STEP Act

This bill requires federal agencies to take certain actions to prevent improper payments (i.e., payments that should not have been made or were made in an incorrect amount).

The bill requires agencies to annually identify as susceptible to significant improper payments any new program or activity that is in its first four years of operation and has, or is expected to have, outlays exceeding $100 million in any of its first three fiscal years of operation, with exceptions for activities that are not susceptible to significant improper payments. (Agencies must report estimates of improper payments for activities identified as susceptible.)

The bill allows agencies, when estimating improper payments, to use an estimation methodology approved by the agency's chief financial officer (CFO). (Currently, only methodologies approved by the Office of Management and Budget may be used.)

An agency’s annual financial statement must include certain reports related to the agency’s improper payments. Such reports must also include a certification by the agency CFO that the identification of programs and activities susceptible to significant improper payments is reliable as well as a description of the CFO's actions to monitor required corrective action plans.

Summary by the Congressional Research Service.