NASA Procedural Requirements

NPR 9010.3A Effective Date: February 03, 2020 Expiration Date: February 03, 2025

Subject: Financial Management Internal Control

Responsible Office: Office of the Chief Financial Officer

Chapter 4. Improper Payments and Recovery

4.1 Overview

4.1.1 An improper payment occurs when Federal funds go to the wrong recipient, the recipient receives an incorrect amount of funds, or the recipient uses the funds in an improper manner. Agency managers are held accountable for strengthening financial management controls to detect and prevent improper payments and ensure that taxpayer dollars are spent wisely and efficiently. Improper Payments Information Act of 2002, as amended, Pub. L. 107-300, Improper Payments Elimination and Recovery Act of 2010, Pub. L. 111-204, and Improper Payments Elimination and Recovery Improvement Act of 2012, Pub. L. 112-248 emphasized improper payment requirements and accountability.

4.1.2 The quality assurance program covering improper payments is intended to ensure that assessments and remediation comply with Pub. L. 107-300, Pub. L. 111-204, Pub. L. 112-248, OMB Circular A-123, Appendix C, and Disposition of Recovered Funds, 31 U.S.C. § 3562. This Chapter provides policy for the effective measurement and remediation of improper payments.

4.2 Improper Payments and Recovery Requirements

4.2.1 The Agency CFO shall ensure compliance with the requirements of Pub. L. 107-300, Pub. L. 111-204, Pub. L. 112-248, OMB Circular No. A-123, and 31 U.S.C. § 3562 through an integrated quality assurance program and report to the President and Congress, through the Performance and Accountability Agency Financial Report, an estimate of the annual amount of improper payments for programs and activities deemed to be susceptible to significant improper payments, regardless of the annual amount of the estimate.

4.2.2 The Agency OCFO shall conduct a risk assessment of all Agency programs at least once every three fiscal years to identify all programs and activities that may be susceptible to significant improper payments in accordance with Pub. L. 111-204.

4.2.3 The Agency OCFO shall report Recovery Audit information in the annual Agency Financial Report in accordance with OMB Circular No. A-136, Financial Reporting Requirements.

4.3 Improper Payments Information Act Requirements

4.3.1 Per Pub. L. 107-300, Pub. L. 111-204, and Pub. L. 112-248, the OCFO, QAD shall conduct a periodic risk assessment on all programs and activities, at least once every three years and identify those which are susceptible to significant improper payment risk. OMB Circular A-123 defines “significant improper payments” as gross annual improper payments (i.e., the total amount of overpayments and underpayments) in the program/activity exceeding (1) both 1.5 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 payments percentage of total program outlays).

4.3.2 For each program or activity determined to be susceptible to significant improper payments, Agency OCFO shall obtain a statistically valid estimate of the annual amount of improper payment in the program or activity. The estimate is a gross total of both over- and under-payments and is based upon a statistically valid sampling and estimation plan that conforms to the requirements of OMB Circular A-123, Appendix C.

4.3.3 The Agency CFO shall identify the root causes of the improper payments and implement appropriate corrective actions to prevent and reduce improper payments.

4.4 Recovery Auditing Requirements

4.4.1 Carry out a cost-effective program for identifying errors made in paying contractors and recovering amounts erroneously paid to the contractors. Recovery audits may be performed by employees of the Agency, by any other department or agency of the United States Government acting on behalf of the executive agency, or by contractors performing recovery audit services under contracts awarded by the executive agency. However, the OIG and other Agency external auditors are normally precluded from carrying out management’s recovery audit program due to independence considerations. NASA may enter into any appropriate type of contract, including a contingency contract, for recovery audit services.

a. All classes of contracts and contract payments should be considered for recovery audits. NASA may exclude classes of contracts and contract payments from recovery audit activities if the Agency head determines that recovery audits are inappropriate or are not a cost-effective method for identifying and recovering improper payments.

b. Recovery auditing contractors may, with the consent of NASA, communicate with vendors for the purpose of identifying the validity of potential payment errors they have identified. However, the recovery auditing contractor may not maintain a presence on the property of the vendors that are the subject of recovery auditing.

c. The recovery auditing contractor itself may not perform the collection activity, unless it meets the definition of a private collection agency, and NASA has statutory authority to utilize private collection agencies. If private collection agencies are used, they shall follow all applicable laws and regulations governing collection of amounts owed to the Federal Government.

d. All funds collected and all direct expenses incurred as part of the recovery audit program are to be accounted for specifically.

e. The identity of all funds recovered are to be maintained as necessary to facilitate the crediting of recovered funds to the correct appropriations and to identify applicable time limitations associated with the appropriated funds recovered.

f. Funds collected under a recovery audit program less any amounts needed to make payments under the related contract(s) are to be available to reimburse the actual expenses incurred for the administration of the program and to pay contractors for recovery audit services.

g. Except as provided in paragraph h below, any amounts erroneously paid by NASA that are recovered under a recovery audit program that are not used to reimburse expenses or pay recovery audit contractors are to be credited to the appropriations from which the improper payments were made, merged with other amounts in those appropriations, and be available for the purposes and period for which such appropriations are available, or if no such appropriations remain available, the funds recovered are deposited to the Treasury as miscellaneous receipts.

h. Contingency fee contracts are to preclude any payment to the recovery audit contractor until the recoveries are actually collected by the Agency.

i. The OCFO, QAD shall submit a Recovery Audit report in accordance with OMB Circular A-136.

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NODIS

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