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The VA Office of Inspector General (OIG) conducted this review to determine whether VA complied with the Improper Payments Elimination and Recovery Act of 2010 (IPERA) for fiscal year (FY) 2018. IPERA requires federal agencies to review and identify programs and activities that may be susceptible to significant improper payments. Payments are considered improper if they are made in an incorrect amount, to an ineligible recipient, for an ineligible good or service, or for goods or services not received. IPERA requires federal inspectors general to review their agencies for compliance. In FY 2018, VA reported improper payment estimates totaling $14.73 billion, an increase from the $10.66 billion reported in FY 2017. The OIG found that VA did not comply with IPERA because it did not satisfy two of the six requirements. Specifically, VA did not meet improper payment reduction targets for eight programs and activities assessed to be at risk for improper payments, and did not report a gross improper rate of less than 10 percent for seven VA programs and activities that had improper payment estimates in its FY 2018 Agency Financial Report. In addition, the OIG identified nine other programs and activities as noncompliant over two to four consecutive fiscal years. The OIG recommended taking steps to achieve improper payment reduction targets for three programs. The OIG is keeping open previous recommendations to meet reduction targets for four programs, and to ensure seven other programs do not exceed the 10 percent improper payment threshold. The OIG also recommended implementing steps to achieve stated reduction targets for the pension program and continuing work with the Department of Defense to increase the frequency of drill pay adjustments.

Despite a continuous focus on improving its Improper Payments Elimination and Recovery Act of 2010 (IPERA) compliance program, the Corporation for National and Community Service (CNCS) remains unable to reliably estimate the amount or the rate of improper payments in the AmeriCorps State and National Program (AmeriCorps), Foster Grandparent Program (FGP), Retired and Senior Volunteer Program (RSVP), and Senior Companion Program (SCP). Also, the improper payments information reported in CNCS’s fiscal year (FY) 2018 Annual Management Report is unreliable and incomplete.CNCS implemented corrective actions to address findings noted in the FY 2017 IPERA audit report and made improvements that resulted in the elimination of certain prior-year findings. As a result of this progress, we are pleased to report that CNCS met an additional Office of Management and Budget (OMB) criterion on conducting program-specific risk assessment for IPERA compliance and fully resolved three prior audit findings in FY 2018.However, CNCS still failed to meet three of the six OMB IPERA compliance criteria, all of which are recurring from the prior year. Specifically: CNCS did not properly identify improper payments, and the published improper payment estimate is not complete or accurate. Specifically, we noted issues with both the population that CNCS used to select IPERA samples and the manner in which CNCS processed the sample items. CNCS did not meet its annual improper payment reduction targets for the programs. In fact, the rate of improper payments for the four programs in FY 2018 was substantially higher than the rate for FY 2017. CNCS published an improper payment estimate that was greater than the acceptable threshold for IPERA compliance, or ten percent, for these programs.In summary, we recommend that CNCS fully implement planned programmatic corrective actions in the AmeriCorps, FGP, RSVP, and SCP grant programs; develop a detailed plan to establish realistic reduction targets and implement actions to reduce the improper payment rates below ten percent for FY 2019; and update its sampling and estimation methodology to ensure that its future improper payment estimates are complete and accurate. Overall, CNCS agreed with our recommendations and their proposed corrective actions will address the intent of our recommendations.

We conducted this review to determine the Department’s FY 2018 compliance with Improper Payments Information Act of 2002, as amended by the Improper Payments Elimination and Recovery Act of 2010 and the Improper Payments Elimination and Recovery Improvement Act of 2012. In determining compliance, we also evaluated the accuracy and completeness of the Department’s improper payment reporting in the U.S. Department of Commerce FY 2018 Agency Financial Report and its performance in reducing and recapturing improper payments.