GAO-24-106608: Improper Payments and Fraud: How They Are Related but Different
Summary
GAO-24-106608, Improper Payments and Fraud: How They Are Related but Different, a Government Accountability Office Q&A report to the Subcommittee on Legislative Branch, Committee on Appropriations, House of Representatives, dated December 7, 2023. It is the fourth report under the provision of House Report 117-389 and describes the relationships and distinctions between improper payments and fraud. It states that executive agencies have reported cumulative improper payment estimates of about $2.4 trillion since fiscal year 2003, including $247 billion for fiscal year 2022, and that not all improper payments are caused by fraud. GAO states that it has made over 40 recommendations on using data to manage fraud risks and that agencies had not fully implemented more than half of them as of August 2023.
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U.S. Government Accountability Office
Improper Payments and Fraud: How They Are
Related but Different
GAO-24-106608
Q&A Report to Subcommittee on Legislative Branch, Committee on Appropriations, House of Representatives
December 7, 2023
Why This Matters Improper payments are a long-standing, significant problem in the federal
government. 1 Since fiscal year 2003, executive agencies have reported
cumulative improper payment estimates of about $2.4 trillion, including $247
billion for fiscal year 2022. Improper payments are any payments that should not
have been made or that were made in an incorrect amount, which can stem from
various causes, including fraud. Fraud involves obtaining a thing of value through
willful misrepresentation. Willful misrepresentation can be characterized by
making material false statements of fact based on actual knowledge, deliberate
ignorance, or reckless disregard of falsity. The extent of fraud government-wide
will likely never be known with certainty because not all fraud will be detected,
investigated, and adjudicated through judicial or other systems. As of December
2023, we are exploring ways to estimate the amount of fraud that affects the
federal government.
Both improper payments and fraud result in significant financial and nonfinancial
impacts to the integrity of federal programs. They erode public trust in
government, waste taxpayer dollars, and hinder agencies’ efforts to execute their
missions and program objectives effectively and efficiently. Legislation, guidance
from the Office of Management and Budget (OMB), and standards for internal
control in the federal government have increasingly focused on the need for
program managers to strategically address improper payments, including those
resulting from fraud. Understanding the relationships and distinctions between
improper payments and fraud is important to more effectively target the
associated root causes and mitigate the impacts of each.
House Report 117-389, accompanying the Legislative Branch Appropriations Act,
2023, includes a provision for GAO to provide quarterly reports in improper
payments. In fiscal year 2023, we issued three reports under this provision. 2 In
this fourth report, we describe examples of the relationships and distinctions
between improper payments and fraud. We also describe relevant GAO and
other federal guidance and executive agency efforts since 2015 to manage and
reduce the causes and impacts of improper payments and fraud.
Key Takeaways • Improper payments and fraud are distinct concepts. Improper payments can
have fraud-related root causes and impacts, but not all are caused by fraud.
• We have made over 40 recommendations to agencies and published
guidance to help them better use data to manage fraud risks that include
fraud-related improper payments. Agencies had not fully implemented more
than half of these recommendations as of August 2023. We have also
recommended that Congress take action in this area, which it had not yet
done as of September 2023.
Page 1 GAO-24-106608 Improper Payments and Fraud
• Implementing our recommendations and guidance can help agencies
address the challenges of fraud-related improper payments, save taxpayer
dollars, and better accomplish their missions and objectives.
Are improper payments No. Improper payments and fraud are two distinct concepts that are not
and fraud the same interchangeable but are related, as figure 1 shows. For example, while all
thing? fraudulent payments are considered improper, not all improper payments are due
to fraud. Similarly, there are types of fraudulent activity that do not result in
improper payments (i.e., nonfinancial fraud).
Figure 1: Relationship between Improper Payments and Fraud
Note: This figure is intended to show the relationship between improper payments and fraud and is not to scale.
As figure 2 shows, improper payments of federal funds, including those
administered by state and local governments, can include different types of
erroneous payments. Some improper payments are fraud-related and some are
not. For example, a non-fraud-related improper payment might result from
unintentional administrative errors or payments made in the correct amount but
without following applicable statutes and regulations. Improper payments can
also include underpayments caused by nonpayment or incomplete payment to
recipients to which the funds are owed.
Page 2 GAO-24-106608 Improper Payments and Fraud
Figure 2: Components of Executive Agency Improper Payment Estimates
Fraud-related improper payments are different from other types of improper
payments because they generally involve individuals or entities intentionally or
knowingly providing false information (e.g., incorrect eligibility or identity
information to receive a benefit from the federal government).
