FSA  uses this information to determine farm program payments, including  payments for various agricultural disaster assistance programs. In a 2007 report, we recommended that FSA implement management  controls, such as matching payment files with SSA’s death master file, to  verify that an individual receiving payments has not died and to provide  reasonable assurance that the agency does not make improper payments  to deceased individuals. FSA Has Established Procedures for Preventing Improper Payments to the Deceased, but Some Supporting Information Is Incomplete

Since 2007, FSA has established procedures for preventing improper  payments to deceased individuals, including matching payments to  program participants with SSA’s data on deceased individuals. This match identifies any program participants who have died. We examined a generalizable random sample of 100 payments  that were made to deceased individuals over a 1-year period beginning in  April 2011 and coded as proper, and we estimated that FSA county  offices coded 91 percent of these payments correctly. On the basis of supporting evidence FSA provided us, we found 9 payments that did not  have sufficient support to be coded as proper. NRCS Does Not Have Procedures in Place to Prevent Improper Payments to Deceased Individuals

NRCS does not have procedures to prevent improper payments to  deceased individuals, and its ability to verify whether payment recipients  are dead or alive is limited. As a result, the agency cannot be certain that  payments it made to over a thousand deceased individuals are proper. In so doing, we estimate that NRCS made $10.6 million in payments  on behalf of 1,103 individuals 1 year or more after death. As a result, RMA may have  provided potentially improper crop insurance subsidies and administrative  allowances on behalf of thousands of deceased individuals. To determine whether some of RMA’s subsidies and allowances may  have been provided on behalf of policyholders who were deceased, we  matched policyholders’ Social Security numbers from RMA’s crop  insurance subsidies and administrative allowance data for crop  reinsurance years 2008 through 2012 against SSA’s complete death  master file. We found that approximately $22 million in subsidies and  allowances may have been provided on behalf of 3,434 policyholders 2 or  more reinsurance years after death. Without  reviewing each subsidy that could have been made to a deceased  individual and reconciling it with SSA’s complete death master file,  however, RMA cannot know whether such subsidies were proper or  improper. Under the standards for  internal control in the federal government, agencies are to clearly  document internal control in the form of management directives,  administrative policies, or operating manuals, and the documentation  should be readily available for examination.policyholders, RMA may be unable to rely on results from data mining  and therefore be less likely to detect fraudulent, wasteful, or abusive crop  insurance claims. FSA’s quarterly review process has largely  enabled the agency to identify thousands of individuals who were paid  after their dates of death. To help RMA prevent improper crop insurance subsidies on behalf of  deceased individuals and to improve the effectiveness of its data  mining, we recommend that the Secretary of Agriculture direct the  Administrator of RMA to develop and implement procedures to  prevent potentially improper subsidies on behalf of deceased  individuals, including (1) matching RMA’s crop insurance records  against SSA’s complete death master file and (2) reviewing each  subsidy provided on behalf of a deceased individual to ensure that an  improper subsidy was not provided. In its comment letter, USDA generally agreed  with our report’s findings and recommendations but stated that it believes  we inaccurately represented NRCS and RMA as having no procedures in  place to identify deceased participants. Appendix I: Objectives, Scope, and Methodology

The objectives of our review were to determine the extent to which  procedures are in place to prevent (1) the Farm Service Agency (FSA)  from making potentially improper payments to deceased individuals,  (2) the Natural Resources Conservation Service (NRCS) from making  potentially improper payments to deceased individuals, and (3) the Risk  Management Agency (RMA) from providing potentially improper subsidies  on behalf of deceased individuals. To determine if state and county offices accurately coded payments made  to deceased individuals as proper or improper, we analyzed a  generalizable, random sample of payments made by FSA to deceased  individuals from April 2011 through March 2012, and we reviewed and  analyzed supporting documentation to determine the individuals’  eligibility. We  did not review a portion of payments made under these programs  because NRCS was unable to provide us with the Social Security  numbers for some program participants. Federal Farm Programs: USDA Needs to Strengthen Controls to Prevent  Improper Payments to Estates and Deceased Individuals.
Why GAO Did This Study

