Reducing Improper Payments to Achieve High Performance inFederal Government

2 Reducing Improper Payments to Achieve High Performance

According to a recent GAO report, “Federal agencies reported an estimated $115.3 billion in improper payments in fiscal year 2011, a decrease of $5.3 billion from the prior year reported estimate of $120.6 billion. The $115.3 billion estimate was attributable to 79 programs spread among 17 agencies.” While progress has been made, there are still opportunities for federal agencies to further mitigate improper payments.

Impetus for ChangeOn July 22, 2010, the Improper Payments Elimination and Recovery Act of 2010 (IPERA) was enacted. IPERA amended the Improper Payments Information Act (IPIA) by expanding on the previous requirements for identifying, estimating and reporting on programs and activities susceptible to significant improper payments and by expanding the requirements for recovering overpayments across a broad range of federal programs.

In today’s stormy fiscal environment, ensuring that federal dollars are spent as intended is critical. Establishing effective accountability measures to prevent and reduce improper payments, and to recover overpayments, becomes an even higher priority. Identifying and analyzing causes of improper payments is key to developing effective corrective actions to move to the next phase of reducing and preventing improper payments in the federal government.

With the right business tools and techniques, federal agencies can detect and prevent overpayments and missed gains, saving taxpayers billions of dollars and making sure that funding is spent as intended.

Using Data Analytics to Detect and Recover FundsFederal agencies must move beyond a reactive, post-payment recovery mindset to one that prevents lost funding and overpayments by using advanced analytic tools to identify processing errors proactively (such as duplicate and erroneous payments) before payments are made. Combined with traditional post-payment recovery audit capabilities, agencies should use data learned from advanced analytics to better determine use of funding, optimize payment terms, tighten operating controls, enhance compliance and gain greater insight into their spending with suppliers.

Analyzing an agency’s procurement and payables data helps prevent, detect and recover the lost funding or erroneous payments that can result from human error, systems integration issues and contract non-compliance. Using advanced business analytics can help an agency to:

Detect and recover lost funding and identify root cause issues.

• Deploy unique solutions to prevent future overpayments and under-recoveries.

• Identify opportunities to reduce and avoid unnecessary costs.

• Highlight opportunities to improve processes and controls.

Achieving High Performance with Cloud Services Cloud computing is currently helping organizations reduce costs, enhance scalability, increase implementation speed, and improve applications and business processes. Cloud computing comprises a set of next-generation technologies, which enable services and solutions that will be:

• Financially more attractive. Total cost of ownership at least 40 percent less and requires little if any capital.

• Operationally, contractually and financially flexible.

• Able to match or improve the functionality that you have today, getting better over time.

• Available as soon as you are ready.

3Reducing Improper Payments to Achieve High Performance

Capturing Overpayments with the Right CapabilitiesThe Accenture Transaction Compliance & Analytics Tool is designed to prevent errors and overpayments before they occur. The tool monitors purchasing and payable transactions using sophisticated algorithms beyond those of even advanced enterprise resource planning (ERP) solutions. This is a radical change in finance and accounting management—an opportunity for agencies to move from a cyclical, post-payment audit routine to a prevention-focused environment where errors are identified and corrected before payment is made.

The tool is flexible and is designed to integrate with any ERP environment, with a short implementation period and a significant return on investment. During operations, it receives uploaded accounts payable data on a regular basis. The tool is a rule-based system that finds problem transactions and promptly sends “warnings” (generated before a suspect payment is made) or “notifications” (generated after a suspect payment has been made) to predetermined personnel. The Accenture Transaction Compliance & Analytics Tool has four modules:

• Duplicate Payments identifies potential or already executed duplicate payments.

• Erroneous Payment compiles pre-payment and disbursement history data to identify potential payments that were made beyond actual invoice amounts.

• Non-Compliant Payments identifies potential non-compliance and provides fraudulent activity analytics (i.e., Vendor Bank Account Duplicate, Invoice Date Suspicious, 3-Way Match, Duplicate Contracts).

• True Positive Manager manages true positive exceptions—compiling a detailed claim history and efficiently monitoring status.

Success StoriesAccenture has enabled organizations to prevent and recover more than $270 million through the Accenture Transaction Compliance & Analytics Tool. Clients have achieved remarkable results, including:

• A leading mobile telecommunications company has, to date, prevented more than $37 million in overpayments.

• A global hotel and hospitality group has prevented overpayments in excess of $11 million with more than 10,000 claims.

• A multinational pharmaceutical company has prevented overpayments in excess of $8 million.

• A global natural resources company has prevented overpayments in excess of $3.6 million.

• A federal healthcare program, with nearly 1.5 million payments since inception, has verified compliance mechanisms and payment controls to confirm a very low rate of erroneous payments.

Bringing the Tools and Technology to Reduce Improper PaymentAccenture is helping organizations to achieve high performance with innovative prevention, detection and recovery services that combine people, process and technology to deliver immediately measurable results. These tools and techniques include:

• Post-payment-recovery audit: A combination of processes, proprietary technology and experienced personnel to help identify lost funding and recover overpayments, duplicate or erroneous payments.

• Business analytics: Analysis of payables transactions to locate process weaknesses and identify opportunities to enhance finance capabilities.

• Prevention of overpayments: Technology tool sets to help detect and prevent vendor overpayments in real time and monitor transaction accuracy.

The potential benefits that agencies can achieve are significant:

• Accurate payments and improved cash flow.

• Reduced costly rework, collection efforts and overall post-audit costs

• Increased internal controls and contract validation.

• Better alignment of resources, enabling a focus on business issues.

For more information, please contact:Kevin Greer, CPA, PMPExecutive DirectorAccenture Federal Finance and Enterprise Performancekevin.t.greer@accenturefederal.com+1 703 947 1470

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About Accenture Accenture is a global management consulting, technology services and outsourcing company, with approximately 244,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.