High-Risk Areas

Benefits to Be Gained by Continued Emphasis on Addressing High-Risk Areas Gao ID: T-AIMD-97-54 March 4, 1997

Drawing on GAO's high-risk series (GAO/HR-97-1 through GAO/HR-97-14, Feb. 1997), the first testimony discusses major government programs prone to waste, fraud, abuse, and mismanagement. GAO focuses on high-risk areas within the Internal Revenue Service, Medicare, and the Supplemental Security Income Program. GAO also discusses such other vulnerable areas as financial management at the Customs Service, information security weaknesses, and the "Year 2000" problem. The second testimony addresses solutions to these serious management problems, which cost taxpayers billions of dollars and undermine the quality of government services. GAO outlines the steps that need to be taken to fix these problems.

GAO noted that: (1) overall, legislative and agency actions have resulted in progress toward fixing these high-risk areas and establishing a solid foundation to help ensure greater progress; (2) however, because these areas involve long-standing problems which are difficult to fix, additional corrective measures are necessary to remove the high-risk designation; (3) GAO's audits of IRS' financial statements, however, have identified many significant weaknesses in IRS' accounting for revenue and accounts receivable, as well as for funds provided to carry out IRS' operations; (4) IRS has improved payroll processing and accounting for administrative operations and is working on solutions to revenue and accounts receivable accounting problems; (5) in addition, IRS is hampered in efficiently and effectively managing its huge inventory of accounts receivable due to inadequate management information; (6) further, while IRS' efforts to reduce filing fraud have resulted in some success, especially through more rigid screening in the electronic filing program, this continues to be a high-risk area; (7) the Customs Service has made considerable progress in correcting major management and organizational structure weaknesses GAO pointed to in its 1992 high-risk report; (8) Medicare, the nation's second largest social program, is inherently vulnerable to and a perpetually attractive target for exploitation; (9) the Congress and the President have been seeking to introduce changes to Medicare to help control program costs, which were $197 billion in fiscal year 1996; (10) a newly designated high-risk area involves overpayments in the SSI program, which provided about $22 billion in federal benefits to recipients between January 1, 1996, and October 31, 1996; (11) one root cause of SSI overpayments is the Social Security Administration's difficulty in corroborating financial eligibility information that program beneficiaries self report and that affects their benefit levels; (12) in September 1996, GAO reported that during the previous 2 years, serious information security control weaknesses had been reported for 10 of the 15 largest federal agencies; (13) GAO had made dozens of recommendations for improvement to individual agencies, and they have started acting on may of them; and (14) the year 2000 problem poses the high risk that computer systems throughout government will fail to run or malfunction because computer computer equipment and software were not designed to accommodate the change of date at the new millennium.

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