In FY 2023, the federal government obligated approximately $1.2 trillion for grants and cooperative agreements, according to USAspending.gov. This figure does not include obligations for other types of financial assistance, such as loans or direct appropriations. A large portion of grant funding was provided under the Bipartisan Infrastructure Law and the IRA of 2022 while additional funding continued to support the nation’s response to the pandemic through the ARP, the CARES Act, and other COVID-19 funding. Improving access to key financial assistance data continues to be a priority for OMB.
In 2023, OMB undertook an initiative to update the Guidance on Grants and Agreements published in 2 CFR to reduce the administrative burden for federal agencies and recipients, as well as to clarify the guidance and make it more accessible. These updates will represent the most substantial changes to the guidance since its release in December 2013 and will reduce unnecessary compliance requirements and ensure that assistance is delivered in a more effective and impactful way and to the communities that most need it.
On August 19, 2023, OMB issued M-23-19 Establishment of the COFFA. This council created a leadership body in the federal government for oversight and management of federal financial assistance. The COFFA launched a partnership among federal grant-making agencies, providing a single forum to inform federal financial assistance policy, oversight, and technology activities. The COFFA is also responsible for providing strategic direction, policy recommendations, and priority-setting for other government-wide grant-related activities.
Preventing improper payments in the federal government continues to be a management priority. To be successful in preventing improper payments, there must be a focus on systemic enhancements intended to make payments correctly the first time with an emphasis on minimizing monetary loss. An improper payment is any payment that should not have been made or that was made in an incorrect amount under statutory, contractual, administrative, or other legally applicable requirement. The term “improper payment” consists of two main components: 1) improper payments resulting in a monetary loss to the government; and 2) improper payments that do not result in a monetary loss to the government. Monetary loss occurs when payments are made to the wrong recipient and/or in the wrong amount. Improper payments that do not result in a monetary loss include under payments and payments made to the right recipient for the right amount, but the payment was not made in accordance with statute or regulation. The federal government, through the CFO community, continues to develop strategies to better analyze and prevent monetary loss.
Agencies with programs reporting more than $100.0 million in monetary loss provide a quarterly scorecard at PaymentAccuracy.gov. These scorecards provide information on the actions taken and progress made on preventing improper payments that would result in monetary loss to the federal government. Details, including FY 2023 improper payment data, for programs with at least $100.0 million in monetary loss can also be found at PaymentAccuracy.gov. This website also includes payment integrity information that had previously been reported in agency financial reports, such as information about program compliance, corrective actions, and accountability mechanisms.
OMB will continue to work with agencies, the CFO Council, and other stakeholders to improve the identification of the root causes of improper payments that result in monetary loss and to prevent improper payments from occurring.
Since the passage of the CFO Act, the federal financial community has made significant progress in financial accounting and reporting. As shown in Table 10, for FY 2023, 19 of the 24 CFO Act agencies obtained an unmodified opinion from the independent auditors on their financial statements. 29 In addition, 52 auditor-identified material weaknesses were identified for FY 2023, two more than in FY 2022. Twenty-eight of these are associated with DOD. The other 24 material weaknesses are associated with non-DOD agencies. Although virtually all federal agencies have adopted and maintained disciplined financial reporting operations, implemented effective internal controls over financial reporting, and integrated transaction processing with accounting records, weaknesses in financial management practices continue to prevent the government as a whole from achieving an audit opinion.
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