Background The Improper Payments Information Act of 2002 (IPIA), as amended by IPERA and the Improper Payments Elimination and Recovery Improvement Act of 2012, requires executive branch agencies, among other things, to (1) review all programs and activities and identify those that may be susceptible to significant improper payments (commonly referred to as conducting a risk assessment), (2) publish improper payment estimates for those programs and activities that the agency identified as being susceptible to significant improper payments, (3) implement corrective actions to reduce improper payments and set reduction targets, and (4) report on the results of addressing the foregoing requirements. IPERA also requires executive agencies’ IGs to annually determine and report on whether their respective agencies complied with six IPERA- related criteria. If an agency does not meet one or more of the six IPERA criteria for any of its programs or activities, the IG considers the agency to be noncompliant overall. The six criteria are as follows: 1. publish a financial report in the form and including all content required by OMB—typically an AFR or a PAR—for the most recent fiscal year, and post that report on the agency website; 2. conduct a program-specific risk assessment, if required, for each program or activity that conforms with IPIA, as amended; 3. publish improper payment estimates for all programs and activities deemed susceptible to significant improper payments; 4. publish corrective action plans for those programs and activities assessed to be susceptible to significant improper payments; 5. publish and meet annual reduction targets for all programs and activities assessed to be at risk for significant improper payments; and 6. report a gross improper payment rate of less than 10 percent for each program and activity for which an improper payment estimate was published. As described above, not all criteria are applicable to every agency. For example, if an agency publishes a financial report and conducts a risk assessment and determines that none of its programs or activities are susceptible to significant improper payments, then the remaining criteria would not be applicable. OMB plays a key role in implementing laws related to improper payment reporting. As required by statute, OMB has established guidance for federal agencies on estimating, reporting, reducing, and recovering improper payments. Such guidance includes OMB Circular A-123 Appendix C, Requirements for Payment Integrity Improvement, which also includes guidance to IGs on determining agency compliance with IPERA. The Council of the Inspectors General on Integrity and Efficiency (CIGIE) also published guidance in July 2019 to assist IGs who are required to conduct an annual improper payment review under IPERA. We continued to report improper payments as a material weakness in internal control in our audit report on the U.S. government’s consolidated financial statements for fiscal years 2018 and 2017 because of the federal government’s inability to determine the full extent to which improper payments occur and reasonably ensure that appropriate actions are taken to reduce them. We have also reported that estimation of improper payments is key to understanding the extent of the problem and to developing effective corrective actions to address it. However, the government’s ability to understand the full scope of its improper payments is hindered by incomplete, unreliable, or understated estimates; risk assessments that may not accurately assess the risk of improper payment; and noncompliance with criteria listed in IPERA. For example, we previously reported that issues and inconsistencies we identified in selected agencies’ processes for estimating improper payments may affect the quality of their estimates. In addition, certain IGs have reported issues with their agencies’ reported improper payment estimates that were caused by insufficient sampling methods and flawed estimation methodologies for calculating and reporting improper payment estimates. Federal Agencies’ Estimates of Fiscal Year 2019 Improper Payments Totaled $175 Billion Based on agencies that reported improper payment estimates in their AFRs and PARs, government-wide estimated improper payments for fiscal years 2019 and 2018 totaled about $175 billion and $151 billion, respectively. See appendix I for the reported amounts by agency and program for fiscal years 2019 and 2018. As shown in figure 1, of the $175 billion for fiscal year 2019, about $121 billion (approximately 69 percent) is concentrated in three program areas: (1) Medicaid, totaling about $57.4 billion (approximately 32.8 percent); (2) Medicare (comprised of three reported programs: Fee-for-Service (Parts A and B), Advantage (Part C), and Prescription Drug (Part D)), totaling about $46.2 billion (approximately 26.5 percent); and (3) Earned Income Tax Credit (EITC), totaling about $17.4 billion (approximately 9.9 percent). Key information contained in agency AFRs and PARs regarding the types and causes of fiscal year 2019 estimates of improper payments, and reasons for significant changes in reported estimates from fiscal year 2018, are summarized as follows: The $175 billion total reported government-wide estimates for fiscal year 2019 is broken down per OMB’s Paymentaccuracy.gov Data Call Instructions by type as follows: overpayments, totaling about $79.1 billion (approximately 45.2 underpayments, totaling about $12.9 billion (approximately 7.4 unknown, totaling about $74.1 billion (approximately 42.4 technically improper due to statute or regulation, totaling about $8.7 billion (approximately 5 percent). About $74.6 billion (approximately 42.7 percent) of the government- wide estimates was reported as monetary loss. About $151.2 billion (approximately 86.6 percent) of the reported government-wide improper payment estimates for fiscal year 2019 related to root causes that occurred in the three areas below. See appendix II for details on the root causes that agencies identified for their reported improper payment estimates for fiscal year 2019. Insufficient documentation to determine payment accuracy. About $74.1 billion (approximately 42.4 percent) resulted from situations where the agency lacked supporting documentation necessary to verify the accuracy of the payments. Administrative or process error. About $39.1 billion (approximately 22.4 percent) resulted from incorrect data entry, classifying, or processing of applications or payments. Inability to authenticate eligibility. About $38 billion (approximately 21.8 percent) resulted from the agency not being able to authenticate eligibility criteria. The fiscal year 2019 total reported government-wide estimated improper payments, among programs that reported estimates, increased by about $24 billion from the fiscal year 2018 total reported. While decreases in estimated improper payments were reported for several programs, these were offset by increases for certain other programs. Between fiscal years 2018 and 2019, six programs had an increase and five programs had a decrease of over $1 billion in estimated improper payments. Appendix III provides information on all the programs that had a substantial change in estimated improper payments between fiscal years 2018 and 2019 and the reasons for those changes as reported in agency AFRs. Examples of substantial changes in improper payments and the reasons for such changes that agencies provided in their AFRs include the following: Department of Health and Human Services (HHS) reported an increase in the total estimated improper payments for the Medicaid program in excess of $21.1 billion for fiscal