Two other distinctions are that (1) improper payment determinations are made by
agency officials while fraud determinations can only be made through the judicial
or other adjudicative system, and (2) improper payments involve payments (i.e.,
financial benefits) whereas fraud can involve benefits that are nonfinancial in
nature, as figure 3 illustrates.
Figure 3: Examples of Financial and Nonfinancial Benefit Fraud
Fraudulently obtained nonfinancial benefits can lead to improper payments by
providing access to payments that individuals, businesses, or other entities are
not eligible to receive. For example, companies have falsely certified their
ownership or other eligibility criteria to the government to fraudulently obtain
status as a small or disadvantaged business eligible for contracts or Small
Business Administration set-aside programs. 3 This nonfinancial benefit resulted
in improper payments when these companies improperly received government
contracts specifically set aside for small or disadvantaged businesses.
Page 3 GAO-24-106608 Improper Payments and Fraud
Fraudulently obtained nonfinancial benefits may not always result in improper
payments but can still have other impacts, such as on trust in government and an
agency’s reputation. They can also create national security, criminal, health,
safety, and other risks. For example, we have previously reported that
fraudulently obtained aircraft registrations pose a risk because they can be used
to conceal the identity of an aircraft’s owner, facilitate criminal activity, and pose
national security and safety risks. 4
What are the root Root causes are activities that lead to improper payments—including those due
causes of improper to fraud—and that, if corrected, would prevent the improper payment from
payments, including occurring. The causes of improper payments can vary from unintentional
those related to fraud? administrative errors to the willful misrepresentation inherent in fraud. According
to OMB guidance, identifying root causes of improper payments is critical to
formulating effective corrective actions. 5
Improper payment root causes. OMB guidance provides root cause categories
for program administrators to use as a starting point when identifying reasons
improper payments occurred. This guidance directs agencies to categorize their
improper payment estimates by root cause and to distribute its total improper
payment estimate across the root cause categories provided by OMB.
Although fraudulent activities could be associated with each of OMB’s categories,
OMB guidance does not identify fraud as a separate root cause category. For
fiscal year 2022, agencies reported the root cause categories detailed in figure 4
to OMB.
Figure 4: Improper Payment Root Cause Categories That Agencies Reported to the Office of
Management and Budget for Fiscal Year 2022
While OMB’s guidance is provided to agencies as a starting point for categorizing
root causes, it notes that further work may be needed to identify the true root
cause that ultimately led to an improper payment. Agencies attributed about
$225.5 billion (approximately 91.3 percent) of improper payment estimates
reported for fiscal year 2022 to four root cause categories specified in OMB
guidance, as table 1 shows.
Page 4 GAO-24-106608 Improper Payments and Fraud
Table 1: Major Improper Payment Root Cause Reporting Categories for Fiscal Year 2022
Root cause reporting Root cause example Fiscal year 2022
category estimated improper
payment amount
(rate)
Failure to access Failure to access the appropriate information About $145.1 billion
data/information needed to determine whether a beneficiary or (approximately 58.8
recipient should be receiving a payment, even percent)
though such information exists and is
accessible to the agency or entity making the
payment. For example, when an agency with
access to the Social Security Administration
Death Master File fails to utilize it and
improperly sends payment to a deceased
individual.
Inability to access the A situation in which the data or information About $35.9 billion
data/information needed to validate payment accuracy exists (approximately 14.5
but the agency or entity making the payment percent)
does not have access to it. For example,
statutory constraints preventing an agency
from being able to access recipients’ earning
or work status through existing databases
that would help prevent improper payments.
Data/information needed A situation in which there is no known About $24.2 billion
does not exist database, dataset, or location currently in (approximately 9.8
existence that contains the data/information percent)
needed to validate the payment accuracy
prior to making the payment. For example, an
agency unable to confirm that an individual
receiving a benefit based on their health or a
medical condition provided complete medical
evidence because no database with that
information exists.
Unknown payment A payment that could be either proper or About $20.3 billion
caused by insufficient or improper, but the agency is unable to discern (approximately 8.2
lack of documentation whether the payment was proper or improper percent)
from applicants to because of insufficient or lack of
determine eligibility documentation. For example, an agency
conducting a periodic review to determine
continued eligibility for a benefit does not
have all the information in the beneficiary’s
case file to confirm continued eligibility.
