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Thoughts on the AGA Conference: Experts Agree “Pay and Chase” Not the Answer

on February 28, 2013
In his opening address to the Association of Government Accountants (AGA) National Leadership Conference, Gene Dodaro, Comptroller General of the Government Accountability Office (GAO), mentioned "detect and prevent improper payments' at the top of his list of how the accountability community can help to address fiscal and performance challenges facing Federal Government.  With Federal Government budgets already tighter and facing further belt-tightening and scrutiny with impending sequestration, Mr. Dodaro emphasized that the ultimate goal is to prevent improper payments from occurring in the first place.  He also mentioned that in 2012 four programs didn't even provide data on improper payments and six others who did had their estimates and the accompanying data rejected because their estimates did not meet OMB guidelines for providing the estimates. Great work is being done in a number of departments and agencies to achieve this objective, including some of Oversight’s most successful government implementations at the US Department of Defense (DOD) Defense Finance and Accounting Service (DFAS), the US Department of Education (ED), and the Bureau of the Census.  DFAS, ED, and Census along with other departments and agencies leverage continuous monitoring and analysis along with the automated insights this produces to predict improper payments that are going to take place so that steps can be taken to prevent the payments from occurring.  They also leverage these systems to address process or systemic issues to prevent the same thing from recurring.  Taking into account the cost of hardware, software, IT operations, and financial management operations, Oversight has seen cost to prevention ratios ranging from $3 to $30 of improper payments prevented for every $1 in monitoring and automated insights costs. Even at the low end of this prevention to cost ratio, Federal Government experience indicates that automated monitoring should be in place in every department and agency, and particularly those like the Centers for Medicare and Medicaid Services (CMS), the Internal Revenue Service (IRS) Earned Income Tax Credit (EITC), and Department of Labor Unemployment Insurance (UI) programs that are at the top of the GAO's "high priority programs" list.  Further, achieving President Obama’s objective of attacking fraud, waste, and abuse in government spending means applying automated monitoring to all payments including vendor payments, grants, purchase cards, fleet cards, and travel cards. Most people now agree that "pay and chase" activities like recovery audits aren't the answer.  In both tough times and prosperous times it seems like common sense to ensure that improper payments are prevented before they occur.  And when the worst case return on investment is 3:1, automated monitoring seems like a solution with which both sides of the aisle can agree.