Emergency Relief Funds: Significant Improvements Are Needed to Address Fraud and Improper Payments (GAO, Testimony, February 1, 2023)

Summary

GAO-23-106556 is a Government Accountability Office testimony before the Committee on Oversight and Accountability, House of Representatives, titled Emergency Relief Funds: Significant Improvements Are Needed to Address Fraud and Improper Payments, as a statement of Comptroller General Dodaro for February 1, 2023. It states that from March 2020 through January 13, 2023, at least 1,044 individuals pleaded guilty to or were convicted at trial of federal charges of defrauding COVID-19 relief programs, and that federal charges were pending against at least 609 individuals or entities. It states that as of November 30, 2022, the government had obligated $4.4 trillion and expended $4.1 trillion of the $4.6 trillion from six COVID-19 relief laws.

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Issuer: Government Accountability Office
Document type: PDF source document
Date: 2023-02-01

Cite this document

“Emergency Relief Funds: Significant Improvements Are Needed to Address Fraud and Improper Payments (GAO, Testimony, February 1, 2023).” Government Accountability Office, dated 2023-02-01. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/2023-02-01-gao-23-106556-emergency-relief-funds-significant-improvements-are-needed-to-add-267b9518-1/, SHA-256 267b9518aaf58dc484af10aa2453e8f27c9957c8ba9ec6377175c19f527544a3.

Full text

United States Government Accountability Office
Testimony
Before the Committee on Oversight and
Accountability, House of
Representatives

EMERGENCY RELIEF
For Release on Delivery
Expected at 10:00 a.m. ET
Wednesday, February 1, 2023

FUNDS
Significant Improvements
Are Needed to Address
Fraud and Improper
Payments
Statement of Statement of Gene L. Dodaro,
Comptroller General of the United States

GAO-23-106556
February 1, 2023

EMERGENCY RELIEF FUNDS
Significant Improvements Are Needed to Address
Fraud and Improper Payments
Highlights of GAO-23-106556, a testimony
before the Committee on Oversight and
Accountability, House of Representatives

Why GAO Did This Study What GAO Found
During emergencies, federal While fraud and accountability issues will continue to occur in COVID-19 relief
agencies must distribute relief funds programs, there is already ample evidence of widespread fraud, improper
quickly while ensuring appropriate payments, and accountability deficiencies during the pandemic. For example,
safeguards are in place. GAO noted GAO found that from March 2020 through January 13, 2023, at least 1,044
early in the COVID-19 pandemic that individuals pleaded guilty to or were convicted at trial of federal charges of
given the urgency of public health defrauding COVID-19 relief programs. This includes the Small Business
needs and economic disruptions, Administration’s (SBA) Paycheck Protection Program (PPP) and COVID-19
agencies gave priority to swiftly Economic Injury Disaster Loan (COVID-19 EIDL) program, the Department of
distributing funds and implementing Labor’s (DOL) Unemployment Insurance (UI) programs, and economic impact
new programs. However, tradeoffs payments issued by the Department of the Treasury and the Internal Revenue
were made that limited progress in Service.
achieving accountability goals.
Also, federal charges were pending against at least 609 individuals or entities for
As of November 30, 2022, the attempting to defraud COVID-19 relief programs. The number of individuals
government had obligated $4.4 facing fraud-related charges has continued to grow since March 2020 and will
trillion and expended $4.1 trillion, or likely increase, as these cases take time to develop.
97 percent and 89 percent,
respectively, of the $4.6 trillion from • SBA Office of Inspector General (OIG). According to SBA OIG officials,
six COVID-19 relief laws. as of January 25, 2023, the SBA OIG has 536 ongoing investigations
involving PPP, the COVID-19 EIDL program, or both.
Three programs—SBA’s PPP and • DOL OIG. From April 1, 2020 through January 10, 2023, the DOL OIG
COVID-19 EIDL program, and DOL’s opened over 198,000 complaints and investigations involving UI. It
UI program—account for a large continues to open at least 100 new UI fraud matters each week.
portion of COVID-19 relief funding.
Based on GAO’s findings and other The extent of fraud associated with PPP, COVID-19 EIDL, UI, and other COVID-
audits, GAO added SBA’s 19 relief programs has not yet been fully determined. Nevertheless, in December
emergency loans for small 2022, GAO found that measures and estimates indicate substantial levels of
businesses issued under PPP and fraud and potential fraud in UI during the pandemic. Specifically, GAO reported
COVID-19 EIDL, and the UI system that if the lower bound of DOL’s 2021 estimated national fraud rate for the regular
to its High-Risk List in March 2021 UI program was extrapolated to total spending across all UI programs during the
and June 2022, respectively. pandemic, it would suggest over $60 billion in fraudulent UI payments. However,
such an extrapolation has inherent limitations and should be interpreted with
This testimony summarizes (1) fraud, caution.
improper payments, and
accountability deficiencies in COVID- One of the many challenges in determining the full extent of fraud is its deceptive
19 relief programs; (2) shortcomings nature. Programs can incur financial losses related to fraud that are never
in agencies’ fraud risk management identified and such losses are difficult to reliably estimate. In ongoing work, GAO
practices and internal controls; and is seeking to calculate a comprehensive estimate of UI fraud and is exploring
(3) the status of recommended ways to estimate the amount of fraud more broadly across the federal
actions to improve these practices in government.
the future. The amount of funds the government will ultimately be able to recover from fraud
GAO reviewed its prior COVID-19 losses is yet to be determined as well. Various reporting from the OIGs provides
findings and recommendations on insight into completed investigations and recoupment efforts. For example, SBA’s
internal controls and fraud risk OIG reported that its collaboration with SBA and the U.S. Secret Service has
management practices. resulted in the seizure of more than $1 billion stolen by fraudsters from the
View GAO-23-106556. For more information,
COVID-19 EIDL program. DOL OIG investigations and investigative assistance
contact Rebecca Shea at (202) 512-6722 or to state workforce agencies have resulted in UI fraud monetary results, including
shear@gao.gov. forfeitures and restitution amounts, in excess of $905 million.

United States Government Accountability Office
Highlights of GAO-23-106556 (Continued)

In addition to noted vulnerabilities to fraud, COVID-19 relief funding exacerbated an already growing improper payments
problem in the federal government.

Government-wide Improper Payment Estimates for Fiscal Years 2003–2022

Note: Prior year improper payment estimates have not been adjusted for inflation.
a
This does not include estimates related to certain significant expenditures to fund response and recovery efforts for the COVID-19 pandemic, such as
the Department of Labor’s (DOL) Pandemic Unemployment Assistance program in the Unemployment Insurance (UI) system.

GAO identified four major factors that contributed to federal programs’ exposure to fraud, improper payments, and other
accountability challenges when administering COVID-19 relief programs. Specifically, agencies:
• Did not strategically manage fraud risks and were not adequately prepared to prevent fraud
• Lacked appropriate controls to prevent, detect, and recover fraudulent and other improper payments
• Lack permanent, government-wide analytic capabilities to help agencies identify fraud
• Continue to have challenges with improper payments
GAO has made 374 recommendations and 19 matters for congressional consideration across its COVID-19 work. As of
January 20, 2023, agencies had fully or partially addressed 147 of these 374 recommendations. Congress had fully
addressed one matter and partially addressed another. The intent of these recommendations were for agencies to
implement mid-course corrections where appropriate and to increase transparency and accountability of the COVID-19
response and for future emergencies. For example 22 recommendations and matters involved actions to address fraud
risks, 11 were tied to specific improper payment issues, and 5 were related to both issues across multiple COVID-19 relief
programs.
The matters for congressional consideration include the following 10 that GAO made in March 2022 to enhance the
transparency and accountability of federal spending.
• New program improper payment reporting. (1) Designate all new federal programs distributing more than $100
million in any one fiscal year as “susceptible to improper payments,” and, thus, subject to more timely improper
payment reporting requirements; and (2) require agencies to report improper payment information in their annual
financial reports.
• Fraud risk management reporting. Reinstate the requirement that agencies report on their antifraud controls and
fraud risk management efforts in their annual financial reports. Such reporting will increase congressional oversight
to better ensure fraud prevention during normal operations and emergencies.
• Fraud analytics. Establish a permanent analytics center of excellence to aid the oversight community in identifying
improper payments and fraud.
• Internal control plans. Require the Office of Management and Budget (OMB) to provide guidance for agencies to
develop internal control plans in advance, that can then be put to immediate use for future emergency funding.
• Data sharing. Amend the Social Security Act to accelerate and make permanent the requirement for the Social
Security Administration to share its full death data with Treasury’s Do Not Pay working system.
• Chief Financial Officer (CFO) authorities. Clarify that agency CFOs have oversight responsibility for internal
controls over financial reporting and key financial information; and require agency CFOs to (1) certify the reliability
and validity of improper payment risk assessments and estimates and monitor associated corrective action plans,
and (2) approve improper payment estimate methodology in certain circumstances.
• USAspending.gov. (1) Clarify the responsibilities and authorities of OMB and Treasury for ensuring the quality of
federal spending data available on USAspending.gov, and (2) extend the previous requirement for agency
inspectors general to review agency data submissions on a periodic basis.
Collectively, these actions can help agencies distribute funds rapidly while maintaining appropriate safeguards. In
addition, these actions will help increase transparency and accountability and strengthen agency efforts to provide proper
stewardship of federal funds.
Chairman Comer, Ranking Member Raskin, and Members of the
Committee:
I appreciate the opportunity to discuss fraud and improper payments in
COVID-19 pandemic relief programs. Since March 2020, Congress and
the Administration have provided trillions in COVID-19 relief funding to
help the nation respond to and recover from the pandemic. Agencies
across the federal government acted quickly to stand up new programs
and greatly scale up existing programs. Federal COVID-19 relief funds
were distributed broadly to state, local, tribal, and territorial governments;
businesses; and individuals to combat the effects of the pandemic on the
public health system as well as the economy. Most of these funds went to
the intended recipients in the intended amounts, providing needed
assistance. However, in other instances, funds were paid improperly,
including funds going to those who sought to defraud the government. 1
Six COVID-19 relief laws provided about $4.6 trillion for pandemic
response and recovery. 2 As of November 30, 2022, the federal
government had obligated a total of $4.4 trillion and expended $4.1
trillion, 97 and 89 percent, respectively, of these relief funds, as reported

1The Payment Integrity Information Act of 2019 defines an improper payment as any
payment that should not have been made or that was made in an incorrect amount
(including overpayments and underpayments) under statutory, contractual, administrative,
or other legally applicable requirements. 31 U.S.C. § 3351(4). As such, improper
payments refer to all kinds of erroneous payments, including but not limited to those
resulting from fraud. Fraud involves obtaining something of value through willful
misrepresentation. All payments made as a result of fraudulent activities are considered to
be improper payments. Improper payments could suggest that a program may be
vulnerable to fraud. However, improper payments amounts are not a valid indicator of the
extent of fraud in a particular program.
2For the purposes of this testimony, the COVID-19 relief laws consist of the six laws
providing comprehensive relief across federal agencies and programs that Treasury uses
to report COVID-19 spending. These six laws are the American Rescue Plan Act of 2021
(ARPA), Pub. L. No. 117-2, 135 Stat. 4; Consolidated Appropriations Act, 2021, Pub. L.
No. 116-260, div. M and N, 134 Stat. 1182 (2020); Paycheck Protection Program and
Health Care Enhancement Act, Pub. L. No, 116-139, 134 Stat. 620 (2020); CARES Act,
Pub. L. No. 116-136, 134 Stat. 281 (2020); Families First Coronavirus Response Act,
Pub.L. No. 116-127, 134 Stat. 178 (2020); and the Coronavirus Preparedness and
Response Supplemental Appropriations Act 2020, Pub. L. No. 116-123, 134 Stat. 146.
Total budgetary resources as of November 30, 2022, reported to the Department of the
Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System,
reflect appropriations, as well as transfers, adjustments, recoveries, rescissions, and
returns of unused indefinite appropriations. Therefore, amounts can fluctuate month to
month. Federal agencies use the Governmentwide Treasury Account Symbol Adjusted
Trial Balance System to report proprietary financial and budgetary execution information
to Treasury.

Page 1 GAO-23-106556 Emergency Relief Funds
by federal agencies to the Department of the Treasury (Treasury). 3 For
additional details on COVID-19 relief funding and spending, see appendix
I.
The CARES Act includes a provision for us to report regularly on the
public health and economic impacts of the pandemic and the federal
response. 4 We have issued 10 government-wide reports since the
pandemic began and plan to issue our eleventh report this summer. In
addition, we have issued at least 200 standalone reports, testimonies,
and science and technology spotlights focused on different aspects of the
pandemic. 5
Across this body of work, we have made 374 recommendations to 26
federal agencies and raised 19 matters for congressional consideration.
As of January 20, 2023, agencies had fully addressed 105 of these 374
recommendations and partially addressed 42. Congress had fully
addressed one matter and partially addressed another. The intent of
these recommendations and matters were for agencies to implement mid-
course corrections where appropriate and to increase transparency and
accountability of the federal COVID-19 response and for future
emergencies. For example, 22 recommendations and matters involved
specific actions to address fraud risks, 11 were related to specific
improper payment issues, and five were related to both issues across
multiple COVID-19 relief programs.
My comments today summarize key findings from our body of work
related to fraud and improper payments during the COVID-19 pandemic.
Specifically, I will discuss the following:
1. Fraud, improper payments, and accountability deficiencies in
COVID-19 relief programs;

3Amounts presented from Treasury’s Governmentwide Treasury Account Symbol
Adjusted Trial Balance System are the most recent available at the time of our analysis.
An obligation is a definite commitment that creates a legal liability of the U.S. government
for the payment of goods and services ordered or received, or a legal duty on the part of
the U.S. government that could mature into a legal liability by virtue of actions on the part
of another party that are beyond the control of the U.S. government. An expenditure is the
actual spending of money, or an outlay. Expenditures include some estimates, such as
estimated subsidy costs for direct loans and loan guarantees. Increased spending in
Medicaid and Medicare is not accounted for in the funding provided by the COVID-19
relief laws.
4Pub. L. No. 116-136, § 19010, 134 Stat. at 579–81.