Source: GAO information and relevant Office of Management and Budget guidance. | GAO-24-106608
Although not required, agencies may also provide additional details on improper
payment root causes in their annual financial reports, such as the reason an
agency did not access available data.
Fraud root causes. Standards for Internal Control in the Federal Government, A
Framework for Managing Fraud Risks in Federal Programs (Fraud Risk
Framework), and our prior reporting have identified opportunity, incentive, and
rationalization as risk factors that can contribute to fraud in federal programs. 6
We have also reported that programs with weak internal controls can be more
vulnerable to fraud and may lack the necessary safeguards to prevent, detect,
and respond to fraud. In addition, we have previously reported on specific
mechanisms that individuals can use to engage in fraudulent activities, such as
misrepresentation, document falsification, social engineering, data breaches,
cybercrime, and coercion. 7
These fraud mechanisms can also align with OMB’s improper payment root
cause categories, reflecting the risk for both inadvertent errors and fraud. For
example, the fraud mechanisms of document falsification or misrepresentation
could also underlie the root cause categories of improper payments related to the
Page 5 GAO-24-106608 Improper Payments and Fraud
inability or failure to access data, such as eligibility or identity verification
information.
Agencies relying on program participants to self-report and self-certify
information on agency forms—without independently verifying such information—
could miss opportunities to prevent improper payments or fraud. In October
2021, we identified fraudulent activities related to unemployment insurance
programs that included individuals’ use of stolen or fake identity information or
personally identifiable information to apply for and receive unemployment
benefits. 8 The Department of Labor has also reported that fraud has historically
been a leading cause of unemployment insurance improper payments. In
addition, it noted that stolen personally identifiable information and program
weaknesses have allowed criminals to defraud unemployment insurance
programs.
How are federal The Payment Integrity Information Act of 2019 (PIIA) contains requirements for
agencies required to managing improper payments and fraud. 9 Requirements for agencies to manage
manage improper improper payments include identifying risks, taking corrective actions, and
payments and fraud? estimating and reporting on improper payments in programs they administer. The
improper payment estimation process is not designed to detect or measure the
amount of fraud that may exist.
PIIA’s requirements related to fraud generally involve implementing control
activities to prevent, detect, and respond to fraud.
Requirements for managing improper payments. Under PIIA, agencies are
required to develop improper payment estimates for programs that may be
susceptible to significant improper payments. 10 Improper payments are
considered “significant” if in the preceding fiscal year they may have exceeded
either (1) 1.5 percent of program outlays and $10 million or (2) $100 million
(regardless of the improper payment rate). Under PIIA, agencies with high-
priority programs are subject to additional reporting requirements. 11 OMB has
assigned a high-priority designation to programs with estimates of improper
payments resulting in monetary losses that are greater than or equal to $100
million annually. PIIA and related OMB guidance also contain reporting and
corrective action requirements to follow to manage improper payments, as figure
5 illustrates.
Page 6 GAO-24-106608 Improper Payments and Fraud
Figure 5: Key Federal Requirements for Agencies to Manage Improper Payments
PIIA requires agencies with programs susceptible to significant improper
payments to report a description of the causes of the improper payments
identified, actions that the agency has planned or taken to address those causes,
and the planned or actual completion dates of those actions.
OMB develops guidance for executive branch agencies on estimating and
reporting improper payments. OMB Circular A-123 Appendix C, Requirements for
Payment Integrity Improvement (OMB M-21-19), carries out OMB’s responsibility
to issue guidance under PIIA. For example, OMB M-21-19 provides guidance to
agencies on their responsibilities to monitor and measure the effectiveness and
progress of improper payment mitigation strategies and corrective actions.
OMB requires agencies to report their improper payment estimates and
categorize them by root cause, which are both reported on
www.PaymentAccuracy.gov. This U.S. government website is managed by OMB
and provides current and historical improper payment data.
Requirements for managing fraud. PIIA requires OMB to maintain guidelines
for agencies to establish financial and administrative controls to identify and
assess fraud risks and that incorporate leading practices detailed in our Fraud
Risk Framework. 12 The Fraud Risk Framework, discussed in detail later in this
report, encompasses control activities to prevent, detect, and respond to fraud.
The framework emphasizes prevention and environmental factors that help
managers achieve their objective to mitigate fraud risks. OMB Circular A-123,
Management’s Responsibility for Enterprise Risk Management and Internal
Control (OMB M-16-17) directs agencies to adhere to the Fraud Risk
Framework’s leading practices as part of their efforts to effectively design,
Page 7 GAO-24-106608 Improper Payments and Fraud
implement, and operate an internal control system that addresses financial and
nonfinancial fraud risks. Figure 6 illustrates key federal requirements for agencies
to manage fraud risk.