year 2019. The majority of the increase in the total estimated improper payments for the Medicaid program was due to HHS’s reintegration of the eligibility component of the Payment Error Rate Measurement (PERM) for Medicaid for fiscal year 2019. From fiscal years 2015 through 2018, HHS did not estimate improper payments attributed to eligibility determinations, but did include a proxy estimate, which was the last reported rate in fiscal year 2014 for the eligibility component, while HHS worked to update this component. For fiscal year 2019, HHS estimated improper payments attributed to eligibility determinations in 17 states (about one-third of all states). HHS’s national eligibility estimated improper payment rate still includes a proxy estimate for 34 remaining states that have not yet been measured since the reintegration of the PERM eligibility component. HHS reported that most eligibility errors identified through the new measurement process were due to insufficient documentation to verify eligibility or noncompliance with eligibility redetermination requirements. HHS also reported that these insufficient documentation situations were related primarily to income or resource verifications. HHS’s fiscal year 2019 AFR noted that another significant cause for estimated Medicaid improper payments is errors resulting from state noncompliance with provider screening and enrollment requirements. The Department of the Treasury (Treasury) began reporting improper payment estimates for fiscal year 2019 for two programs deemed newly susceptible to significant improper payments. Specifically, Treasury reported about $7.2 billion and $2.1 billion in improper payment estimates for Additional Child Tax Credit and American Opportunity Tax Credit, respectively. In addition, HHS reported a decrease in the total estimated improper payments for the Medicare Fee-for-Service (Parts A and B) program of about $2.7 billion. According to HHS’s fiscal year 2019 AFR, the decrease in the estimate is due to a reduction in estimated improper payments for home health; Medicare Fee-for- Service Part B; and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies claims. As stated earlier, the federal government’s ability to understand the full scope of its improper payments is hindered by incomplete, unreliable, or understated agency estimates and risk assessments that may not accurately assess the risk of improper payment. For example, certain federal programs and activities that agencies determined to be at risk for significant improper payments did not report estimates of improper payments for fiscal year 2019, including the Premium Tax Credit and Temporary Assistance for Needy Families programs, and as we previously reported, the Department of Defense (DOD) lacks quality assurance procedures to ensure the completeness and accuracy of the payment populations from which it develops improper payment estimates. CFO Act Agencies’ Reported Compliance with IPERA Half of the CFO Act Agencies Were Reported as Compliant for Fiscal Year 2018 Eight years after the implementation of IPERA, half of the 24 CFO Act agencies were compliant with IPERA overall for fiscal year 2018, as reported by their IGs. See appendix IV for each CFO Act agency’s overall compliance with IPERA. With regard to the six IPERA criteria, as shown in figure 2, IGs reported all agencies as compliant with the requirement to conduct program-specific risk assessments if it was applicable to the agency. In addition, 22 of 24 agencies (92 percent) met the requirement to publish a PAR or AFR. Based on the IGs’ fiscal year 2018 compliance reports, agencies were most frequently reported as noncompliant with the IPERA requirement to publish and meet annual targets for improper payment reduction. Out of the 14 agencies for which this requirement was applicable, IGs for eight agencies (57 percent) reported that their agencies were noncompliant. The second most-frequently reported area of noncompliance related to the IPERA requirement for agencies’ reported improper payment rates to be below 10 percent for programs that published estimates. Out of the 15 agencies for which this requirement was applicable, IGs for five agencies (33 percent) reported that their agencies were noncompliant. See appendix IV for additional details on each CFO Act agency’s compliance with the six IPERA criteria for fiscal year 2018, as reported by their IG. In addition, IGs for certain CFO Act agencies reported quality issues in their agencies’ reporting of improper payment data. Although the issues did not result in noncompliance with the related IPERA criterion, the IGs noted these as areas that need improvement. For example, one agency reported inaccurate amounts for identified and recaptured improper payments in its AFR. However, the IG reported that the agency was compliant with the IPERA criterion for publishing financial information in a PAR or AFR. Another agency’s IG reported that its agency did not accurately evaluate its corrective actions’ effectiveness in recapturing improper payments. However, the IG reported that the agency was compliant with the IPERA criterion to publish corrective action plans. As we stated above pertaining to the IGs’ determination of compliance with IPERA criteria, these determinations are based on whether the agency met the requirements and is not a judgment on the quality of the work conducted in order to meet those requirements. Trends in Reported Overall IPERA Compliance for Fiscal Years 2016 through 2018 As stated above, IGs for 12 of the 24 CFO Act agencies reported that their agencies were compliant with IPERA overall for fiscal year 2018. As shown in figure 3, this is an increase from 10 agencies reported as compliant for fiscal year 2017, and 11 agencies reported as compliant for fiscal year 2016. The improvement in IPERA compliance is attributable to the Departments of Commerce and Education, which were reported by their IGs as noncompliant in fiscal year 2017 but compliant in fiscal year 2018. No agencies that IGs reported as compliant in fiscal year 2017 were reported as noncompliant in fiscal year 2018. In addition, the IGs reported that 21 programs within these agencies were noncompliant with IPERA for each of the past 3 fiscal years (2016–2018). Improper payment estimates for these programs totaled about $78 billion, representing approximately 52 percent of the $151 billion government- wide reported improper payment estimates for fiscal year 2018. As shown in table 1, this includes improper payment estimates for Medicaid of about $36 billion and for EITC of about $18 billion. As shown in figure 4, the number of programs reported as noncompliant with IPERA for 3 or more consecutive years has increased since fiscal year 2016. Specifically, the number of programs reported as noncompliant for 3 or more consecutive years increased from 14 programs in fiscal year 2016 to 18 programs in fiscal year 2017 and 21 programs in fiscal year 2018. The reported improper payment estimates for these programs totaled about $109 billion for fiscal year 2016, $74 billion for fiscal year 2017, and $78 billion for fiscal year 2018. The total improper payment estimates for programs reported as noncompliant for 3 or more consecutive years decreased for fiscal 2017 primarily because the Medicare Fee-for-Service program, with about $41 billion of improper payments in fiscal year 2016, was reported as compliant beginning fiscal year 2017. Agency Comments We provided a draft of this report to OMB and CIGIE for review and comment. CIGIE stated that it had no comments. OMB did not provide any comments. We also provided the full draft for review and comment to agencies