5For a complete list of our recurring CARES Act oversight reports and other COVID-19
reports, see https://www.gao.gov/coronavirus.

Page 2 GAO-23-106556 Emergency Relief Funds
2. Shortcomings in the federal agencies’ fraud risk management
practices and internal controls for COVID-19 relief programs; and
3. The status of recommended actions to increase the transparency
and accountability of federal spending during emergency and
nonemergency periods.
Given the government-wide scope of this work, we undertook a variety of
methodologies. These methodologies include examining federal laws;
agency documents, guidance, processes, and procedures; and available
agency budgetary data and other financial and management information.
In addition, we interviewed federal and state officials. We also reviewed
findings from our prior work on internal controls and fraud risk
management practices in COVID-19 relief programs. More detailed
information on the objectives, scope, and methodology that this statement
is based on can be found in the individual reports from which we obtained
this information.
We conducted the work on which this statement is based 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.
While the extent of fraud and accountability issues will continue to unfold
Fraud, Improper in COVID-19 relief programs, there is already ample evidence of
Payments, and widespread fraud, improper payments, and accountability deficiencies.
For example:
Accountability
Unemployment Insurance. In a report released in January 2023,
Deficiencies in we found that measures and estimates indicate substantial levels
COVID-19 Relief of fraud and potential fraud in UI programs—a federal-state
partnership overseen by the Department of Labor (DOL)—during
Programs the pandemic. 6 We found that based on formal determinations of
fraud by states and territories, UI fraud during the pandemic is at

6GAO, Unemployment Insurance: Data Indicate Substantial Levels of Fraud during the
Pandemic; DOL Should Implement an Antifraud Strategy, GAO-23-105523 (Washington,
D.C.: Dec. 22, 2022). UI programs include those that were established prior to the COVID-
19 pandemic (including the regular UI program and Extended Benefits) and programs
established in response to the COVID-19 pandemic (such as Pandemic Unemployment
Assistance and Federal Pandemic Unemployment Compensation, among others). We
refer to measures as counts of detected activities and to estimates as projections or
inferences based on measures, assumptions, or analytical techniques.

Page 3 GAO-23-106556 Emergency Relief Funds
least $4.3 billion. However, this does not account for potential
fraud that has not been formally determined as such.
We also reported that if the lower bound of DOL’s estimated
national fraud rate for the regular UI program for 2021 was
extrapolated to total spending across all UI programs during the
pandemic, it would suggest over $60 billion in fraudulent UI
payments. However, such an extrapolation has inherent limitations
and should be interpreted with caution. Current evidence supports
this number as a conservative estimate of fraud because it is
derived from the regular UI program estimated fraud rate,
whereas, the fraud rate for pandemic UI programs is likely higher.
In ongoing work, we are seeking to calculate a comprehensive
estimate of UI fraud and are exploring ways to estimate the
amount of fraud more broadly across the federal government.
According to DOL Office of Inspector General (OIG) officials, from
April 1, 2020 through January 10, 2023, DOL OIG opened over
198,000 investigative matters involving UI. 7 The DOL OIG
continues to open about 100 to 300 new UI fraud-related matters
each week. From April 1, 2020 through January 10, 2023, DOL
OIG UI fraud investigations resulted in over 1,239 indictments or
initial charges, and 589 convictions according to DOL OIG
officials. Also, according to DOL OIG officials, their investigations
and investigative assistance to state workforce agencies have led
to UI fraud monetary results in excess of $905 million. 8
Paycheck Protection Program and COVID-19 Economic Injury
Disaster Loan program. According to Small Business
Administration (SBA) OIG officials, as of January 25, 2023, the
SBA OIG has 536 ongoing investigations involving the Paycheck
Protection Program (PPP), COVID-19 Economic Injury Disaster
Loan (COVID-19 EIDL) program, or both. Also, according to a

7The DOL OIG categorizes all investigative matters as either a complaint or an
investigation. Complaints include those received through the DOL OIG’s hotline or the
Department of Justice’s National Center for Disaster Fraud. Complaints require further
review before determining if the DOL OIG will open an investigation. An investigation is
something that, if proven, the DOL OIG anticipates will result in some type of criminal,
civil, or administrative outcome.
8According to the DOL OIG, these include, but are not limited to, funds seized through
forfeiture from bank accounts used to receive illicit proceeds of UI fraud, funds
administratively returned to state workforce agencies by financial institutions based on the
DOL OIG’s work, and court-ordered restitution amounts.

Page 4 GAO-23-106556 Emergency Relief Funds
September 2022 SBA OIG report, it has ongoing investigations
into international organized crime operations that applied for and
obtained pandemic relief funds. 9 The SBA OIG’s fraud
investigations as of January 25, 2023 have resulted in 776
indictments and 426 convictions. Further, according to SBA OIG
officials, $378,010,194 in restitution has been ordered.

Additionally, SBA’s OIG reported that its collaboration with SBA
and the U.S. Secret Service has resulted in the seizure of more
than $1 billion stolen by fraudsters from the COVID-19 EIDL
program. 10 The OIG also played a key role in assisting financial
institutions in the return of another $8 billion to SBA’s COVID-19
EIDL program. In addition, SBA has also received over $20 billion
in COVID-19 EIDL funds returned by borrowers. However,
according to SBA OIG officials, not all of these returns are related
to fraud.
The extent of fraud associated with these and other COVID-19 relief
programs has not yet been determined. One of the many challenges in
determining the full extent of fraud is its deceptive nature. Programs can
incur financial losses related to fraud that are never identified and such
losses are difficult to reliably estimate. 11
One measure of identified fraud is the count of adjudicated cases. For
example, many individuals have already pleaded guilty to federal charges
of defrauding COVID-19 relief programs. Based on our analysis of
Department of Justice (DOJ) public statements and court documentation,
we found that from March 2020 through January 13, 2023, at least 1,006
individuals or entities pleaded guilty to and 38 individuals or entities were

9SBA OIG, COVID-19 Economic Injury Disaster Loan Applications Submitted from Foreign
IP Addresses, Report No. 22-17 (Washington, D.C.: Sept. 12, 2022).
10Small Business Administration, Office of Inspector General, Top Management and
Performance Challenges Facing the Small Business Administration in Fiscal Year 2023,
Report No. 23-01 (Washington, D.C.: Oct. 14, 2022).
11The deceptive nature of fraud makes it difficult to measure in a reliable way. Various
entities report data that provide insight into the extent of federal fraud, including fraud in
COVID-19 relief programs. However, differing methodologies, incomplete data, and
inconsistent reporting mean that these figures cannot be added to determine total fraud. In
January 2023, we reported that determining the total extent of fraud is challenging
because (1) there are varying definitions of fraud that impact reporting, (2) fraud is not
easy to detect or prove, and (3) existing fraud data are insufficient. GAO, GAOverview:
Fraud in the Federal Government—Challenges Determining the Extent of Federal Fraud,
GAO-23-106110 (Washington, D.C.: Jan. 23, 2023).

Page 5 GAO-23-106556 Emergency Relief Funds
convicted at trial of federal charges of defrauding COVID-19 relief
programs—including SBA’s PPP and COVID-19 EIDL program, DOL’s UI
programs, and economic impact payments (EIP) issued by Treasury
(including the Internal Revenue Service). 12
Of the individuals or entities who pleaded guilty to or were convicted at
trial, at least 779 had been sentenced as of January 13, 2023. For
example, in one case of UI fraud, an individual was sentenced to 1 year
of probation and ordered to pay a $2,000 fine and over $16,000 in
restitution. In another case, an individual who pleaded guilty to PPP fraud
was sentenced to over 17 years in prison and 5 years supervised release
and ordered to pay nearly $4.5 million in restitution. As shown in figure 1,
while the majority of these 1,044 individuals or entities who pleaded guilty
to or were convicted at trial for charges related to SBA and DOL
programs, other COVID-19 relief programs were also defrauded.

12This analysis is limited to the DOJ cases we identified from public sources, which may
not include all criminal and civil cases charged by DOJ as of January 13, 2023.

Page 6 GAO-23-106556 Emergency Relief Funds
Figure 1: Number of Individuals or Entities That Have Pleaded Guilty to or Were Convicted at Trial of Federal Fraud-Related
Charges, by COVID-19 Relief Program, as of Jan. 13, 2023

Page 7 GAO-23-106556 Emergency Relief Funds
The number of individuals or entities facing fraud-related charges has
Fraud in Economic Impact Payments
(EIP) grown since March 2020 and will likely continue to increase, as these
cases take time to develop. 13 Based on our analysis of DOJ public
Participants statements and court documentation through January 13, 2023, federal
Two members of a family were sentenced charges were pending against at least 609 individuals or entities for
to federal prison, and a third to probation, attempting to defraud COVID-19 relief programs.
for their roles in a $530,293 scheme to file
false tax returns and steal EIPs sent to
others. In addition, the three were ordered
Additionally, federal hotlines have received numerous complaints from the
to pay $150,894 in restitution. public, many alleging potential fraud involving COVID-19 relief funds. For
Fraud scheme example, from March 13, 2020 through January 22, 2023, our hotline—
Acting as tax preparers, the family known as FraudNet—received about 3,750 complaints related to the
recruited foreign individuals who had spent
time in the United States to file fraudulent
CARES Act, about half of which involve SBA’s PPP and COVID-19 EIDL
returns for education and other credits. To program, DOL’s UI programs, and EIPs issued by Treasury and the
hide the scheme, the family enlisted others Internal Revenue Service. 14 According to SBA OIG officials, from March
to open U.S. bank accounts to deposit the
refunds, ultimately opening 68 accounts 2020 through December 2022, the OIG had received 227,567 hotline
across 16 banks in the names of 14 complaints, many of which relate to PPP and the COVID-19 EIDL
different individuals. When EIPs were sent
to qualifying individuals with bank program. According to the DOL OIG, since the pandemic started, it has
accounts on file, hundreds of payments seen an increase of more than 1,000 times in the volume of its UI work
were made into the accounts under their involving complaints and investigations.
control based on the false returns they had
filed.
In addition to noted vulnerabilities to fraud, the COVID-19 relief funding
Impacts
exacerbated an already growing improper payments problem in the
While the EIP was intended to support
families in need, this family stole federal government. For example, DOL reported an increase in the
emergency support funds to use on estimated improper payment amounts from $8.0 billion (a 9.2 percent
personal expenses and to buy real estate.
Approximately $380,000 of stolen funds
estimated improper payment rate) for fiscal year 2020 to $78.1 billion (an
were recovered, primarily through sales of 18.9 percent estimated improper payment rate) for fiscal year 2021. 15 For
the ill-gotten property. fiscal year 2022, DOL reported estimated improper payments of $18.9
Source: GAO analysis of court documentation |
GAO-23-106556.

13The statute of limitations for mail fraud and wire fraud prosecutions is 5 years (18 U.S.C.
§ 3282), except for mail and wire fraud schemes that affect a financial institution, in which
case the statute is 10 years (18 U.S.C. § 3293). Also, the statute of limitations for fraud
related to PPP loans (15 U.S.C. § 636(a)(36)(W)) and PPP second draw loans (15 U.S.C.
§ 637(a)(37)(P)), and certain COVID-19 EIDL loans (15 U.S.C. § 636(b)(16)), COVID-19
EIDL advances (15 U.S.C. § 9009b(i)) and targeted COVID-19 EIDL advances (15 U.S.C.
§ 9009b(i)) has been extended to 10 years.
14The remainder of the complaints relate to a variety of other programs and issues,
including other federal COVID-relief programs such as the Higher Education Emergency
Relief Fund and the Emergency Rental Assistance Program.
15DOL did not separately report an estimate for the pandemic UI programs, but instead
reported that the improper payment estimate for the Unemployment Insurance program of
$78 billion included the Federal Pandemic Unemployment Compensation and Pandemic
Emergency Unemployment Compensation programs.

Page 8 GAO-23-106556 Emergency Relief Funds
billion (a 22.2 percent estimated improper payment rate). However, these
estimates do not include Pandemic Unemployment Assistance (PUA). 16
DOL’s OIG applied the fiscal year 2021 DOL-reported improper payment
rate of 18.71 percent to its estimate of $872.5 billion in pandemic UI
payments. The OIG assumed that the pandemic rate of improper
payments would be this high in order to conclude that at least $163 billion
in pandemic UI benefits could have been paid improperly. 17 The OIG
further speculated that a significant portion of these estimated improper
payment amounts could be attributable to fraud. However, the OIG did
not provide further clarification of what the fraud rate might be.
In fiscal year 2022, SBA reported estimated improper payments for PPP
and the COVID-19 EIDL program totaling $36.7 billion (estimated
improper payment rates of 4.24 percent for PPP, 4.50 percent for COVID-
19 EIDL loans, and 9.76 percent for COVID-19 EIDL advances). Fiscal
year 2022 is the first year these programs reported improper payment
data.

