United States Government Accountability Office

Highlights of GAO-24-105833, a report to 

congressional committees

April 2024

FRAUD RISK MANAGEMENT

2018-2022 Data Show Federal Government Loses an 

Estimated $233 Billion to $521 Billion Annually to 

Fraud, Based on Various Risk Environments

What GAO Found

GAO estimated total direct annual financial losses to the government from fraud 

to be between $233 billion and $521 billion, based on data from fiscal years 2018 

through 2022. The range reflects the different risk environments during this 

period. Ninety percent of the estimated fraud losses fell in this range. 

GAO collected data from three key sources to develop the estimate: investigative 

data, such as the number of cases sent for prosecution and the dollar value of 

closed cases; Office of Inspector General (OIG) semiannual report information; 

and confirmed fraud data reported to the Office of Management and Budget 

(OMB) by agencies. GAO organized these data around three fraud categories—

adjudicated, detected potential, and undetected potential. Model design and 

validation were also informed by 46 fraud studies. OIG and other knowledgeable 

officials agreed with these categories and subcategories. 

Categories of Fraud-Related Data Used in GAO’s Estimate

GAO’s approach is sensitive to the assumptions made about fraud and accounts 

for data uncertainty and limitations. GAO used a well-established probabilistic 

method for estimating a range of outcomes under different assumptions and 

scenarios where there is uncertainty. The estimate does not include fraud loss 

associated with federal revenue or fraud against federal programs that occurs at 

the state, local, or tribal level unless federal authorities investigated and reported 

it. GAO’s estimate is in line with other estimates of fraud losses from the United 

Kingdom and Association of Certified Fraud Examiners, among others.

View GAO-24-105833. For more information, 

contact Rebecca Shea at (202) 512-6722 or 

shear@gao.gov or Jared Smith at (202) 512-

2700 or SmithJB@gao.gov.

Why GAO Did This Study

All federal programs and operations 

are at risk of fraud. Therefore,

agencies need robust processes in 

place to prevent, detect, and respond 

to fraud. While the government 

obligated almost $40 trillion from fiscal 

years 2018 through 2022, no reliable 

estimates of fraud losses affecting the 

federal government previously existed.

As part of GAO’s work on managing

fraud risks, this report (1) estimates the

range of total direct annual financial 

losses from fraud based on 2018-2022 

data and (2) identifies opportunities 

and challenges in fraud estimation to 

support fraud risk management.

GAO estimated the range of total direct 

annual financial losses from fraud 

based on 2018-2022 data using a 

Monte Carlo simulation model. GAO

identified opportunities and challenges 

through interviews and data collection 

focused on 12 agencies representing 

about 90 percent of federal obligations. 

What GAO Recommends

GAO is making two recommendations 

to OMB—one in collaboration with the 

Council of the Inspectors General on 

Integrity and Efficiency (CIGIE) and the 

other with agency input to improve the 

availability of fraud-related data. GAO

is also making a recommendation to

the Department of the Treasury to 

expand government-wide fraud 

estimation, in consultation with OMB.

OMB generally agreed with the 

recommendations but disagreed with 

the estimate. GAO believes the 

estimate is sound, as discussed in the 

report. CIGIE stated it would work with 

OMB to consider how OIGs might 

improve fraud-related data. Treasury 

agreed with the recommendation.
Highlights of GAO-24-105833 (Continued)

As a first of its kind government-wide estimate of federal dollars lost to fraud, there are known uncertainties associated with 

the model and underlying data important to interpreting the results. These include caveats related to

• applying the estimate to agencies or programs. GAO’s model was developed to estimate government-wide federal 

fraud. The fraud estimate’s range represents 3 to 7 percent of average federal obligations. These percentages should 

not be applied at the agency or program level. While every federal program and operation is at risk of fraud, the level of 

risk can vary substantially. Controls, growth or shrinkage of budget, and the emergence of new fraud schemes are 

some reasons the risk level can vary;

• drawing conclusions about pandemic fraud. GAO’s estimate is based on data from fiscal years 2018 through 2022. 

The data include time periods and programs with and without pandemic-related spending. Therefore, the estimate 

includes, but is not limited to, pandemic-related spending fraud. While the upper range of the estimate is associated 

with higher-risk environments, it is not possible to break out a subset of our government-wide estimate to describe 

pandemic program fraud;

• comparing with improper payment estimates. GAO’s estimate is not comparable to improper payment estimates. 

Improper payment estimates are based on a subset of federal programs, using a methodology not designed to identify

fraud. GAO has also consistently reported that the federal government does not know the full extent of improper 

payments and has long recommended that agencies improve their improper payment reporting. In contrast, GAO’s 

fraud estimate includes all federal programs and operations and is based on fraud-related data. With these differences 

in scope and data, the upper end of GAO’s estimated fraud range exceeded annual improper payment estimates; and

• assuming the estimate is predictive. GAO’s estimate is not based on a predictive model. Factors such as the 

amount of emergency spending, the effectiveness of federal fraud risk management, and the nature of new fraud 

threats could substantially impact the scale of future fraud.

GAO has previously issued Matters for Congressional Consideration and recommendations to improve agencies’ program 

integrity, including fraud risk management. Fraud estimation provides opportunities to improve fraud risk management, 

according to OIG and agency officials. For example, estimates can demonstrate the scope of the problem, improve 

oversight prioritization, and help determine the return on investment from fraud risk management activities. While it is not 

possible to eliminate fraud, with a better understanding of the costs, agencies will be better positioned to manage the risk.

How Fraud Estimates Can Improve Fraud Risk Management

OIG and agency officials noted challenges in producing fraud estimates, such as limited available fraud-related data and 

use of varying terms and definitions of fraud for recording data. These data gaps and variability result in information that 

cannot be readily compared or consolidated to determine the extent of fraud across the federal government. Guidance for 

collecting and reporting fraud-related data is currently limited to OIG semiannual reports and confirmed fraud reported by 

agencies to OMB, which are not designed to support fraud estimation. With guidance targeted to the purpose of fraud 

estimation, agencies and OIGs would be better positioned to collect and report data on potential and adjudicated fraud in 

support of estimation efforts. 

OIG and agency officials also noted the utility of agency or program-level estimates compared with government-wide

estimates. They further noted the need for expertise and data-analytics capacity to produce estimates. GAO previously 

reported that agencies identified limitations in expertise, data, and tools as a significant challenge for their fraud risk 

management efforts. These challenges could also impact agencies’ ability to develop effective fraud estimates at a 

program or agency level. The Department of the Treasury’s Office of Payment Integrity (OPI) supports agencies facing 

such challenges. OPI’s resources are dedicated to preventing and detecting improper payments through a variety of datamatching and data-analytics services. Therefore, OPI is well positioned—with the expertise, data, and analytic tools—to 

evaluate and advance methods that the federal government can take to estimate fraud in support of fraud risk 

management.