oversight

Inspection of the National Science Foundation's Compliance with the Improper Payments Elimination and Recovery Act of 2010 for FY 2016

Published by the National Science Foundation, Office of Inspector General on 2017-05-16.

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

Inspection of the National Science

Foundation’s Compliance with the

Improper Payments Elimination and

Recovery Act of 2010

for FY 2016





May 16, 2017

OIG 17-3-005

AT A GLANCE
Inspection of the National Science Foundation's Compliance with
the Improper Payments Elimination and Recovery Act of 2010
for FY 2016
Report No. OIG 17-3-005
May 16, 2017

WHY WE DID THIS INSPECTION
The Improper Payments Elimination and Recovery Act of 2010 (IPERA) requires agencies to
periodically review and identify programs and activities that may be susceptible to significant
improper payments. Office of Management and Budget (OMB) implementing guidance for IPERA,
OMB M-15-02, requires Federal agencies to institute a systematic method of reviewing all
programs and activities and identify programs susceptible to significant improper payments. In
addition, IPERA and OMB M-15-02 require each Office of Inspector General to review annually
improper payment reporting in the Agency Financial Report (AFR).

WHAT WE FOUND
We found that NSF complied with IPERA reporting requirements for FY 2016 based on our review of
the agency’s AFR and website. Additionally, we found that NSF has demonstrated strong progress in
working toward its next full IPERA risk assessment in FY 2018.

WHAT WE RECOMMEND
While we do not have a formal recommendation, we suggest that NSF continue to focus on
implementing and documenting a strong risk assessment process to ensure ongoing compliance with
IPERA.

AGENCY RESPONSE
NSF responded that it will continue to collaborate with us to implement and document a strong risk
assessment process to ensure ongoing compliance with IPERA.

CONTACT US
For further information, contact us at (703) 292-7100 or oig@nsf.gov.
MEMORANDUM

DATE:	            May 16, 2017

TO:	              Martha A. Rubenstein
                  Office Head and Chief Financial Officer
                  Office of Budget, Finance, and Award Management


FROM:	            Mark Bell
                  Assistant Inspector General
                  Office of Audits

SUBJECT:	         Final Report No. 17-3-005, Inspection of the NSF’s Compliance with the Improper
                  Payments Elimination and Recovery Act of 2010 for FY 2016


Attached is the final report on the subject inspection. We have included NSF’s response to the draft
report as an appendix.

This report contains no formal recommendations. However, we suggest that NSF continue to focus on
implementing and documenting a strong risk assessment process to ensure ongoing compliance with
IPERA. NSF responded that it will continue to collaborate with us to implement and document a
strong risk assessment process to ensure ongoing compliance with IPERA.

We appreciate the courtesies and assistance NSF staff provided during the audit. If you have any
questions, please contact Catherine Walters, Audit Manager, at (703) 292-7100.
Background
The Improper Payments Elimination and Recovery Act of 2010 (IPERA) requires that Federal
agencies periodically perform risk assessments for programs that may be susceptible to improper
payments. The Office of Management and Budget (OMB) issued implementing guidance for IPERA 1
that requires agencies to report information about improper payments in the Annual Financial Report
(AFR). Additionally, IPERA requires the Inspector General to review improper payment reporting in
the AFR for compliance with these requirements.


Results of FY 2016 OIG Review of NSF’s Compliance with IPERA
According to OMB guidance, an agency is required to meet six specific requirements to comply with
IPERA. If an agency does not meet one or more of these requirements, then it is not compliant under
IPERA. Based on our review of NSF's FY 2016 AFR, 2 we found that NSF complied with IPERA
reporting requirements for FY 2016.

Specific results for the IPERA compliance requirements are as follows:
    OMB M-15-02 Requirements                                                                     NSF Complied
    Published an AFR for the most recent fiscal year and posted that report and
                                                                                                        Yes
    any accompanying materials required by OMB on the agency website
    Conducted a program-specific risk assessment for each program or activity that
                                                                                                        NIA*
    conforms with Section 3321 note of Title 31 U.S.C. (if required)
    Published improper payment estimates for all programs and activities
                                                                                                       NIA**
    identified as susceptible to significant improper payments under its risk
    assessment (if required)
    Published programmatic corrective action plans in the AFR (if required)                            NIA**
    Published, and is meeting, annual reduction targets for each program assessed to
    be at risk and estimated for improper payments (if required and applicable)                        NIA**

    Reported a gross improper payment rate of less than 10 percent for each program
    or activity for which an improper payment estimate was obtained and published                      NIA**
    in the AFR
*
 IPERA requires agencies to perform a risk assessment at least once every 3 years for programs deemed to be at low risk
for significant improper payments. Because NSF's FY 2015 IPERA risk assessment found that the agency was not
susceptible to significant improper payments, the next full risk assessment is not required until 2018.
**
  Because NSF’s FY 2015 IPERA risk assessment found that the agency was not susceptible to significant improper
payments, these requirements are not applicable.

1
  OMB Memorandum M-15-02, Appendix C to Circular No. A-123, Requirements for Effective Estimation and Remediation
of Improper Payments, October 20, 2014.
2
  nsf.gov/pubs/2017/nsf17002/pdf/08%20Chapter%203%20Appendices.pdf




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Follow-Up on OIG’s Prior Year Review of NSF’s Compliance with IPERA
In our review of NSF's IPERA compliance for 2015, 3 we found that NSF complied with IPERA
reporting requirements for FY 2015. However, we identified areas for improvement in the agency's
IPERA risk assessment process. NSF generally concurred with the recommendations and provided a
corrective action plan on July 15, 2016.