16PUA authorized UI benefits for individuals not otherwise eligible for UI benefits, such as
self-employed workers and independent contractors, who were unable or unavailable to
work as a result of specified COVID-19 reasons. At the time of the program’s expiration in
September 2021, PUA generally authorized up to 79 weeks of benefits. Pub. L. No. 117-2,
§ 9011(a), (b), 135 Stat. 4, 118; Pub. L. No. 116-260, div. N, tit. II, § 201(a), (b), 134 Stat.
1182, 1950-1951 (2020); Pub. L. No. 116- 136, § 2102, 134 Stat. 281, 313 (2020). The
PUA program initially allowed applicants to self-certify their eligibility and did not require
them to provide any documentation of self-employment or prior income. Relying on
program participants to self-report and self-certify information increases the risk of
improper payments including those resulting from fraud. DOL has reported that a total of
$131.3 billion in PUA compensation was paid to claimants as of October 8, 2022.
Department of Labor, Employment and Training Administration, “Families First
Coronavirus Response Act and Coronavirus Aid, Relief, and Economic Security (CARES)
Act Funding to States,” accessed Jan. 26, 2023:
https://oui.doleta.gov/unemploy/docs/cares_act_funding_state.html.
17The DOL OIG’s 18.71 percent improper payment rate does not include unknown
payments. When unknown improper payments are included, the total improper payment
rate is 18.92 percent. Larry D. Turner, Inspector General, DOL, Office of Inspector
General, testimony before the U.S. Senate Committee on Homeland Security and
Governmental Affairs, Number 19-22-003-03-315, Mar. 17, 2022. When an executive
agency’s review is unable to discern whether a payment was proper as a result of
insufficient or lack of documentation, this payment must also be included in the improper
payment estimate. 31 U.S.C. §3352(c)(2).

Page 9 GAO-23-106556 Emergency Relief Funds
Fraud in COVID-19 Economic Injury
In addition to these significant improper payment estimates for PPP, the
Disaster Loan Program (EIDL) COVID-19 EIDL program, and UI, neither SBA nor DOL received
Advances unmodified (“clean”) audit opinions on their financial statements for fiscal
year 2021 or 2022. 18 Specifically, the auditors of SBA’s financial
Participants
statements found issues with the agency’s consolidated financial
Two individuals were sentenced to 121
and 66 months in federal prison, statements for the last 3 years. For fiscal year 2020, the SBA’s
respectively, and ordered to forfeit consolidated financial statements received a disclaimer of opinion,
$680,710 and pay more than $3.7 million
in monetary penalties for their roles in a
meaning external auditors were unable to express an opinion due to
COVID-19 EIDL fraud scheme. insufficient evidence. 19 Additionally, for fiscal years 2021 and 2022, SBA
Fraud scheme received a disclaimer of opinion on one of its financial statements and the
The duo operated a telemarketing scheme remainder were unaudited. 20
where, in exchange for a fee, they took
personal identifying information (PII) from As the basis for these years’ disclaimers, the auditors reported that SBA
victims and promised to file an application
for an agricultural grant. Instead, they filed was unable to provide adequate evidence to support a significant number
fraudulent COVID-19 EIDL applications of transactions and account balances due to inadequate processes and
using the victims’ PII. They received $1.56
million in COVID-19 EIDL Advances and controls related to its implementation of its programs authorized under the
attempted to receive an additional $1.44 CARES Act and related legislation, including PPP. In addition, SBA
million. They also used a credit and debit received a disclaimer of an opinion in fiscal year 2022, in part, because
card processing service to charge third
parties, from which they obtained at least the agency did not adequately design and implement controls to ensure
$700,000 in fees. that approved COVID-19 EIDL loans were provided to eligible borrowers
Impacts and accurately recorded. The financial statement auditor found examples
The duo diverted needed funds from where SBA approved and disbursed COVID-19 EIDL loans to borrowers
legitimate businesses and used
individuals’ PII without their consent. They with fraudulent tax identification numbers; the auditor also identified other
transferred stolen funds to their personal concerns about potential fraud. SBA’s auditor made 31 recommendations
bank account.
Source: GAO analysis of court documentation |
in its fiscal year 2022 auditor’s report to address control deficiencies
GAO-23-106556. related to these programs.

18SBA also received a disclaimer of opinion for its fiscal year 2020 consolidated financial
statements.
19See Small Business Administration, Office of Performance Management and the Chief
Financial Officer, Agency Financial Report for Fiscal Year 2020 (Washington D.C.: Dec.
18, 2020).
20See Small Business Administration, Office of Performance, Planning and the Chief
Financial Officer, Agency Financial Report for Fiscal Year 2021 (Washington D.C.: Nov.
15, 2021) and Small Business Administration, Office of Performance, Planning, and the
Chief Financial Officer, Agency Financial Report for Fiscal Year 2022 Washington, D.C.:
Nov. 15, 2022).

Page 10 GAO-23-106556 Emergency Relief Funds
DOL received a modified opinion for its financial statements for fiscal
years 2021 and 2022. 21 The modified opinion was made in part because
the auditors were unable to obtain sufficient appropriate audit evidence
about the completeness of the benefit overpayment receivable for
COVID-19 related UI benefits. DOL’s auditor made three
recommendations in its fiscal year 2022 auditor’s report to address the
issues related to the modified opinion.
We have found a range of internal control shortcomings across a wide
range of programs and made many recommendations that agencies are
in the process of implementing. These shortcomings are discussed in
detail later in this statement.
A high incidence of fraud can lead to public perception that pandemic
relief funds are easy to obtain fraudulently and make the government a
target for further exploitation. However the impacts of fraud go beyond
financial losses. Public perception of widespread fraud in pandemic relief
programs can erode trust in government—including confidence in the
government’s ability to manage taxpayer dollars, prevent fraud, and
pursue justice. According to DOJ officials, instances of fraud can
normalize additional fraudulent behavior, which increases cynicism
among the public. The officials further emphasized that DOJ prosecutes
fraud to restore faith in government by seeking justice, recovering stolen
funds, and illustrating that the government holds bad actors accountable.
As a result, according to DOJ officials, DOJ publishes most cases of
pandemic relief fraud in press releases to deter others from committing
fraud and to promote trust in government.
Furthermore, identity theft inflicts damage to victims’ financial and
emotional health. According to DOJ, victims of identity theft have had
their bank accounts wiped out, had their credit histories ruined, and had
jobs and valuable possessions taken away. In COVID-19 relief program
fraud cases, according to DOJ officials, identity theft affects victims
through (1) negative impacts on credit, (2) denial of entitlements and
other benefits (e.g., unemployment benefits) because of prior claims filed
using victims’ identities, (3) susceptibility to other types of fraud, and (4)
time and effort spent rectifying issues related to identity theft.

21See Department of Labor, Agency Financial Report Fiscal Year 2021 (Washington,
D.C.: Nov. 19, 2021) and Department of Labor, Agency Financial Report Fiscal Year 2022
(Washington, D.C.: Dec. 13, 2022).

Page 11 GAO-23-106556 Emergency Relief Funds
Identity theft can also affect victims’ physical and psychological health.
Victims may experience anxiety, sleeplessness, and depression, among
other symptoms. According to DOJ, the emotional trauma associated with
identity theft can be as devastating as many violent offenses.
We identified four major factors that contributed to agencies’ exposure to
Shortcomings in fraud, improper payments, and other accountability challenges when
Management administering COVID-19 relief programs. Specifically, when the pandemic
began, agencies (1) did not strategically manage fraud risks, (2) lacked
Practices and Internal appropriate internal controls to prevent, detect, and recover fraudulent
Controls Led to Fraud and other improper payments, (3) lacked permanent, government-wide
analytic capabilities to help identify fraud, and (4) continued to have
and Improper challenges with improper payments.
Payments in COVID-
19 Relief Programs
Agencies Did Not Federal agencies did not strategically manage fraud risks and were not
Strategically Manage adequately prepared to prevent fraud when the pandemic began. In July
2015, we issued A Framework for Managing Fraud Risks in Federal
Fraud Risks
Programs (Fraud Risk Framework). This framework provides a
comprehensive set of key components and leading practices to help
agency managers combat fraud in a strategic, risk-based way. 22 The
Fraud Reduction and Data Analytics Act of 2015 required the Office of
Management and Budget (OMB) to establish guidelines for federal
agencies to create controls to identify and assess fraud risks and to
design and implement anti-fraud control activities. 23 The act further
required OMB to incorporate the leading practices from the Fraud Risk
Framework in the guidelines. 24 As depicted below in figure 2, the Fraud

22GAO, A Framework for Managing Fraud Risks in Federal Programs, GAO-15-593SP
(Washington, D.C.: Jul. 28, 2015).
23Pub. L. No. 114-186, 130 Stat. 546 (2016).

24The Payment Integrity Information Act of 2019 requires these guidelines to remain in
effect, subject to modification by OMB as necessary, and in consultation with GAO. Pub.
L. No. 116-117, § 2(a), 134 Stat. 113, 131 - 132 (2020), codified at 31 U.S.C. § 3357. In
October 2022, OMB issued a Controller Alert reminding agencies that consistent with the
guidelines contained in OMB Circular A-123, which are required by Section 3357 of the
Payment Information Integrity Act of 2019, Pub. L. No. 116-117, they must establish
financial and administrative controls to identify and assess fraud risks. In addition, OMB
reminded agencies that they should adhere to the leading practices in GAO’s Fraud Risk
Management Framework as part of their efforts to effectively design, implement, and
operate an internal control system that addresses fraud risks. OMB, CA-23-03,
Establishing Financial and Administrative Controls to Identify and Assess Fraud Risk,
(Oct. 17, 2022).

Page 12 GAO-23-106556 Emergency Relief Funds
Risk Framework describes leading practices for managing fraud risk and
includes four components: commit, assess, design and implement, and
evaluate and adapt.

Figure 2: The Four Components of the Fraud Risk Framework and Selected Leading Practices

These leading practices are applicable during normal operations, as well
as during emergencies. In June 2020, we reported that because the
government needed to provide funds and other assistance quickly to
those affected by COVID-19 and its economic effects, federal relief

Page 13 GAO-23-106556 Emergency Relief Funds
programs were vulnerable to significant risk of fraudulent activities. 25 We
Fraud in Unemployment Insurance (UI)
recognize that eliminating all fraud and fraud risk is not a realistic goal.
Participants However, we expressed concern in March 2022 about the pace and
A foreign official was sentenced to 5 years extent to which agencies have implemented controls to prevent, detect,
in prison and ordered to pay $604,260 in and respond to fraud in a manner consistent with leading practices since
restitution for his attempt to steal nearly
$2.4 million from the United States
the Fraud Reduction and Data Analytics Act of 2015 was enacted in
government, including approximately 2016. 26 Had agencies already been strategically managing their fraud
$500,000 in pandemic-related
unemployment benefits.
risks, they would have been better positioned to identify and respond to
Fraud scheme
the heightened risks that emerged during the pandemic.
Since 2017, the foreign official stole the Agency OIGs have also raised concerns about the ability of agencies to
personal identifying information (PII) of
more than 20,000 Americans to submit strategically manage fraud risks. For example, the SBA OIG identified
more than $2 million in claims for federally managing fraud risks as a top management challenge for the agency,
funded disaster relief benefits and
fraudulent tax returns. The largest amount
citing the susceptibility of pandemic relief programs to significant fraud
of fraud was committed against one state risks and vulnerabilities as a particular concern. The DOL OIG has
workforce agency, which paid out similarly reported significant concerns with the ability of DOL and state
$350,763 in fraudulent pandemic UI
claims. He also submitted fraudulent workforce agencies to deploy UI and other program benefits
pandemic UI claims in at least 17 other expeditiously and efficiently while ensuring integrity and adequate
states.
oversight, particularly in response to national emergencies and disasters.
Impacts
The various state workforce agencies Other entities have emphasized the heightened fraud risks associated
involved paid out almost $500,000 in UI with the COVID-19 relief programs. For example, at the beginning of
benefits. In addition, his actions affected
thousands of Americans whose identities March 2022, the White House noted that there has been an “expansion
he had stolen, particularly those whose of foreign and domestic criminal syndicates defrauding” benefits
benefits he fraudulently obtained, given
they were qualified for disaster aid and programs intended to help Americans deal with the pandemic’s
may have needed it urgently. impacts. 27 Additionally, the Pandemic Response Accountability
Source: GAO analysis of court documentation |
GAO-23-106556.
Committee (PRAC) has stated that the unprecedented amount of money
made available for pandemic relief, and the quick distribution of most

25GAO, COVID-19: Opportunities to Improve Federal Response and Recovery Efforts,
GAO-20-625 (Washington, D.C.: June 25, 2020).
26GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure
Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022).
27White House, Fact Sheet: President Biden to Announce New Steps to Combat Criminal
Fraud and Identity Theft in Pandemic Relief Programs (Washington, D.C.: Mar. 1 2022),
accessed Mar. 7, 2022, https://www.whitehouse.gov/briefing-room/statements-
releases/2022/03/01/fact-sheet-president-biden-to-announce-new-steps-to-combat-
criminal-fraud-and-identity-theft-in-pandemic-relief-programs/.

