Audit: DOE-OIG-24-19

May 29, 2024

The Department of Energy’s Payment Integrity Reporting in the Fiscal Year 2023 Agency Financial Report

The Payment Integrity Information Act of 2019 was signed into law in March 2020 and requires agencies to identify and review all programs and activities they administer that may be susceptible to significant improper payments based on guidance provided by the Office of Management and Budget (OMB).  The current Administration has identified payment integrity as a top priority, focusing on reducing improper payments and protecting taxpayer money.
We conducted this audit to determine whether the Department of Energy met OMB criteria for compliance with the Payment Integrity Information Act of 2019.

The Department’s fiscal year 2023 improper payment reporting was aligned with OMB criteria.  The Department published its fiscal year 2023 Agency Financial Report, and posted that report, and the accompanying materials, on its website.  However, we identified areas where improvements to the payment integrity process could result in more efficient and accurate identification of improper payments.  The Department has not identified underlying root causes for reported improper payments.  The Department is also at risk of exceeding OMB’s threshold for improper payments as a result of new spending appropriations.  However, staffing shortages and lack of data analytics advancement put the Department at risk for inadequate oversight of improper payments.

Without identifying underlying root causes, the Department is unable to take appropriate corrective actions to mitigate recurrences.  Increased appropriations also place the Department at heightened risk of exceeding the OMB’s improper payment threshold, which would require additional reporting responsibilities.  Without the continued expansion of data analytics, the Department’s ability to perform comprehensive and timely reviews will ultimately result in unidentified fraud, waste, and abuse of Department resources.

We made four suggestions designed to improve management of the payment integrity program.  We suggest the Department perform gap analyses to determine and acquire the necessary human capital and data analytic resources; evaluate the use of artificial intelligence, machine learning, forecasting, and trending to manage improper payments; evaluate and develop formalized guidance in preparation of exceeding the OMB threshold; and reevaluate the risk assessment process to allocate more emphasis on the increased spending associated with new spending appropriations.