U.S. Department of Education's Compliance with the Improper Payments Elimination and Recovery Act of 2010 for Fiscal Year 2012

We found that the Department complied with IPERA, although issues remained with the completeness of the calculation of the estimated improper payment rate for the Pell Grant program. In addition, its proposed methodologies for estimating improper payment rates for the Pell Grant, William D. Ford Direct Loan, and Federal Family Education Loan programs were flawed. We found that the Department used new methodologies for estimating improper payment rates that were pending approval by Office of Management and Budget (OMB) and that the Department did not follow OMB guidance for reporting of Payment recapture audit programs. We recommended that the Department ensure that the issues identified for the estimated improper payment rate for the Pell Grant program computed under the OMB-approved methodology using the FAFSA/Internal Revenue Service (IRS) Data Statistical Study and the issues identified in our FY 2011 IPERA audit are adequately addressed. The Department should also ensure that the proposed methodologies for estimating improper payment rates for all programs use the appropriate point estimate and disclose the estimate’s confidence limits.