What GAO Found All federal programs and operations are at risk of fraud, regardless of whether they provide financial or nonfinancial benefits or delivery takes place at the federal, state, or local level. Understanding the scope of the problem is critical to combating fraud. In 2024, GAO estimated total direct annual financial losses to the government from fraud at between $233 billion and $521 billion, based on fiscal year 2018 through 2022 data. The estimate captures losses that occur at the state, local, tribal, or other government level if those losses included a federal investigative, administrative, or related action. State agencies administer federal programs, making payment, eligibility, and other decisions. In fiscal year 2025, the federal government provided an estimated $1.2 trillion to state and local governments in federal grants. The programs vary in size, but some, such as Medicaid, involve millions of beneficiaries. Decentralized program delivery such as through distributed payment and eligibility decisions can heighten the risk of fraud. GAO has previously reported that federal and state program managers’ efforts to manage fraud risks have been challenged by weak control environments, data and system limitations, and limited capacity to manage risks. For example, one state agency administering a federally…
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Combating Fraud: Challenges in Managing Fraud Risks in Federally Funded, State-Administered Programs
Source: US GAO Reports — US Government, Public Domain