U.S. Department of State Fiscal Year 2020 Agency Financial Report

Payment Integrity and Other Laws and Regulations P ayment I ntegrity I nformation A ct O ver the past decade, laws and regulations governing the identification and recovery of improper payments have evolved to strengthen improvements in payment accuracy and raise public confidence in Federal programs. The Improper Payments Information Act of 2002 (IPIA), as amended and expanded by other related laws, collectively required agencies to periodically review all programs and activities to identify those susceptible to significant improper payments, to conduct payment recapture audits, and to leverage Government-wide Do Not Pay initiatives. The IPIA regulations also required extensive reporting requirements. In recent years, OMB transformed the improper payment compliance framework to create a more unified, comprehensive, and less burdensome set of requirements. IPIA was repealed and replaced by the Payment Integrity Information Act of 2019 (PIIA), which was passed on March 2, 2020. The PIIA modified and restructured existing improper payments laws to help agencies better identify and reduce any money wasted as a result of improper government payments. Not all improper payments are fraud, and not all improper payments represent a loss to the government. Generally, an improper payment is any payment that should not have been made or that was made in an incorrect amount under a statutory, contractual, and administrative or other legally applicable requirement. The Department defines its programs and activities in alignment with the manner of funding received through appropriations, as further subdivided into funding for operations carried out around the world. Risk assessments over all programs are done every three years. In the interim years, risk assessments evaluating programs that experience any significant legislative changes and/or significant increase in funding will be done to determine if the Department continues to be at low risk for making significant improper payments at or above the threshold levels set by OMB. The Department conducted a risk assessment of all programs and activities in 2019. During 2020, the Department conducted risk assessments of the following programs: Voluntary Contributions; Assessed Contributions; Diplomatic and Support Programs; Security in Afghanistan and Pakistan; International Security; Embassy Operations; and Construction. After performing risk assessments for these programs, the Department determined that none of its programs in 2020 were risk-susceptible for making significant improper payments at or above the threshold levels set by OMB. Annually, the Department submits data to OMB that is collected and presented on https://paymentaccuracy.gov/ by individual agency or on a Government-wide consolidated basis. This website contains current and historical information about improper payments made under Federal programs, as well as extensive information about how improper payments are defined and tracked. Please refer to the https://paymentaccuracy.gov/ website for detailed results from the Department's efforts in 2020 to comply with PIIA. F raud R eduction R eport Government leaders are under increasing pressure, with limited resources and more public scrutiny, to reduce or eliminate fraud, waste, abuse, misconduct, and improper payments in Federal programs and operations. Fraud in the Federal Government is a serious problem that wastes taxpayer dollars, prevents Federal programs from carrying out their intended purpose and serving target populations, and creates potential national security risks. Congress and Federal agencies have been working to combat fraud and reduce improper payments by creating policies and legislation that will give agencies the tools that they need to target and prevent fraud. PIIA incorporated section 3(a) of the Fraud Reduction and Data Analytics Act (FRDAA) of 2015 and officially repealed FRDAA. Therefore, under PIIA agencies are 140 | U ni ted S tates D epartment of S tate 2020 A gency F inanci al R eport OTHER INFORMATION | PAYMENT INTEGRITY AND OTHER LAWS AND REGULATIONS