USDA's improper payment reporting faulted for fourth straight year

By Daniel Enoch

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WASHINGTON, May 20, 2015 - For the fourth straight year, the USDA's Inspector General has found the agency failed to comply with mandatory reporting requirements regarding improper payment information. Total improper payments in the 20 high-risk programs for fiscal 2014 came to $6.9 billion, or a 5.5 percent improper payment rate.

“USDA must take steps to ensure its mandated actions are completed and on time to meet improper payment requirements and adequately report USDA's progress,” the Office of Inspector General said in the report.

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The OIG found that that eight of the 20 high risk programs failed to comply with one or more of the requirements mandated by federal law, including publication of an improper payment estimate, meeting annual reduction targets, and publishing gross improper payment rates of less than 10 percent. High-risk programs were defined as those susceptible to significant improper payments.

The shortcomings were caused in some cases by component agencies using flawed sampling methods to report improper payment estimates and in others by ineffective corrective actions.

The Supplemental Nutrition and Assistance Program (SNAP) and the National School Lunch Program (NSLP) accounted for approximately $4.2 billion, or about 60 percent, of the $6.9 billion in improper payments during FY 2014, according to the report. USDA's Food and Nutrition Service (FNS) was faulted for using an “aged 2005 study” to estimate its improper payments. The OIG also said it found that FNS had not established procedures for gathering and reporting overpayments from the programs.

The OIG found that six high-risk programs accounted for $508 million in reported improper payments that could have been avoided if their reduction targets were met. Among the worst performers in this category was the Farm Security and Rural Investment Act Programs (FSRIP), under the Natural Resources Conservation Service, which missed its reduction target by 16 percent, accounting for approximately $360 million of the “avoidable” $508 million in reported improper payments.

The report had some good things to say about USDA's efforts. It noted that the department had provided evidence that its component agencies are making progress toward complying with improper payment requirements. For example, the number of noncompliant programs fell from 11 in FY 2013 to eight in FY 2014. In addition, OIG determined that USDA was in substantial compliance with three of the six improper payment requirements.

OIG said USDA generally agreed with the findings in the audit and its recommendations, including that the department implement a process to identify, collect and report overpayment information on Food and Nutrition Service high-risk and high-priority programs from available sources. FNS promised to begin reporting recoveries of overpayments in SNAP to USDA on a quarterly basis beginning with the third quarter of FY 2015.

The audit noted that USDA delivers about $144 billion annually in public services through more than 300 programs.

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