Monday, March 15, 2010

Finding and Recapturing Improper Payments - Incentivizing the Auditors

Late last week, President Obama announced another program to reduce payment errors and eliminate waste, fraud and abuse in Federal programs.

Previously, last November, the President issued an Executive Order 13520 directing Executive departments and agencies to use every tool available to identify and subsequently recliaim the funds associated with improper payments.
The identification of improper payments promotes accountability at executive departments and agencies; it also makes the integrity of Federal spending transparent to taxpayers. Reclaiming the funds associated with improper payments is a critical component of the proper stewardship and protection of taxpayer dollars, and it underscores that waste, fraud, and abuse by entities receiving Federal payments will not be tolerated
To further intensify efforts to reclaim improper payments, the Obama administration is expanding the use of "Payment Recapture Audits," which have proven to be effective mechanisms for detecting and recapturing payment errors".

A Payment Recapture Audit is a process of identifying improper payments paid to contractors or other entities whereby highly skilled accounting specialists and fraud examiners use state-of-the-art tools and technology to examine payment records and uncover such problems as duplicate payments, payments for services not rendered, overpayments, and fictitious vendors.

Here's where it gets real interesting. The President emphasized one approach that has worked effectively in the past - using professional and specialized auditors on a contingency basis, with their compensation tied to the identification of misspent funds. This is going to get very interesting - hoardes of auditors paid on a contingency basis. There has never been a more important time to ensure your billing system is adequate. We can help you.

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