March 2017

1. Improper Payment Information Act Program • Post Payment Review Training March 2017

2. Post Payment Review (PPR) Training Objectives During the Post Payment Review training, participants will receive information on how to identify, correct, prevent, and report improper payments. • Inform Navy staff of the Improper Payment Information Act as it relates to the post payment review process • Provide an overview on how to review vouchers, identify improper payments, and report results • Review sample improper payment vouchers for verification • Review the process to correct improper payments (pay overpayments and/or remit underpayments) • Provide tips on how to prevent improper payments through root cause analysis and corrective action plans • Understand reporting requirements and associated documentation

3. Background The IPIA policy was developed to decrease improper payments and increase agency accountability. OMB has oversight and governs improper payment policy. • Improper Payment Information Act (IPIA) of 2002 requires agencies to periodically review all programs and activities (hereafter “programs”) and identify those that may be susceptible to significant improper payments. For those programs that are susceptible to significant improper payments, the law requires agencies to develop sampling plans and sample vouchers to determine the root causes of improper payments and to develop corrective actions to prevent improper payments from recurring. • OMB Circular A-123, Appendix C, Part 1A, Paragraph 2 defines an improper payment as: • Overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amounts and duplicate payments) • Any payment (over or underpayment) made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirement • Any payment that was made to an ineligible recipient or for an ineligible good or service, or payment for goods or services not received (except for such payments authorized by law) • When an agency’s review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment must also be considered an improper payment

4. Key Highlights The PPR process includes retention requirements, associated terms/ acronyms and critical forms Record Retention Associated Terms/ Acronyms Critical Forms • Acronym and term definition used within the PPR process include: • Improper Payment Information Act (IPIA) • Post Payment Review (PPR) • Root Cause Analysis (RCA) • Corrective Action Plan (CAP) • DoD Financial Management Regulation (DOD FMR) • Office of Management and Budget (OMB) • Tax Identification Number (TIN) • High Dollar Overpayment – overpayment made to an individual or entity. Any payment in excess of 50 percent of the correct amount of the intended payment (see appendix for details) • Program Office must retain PPR supporting documentation for a minimum of three years after the completion of the Inspector General review or the completion of actions resulting from the review • Retain copies of sample sets, vouchers, and supporting documentation for each finding • Retain copies of RCAs and CAPs • Ensure records retained are sufficient for internal and external auditors to replicate the reported results • Post Pay Review Checklist (see slide 8) –a guide used when reviewing vouchers and supporting documentation • Matrix of Improper Payment Categories (i.e. similar to DoD FMR, Volume 4, Chapter 14) (see slide 13) – a document that must be completed for every improper payment by the Reviewer • Reporting Requirements-(see slide 16) this is a template that provides specific reporting requirements to the Program Office/FMO • A-136, Table 1 and the Overpayment Recapture Form (see slide 24, 25) – provides additional information to report

5. Key Stakeholder Roles and Responsibilities Stakeholders play a key role in the PPR process. Reviewers FMO Certifying Officer Program Office • Responsible for administering the DON IPIA program and PPR requirements • Provide instruction and guidance to Reviewers and review sampling plans • Consolidate all PPR, Root Cause Analysis (RCA) and Corrective Action Plans (CAP) metrics for DON • Prepare Annual Financial Report (AFR) and incorporate IPIA notes • Pull vouchers and identify improper payments • Communicate improper payments to Certifying Officers • Provide insight into root causes and support the CAP resolution • Track and report results of the PPR and provide to the Program Office • Issue sample sets to the Reviewer • Collect information from Reviewer • Identify the root cause(s) of improper payment(s) and develop corrective action plans • Consolidate reviewer information, the estimate table and Table 14-1 of the DoD FMR • Perform review of improper payments received from Reviewer • Collect over payments and/or pay underpayments. • Provide a status of improper payments and collections to reviewer • Support root cause analysis and CAP development

6. Post Payment Review (PPR) Process The PPR process provides a standardized method to identify, correct, prevent, and report improper payments. Process Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements Role Activity

7. Receive and Validate Samples Reviewers are responsible for receiving and validating sample sets. Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Receipt of Sample Sets • Receive sample sets from Service Providers of transactions derived from the payment program universe, or • Obtain sample sets according to internal sampling plans • Validate Samples • Inspect to ensure there is sufficient information to review vouchers • Accept sample set • Retrieve vouchers and/or supporting documentation for review

8. Review Vouchers and Documents Reviewers examine vouchers and documents to determine if a payment is improper. Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Reviewing Payment Information • Leverage the Sample Post Payment Review Checklist1to review sample sets and vouchers to determine if the payment is improper • Ensure there is appropriate supporting documentation (e.g. verify signature, match information to the voucher and payment documents, and identify missing documentation, etc.) • Identify improper payments and inform Certifying Officer for action to correct, prevent and report • Reporting Requirements • Receive the status ofthe RCA, CAP, and collection activities from the Certifying Officer • Track and report results of the review to the Program Office • ReportHigh dollar Overpayments individually and as part of an aggregate Improper Payment Report 1 Sample Post Pay Package is included on next slide.

