SBA Hot Topic Tuesday – GAO Reports to Congress About COVID Fraud and Improper Payments

February 7, 2023

Delaney Sexton
Contributing Editor

SBA Hot Topic Tuesday – GAO Reports to Congress About COVID Fraud and Improper Payments

Source: GAO, GAO-23-106556

At the beginning of February, the U.S. Government Accountability Office published a report about emergency relief funds and the improvements that are necessary to address fraud and improper payments. The report was used as testimony before the Committee on Oversight and Accountability, House of Representatives.

From March 2020 to January 13, 2023, there were at least 1,044 individuals who pleaded guilty or were convicted at trial for defrauding COVID-19 relief programs. SBA Office of Inspector General officials have 536 ongoing investigations for PPP and EIDL fraud as of January 25, 2023. For the EIDL program alone, the SBA OIG and U.S. Secret Service seized more than $1 billion that was stolen by fraudsters.

The Government Accountability Office found that four major factors contributed to the fraud and improper payments that occurred throughout the disbursement of COVID relief funds. According to the report, agencies did not strategically manage fraud risks, and they were not adequately prepared to prevent fraud. Further, agencies lacked appropriate controls that could detect, prevent, and recover these fraudulent or improper payments. They also lacked permanent government-wide analytic capabilities that could help identify fraud. Finally, the GAO states that there are ongoing challenges with improper payments.

In response to these deficiencies, the GAO made 374 recommendations to enhance transparency and accountability when it comes to federal spending. Here are some of the key recommendations that were made for congressional consideration:

• New federal programs that distribute more than $100 million in one fiscal year should be considered susceptible to improper payments and subject to timely improper payment reporting requirements.
• In annual financial reports, agencies should be required to report improper payment information.
• The requirement that agencies should report their antifraud controls and fraud risk management efforts in their annual financial reports should be reinstated.
• A permanent analytics center to help with oversight and identification of improper payments and fraud should be established.
• The Office of Management and Budget should be required to provide guidance to agencies for the development of internal control plans in advance.
• The Social Security Act should be amended so the Social Security Administration would be permanently required to share its full death data with the Treasury’s Do Not Pay working system.
• Agency Chief Financial Officers should be required to certify the reliability and validity of improper payment risk assessments, monitor corrective action plans, and approve improper payment estimate methodology.

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