and respective IG offices we met with throughout the course of this work. In addition, we sent summary facts to other agencies that had substantial changes in reported improper payment estimates between fiscal years 2018 and 2019 (as shown in app. III), and provided the full draft for review and comment, upon request, to those agencies. We received written comments from the U.S. Agency for International Development, which is reproduced in appendix V. The Department of Health and Human Services, Department of Veterans Affairs, and the Social Security Administration’s Office of Inspector General provided technical comments, which we incorporated in the report as appropriate. The remaining agencies and IG offices informed us that they had no comments. We are sending copies of this report to the appropriate congressional committees, the Director of the Office of Management and Budget, the Chairman of the Council of the Inspectors General on Integrity and Efficiency, and other interested parties. In addition, the report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2623 or davisbh@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made key contributions to this report are listed in appendix VI. Appendix I: Reported Improper Payment Estimates and Rates by Agency and Program for Fiscal Years 2019 and 2018 Table 2 details the improper payment estimates and rates that federal agencies reported to the Office of Management and Budget or in their agency financial reports or performance and accountability reports for fiscal years 2019 and 2018. In addition, as shown in the table 2, 17 programs had a substantial change in their reported improper payment estimates or rates between fiscal years 2018 and 2019. The reasons for the changes, as reported in the agency financial reports, are detailed in appendix III. Appendix II: Agency-Reported Root Causes for Improper Payment Estimates for Fiscal Year 2019 Table 3 shows the government-wide agency-reported improper payment estimates and rates for fiscal year 2019, grouped by Office of Management and Budget (OMB) improper payment root cause categories. OMB defines the root cause categories as follows: Insufficient documentation to determine: For this category, there is a lack of supporting documentation necessary to verify the accuracy of a payment identified in the improper payment testing sample. For example, a program does not have documentation to support a beneficiary’s eligibility for a benefit, and without that particular documentation, the agency is unable to discern that the payment was for the correct amount or went to the right recipient. Administrative or process errors: In this category, errors were caused by incorrect data entry, classifying, or processing of applications or payments. For example, an eligible beneficiary receives a payment that is too high or too low because of a data entry mistake (such as transposing a number) or an agency enters an incorrect invoice amount into its financial system. Inability to authenticate eligibility: In this category, an improper payment is made because the agency is unable to authenticate eligibility criteria. These types of errors include but are not limited to (1) inability to access data and (2) data needed do not exist. Program design or structural issue: For this category, improper payments result from the design of the program or a structural issue. For example, a scenario in which a program has a statutory (or regulatory) requirement to pay benefits when due, regardless of whether all the information has been received to confirm payment accuracy. Medical necessity: For this category, a medical provider delivers a service or item that does not meet coverage requirements for medical necessity (for example, providing a power wheelchair to a patient whose medical record does not support meeting coverage requirements for a power wheelchair). Failure to verify data: In this category, the agency (federal, state, or local), or another party administering federal dollars, fails to verify appropriate data to determine whether a recipient should be receiving a payment, even though such data exist in government or third-party databases. In these situations, the data needed exist, and the agency or other party administrating federal dollars had access to them but did not check the payment against those data prior to making the payment. Other reason: This category covers when the improper payment does not meet any of the above categories. Appendix III: Programs with Substantial Changes in Reported Improper Payment Estimates or Rates from Fiscal Year 2018 to Fiscal Year 2019 Table 4 shows the 17 programs that had a substantial change in the improper payment estimates or rates between fiscal years 2018 and 2019, and the reasons for those changes, as reported in the agency financial reports. Appendix IV: Fiscal Year 2018 CFO Act Agencies’ IPERA Compliance as Reported by Their Inspectors General Figure 5 details the Chief Financial Officers Act of 1990 (CFO Act) agencies’ overall compliance with the Improper Payments Elimination and Recovery Act of 2010 (IPERA), as well as the agencies’ compliance with each of the six IPERA criteria for fiscal year 2018, as reported by their inspectors general. Appendix V: Comments from the U.S. Agency for International Development Appendix VI: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments Beryl H. Davis, (202) 512-2623 or davisbh@gao.gov In addition to the contact named above, Matt Valenta (Assistant Director), Cherry Vasquez (Auditor in Charge), Pat Frey, Jason Kelly, Jim Kernen, Anne Thomas, Judy Tsan, and Landon Western made key contributions to this report.


Background The LDA defines a lobbyist as an individual who is employed or retained by a client for compensation for services that include more than one lobbying contact (written or oral communication to covered officials, such as a high ranking agency official or a Member of Congress made on behalf of a client), and whose lobbying activities represent at least 20 percent of the time that he or she spends on behalf of the client during the quarter. Lobbying firms are persons or entities that have one or more employees who lobby on behalf of a client other than that person or entity. The LDA requires lobbyists to register with the Secretary of the Senate and the Clerk of the House, and to file quarterly reports disclosing their respective lobbying activities. Lobbyists are required to file their registrations and reports electronically with the Secretary of the Senate and the Clerk of the House through a single entry point. Registrations and reports must be publicly available in downloadable, searchable databases from the Secretary of the Senate and the Clerk of the House. No specific statutory requirements exist for lobbyists to generate or maintain documentation in support of the information disclosed in the reports they file. However, guidance issued by the Secretary of the Senate and the Clerk of the House recommends that lobbyists retain copies of their filings and documentation supporting reported income and expenses for at least 6 years after they file their reports. Figure 1 provides an overview of the registration and filing process. Lobbying firms are required to register with the Secretary of the Senate and the Clerk of the House for each client if the firms receive or expect to receive more than $3,000 in income from that client for lobbying activities. Lobbyists are also required to submit an LD-2 quarterly report for each registration filed. The LD-2s contain information that includes: the name of the lobbyist reporting on quarterly lobbying activities; the name of the client for whom the