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                BlogSearch < WatchBlog: Following the Federal Dollar
    Protecting Emergency Assistance Funding from Payment Errors, Including Fraud Posted on July 13, 2023
                    Federal emergency assistance is a critical resource for helping communities, businesses, and individuals respond to and recover from natural disasters, public health emergencies, and more. But over the last 20 years the federal government has made nearly $2.4 trillion in payment errors for both emergency and nonemergency programs, wasting important resources and undermining the credibility of federal efforts. What can be done to better protect federal emergency assistance from payment errors, including fraud?

Today’s WatchBlog post looks at some examples of payment errors, including fraud, in emergency assistance funding, as well as our new guide to help Congress and federal agencies prevent and reduce them.

Image
              Photo showing two hands exchanging money ($100 bills).

**How do these errors happen?**

When the federal government provides emergency assistance, the risk of payment errors may increase because the need to provide this assistance quickly can lead agencies to relax or forego implementation of effective safeguards. For example, the COVID-19 pandemic saw an increase in the frequency and volume of identity-related fraud, particularly in the areas of unemployment insurance and assistance to small businesses.  Specifically:

While more than $1.1 trillion in COVID-19-related **small business assistance** helped many people, two of the Small Business Administration’s key programs reported an estimated $35.9 billion in payment errors in FY 2022 alone. SBA’s oversight plans weren’t finalized before funds had to be disbursed, and the agency had few safeguards in place.Listen to our recent podcast with GAO’s Johana Ayers to learn more about our work on fraud in small business COVID-19 relief programs.

TranscriptStates received more than 42 million **unemployment insurance** claims from March 21 to May 30, 2020, compared with 5.1 million in all of FY 2019. While this insurance assisted many workers, payment errors may have accounted for at least $191 billion of the $888 billion disbursed during the pandemic, according to Department of Labor auditors.**What can be done about it?**

Today, we issued a new guide to help Congress and federal agencies prevent and reduce payment errors, including fraud, in emergency assistance programs.

*“This important new tool is designed to help federal agencies improve their response to the growing threat posed by emergencies, such as natural disasters and public health crises,”* said Gene L. Dodaro, Comptroller General of the United States and head of the GAO. *“The federal government has provided billions of dollars to communities recovering from emergencies, and must strategically manage the risk of payment errors and fraud. This will help ensure federal emergency funds get to the people and businesses that need them.”*

Our new guide provides five principles and corresponding practices that can help Congress and federal program managers mitigate payment errors, particularly in emergency assistance programs. They are:

Commit to managing payment errors
	Identify and assess payment error risks, including fraud
	Design and implement effective control activities
	Monitor the effectiveness of controls in managing payment errors
	Provide and obtain information to manage payment errorsBy applying these principles, federal agencies will be better prepared to respond to emergencies while ensuring that federal dollars are spent effectively and reach those in need.

Comments on GAO’s WatchBlog? Contact blog@gao.gov.
TopicsGovernment Operations
                        Small Business Administration
              Federal Emergency Management Agency
              Department of Labor
              Internal Revenue Service
                        Fraud
              Improper payments
              Payment errors
              Coronavirus
              Emergency response funds
                        Forensic Audits and Investigative Service
              Financial Management and Assurance
              Financial Markets and Community Investment
GAO Contacts
    
      Chuck Young
      
              Chuck Young
            
            Managing Director
      
            youngc1@gao.gov
      
            (202) 512-4800
		
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	Published:  May 18, 2023


	Publicly Released: May 18, 2023
							A Framework for Managing Improper Payments in Emergency Assistance ProgramsProduct Number
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	Published:  Jul 13, 2023


	Publicly Released: Jul 13, 2023
About WatchblogGAO's mission is to provide Congress with fact-based, nonpartisan information that can help improve federal government performance and ensure accountability for the benefit of the American people. GAO launched its WatchBlog in January, 2014, as part of its continuing effort to reach its audiences—Congress and the American people—where they are currently looking for information.

The blog format allows GAO to provide a little more context about its work than it can offer on its other social media platforms. Posts will tie GAO work to current events and the news; show how GAO’s work is affecting agencies or legislation; highlight reports, testimonies, and issue areas where GAO does work; and provide information about GAO itself, among other things.

Please send any feedback on GAO's WatchBlog to blog@gao.gov.
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