We evaluated the corrective actions NSF has taken in response to our FY 2015 report and found that
NSF has demonstrated strong progress in working toward its next full IPERA risk assessment in FY
2018. For example, we recommended that NSF allow sufficient time to conduct a thorough and
robust assessment of the agency's susceptibility to improper payments. In its corrective action plan in
response to the FY 2015 report, NSF committed to collecting information for its risk assessment by
leveraging its internal control over financial reporting assessment process completed as part of its
annual OMB Circular A-123 Appendix A process, which results in a 3-year IPERA qualitative risk
assessment reporting cycle for 2018.

We observed that NSF has taken several actions to implement its plans. NSF issued Standard
Operating Guidance BFA 2017-1, Procedures for the Improper Payments Risk Reviews, on
November 10, 2016 (IPERA SOG), which documents the scope, approach, and methodology for the
IPERA risk assessment. Specifically, the Methodology section of the IPERA SOG documents NSF's
phased approach to completing assessments in each of the 3 years in the cycle and rolling those
results into a full risk assessment in the third year. NSF also provided documentation that
demonstrates it followed the IPERA SOG in its work to assess NSF's risk of improper payments for
FY 2016. For example, NSF provided spreadsheets that document the overall results of discussions
with NSF staff and leadership to assess NSF’s risk of improper payments according to the nine risk
factors identified in OMB M-15-02. NSF also provided the results of testing conducted to identify
improper payments. Collectively, these actions demonstrate that NSF is taking action to ensure that it
will conduct the FY 2018 IPERA risk assessment with sufficient time to allow for a robust analysis.

Conclusion
While we do not have a formal recommendation, we suggest that NSF continue to focus on
implementing and documenting a strong risk assessment process to ensure ongoing compliance with
IPERA.

OIG Evaluation of Agency Response
NSF responded that it will continue to collaborate with us to implement and document a strong risk
assessment process to ensure ongoing compliance with IPERA. We have included NSF's response to this
report in its entirety as Appendix A.


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    nsf.gov/oig/_pdf/NSF%20IPERA%20%20redacted.pdf




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       NATIONAL SCIENCE FOUNDATION
N SF
       OFFICE OF INSPECTOR GENERAL


  Appendix A: Agency Response 





           MEMORANDUM                        MAY 1 2 Z017


           To:           Mark Bell
                         Assistant Inspector General
                         Office of Audits

           From:         Martha A. Rubenstein
                         Chief Financial Officer and   ce Head
                         Office of Budget, Finance an Award Management

           Subject:      Management's Response to Official Draft Report, Inspection of the NSF's
                         Compliance with the Improper Payments Elimination and Recovery Act of
                         2010 for FY 2016



           Thank you for the opportunity to review the report on the inspection of NSF's
           compliance with IPERA for FY 2016. I appreciate your staff's work on the report and
           acknowledgement of our efforts. We will continue to collaborate with the Office of
           Inspector General to implement and document a strong risk assessment process to
           ensure ongoing compliance with IPERA.

           If you have any questions about our response and our planned actions, please contact
           Mike Wetklow, Deputy Chief Financial Officer and Division Director, Division of Financial
           Management at (703) 292-8280 or mwetklow@nsf.gov.




           cc: 	   Christina Sarris, OD
                   Laura Rainey, OIG
                   Catherine Walters, OIG
                   Mike Wetklow, DFM
                   John Lynskey, DFM
                   Mike Howe, DFM




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Appendix B: Objectives, Scope, and Methodology
We performed this inspection to:

       •	 Determine whether NSF is in compliance with the requirements of IPERA, and accurately
          and completely reported on improper payments in its FY 2016 Annual Financial Report
          (AFR) and accompanying materials, and
       •	 Evaluate the corrective actions taken in response to our FY 2015 report on NSF’s IPERA
          compliance.

The scope of this inspection included improper payment information contained in NSF’s FY 2016 AFR;
the work performed by NSF to support that information; and the actions NSF has taken to implement the
planned corrective actions in response to our FY 2015 report NSF’s Compliance with the Improper
Payments Elimination and Recovery Act for FY 2015, Report No. 16-3-005. To accomplish our
objectives, we reviewed the FY 2016 AFR published on NSF’s website; interviewed staff in NSF’s
Office of Budget, Finance, and Award Management; and reviewed documentation supporting NSF’s
ongoing process to reduce improper payments and implement corrective actions.

We conducted this inspection from March to April 2017 in accordance with the Quality Standards for
Inspection and Evaluation, issued by the Council of Inspectors General on Integrity and Efficiency.




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Appendix C: OIG Contact and Staff Acknowledgments
OIG Contact:

Catherine Walters, Audit Manager, (703) 292-7100, cwalters@nsf.gov


Staff Acknowledgments:

In addition to the contact named above, Marie Maguire, Deputy Assistant Inspector General for Audits;
Laura Rainey, Audit Manager; Nacole White, Audit Program Specialist; Elizabeth Argeris,
Communications Analyst; and Billy McCain, Independent Report Referencer, made key contributions to
this report.




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