GAO: Understanding the relationships between improper payments and fraud is important to effectively target associated causes. Image: William Sawalich/Shutterstock.com
By: FEDweek StaffImproper payments and fraud “are distinct concepts,” the GAO has said, noting that improper payments “can have fraud-related root causes and impacts, but not all are caused by fraud.”
Although not stating so specifically, the report addresses statements commonly made by members of Congress equating the two as proof of government inefficiency and waste. Those arguments in recent years have focused in particular pandemic relief programs that were newly created or that caused a surge in spending under existing programs.
The GAO report says that improper payments “are a long-standing, significant problem in the federal government,” with agencies reporting about $2.4 trillion in improper payments since 2003 including $247 billion for fiscal year 2022.
However, the term includes both overpayments and underpayments as well as payments that are correct but not fully documented. The OMB recently released fiscal 2023 data showing overall rate rising from 5.12 to 5.43 percent, although it said that was mainly due to an increase in payments with insufficient documentation.
Improper payments “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 report said.
Meanwhile, not all forms of fraud result in a financial loss but can “create national security, criminal, health, safety, and other risks.” It gave as an example fraudulent airplane registrations that can conceal the identity of the true owner and facilitate criminal activity,
“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,” GAO said.
It noted that it has issued guidance to help agencies better use data to manage fraud risks that include fraud-related improper payments and has made some 40 recommendations in prior reports, less than half of which have been fully carried out.
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