oversight

U.S. Department of the Interior's Compliance With the Improper Payments Elimination and Recovery Act of 2010 in Its Fiscal Year 2019 Agency Financial Report

Published by the Department of the Interior, Office of Inspector General on 2020-07-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                            INSPECTION




                  OFFICE OF
                  INSPECTOR GENERAL
                  U.S.DEPARTMENT OF THE INTERIOR




    U.S. Department of the Interior’s
    Compliance With the
    Improper Payments Elimination
    and Recovery Act of 2010
    in its Fiscal Year 2019
    Agency Financial Report




   In recognition of Secretarial Order No. 3380, we are providing estimated costs
   associated with certain work products. Applying a formula involving prior salary
   and benefit expenses, we estimate the cost of preparing this report to be $13,000.



Report No.: 2020-FIN-023
                -   -                                                            July 2020
             OFFICE OF
             INSPECTOR GENERAL
             U.S.DEPARTMENT OF THE INTERIOR



Memorandum

To:           David L. Bernhardt
              Secretary, U.S. Department of the Interior

From:         Mark Lee Greenblatt
              Inspector General

Subject:      Final Inspection Report – U.S. Department of the Interior’s Compliance With the
              Improper Payments Elimination and Recovery Act of 2010 in Its Fiscal Year 2019
              Agency Financial Report
              Report No. 2020-FIN-023

       We conducted this inspection to determine whether the U.S. Department of the Interior
met the requirements of the Improper Payments Elimination and Recovery Act of 2010 (IPERA)
and accurately and completely reported on improper payments in its Agency Financial Report
(AFR) for fiscal year (FY) 2019 and accompanying materials. Attachment 1 provides our scope
and methodology.

         We found that the Department complied with all applicable IPERA reporting
requirements for FY 2019, namely the first two requirements of six. Specifically, it complied
with the first requirement by publishing the AFR and posting it on the Department’s website, and
it complied with the second by conducting a program-specific risk assessment for 86 programs
that met the reporting threshold for the fiscal year. We found an error in the number of programs
reported as having been risk assessed. In particular, the Department misreported the number of
programs that were risk assessed in FY 2019 as 93, when the actual number was 86. However,
this reporting error does not change our determination that the Department complied with the
requirement. We did not consider the four remaining IPERA reporting requirements applicable
for this reporting period because the Department did not identify any programs that were
susceptible to significant improper payments. Our analysis supported the Department’s
conclusion.

Background
       IPERA, which became law on July 22, 2010, amended the Improper Payments
Information Act of 2002 (IPIA) to prevent the loss of taxpayer dollars through improper
payments. On January 10, 2013, the President signed into law the Improper Payments
Elimination and Recovery Improvement Act of 2012 (IPERIA), amending IPERA. The Office of
Management and Budget (OMB) issued implementation guidance with requirements from IPIA,
IPERA, and IPERIA on October 20, 2014, as OMB Memorandum M-15-02 (Appendix C to
Circular No. A-123, Requirements for Effective Estimation and Remediation of Improper


                             Office of Inspector General | Washington, DC
Payments). On June 26, 2018, the OMB replaced M-15-02 with M-18-20 (Appendix C to OMB
Circular A-123, Requirements for Payment Integrity Improvement) to transform the improper
payment compliance framework and create a more unified, more comprehensive, and less
burdensome set of requirements. On March 2, 2020, the President signed The Payment Integrity
Information Act of 2019 (PIIA), which revokes and incorporates select provisions from IPIA,
IPERA, and IPERIA. The OMB will issue implementing guidance for PIIA. Until then, agencies
will continue to follow OMB Memorandum M-18-20.

        IPERA requires each Federal agency to follow the OMB guidance to periodically review
and identify all programs and activities that may be susceptible to significant improper payments.
IPERA defines significant improper payments as (1) more than $10 million of all program or
activity payments made during the fiscal year reported and 1.5 percent of total program outlays
or (2) more than $100 million. To comply with IPERA, the agency must:

       1. Publish an AFR that included a section related to IPERA reporting and post the AFR
          on the agency website—for the Department, see https://www.doi.gov/pfm/afr/2019

       2. Perform a program-specific risk assessment on any new programs, programs with
          significant increases in expenditures, or programs due for assessment on a 3-year
          cycle

