4Overpayments may be unintentional or fraudulent. Unintentional overpayments are accidental in
nature. Fraudulent overpayments are caused by willful misrepresentation for the purpose of
obtaining funds, services, or benefits as determined through a court or other adjudicative process.
5GAO, COVID-19: Current and Future Federal Preparedness Requires Fixes to Improve Health
Data and Address Improper Payments, GAO-22-105397 (Washington, D.C.: Apr. 27, 2022).
6OMB’s PaymentAccuracy.gov data call for fiscal year 2023 included guidance for agencies to use
when reporting the types of their estimated improper payments. This guidance was in addition to
that provided in OMB M-21-19 on reporting estimates for programs that are identified as
susceptible to improper payments.
731 U.S.C. §3352(c)(2).
831 U.S.C. §3352(c)(1)(A).
9Office of Management and Budget, Requirements for Payment Integrity Improvement.
10OMB guidance states that, to the extent possible, the data used for estimating improper payments
in a given program should coincide with the fiscal year being reported. For their fiscal year 2023
estimates, agencies reported using sampling time frames that ranged from calendar year 2015 (i.e.,
January 2015 through December 2015) to fiscal year 2023 (i.e., October 2022 through September
2023).
11HHS also attributed the decline to improvements in state compliance with requirements. The
department could not determine how much of the decline was due to flexibilities granted during the
public health emergency versus improvements in state compliance.
12Additional discussion on the relationship between improper payments and fraud can be found in
our December 2023 report. GAO, Improper Payments and Fraud: How They Are Related but
Different, GAO-24-106608 (Washington, D.C.: Dec. 7, 2023).
13GAO, Fraud Risk Management: 2018–2022 Data Show Federal Government Loses an Estimated
$233 Billion to $521 Billion Annually to Fraud, Based on Various Risk Environments, GAO-24-
105833 (Washington, D.C.: Apr. 16, 2024).
14Separate evaluations provide feedback on the effectiveness of an entity’s ongoing monitoring of
its internal control system. GAO, Standards for Internal Control in the Federal Government, GAO-
14-704G (Washington, D.C.: September 2014).
15GAO, A Framework for Managing Improper Payments in Emergency Assistance Programs, GAO-
23-105876 (Washington, D.C.: July 2023).
16GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure Transparency
and Accountability for COVID-19 and Beyond, GAO-22-105715 (Washington, D.C.: Mar. 17, 2022).
17Executive agencies are required by law to prepare annual financial statements and have them
audited. 31 U.S.C. § 3515.
18Council of the Inspectors General on Integrity and Efficiency (CIGIE), Guidance for Payment
Integrity Information Act Compliance Reviews (Washington, D.C.: October 2023). CIGIE’s guidance
notes that each office of inspector general should use its professional judgment in determining the
level of work it should perform based on its specific agency’s programs.
Page 20 GAO-24-107482 Improper Payments
1931 U.S.C. § 3352(a)(3)(A), (c)(2).
20GAO, GAO's Agency Protocols (Updated January 23, 2019), GAO-19-55G (Washington, D.C.:
Nov. 19, 2018).
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