Federal Reports

What We Looked AtThe Payment Integrity Information Act of 2019 (PIIA) requires agencies to identify, report, and reduce improper payments in programs susceptible to significant improper payments. For fiscal year 2021, the Department of Transportation (DOT) tested three programs with total expenditures over $49 billion and estimated that about 1.41 percent were improper payments. PIIA also requires inspectors general to report annually on their agencies' compliance. Accordingly, our audit objective was to determine whether DOT complied in 2021 with PIIA's requirements.What We FoundDOT is in compliance with PIIA requirements. For fiscal year 2021, DOT reported improper payment estimates for three susceptible programs. The payment integrity information in DOT's 2021 Agency Financial Report and data posted to the Payment Accuracy website were accurate and complete. A clerical error related to payment recapture data for two programs occurred but did not impact DOT's compliance with PIIA. DOT conducted four risk assessments for programs and reported one program, the Federal Transit Administration's (FTA) Coronavirus Aid, Relief, and Economic Security Act program, susceptible to significant improper payments. DOT published improper and unknown payment amounts and estimated future rates on the Payment Accuracy website. However, we found issues with the universe population identification procedures for the Federal Aviation Administration's and FTA's Bipartisan Budget Act of 2018 activities. The Federal Highway Administration's (FHWA) Highway Planning and Construction Program did not meet its reduction target of .80 percent and reported estimated improper payments about $697 million. The total estimate did not impact FHWA's compliance with PIIA. For fiscal year 2021, DOT reported an improper and unknown payment estimate of less than 10 percent. FHWA improved its corrective action plan by focusing on root causes of improper and unknown payments and prioritized these actions.RecommendationsDOT concurred with our three recommendations to help improve its reporting processes for improper payments. We consider these recommendations resolved but open pending completion of planned actions.

The objective of our audit was to determine whether the U.S. Department of Education complied with the Payment Integrity Information Act of 2019 (PIIA) for fiscal year (FY) 2021.The Department did not comply with the PIIA because it did not meet one of the six compliance requirements. The Department published unreliable improper payment estimates for three programs that required an estimate for FY 2021: Title I, Part A; Pell; and Direct Loan. We reviewed the corrective action plans and found the Department’s Title I, Part A proposed corrective actions to be inadequate and ineffective in addressing the true root cause of the reported improper payments.

We audited the U.S. Department of Housing and Urban Development’s (HUD) fiscal year 2021 compliance with the Payment Integrity Information Act of 2019 (PIIA) and implementation of Office of Management and Budget (OMB) guidance.  PIIA was enacted to prevent and reduce improper payments and require each agency’s inspector general to perform an annual review of the agency’s compliance with PIIA.  Our objectives were to assess (1) whether HUD had met all requirements of PIIA and OMB Circular A-123, Appendix C-Requirements for Payment Integrity Improvement and (2) HUD’s efforts to prevent and reduce improper and unknown payments.We found that HUD was noncompliant with PIIA in fiscal year 2021.  Specifically, HUD’s improper and unknown payment estimates were noncompliant and unreliable because HUD was unable to test the full payment cycle for the Office of Public and Indian Housing’s Tenant Based Rental Assistance (PIH-TBRA) and Office of Multifamily Housing’s Rental Subsidy (MF-Rental Subsidy) programs, representing 63 percent of HUD’s total expenditures. This was due to logistical and security challenges, as documentation was not readily available, and HUD could not properly secure the data.  Without completing its testing, HUD reported a 100 percent payment accuracy rate, instead of classifying the rate as unknown in accordance with OMB criteria.  This put HUD at risk of not implementing corrective actions and other compliance requirements.  In addition, in the PIH-TBRA program, two of the primary monitoring and verification controls for improper payment detection and prevention were suspended due to COVID-19 related issues, increasing the risk of improper payments.  HUD also missed opportunities to detect improper and unknown payments in its Office of Community Planning and Development (CPD) programs.  Finally, there were some errors in HUD’s information on PaymentAccuracy.gov due to new government-wide processes.  While HUD made some progress in fiscal year 2021, significant efforts are needed to bring PIH-TBRA and MF-Rental Subsidy programs into compliance.For HUD’s noncompliant programs, we recommend that HUD (1) develop and implement a sampling methodology that allows for the timely testing of the full payment cycle and (2) consult with OMB on the appropriate reporting for untested portions of the payment cycle.  Next, we recommend that HUD develop and implement a plan that ensures adequate internal controls over the PIH-TBRA program to detect and prevent improper payments, which can be implemented in a virtual environment.  We also recommend that HUD work with grantees to better identify the risks of improper and unknown payments throughout the payment cycle in its CPD programs and ensure that its risk assessments and improper and unknown payment estimates fully consider these risks.  Finally, we recommend that HUD coordinate with OMB to ensure that its data on PaymentAccuracy.gov are accurate.

The Smithsonian Office of the Inspector General contracted with Castro & Company, LLC to evaluate the effectiveness of the Smithsonian's information security program in fiscal year 2021.