Work is Needed to Identify and Curb Fraud in Federal Programs, According to GAO

Published: January 25, 2023

Federal Market AnalysisGAOWaste, Fraud, and Abuse

GAO recommends consistent definitions, improved detection, and enhanced data collection to decrease fraud in federal programs.

Earlier this week, GAO released a new kind of report, a GAOverview. This GAOverview was a short, 2-page summary of fraud in the federal government. GAO determined measuring the extent of fraud is challenging due to varying definitions, imperfect detection and reporting, and insufficient data.

GAO’s research cites the Council of Inspectors General on Integrity and Efficiency (CIGIE) estimated the total for recoveries and receivables from investigations for FY 2021 to be $12.1B. However, this amount includes other crimes beyond fraud, such as theft and mismanagement of government funds. GAO also references paymentaccuracy.gov totals for confirmed fraud for FY 2021 of $4.5B. Deltek’s analysis of FY 2022 data from the same source indicates $4.4B for confirmed fraud. However, these numbers likely do not contain all fraud.

Additional analysis of the FY 2022 improper payments data on the paymentaccuracy.gov site shows the Department of Labor with the highest total of confirmed fraud at $1.6B followed by HHS with $1.4B.  The confirmed fraud data for FY 2022 is not broken down by federal program but rather presented in agency-wide totals.

Analysis of the data for the “root cause of monetary loss” from this same website, shows most monetary loss occurs due to “failure to access data/information needed.” This refers to data that would be used to determine if a payment is improper such as information regarding the eligibility of a beneficiary for the payment. Paymentaccuracy.gov shows just under $200B classified as “monetary loss.” Of this amount, 71% was attributed to “failure to access data/information needed.”

GAO’s report states that determining the total extent of fraud is challenging due to three factors:

  • Varying Definitions of Fraud Impact Reporting
  • Fraud Is Not Easy to Detect or Prove
  • Fraud Data Are Insufficient

GAO offers three recommendations for better determining the extent of fraud:

  • Consistent Use of Definitions - Using common definitions when measuring and estimating fraud could improve the ability to compare data across agencies.
  • Improved Detection and Reporting - Fraud detection and reporting mechanisms, like data analytics and hotlines could help agencies identify fraudulent activity.
  • Enhanced Data Collection – Agencies could better understand fraud trends, impact, or scope with more timely and complete collection of reliable data.

Deltek believes continued federal efforts to curb fraud could lead to contracting opportunities for forensic accounting, investigators, claims analysts, and IT products and services, such as analytics, AI, and blockchain solutions.