9. Review Vouchers and Documents: Sample Post Pay Review Package Reviewers use PPR checklist to as a guide when reviewing vouchers and sample sets. 1 General Information about the program under review. 1 2 2 General payment information includes vendor details and voucher information. Link to Checklist 3 * Payment review findings indicated all items that require verification and, if necessary, corrective action. 3 *

10. Review Vouchers and Documents: Key Points to Review Items to consider when verifying an invoice: • Were funds available? • Was the payment permitted by law, and in accordance with the terms of the applicable agreement? • Was the TIN or Payee ID number correct? • Was the payment a duplicate? • Were all cost effective discounts taken? • Were all applicable deductions made and credited to the proper account in the correct amount? • Was the proper document used? • Were special vendor reporting entries and documents, if required, furnished?

11. Correct & Prevent: Certifying Officer For each improper payment, the Certifying Officer validates the Reviewer’s analysis and recovers overpayment or remits underpayment Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Review improper payment • Verify the Reviewer’s findings to determine if the payment (i.e. over or underpayment) is following the applicable policy • Analyze any other documents (such as contracts, or other supplemental information) that may apply to the payment • Recover overpayment or remit underpayment • For overpayment, recover determined amount in accordance with the standard processes for that specific payment type in accordance with the DoD FMR Volume 16: • Initiate collection by contacting the payee and inform them of the overpayment • Follow due process • Receive funds from payee • Initiate additional collection actions, if necessary, in accordance with local standard operating procedures • For underpayment, remit determined amount in accordance with standard processes for the specific payment type in accordance with the DoD FMR Volume 16: • Contact payee and inform them of the underpayment • Pay the underpaid funds to the payee • Report to the Reviewer the status of collections and/or supplemental payments on a monthly basis

12. Correct & Prevent: Program Office The Program Office takes action to prevent the recurrence of identified improper payments by conducting a Root Cause Analysis Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Reviewer: Classify individual improper payments using the Matrix of Improper Payment Categories and send the matrix to the Program Office • Program Office: Identify the primary cause(s) of issues and conduct an RCA: • Use information from the Reviewer’s “Matrix of Improper Payment Categories” to identify the primary issues • Collect relevant issue information • Identify contributing factors • Document the RCA • Track improper payment collection information Matrix of Improper Payment Categories ($ in Millions)* *Similar to table in DoD FMR, Volume 4, Chapter 14

13. Correct & Prevent: CAP Development Corrective Action Plans (CAPs) provide specific actionable steps to prevent the recurrence of improper payments Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Corrective Action Plan (CAP): • Design, implement, and monitor a CAP to resolve the weakness and prevent recurrence • Include specific, actionable steps. Consider the following: • State the objective of the CAP, identify a project leader and team, and identify affected processes and the associated stakeholders • Engage stakeholders who know the process and might be affected by changes • Verify existing process documentation, controls, and develop To-Be process • Develop implementation plan, roles and responsibilities, and identify risks and associated mitigation plans • Identify clear measures to evaluate the effectiveness of the CAP implementation and ongoing sustainment • Implement the corrections • Allow sufficient time for performance data to accumulate, then evaluate • Review at least monthly until there is reasonable assurance that the CAP has been implemented successfully • Report results, provide evidence of success, and retain related artifacts

14. Report Requirements Final reporting requirements of improper payment summaries are conducted by the Program Office and FMO. Receive and Validate Samples Review Vouchers And Documents Correct and Prevent Report Requirements • Program Office: • Forward to FMO quarterly: • Total number and dollar value of payments, • Overall program improper payment estimate • Status summariesof RCAs and CAPs • High dollar overpayments • Consolidate all matrices of Improper payment categories into one matrix for FMO using Table 14-1 of the DOD FMR • Provide other information as directed by FMO • Report high dollar overpayment information (see slide 17) • FMO: • Consolidate DON reporting and submit to OSD (including a consolidation of the findings from all PPR reviews) • Incorporate the program estimates into the Agency Financial Report (AFR) • Include information from IPIA portion of the OMB Circular A-136 Table 1

