BACKGROUND

Agencies are required to periodically review all programs and activities and identify those that may be susceptible to significant improper payments, take multiple actions when programs and activities are identified as susceptible to significant improper payments, and annually report information on their improper payments monitoring and minimization efforts. The Department has not itself identified any programs or activities susceptible to significant improper payments.

The Department recognizes the importance of maintaining adequate internal controls to ensure proper payments, and the Department’s commitment to continuous improvement in the overall disbursement management process remains high. Each of the Department’s payment offices have implemented policies and procedures to detect and prevent improper payments. The Department continually works to ensure the integrity of its disbursements.

PAYMENT INTEGRITY INFORMATION ACT (PIIA) OF 2019 AND RELATED OMB GUIDANCE

PIIA was signed into law on March 2, 2020 with one intention being to serve as a more comprehensive Public Law for payment integrity legislation.

Office of Management and Budget Circular A-123, Management’s Responsibility for Enterprise Risk Management and Internal Control (July 15, 2016), Appendix C, Requirements for Payment Integrity Improvement (March 5, 2021) contains guidance to federal agencies related to PIIA. 

DEPARTMENT OF COMMERCE PAYMENT INTEGRITY ANNUAL REPORTING

The Department’s annual Agency Financial Report, Other Information (Unaudited) section, Payment Integrity, refers readers to Departmental Payment Integrity information included at PaymentAccuracy.gov. This website is centralized location to publish information about U.S. government improper payments made to individuals, organizations, and contractors. This website also provides a centralized place where suspected incidents of fraud, waste, and abuse can be reported, and contains information about (1) current and historical rates and amounts of improper payments; (2) why improper payments occur; and (3) what agencies are doing to reduce and recapture improper payments.

Additionally, PaymentAccuracy.gov contains the Department's annual data for overpayments identified and verified as recaptured through all sources. The website also contains other Departmental payment integrity and fraud-related information, including prior year data.

DEPARTMENT OF COMMERCE KEY PAYMENT INTEGRITY EFFORTS

Improper Payments Risk Assessment Process

Each of the Department’s bureaus/reporting entities periodically completes or updates, over a one to three-year period (depending on the size of the entity), improper payments risk assessments covering all of its programs/activities as required by OMB Circular A-123, Appendix C. These improper payments risk assessments of the entity’s programs/activities also incorporate improper payments risk assessments every three years of the control, procurement, and grants management environments.

Improper Payments and Recaptures of Improper Payments

The Department has extensive payment integrity monitoring, minimization, recapturing, and corrective actions efforts in place, including the identification of improper payments through bureau post-payment reviews, the Department’s Office of Inspector General (OIG) audits or reviews, Single Audit Act audits of grants/cooperative agreements, other grants/cooperative agreements audits or reviews, contract closeout reviews, grants/cooperative agreements closeout reviews, other audits or reviews, and sample reviews of Department-wide sustained disallowed costs.

The Department’s bureaus report improper payments and related recaptures information (recaptures information for improper payments of $10 thousand or more) to the Department’s Office of Financial Management (OFM) on a quarterly basis. OFM then tracks the improper payments of $10 thousand or more that have not been fully recaptured, and periodically throughout the fiscal year requests updates from the responsible bureaus on tracked, unrecaptured improper payments.

OMB Circular A-123, Appendix C provides guidance for agencies to determine if cost-effective payment recapture audits can be performed. The Department periodically evaluates if there are any categories of disbursements for which payment recapture auditing could be or could become cost effective.