       3. Publish improper payment estimates for all programs identified as susceptible to
          significant improper payments under its risk assessment

       4. Publish programmatic corrective action plans, on the actions it has taken to reduce
          improper payments for programs or activities that have significant improper payments

       5. Publish, and meet, annual reduction targets for each program assessed to be at risk
          and estimated for improper payments

       6. Report a gross improper payment rate of less than 10 percent for each program for
          which an improper payment rate estimate was obtained and published

        OMB Memorandum M-18-20 requires agencies to institute a systematic method of reviewing
all programs to identify those susceptible to significant improper payments. The OMB requires
agencies to perform risk assessments at least once every 3 years for programs that are deemed to be
not susceptible to significant improper payments. In FY 2019, the Department conducted its latest 3-
year risk assessments of 86 Department programs. If a program that is on a 3-year risk assessment
cycle experiences a significant increase in its funding level, the OMB requires the agency to reassess
the program’s risk susceptibility during the next annual cycle. For newly established programs,
agencies should also complete a risk assessment after the first 12 months of the program.

       OMB Memorandum M-18-20 also requires that each agency’s Inspector General review
the agency’s improper payment reporting published in the agency’s annual Performance and
Accountability Report (PAR) or AFR and accompanying materials to determine whether the
agency has complied with IPERA.



                                                                                                    2
Results of Inspection
        We found that the Department complied with all applicable IPERA reporting
requirements for FY 2019; the applicable requirements were the first and second requirements of
six (see Figure 1). Specifically:

       •   The Department complied with the first reporting requirement by publishing an AFR
           that included a section related to IPERA reporting and posting the AFR on its
           website — https://www.doi.gov/pfm/afr/2019.

       •   The Department complied with the second reporting requirement by performing the
           3-year risk assessments on 86 programs, including those that were new or had
           significant increases in expenditures in FY 2019 (see Attachment 2 for a list of all 86
           assessed programs).

        We reviewed the summary of FY 2019 risk assessments on the DOI SharePoint site and
verified that each program’s risk assessment score was below the threshold that would have
required the Department to report an improper payment estimate for that program. To ensure that
the risk assessments were done appropriately, we reviewed the Department’s program-specific
risk assessment summary schedules and verified that the nine required qualitative risk factors
were addressed for each program and that the risk assessment rating appeared reasonable based
on responses provided in the schedules, with no deficiencies noted. The four remaining IPERA
reporting requirements were not applicable for this reporting period because the Department did
not identify any programs that were susceptible to significant improper payments.

              Figure 1: IPERA Criteria and the Department’s Compliance

                                                                                   Department
 IPERA Requirement                                                                 Compliance

 The agency published a PAR or AFR for the most recent fiscal year and
                                                                                        YES
 posted that report on its website.
 The agency conducted a specific risk assessment for each program or
                                                                                        YES
 activity in that fiscal year or obtained a waiver from the OMB.
 The agency published improper payment estimates for all programs and
 activities identified as susceptible to significant improper payments under            N/A
 its risk assessment.
 The agency published programmatic corrective action plans in the PAR or
                                                                                        N/A
 AFR.
 The agency published and met annual reduction targets for each program
                                                                                        N/A
 assessed to be at risk and measured for improper payments.
 The agency reported a gross improper payment rate of less than
 10 percent for each program and activity for which an improper payment                 N/A
 estimate was obtained and published in the PAR or AFR.




                                                                                                     3
         Although we determined that the Department was in compliance with the risk assessment
requirement by conducting and reporting its required 3-year risk assessments in FY 2019, we
identified that seven programs that were risk assessed in FY 2018 were erroneously included in
the FY 2019 AFR’s “Payment Integrity” section as having been risk assessed in FY 2019. As a
result, the Department misreported by overstating the number of programs that were risk
assessed for FY 2019 as 93, when the actual number of programs assessed in FY 2019 was in
fact 86 (see Figure 2).

Figure 2: DOI Programs Risk Assessed in FY 2018 But Erroneously Included in the
             FY 2019 AFR as Having Been Risk Assessed in FY 2019

 Bureau                             Program

 Departmental offices               Office of Natural Resources Revenue operations
 U.S. Fish and Wildlife Service     National Wildlife Refuge (5091-F000*)
 Bureau of Land Management          Land Acquisition (Bureau of Land Management)
 National Park Service              Concessioner Improvement Accounts
 Bureau of Reclamation (BOR)        BOR Central Utah Project Completion Account
 Bureau of Reclamation              Utah Reclamation Mitigation and Conservation Account
 U.S. Fish and Wildlife             FWS Federal Aid – Highways (Liquidation of Contract
 Service (FWS)                      Authorization), U.S. Department of Transportation

* Unique identifier provided because there are two funds with the same fund name.

