USDA paid billions in improper payments, report finds

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Photo by Darrell Hoemann/Midwest Center for Investigative Reporting

Since the implementation of the Improper Payments Recovery and Elimination Act in 2010, the USDA has not complied with the law’s requirements, stated an Office of Inspector General audit.

The U.S. Department of Agriculture reported an estimated $6.2 billion in improper payments in 2013, according to a Office of Inspector General’s April report.

An OIG audit found $416 million in improper payments could have been avoided by meeting annual reduction targets. The improper payments mainly resulted from non-compliances such as not reporting comprehensive estimates or error rates below ten percent. The improper payments also resulted from not meeting annual reduction target rates.

Since the implementation of the Improper Payments Recovery and Elimination Act in 2010, the USDA has not complied with the law’s requirements, stated the audit.

The act, amended from the 2002 Improper Payments Information Act, called for a review of high-risk government agencies most susceptible to improper payments.

Out of the USDA’s 300 programs, the report listed 16 as high-risk programs. Three of those programs did not report a gross estimate, two reported improper payment estimates more than ten percent and eight missed their reduction targets.

All programs that did not report a gross estimate or reported a partial estimate of improper payments were under the Food and Nutrition Service department of the USDA.

“Eight years have passed without CACFP (Child and Adult Care Food Program) developing a reliable method to estimate improper payments,” the audit states.

The School Breakfast Program and National School Lunch Program had improper payment percentages of 25 percent and 15 percent percent, respectively.

Officials believe new strategies in the Healthy, Hunger-Free Kids Act of 2010 will reduce the two programs’ errors, but “it would take time to achieve less than a ten percent error rate.”

The federal inspector general’s office reported that flawed sampling systems have led the USDA to inaccurate estimates of the improper payments.

“RMA (Risk Management Agency) reported that FCIC (Federal Crop Insurance Corporation) improper payments were approximately $566 million, a 5.23 percent error rate,” the audit stated, “however, because of RMA’s sampling methods, OIG believes this estimate may have been understated.”

The report also stated the Risk Management Agency evaluators left out reporting large payments and indemnities below $2,500 from its sampling plan.

To correct these issues, the USDA must submit a plan to Congress for agencies that were noncompliant with the 2002 Improper Payments Information Act for one year to become compliant.

It must also reauthorize proposals or statutory changes that bring high-risk programs that did not comply with the act for three years into compliance, and establish a process to document communications about the act.


Reporter's notes: Office of Inspector General report

USDA-Compliance with the Improper Payments of Information Act (Text)


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