15. Program Reporting Format • Summary of RCA / CAP • RCA • CAP • RCA • CAP • RCA • CAP High level information only Table 14-1 of the DOD FMR. Only fill out applicable columns

16. Program Reporting Quality Assurance Checklist

17. Appendix

18. Acronyms • Improper Payment Information Act (IPIA) • Improper Payment Elimination and Recovery (IPERA) • Improper Payment Elimination and Recovery Improvement Act (IPERIA) • Post Payment Review (PPR) • DoD Financial Management Regulation (DoD FMR) • Office of Management and Budget (OMB) • Root Cause Analysis (RCA) • Corrective Action Plan (CAP) • Tax Identification Number (TIN)

19. Definitions/Descriptions • Improper Payment: from OMB Circular A-123, Appendix C, Part 1A, Paragraph 2: • Overpayments or underpayments that are made to eligible recipients (including inappropriate denials of payment or service, any payment that does not account for credit for applicable discounts, payments that are for an incorrect amounts and duplicate payments) • Any payment (over or underpayment) made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirement • Any payment that was made to an ineligible recipient or for an ineligible good or service, or payment for goods or services not received (except for such payments authorized by law) • When an agency’s review is unable to discern whether a payment was proper as a result of insufficient or lack of documentation, this payment must also be considered an improper payment • High Dollar Improper Overpayment: A high dollar overpayment can be made to an individual or to an entity. A high dollar overpayment that is in excess of 50 percent of the correct amount of the intended payment under the following circumstances: • Where the total payment to an individual exceeds $25,000 as a single payment or in cumulative payment for the quarter; or • Where the payment to an entity exceeds $100,000 as a single payment or in cumulative payments for the quarter

20. Definitions/Descriptions, continued • Post Payment Review (PPR): All reportable programs must perform PPRs and report results to the DON SAO via FMO’s IPIA PM. When conducting PPRs, reviewers must also determine and report High-Dollar overpayments in accordance with ref  (a), including the absence of High-Dollar overpayments: • Sample Draw And Review: PPR reviewers are required to use a sample draw. • Root Causes And Corrective Actions: Improper payments will be researched to determine root causes, and necessary corrective actions will be implemented to prevent future improper payments. • Overpayments (Receivables): For improper payments which have been reviewed and determined to be collectible debts, the appropriate accountable official must make diligent collection efforts. Collections must be tracked and reported through resolution (e.g., debtor repaid, certifying officer relief of liability granted, etc.) This information should be reported back to the PPR so that they can include this information in their reporting. The same applies to underpayments. • Underpayments (Payables): For improper payments which have been reviewed and determined to be due the payee (including improper denials and offsets of payments), the appropriate accountable official must ensure payments are made to payees for all monies due 

21. References • Improper Payments Information Act (2002): https://www.gpo.gov/fdsys/pkg/PLAW-107publ300/pdf/PLAW-107publ300.pdf • Improper Payments Elimination and Recovery Act (2010): https://www.gpo.gov/fdsys/pkg/PLAW-111publ204 • Improper Payments Elimination and Recovery Improvement Act (2012): https://www.ssa.gov/improperpayments/documents/IPERIA--PLAW-112publ248.pdf • DoD FMR, Volume 4, Chapter 14, Section 140201: http://comptroller.defense.gov/Portals/45/documents/fmr/archive/04arch/04_14_Oct11.pdf • OMB Circular A-136 Table 1 (page 153): https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/OMB/circulars/a136/a136_revised_2015.pdf • OMB Circular A-123, Appendix C: https://paymentaccuracy.gov/pdf/m-15-02.pdf • ASN (FM&C) FM Policy Letter 16-01, Delegation of Authority to Appoint Accountable Officials: http://www.public.navy.mil/bupers-npc/reference/messages/Documents/NAVADMINS/NAV2016/NAV16066.txt

22. Post Pay Review Checklist

23. Matrix of Improper Payment Categories Matrix of Improper Payment Categories ($ in Millions)* • DoD FMR, Volume 4, Chapter 14, Section 140201: http://comptroller.defense.gov/Portals/45/documents/fmr/archive/04arch/04_14_Oct11.pdf

24. OMB Circular A-136 Table 1 Page 153: https://obamawhitehouse.archives.gov/sites/default/files/omb/assets/OMB/circulars/a136/a136_revised_2015.pdf --This report is to be submitted annually --Note the percentage of improper payments need to reduce for out years

25. Overpayments Report Improper Payment Recapture with and without Audit Programs Taken from Table 4 of OMB Circular A-136