FSA Overpaid $28 Million in Sure Claims in 2011

The Office of the Inspector General released a May audit of USDA Farm Service Agency (FSA) assistance programs, estimating that about $28 million in FSA payments were improperly distributed during fiscal year 2011.

The Office sampled 122 payments totaling $5.2 million.  14 errors were identified, 10 of which were SURE payments.

Many of the errors were caused by data entry mistakes at the county office, including omitting appropriate crop indemnity information, entering incorrect production to count, and entering incorrect county office committee adjusted production, among others.

Although mistakes were made in 2011, there appears to be substantial progress in reducing the amount of mistakes, since during the 2010 fiscal year, over $49 million in improper FSA payments were found.

As a CPA, my concerns with these types of reports is the amount of sample size.  Taking 122 counts and then extrapolating the error rate to all payments appears to not be enough of a sample size.  For example, if 13 of the 14 error samples had a $1,000 error and the other had a $1 million error, then by extrapolating, you might get the $28 million number, whereas, if you threw out the $1 million error, the new total error might be less than a million.

I am assuming that the Office did use correct sampling methods and sample size, but it just seems like this is too few of a number to get an accurate assessment of the total error amount.