        This misreporting of the number of programs risk assessed in FY 2019 occurred because
of a SharePoint system reporting issue. According to the Office of Financial Management
(PFM), the PFM was still working out a problem with its new reporting tool that did not
correctly eliminate the previous year’s risk assessed programs from the program count. We plan
to revisit whether the PFM has corrected the problem during our next review of the Department’s
payment integrity reporting, for the FY 2020 AFR.

        Because the Department expended Hurricane Sandy funds during FY 2019, it is required
by the Disaster Relief Act to identify these funds as susceptible to significant improper payments
and determine and report an improper payment estimate. During FY 2017, the Department
applied for and received a waiver from the OMB for relief from the Act’s requirement for
reporting an improper payment estimate, but the OMB requested that the Hurricane Sandy
program be placed on a cycle of risk assessment every 3 years. NPS Hurricane Sandy
supplemental funding of $12,035,839 was included in the FY 2019 risk assessment cycle, and
the risk was assessed by the Department as low for this funding, therefore not requiring the
reporting of an improper payment rate in the DOI’s AFR for FY 2019.

        In addition, OMB Memorandum M-18-14, Implementation of Internal Controls and
Grant Expenditures for the Disaster-Related Appropriations, requires that, starting with FY 2019
reporting, disaster relief programs with expenditures meeting or exceeding $10 million will
automatically be considered susceptible to improper payments and therefore require an improper


                                                                                                 4
payment rate to be calculated and reported in the Department’s AFR. We determined, however,
that the Department decided to delay the risk assessment and reporting of an improper payment
rate for disaster relief funding related to Hurricanes Harvey, Irma, and Maria until FY 2020. We
reviewed email correspondence showing that the Department asked for and obtained approval for
this decision from the OMB, but the Department did not disclose this arrangement in its FY 2019
AFR. Regardless, in FY 2020, we expect that the Department will report an improper payment
rate for the Harvey, Irma, and Maria disaster relief funding.

        We do not require a response to this report. If you have any questions regarding our
inspection or require further information, please contact me at 202-208-5745.

      The legislation creating the Office of Inspector General requires that we report to
Congress semiannually on all audit, inspection, and evaluation reports issued; actions taken to
implement our recommendations; and recommendations that have not been implemented.




                                                                                                  5
Attachment 1: Scope and Methodology
        The scope of this inspection was to review the improper payment information contained
in the U.S. Department of the Interior’s Agency Financial Report (AFR) for fiscal year (FY)
2019 to ensure it complied with Improper Payments Elimination and Recovery Act of 2010
(IPERA) reporting requirements. We conducted this inspection from April through May 2020.

       To accomplish our objective, we:

       •   Reviewed the AFR for information reported on improper payments

       •   Interviewed Office of Financial Management (PFM) staff

       •   Reviewed the Department’s request for and the Office of Management and Budget’s
           waiver of the IPERA requirement to report an improper payment rate for Hurricane
           Sandy relief program funding

       •   Reviewed the PFM’s internal guidance and methodology for performing risk
           assessments and determining risk ratings

       •   Reviewed the PFM’s FY 2019 program-specific risk assessments summary schedules

       •   Reviewed the Department’s internal controls over the preparation and reporting of the
           AFR

       We conducted our inspection in accordance with the Quality Standards for Inspection and
Evaluation as put forth by the Council of the Inspectors General on Integrity and Efficiency.
We believe that the work performed provides a reasonable basis for our conclusions.




                                                                                                0
Attachment 2: FY 2019 Programs Assessed for Risk of
Improper Payments
Following is the list of programs assessed for risk of improper payments presented in the
U.S. Department of Interior’s Agency Financial Report for fiscal year (FY) 2019. The original
included seven programs that should not have been listed, which we have omitted, but otherwise
we present the list without alteration.

