Reducing Improper Payments in the Federal Government

According to paymentaccuracy.gov, federal agencies reported $125.4 billion in improper payments in FY2010, which marked an increase of $16.2 billion from the prior year estimate. Payment and vendor-pricing errors, as well as duplicate payments hurt an organization. According to Accenture research, the average error is 1-5 for every 1,000 payment transactions and even the best-run organizations have an error rate of 1-2 in every 1,000 transactions.

On July 22, the Improper Payments Elimination and Recovery Act of 2010 (IPERA) was enacted. IPERA amended the Improper Payments Information Act (IPIA) by expanding on the previous requirements for identifying, estimating and reporting on programs and activities susceptible to significant improper payments and to expand requirements for recovering overpayments across a broad range of federal programs.

Accenture is helping organizations to achieve high performance with innovative prevention, detection and recovery services that combine people, process and technology to deliver immediately measurable results. With the appropriate audit and analytics tools and techniques, agencies can drive toward high performance. These tools and techniques include:

• Post-payment recovery audit—A combination of processes, proprietary technology and experienced personnel to help identify lost funding and recover overpayments, duplicate or erroneous payments.
  
  
• Business analytics—Analysis of payables transactions to locate process weaknesses and identify opportunities to enhance finance capabilities.
  
  
• Prevention of overpayments—Technology toolsets to help detect and prevent vendor overpayments in real time and monitor transaction accuracy.
  
  

The potential benefits that agencies can achieve are significant:

• Increased internal controls and contract validation.
  
  
• Better alignment of resources, enabling a clearer focus on business issues.
  
  
• Accurate payments and improved cash flow.
  
  
• Reduced rework, collection effort, and overall post-audit costs.

Accenture has enabled organizations to prevent and recover more than $270 million through our Accenture Transaction Compliance & Analytics solution. Organizations have been reaping the advantages of the tools available to prevent improper payments and recover overpayments. With Accenture’s help, several clients have achieved the following results:

• A leading mobile telecommunications company has, to date, prevented more than $37 million in overpayments.
  
  
• A global hotel and hospitality group has prevented overpayments in excess of $11 million with more than 10,000 claims.
  
  
• A multinational pharmaceutical company has prevented overpayments in excess of $8 million.
  
  
• A global natural resources company has prevented overpayments in excess of $3.6 million.
  
  
• A federal health care program, with nearly 1.5 million payments since inception, has verified compliance mechanisms and payment controls to confirm a very low rate of erroneous payments.
  
  

In today’s stormy fiscal environment, ensuring that federal dollars are spent as intended is critical. Establishing effective accountability measures to prevent and reduce improper payments, and to recover overpayments, becomes an even higher priority. In this regard, identifying and analyzing causes of improper payments will be a key to developing effective corrective actions to move to the next phase of reducing and preventing improper payments in the federal government.