Figure 6: Key Federal Requirements for Agencies to Manage Fraud Risk
OMB also published a notification in October 2022 reminding agencies of these
requirements and stating that in adherence with PIIA, agencies must establish
financial and administrative controls to identify and assess fraud risks. 13 The
notification informs agencies that all programs, regardless of their improper
payment risks or rates, should strategically manage their fraud risks. The
notification further directs agencies to consider both financial and nonfinancial
fraud risks, such as individuals obtaining beneficiary payments or personally
identifiable information through willful misrepresentation.
Since fiscal year 2017, OMB has directed agencies to provide data on dollars
associated with confirmed fraud—cases that have been adjudicated as fraud by
a court—on its PaymentAccuracy.gov website. Beyond this directive, agencies
are not required to report financial and nonfinancial fraud. Agencies are also not
required to report the root causes of the confirmed fraud reported on
PaymentAccuracy.gov.
PIIA contained fraud risk management agency reporting requirements for
agencies’ annual financial reports, but those requirements expired in 2020. In
March 2022, we recommended that Congress amend PIIA to reinstate the
requirement that agencies report on their antifraud controls and fraud risk
management efforts in their annual financial reports. 14 As of October 2023,
Congress had not passed legislation reinstating this requirement.
Estimated improper payment amounts cannot be used to determine the extent of
fraud in a particular program. Agencies’ Inspectors General may report on certain
results of investigations but do not uniformly record and report fraud and related
data. Similarly, federal programs that report improper payment data do not
consistently assess what proportion of those payments were the result of fraud.
As we reported in January 2023, an estimate of the amount of fraud across all
federal programs does not currently exist because existing data on fraud make it
difficult to produce reliable government-wide estimates. 15 We are exploring ways
to estimate the amount of fraud that affects the federal government.
Page 8 GAO-24-106608 Improper Payments and Fraud
What resources does We have developed several resources to help agencies combat improper
GAO have to help payments, including those related to fraud. These resources include guidance
agencies manage such as A Framework for Managing Improper Payments in Emergency
improper payments and Assistance Programs (Managing Improper Payments Framework) and our Fraud
Risk Framework, and the web-based Antifraud Resource. These resources can
fraud?
help agencies better understand and combat the causes and impacts of improper
payments and fraud.
Managing Improper Payments Framework. In July 2023, we issued our
Managing Improper Payments Framework. 16 This framework includes leading
practices to help federal agencies combat improper payments, including those
stemming from fraud, in emergency and nonemergency programs before they
occur. Agencies should also use this framework with existing requirements
related to managing improper payments, including those stemming from fraud.
Such requirements include the internal control standards outlined in Standards
for Internal Control in the Federal Government. Our Managing Improper
Payments Framework includes an overall five-step approach, as figure 7
describes.
Figure 7: Framework for Managing Improper Payments in Emergency Assistance Programs
Page 9 GAO-24-106608 Improper Payments and Fraud
This approach includes principles that align with leading practices described in
our Fraud Risk Framework, such as identifying and assessing fraud risks that
cause improper payments. Federal agencies should use the Managing Improper
Payments Framework in conjunction with GAO’s Fraud Risk Framework’s
leading practices for combatting fraud and improper payments in a strategic, risk-
based manner.
Fraud Risk Framework. GAO’s Fraud Risk Framework outlines four key
components that serve as a guide for agency managers to use when developing
efforts to combat fraud in a strategic, risk-based way. As figure 8 illustrates, the
four key components of GAO’s Fraud Risk Framework are commit, assess,
evaluate and adapt, and design and implement. 17
Figure 8: The Four Components of Our Fraud Risk Framework
Antifraud resource. In January 2022, we issued our antifraud resource. 18 This
online interactive tool can help inform federal officials, Congress, the media, and
the public about key characteristics of fraud schemes and provide resources for
combating them. The resource includes GAO’s Conceptual Fraud Model, which
was developed to describe the nature of known fraud, both financial and
nonfinancial, that affects federal programs and operations. The primary intended
users of GAO’s Antifraud Resource are U.S. federal government managers and
employees. It may also be applicable to state, local, and foreign government
agencies, as well as nonprofit entities and others responsible for fraud risk
management. Figure 9 references the online location of this antifraud resource.