USDA spends about $20 billion annually on federal programs that support farm income, conserve natural resources, and help farmers manage risks from natural disasters, benefiting over 1 million participants. Given their cost and continuing nationwide budget pressures, these programs have come under increasing scrutiny. One concern has been the distribution of benefits to ineligible participants, including potentially improper payments to deceased individuals, which, as GAO and others have reported, may call into question whether these farm safety net programs are benefiting the agricultural sector as intended. GAO was asked to evaluate USDA controls over payments to the deceased. This report examines the extent to which procedures are in place to prevent (1) FSA and (2) NRCS from making potentially improper payments to deceased individuals and (3) RMA from providing potentially improper subsidies on behalf of deceased individuals. GAO reviewed a random sample of payments, compared USDA's databases with SSA's master list of deceased individuals, and interviewed agency officials.

What GAO Found

Since 2007, the Department of Agriculture's (USDA) Farm Service Agency (FSA), which administers various programs for farmers that help support farm incomes and provide disaster assistance, has established procedures for preventing improper payments to deceased individuals, including, on a quarterly basis, matching payments to program participants with the Social Security Administration's (SSA) data on deceased individuals. In addition, FSA state and county offices review and verify whether payments made to deceased individuals are proper or improper. Overall, these procedures have enabled FSA to identify thousands of deceased individuals who were paid $3.3 million in improper payments after their dates of death, of which FSA has recovered approximately $1 million. GAO reviewed a generalizable random sample of payments to deceased individuals that FSA identified as proper and found that 9 percent did not have sufficient support to be coded as proper. More monitoring to ensure that county offices' coding of payments is supported by documentation could help reduce the error rate.
The Natural Resources Conservation Service (NRCS), a USDA agency that administers voluntary conservation programs, does not have procedures to prevent potentially improper payments to deceased individuals. For example, NRCS's ability to verify whether payment recipients have died is limited because the agency does not match these recipients against SSA's master list of deceased individuals. Under the standards for internal control in the federal government, agencies are to clearly document such control in the form of management directives, administrative policies, or operating manuals. GAO did a data review for fiscal year 2008 to April 2012, and estimates that NRCS made $10.6 million payments on behalf of 1,103 deceased individuals 1 year or more after their death. Some of these payments may have been proper, but NRCS cannot be certain because it neither identifies which of its payments were made to deceased individuals, nor reviews each of these payments.
USDA's Risk Management Agency (RMA), which administers crop insurance programs, does not have procedures in place consistent with federal internal control standards to prevent potentially improper subsidies on behalf of deceased individuals. For example, RMA does not use SSA's master list of deceased individuals to verify whether its policyholders have died. GAO matched every policyholder's Social Security number in RMA's crop insurance subsidy and administrative allowance data for crop insurance years 2008 to 2012 with SSA's master list of deceased individuals and found that $22 million in subsidies and allowances may have been provided on behalf of an estimated 3,434 program policyholders 2 or more years after death. Many of these subsidies and allowances may have been proper, but without reviewing each subsidy and allowance made on behalf of deceased individuals, RMA cannot be certain that these subsidies and allowances are proper. In addition, without accurate records of which policyholders are deceased, RMA may be less likely to rely on results from data mining--a technique for extracting knowledge from large volumes of data--and therefore be less likely to detect fraudulent, wasteful, or abusive crop insurance claims.

What GAO Recommends

GAO recommends that FSA further strengthen its verification of payments to deceased individuals, NRCS develop and implement procedures to prevent improper payments to deceased individuals, and RMA develop and implement procedures to prevent improper crop insurance subsidies on behalf of deceased policyholders and to improve the effectiveness of its data mining. USDA generally agreed with GAO's findings and recommendations.