I. Payment Types
For purposes of PIIA implementation, all program outlays will fall in one of three possible payment type categories: proper payment; IP; or UP. At a high level, a payment is ‘proper’ if it was made to the right recipient for the right amount, a payment is ‘improper’ if it was made in an incorrect amount or to the wrong recipient, and for instances where an agency is unable to determine whether the payment falls into the proper or improper category that payment should be considered an ‘unknown’ payment. Programs should use reasonableness when deciding which of the three buckets a payment falls into.
A. Types of Improper Payments
All IPs will fall into one of two categories: (1) IPs resulting in a monetary loss or (2) IPs that do not result in a monetary loss. The monetary loss IPs have an overpayment amount that, in theory, should/could be recovered whereas the non-monetary loss IPs do not have any associated transfer of Federal funds that were in excess and therefore cannot be recovered.
1. Monetary Loss Improper Payments
Although working to reduce all IPs is important goal, the prevention of IPs resulting in a monetary loss should be the highest priority. Both unintentional and intentional IPs that result in a monetary loss jeopardize agency missions by diverting resources from their intended purpose. The nuance between the two is that IPs that are intentional are fraudulent.
a) Intentional vs. Unintentional Monetary Loss IP
Monetary loss IPs, fall into two distinct categories, those which are intentional and those which are unintentional. Intentional monetary loss IPs are more commonly referred to as financial fraud and are overpayments that occur on purpose. Unintentional monetary loss IPs are overpayments that are accidental in nature because at the time of the payment the program is
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