Although the Department of Homeland Security has made improvements to reduce improper payments (IPs) and unknown payments (UPs), the Office of Inspector General (OIG) has found that DHS did not comply with the Payment Integrity Information Act of 2019 (PIIA) in fiscal year (FY) 2022.
According to Office of Management and Budget (OMB) Circular A123, an agency must meet all 10 PIIA requirements to be considered compliant. Although DHS complied with 9 of the 10 requirements, OIG said it did not comply with the requirement to ensure that the IP risk assessment methodology it used adequately concluded whether a program was likely to make IPs and UPs above or below the statutory threshold.
Specifically, DHS concluded that the Federal Emergency Management Agency’s (FEMA) Funeral Assistance program was unlikely to make IPs and UPs and, therefore, did not need payment integrity testing. OIG found this conclusion inconsistent with its own review of the program’s risk assessment and recent OIG and Government Accountability Office reports, which indicated that the Funeral Assistance program is at high risk for IPs, fraud, waste, and abuse. Ultimately, OIG determined that the internal control testing FEMA conducted did not account for internal control deficiencies in the component’s policies and procedures or for the inherent risk associated with an unprecedented demand for assistance due to the COVID-19 pandemic.
OIG has made three recommendations to address the shortcomings, with which DHS has concurred. The Department added that the FEMA Office of the Chief Financial Officer’s Risk Management and Compliance Division will conduct payment integrity testing on FY 2022 Funeral Assistance program disbursements as part of the FY 2024 reporting cycle. In addition, DHS said its Office of the Chief Financial Officer’s Risk Management and Assurance Division will ensure that all DHS components, including FEMA, assess and conduct payment integrity testing in accordance with PIIA requirements.