lobbyist lobbied; a list of individuals who acted as lobbyists on behalf of the client during the reporting period; whether any lobbyists served in covered positions in the executive or legislative branch, such as high-ranking agency officials or congressional staff positions, in the previous 20 years; codes describing general lobbying issue areas, such as agriculture and education; a description of the specific lobbying issues; houses of Congress and federal agencies lobbied during the reporting reported income (or expenses for organizations with in-house lobbyists) related to lobbying activities during the quarter (rounded to the nearest $10,000). The LDA requires lobbyists to report certain political contributions semiannually in the LD-203 report. These reports must be filed 30 days after the end of a semiannual period by each lobbying firm registered to lobby and by each individual listed as a lobbyist on a firm’s lobbying report. The lobbyists or lobbying firms must: list the name of each federal candidate or officeholder, leadership political action committee, or political party committee to which he or she contributed at least $200 in the aggregate during the semiannual period; report contributions made to presidential library foundations and presidential inaugural committees; report funds contributed to pay the cost of an event to honor or recognize an official who was previously in a covered position, funds paid to an entity named for or controlled by a covered official, and contributions to a person or entity in recognition of an official, or to pay the costs of a meeting or other event held by or in the name of a covered official; and certify that they have read and are familiar with the gift and travel rules of the Senate and House, and that they have not provided, requested, or directed a gift or travel to a Member, officer, or employee of Congress that would violate those rules. The LDA also requires that the Secretary of the Senate and the Clerk of the House guide and assist lobbyists with the registration and reporting requirements and develop common standards, rules, and procedures for LDA compliance. The Secretary of the Senate and the Clerk of the House review the guidance annually. It was last revised January 31, 2017, to (among other issues), revise the registration threshold to reflect changes in the Consumer Price Index, and clarify the identification of clients and covered officials and issues related to rounding income and expenses. The guidance provides definitions of LDA terms, elaborates on registration and reporting requirements, includes specific examples of different disclosure scenarios, and provides explanations of why certain scenarios prompt or do not prompt disclosure under the LDA. The offices of the Secretary of the Senate and the Clerk of the House told us they continue to consider information we report on lobbying disclosure compliance when they periodically update the guidance. In addition, they told us they email registered lobbyists quarterly on common compliance issues and reminders to file reports by the due dates. The Secretary of the Senate and the Clerk of the House, along with USAO, are responsible for ensuring LDA compliance. The Secretary of the Senate and the Clerk of the House notify lobbyists or lobbying firms in writing that they are not complying with the LDA reporting. Subsequently, they refer those lobbyists who fail to provide an appropriate response to USAO. USAO researches these referrals and sends additional noncompliance notices to the lobbyists or lobbying firms, requesting that they file reports or terminate their registration. If USAO does not receive a response after 60 days, it decides whether to pursue a civil or criminal case against each noncompliant lobbyist. A civil case could lead to penalties up to $200,000 for each violation, while a criminal case—usually pursued if a lobbyist’s noncompliance is found to be knowing and corrupt—could lead to a maximum of 5 years in prison. Lobbyists Generally Demonstrate Compliance with Disclosure Requirements Lobbyists Filed Disclosure Reports as Required for Most New Lobbying Registrations Generally, under the LDA, within 45 days of being employed or retained to make a lobbying contact on behalf of a client, the lobbyist must register by first filing an LD-1 form with the Secretary of the Senate and the Clerk of the House. Thereafter, the lobbyist must file quarterly disclosure (LD-2) reports that detail the lobbying activities, including filing a first report for the quarter in which the lobbyist registered. Of the 3,618 new registrations we identified for the third and fourth quarters of 2017 and the first and second quarters of 2018, we matched 3,329 of them (92.01 percent) to corresponding LD-2 reports filed within the same quarter as the registration. These results are consistent with the findings we have reported in prior reviews. We used the House lobbyists’ disclosure database as the source of the reports. We also used an electronic matching algorithm that allows for misspellings and other minor inconsistencies between the registrations and reports. Figure 2 shows lobbyists filed disclosure reports as required for most new lobbying registrations from 2010 through 2018. As part of their regular enforcement procedures, the Clerk of the House and the Secretary of the Senate are to follow up with newly filed registrations where quarterly reports were not filed. If the Clerk of the House and the Secretary of the Senate are unsuccessful in bringing the lobbyist into compliance, they may refer those cases to USAO as described earlier in figure 1. For Most LD-2 Reports, Lobbyists Provided Documentation for Key Elements, Including Documentation for Their Income and Expenses For selected elements of lobbyists’ LD-2 reports that can be generalized to the population of lobbying reports, our findings have generally been consistent from year to year. Most lobbyists reporting $5,000 or more in income or expenses provided written documentation to varying degrees for the reporting elements in their disclosure reports. Figure 3 shows that for most LD-2 reports, lobbyists provided documentation for income and expenses for sampled reports from 2010 through 2018, and our 2018 estimate does not represent a statistically significant change from 2017. Figure 4 shows that in 2018, 10 percent of lobbyists’ reported income or expenses differed by $10,000 or more. Additionally, for some LD-2 reports, lobbyists did not round their income or expenses as the guidance requires. In 2018, we estimate 20 percent of reports did not round reported income or expenses according to the guidance. We have found that rounding difficulties have been a recurring issue on LD-2 reports from 2010 through 2018. As we previously reported, several lobbyists who listed expenses told us that based on their reading of the LD-2 form, they believed they were required to report the exact amount. While this is not consistent with the LDA and the guidance, this may be a source of some of the confusion regarding rounding errors. In 2016, the guidance was updated to include an additional example about rounding expenses to the nearest $10,000. The LDA requires lobbyists to disclose lobbying contacts made with federal agencies on behalf of the client for the reporting period. This year, of the 99 LD-2 reports in our sample, 46 reports disclosed lobbying activities at federal agencies. Of those, lobbyists provided documentation for all disclosed lobbying activities at the federal agencies for 29 LD-2 reports. Figure 5 shows that lobbyists for most LD-2 reports provided documentation for selected elements of their LD-2 reports that