•   Abandoned Mine Reclamation Fund                •   FWS Land Acquisition
•   BIA Federal Highways (Liquidation of           •   FWS Natural Resource Damage Assessment
    Contract Authorization)                            Program
•   BIA Wildland Fire                              •   FWS Wildland Fire Management
•   BIA, BIE Contract Support Costs                •   Helium Fund
•   BLM Management of Land Resources               •   Historic Preservation Fund-Special
•   BLM Recreation Enhancement Fee Program         •   IA Construction Program
•   BLM Southern Nevada Public Land                •   Indian Guaranteed Loan Program Account
    Management                                     •   Indian Land and Water Claim Settlements
•   BLM Wildfire Management                        •   Indian Land Consolidation
•   BLM Working Capital Fund                       •   Insular Affairs Operations – Assistance to
•   BOR Policy and Administration                      Territories
•   BOR Working Capital Fund                       •   Insular Affairs Operations – Compact of
•   California Bay-Delta Restoration                   Free Association

•   Central Valley Project Restoration Fund        •   Insular Affairs Operations – Payments to
                                                       U.S. Territories
•   Childcare Entitlement to States, HHS
                                                   •   Interior Franchise Fund, Departmental
•   Colorado River Dam Fund, Boulder Canyon            Management
    Project
                                                   •   Land Acquisition and State Assistance
•   Contributions from Annuity Benefits
                                                   •   Land and Resource Management Trust
•   Cooperative Endangered Species                     Funds
    Conservation Fund
                                                   •   Land Buy-Back
•   DO Administrative Operations
                                                   •   Lower Colorado River Basin Development
•   DO Land and Water Conservation Fund                Fund
•   DO National Indian Gaming Commission,          •   Migratory Bird Conservation Account
    Gaming Activity Fees
                                                   •   National Recreation and Preservation
•   DO Wildland Fire Management
                                                   •   National Wildlife Refuge Fund (1691-
•   DO Working Capital Fund                            F000*)
•   Emergency Relief                               •   North American Wetlands Conservation
•   Federal Aid to Wildlife Restoration                Fund
•   FWS Construction Program                       •   NPS Construction Program
•   FWS Cooperative Endangered Species             •   NPS Donations
    Conservation Fund for LWCF


                                                                                                    1
•   NPS Federal Aid Highways (Liquidation of           •   Payments to Counties Oregon and California
    Contract Authorization)                                Grant Lands
•   NPS Hurricane Sandy Supplemental                   •   Payments to State and County From Clark
•   NPS Recreational Enhancement Fee                       County, Land Sales
    Program                                            •   Payments to States for the Childcare and
•   NPS Wildfire Management                                Development Block Grant

•   Office of Inspector General Operations             •   Permit Processing Fund

•   Office of the Solicitor Operations                 •   Power Systems, Indian Irrigation Projects

•   Office of the Special Trustee for American         •   Resource Management
    Indians Operations                                 •   Royalty Offshore
•   Offshore Safety and Environmental                  •   Service Charges, Deposits and Forfeitures
    Enforcement                                        •   Sportfish Restoration Account
•   Oil Spill Research                                 •    State and Tribal Wildlife Grants
•   Operation and Maintenance of Quarters              •   Supplemental Payments to United Mine
•   Operations and Maintenance, Indian                     Workers of America
    Irrigation System                                  •   Temporary Assistance for Needy Families
•   Operation of Indian Programs                       •   Training and Employment Services,
•   Operations of the National Park System                 Employment and Training Administration
•   Oregon and California Land Grants                  •   Transportation Systems Fund
•   OS Natural Resource Damage Assessment              •   Upper Colorado River Basin Fund
    and Restoration Fund                               •   USGS All Programs
•   OSMRE Regulation and Technology                    •   USGS Working Capital Fund
•   Park Concessions Franchise Fees                    •   Water and Related Resources
•   Payments in Lieu of Coal Receipts
•   Payments in Lieu of Taxes

* Unique identifier provided because there are two funds with the same fund name.

Abbreviations:
BIA = Bureau of Indian Affairs
BIE = Bureau of Indian Education
BLM = Bureau of Land Management
BOR = Bureau of Reclamation
FWS = U.S. Fish and Wildlife Service
HHS = U.S. Department of Health and Human Services
LWCF = Land and Water Conservation Fund
NPS = National Park Service
OSMRE = Office of Surface Mining Reclamation and Enforcement
USGS = U.S. Geological Survey




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