Audit Report: DOE-OIG-20-40

May 11, 2020

The Department of Energy’s Improper Payment Reporting in the Fiscal Year 2019 Agency Financial Report

The Improper Payments Elimination and Recovery Improvement Act of 2012 (IPERIA) was signed into law on January 10, 2013, amending the Improper Payments Elimination and Recovery Act of 2010 (IPERA) and the Improper Payments Information Act of 2002.  The Office of Management and Budget (OMB) issued Memorandum M-18-20, Appendix C to Circular Number A-123, Requirements for Payment Integrity Improvement, as implementation guidance to Federal agencies for IPERIA in June 2018.  While all three laws are still in effect, the agency Inspector General guidance included in OMB Memorandum M-18-20 focuses on compliance with IPERA.  The Department of Energy’s Office of Finance and Accounting, a component of the Office of the Chief Financial Officer (OCFO), communicated instructions for meeting improper payment and payment recapture audit requirements, prescribed by OMB Circular Number A-123, to its 48 payment reporting sites.  In accordance with OMB M-18-20, the Department implemented a 3-year risk assessment review cycle and last completed an improper payment risk assessment in fiscal year (FY) 2018.  Only payment reporting sites that experienced significant: (1) changes in legislation, (2) increases in outlays, or (3) changes to the site’s payment processes that would make the site susceptible to significant improper payments were required to complete risk assessments during FY 2019.  Twenty-one sites met one or more of these criteria and performed risk assessments in the past year.  Based on the site risk assessments performed in FY 2019 and consolidated at the Departmental level, the OCFO determined that the Department was not susceptible to significant improper payments.

OMB requires the Office of Inspector General to perform an annual review of the Department’s improper payment reporting in its Agency Financial Report, and accompanying materials, to determine whether the Department was compliant with IPERA.  The objective of this audit was to determine whether the Department met the OMB criteria for compliance with IPERA.

We determined that the Department’s FY 2019 improper payment reporting was in accordance with OMB criteria.  Specifically, the Department published an Agency Financial Report for FY 2019 and posted that report, as well as accompanying materials, on its website.  However, we found that enhancements to the OCFO’s review process could improve reliability of the improper payments reported.  Specifically, although in previous years the OCFO had conducted site visits that evaluated the site’s improper payment processes, the reviews were limited and were not scheduled for FY 2020 due to travel restrictions as the result of the coronavirus pandemic.  We also noted that the onsite review process was not documented in a formalized standard operating procedure and believe that improved oversight could ensure more accurate reporting of improper payments.  Because we determined that the Department’s improper payment reporting was in accordance with OMB criteria, we did not issue any formal recommendations, although we did suggest that the OCFO resume conducting annual site visits to review improper payment processes.

Topic: Management & Administration