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Improper Payments Information Act (IPIA) of 2002, as amended

IPIA of 2002, as amended by the Improper Payments Elimination and Recovery Act (IPERA) of 2010, requires agencies to annually estimate and report on improper payments and agency actions to reduce them to the President and Congress. A review of all programs and activities that the USPTO administers is performed annually to assist in identifying and reporting erroneous or improper payments. The USPTO has not identified any significant problems with improper payments. However, the USPTO recognizes the importance of maintaining adequate internal controls to ensure the accuracy and integrity of payments made by the agency, and the USPTO maintains a strong commitment to continuous improvement in the overall disbursement management process. The USPTO has implemented procedures to detect and prevent improper payments. For FY 2012 and beyond, the USPTO will continue its efforts to ensure the integrity of its disbursements.

The USPTO annually conducts an assessment of the effectiveness of internal control over financial reporting, in compliance with OMB Circular A-123, Management’s Responsibility for Internal Control. Furthermore, the FY 2010 assessment included a review of internal controls over disbursement processes, which indicated that current internal controls over disbursement processes are sound.

The USPTO completes an annual improper payments risk assessment covering all of its programs/activities as required by OMB Circular A-123, Appendix C. These improper payments risk assessments of the entity’s programs/activities also include assessments of the corporate control and procurement environment. The improper payments program/activity risk assessment has revealed no risk-susceptible programs.

The results of the USPTO assessments revealed no risk-susceptible programs, and demonstrated that, overall, the USPTO has strong internal controls over disbursement processes, the amount of improper payments by the USPTO is immaterial, and the risk of improper payments is low. An estimated improper payment rate, accordingly, was deemed not necessary.

During FY 2011, the USPTO did not have any erroneous payments that exceeded the ten million dollar threshold. The USPTO continuously seeks to identify overpayments and erroneous payments by reviewing (1) credit memos and refund checks issued by vendors or customers and (2) undelivered electronic payments returned by financial institutions.

During FY 2008, the USPTO initiated an internal recovery audit program. Under this program, a letter similar to that sent by our recovery audit contractor is sent to vendors on a rotational basis. This program excludes grants, travel payment, purchase card transactions, inter-agency agreements, government bills of lading, and gift and bequest transactions. This program continued through FY 2011. There were no items identified as recoverable.

Improper Payment Reduction Outlook
(Dollars in Millions)
Program FY 2010 FY 2011 FY 2012 FY 2013 FY 2014
Outlays Improper
Payment
Percent
Improper
Payment
Dollars
Outlays Improper
Payment
Percent
Improper
Payment
Dollars
Estimated
Outlays
Estimated
Outlays
Estimated
Outlays
Patent $1,730 0.01% $0.02 $1,886 0.00% $- $2,410 $2,496 $2,712
Trademark 178 0.01% - 189 0.00% - 242 250 272
Intellectual Property 45 0.01% - 42 0.00% - 54 56 61
Total $1,953 0.01% $0.02 $2,117 0.00% $- $2,706 $2,802 $3,045

During FY 2005, the USPTO entered into an agreement with the DOC to use an existing contract for recovery audit services. The audit was limited to closed obligations greater than $0.1 million. Further excluded were grants, travel payments, purchase card transactions, inter-agency agreements, government bills of lading, and gift and bequest transactions.

The audit was completed in FY 2006 and resulted in three invoices that were identified as recoverable improper payments, which are statistically insignificant. The improper payments identified of $0.1 million were recovered during FY 2006. Accordingly, no recovery audit services were conducted from FY 2007 through FY 2011.

FY 2005 Summary of Recovery Audit Effort
(Dollars in Millions)
Amount subject to review $159.4
Number of invoices 4,433
Actual amount reviewed $107.3
Number of invoices 985

In FY 2011, the USPTO continued its reporting procedures to senior management and to the DOC on improper payments, identifying the nature and magnitude of any improper payments, along with any necessary control enhancements to prevent further occurrences of the types of improper payments identified.

United States Patent and Trademark Office
Last Modified: 01/03/2012 14:04:40