include general issue area codes for lobbying activities, lobbying the House and the Senate, and individual lobbyists listed from 2010 through 2018. In 2017 and 2018, there was an improvement of compliance with documentation for lobbying the House and the Senate over the previous 7 years. For Most Lobbying Disclosure Reports (LD-2), Lobbyists Filed Political Contribution Reports (LD- 203) for All Listed Lobbyists Figure 6 shows that lobbyists for most lobbying firms filed contribution reports as required in our sample from 2010 through 2018. All individual lobbyists and lobbying firms reporting lobbying activity are required to file political contribution (LD-203) reports semiannually, even if they have no contributions to report, because they must certify compliance with the gift and travel rules. For Some LD-2 Reports, Lobbyists May Have Failed to Disclose Previously Held Covered Positions The LDA requires a lobbyist to disclose previously held covered positions in the executive or legislative branch, such as high-ranking agency officials and congressional staff, when first registering as a lobbyist for a new client. This can be done either on a new LD-1 or on the quarterly LD- 2 filing when added as a new lobbyist. This year, we estimate that 19 percent of all LD-2 reports may not have properly disclosed previously held covered positions as required. As in our other reports, some lobbyists were still unclear about the need to disclose certain covered positions, such as paid congressional internships or certain executive agency positions. Figure 7 shows the extent to which lobbyists may not have properly disclosed one or more covered positions as required from 2010 through 2018. Some Lobbyists Amended Their Disclosure Reports after We Contacted Them Lobbyists amended 23 of the 99 LD-2 disclosure reports in our original sample to change previously reported information after we contacted them. Of the 23 reports, 10 were amended after we notified the lobbyists of our review, but before we met with them. An additional 13 of the 23 reports were amended after we met with the lobbyists to review their documentation. We consistently find a notable number of amended LD-2 reports in our sample each year following notification of our review. This suggests that sometimes our contact spurs lobbyists to more closely scrutinize their reports than they would have without our review. Table 1 lists reasons lobbying firms in our sample amended their LD-2 reports. Most LD-203 Contribution Reports Disclosed Political Contributions Listed in the Federal Election Commission Database As part of our review, we compared contributions listed on lobbyists’ and lobbying firms’ LD-203 reports against those political contributions reported in the Federal Election Commission (FEC) database to identify whether political contributions were omitted on LD-203 reports in our sample. The samples of LD-203 reports we reviewed contained 80 reports with contributions and 80 reports without contributions. We estimate that overall in 2018, lobbyists failed to disclose one or more reportable contributions on 33 percent of reports. Additionally, eight LD- 203 reports were amended in response to our review. Table 2 shows our results from 2010 to 2018; estimates in the table have a maximum margin of error of 11 percentage points. For this year’s review, the estimated change in the percent of LD-203 reports missing one or more FEC- reportable contributions was a statistically significant increase compared to each of the prior 9 years. Most Lobbying Firms Reported Some Level of Ease in Complying with Disclosure Requirements and Understood Lobbying Terms As part of our review, we conducted interviews with 97 different lobbying firms in the 2018 sample of LD-2 disclosure reports. Consistent with prior reviews, most lobbying firms reported that they found it “very easy” or “somewhat easy” to comply with reporting requirements. Of the 97 different lobbying firms interviewed, 24 reported that the disclosure requirements were “very easy,” 61 reported them “somewhat easy,” and 11 reported them “somewhat difficult” or “very difficult.” One lobbying firm did not respond to this question (see figure 8). Most lobbying firms we surveyed rated the definitions of terms used in LD-2 reporting as “very easy” or “somewhat easy” to understand with regard to meeting their reporting requirements. This is consistent with prior reviews. Figure 9 shows what lobbyists reported as their ease of understanding the terms associated with LD-2 reporting requirements from 2012 through 2018. The U.S. Attorney’s Office for the District of Columbia Continues to Enforce the LDA The U.S. Attorney’s Office Has Resources and Authorities to Enforce LDA Compliance The U.S. Attorney’s Office for the District of Columbia (USAO) officials stated that they continue to have sufficient personnel resources and authority under the LDA to enforce reporting requirements. This includes imposing civil or criminal penalties for noncompliance. Noncompliance refers to a lobbyist’s or lobbying firm’s failure to comply with the LDA. However, USAO noted that due to attrition the number of the assigned personnel has changed from 2017 as indicated in table 3. USAO officials stated that lobbyists resolve their noncompliance issues by filing LD-2, LD-203, or LD-2 amendments, or by terminating their registration, depending on the issue. Resolving referrals can take anywhere from a few days to years, depending on the circumstances. During this time, USAO creates summary reports from its database to track the overall number of referrals that are pending or become compliant as a result of the lobbyist receiving an email, phone call, or noncompliance letter. Referrals remain in the pending category until they are resolved. The pending category is divided into the following areas: “initial research for referral,” “responded but not compliant,” “no response /waiting for a response,” “bad address,” and “unable to locate.” USAO officials noted that they attempt to review and update all pending cases every six months. USAO focuses its enforcement efforts primarily on the “responded but not compliant” and the “no response/waiting for a response” groups. Officials told us that, if after several attempts, it cannot contact the noncompliant firm or its lobbyist, it confers with both the Secretary of the Senate and the Clerk of the House to determine whether further action is needed. In the cases where the lobbying firm is repeatedly referred for not filing disclosure reports but does not appear to be actively lobbying, USAO suspends enforcement actions. USAO officials reported they will continue to monitor these firms and will resume enforcement actions if required. Status of LD-2 Enforcement Efforts USAO received 3,798 referrals from both the Secretary of the Senate and the Clerk of the House for failure to comply with LD-2 reporting requirements cumulatively for filing years 2009 through 2018. Figure 10 shows the number and status of the referrals received, and the number of enforcement actions taken by USAO to bring lobbying firms into compliance. Enforcement actions include USAO attempts to bring lobbyists into compliance through letters, emails, and calls. About 40 percent (1,533 of 3,798) of the total referrals received are now compliant because lobbying firms either filed their reports or terminated their registrations. In addition, some of the referrals were found to be compliant when USAO received the referral, so no action was taken. This may occur when lobbying firms respond to the contact letters from the Secretary of the Senate and the Clerk of the House after USAO received the referrals. About 59 