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The Five Initatives


2002: Steadily Improving Financial Performance

This Improved Financial Performance initiative is improving the quality and timeliness of financial information so that it can be used to reduce waste, fraud, and abuse and manage federal programs more effectively. We are able to show real improvement here.

21 of 24 major departments and agencies passed their fiscal year 2002 financial audits. For the first time ever, the Department of Agriculture, with Ted McPherson as CFO, received a clean opinion on its financial statements. The Department, which has received a disclaimer for the past 6 years, overcame massive financial management challenges to get its clean audit opinion. The Department of Education (Jack Martin, CFO), FEMA (Matt Jadacki, Acting CFO) and NASA (Gwendolyn Brown, Acting CFO) reclaimed the clean opinions they lost in the past. USAID (Susan Rebern, CFO) also made substantial progress receiving a qualified opinion-an improvement from 6 consecutive disclaimers.

We are accelerating the deadline for financial statements from March 31st to November 15th in 2004, just 45 days after the end of the fiscal year. The Department of the Treasury (Teresa Ressel, Acting CFO) and the Social Security Administration (Dale Sopper, CFO) met the accelerated deadline this reporting cycle, 2 years ahead of schedule. The fact that these agencies met the 45 day goal, compared with 151 days in the past, shows that the government's managers can meet this new standard.

There is also progress in resolving material weaknesses, major challenges identified in the financial statement audit process. For the first time in 20 years, EPA (Linda Combs, CFO) has no material internal control weaknesses and no reportable conditions.

We are getting a handle on the problem of erroneous payments. After all, you can't manage what you can't measure. Measuring erroneous payments is a first step to reducing them. Although previously reported to be around $20 billion, estimates we have received for programs that make almost $1 trillion in payments each year show that erroneous payments are more than $30 billion. While clearly unacceptable, these growing estimates demonstrate that agencies are actually coming closer to understanding the scope and nature of the problem

Medicare's erroneous payment rate has fallen from 6.8 percent to 6.3 percent and the Food Stamp program reduced its national error rate from 8.9 percent to 8.7 percent. Just these small rate reductions prevented the waste of almost $1 billion. To maintain the pressure to keep erroneous payments low, the Department of Agriculture's Food and Nutrition Service pursued cash sanctions against states with above-average error rates in the Food Stamps program. These and other agencies are taking steps to ensure that applicants for benefits are eligible for them. Agencies are using existing federal databases - like the New Hires database, which provides regular updates of individual income - to verify the income of applicants for federal benefits.

Congress endorsed our erroneous payments effort with the passage of the Improper Payments Information Act of 2002. This expands the requirement for programs to estimate their erroneous payments. This is the first step to reducing them and preventing the waste of taxpayer dollars.

Yours truly,

Mark Everson

The Five Initatives:
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