Page 14 GAO-23-106556 Emergency Relief Funds
funds, put the money at a higher risk for fraud. 28 These known fraud risks
underscore the importance of fraud risk management.
Across our COVID-19 work, we found that agencies did not consistently
Fraud in Paycheck Protection Program
(PPP) apply leading practices to manage fraud risks in COVID-19 spending,
including designating dedicated antifraud entities, assessing fraud risks,
Participants or developing antifraud strategies. For example:
An individual was sentenced to more than
11 years in prison and ordered to pay over
• Paycheck Protection Program and COVID-19 Economic Injury
$17 million in restitution in connection with Disaster Loans. In our reviews of PPP and the COVID-19 EIDL
his fraudulent scheme to obtain program, we have made several recommendations to SBA to improve
approximately $24.8 million in PPP loans.
its fraud risk management efforts. As of January 2023, SBA has
Fraud scheme
implemented many of these recommendations and is in the process of
The individual submitted 15 fraudulent
applications to eight different lenders for implementing others. However, SBA’s initial approach to managing
purported businesses he owned or fraud risks in PPP and the COVID-19 EIDL program, as well as in its
controlled, claiming these businesses had
numerous employees and hundreds of
longstanding programs, had not been strategic. For example, SBA did
thousands of dollars in payroll expenses not designate a dedicated antifraud entity until February 2022. This
when, in fact, no business had employees new entity—the Fraud Risk Management Board—is to oversee and
or paid wages consistent with the amounts
claimed. The individual received over $17 coordinate SBA’s fraud risk prevention, detection, and response
million in PPP loan funds. activities.
Impacts
As COVID-19 devastated companies
Further, in March 2021, we found that SBA had not conducted fraud
around the nation, this individual diverted risk assessments for PPP and the COVID-19 EIDL program and
millions of dollars from the relief fund that recommended that it do so. 29 When SBA developed its fraud risk
could have helped them. He used the
funds to purchase multiple homes, pay off assessments for the programs in October 2021, PPP had already
mortgages on other homes, and buy a stopped accepting new applications and the COVID-19 EIDL program
fleet of luxury cars. He also sent millions of
dollars in PPP proceeds in international
would stop at the end of that year. As we mentioned in prior work,
money transfers. fraud risk assessments are most helpful in developing preventive
Source: GAO analysis of court documentation |
GAO-23-106556.
fraud controls to avoid costly and inefficient “pay-and-chase” activities.
For example, while the PPP fraud risk assessment can help SBA
identify potential fraud as it continues to review the PPP loans for
forgiveness, it could not be used to identify potential fraud during the
application process.
In March 2021, we also recommended that SBA develop a strategy
that outlines specific actions to monitor and manage fraud risks in
PPP and the COVID-19 EIDL program on a continuous basis. As of

28The CARES Act established the PRAC within the Council of Inspectors General on
Integrity and Efficiency, the oversight and coordination body for the inspector general
community. Pub. L. No. 116-136, § 15010(b), 134 Stat. 281, 534 (2020). The PRAC is
composed of 21 inspectors general.
29GAO, COVID-19: Sustained Federal Action Is Crucial as Pandemic Enters Its Second
Year, GAO-21-387 (Washington, D.C.: Mar. 31, 2021).

Page 15 GAO-23-106556 Emergency Relief Funds
January 2023, we are continuing discussions with SBA on missing
elements of the current strategy such as timelines and ongoing fraud
detection.
• Unemployment Insurance. In October 2021, we found that DOL had
not clearly assigned defined responsibilities to a dedicated antifraud
entity or comprehensively assessed fraud risks for the UI programs, in
alignment with leading practices. 30 We made six recommendations to
improve DOL’s ability to identify and assess fraud risks to the UI
programs. For example, we recommended that DOL designate a
dedicated antifraud entity with clearly defined and documented
responsibilities and authority, including responsibility and authority for
facilitating communication about fraud issues to stakeholders. At the
time, DOL neither agreed nor disagreed with these recommendations.
In its response to our January 2023 report, DOL stated that it was
proceeding with implementing these October 2021 recommendations.
Specifically, the department is in the process of designating a
dedicated entity and documenting responsibilities for managing the
process of assessing fraud risk. The department is also working to
develop a UI fraud risk profile in accordance with the Fraud Risk
Framework.
In addition, we found in January 2023 that DOL had not designed and
implemented an antifraud strategy to guide its actions based on a
fraud risk profile in alignment with leading practices in the Fraud Risk
Framework; we recommended that it do so. 31 DOL stated that it plans
to develop a strategy.
• Affordable Connectivity Program. In January 2023, we found that
the Federal Communications Commission (FCC) had not developed
an antifraud strategy to address identified fraud risks associated with
the Affordable Connectivity Program. 32 We also found FCC had not
developed processes to conduct regular fraud risk assessments or

30GAO, COVID-19: Additional Actions Needed to Improve Accountability and Program
Effectiveness of Federal Response, GAO-22-105051 (Washington, D.C.: Oct. 27, 2021).
31GAO-23-105523.

32In December 2020, the Consolidated Appropriations Act, 2021 directed FCC to establish
the Emergency Broadband Benefit Program to help low-income households afford Internet
service during the COVID-19 pandemic. In November 2021, the Infrastructure Investment
and Jobs Act made several changes to the program to transform it from a temporary,
emergency program to a longer-term program known as the Affordable Connectivity
Program. GAO, Affordable Broadband: FCC Could Improve Performance Goals and
Measures, Consumer Outreach, and Fraud Risk Management, GAO-23-105399
(Washington, D.C.: Jan. 18, 2023).

Page 16 GAO-23-106556 Emergency Relief Funds
monitor certain antifraud controls. We made six recommendations to
improve FCC’s processes for managing fraud risks, including that
FCC develop and implement (1) a process for conducting regular
fraud risk assessments, (2) an antifraud strategy that aligns with
leading practices in the Fraud Risk Framework, and (3) processes to
monitor specific antifraud controls. FCC agreed with our
recommendations and described its plans to address them.

Open Matter for Congressional
We previously reported that Congress’s ability to oversee agencies’
Consideration efforts to manage fraud risks is hindered by the lack of fraud-related
Congress should amend the Payment reporting requirements. The Fraud Reduction and Data Analytics Act of
Integrity Information Act of 2019 to 2015 and the Payment Integrity Information Act of 2019 required
reinstate the requirement that agencies
report on their antifraud controls and fraud agencies to report on their antifraud controls and fraud risk management
risk management efforts in their annual efforts in their annual financial reports. However, the requirement to
financial reports. report such information ended with the fiscal year 2020 annual financial
Source: GAO-23-106556.
report. Since then, there has been no similar requirement for agencies to
report on their efforts to manage fraud risks. 33 In March 2022, we
suggested that Congress amend the Payment Integrity Information Act of
2019 to reinstate reporting requirements. 34
Agencies Lacked During the COVID-19 pandemic, agencies have had to distribute
Appropriate Internal emergency relief funding quickly and efficiently. However, agencies also
need to ensure the appropriate financial and other safeguards are in
Controls to Prevent,
place. We found significant shortcomings in agencies’ internal controls,
Detect, and Recover which contributed to significant fraud and improper payments in COVID-
Fraudulent and Other 19 relief programs.
Improper Payments Also, we previously reported that when new programs began or existing
ones were greatly expanded, agencies frequently did not develop or
implement internal controls for eligibility or identity verification to help
prevent fraud and improper payments. 35 In addition, agencies did not
quickly implement certain post-payment controls such as reviewing
payments after they were made to detect and recover fraud and improper
payments. Lastly, we identified urgent needs for modernizing legacy data
systems to better ensure program integrity.

33The Payment Integrity Information Act of 2019 includes multiple ongoing reporting
requirements for agencies related to improper payments generally but none specifically
mentions fraud.
34GAO-22-105715.

35GAO-22-105715.

Page 17 GAO-23-106556 Emergency Relief Funds
Although federal laws have required agencies to submit specific internal
Open Matter for Congressional
Consideration control plans for relief funds in previous emergencies, there was no such
Congress should pass legislation requiring requirement for the COVID-19 pandemic. 36 An effective, robust internal
the Office of Management and Budget control system helps agencies adapt to shifting environments, evolving
(OMB) to provide guidance for agencies to
develop plans for internal control that demands, changing risks, and new priorities throughout the lifecycle of
would then immediately be ready for use federal programs. We found that many agencies, including those that
in, or adaptation for, future emergencies or
crises and requiring agencies to report
administered some of the largest COVID-19 relief programs, did not
these internal control plans to OMB and initially implement effective internal controls or apply financial
Congress. management practices to manage and oversee the distribution and use of
Source: GAO-23-106556.
COVID-19 relief funds. In March 2022, we suggested that Congress pass
legislation requiring OMB to (1) provide guidance for agencies to develop
plans for internal control in advance that would then immediately be ready
for use in, or adaptation for, future emergencies or crises and (2) require
agencies to report these plans to OMB and Congress. 37

Upfront Eligibility and Identity Confirming the eligibility and identity of individuals receiving payments—
Verification Controls such as confirming wage information or housing status, or verifying
identity—are key controls to prevent improper payments, including those
that result from fraud. 38 We found that federal and state agencies relied
on self-attestation or self-certification for individuals to verify their
eligibility or identity to receive assistance from some emergency relief
programs, which left the agencies open to significant fraud risks.

36For example, in 2013, 2017 and 2018, four supplemental appropriations acts were
enacted to provide disaster relief funding to help mitigate the effects of Hurricanes Sandy,
Harvey, Irma, and Maria, and the California wildfires. See Pub. L. No. 113-2, div. A, 127
Stat. 4 (2013), Pub. L. No. 115-56, div, B, 131 Stat. 1129, 1136 (2017); Pub. L. No. 115-
72, div. A, 131 Stat. 1224 (2017); and Pub. L. No. 115-123, div. B, subdiv. 1, 132 Stat 64,
65 (2018). These supplemental appropriations acts provided an internal control oversight
framework to limit improper payments of these funds, requiring the Office of Management
and Budget to issue criteria for federal agencies to use in designing internal controls for
spending disaster relief funding. Among other requirements, they required federal
agencies to submit their internal control plans for relief fund spending to GAO, their
respective inspectors general, OMB, and Congress.
37GAO-22-105715.

38As part of agency improper payment estimates, for fiscal year 2021 and onward, federal
executive agencies are specifically required to report on the portion of their programs’
improper payment estimates where the root cause of the improper payment is due to
failure to verify identity. OMB Circular No. A-123, Appendix C, Requirements for Payment
Integrity Improvement (OMB M-21-19). For fiscal year 2022, agencies estimated that
about $1.8 billion in improper payments included “identity” as a root cause.

Page 18 GAO-23-106556 Emergency Relief Funds
Unemployment Insurance. In response to the COVID-19 pandemic,
Congress allowed states to ease certain requirements in the regular UI
program to help support unemployed workers. Congress also created
new UI programs that expanded eligibility and enhanced UI benefits. For
example, the CARES Act created the PUA program, which allowed
applicants to self-certify their eligibility and did not require them to provide
Fraud in Federal Child Nutrition any documentation of self-employment or prior income.
Program
Relying on program participants to self-report and self-certify information
on agency forms, instead of verifying such information independently,
Participants
Three individuals associated with a
could cause an agency to miss opportunities to prevent program fraud
nonprofit organization pleaded guilty to and abuse. 39 To help address this risk, the Consolidated Appropriations
their roles in a $250 million scheme to Act, 2021, enacted in December 2020, included a requirement for
defraud the Federal Child Nutrition
Program in Minnesota. Over 40 individuals individuals to submit documentation of employment or self-employment
have been charged in the scheme. when applying for PUA. 40
Fraud scheme
Through the use of shell companies, In addition, during the pandemic, states have been encouraged to
bribes, kickbacks, and fake invoicing, process and pay claims quickly while experiencing a historic number of
individuals claimed reimbursement for
purportedly serving meals to hundreds or
claims. In an effort to speed claims processing, DOL encouraged states
thousands of children a day. In total, the to temporarily suspend the existing waiting period for benefits and the
individuals claimed to have served over 1.3 CARES Act provided full federal funding for the first week of regular UI
million meals between December 2020
through June 2021, and received over $3 benefits to states that did so. According to DOL officials, under the regular
million in reimbursement. UI program, DOL allows states to take up to 21 days to make the first
Impacts payment of benefits, giving them time to detect potential fraud. Waiving
Rather than using funds to feed children in the waiting period meant that some states had less time to employ tools
need, the individuals used the proceeds for
their personal purposes. for fraud prevention and detection, according to National Association of
Source: GAO analysis of court documentation | State Workforce Agencies officials. 41
GAO-23-106556.

In October 2021, we identified fraudulent activities related to UI programs
that included individuals’ use of stolen or fake identity information or
personally identifiable information to apply for and receive unemployment
benefits. 42 According to officials from DOL, the agency observed an
increase in the frequency and volume of identity-related fraud, as well as

39GAO-22-105051.

40The Consolidated Appropriations Act, 2021, extended the PUA program and included a
requirement that all PUA claimants must submit documentation substantiating
employment, self-employment, or the planned commencement of employment or self-
employment. Pub. L. No. 116-260, div. N, tit. II, § 241(a), 134 Stat, 1182, 1959-60.
41State workforce agencies are responsible for administering UI programs, among other
things. The National Association of State Workforce Agencies represents all 50 state
workforce agencies, the District of Columbia, and U.S. territories.
42GAO-22-105051.

Page 19 GAO-23-106556 Emergency Relief Funds
significantly more sophisticated fraud schemes, since the beginning of the
pandemic.
DOL continues to invest in its own identity verification resources. For
example, in January 2023, we reported that DOL provided funding to
Potential Fraud in Paycheck Protection procure and implement an identity verification service, which became
Program (PPP) – Lenders
available to states in July 2020, according to DOL officials. This service
provides access to new datasets to conduct enhanced UI claimant
Civil Monetary Penalties
The Federal Reserve Board fined a PPP
identity verification, which can help prevent payment of fraudulent claims
lender bank $2.3 million for processing six based on false identities. It also contains a cross-match with the Social
PPP loans despite having detected that the Security Administration Death Master File to identify the use of a
loan applications contained significant
indications of potential fraud and for failing to deceased person’s Social Security number when filing for benefits. As of
report the potential fraud in a timely manner. October 2022, there were 41 states using the identity verification service,
The six loans totaled approximately $1.1
million.
according to DOL officials.
Paycheck Protection Program. As we reported in June 2020, given the
Impacts immediate need for PPP loans, SBA worked to streamline PPP so that
Lenders were allowed to provide PPP loans lenders could begin distributing funds as quickly as possible. 43 SBA’s
to qualified small businesses negatively
affected by the COVID-19 pandemic, but initial interim final rule allowed lenders to rely on borrower certifications to
were required to follow their anti-money determine the borrower’s eligibility and use of loan proceeds, and
laundering policies. This lender bank’s
processing and funding of potentially required limited lender review of documents provided by the borrower to
fraudulent PPP loans despite indicators of determine the qualifying loan amount and eligibility for loan forgiveness. 44
potential fraud and failure to report the
potential fraud in a timely manner violated As set forth in the CARES Act, borrowers had to certify in good faith that
these policies and constituted unsafe or
unsound banking practices. (1) current economic uncertainty made the loan request necessary to
support the applicant’s ongoing operations and (2) the funds would be
used to retain workers and maintain payroll or make mortgage interest
payments, lease payments, and utility payments. To streamline the
process, SBA required minimal loan underwriting from lenders, which

43GAO-20-625.

