GAO Efforts Related to the Problem of Fraud in the Government

Efforts by GAO to prevent fraud, abuse, waste, and error in Government programs are discussed. In addition, two previous GAO reports are discussed concerning: (1) the Federal manager's responsibility to resolve audit findings, and (2) problems involved in grant auditing. A task force was established for the Prevention of Fraud. The first of its efforts was an overview assessment dealing with the known instances of fraud, its causes, and actions taken by management to prevent its recurrence. Information obtained indicates that a wide variety of Federal programs and activities are affected. These areas include: payroll, loan guarantees, theft of equipment, and educational benefits programs. The operation of a nationwide hotline to report instances of fraud in Federal programs was the second task force effort. The allegations reported covered a wide range of abuses, including theft, private use of Government property, working-hour abuses, improper financial transactions, improper expenditure of grant funds, cheating on benefit eligibility, and payment of bribes. The amount of money involved in these allegations is less important than the impact this has in terms of destroying the people's confidence in the operations of the Government. GAO is now monitoring the results of agency Inspector General's work in order to develop profiles of fraudulent activity ad agency actions to prevent it from occurring. The third task force effort, vulnerability assessments, is an effort to estimate the susceptibility of agencies and their programs to fraud and abuse. Based on this work, GAO believes that all of the agencies visited are vulnerable to fraud and abuse, because Federal headquarters, regional offices, and other field locations and grantees have inadequate internal controls over their operations. Significant problems occurring due to the lack of adequate internal controls include: excessive cash, payroll fraud, and improper use of grant funds. While progress has been made to resolve audit findings, more needs to be done before effective systems are fully implemented. GAO has plans to review the Executive Department's progress in improving their audit resolution systems. Unnecessary costs in grant auditing result from duplication of effort and from auditing grants too small to warrant more than occasional audits. The audit focus is often too narrow to prevent effectively unauthorized expenditures and the loss of public funds.