Improper Payment Risk Assessment

We contracted with RMA Associates, LLC, an independent certified public accounting firm, to conduct the FY 2019 improper payments risk assessment for the National Endowment for the Arts (Arts Endowment) in compliance with the Improper Payments Elimination and Recovery Act (IPERA). IPERA defines significant as improper payments that exceed $10 million and 2.5 percent of the program’s total expenditures or $100 million regardless of the proportion to the program’s total expenditures. RMA performed a risk assessment to determine if the Arts Endowment’s grants program is susceptible to improper payments. In performing the assessment, RMA only assessed inherent risk. Based on the assessment of inherent risk, four potential areas of risk were identified: $7.3 million were sourced from manual invoice entries; $4.3 million payments were held; $74.4 million transactions were created by one user; and $5.3 million of vendor payments were flagged as suspicions payments.