44See 85 Fed. Reg. 20,811 (Apr. 15, 2020). The interim final rule stated that lenders would
be held harmless for borrowers’ failure to comply with program criteria.

Page 20 GAO-23-106556 Emergency Relief Funds
made the program more susceptible to fraudulent applications. 45 As we
have previously reported, reliance on applicant self-certifications can
make a program more vulnerable to exploitation by criminal actors or
ineligible applicants. 46

COVID-19 Economic Injury Disaster Loans. The CARES Act initially
restricted SBA from obtaining federal tax return transcripts as part of the
COVID-19 EIDL application process. As a result, SBA relied on self-
certification when processing loan and advance applications. The
Consolidated Appropriations Act, 2021—enacted 9 months later—
removed this restriction. In September 2022, the SBA OIG found that
SBA did not implement the tax return transcript requirement in a timely
manner, potentially disbursing COVID-19 EIDL loans to ineligible
entities. 47 Specifically, the SBA OIG found that for about 4 months after
Congress removed the tax return prohibition, SBA made 133,832 COVID-
19 EIDL disbursements, totaling about $8.5 billion without proving
applicant eligibility using official tax information. Of that amount, more
than $92 million was disbursed to businesses with suspect tax
identification numbers.
The SBA OIG reviewed a sample of loans approved before SBA
implemented the requirement for tax return transcripts and found that
about half of them, totaling $1.1 million, should not have been approved.
The SBA OIG also reviewed a sample of COVID-19 EIDL disbursements
approved after the tax return transcript requirement was implemented. It

45See 85 Fed. Reg. 20,811, 20,815 (Apr. 15, 2020). Because of the limited loan
underwriting, lenders and SBA have less information from applicants to detect errors or
fraud. For standard loans under SBA’s 7(a) program, borrowers have to provide
documentation that includes a completed application, personal and business financial
statements, and income tax returns. However, the initial interim final rule’s requirement
that lenders follow applicable Bank Secrecy Act requirements may require lenders to
collect additional identifying information from borrowers before approving a PPP loan.
(The Bank Secrecy Act and its implementing regulations generally require financial
institutions, including banks, to collect and retain various records of customer transactions,
verify customers’ identities, maintain anti-money laundering compliance programs, and
report suspicious transactions.) In an interim final rule posted to SBA’s website on May 22,
2020, SBA informed lenders that the lender would not receive its lender processing fee if
SBA determined that the borrower was ineligible for a PPP loan. See 85 Fed. Reg.
33,010, 33,014 (June 1, 2020).
46GAO, Aviation: FAA Needs to Better Prevent, Detect, and Respond to Fraud and Abuse
Risks in Aircraft Registration, GAO-20-164 (Washington, D.C.: Mar. 25, 2020).
47Small Business Administration, Office of Inspector General, Follow-up Inspection of
SBA’s Internal Controls to Prevent COVID-19 EIDLs to Ineligible Applicants, Report No.
22-22 (Washington, D.C.: Sept. 29, 2022).

Page 21 GAO-23-106556 Emergency Relief Funds
found that disbursements totaling $838,000 should not have been
approved because the loan files did not contain conclusive evidence that
the businesses existed on or before January 31, 2020.
The SBA OIG recommended that SBA recover funds disbursed to the
ineligible applicants identified in the sample. It also recommended that
SBA review the remaining COVID-19 EIDL disbursements with suspect
tax identification numbers. If SBA flags those borrowers as ineligible, it
should recover the funds. SBA stated that it plans to review the loans
identified in the sample as well as the loans the SBA OIG identified that
may not meet eligibility criteria. If the business is ineligible, SBA will
attempt recovery of those loan funds.
Post Payment Review and Unemployment Insurance. In late May 2021, DOL’s OIG reported that
Recovery Controls some states did not perform required overpayment recovery activities. 48
Specifically, DOL OIG found that 19 states (38 percent) did not perform
the required overpayment recovery activities, such as benefit offsets, for
the recipients to repay the UI overpayments. 49 The OIG further reported
that once states identify overpayments, it is essential that they complete
recovery activities to mitigate the risk of financial loss as a result of
overpaid claims. 50 The OIG recommended that DOL assist states with
reporting of claims, overpayments, and fraud to create clear and accurate
information and then use the overpayment and fraud reporting to prioritize
and assist states with fraud detection and recovery. In ongoing work, we

48Department of Labor, Office of Inspector General, COVID-19: States Struggled to
Implement CARES Act Unemployment Insurance Programs, Report No. 19-21-004-03-
315 (Washington, DC: May 28, 2021).
49In this case, benefit offsets are benefits withheld by the state agency to satisfy the
requirement for the recipient to repay an overpayment.
50DOL has issued various guidance during the pandemic related to overpayments.

Page 22 GAO-23-106556 Emergency Relief Funds
are reviewing agency COVID-19 overpayment recovery efforts, including
those for UI. 51
Fraud in Unemployment Insurance (UI)
From April 2020 through September 2022, states and territories reported
Participants about $48.6 billion in overpayments across the UI programs, including
A contract employee for a state workforce about $15.3 billion from PUA, $18.7 billion from Federal Pandemic
agency was sentenced to almost 5 years
in prison and ordered to pay around $4
Unemployment Compensation, $11.7 billion from the regular UI and
million in restitution for wire fraud. Extended Benefits programs, and $2.9 billion from Pandemic Emergency
Fraud scheme Unemployment Compensation. 52
The employee was responsible for
reviewing, processing, and verifying the States and territories also report the amounts of fraud overpayments, a
legitimacy of CARES Act UI claims. Using subset of the total overpayment amounts. From April 2020 through
insider access, the employee disbursed to
personal accounts over $2 million in September 2022, states and territories reported about $4.8 billion in
federal and state funds intended for overpayments from fraud across the UI programs, including about $1.6
unemployment assistance.
billion from PUA, $1.8 billion from Federal Pandemic Unemployment
Impacts
Compensation, $1.2 billion from the regular UI and Extended Benefits
Rather than ensuring unemployment funds
went to those in need, the employee used programs, and $0.2 billion from Pandemic Emergency Unemployment
their position to fraudulently obtain funds Compensation. 53 However, according to DOL, states do not report these
to purchase high-end handbags and other
luxury goods.
overpayments as fraud until investigations are complete and fraud has
Source: GAO analysis of court documentation | been confirmed, which may take a long time.
GAO-23-106556.

51In January 2021, we identified concerns about overpayments and potential fraud in the
UI system, specifically in the PUA program. We recommended that DOL collect data from
states on the amount of PUA overpayments recovered. GAO, COVID-19: Critical Vaccine
Distribution, Supply Chain, Program Integrity, and Other Challenges Require Focused
Federal Attention, GAO-21-265 (Washington, D.C.: Jan. 28, 2021). The Consolidated
Appropriations Act, 2021 provided states with authority to waive certain PUA
overpayments. In March 2021, we recommended that DOL collect data from states on the
amount of overpayments waived in the PUA program. GAO, COVID-19: Sustained
Federal Action Is Crucial as Pandemic Enters Its Second Year, GAO-21-387 (Washington,
D.C.: Mar. 31, 2021). DOL issued PUA program guidance and updated instructions in
January 2021 for states to report PUA overpayments recovered. In September 2021, it
issued guidance and updated instructions for states to report PUA overpayments waived.
States have begun reporting these data to DOL but sustained reporting by more states is
needed to help inform DOL, policymakers, and the public about the amount of PUA
overpayments recovered and waived.
52We accessed the overpayments data on January 19-20, 2023; these data are subject to
change as more states report data and as states revise previously reported data. This
overpayments data is based on state reporting on overpayments and therefore differs
from DOL’s reporting on estimated improper payments.
53Because states may use different definitions, an overpayment that is classified as
fraudulent in one state might not be classified as fraudulent in another state. We accessed
the fraud overpayments data on January 19-20, 2023; these data are subject to change as
more states report data and as states revise previously reported data. The total PUA
amount shown also includes fraud overpayments related to identity theft.

Page 23 GAO-23-106556 Emergency Relief Funds
Crosscutting Fraud: COVID-19 Paycheck Protection Program and COVID-19 Economic Injury
Economic Injury Disaster Loans (EIDL) Disaster Loans. Beginning in June 2020, in our first government-wide
Program, Paycheck Protection Program report on the federal response to the COVID-19 pandemic, we noted the
(PPP), and Unemployment Insurance
(UI) need for SBA to develop and implement plans to respond to program
integrity risks in its small business loan programs. 54 Specifically, we
Participants recommended that SBA develop and implement plans to identify and
Four defendants were sentenced for respond to risks in PPP to, among other things, ensure program integrity,
conspiracy to defraud several COVID-19
relief programs. The ringleader was achieve program effectiveness, and address potential fraud.
sentenced to 4 years in federal prison and To address this recommendation, SBA developed a plan in late 2020
ordered to pay $38,756 in restitution and a outlining steps it planned to take to review PPP loans made in 2020,
fine of $20,000.
Fraud scheme
including automated screenings of all loans, manual reviews of selected
Through her tax-preparation business, the loans, and quality control reviews to ensure the quality, completeness,
ringleader recruited at least five people to and consistency of the review process. SBA provided a finalized plan and
prepare fraudulent tax returns and full-set of updated procedures covering the remaining loans in January
applications to COVID-19 relief programs
for clients. She charged her clients up to 50 2022. To implement the plan, SBA’s loan review contractors conducted
percent of the fraudulent COVID-19 EIDL automated screenings for all PPP loans made in 2020 in August and
proceeds, paying her employees a flat fee
for each fraudulent application that early September 2020.
received funding. She also submitted
fraudulent COVID-19 EIDL applications in The contactor used a rules-based tool to compare PPP loan data against
her own name. She defrauded PPP by publicly available information and apply eligibility and fraud detection
obtaining a fraudulent PPP loan of $3,548.
Finally, she also claimed more than
rules to identify anomalies or attributes that could indicate noncompliance
$33,000 in UI payments to which she was with eligibility requirements. According to SBA officials, contractor staff
not entitled. completed about 78,000 manual reviews and referred about 8,900 loans
Impacts
to SBA for further review, as of November 15, 2021.
Instead of going to small businesses in
need or individuals facing unemployment Starting in January 2021, SBA’s contractors began screening all PPP
during the pandemic, the defendants
redirected those funds to their own loan applications using screening rules with potential indicators of non-
purposes. eligibility or fraud risk. These rules were developed from information
Source: GAO analysis of court documentation |
GAO-23-106556.
gathered in SBA’s review of 2020 loans. In addition, SBA continued to
conduct manual reviews of flagged loans. According to SBA data, as of
October 2022, about 93 percent of PPP borrowers had applied for loan
forgiveness. As a result of it implementing the PPP oversight plan we
recommended, SBA had conducted reviews and determined that some
borrowers were ineligible for the related loan amounts or used the loan
proceeds for unauthorized uses. These reviews resulted in PPP loan
proceeds with a net present value of about $4.7 billion not being forgiven.
The SBA OIG also reported on concerns about SBA’s recovery controls.
Specifically, the SBA OIG issued a management advisory in September

54GAO-20-625.

Page 24 GAO-23-106556 Emergency Relief Funds
2022 about its concerns regarding SBA’s decision to end collections on
purchased PPP loans with an outstanding balance of $100,000 or less. 55
In March 2021, we recommended that SBA implement a comprehensive
oversight plan to identify and respond to risks in the COVID-19 EIDL
program to help ensure program integrity, achieve program effectiveness,
and address potential fraud. As of January 2023, SBA has developed an
oversight plan that describes controls SBA had or planned to implement
to identify and address fraud risks in the COVID-19 EIDL program. We
are continuing to monitor SBA’s progress to fully implement the controls
described in its oversight plan.
In March 2021, based on our findings on these programs and the audit of
SBA’s fiscal year 2020 financial statements, we added SBA’s emergency
loans for small businesses issued under PPP and the COVID-19 EIDL
program to our High Risk List. 56 These two programs together comprise
COVID-19 relief funding estimated at over $900 billion. While these loans
and advances helped many small businesses, SBA’s limited initial internal
controls and lack of finalized oversight plans at the beginning of these
programs created significant risk of hundreds of millions of dollars in
improper payments.
Restaurant Revitalization Fund. In July 2022, we found that SBA had
not used data analytics to identify potentially fraudulent Restaurant
Revitalization Fund (RRF) award recipients. 57 During the application
process, SBA collected a variety of data from applicants, such as
business characteristics, to screen applications for potential fraud.
However, SBA officials told us they were not analyzing these data to
detect potentially fraudulent recipients. We recommended that SBA
develop and implement data analytics across the RRF awards as a
means to detect fraudulent award recipients. As of January 2023, SBA
told us that the agency had taken steps to execute data analytics across
the RRF portfolio and plans to issue a report on its findings by March

55Small Business Administration, Office of Inspector General, Management Advisory:
SBA’s Guaranty Purchases for Paycheck Program Loans, Report No. 22-25 (Washington,
D.C.: Sept. 30, 2022).
56Additional details about the audits of SBA’s financial statements are provided earlier in
this testimony. We designate federal programs and operations as “high risk” due to their
vulnerabilities to fraud, waste, abuse, and mismanagement, or because they need
transformation. GAO, High-Risk Series: Dedicated Leadership Needed to Address Limited
Progress in Most High Risk Areas, GAO-21-119SP (Washington, D.C.: Mar. 2, 2021).
57GAO, Restaurant Revitalization Fund: Opportunities Exist to Improve Oversight,
GAO-22-105442 (Washington, D.C.: Jul. 14, 2022).

