OIG: NASA’s Compliance with the Improper Payments Information Act for Fiscal Year 2015
WHY WE PERFORMED THIS AUDIT
In fiscal year (FY) 2015, the Federal Government made an estimated $137 billion in improper payments to individuals, organizations, and contractors, an increase of approximately $12 billion from FY 2014. An improper payment is any payment that should not have been made or was made in an incorrect amount. Improper payments may include payments made to an ineligible recipient or for ineligible goods or services, duplicate payments, payments in an incorrect amount (overpayments or underpayments), payments that lack adequate supporting documentation, or payments for goods and services the agency did not receive.
To help reduce improper payments, the Improper Payments Information Act of 2002 requires heads of Federal agencies to annually identify programs and activities susceptible to improper payments and report information about those payments. In addition, agency Inspectors General are required annually to evaluate whether their agencies comply with the Act’s requirements.
Our objective in this audit was to determine whether NASA complied with the Act in FY 2015. We also evaluated the accuracy and completeness of the Agency’s reporting and its implementation of recommendations we made in prior reports examining the Agency’s compliance. To conduct this review, we examined applicable laws and regulations, interviewed Agency personnel, and reviewed NASA’s Agency Financial Report and supporting documentation.
WHAT WE FOUND
NASA met all applicable Office of Management and Budget (OMB) criteria and complied with the Act for FY 2015. However, as discussed in our previous reports, we continue to believe the Agency can improve its risk assessment process to increase the likelihood of identifying improper payments.
First, NASA should assign greater weight to the risk condition “External Monitoring and Assessments,” the only condition that considers independent and objective assessments of program performance by our office and the Government Accountability Office. Second, NASA considered only the risk factors listed in the Act and OMB guidance, discounting other relevant factors such as the substantial backlog of incurred cost audits, which assess costs contractors charge to the Government and are a key control for detecting improper payments. Third, NASA continued to limit its annual payment recapture audits to fixed-price contracts, which have a lower risk of improper payments than cost-type contracts, grants, or cooperative agreements. By doing so, NASA increased the risk improper payments may go undetected. Finally, although NASA included the required information on its recapture audit efforts in its FY 2015 Agency Financial Report, we continue to find inaccuracies in the Agency’s reporting.
WHAT WE RECOMMENDED
To improve NASA’s risk assessment process and the accuracy and completeness of its reporting, we made five recommendations to the Chief Financial Officer: (1) revisit the risk condition weighted percentages to better reflect their relevance and significance and document the rationale for the percentages assigned, (2) incorporate a risk factor that considers the timeliness of incurred cost audits, (3) develop written policies and procedures detailing the process for reporting overpayments identified and recaptured from sources outside of payment recapture audits, (4) disseminate the appropriate system query logic to identify potential overpayments and train the affected organizations or individuals to execute the query and analyze the results, and (5) obtain management decision letters issued by contracting officers to identify potential overpayments and report any overpayments determined to be improper in the Agency Financial Report.
NASA management concurred or partially concurred with our recommendations and proposed corrective actions. We find the actions responsive to recommendations 3, 4, and 5 and therefore these recommendations are resolved and will be closed upon verification of the proposed corrective actions. For recommendations 1 and 2, we find the Agency’s proposed actions insufficient and consider the recommendations unresolved pending further discussions with NASA officials.