percent (2,250 of 3,798) of referrals are pending further action because USAO could not locate the lobbying firm, did not receive a response from the firm after an enforcement action, or plans to conduct additional research to determine if it can locate the lobbying firm. The remaining 15 referrals did not require action or were suspended because the lobbyist or client was no longer in business or the lobbyist was deceased. Status of LD-203 Referrals LD-203 referrals consist of two types: (1) LD-203(R) referrals represent lobbying firms that have failed to file LD-203 reports for their lobbying firm; and (2) LD-203 referrals represent the lobbyists at the lobbying firm who have failed to file their individual LD-203 reports as required. USAO received 2,629 LD-203(R) referrals from lobbying firms (cumulatively from 2009 through 2018) and 5,897 LD-203 referrals for individual lobbyists (cumulatively from 2009 through 2017) from the Secretary of the Senate and the Clerk of the House for noncompliance with reporting requirements). LD-203 referrals are more complicated than LD-2 referrals because both the lobbying firm and the lobbyists within the firm are each required to file an LD-203. Lobbyists employed by a lobbying firm typically use the firm’s contact information and not the lobbyists’ personal contact information. This makes it difficult to locate a lobbyist who is not in compliance and may have left the firm. In 2018, USAO officials confirmed that, while many firms have assisted USAO by providing contact information for lobbyists, they are not required to do so. According to officials, USAO has difficulty pursuing LD-203 referrals for lobbyists who have departed a firm without leaving forwarding contact information with the firm. While USAO utilizes web searches and online databases, including social media, to find these missing lobbyists, it is not always successful. Figure 11 shows the status of LD-203(R) lobbying firm referrals received and the number of enforcement actions taken by USAO to bring lobbying firms into compliance. About 42 percent (1,093 of 2,629) of the lobbying firms referred by the Secretary of the Senate and the Clerk of the House for noncompliance from calendar years 2009 through 2018 are now considered compliant because firms either filed their reports or terminated their registrations. About 58 percent (1,523 of 2,629) of the referrals are pending further action. The remaining 13 referrals did not require action or were suspended because the lobbyist or client was no longer in business or the lobbyist was deceased. USAO received 5,897 LD-203 individual lobbyists referrals from the Secretary of the Senate and the Clerk of the House for lobbyists who failed to comply with LD-203 reporting requirements for calendar years 2009 through 2017. Figure 12 shows the status of the referrals received and the number of enforcement actions taken by USAO to bring lobbyists into compliance. In addition, figure 12 shows that about 32 percent (1,880 of 5,897) of the lobbyists had come into compliance by filing their reports or no longer being registered as a lobbyist. About 68 percent (4,003 of 5,897) of the referrals are pending further action because USAO could not locate the lobbyist, did not receive a response from the lobbyist, or plans to conduct additional research to determine if it can locate the lobbyist. The remaining 14 referrals did not require action or were suspended because the lobbyist or client was no longer in business or the lobbyist was deceased. USAO received LD-203 referrals from the Secretary of the Senate and the Clerk of the House for 7,617 individual lobbyists who failed to comply with LD-203 reporting requirements for any filing year from 2009 through 2017. Figure 13 shows the status of compliance for individual lobbyists listed on referrals to USAO. About 36 percent (2,706 of 7,617) of the lobbyists had come into compliance by filing their reports or by not being registered as a lobbyist. About 65 percent (4,911 of 7,617) of the referrals are pending action because USAO could not locate the lobbyists, did not receive a response from the lobbyists, or plans to conduct additional research to determine if it can locate the lobbyists. USAO officials said that many of the pending LD-203 referrals represent lobbyists who no longer lobby for the lobbying firms affiliated with the referrals, even though these lobbying firms may be listed on the lobbyist’s LD-203 report. Status of Enforcement Settlement Actions According to USAO officials, lobbyists and lobbying firms who repeatedly fail to file reports are labeled chronic offenders and referred to one of the assigned attorneys for follow-up. USAO also receives complaints regarding lobbyists who are allegedly lobbying but never filed an LD-203. USAO officials added that USAO monitors and investigates chronic offenders to ultimately determine the appropriate enforcement actions, which may include settlement or other civil actions. Additionally, USAO officials reported that they are working to resolve an active case involving a chronic offender firm and lobbyist that was pending as of 2018. USAO officials noted that the agency is continuing settlement discussions with the company that failed to respond to required LDA violation notices and its lobbyist did not respond to individual violations for semiannual reporting. The company is now current on filing its reports and USAO is working with the Secretary of the Senate and the Clerk of the House on settling past violations. USAO continues to review its records to identify additional chronic offenders for further action due to noncompliance. Agency Comments We provided a draft of this report to the Department of Justice for review and comment. The Department of Justice did not have comments. We are sending copies of this report to the Attorney General, the Secretary of the Senate, the Clerk of the House of Representatives, and interested congressional committees and members. In addition, this report is available at no charge on the GAO website at http://www.gao.gov. If you or your staff have any questions about this report, please contact me at (202) 512-2717 or jonesy@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. GAO staff who made major contributions to this report are listed in appendix IV. Appendix I: List of Lobbyists and Clients for Sampled Lobbying Disclosure Reports The random sample of lobbying disclosure reports we selected was based on unique combination of House ID, lobbyist, and client names (see table 4). Appendix II: List of Sampled Lobbying Contribution Reports with and without Contributions Listed Lobbyist or lobbying firm Jessica Woolley National Multifamily Housing Council, Inc. Appendix III: Objectives, Scope, and Methodology Our objectives were to determine the extent to which lobbyists are able to demonstrate compliance with the Lobbying Disclosure Act of 1995, as amended (LDA) by providing documentation (1) to support information contained on registrations and reports filed under the LDA; (2) to identify challenges or potential improvements to compliance, if any; and (3) to describe the resources and authorities available to the U.S. Attorney’s Office for the District of Columbia (USAO), its role in enforcing LDA compliance, and any efforts it has made to improve LDA enforcement. We used information in the lobbying disclosure database maintained by the Clerk of the House of Representatives (Clerk of the House). To assess whether these disclosure data were sufficiently reliable for the purposes of this report, we reviewed relevant documentation and consulted with knowledgeable officials. Although registrations and reports are filed