Agencies must keep watchful eye on improper payments, report says

Agencies need to strengthen internal controls over their accounting systems and regularly monitor their efforts to reduce improper payments to avoid wasting taxpayers' money, a new report from the General Accounting Office says. GAO studied how several public and private sector organizations tackled improper payments. The watchdog agency concluded that a comprehensive risk assessment of programs vulnerable to waste and fraud and constant oversight of accounting systems are key elements in reducing improper payments. Twelve of the largest federal agencies reported making improper payments totaling $20.7 billion in fiscal 1999. Improper payments are overpayments to contractors and beneficiaries made as the result of miscalculation or fraud. Tax refunds and agency programs such as Medicare and Medicaid are especially prone to accounting errors. According to GAO, federal managers can help cut down on improper payments by instilling in the workforce a sense of accountability and stressing the importance of efficient accounting systems. "People make internal controls work, and responsibility for good internal controls rests with all managers," said the report, "Strategies to Manage Improper Payments: Learning from Public and Private Sector Organizations" (GAO-01-703G). Pinpointing program areas susceptible to waste and fraud is an important way agencies can reduce improper payments, said the report.

GAO praised the Health and Human Services Department for reporting an annual estimate of improper payments in its Medical-Fee-for-Service program, and said the department's initiative has helped identify and reduce erroneous payments. In fact, according to a March report from Health and Human Services' inspector general, the Health Care Financing Administration has cut Medicare overpayments by nearly 50 percent over the past five years.

Data-sharing has proved useful as well, according to GAO. The Social Security Administration shares data with the Housing and Urban Development Department to verify the identity of recipients of housing benefits and identify potentially fraudulent claims. SSA also shares information with state and local agencies to confirm the eligibility of people applying for state or federal benefits. According to GAO, agency leaders must make a serious commitment to tackling improper payments. Since the government plans to spend more money over the next few years on programs such as Medicare and Social Security, it cannot afford to lose money to improper payments that could be avoided through proper oversight. "Just putting control activities in place is not the end of the process-monitoring progress and results is essential and must include the involvement of top-level officials," the report said.

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