Elimination of Improper Payments U.S. DEPARTMENT OF AGRICULTURE RURAL DEVELOPMENT PAYMENT RECAPTURE RECOVERY AUDITING (PRRA) INITIATIVE RENTAL ASSISTANCE (RA) PROGRAM 2

USDA, Rural Development Rental Assistance Program  The Rental Assistance (RA) program is Rural Development’s number one high risk program for improper payments and is part of phase 1 of the PRRA initiative for the Department.  The RA program provides financial assistance for households with income too low to pay the basic rent in Multi-Family Housing (MFH) complexes.  Rural Development pays the owner of the MFH complex the difference between the tenant’s contribution (30% of their adjusted income) and the monthly rental rate. 3

USDA, Rural Development Rental Assistance Statistics  The RA program total outlays were approximately $1.12 billion in fiscal year  Funds are disbursed to approximately 15,000 Multi- Family Housing project owners to subsidize the unit rent for approximately 270,000 lower income tenants.  Based on an extrapolation from an internal audit we have estimated that approximately $38 million or 3.44% in improper payments were made in fiscal year

USDA, Rural Development Rental Assistance Statistics  The RA program is subject to risk because there are over 450,000 tenants nationwide, with approximately 270,000 receiving RA, that must be monitored to ensure their income situation has not changed in a way which would make them ineligible to receive assistance.  Tenant income is recertified on an annual basis; however, if a tenant has a change in income during the year and fails to report it then there is a potential for an improper payment of RA. 5

USDA, Rural Development Current Tenant Certification Process  Prior to the PRRA, Rural Development identified most improper payments through an annual tenant income certification process. Challenge with this process are:  It is an annual process performed by the project managers. If a change occurs, such as a death of the tenant or an increase in income, it may not be identified timely.  It is a manual process so it is at risk for typographical / calculation errors.  Missing or lack of documentation from the tenant.  Once every 3 years a Rural Development site visit is performed where the tenant certifications are validated. 6

USDA, Rural Development Current Activities  As a pilot Rural Development provided a data extract file of 450,000 tenants to Accenture in December  Accenture utilized their Accenture Transaction Compliance & Analytics Tool (ATCAT) to provide Rural Development a report of approximately 400 tenants suspected of receiving an improper payment based on current program policies.  390 tenants were identified as receiving RA that were believed to be deceased for more than 30 days. The remainder were related to typographical errors, errors related to deductions, or incorrect SSN reported. 7

USDA, Rural Development Current Activities  Rural Development’s MFH Program Staff and servicing offices across the country analyzed the tenant information in June 2013 to verify if improper payments were made.  Once improper payments were verified, Rural Development began establishing receivables for the recapture of the payments. So far, we have established 71 receivables for $43,127 and have collected $15,496.  Rural Development will continue to bill and recover funds from individuals that received improper payments. 8

USDA, Rural Development Future Activities  Accenture will provide status reports, analyze the results, and provide recommendations to refine the RA Program to prevent improper payments in the future. Accenture is also working on developing a wage matching process.  Rural Development will make changes to the current processes and/or add edits or interfaces to existing systems to reduce future improper payments. 9

USDA, Rural Development C hallenges  Creation of data extract file with appropriate details  Protection of Personally Identifiable Information  Reduce the number of false positives based on additional program policies  Lack of resources for the manual review process to validate tentatively identified improper payments  Automation changes needed to track improper payments and recoveries, and to prevent future improper payments 10

USDA, Rural Development Benefits of PRRA Services  Reduce number of improper payments  Increase recoveries  Identify improper payment causes and provide recommendations to prevent future improper payments 11

Contact Information  Tony Bainbridge U.S. Department of Agriculture Rural Development Deputy Chief Financial Officer (314)