Audit of Department of State FY 2021 Compliance With Payment Integrity Requirements

What OIG Audited
In FY 2021, improper and unknown federal payments government-wide totaled approximately $281 billion. The Payment Integrity Information Act of 2019 (PIIA) requires Inspectors General to annually determine whether agencies complied with the Act and established requirements for agencies that were deemed noncompliant. Kearney & Company, P.C. (Kearney), acting on the Office of Inspector General’s (OIG) behalf, conducted this audit to determine whether the Department of State (Department) complied with PIIA for FY 2021. As part of this objective, Kearney also evaluated the Department’s efforts to prevent and reduce improper and unknown payments.

What OIG Recommends
The Department complied with PIIA requirements for FY 2021. However, OIG made one recommendation to improve the Department’s risk assessment process by considering subsequent events that may impact its risk assessment conclusions. On the basis of the Bureau of the Comptroller and Global Financial Services’ (CGFS) response to a draft of this report, OIG considers the recommendation resolved, pending further action. A synopsis of management’s response to the recommendation and OIG’s reply follow the recommendation in the Audit Results section of this report. CGFS’ response to a draft of this report is reprinted in its entirety in Appendix B.

What OIG Found
For the FY 2021 reporting period, Kearney found that the Department complied with payment integrity requirements, as presented in Table 1.

Specifically, Kearney found that the Department published the FY 2021 financial statements and accompanying material, which included all applicable payment integrity information, on its website. In addition, the Department conducted program-specific risk assessments and made appropriate conclusions related to the risk assessments. The programs subject to risk assessments during FY 2021 are listed in Table A.1. Although in compliance, the Department could improve its risk assessment process by assessing significant subsequent events that may occur after an assessment has been completed. With respect to the Department’s efforts to prevent and reduce improper and unknown payments, Kearney did not identify any needed improvements (including improper and unknown payments determination and estimation methodology, as well as actions to improve prevention and reduction).