Where Did We Put That $125 Billion?

Press Release

As millions of Americans file their income taxes today, a hearing held by the Subcommittee on Government Organization, Efficiency and Financial Management, chaired by U.S. Congressman Todd Platts (PA-19), revealed that the federal government made more than $125 billion in improper payments in 2010. The hearing underscored the need for the federal government to seek solutions to strengthen internal controls at federal agencies and ensure taxpayer dollars are spent much more wisely.

An improper payment could be an incorrect payment, an over- or under- payment, and could include a payment to an ineligible recipient, a payment for an ineligible service, a duplicate payment or a payment for a service not received. The $125.4 billion in improper payments noted by federal agencies in 2010 is larger than President Obama's Fiscal Year 2012 budget request for the entire Department of Veterans Affairs.

"Focusing on eliminating improper payments goes to the very heart of government accountability," said Congressman Platts. "When citizens pay their taxes, they have an absolute right to expect that their tax dollars are being spent responsibly and appropriately."

In 2002, Congress enacted the Improper Payments Information Act, which required agencies to estimate erroneous payments annually and report their findings to Congress and taxpayers. In the intervening years, the amount of improper payments recorded by federal agencies more than tripled, a result of better detection and reporting mechanisms. Last year, Congress adopted the Improper Payments Elimination and Recovery Act to strengthen agency governance practices by incorporating more stringent performance frameworks, recovery audits and other tools to measure program outcomes and recoup improper payments.

Witnesses at today's hearing included officials from the Office of Management and Budget and the Government Accountability Office (GAO). Congressman Platts noted that while newer technologies such as continuous transaction monitoring can help the government move towards better prevention and detection of improper payments, the bedrock for any successful, sustainable and cost-effective solution will be stronger internal controls. Agencies need to understand the root causes of errors and develop better controls to prevent or detect them, Congressman Platts said, before the money goes out the door. Another way to improve internal controls is to have a third party evaluate them, and the witnesses discussed ongoing efforts to shift audit resources to provide more scrutiny for payment activities.

The subcommittee will continue its oversight efforts of improper payments throughout the 112th Congress as part of its ongoing review of Executive Branch financial management and accountability issues. The Subcommittee has already examined the Fiscal Year 2010 Consolidated Financial Statements of the U.S. Government and will be conducting future hearings on a recent GAO study which identified dozens of instances where unnecessary duplication exists in federal programs, costing taxpayers billions of dollars annually and fostering an inefficient delivery of government services.

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