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OMB to Alter Guidance for Reducing Improper Payments

Deputy controller asks IGs, program managers to reinforce that "it's not sexy" to steal from government.

Inspectors general are the “best friends” of program managers and the White House budget office when it comes to catching fraud and reducing agency improper payments, the deputy U.S. controller said on Wednesday.

Mark Reger, now in his third month as the No. 2 at the Office of Federal Financial Management, said his team is reworking  Circular A-123 guidance on controlling for financial integrity “to make it less prescriptive and to rely on the people on the ground,” particularly inspectors general.

Reger spoke to federal employees and vendors at the information technology firm MeriTalk’s Big Data Forum titled “Stealing From Uncle Sam.” The forum spotlighted efforts to curb the $106 billion in improper payments handed out in fiscal 2013 by such agencies as the Internal Revenue Service and the Centers for Medicare and Medicaid Services.

Reger, a former Maryland State Treasury official, noted that the rate of bad payments has dropped steadily over the past four years, thanks in part to Congress’s enactment of the 2012 Credit Card Fraud Prevention Act and the 2012 Improper Payments Elimination and Recovery Act. “The most important tool is the education of agency enforcers in the field,” he said, praising the watchdogs for gathering better data, working together and sharing information. “I don’t know a single inspector general who isn’t thrilled to find additional money.”

Fraud, such as false billing for medical treatments or claiming of tax refunds under a false identity, results when there is “incentive and pressure, opportunity and attitude or rationalization,” he said, “or when we expand government operations without checks and balances.”

Many of programs that rely on state and local governments to deliver services create such opportunities, Reger added. As the baby-boomers age, demand for government services will only increase, which is why “IGs must ensure controls are in place for proper service delivery,” Reger said. He said he couldn’t promise the progress on curbing improper payments will continue.

The increasing use of data analytics has allowed progress in such areas as federal employee misuse of credit or purchasing cards, the deputy controller said. “The data is now generated back to the agencies every day,” he said. “Employees found to have committed fraud have had their cards cancelled, or been fired, or disciplined in some fashion.”

Coming changes to the financial controls circular will include requiring fewer reports and more-detailed categories of fraud, or “bucketing,” to distinguish, for example, between an unmerited payment and a claim lacking proper documentation, he said.

Reger urged IGs, program managers and vendors to report fraud to the Government Accountability Office’s fraud line at, and to peruse their own Medicare bills in search of bad charges.  “Please reinforce that it’s not okay to steal from federal government, it’s not sexy,” Reger said.

Rooting out improper payments will require a comprehensive approach, using all of the available tools, he told Government Executive later.

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