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The Requirements


The Improper Payments Elimination and Recovery Improvement Act (IPERIA), Public Law 112-248, signed into law by the President on January 10, 2013, amends the Improper Payments Elimination and Recovery Act (IPERA) of 2010 (Public Law 111-204) which amended the Improper Payments Information Act (IPIA) of 2002 (Public Law 107-300), and repealed the Recovery Auditing Act (Section 831 of the FY 2002 Defense Authorization Act, Public Law 107-107).  Under the IPERIA and OMB implementing guidance in Appendix C of Circular A-123, agencies are to assess all programs and activities they administer and identify those that may be susceptible to significant improper payments.  Where the risk of improper payments is assessed as potentially significant, agencies are required to estimate the annual amount of improper payments and report the estimates in their annual report (PAR or AFR) to OMB, along with plans and targets to reduce improper payments. 


The statute defines a “significant” level of improper payments as annual improper payments exceeding 1) both 2.5 percent of program outlays and $10 million of all program or activity payments made during the fiscal year reported, or 2) $100 million (regardless of the improper payment percentage of total program outlays). 
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HUD’s Commitment


At the time of implementation of the IPIA, the Secretary designated the Chief Financial Officer as the lead official for overseeing HUD actions to address improper payment issues and bring HUD into compliance with requirements of the IPIA and OMB implementing guidance.  The Office of the Chief Financial Officer (OCFO) implemented the IPIA requirements and continues to address improper payment issues under the IPERIA.  HUD’s plans, goals, and results for identifying and reducing improper payments are tracked and reported in the annual AFR.  Additionally, managers are held accountable for achieving improper payment reduction targets via goals established for their program.
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Summary of HUD Results to Date


Prior to enactment of the IPIA, IPERA, and IPERIA, OMB requested agency input on improper payments in select programs, including the Community Development Block Grant (CDBG) Entitlement and Non-Entitlement (States and Small Cities programs).  These CDBG programs were identified through statistical sampling in HUD’s initial annual risk assessment to be at low risk of improper payments and did not warrant reporting.  OMB subsequently revised its guidance to clarify that agencies should continue to report on programs until they could document a minimum of two consecutive years in which improper payments are less than $10 million annually, after which they could submit to OMB a request for relief from annual reporting.


HUD’s analysis for two consecutive years determined that the CDBG Programs were below the $10 million threshold for required reporting, and on March 14, 2007, OMB approved HUD’s request for relief from annual improper payment reporting for those programs.  HUD will continue to conduct an annual risk assessment of the CDBG programs and provide results annually to OMB by June 30. 
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Results of Annual Risk Assessment Update and
Continued Payment Testing


The FY 2013 risk assessment update was based on payments and other relevant activities that occurred during FY 2012.  Approximately 200 distinct program and administrative payment activities were identified from all of HUD’s financial management systems in FY 2012, with total payments of $106.4 billion. The payment universe consisted


Results of Annual Risk Chart


of the following distribution: HUD’s risk assessment update in FY 2013 did not identify any new activities as being at risk of significant improper payments.  Programs that previously tested below the improper payment threshold established by the IPERIA were removed from HUD’s at risk inventory and are not subject to re-testing unless there is significant change in the nature of the activity, HUD’s internal control structure, or operating environment.
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HUD wins 7th consecutive CEAR award.

FY 2013 Agency Financial Report
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