Figure 9: Reference to GAO’s Antifraud Resource
Page 10 GAO-24-106608 Improper Payments and Fraud
How can agencies’ We have previously reported on features of corrective actions that agencies have
efforts to combat taken to reduce improper payment rates, such as establishing accountability,
improper payments facilitating collaboration, and providing technology, tools, and training (see table
support efforts 2). 19
designed to combat Table 2: Examples of Features of Corrective Actions Agencies Have Taken to Reduce
fraud? Improper Payments
Establishing Department of Veterans Affairs’s (VA) Veterans Health Administration
accountability (VHA) established program-level senior accountable officials to
increase accountability and involvement of program offices in reducing
improper payments. In addition, VHA established compliance
benchmarks for all VHA high-risk programs and set goals for each
senior accountable official to meet Payment Integrity Information Act of
2019 (PIIA) compliance by specified dates.
Facilitating Health and Human Services (HHS) supported states in establishing
collaboration mitigation strategies and corrective actions for Child Care and
Development Fund (CCDF) improper payments. The CCDF program
provides tribal governments, states, and U.S. territories with funding to
help low-income families access childcare HHS also promoted
collaboration by conducting site visits in states needing assistance to
address improper payment root causes.
Providing Federal Communications Commission (FCC) and the Universal Service
technology, Administrative Company (USAC), a not-for-profit company
tools, and administering FCC programs, launched the National Verifier to address
training program integrity issues. According to the FCC, National Verifier
reduces improper payments related to ineligible, deceased, and
duplicate subscribers and oversubscribed addresses. National Verifier
uses a combination of automated and manual processes to verify
eligibility and avoid duplicate enrollments, confirming whether a
consumer is qualified for the Lifeline program. In addition, FCC officials
stated that the Schools and Libraries program’s use of open data and
other coding capabilities allowed the FCC to improve its eligibility
validation for invoices. USAC also implemented outreach efforts to
reduce improper payments and the causes of errors identified during
audits and payment quality assurance reviews. These outreach efforts
include newsletters and webinars to educate carriers on rules and
program requirements.
Source: GAO (information); Icons-Studio/stock.adobe.com (icons). | GAO-24-106608
Note: These examples were from GAO, Improper Payments: Programs Reporting Reductions Had Taken
Corrective Actions That Shared Common Features, GAO-23-106585 (Washington, D.C.: June 30, 2023).
Corrective actions designed to reduce improper payments, such as those
described in table 2, can help identify improper payments that are due to errors in
providing inaccurate information. These corrective actions can further support
existing or future antifraud fraud controls designed specifically to prevent, detect,
and respond to fraud, such as those described in table 3. For example, improper
payment corrective actions focusing on accountability, collaboration, and tools
and training can also help combat fraud-related improper payments.
Page 11 GAO-24-106608 Improper Payments and Fraud
Table 3: Examples of How Corrective Actions to Reduce Improper Payments Align with
Efforts to Combat Fraud
Establishing Centers for Medicare and Medicaid Services (CMS) created the Center
accountability for Program Integrity (CPI), a dedicated and centralized antifraud entity
accountable for strategically managing improper payment risks related
to fraud in the Medicare and Medicaid programs. This entity is an
executive-level office with a direct reporting line to executive-level
management at CMS. According to CMS officials, CPI has heightened
visibility across CMS and is involved in executive-level conversations.a
Facilitating U.S. Export and Import Bank of the United States (EXIM) took
collaboration collaborative steps to develop and implement an antifraud strategy. Its
control activities are based on results of a fraud risk assessment and
corresponding fraud risk profile. These control activities help mitigate
fraud risks impacting EXIM’s various loan programs. For instance,
EXIM established working groups of internal officials from various
divisions to help implement EXIM’s antifraud strategy. The working
groups did so by assessing the fraud risk within their respective
divisions; designing, implementing, and operating an internal control
system for their financial programs; and reporting issues related to
fraud or compliance objectives in their respective areas.b
Providing Federal Communications Commission’s (FCC) program administrator,
technology, the Universal Service Administrative Company (USAC), established
tools, and payment recapture audits and an improper payment testing program.
training Specifically, the program included corrective actions such as
technology, guidance, and auditor training to detect and deter improper
payments to telecommunication carriers. Improper payments can result
from carriers’ fraudulent misrepresentation of discounted
telecommunication services or goods to schools and libraries.c
Source: GAO (information); Icons-Studio/stock.adobe.com (icons). | GAO-24-106608
a
GAO, Medicare: Actions Needed to Better Manage Fraud Risks, GAO-18-660T (Washington, D.C.: July 17,
2018).
