GAO says programs handling $1.2 trillion face persistent fraud-management gaps

The Government Accountability Office said July 23 that federal and state agencies still face persistent challenges managing fraud risks in major public-benefit and disaster-assistance programs that collectively received about $1.2 trillion in fiscal year 2025.

GAO examined 20 federally funded programs administered by federal, state and local entities. The programs include Medicaid, the Supplemental Nutrition Assistance Program and Federal Emergency Management Agency disaster assistance programs. Together, they represented nearly 90% of the relevant federal obligations among state-administered programs with obligations above $100 million.

The review did not find that every program had failed to prevent fraud, and it did not establish that the entire $1.2 trillion was exposed to fraud. Instead, the assessment identified fraud risks and described ways agencies could improve prevention, detection and oversight.

What the review found

GAO’s report, Combating Fraud: Managing Risks in Federally Funded, State-Administered Programs, focuses on how federal and state agencies identify and respond to the possibility of fraud. Its recommendations include stronger risk management, expanded use of data analytics and improved reporting.

Those controls matter because state-administered programs distribute federal money and public benefits across the country. Weak risk-management practices can make it harder for agencies to identify suspicious activity, prevent improper payments or determine whether safeguards are working as intended.

GAO cited an estimated annual federal fraud loss of between $233 billion and $521 billion. That estimate is based on fiscal-year 2018 through 2022 data. It is not a new audited total for fiscal year 2026, nor does it mean that $233 billion to $521 billion was stolen in 2026.

A continuing oversight concern

The July assessment follows earlier GAO work documenting unresolved weaknesses. In testimony and background released April 15, the watchdog reported that about 40% of its fraud-risk recommendations for federal programs administered by states remained open as of April 2026.

A separate report published Jan. 5 found that four of five selected programs did not fully include or document key practices intended to strengthen oversight and fraud prevention. That review produced 12 recommendations and covered programs representing about $227 billion in major federal investments.

Taken together, the reports point to a management problem that extends beyond a single agency or benefit program: agencies may identify fraud risks and recommended safeguards, but implementation and documentation can remain incomplete.

What happens next

Congress and the responsible agencies are expected to follow up on the July recommendations. GAO identified stronger risk management, data analytics and reporting as areas for improvement, but the report itself does not turn those recommendations into enacted requirements.

The source material does not list an agency-specific implementation deadline for the new recommendations. That leaves follow-up by Congress and federal and state agencies as the next known step, with no single deadline identified in the assessment.

For taxpayers and people who rely on Medicaid, SNAP or disaster assistance, the practical issue is how effectively agencies protect both public funds and access to legitimate benefits. GAO’s findings describe risks and control gaps across a large portion of federally funded, state-administered spending; they do not constitute a finding that fraud occurred in every reviewed program.