through a single web portal, each chamber subsequently receives copies of the data and follows different data-cleaning, processing, and editing procedures before storing the data in either individual files (in the House) or databases (in the Senate). Currently, there is no means of reconciling discrepancies between the two databases caused by the differences in data processing. For example, Senate staff told us during previous reviews they set aside a greater proportion of registration and report submissions than the House for manual review before entering the information into the database. As a result, the Senate database would be slightly less current than the House database on any given day pending review and clearance. House staff told us during previous reviews that they rely heavily on automated processing. In addition, while they manually review reports that do not perfectly match information on file for a given lobbyist or client, staff members approve and upload such reports as originally filed by each lobbyist, even if the reports contain errors or discrepancies (such as a variant on how a name is spelled). Nevertheless, we do not have reason to believe that the content of the Senate and House systems would vary substantially. Based on interviews with knowledgeable officials and a review of documentation, we determined that House disclosure data were sufficiently reliable for identifying a sample of quarterly disclosure reports (LD-2) and for assessing whether newly filed lobbyists also filed required reports. We used the House database for sampling LD-2 reports from the third and fourth quarters of 2017 and the first and second quarters of 2018, as well as for sampling year-end 2017 and midyear 2018 political contributions reports (LD-203). We also used the database for matching quarterly registrations with filed reports. We did not evaluate the Offices of the Secretary of the Senate or the Clerk of the House, both of which have key roles in the lobbying disclosure process. However, we did consult with officials from each office. They provided us with general background information at our request. To assess the extent to which lobbyists could provide evidence of their compliance with reporting requirements, we examined a stratified random sample of 99 LD-2 reports from the third and fourth quarters of 2017 and the first and second quarters of 2018. We excluded reports with no lobbying activity or with income or expenses of less than $5,000 from our sampling frame. We drew our sample from 49,918 activity reports filed for the third and fourth quarters of 2017 and the first and second quarters of 2018 available in the public House database, as of our final download date for each quarter. Our sample of LD-2 reports was not designed to detect differences over time. However, we conducted tests of significance for changes from 2010 to 2018 for the generalizable elements of our review. We found that results were generally consistent from year to year and there were few statistically significant changes (as noted in our report) after using a Bonferroni adjustment to account for multiple comparisons. For this year’s review, we estimated that 97 percent of LD-2 reports provided written documentation for the lobbying income and expenses. Our sample is based on a stratified random selection and is only one of a large number of samples that we may have drawn. Because each sample could have provided different estimates, we express our confidence in the precision of our particular sample’s results as a 95-percent confidence interval. This interval would contain the actual population value for 95 percent of the samples that we could have drawn. The percentage estimates for LD-2 reports have 95-percent confidence intervals of within plus or minus 12 percentage points or fewer of the estimate itself. We contacted all the lobbyists and lobbying firms in our sample and, using a structured web-based survey, asked them to confirm key elements of the LD-2 and whether they could provide written documentation for key elements in their reports, including the amount of income reported for lobbying activities; the amount of expenses reported on lobbying activities; the names of those lobbyists listed in the report; the houses of Congress and the federal agencies that they lobbied, and the issue codes listed to describe their lobbying activity. After reviewing the survey results for completeness, we interviewed lobbyists and lobbying firms to review the documentation they reported as having on their online survey for selected elements of their respective LD- 2 report. Prior to each interview, we conducted a search to determine whether lobbyists properly disclosed their covered position as required by the LDA. We reviewed the lobbyists’ previous work histories by searching lobbying firms’ websites, LinkedIn, Leadership Directories, Legistorm, and Google. Prior to 2008, lobbyists were only required to disclose covered official positions held within 2 years of registering as a lobbyist for the client. The Honest Leadership and Open Government Act of 2007 amended that time frame to require disclosure of positions held 20 years before the date the lobbyists first lobbied on behalf of the client. Lobbyists are required to disclose previously held covered official positions either on the client registration (LD-1) or on an LD-2 report. Consequently, those who held covered official positions may have disclosed the information on the LD-1 or a LD-2 report filed prior to the report we examined as part of our random sample. Therefore, where we found evidence that a lobbyist previously held a covered official position, and that information was not disclosed on the LD-2 report under review, we conducted an additional review of the publicly available Secretary of the Senate or Clerk of the House database to determine whether the lobbyist properly disclosed the covered official position on a prior report or LD-1. Finally, if a lobbyist appeared to hold a covered position that was not disclosed, we asked for an explanation at the interview with the lobbying firm to ensure that our research was accurate. In previous reports, we reported the lower bound of a 90-percent confidence interval to provide a minimum estimate of omitted covered positions and omitted contributions with a 95-percent confidence level. We did so to account for the possibility that our searches may have failed to identify all possible omitted covered positions and contributions. As we have developed our methodology over time, we are more confident in the comprehensiveness of our searches for these items. Accordingly, this report presents the estimated percentages for omitted contributions and omitted covered positions rather than the minimum estimates. As a result, percentage estimates for these items will differ slightly from the minimum percentage estimates presented in prior reports. In addition to examining the content of the LD-2 reports, we confirmed whether the most recent LD-203 reports had been filed for each firm and lobbyist listed on the LD-2 reports in our random sample. Although this review represents a random selection of lobbyists and firms, it is not a direct probability sample of firms filing LD-2 reports or lobbyists listed on LD-2 reports. As such, we did not estimate the likelihood that LD-203 reports were appropriately filed for the population of firms or lobbyists listed on LD-2 reports. To determine if the LDA’s requirement for lobbyists to file a report in the quarter of registration was met for the third and fourth quarters of 2017 and the first and second quarters of 2018, we used data filed with the Clerk of the House to match