b
GAO, Export-Import Bank: Additional Documentation about Stakeholder Roles and Clarity about Fraud Risks
Would Strengthen Antifraud Efforts, GAO-22-105340 (Washington, D.C.: Sept. 27, 2022).
c
GAO, Improper Payments: Programs Reporting Reductions Had Taken Corrective Actions That Shared
Common Features, GAO-23-106585 (Washington, D.C.: June 30, 2023), and Telecommunications: FCC
Should Take Action to Better Manage Persistent Fraud Risks in the Schools and Libraries Program,
GAO-20-606 (Washington, D.C.: Sept. 16, 2020).
What challenges exist We have reported many existing challenges that can limit agencies’ abilities to
in using data to use data to manage improper payments and fraud. 20 Such challenges include
manage improper using and accessing complete and reliable data to prevent and identify fraud-
payments and fraud? related improper payments, as the examples in table 4 illustrate. We have also
made recommendations to agencies and Congress to help address these
challenges (see table 4). Implementing these recommendations can help
agencies combat the related causes and impacts of fraud-related improper
payments.
Page 12 GAO-24-106608 Improper Payments and Fraud
Table 4: Examples of Challenges Agencies Face in Using Data to Manage Fraud-Related
Improper Payments and GAO’s Recommendations to Address Them
Incomplete or Some agencies work with incomplete or unreliable data when
unreliable managing fraud-related improper payments.
data For example, we reported in 2018 that the Department of Defense
(DOD) needs to take steps to collaborate with its component agencies
to improve the reliability and completeness of the data obtained on all
foreign military payments. Doing so would help ensure that no fraud-
related improper payments were made to civilian personnel conducting
oversight of DOD contracts. We made recommendations to address
this issue. DOD agreed with these recommendations, but had not yet
implemented them as of October 2023.a
We also recommended in 2023 that the Department of Housing and
Urban Development (HUD) develop guidance for state and local
entities that receive HUD’s disaster recovery grants to collect complete
and consistent data to better support applicant eligibility
determinations and fraud risk management. HUD agreed with this
recommendation, but had not yet implemented it as of October 2023.b
Not Some agencies do not use existing data that could help validate
leveraging payment eligibility and compliance.
available data For example, we recommended in 2018 that the Internal Revenue
Service (IRS) take steps to assess the benefits and costs of using
available wage data to identify potential fraud-related improper tax
refunds before sending the refunds to recipients. We reported that
using such data could help IRS identify the underreporting of wages,
employment fraud, and other noncompliance before issuing refunds.
IRS has taken some steps that partially respond to this
recommendation, but, as of October 2023, it had not yet taken the
additional steps needed to fully implement this recommendation.c
Data sharing Legal requirements can inhibit sharing of key personally identifiable
limitations information data with some agencies that could help identify fraud-
related improper payments.
For example, we reported earlier in 2023 that the Small Business
Administration (SBA) faces statutory obstacles that prevent the Social
Security Administration from sharing key data, including Social
Security numbers, with SBA. These data could help SBA effectively
detect and prevent fraud-related improper payments in SBA’s
pandemic-relief programs, consistent with leading practices in our
fraud risk framework. We recommended that SBA develop a plan for
obtaining access to those external sources of data, which might
involve pursuing statutory authority or entering into a data-sharing
agreement to obtain such access. SBA agreed with this
recommendation, but had not yet implemented it as of October 2023.d
Limited Limitations on data access and data capabilities can constrain
access to agencies’ oversight capabilities and resources.
data and data For example, most of the 24 Chief Financial Officers Act of 1990
capabilities agencies that we surveyed in 2023 reported challenges with accessing
relevant data. They also reported limited staff, tools, and funding to
support data analytical capabilities, impeding efforts to identify or
prevent fraud-related improper payments.e
We also reported in 2022 that many agencies face limited access to
data on deceased individuals that the Social Security Administration
(SSA) is currently required to share in Treasury’s Do Not Pay (DNP)
system for 3 years. The DNP system is a data matching service for
agencies to use in preventing fraud-related improper payments,
including those to deceased individuals. As result, we recommended
that Congress accelerate and make permanent this existing
requirement.f Treasury officials have informed us that by the end of
this calendar year, the Do Not Pay working system should have full
access to the full death data. However, under current law, that access
will end in 2026. As of October 2023, Congress had not yet taken
action on this recommendation.
