OMB Update AGA Internal Control and Fraud Prevention Training

Transcription

1 OMB Update AGA Internal Control and Fraud Prevention Training September 20, 2017 Office of Federal Financial Management Office of Management and Budget 1 President s Management Agenda 2 1

2 Office of Federal Financial Management (OFFM) Created by the Chief Financial Officers Act (CFO) of 1990, OFFM s mission is to support the effective and transparent use of Federal financial resources. OFFM is focusing on the broader questions of promoting fiscal responsibility and financial accountability by: Improving the quality, utility, and transparency of financial information; Protecting against waste, fraud and abuse; and Helping agencies maximize the impact of their limited financial resources. OFFM provides leadership, guidance, and assistance to agencies in their efforts to implement financial management improvements, establish Government-wide financial management policies for executive branch agencies, and carry out the financial management objectives of the CFO Act. OFFM personnel are OMB s subject matter experts on enterprise risk management, audit policy, debt collection, Federal financial systems, Federal grants, financial statements and standards, improper payments and program integrity, real property, data analytics, and transparency. OFFM, one of OMB s statutory offices, is headed by the Controller who is appointed by the President and confirmed by the Senate. 3 Overall Responsibilities POLICY AREAS ERM and Internal Controls Grants Management Real Property Improper Payments and Payment Integrity Financial Systems/Shared Services Travel and Conferences Government Charge Card Debt Collection Federal Financial Reporting Transparency and Data Management Antideficiency Act Violations BUDGET AND POLICY DEVELOPMENT Provide guidance and management initiatives to implement policy areas of focus Oversee policies, regulations, budget formulation and management initiatives to include supporting: $4T in gross cost, $144B in improper payments, $1T in debts, $28B in charge card payments, $700B in Federal grant programs, management of 1.1M real property assets, and over $4T in transparent reporting of federal spending data. Support budget preparation, Director s reviews and Congressional hearings COORDINATION Regularly coordinate with RMOs, OFCIO, OFPP, OPPM, etc. Coordinate w/ agency leadership through the Chief Financial Officers Council, Council on Financial Assistance Reform (COFAR), Shared Services Governance Board (SSGB), etc. Regularly engage industry groups (e.g., AGA) and other stakeholders through formal and informal means Day to day support for agencies CHAIR OF COUNCILS/COMMITTEES OPERATIONS AND PERSONNEL ORG. EXCELLENCE Statutorily Required Chief Financial Officers Council (CFOC) November 1990 Council of the Inspectors General on Integrity and Efficiency (CIGIE) October 2008 Executive Initiatives Federal Accounting Standards Advisory Board (FASAB) January 1991 Federal Real Property Council (FRPC) February 2004 Council on Financial Assistance Reform (COFAR) October 2011 Shared Services Governance Board (SSGB) November Regular Reports to Congress, for ex: Improper Payments Charge Cards Do Not Pay Initiative Annual financial management 5-Year Plan Data collection and analysis required by statute, for ex: GONE Act Provide legislative development and technical assistance Excellent FEVS Survey Scores: Overall engagement score 100% - (two years in a row) Two years in a row 100% view their work as important 93.7% recommend OFFM as a good place to work 4 2

3 Payment Integrity Office of Federal Financial Management Office of Management and Budget 5 Payment Integrity/Improper Payment: Definition An improper payment is any payment that should not have been made or that was made in an incorrect amount. Improper Payments can be: Incorrect amounts paid to eligible recipients, Payments made to ineligible recipients, Payments for goods or services not received, Duplicate payments, Payments when an agency s review is unable to discern whether a payment was proper due to lack of documentation. All financial Fraud is an improper payment but not all improper payments are fraud 6 3

4 Improper Payments - Background Improper Payments Information Act (IPIA) Created basic framework for identifying and reporting improper payments Improper Payments Elimination and Recovery Act (IPERA) Put into law specific thresholds for identifying high-risk programs Strengthened corrective action plans Expanded payment recapture audits Established annual OIG compliance reviews Federal Improper Payments Coordination Act (FIPCA) Authorizes OMB to approve implementation of judicial and legislative branches of government, as well as federally funded state programs, to access the Do Not Pay Initiative Requires Reporting of Death Information by the Department of State and the DoD Executive Order Improved agency accountability Increased transparency Established highpriority programs and accountable official requirements Improper Payments Elimination & Recovery Improvement Act (IPERIA) Required agencies to include all identified improper payments in the reported estimate, regardless of whether the improper payment has been or is being recovered Improved agency estimation and recovery of improper payments Reinforced and accelerated the Administration s Do Not Pay efforts Fraud Reduction and Data Analytics Act (FRDA) Requires the OMB to establish guidelines to identify and assess fraud risks and design and implement control activities in order to prevent, detect, and respond to fraud, including improper payments 7 IP Amount and Percentage Trend 27 Programs 114 Programs 8 4

