Financial Management

Improper Payments Reported in Fiscal Year 1999 Financial Statements Gao ID: AIMD-00-261R July 27, 2000

Pursuant to a congressional request, GAO provided information on the extent of improper payment estimates reported in agencies' during fiscal year (FY) 1999 financial statements.

GAO noted that: (1) last year, GAO reported that 8 of 12 agencies reported improper payments in their FY 1998 financial statements; (2) this year, GAO identified four additional agencies--the Departments of Defense, Energy, Justice and State--that reported improper payments in their FY 1999 financial statements; (3) another agency--the Agency for International Development--which reported making improper payments in its FY 1998 financial statements, did not report any improper payments in its FY 1999 financial statements; (4) GAO's prior report also noted that 9 agencies collectively reported improper payment estimates of $19.1 billion in their FY 1998 financial statements; (5) GAO's audits and those of agency inspectors general continue to demonstrate that improper payments are much more widespread than agency financial statement reports have disclosed thus far; (6) additionally, not all agencies are performing comprehensive internal studies or reviews to determine the propriety of program expenditures for certain programs, including some of those that disclosed improper payments in their FY 1999 financial statements; (7) because the methodologies used by some agencies to estimate improper payments do not always result in complete estimates and many other agencies have not attempted to identify or estimate improper payments, the government does not have a reasonable basis for gauging the extent of its improper payments; (8) ascertaining the extent of improper payments is the first step in assessing the need for and extent of corrective actions required; and (9) obtaining these data would give agencies baseline information for assessing causes and making cost-effective decisions about enhancing controls to minimize future improper payments.

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