Source: GAO (information); Icons-Studio/stock.adobe.com (icons). | GAO-24-106608
Page 13 GAO-24-106608 Improper Payments and Fraud
a
GAO, Foreign Military Sales: Financial Oversight of the Use of Overhead Funds Needs Strengthening,
GAO-18-553 (Washington, D.C.: July 30, 2018).
b
GAO, Disaster Recovery: HUD Should Develop Data Collection Guidance to Support Analysis of Block Grant
Fraud Risks, GAO-23-104382 (Washington, D.C.: Aug. 17, 2023).
c
GAO, Tax Fraud and Noncompliance: IRS Can Strengthen Pre-refund Verification and Explore More Uses,
GAO-18-224 (Washington, D.C.: Jan. 30, 2018).
d
GAO, COVID Relief: Fraud Schemes and Indicators in SBA Pandemic Programs, GAO-23-105331
(Washington, D.C.: May 18, 2023).
e
GAO, Fraud Risk Management: Information on Agencies’ Current Status, GAO-24-106565 (Washington, D.C.:
Nov. 1, 2023).
f
GAO, 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).
Since 2015, we have made over 40 recommendations for agencies to use data
analytical capabilities to help manage fraud risk, such as to verify self-reported
data and identify fraud-related improper payments. More than half of these
recommendations had not been fully implemented as of August 2023. 21
How GAO Did This We reviewed relevant federal statutes, standards, and guidance that focused on
Study management of, or distinctions and relationships between, improper payments
and fraud. We also conducted a literature review of relevant GAO products and
other federal reports that focused on these issues and that were issued since we
published our Fraud Risk Framework in 2015.
The distinctions and relationships between improper payments and fraud that we
describe in this report are not intended to be an exhaustive list. Similarly,
examples of federal requirements, standards, and guidance described in this
report are not intended to present a comprehensive, detailed analysis of all
improper payment and fraud risk management requirements, standards, or
guidance that may exist.
We conducted this performance audit from January 2023 to December 2023 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.
List of Addressees The Honorable Mark E. Amodei
Chairman
The Honorable Adriano Espaillat
Ranking Member
Subcommittee on Legislative Branch
Committee on Appropriations
House of Representatives
We are sending copies of this report to the appropriate congressional
committees. We are also sending informational copies to OMB, the Council of the
Inspectors General on Integrity and Efficiency, and other interested parties. In
addition, the report is available at no charge on the GAO website
at https://www.gao.gov.
Page 14 GAO-24-106608 Improper Payments and Fraud
GAO Contact For more information, contact: Rebecca Shea, Director, Forensic Audits and
Information Investigative Service, at (202) 512-6722 or SheaR@gao.gov.
Chuck Young, Managing Director, Public Affairs, YoungC1@gao.gov,
(202) 512-4800.
A. Nicole Clowers, Managing Director, Congressional Relations,
ClowersA@gao.gov, (202) 512-4400.
Staff Acknowledgments: Gabrielle Fagan (Assistant Director), Flavio Martinez
(Analyst in Charge), Daniel Silva (Senior Auditor), Jim Ashley, Leia Dickerson,
Colin Fallon, Daniel Flavin, Jason Kirwan, Barbara Lewis, Maria McMullen,
James Murphy, Hannah Padilla, Amanda Stogsdill, and Matthew Valenta made
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Endnotes
1Improper payments are any payments that should not have been made or that were made in an
incorrect amount (including overpayments and underpayments) under statutory, contractual,
administrative, or other legally applicable requirements. Improper payments include any payment to
an ineligible recipient or ineligible service, duplicate payments, payments for services not received
(except where authorized by law), and any payment for an incorrect amount. 31 U.S.C. § 3351(4).
Executive agency estimates of improper payments also treat as improper any payments whose
propriety cannot be determined due to lacking or insufficient information. 31 U.S.C. § 3352(c)(2).
2GAO, Improper Payments: Fiscal Year 2022 Estimates and Opportunities for Improvement,
GAO-23-106285 (Washington, D.C.: Mar. 29, 2023); Improper Payments: Programs Reporting
Reductions Had Taken Corrective Actions That Shared Common Features, GAO-23-106585
(Washington, D.C.: June 30, 2023); and Improper Payments: Opportunities for Interagency
Collaboration and Improvements, GAO-23-106761 (Washington, D.C.: Sept. 28, 2023).