newly filed registrations with corresponding disclosure reports. Using an electronic matching algorithm that includes strict and loose text matching procedures, we identified matching disclosure reports for 3,329, or 92.01 percent, of the 3,618 newly filed registrations. We began by standardizing client and lobbyist names in both the report and registration files (including removing punctuation and standardizing words and abbreviations, such as “company” and “CO”). We then matched reports and registrations using the House identification number (which is linked to a unique lobbyist-client pair), as well as the names of the lobbyist and client. For reports we could not match by identification number and standardized name, we also attempted to match reports and registrations by client and lobbyist name, allowing for variations in the names to accommodate minor misspellings or typos. For these cases, we used professional judgment to determine whether cases with typos were sufficiently similar to consider as matches. We could not readily identify matches in the report database for the remaining registrations using electronic means. To assess the accuracy of the LD-203 reports, we analyzed stratified random samples of LD-203 reports from the 29,798 total LD-203 reports. The first sample contains 80 reports of the 9,502 reports with political contributions and the second contains 80 reports of the 20,296 reports listing no contributions. Each sample contains 40 reports from the year- end 2017 filing period and 40 reports from the midyear 2018 filing period. The samples from 2018 allow us to generalize estimates in this report to either the population of LD-203 reports with contributions or the reports without contributions to within a 95-percent confidence interval of within plus or minus 11 percentage points or fewer. Although our sample of LD- 203 reports was not designed to detect differences over time, for this year’s review, the estimated change in percentage of LD-203 reports missing one or more reportable contributions was a statistically significant increase compared to each of the prior 9 years. While the results provide some confidence that apparent fluctuations in our results across years are likely attributable to sampling error, the inability to detect significant differences may also be related to the nature of our sample, which was relatively small and designed only for cross- sectional analysis. We analyzed the contents of the LD-203 reports and compared them to contribution data found in the publicly available Federal Elections Commission’s (FEC) political contribution database. We consulted with staff at FEC responsible for administering the database. We determined that the data are sufficiently reliable for the purposes of our reporting objectives. We compared the FEC-reportable contributions on the LD-203 reports with information in the FEC database. The verification process required text and pattern matching procedures so we used professional judgment when assessing whether an individual listed is the same individual filing an LD-203. For contributions reported in the FEC database and not on the LD-203 report, we asked the lobbyists or organizations to explain why the contribution was not listed on the LD-203 report or to provide documentation of those contributions. As with covered positions on LD-2 disclosure reports, we cannot be certain that our review identified all cases of FEC-reportable contributions that were inappropriately omitted from a lobbyist’s LD-203 report. We did not estimate the percentage of other non-FEC political contributions that were omitted because they tend to constitute a small minority of all listed contributions and cannot be verified against an external source. To identify challenges to compliance, we used a structured web-based survey and obtained the views from 97 different lobbying firms included in our sample on any challenges to compliance. The number of different lobbying firms is 97, which is less than our original sample of 99 reports because some lobbying firms had more than one LD-2 report included in our sample. We calculated responses based on the number of different lobbying firms that we contacted rather than the number of interviews. Prior to our calculations, we removed the duplicate lobbying firms based on the most recent date of their responses. For those cases with the same response date, the decision rule was to keep the cases with the smallest assigned case identification number. To obtain their views, we asked them to rate their ease with complying with the LD-2 disclosure requirements using a scale of “very easy,” “somewhat easy,” “somewhat difficult,” or “very difficult.” In addition, using the same scale, we asked them to rate the ease of understanding the terms associated with LD-2 reporting requirements. To describe the resources and authorities available to the U.S. Attorney’s Office for the District of Columbia (USAO) and its efforts to improve its LDA enforcement, we interviewed USAO officials. We obtained information on the capabilities of the system officials established to track and report compliance trends and referrals and on other practices established to focus resources on LDA enforcement. USAO provided us with reports from the tracking system on the number and status of referrals and chronically noncompliant lobbyists and lobbying firms. The mandate does not require us to identify lobbyists who failed to register and report in accordance with the LDA requirements, or determine for those lobbyists who did register and report whether all lobbying activity or contributions were disclosed. Therefore, this was outside the scope of our audit. We conducted this performance audit from May 2018 to March 2019 in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives. Appendix IV: GAO Contact and Staff Acknowledgments GAO Contact Staff Acknowledgments In addition to the contact named above, Clifton G. Douglas Jr. (Assistant Director), Shirley Jones (Managing Associate General Counsel), Ulyana Panchishin (Analyst-in-Charge), James Ashley, Krista Loose, Kathleen Jones, Amanda Miller, Sharon Miller, Robert Robinson, Stewart W. Small, Peter Verchinski, and Khristi Wilkins made key contributions to this report. Assisting with lobbyist file reviews were Adam Brooks, Jazzmin R. Cooper, Colleen Corcoran, Rianna B. Jansen, Benjamin Legow, Regina Morrison, Andrew Olson, Amanda R. Prichard, Alan Rozzi, Bryan Sakakeeny, Kate Wulff, and Edith P. Yuh. Related GAO Products Lobbying Disclosure: Observations on Lobbyists’ Compliance with New Disclosure Requirements. GAO-08-1099. Washington, D.C: September 30, 2008. 2008 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-09-487. Washington, D.C: April 1, 2009. 2009 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-10-499. Washington, D.C: April 1, 2010. 2010 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-11-452. Washington, D.C: April 1, 2011. 2011 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-12-492. Washington, D.C: March 30, 2012. 2012 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-13-437. Washington, D.C: April 1, 2013. 2013 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-14-485. Washington, D.C: May 28, 2014. 2014 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-15-310. Washington, D.C.: March 26, 2015. 2015 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-16-320. Washington, D.C.: March 24, 2016. 2016 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-17-385. Washington, D.C.: March 31, 2017. 2017 Lobbying Disclosure: Observations on Lobbyists’ Compliance with Disclosure Requirements. GAO-18-388, Washington, D.C.: March 30, 2018.