APRIL 19, 2024. The United States Government Accountability Office (GAO) has released a first of its kind report on annual financial losses to the government due to fraud and the numbers are astounding. The GAO estimated that the federal government loses between $233 billion and $521 billion every year, based on data from fiscal year 2018 to 2022. These estimates are based on data from three main sources: investigative data – the number of cases prosecuted, and money recovered from those cases – Office of Inspector General (OIG) reports and confirmed accounts of fraudulent activity reported to the Office of Management and Budget (OMB). GAO ran these data sets through well-established probabilistic methods and models to create the estimate range, accounting for different scenarios and situations involving uncertainty.

The GAO report is organized around three fraud categories: Adjudicated, detected potential, and undetected potential. Adjudicated fraud is defined as fraud brought before a court or other determining body and determined to exist; those who participated in the fraud are held liable. Detected potential fraud is a potential fraudulent action that the government is aware of but has yet to determine if it is truly fraud. This category has several steps: detection, investigation without action, and initiation of adjudication without determination of liability. Undetected potential fraud is fraud that exists but has not been detected by the government yet. Data from the other two categories were used to calculate data for this category.

The GAO’s aim in releasing this report is to bolster oversight on fraud protection management. Currently, data on reporting fraud is limited to OIGs’ semi-annual reports. The GAO recommends fraud estimation as a strong step towards fraud management and prevention. Estimates can provide a better understanding of the issue’s scope, allowing agencies to properly prioritize oversight resources. Ultimately, this will increase the return on investment of fraud prevention resources and save the government money by preventing loss of funds through fraud.

At the end of its report, the GAO issued recommendations to OMB and the Department of Treasury to improve the availability of fraud data and expand fraud estimation abilities in government agencies. In addition to these recommendations, the government will continue to work with whistleblowers to help curb fraud, whose importance cannot be overstated even with the potential for the government to improve its surveillance and prevention measures.

Read the highlights: https://www.gao.gov/assets/d24105833high.pdf