Page 25 GAO-23-106556 Emergency Relief Funds
2023. SBA stated that the results would be incorporated into post-award
review procedures.
In addition to our findings on analytical controls, we found that SBA had
not fully used law enforcement data to identify potential fraud in the RRF
program. SBA used PPP data to verify applicant identities and award
amounts. However, agency officials told us they were not cross-checking
data on RRF recipients against information on suspicious borrowers from
the PPP program provided by DOJ and the SBA OIG. Among other
things, we recommended that SBA develop, document, and implement
procedures to use enforcement data on suspected fraud in other SBA
programs, such as PPP, to identify potential fraud in RRF recipients. As
of January 2023, SBA stated that it had begun reviewing 10 percent of all
RRF awards to confirm eligibility and use of funds compliance. SBA
indicated that the 10 percent sample for review includes RRF recipients
that have a flagged PPP loan. We will continue to review information
provided to us by SBA that focuses on the use of enforcement data on
suspected fraud in other SBA programs.
Shuttered Venue Operators Grant Program. In October 2022, we found
that SBA’s draft procedures for post-award monitoring of grants awarded
through the Shuttered Venue Operators Grant program discuss strategies
to identify and respond to suspected fraud. However, we found that SBA’s
draft procedures did not clearly link planned efforts to the risks the agency
identified in its periodic risk assessments. 58 Moreover, the procedures did
not explicitly discuss whether the risks were within accepted tolerance
levels for the program. While SBA stated that it has a number of
monitoring procedures for addressing program risk more generally, we
maintain that the draft procedures do not provide specific linkage to the
risks SBA identified.
Emergency Rental Assistance. In December 2022, we identified
potentially duplicative emergency rental assistance payments but found
that Treasury had not conducted a detailed risk assessment of the

58GAO, COVID Relief: SBA Could Improve Communications and Fraud Risk Monitoring
for Its Arts and Entertainment Venues Grant Program, GAO-23-105199 (Washington,
D.C.: Oct. 11, 2022).

Page 26 GAO-23-106556 Emergency Relief Funds
program’s susceptibility to improper payment, for example, by reviewing
grantee payment data. 59 We also found that Treasury significantly lacked
complete data on payments grantees made to landlords and renter
households, which the agency needs to ensure payments complied with
Fraud in Coronavirus Food Assistance program requirements. We recommended that Treasury collect complete
Program (CFAP) payment data from grantees and conduct a detailed assessment of
improper payment risks. Treasury agreed with our recommendations.
Participants While agency officials said close-out reporting requirements would help
An individual was sentenced to 2.5 years
in prison and around $250,000 in
improve the completeness of payment data reported by grantees, officials
restitution for making a false claim to did not commit to additional steps to assess or address improper payment
CFAP. risks because of resource limitations. 60
Fraud scheme
The individual claimed loss of livestock at The Coronavirus Food Assistance Program. In September 2022, we
their commercial farming operation, found problems with the process the U.S. Department of Agriculture
despite not owning or operating a farming
operation. The individual also submitted a (USDA) used to review claims producers submitted for payment to the
fraudulent IRS Form 7200, meant to Coronavirus Food Assistance Program. 61 This program provided $31
request an advance payment of employer
credits under the Families First
billion to producers of agricultural commodities, including crops and
Coronavirus Response Act. livestock, to offset losses associated with the COVID-19 pandemic. We
Impacts reviewed claims of 90 producers with risk factors for improper payments
In total, the individual attempted to obtain and found that over half of these producers did not provide full support for
over $1.5 million in COVID-19 relief
funding.
their payments, potentially making it harder to identify payment errors and
Source: GAO analysis of court documentation | fraud. We referred those claims where full support was not provided to
GAO-23-106556.
the USDA OIG. As of January 2023, the OIG is reviewing these referrals

59GAO, Emergency Rental Assistance: Treasury’s Oversight is Limited by Incomplete
Data and Risk Assessment, GAO-23-105410 (Washington, D.C.: Dec. 20, 2022).
Congress appropriated $46.55 billion to Treasury for the Emergency Rental Assistance
(ERA) programs to address financial and housing instability caused by the COVID-19
pandemic. Congress appropriated these funds in December 2020 and March 2021, known
as ERA1 and ERA2, respectively. For the purposes of this statement, we refer to ERA1
and ERA2 collectively as the ERA programs. Treasury uses the same approach but
considers ERA1 and ERA2 to be separate programs managed by the same office. The
ERA programs make funding available to state, territorial, tribal, and local governments
(grantees), which are to use the funds to provide assistance to eligible households for
rent, utility, and other housing-related expenses.
60We found earlier in January 2022 that Treasury had not designed processes, such as
post-payment reviews or recovery audits, for identifying and recovering overpayments
made by grantees to households, landlords, or utility providers to help reasonably assure
payment integrity for the ERA programs. As of September 2022, Treasury had not
responded to our request for additional information on the status of this recommendation.
GAO, COVID-19: Significant Improvements Are Needed for Overseeing Relief Funds and
Leading Responses to Public Health Emergencies, GAO-22-105291 (Washington, D.C.:
Jan. 27, 2022).
61GAO, Coronavirus Food Assistance Program: USDA Should Conduct More Rigorous
Reviews of Payments to Producers, GAO-22-104397 (Washington, D.C.: Sept. 8, 2022).

Page 27 GAO-23-106556 Emergency Relief Funds
for potential investigation and will provide more information once case
determinations or investigations are completed.
We also recommended that USDA conduct additional and more rigorous
reviews of Coronavirus Food Assistance Program payments. While USDA
generally agreed with the recommendations, as of September 2022, the
agency has not yet taken action to implement these recommendations.
USDA noted that its Farm Service Agency intends to provide a response
on the status of actions to address the recommendation by the end of
January 2023.
Payroll Support Program. In November 2020, we found that Treasury
had not completed developing and implementing a plan to monitor
recipients’ compliance with the Payroll Support Program, which provided
$32 billion in assistance to aviation businesses, 3 months after the first
quarterly compliance reports were due. 62 In April 2021, GAO confirmed
that Treasury had developed, documented, and implemented a risk-
based approach to monitor Payroll Support Program recipients’
compliance with the terms of assistance. Treasury’s risk-based approach
entails a two level compliance review. In the first-level review, Treasury
conducts automated testing on all recipients’ quarterly reports using
factors that can trigger recipients being moved to the next review. In the
second level review, Treasury analysts conduct a more detailed review of
recipients that failed the first level review or were selected for other
reasons. Treasury has also developed penalties and a process for
remediating noncompliance with Payroll Support Program agreement
terms. Since April 2021, Treasury has identified noncompliance by
recipients and applied penalties, as appropriate.

Coronavirus State and Local Fiscal Recovery Funds. In October
2021, we reported that Treasury officials told us they were developing
plans for overseeing the Coronavirus State and Local Fiscal Recovery
Funds (CSLFRF), which provides funds to states, local, and tribal
governments, the District of Columbia, and U.S. territories for a broad
range of costs stemming from the fiscal effects of the COVID-19

62GAO, COVID-19: Urgent Actions Needed to Better Ensure an Effective Federal
Response, GAO-21-191 (Washington, D.C.: Nov. 30, 2020).

Page 28 GAO-23-106556 Emergency Relief Funds
pandemic. 63 However, as of October 2021, Treasury had not yet finalized
or documented such plans, to include developing the department’s
approach for monitoring recipients’ use of program funds. 64 We
recommended that Treasury finalize key recipient monitoring policies and
procedures. As of September 2022, Treasury had designed and
documented a risk-based compliance policy to monitor CSLFRF
recipients’ use of program funds and asserted that the agency would
continue to adopt additional procedures as appropriate.
Provider Relief Fund. In October 2021, we found that the Health
Resources and Services Administration (HRSA), within the Department of
Health and Human Services, had not finalized procedures for recovering
overpayments or recovered the bulk of the overpayments that it had
already identified. 65 We recommended that HRSA establish time frames
for completing post-payment reviews to promptly address risks and
identify overpayments, as well as finalize and implement post-payment
recovery of any Provider Relief Fund overpayments, unused payments, or
payments not properly used.
While it took initial actions to address this recommendation, HRSA
suspended its post-payment recovery efforts in March 2022. HRSA
reported in January 2023 that the agency paused its recovery efforts in
order to design a dispute resolution process for providers who do not
believe they should have to return funds and also to get legal clarification
on its authority to recover overpayments. HRSA finalized its dispute
resolution process in December 2022 and also began sending out
repayment notices to providers that did not fulfill their reporting
requirements. The agency intends to send out repayment notices by
September 2023 to all providers who did not fulfill their reporting
requirements. According to HRSA, the agency is still in the process of
determining its authority to recover overpayments in other scenarios. We
will continue to monitor the status of this recommendation as HRSA

63Pub. L. No. 117-2, tit. IX, subtit. M, § 9901, 135 Stat. at 223 (codified at 42 U.S.C. §§
802-03). This law appropriated $350 billion in total funding for two funds—the Coronavirus
State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund. For
purposes of this testimony, we discuss these two funds collectively as the Coronavirus
State and Local Fiscal Recovery Funds (CSLFRF).
64GAO-22-105051. The Provider Relief Fund reimburses eligible providers for health care-
related expenses or lost revenues attributable to COVID-19.
65GAO-22-105051.

Page 29 GAO-23-106556 Emergency Relief Funds
finalizes its processes and determines the scenarios under which the
agency will recover funds.
UI IT System Controls and In recent years, GAO, DOL, and the DOL OIG have reported on the need
Modernization for improving federal and state management of the UI system,
modernizing IT, and improving program integrity. 66
Based on our findings from this body of work and the urgent need to
address persistent issues in the UI system, in June 2022, we added the
UI system to our High-Risk List. 67 DOL has some activities planned and
underway for the UI system, such as creating a UI modernization office
and implementing strategies aimed at reducing risk. However, many long-
standing issues remain unaddressed and will require DOL to work with
states and other stakeholders to make progress in this area.
GAO and the DOL OIG have also reported on the challenges that some
states’ reliance on legacy systems pose to UI programs. 68 Specifically,
the DOL OIG had identified legacy IT systems as one of the causes of
states’ inability to detect and recover improper payments, including
fraudulent payments. 69 For example, some state officials reported that
their IT systems did not have the capability to perform cross-matches—a
method used to detect improper payments—for such a large volume of
claims. According to OMB, as of November 2022, 43 states are
performing cross-matching. In ongoing work, we are reviewing UI IT
system modernization efforts.
Federal Inspectors Responsibilities for planning and implementing fraud risk management
General Lack Permanent, and detection activities start with agency management officials, however,
the oversight community plays a critical role in identifying and
Government-wide Analytic
investigating suspected fraud. The importance of this role in
Capabilities to Help nonemergency periods is heightened during emergencies such as the
Agencies Identify Fraud COVID-19 pandemic as agencies work to implement large-scale relief
efforts quickly.

66The UI system includes UI programs that were established prior to the COVID-19
pandemic and programs established in response to the COVID-19 pandemic.
67GAO, Unemployment Insurance: Transformation Needed to Address Program Design,
Infrastructure, and Integrity Risks, GAO-22-105162 (Washington, D.C.: June 7, 2022).
68GAO-22-105162.

69Department of Labor, Office of Inspector General, COVID-19: States Struggled to
Implement CARES Act Unemployment Insurance Programs, Report No. 19-21-004-03-
315 (Washington, D.C.: May 28, 2021).

Page 30 GAO-23-106556 Emergency Relief Funds
At the outset of the pandemic, there was no permanent, government-wide
analytical capability to help inspectors general identify fraud. Previously,
this type of analytical capability had existed within the Recovery
Operations Center, established by the Recovery Board. The board,
composed of agency inspectors general, was created by the American
Recovery and Reinvestment Act of 2009 to oversee funds appropriated
under the act.
GAO previously recommended that Congress and Treasury preserve the
Recovery Operations Center’s functions, given its proven value in
ensuring federal spending accountability. 70 Congress and Treasury did
not implement our recommendations to make such a center permanent,
and the Recovery Board and Recovery Operations Center’s activity
terminated at the end of September 2015.
In March 2021, the American Rescue Plan Act of 2021 (ARPA)
appropriated $40 million dollars to the PRAC, which subsequently
established the Pandemic Analytics Center of Excellence (PACE). The
role of PACE is to help oversee the trillions of dollars in federal pandemic-
related emergency spending. According to the PRAC, the PACE applies
the best practices of the Recovery Operations Center, with the goal of
building an “affordable, flexible, and scalable analytics platform” to
support OIGs during their pandemic-related work, including beyond the
organization’s sunset date in 2025.
However, PACE was not established until more than a year after
Open Matter for Congressional
Consideration agencies began distributing relief funds. The delayed establishment of the
Congress should establish a permanent center resulted in the loss of valuable time for OIGs to help program
analytics center of excellence to aid the officials understand fraud risks and identify potential fraud. In addition, the
oversight community in identifying
improper payments and fraud. center is focused on pandemic programs only and is time-limited. In
Source: GAO-23-106556. March 2022, we recommended that Congress consider establishing a
permanent analytics center of excellence to aid the oversight community
in identifying improper payments and fraud. 71 Without permanent
government-wide analytics capabilities to assist the oversight community,
agencies will have limited resources to apply to nonpandemic programs
to ensure robust financial stewardship, as well as better prepare for
applying fundamental financial and fraud risk management practices to
future emergency funding.