5 FY 2016 Payment Accuracy Represents payments made by programs that measure improper payments 9 FY 2016 Improper Payment Classification Government-Wide ($ in Millions) 10 5

6 Root Cause Categories - Definitions Failure to Verify Data: 1. Death Data 2. Financial Data 3. Excluded Party Data 4. Prisoner Data 5. Other Data Administrative Process Errors 6. Made by Federal 7. Made by State 8. Made by Other 9. Insufficient Documentation to Determine 10. Program Design or Structural Issue 11. Medical Necessity 12. Inability to Authenticate Eligibility 13. Other OMB expanded the Root Cause Categories from 3 to 13 to help better identify the cause of improper payments at agencies. When an agency (Federal, State, or local), or another party administering Federal dollars, fails to verify appropriate data to determine whether or not a recipient should be receiving a payment. Errors caused by incorrect data entry, classifying, or processing of applications or payments. Where there is a lack of supporting documentation necessary to verify the accuracy of a payment identified in the improper payment testing sample. When improper payments are the result of the design of the program or a structural issue. A situation in which a medical provider delivers a service or item that does not meet coverage requirements for medical necessity. A situation in which an improper payment is made because the agency is unable to authenticate eligibility criteria. A situation that does not fit in any other category Confirmed fraud is to be included in this category. 11 FY 2016 Root Cause Category Matrix Government-Wide ($ in Millions) 12 6

7 Fraud Reduction and Data Analytics Act The Fraud Reduction and Data Analytics Act of 2015, requires OMB to establish guidelines for agencies to establish financial and administrative controls to identify and assess fraud risks and design and implement control activities in order to prevent, detect, and respond to fraud, including improper payments. (Accomplished through July 15, 2016 update to OMB Circular A-123) The guidelines shall incorporate the leading practices identified in the GAO Framework for Managing Fraud Risks in Federal Programs 13 Fraud Reduction and Data Analytics Act Agencies are required to establish financial and administrative controls including: Conducting an evaluation of fraud risks and using a risk-based approach to design and implement financial and administrative control activities to mitigate identified fraud risks; Collecting and analyzing data from reporting mechanisms on detected fraud to monitor fraud trends and using that data and information to continuously improve fraud prevention controls; and Using the results of monitoring, evaluation, audits, and investigations to improve fraud prevention, detection, and response. 14 7

8 Fraud Reduction and Data Analytics Act Agencies are required to submit to Congress, as part of their FY 2017 FY 2019 annual AFR, a report on the progress of the agency in: Implementing (1) the required financial and administrative controls, (2) the fraud risk principle (Principle 8) in the GAO Standards for Internal Control in the Federal Government (the Green Book ); and (3) OMB Circular A-123 with respect to the leading practices for managing fraud risk; Identifying risks and vulnerabilities to fraud, including with respect to payroll, beneficiary payments, grants, large contracts, and purchase and travel cards; and Establishing strategies, procedures, and other steps to curb fraud. 15 Working Group On December 21, 2016 OMB established the working group required by the FRDAA. The Chief Financial Officer (CFO) from every agency was invited to participate and was chaired by the OMB Controller. We have since held several meetings and developed the implementation plan for an interagency library of data analytics and data sets. In addition, the working group has agreed upon a common definition for fraud in their respective programs, began working on a fraud taxonomy, and identified a variety of existing tools, and training materials for government-wide use. 9/15/2017 5:07 PM 16 8

9 Distinguishing Fraud from Improper Payments? Fraud Improper Payments Intentional deception but does not result in a payment. Examples: tax evasion, theft of proprietary information, forged government documents. Intentional deception resulting in a payment that should not have been made or that was made in an incorrect amount. Examples: false billings, false claims for EITC Unintentional or does not result in a third part obtaining something of value. Examples: transposing a number on an invoice, underpayments 9/15/2017 5:07 PM 17 FY 2017 Fraud Reporting On November 16 th, 2017 OMB will publish the FY 2017 government-wide fraud estimate on paymentaccuracy.gov Download data in Excel under Resources Tab or link at bottom of page. This downloadable data will contain agencies FY 2017 Confirmed Fraud estimates. 9/15/2017 5:07 PM 18 9