GAO Finds Fraud-Risk Gaps Across $1.1 Trillion in Programs
A Government Accountability Office report publicly released July 23 found that 15 of the 20 largest federally funded programs administered by states and other government entities lacked documented evidence of systematic fraud-risk identification and assessment.
The programs—including Medicaid, the Supplemental Nutrition Assistance Program and disaster assistance—accounted for about $1.1 trillion in federal obligations during fiscal year 2025. Together, they represented nearly 90% of obligations among qualifying programs administered by states and other government entities.
The finding does not mean that the $1.1 trillion was fraudulent or that every state, program or recipient experienced fraud. It means that most of the programs reviewed could not show documented evidence that they had systematically assessed fraud risks and prioritized responses.
What GAO reviewed
GAO selected the 20 programs using fiscal-year 2025 data from USAspending.gov. The programs cover services ranging from health care and food assistance to housing, education and disaster recovery.
The review examined how each program is administered, who distributes and safeguards funds, what fraud risks have been identified and what controls are in place. The programs often operate through multiple layers of government. Federal agencies may provide funds to states, which can rely on local governments, subrecipients, contractors and subcontractors to deliver services or complete projects.
That structure can help programs reach beneficiaries and communities, but it also creates more points where eligibility decisions, payments, procurement and oversight can break down.
Why the gaps matter
GAO identified recurring concerns involving limited data sharing, weak control environments, insufficient analytic capacity and inadequate visibility into activity below the state level. Legal or system restrictions can also make it difficult for agencies to share information that might reveal suspicious activity across programs.
The report also warns against relying mainly on “pay-and-chase” enforcement—investigating and recovering money after it has already been issued. GAO’s recommended direction is to improve prevention and early detection, including the use of analytic tools and recipient-verification resources before payments are made.
Examples cited by GAO included housing-assistance vouchers paid for vacant units after households allegedly underreported income; a consultant convicted of falsifying permits connected to a $4.3 million airport improvement project; and an alleged scheme involving fraudulent student-aid applications for more than 1,200 people at more than 100 schools in 24 states.
Those examples involve specific risks, allegations or adjudicated cases. They are not evidence that all participants, landlords, contractors or schools in the programs were involved in fraud.
How to read the dollar figures
GAO separately estimated that about $1.2 trillion in federal grants went to state and local governments in fiscal year 2025. That figure describes the scale of federal grant funding; it is not a fraud-loss estimate and is not identical to the $1.1 trillion in obligations for the 20 programs selected for the new review.
GAO has also estimated that the federal government loses between $233 billion and $521 billion annually to fraud. That range is based on fiscal-year 2018 through 2022 data and covers federal programs and operations more broadly. It should not be treated as a current-year loss figure for the 20 programs in the July report.
What oversight could change
GAO identified 22 open recommendations to agencies related to fraud-risk management among the programs reviewed. The report highlights three broad priorities: improving fraud-detection analytics, increasing transparency through reporting and data, and adapting controls as fraud methods change.
GAO also said Congress could help by expanding analytic resources and reporting requirements. The House Committee on Oversight and Government Reform said the findings support several fraud-prevention bills that the House has passed or is considering. Those proposals would still require further legislative action before becoming law.
For people who receive Medicaid, SNAP or disaster assistance, the report does not announce a change in eligibility, payments or application procedures. Beneficiaries should continue following instructions from the agency administering their program. The immediate question is whether federal and state officials improve oversight without disrupting legitimate access to services.
Sources
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