3GAO, Defense Procurement: Ongoing DOD Fraud Risk Assessment Efforts Should Include
Contractor Ownership, GAO-20-106 (Washington, D.C.: Nov. 25, 2019).
4GAO, 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).
5Office of Management and Budget, Requirements for Payment Integrity Improvement, Circular No.
A-123, Appendix C, OMB-M-21-19 (Washington, D.C.: Mar. 5, 2021).
6GAO, Standards for Internal Control in the Federal Government, GAO-14-704G
(Washington, D.C.: September 2014); A Framework for Managing Fraud Risks in Federal
Programs, GAO-15-593SP (Washington, D.C.: July 28, 2015); and Medicare and Medicaid: CMS
Needs to Fully Align Its Antifraud Efforts with the Fraud Risk Framework, GAO-18-88 (Washington,
D.C.: Dec. 5, 2017).
7GAO, Federal Student Loans: Education Needs to Verify Borrowers’ Information for Income-Driven
Repayment Plans, GAO-19-347 (Washington, D.C.: June 25, 2019); Fake Caller ID Schemes:
Information on Federal Agencies’ Efforts to Enforce Laws, Educate the Public, and Support
Technical Initiatives, GAO-20-153 (Washington, D.C.: Dec. 18, 2019); High-Risk Series: Federal
Government Needs to Urgently Pursue Critical Actions to Address Major Cybersecurity Challenges,
GAO-21-288 (Washington, D.C.: Mar. 24, 2021); and DOD Fraud Risk Management: Actions
Needed to Enhance Department-Wide Approach, Focusing on Procurement Fraud Risks, GAO-21-
309 (Washington, D.C.: Aug. 19, 2021).
8GAO, COVID-19: Additional Actions Needed to Improve Accountability and Program Effectiveness
of Federal Response, GAO-22-105051 (Washington, D.C.: Oct. 27, 2021).
9Pub. L. No. 116-117, 134 Stat. 113 (2020) (codified at 31 U.S.C. §§ 3351-58).
1031 U.S.C. § 3352(a)(1)(B).
1131 U.S.C. § 3352(b)(2).
Page 15 GAO-24-106608 Improper Payments and Fraud
1231 U.S.C. § 3357(b). The Fraud Reduction and Data Analytics Act of 2015 (FRDAA) originally
required OMB to establish these guidelines for agencies in 2016. Pub. L. No. 114-186, 130 Stat.
546 (2016). FRDAA was repealed and replaced by PIIA in 2020.
13Office of Management and Budget, Establishing Financial and Administrative Controls to Identify
and Assess Fraud Risk, CA-23-03 (Washington, D.C.: Oct. 17, 2022).
14GAO, 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).
15GAO, Fraud in the Federal Government: Challenges Determining the Extent of Federal Fraud,
GAO-23-106110 (Washington, D.C.: Jan. 23, 2023).
16GAO, A Framework for Managing Improper Payments in Emergency Assistance Programs,
GAO-23-105876 (Washington, D.C.: July 13, 2023).
17GAO-15-593SP.
18GAO, “The GAO Antifraud Resource,” (Washington, D.C.: Jan. 10, 2022), accessed Sept. 6,
2023, https://gaoinnovations.gov/antifraud_resource/.
19GAO, Improper Payments: Programs Reporting Reductions Had Taken Corrective Actions That
Shared Common Features, GAO-23-106585 (Washington, D.C.: June 30, 2023).
20GAO, Foreign Military Sales: Financial Oversight of the Use of Overhead Funds Needs
Strengthening, GAO-18-553 (Washington, D.C.: July 30, 2018); Disaster Recovery: HUD Should
Develop Data Collection Guidance to Support Analysis of Block Grant Fraud Risks,
GAO-23-104382 (Washington, D.C.: Aug. 17, 2023); Tax Fraud and Noncompliance: IRS Can
Strengthen Pre-refund Verification and Explore More Uses, GAO-18-224 (Washington, D.C.: Jan.
30, 2018); COVID Relief: Fraud Schemes and Indicators in SBA Pandemic Programs,
GAO-23-105331 (Washington, D.C.: May 18, 2023); Fraud Risk Management: Information on
Agencies’ Current Status, GAO-24-106565 (Washington, D.C.: Nov. 1, 2023); and 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).
21GAO, Fraud Risk Management: Information on Agencies’ Current Status, GAO-24-106565
(Washington, D.C.: Nov. 1, 2023).
Page 16 GAO-24-106608 Improper Payments and Fraud
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