70GAO, Federal Spending Accountability: Preserving Capabilities of Recovery Operations
Center Could Help Sustain Oversight of Federal Expenditures, GAO-15-814 (Washington,
D.C.: Sept. 14, 2015).
71GAO-22-105715.

Page 31 GAO-23-106556 Emergency Relief Funds
Agencies Continue to Reducing improper payments is critical to safeguarding federal funds.
Have Challenges with Improper payments have consistently been a government-wide issue.
Since fiscal year 1997, our audit reports on the U.S. government’s
Improper Payments
consolidated financial statements have identified improper payments as a
material deficiency or material weakness in internal control.
Since fiscal year 2003, cumulative improper payment estimates have
totaled about $2.4 trillion (see fig. 3). 72 For fiscal year 2022, OMB
reported that federal agencies had estimated about $247 billion in
improper payments. While this estimation of total improper payments
represented a decrease of about $34 billion from the prior fiscal year
($281 billion), it was an increase in more than $40 billion from fiscal year
2020 ($206 billion). 73
However, this estimate does not reflect all government-wide improper
payments. Notably, several agencies with large programs that have been
identified as susceptible to significant improper payments are not
reporting estimates as required. These programs include DOL’s PUA
program, USDA’s Supplemental Nutrition Assistance Program, and the
Department of Health and Human Services’ Temporary Assistance for
Needy Families program.

72In 2003, federal executive agencies were required by statute to begin reporting
estimated improper payments for certain programs and activities. Statutes that govern
improper payment reporting define executive agency to mean a department, or agency, or
an instrumentality in the executive branch of the U.S. government. 31 U.S.C. § 102. Prior-
year improper payment estimates have not been adjusted for inflation.
73Agencies report improper payment information at www.paymentaccuracy.gov—a U.S.
government website managed by the Office of Management and Budget (OMB)—which
contains, among other things, information about current and historical rates and amounts
of estimated improper payments. For more information on improper payment estimates
across the federal government, see appendix II.

Page 32 GAO-23-106556 Emergency Relief Funds
Figure 3: Government-wide Improper Payment Estimates for Fiscal Years 2003–2022 Totaled $2.4 Trillion

Note: Prior year improper payment estimates have not been adjusted for inflation.

Improper payments remain a pervasive problem across the federal
government. For example, 18 agencies reported improper payment
estimates for 82 federal programs or activities for fiscal year 2022. 74 In
addition, 17 of these programs and activities reported estimated improper
payment rates of 10 percent or greater. Although federal agencies have
increased their recoveries of overpayments from the previous fiscal year,
from $22.5 billion for fiscal year 2021 to $23.2 billion for fiscal year 2022,
total recoveries represented about 9 percent to 12 percent of estimated
overpayments made in both years.

74Agencies are required to develop improper payment estimates and corrective action
plans for any programs or activities identified as susceptible to significant improper
payments by the agency administering the program or activity, OMB, or statute.

Page 33 GAO-23-106556 Emergency Relief Funds
In our March 2022 testimony before the Senate Committee on Homeland
Congress Can Take Security and Governmental Affairs, we identified 10 actions that Congress
Certain Actions Now could take to strengthen internal controls and financial and fraud risk
management practices across the government. 75 These matters for
to Increase congressional consideration remain open. We continue to believe that
Transparency and such actions will increase accountability and transparency in federal
spending in both emergency and nonemergency periods. (See app. III for
Accountability of the list of the 10 matters for congressional consideration.)
Future Federal Make program integrity enhancements. We suggested three matters
Spending for congressional consideration to further enhance program integrity
efforts across the government: 76
• Establish a permanent analytics center of excellence to aid the
oversight community in identifying improper payments and fraud.
• Amend the Payment Integrity Information Act of 2019 to reinstate the
requirement that agencies report on their antifraud controls and fraud
risk management efforts in their annual financial reports.
• Pass legislation requiring OMB to (1) provide guidance for agencies to
develop plans in advance for internal control that would then
immediately be ready for use in, or adaptation for, future emergencies
or crises and (2) require agencies to report these plans to OMB and
Congress.
Amend the Payment Integrity Information Act of 2019. Quickly
reporting improper payment estimates for emergency relief programs is
critical to agency accountability and transparency over whether
appropriated funds were spent for their intended purposes. In addition,
estimating improper payments and identifying root causes help ensure
that agencies develop and implement corrective actions to reduce them.
In November 2020, we suggested that Congress consider, in any future
legislation appropriating COVID-19 relief funds, designating as
“susceptible to significant improper payments” all executive agency
programs and activities that made more than $100 million in payments
from COVID-19 relief funds. 77 In March 2022, we suggested that
Congress amend the Payment Integrity Information Act of 2019 to apply
this criteria to all new federal programs for their initial years of operation. 78

75GAO-22-105715.

76GAO-22-105715.

77GAO-21-191.

78GAO-22-105715.

Page 34 GAO-23-106556 Emergency Relief Funds
Delays in estimating improper payments can negatively affect an
agency’s ability to develop timely corrective actions.
Strengthen management of improper payment risks and spending
data. Since enactment of the Chief Financial Officers Act of 1990 (CFO
Act), accounting and financial reporting standards have continued to
evolve to provide greater transparency and accountability over the federal
government’s operations and financial condition, including long-term
sustainability.
In August 2020, we suggested eight matters for congressional
consideration to improve federal financial management through
refinements to the CFO Act and related statutes. Such actions included
that Congress consider legislation to require that chief financial officers
(CFO) and deputy CFOs at the CFO Act agencies have the necessary
responsibilities to carry out federal financial management activities
effectively, and agency identification and, if necessary, development of
key financial management information needed for effective financial
management and decision-making, as well as annual assessments and
reporting by agency management on the effectiveness of internal controls
over key financial management information and auditor testing and
reporting on agency internal control over the information. 79
In March 2022, we suggested three matters with additional refinements
based on experiences during the COVID-19 pandemic and the rapid
growth and magnitude of improper payments: 80
• Clarify that (1) CFOs at CFO Act agencies have oversight
responsibility for internal controls over financial reporting and key
financial management information that includes spending data and
improper payment information and that (2) executive agency
internal control assessment, reporting, and audit requirements for
key financial management information, discussed above, include
internal controls over spending data and improper payment
information.
• Require each agency CFO to (1) submit a statement, in agencies’
annual financial reports, certifying the reliability of improper
payment risk assessments and the validity of improper payment
estimates, and describing the actions of the CFO to monitor the

79GAO, Federal Financial Management: Substantial Progress Made since Enactment of
the 1990 CFO Act; Refinements Would Yield Added Benefits, GAO-20-566 (Washington,
D.C.: Aug. 6, 2020).
80GAO-22-105715.

Page 35 GAO-23-106556 Emergency Relief Funds
development and implementation of any corrective action plans;
and (2) approve any methodology that is not designed to produce
a statistically valid estimate.
• Require improper payment information required to be reported
under the Payment Integrity Information Act of 2019 to be included
in agency financial reports.
Extend requirements for OIGs to report on USAspending.gov data. In
March 2022, we testified about the lack of quality federal spending data
for financial management reviews. 81 Quality federal spending data is key
for management to help assess whether agencies are meeting program
objectives. In addition, providing clear and transparent information about
limitations and inconsistencies of data can help users understand the
extent to which the data are comparable and reliable. We suggested that
Congress amend the DATA Act to (1) extend the previous requirement for
agency inspectors general to review the completeness, timeliness,
quality, and accuracy of their respective agency data submissions on a
periodic basis 82 and (2) clarify the responsibilities and authorities of OMB
and Treasury for ensuring the quality of data available on
USAspending.gov. 83
Amend the Social Security Act regarding the sharing of full death
data. Data sharing can allow agencies to enhance their efforts to prevent
improper payments to deceased individuals. To enhance identity
verification through data sharing, we have previously suggested that
Congress consider amending the Social Security Act to explicitly allow the
Social Security Administration to share its full death data with Treasury’s
Do Not Pay system, a data matching service for agencies to use in
preventing payments to ineligible individuals. 84 In December 2020,
Congress passed, and the President signed into law the Consolidated
Appropriations Act, 2021, which requires the Social Security
Administration to share, to the extent feasible, its full death data with

81GAO-22-105715.

82The DATA Act required each OIG to issue three reports assessing agency data
submission and implementation and use of data standards. The last report was due
November 2021. Pub. L. No. 113-101, § 3, 128 Stat. at 1151. For more information, see
GAO-20-540.
83Pub. L. No. 113-101, § 3, 128 Stat. at 1148.

84GAO, Improper Payments: Strategy and Additional Actions Needed to Help Ensure
Agencies Use the Do Not Pay Working System as Intended, GAO-17-15 (Washington,
D.C.: Oct. 14, 2016); GAO-20-625.

Page 36 GAO-23-106556 Emergency Relief Funds
Treasury’s Do Not Pay working system for a 3-year period, effective on
the date that is 3 years from enactment of the act. In March 2022, we
suggested that Congress accelerate and make permanent the
requirement for the Social Security Administration to share its full death
data with Treasury’s Do Not Pay working system. 85
Also, the Joint Financial Management Improvement Program, a
cooperative venture between Treasury, OMB, the Office of Personnel
Management, and GAO, has taken steps to help address fraud and
improper payments. For example, in October 2020, the Joint Financial
Management Improvement Program began an initiative to identify key
practices to enhance identity verification and potentially reduce improper
payments. As part of this effort, the Joint Financial Management
Improvement Program convened a panel of experts from federal, state,
and international governments as well as the private and nonprofit
sectors. In July 2022, the program issued a report distilling concepts and
ideas discussed by the expert panel into a set of key practices and
considerations. 86
To accompany the report, the Joint Financial Management Improvement
Program also published an interactive and illustrative model that allows
users to understand the potential benefits and tradeoffs of implementing
various identity verification tools and processes. 87
GAO also has ongoing work developing a framework to provide principles
and practices that can help federal managers mitigate improper payments
in emergency assistance programs. Specifically, the framework will
incorporate standards for internal controls and for financial and fraud risk
management practices as well as requirements from relevant laws and
guidance on improper payments. This work will highlight aspects of
managing improper payments that arise in the context of emergency
assistance, which may necessitate special considerations. This
framework is also intended as a resource for Congress to use when
designing new programs or appropriating additional funding in response
to emergencies.

85GAO-22-105715.

86Joint Financial Management Improvement Program, Key Practices to Reduce Improper
Payments through Identity Verification, JFMIP-22-01 (Washington, D.C.; July 2022).
87Joint Financial Management Improvement Program and GAO Innovation Lab, ID
Verification Controls Simulator: An Interactive Illustration of Concepts identified by the
June 2021 JFMIP Expert Panel on Identity Verification to Prevent Improper Payments,
https://gaoinnovations.gov/id_verification/, accessed Jan. 22, 2023.

Page 37 GAO-23-106556 Emergency Relief Funds
Chairman Comer, Ranking Member Raskin, and Members of the
Committee, this concludes my prepared statement. I would be pleased to
respond to any questions.
For further information about this testimony, please contact Rebecca
GAO Contact Shea, Director, Forensic Audits and Investigative Service, at (202) 512-
6722 or shear@gao.gov; Orice Williams Brown, Chief Operating Officer,
at (202) 512-5600 or williamso@gao.gov; or A. Nicole Clowers, Managing
Director, Congressional Relations, at (202) 512-4400 or
clowersa@gao.gov.
Contact information for our Office of Public Affairs may be found on the
last page of this report.

Page 38 GAO-23-106556 Emergency Relief Funds
Appendix I: COVID-19 Relief Funding and
Spending

The six COVID-19 relief laws have provided about $4.6 trillion for
pandemic response and recovery.
Figure 4 provides details on COVID-19 relief funding by agency.

Figure 4: COVID-19 Relief Funding By Agency, as of Nov. 30, 2022

aFor the purposes of this testimony, the COVID-19 relief laws consist of the six laws providing comprehensive relief across federal agencies and
programs that Treasury uses to report COVID-19 spending. These six laws are the American Rescue Plan Act of 2021 (ARPA), Pub. L. No. 117-2, 135
Stat. 4; Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, div. M and N, 134 Stat. 1182 (2020); Paycheck Protection Program and Health
Care Enhancement Act, Pub. L. No, 116-139, 134 Stat. 620 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 178 (2020); Families First Coronavirus
Response Act, Pub.L. No. 116-127, 134 Stat. 178 (2020); and the Coronavirus Preparedness and Response Supplemental Appropriations Act 2020,
Pub. L. No. 116-123, 143 Stat. 146. Total budgetary resources as of November 30, 2022, reported to the Department of the Treasury’s Governmentwide
Treasury Account Symbol Adjusted Trial Balance System, reflect appropriations, as well as transfers, adjustments, recoveries, rescissions, and returns
of unused indefinite appropriations. Therefore, amounts can fluctuate month to month. Federal agencies use the Governmentwide Treasury Account
Symbol Adjusted Trial Balance System to report proprietary financial and budgetary execution information to Treasury.

The major spending areas shown in table 1 represent $3.7 trillion, or 80
percent, of the total amounts provided. For these nine spending areas,
agencies reported obligations totaling $3.6 trillion and expenditures
totaling $3.4 trillion as of November 30, 2022. Table 1 also provides
additional details on budgetary resources, obligations, and expenditures
of government-wide COVID-19 relief funds, including the major spending
areas as of November 30, 2022.

