Sneak Preview: GAO Finds Agencies Are Failing To Meet Fraud Best Practices
(The following was excerpted from a recent Thompson Grants Compliance Expert article.) Several federal agencies agreed with recommendations in a recent Government Accountability Office (GAO) report faulting the agencies for not completely adopting antifraud best practices and calling for them to implement leading governmentwide strategies to limit the risk of fraud, waste and abuse when disbursing federal financial assistance under technical programs enacted through recent legislation.
The report focused on $227 billion in funding received by five agencies for programs created under the Infrastructure Investment and Jobs Act (Pub. L. 117-58), Inflation Reduction Act (Pub. L. 117-169) and the CHIPS and Science Act (Pub. L. 117-167) to determine to what extent awardees were properly performing oversight. GAO specifically assessed agency adoption of fraud practices within five programs established under these laws — the Federal Communications Commission’s (FCC) Universal Service Program for Schools and Libraries, the Department of Commerce’s (DOC) CHIPS for America Fund, the Environmental Protection Agency’s (EPA) Greenhouse Gas Reduction Fund (GGRF) (which has now been repealed), the Department of Health and Human Services’ (HHS) Health Center Program and Department of Energy’s (DOE) Regional Clean Hydrogen Hubs (H2Hubs) program.
“Effective stewardship of taxpayer funds is a critical responsibility of the federal government,” GAO explained. “Proactively managing payment integrity risks can help facilitate a program’s mission and strategic goals by helping to ensure that taxpayer dollars and government services serve their intended purposes.”
GAO identified selected requirements and leading practices for oversight of federal awards to prevent fraud, waste and abuse, including subpart F of the Office of Management and Budget’s (OMB) uniform guidance (2 C.F.R. Part 200); GAO’s A Framework for Managing Fraud Risks in Federal Programs (i.e., the Fraud Risk Framework): (2) OMB Circular A-123; and OMB’s Transmittal of Appendix C to OMB Circular A-123.
The nine fraud-risk reduction requirements and best practices that GAO identified for federal agencies were: (1) create a structure with a dedicated entity to lead fraud management activities; (2) have a senior management council to assess and monitor deficiencies in internal control; (3) maintain agencywide and program-specific risk profiles; (4) assess program-specific risks, including fraud and improper payments; (5) determine risk responses and document an antifraud strategy based on the fraud risk profile; (6) design and implement specific control activities to prevent and detect fraud; (7) establish collaborative relationships with stakeholders and create incentives to help ensure effective implementation of the antifraud strategy; (8) conduct risk-based monitoring and evaluate all components of the fraud risk framework; and (9) undergo and evaluate audits, including recovery audits and single audits.
(The full version of this story has now been made available to all for a limited time here.)
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