High rates of improper payments by government agencies continue to be a problem, primarily because they are seen as part of the cost of doing business, according to a new report by the Association of Government Accountants.
Federal government agencies paid about $125 billion in improper payments in fiscal year 2010, which was 9.6 percent of the 2010 deficit, or about $1,000 per working person, according to Improper Payments: Not Just the Purview of the CFO Anymore? report.
“There is an inevitable tension between imposing effective internal controls over making payments to recipients and delivering the benefits and services that the agency’s mission entails,” says report author Anna Gowans Miller, AGA’s former director of research. “If the mission is to redistribute wealth or help the poor and aged, many federal officials and members of Congress feel that erring on the side of paying out the benefits quickly is better than cold-hearted efficiency.”
The report outlines several recommendations for reducing the cost of improper payments, including requiring government agencies to conduct regular risk assessments of programs and set improper payment targets. The report also suggest that agencies use all means of debt collection necessary and cooperate in sharing data and streamlining eligibility requirements to facilitate screening.
Agencies should also set up agreements to use data from other agencies for matching and data mining to prevent improper payments, as well as detecting them after they have been made. This data should be available to states and other “pass through entities” the report says.
While many of the recommendations from the report aren’t new, the study identifies the need for agencies to establish quantifiable targets to reduce improper payments, said Ashley Skyrme, vice president of Booz Allen Hamilton, which sponsored the study. Plus, agencies should promote information sharing among each other to help combat improper payments.
“Fifty percent of payments that are improper are because it’s very difficult to make sure that somebody’s eligible to receive the money,” Skyrme said. “So, by sharing information around income, being able to validate who the beneficiary is and whether their income is correct and that they deserve that payment, can put a strong dent in the challenge. We really underscore that we want agencies to work together, share information and definitely verify up front before letting the improper payment go out the door.”