Page 39 GAO-23-106556 Emergency Relief Funds
Table 1: COVID-19 Relief Funding and Spending, as of Nov. 30, 2022

Major spending area Total budgetary resources Total Total
($ in billions) obligations expenditures
($ in billions) ($ in billions)
Economic Impact Payments 858.6 858.0 858.0
(Department of the Treasury)
Business Loan Programs 833.0 828.1 828.0a
(Small Business Administration)
Unemployment Insurance 702.0 699.9 690.3
(Department of Labor)
Coronavirus State and Local Fiscal Recovery 350.0 349.9 349.5
Funds
(Department of the Treasury)
Public Health and Social Services Emergency 345.7 324.0 274.0
Fund
(Department of Health and Human Services)
Education Stabilization Fund 277.7 277.3 142.7
(Department of Education)
Coronavirus Relief Fund 150.0 149.9 149.8
(Department of the Treasury)
Supplemental Nutrition Assistance Programs 121.1 101.8 101.3
(Department of Agriculture)
Pension Benefit Guaranty Corporation Fundb 52.7 8.9 7.8
(Pension Benefit Guaranty Corporation)
Other areasc 908.2 848.5 674.6
Totald 4,599.0 4,446.3 4,075.9
Source: GAO analysis of data from the Department of the Treasury and applicable agencies. | GAO-23-106556

Note: Total budgetary resources, obligations, and expenditure data shown for the major spending areas are based on data reported by applicable
agencies to Treasury’s Governmentwide Treasury Account Symbol Adjusted Trial Balance System. Each spending area may include multiple programs.
Total budgetary resources reflect the amount of funding made available for the COVID-19 response under the American Rescue Plan Act of 2021
(ARPA), Pub. L. No. 117-2, 135 Stat. 4; Consolidated Appropriations Act, 2021, Pub. L. No. 116-260, div. M and N, 134 Stat. 1182 (2020); Paycheck
Protection Program and Health Care Enhancement Act, Pub. L. No. 116-139, 134 Stat. 620 (2020); CARES Act, Pub. L. No. 116-136, 134 Stat. 281
(2020); Families First Coronavirus Response Act, Pub. L. No. 116-127, 134 Stat. 178 (2020); and Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020, Pub. L. No. 116-123, 134 Stat. 146. Total budgetary resources reflect appropriations, as well as transfers,
adjustments, recoveries, rescissions, and returns of unused indefinite appropriations. Therefore, amounts can fluctuate from month to month. An
obligation is a definite commitment that creates a legal liability of the U.S. government for the payment of goods and services ordered or received, or a
legal duty on the part of the U.S. government that could mature into a legal liability by virtue of actions on the part of another party that are beyond the
control of the U.S. government. An expenditure is the actual spending of money, or an outlay. Expenditures shown include some estimates, such as
estimated subsidy costs for direct loans and loan guarantees.
aThe Small Business Administration’s Business Loan Program account includes activity for the Paycheck Protection Program loan guarantees and
certain other loan subsidies. These expenditures relate mostly to the loan subsidy costs (i.e., the loan’s estimated long-term costs to the U.S.
government).
bUnder the American Rescue Plan Act of 2021, the Pension Benefit Guaranty Corporation will receive the necessary funding to provide payments to
qualifying multiemployer plans as defined in this law to remain solvent through the end of plan year 2051. The requested amount will fund the fiscal year
2022 Special Financial Assistance payments to qualifying plans and related administrative expenses.
cSeveral provisions in the Families First Coronavirus Response Act and the American Rescue Plan Act of 2021 authorized increases in Medicaid
payments to states and U.S. territories. The Congressional Budget Office estimated that federal expenditures from these provisions would total

Page 40 GAO-23-106556 Emergency Relief Funds
approximately $76.9 billion through fiscal year 2030. The largest increase to federal Medicaid spending is based on a temporary formula change rather
than a specific appropriated amount. Some of the estimated costs in this total are for the Children’s Health Insurance Program, permanent changes to
Medicaid, and changes not specifically related to COVID-19. This increased spending is not accounted for in the funding provided by the COVID-19
relief laws and is therefore not included in this table.
dBecause of rounding, amounts shown in columns may not sum to the totals.

Total unobligated balances—the amount of budgetary resources still
available—were $152.7 billion, or 3 percent of the total amount provided,
as of November 30, 2022. Three major spending areas shown in table 2
represent $84.9 billion, or 56 percent of the total unobligated balance.
Table 2 provides additional details on budgetary resources, obligations,
unobligated balances, and expenditures of government-wide COVID-19
relief funds as of November 30, 2022.

Table 2: COVID-19 Relief Unobligated Balances, as of Nov. 30, 2022

Major spending area Total budgetary resources Total Unobligated Total
($ in billions) obligations Balance expenditures
($ in billions) ($ in billions) ($ in billions)
Pension Benefit Guaranty 52.7 8.9 43.8 7.8
Corporation Funda
(Pension Benefit Guaranty
Corporation)
Public Health and Social Services 345.7 324.0 21.7 274.0
Emergency Fund
(Department of Health and Human
Services)
Supplemental Nutrition Assistance 121.1 101.8 19.3 101.3
Programs
(Department of Agriculture)
Other areas 4,079.5 4,011.6 67.9 3,692.8
Totalb 4,599.0 4,446.3 152.7 4,075.9
Source: GAO analysis of data from the Department of the Treasury and applicable agencies. | GAO-23-106556
aUnder the American Rescue Plan Act of 2021, the Pension Benefit Guaranty Corporation will receive the necessary funding to provide payments to
qualifying multiemployer plans as defined in this law to remain solvent through the end of plan year 2051. The requested amount will fund the Special
Financial Assistance payments to qualifying plans and related administrative expenses.
bBecause of rounding, amounts shown in columns may not sum to the totals.

We have ongoing work reviewing how selected states planned for, used,
and managed COVID-19 relief funding across selected programs as well
as any related challenges. In addition, we have ongoing work reviewing
COVID-19 relief funding received by U.S. territories.

Page 41 GAO-23-106556 Emergency Relief Funds
Appendix II: Improper Payments across the
Federal Government

Improper payments—payments that should not have been made or that
Estimating Improper were made in an incorrect amount—have consistently been a
Payments government-wide issue. 1 Since fiscal year 2003, federal executive
agencies have been required by statute to report estimated improper
payments for certain programs and activities. 2 For fiscal year 2022, 18
agencies reported improper payment estimates totaling about $247
billion, based on improper payment estimates reported individually by 82
federal programs or activities on www.paymentaccuracy.gov. 3 Most of the
estimate was concentrated in the following areas: the Department of
Health and Human Services’ (HHS) Medicaid ($81 billion); HHS’s
Medicare—comprised of three programs—($47 billion); 4 and Small
Business Administration’s Paycheck Protection Program ($29 billion).
Fiscal year 2022 total estimates represented a decrease of about $34
billion from the prior fiscal year. However, the $247 billion of reported
improper payment estimates for fiscal year 2022 does not include
estimates related to certain significant expenditures to fund response and
recovery efforts for the COVID-19 pandemic, such as the Department of
Labor’s (DOL) Pandemic Unemployment Assistance (PUA) program. 5 In
addition, our audit work has consistently shown that federal agencies

1Improper payments include both overpayments and underpayments, any payments to an
ineligible recipient, any payment for an ineligible good or service, any duplicate payment,
any payment for a good or service not received (except for such payments where
authorized by law), and any payment that does not account for credit for applicable
discounts under statutory, contractual, administrative, or any other legally applicable
requirements. See 31 U.S.C. § 3351(4). When an executive agency’s review is unable to
discern whether a payment was proper as a result of insufficient or lack of documentation,
this payment must also be included in the improper payment estimate. 31 U.S.C. §
3352(c)(2). While not all improper payments are the result of fraud, all payments made as
a result of fraudulent activities are considered to be improper payments. In addition,
improper payment estimates are not intended to measure fraud in a particular program.
2Statutes that govern improper payment reporting define executive agency to mean a
department, an agency, or an instrumentality in the executive branch of the U.S.
government. 31 U.S.C. § 102.
3For purposes of this statement, the estimated improper payment rate (also referred to as
the “improper payment rate”) is the estimated amount of improper payments expressed as
a percentage of program outlays in a given fiscal year. The website,
www.paymentaccuracy.gov—a U.S. government website managed by the Office of
Management and Budget (OMB)—which contains, among other things, information about
current and historical rates and amounts of estimated improper payments.
4Medicare is comprised of Fee-For-Service, Part C, and Part D programs.

5In November 2022, DOL reported that it was conducting additional analysis of the PUA
improper payment estimates and would report on these estimates in fiscal year 2023.

Page 42 GAO-23-106556 Emergency Relief Funds
have not been reporting improper payment estimates for all risk-
susceptible programs. Beyond PUA and other risk-susceptible COVID-19
relief programs, we also identified other programs, such as HHS’s
Temporary Assistance for Needy Families and U.S. Department of
Agriculture’s Supplemental Nutrition Assistance Program that did not
report fiscal year 2022 estimated improper payment amounts.
For programs that are included for fiscal year 2022, federal agencies
continue to report significant estimated improper payment amounts and
rates. For fiscal year 2022, 18 programs had reported over $1 billion in
estimated improper payments, with 10 of these programs reporting over
$1 billion for each of the last 5 fiscal years. In addition, for fiscal year
2022, agencies reported estimated improper payment rates of 10 percent
or greater for 17 programs and activities, accounting for about 59 percent
of the government-wide total of reported estimated improper payments. 6
As shown in figure 5, the number of programs reporting an improper
payment rate of at least 10 percent had been generally growing in the
past 5 fiscal years but decreased from 26 programs and activities in fiscal
year 2021 to 17 programs and activities this year.

6Agencies are required to develop improper payment estimates and corrective action
plans for any programs or activities identified as susceptible to significant improper
payments by the agency administering the program or activity, OMB, or statute.

Page 43 GAO-23-106556 Emergency Relief Funds
Figure 5: Number of Programs Reporting Annual Improper Payment Rates Higher
than 10 Percent for Fiscal Years 2018–2022

Note: The estimated improper payment rate is the estimated amount of improper payments expressed as a percentage of program
outlays in a given fiscal year.

During emergencies and crises when the federal government provides
Managing Improper emergency assistance, the risk of improper payments may be higher
Payments for because the need to provide such assistance quickly can detract from the
planning and implementation of effective controls. Effective management
Emergency of improper payments helps facilitate the goals of emergency assistance
Assistance Programs programs by ensuring that taxpayer resources serve their intended
purpose.
We also have ongoing work developing a framework for managing
improper payments for emergency assistance programs. Specifically, the
framework will incorporate standards for internal controls and financial
and fraud risk management practices, as well as requirements and
guidance from relevant laws and guidance on improper payments. This
work will highlight aspects of managing improper payments that arise in
the context of emergency assistance, which may necessitate special
considerations.

Page 44 GAO-23-106556 Emergency Relief Funds
Appendix III: Matters for Congressional
Consideration

In a March 2022 testimony before the Senate Committee on Homeland
Security and Governmental Affairs, we recommended the following 10
matters for congressional consideration: 1
• Congress should pass legislation requiring the Office of
Management and Budget (OMB) to provide guidance for agencies
to develop plans for internal control that would then immediately
be ready for use in, or adaptation for, future emergencies or crises
and requiring agencies to report these internal control plans to
OMB and Congress. (Matter for Congressional Consideration 1)
• Congress should amend the Payment Integrity Information Act of
2019 to designate all new federal programs making more than
$100 million in payments in any one fiscal year as “susceptible to
significant improper payments” for their initial years of operation.
(Matter for Congressional Consideration 2)
• Congress should amend the Payment Integrity Information Act of
2019 to reinstate the requirement that agencies report on their
antifraud controls and fraud risk management efforts in their
annual financial reports. (Matter for Congressional Consideration
3)
• Congress should establish a permanent analytics center of
excellence to aid the oversight community in identifying improper
payments and fraud. (Matter for Congressional Consideration 4)
• Congress should clarify that (1) chief financial officers (CFO) at
CFO Act agencies have oversight responsibility for internal
controls over financial reporting and key financial management
information that includes spending data and improper payment
information; and (2) executive agency internal control assessment,
reporting, and audit requirements for key financial management
information, discussed in an existing matter for congressional
consideration in our August 2020 report, 2 include internal controls
over spending data and improper payment information. (Matter for
Congressional Consideration 5)
• Congress should require agency CFOs to (1) submit a statement
in agencies’ annual financial reports certifying the reliability of

1GAO, Emergency Relief Funds: Significant Improvements Are Needed to Ensure
Transparency and Accountability for COVID-19 and Beyond, GAO-22-105715
(Washington, D.C.: Mar. 17, 2022).
2GAO, Federal Financial Management: Substantial Progress Made since Enactment of
the 1990 CFO Act; Refinements Would Yield Added Benefits, GAO-20-566 (Washington,
D.C.: Aug. 6, 2020).

Page 45 GAO-23-106556 Emergency Relief Funds
improper payments risk assessments and the validity of improper
payment estimates, and describing the actions of the CFO to
monitor the development and implementation of any corrective
action plans; and (2) approve any methodology that is not
designed to produce a statistically valid estimate. (Matter for
Congressional Consideration 6)
• Congress should consider legislation to require improper payment
information required to be reported under the Payment Integrity
Information Act of 2019 to be included in agencies’ annual
financial reports. (Matter for Congressional Consideration 7)
• Congress should amend the DATA Act to extend the previous
requirement for agency inspectors general to review the
completeness, timeliness, quality, and accuracy of their respective
agency data submissions on a periodic basis. (Matter for
Congressional Consideration 8)
• Congress should amend the DATA Act to clarify the
responsibilities and authorities of OMB and Department of the
Treasury for ensuring the quality of data available on
USAspending.gov. (Matter for Congressional Consideration 9)
• Congress should amend the Social Security Act to accelerate and
make permanent the requirement for the Social Security
Administration to share its full death data with the Department of
the Treasury’s Do Not Pay working system. (Matter for
Congressional Consideration 10)

(106556)
Page 46 GAO-23-106556 Emergency Relief Funds
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