The objective of our audit was to determine whether the U.S. Department of Education (Department) complied with the Payment Integrity Information Act of 2019 (PIIA) for fiscal year (FY) 2025.
We found that the Department complied with the PIIA for the FY 2025 reporting period because it met all six compliance requirements. We also found that some of the Department’s oversight and financial controls that identify and prevent improper payments and unknown payments are operating at a reduced scale due to workforce optimization efforts undertaken during FY 2025. However, the Department believes that despite the reduction in force and other staffing changes that occurred last year, it maintains the core capabilities necessary to support compliance with the PIIA and OMB Circular A-123, Appendix C, requirements. Additionally, we found that the Department could improve its processes for implementing its methodologies for estimating improper payments and unknown payments. While we found that the point estimates for the Federal Pell Grant (Pell) and William D. Ford Federal Direct Loan (Direct Loan) programs reflect the programs' annual improper payments and unknown payments, we found that the Department’s improper payment and unknown payment estimates for these programs were not reliable because of issues in the calculation of the confidence intervals. Specifically, the improper payment sampling and estimation plans for the Pell and Direct Loan programs included nonrandom student-level sampling from some of the compliance audits Federal Student Aid (FSA) used to calculate the estimates, which affected the accuracy and appropriateness of the confidence intervals used in the calculation of the improper payment and unknown payment estimates. The nonrandom student-level sampling issue has been a repeat finding since our report on the Department’s compliance with improper payment reporting requirements for FY 2019.
We recommend that the Department and FSA assess the adequacy of resources and control activities to ensure that oversight and financial controls are designed and implemented appropriately to adequately identify and prevent improper payments and unknown payments in light of recent workforce optimization efforts, and that FSA develop sampling and estimation plans for the Pell and Direct Loan programs that will produce reliable estimates.