High Risk Series

In 1990, GAO began a special effort to identify federal programs at high risk of waste, fraud, abuse, and mismanagement. GAO issued a series of reports in December 1992 on the fundamental causes of the problems in the high-risk areas. This report is part of the second series that updates the status of those areas. The Overview discusses the urgent need to continue addressing critical high-risk problems, including such areas as Defense Department (DOD) contract and inventory management, revenue collections, major lending programs, and oversight of tens of billions of dollars in contracts. Also, GAO has designated new areas as high risk, such as long-standing financial management weaknesses in DOD, growing fraudulent tax filings, and several critical information system modernization projects that are plagued with problems. In five areas, such as the Pension Benefit Guaranty Corporation, improvement has been significant enough for GAO to remove them from the high-risk list. In only three areas--DOD weapons system acquisition and inventory management and the Internal Revenue Service's collection of delinquent receivables--has little progress been made. The series also includes a Quick Reference Guide and a separate report for each of 10 areas, detailing continuing significant problems and needed corrective action. Readers have the following three options in ordering the high-risk series: (1) request any of the individual reports in the series, including the Overview (HR-95-1), the Guide (HR-95-2), or any of the 10 issue area reports; (2) request the Overview and the Guide as a package (HR-95-21SET); or (3) request the entire series as a package (HR-95-20SET).

GAO found that: (1) in 15 of the 18 high-risk areas, congressional and agency efforts have prompted long-needed improvements and agencies have made sufficient progress in some areas to warrant removal of their high-risk designation; (2) 3 high-risk areas have shown little improvement; (3) almost all of the major departments and agencies have not been able to pass the test of an independent financial statement audit; (4) the six broad high-risk categories that affect almost all of the government's $1.25 trillion revenue collection efforts and hundreds of billions of dollars in federal expenditures include the Department of Defense's budgeting, asset management, and financial management, the Internal Revenue and Customs Services' record keeping, financial and information systems, and internal controls, information technology acquisition, Medicare fraud and abuse, agricultural, educational, and housing loan program losses, and civilian agencies' contract management; and (5) Congress has established a legislative framework that requires agencies to set goals, operate programs, and measure results using reliable cost and performance information which should cause agencies to redirect their management focus, improve their financial systems, and measure results.