Reducing Federal Improper Payments

For fiscal year 2008, the federal government reported an estimate of about $72 billion in improper payments involving over 70 programs. However, this amount does not reflect the full scope of improper payments governmentwide. Some risk-susceptible agency programs, such as The National Flood Insurance Program, have not reported a comprehensive improper payment estimate. Others, such as the Medicare Prescription Drug Benefit program, have not yet even established a target date for estimating improper payments.

Federal programs and operations with greater vulnerabilities to fraud, waste, abuse, and mismanagement that lead to improper payments have been a key emphasis for several of GAO’s high-risk designations, such as Department of Defense financial management, Medicare and Medicaid program operations, and contract management at the Departments of Defense and Energy and the National Aeronautics and Space Administration.

Effectively resolving these issues and addressing the following key challenges agencies face to reduce improper payments are critical steps toward achieving significant cost savings.

• Internal control. Agencies should design and implement internal controls to identify and prevent improper payments, as well as to combat fraud. For example, the Department of Homeland Security needs to establish sufficient controls to prevent duplicate payments and to ensure receipt of goods and services prior to payment of invoices.


• Program design. There are several key initiatives that federal agencies with state-administered programs should utilize to fulfill improper payment reporting requirements. Such initiatives include establishing a culture of accountability, developing a system to collect program information at the state level for estimating improper payments, and monitoring program performance. Agency programs making progress toward fully addressing these issues include the Temporary Assistance for Needy Families program and the Child Care Development Fund.


• Legal barriers. Legislation may be needed in some instances to address current legal prohibitions against sharing improper payment-related data among federal agencies.  For example, the Department of Education has reported that Section 6103(c) of the Internal Revenue Code concerning confidentiality of tax-return information prohibits Education from sharing and matching data with IRS. GAO continues to support proposed legislative reforms that assist agency action to reduce improper payments, such as imposing penalties for fraud, improving benefit coordination between agencies, and simplifying eligibility requirements.

Reducing improper payments is a major factor in federal agencies’ ability to fulfill their stewardship obligation to prevent fraud, waste, and abuse; to use tax dollars appropriately; and to ensure financial accountability to the President, Congress, and the American people.

For information on the improper payments within Medicare, see “Using Thresholds to Identify Questionable Claims for Medical Equipment and Supplies” and within  Medicaid, see “Enhancing Medicaid Payment Oversight”

^ Back to topKey Reports

Improper Payments: Status of Agencies' Efforts to Address Improper Payment and Recovery Auditing Requirements

GAO-08-438T, January 31, 2008

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 37 pages)   Accessible Text

Improper Payments: Responses to Posthearing Questions Related to Status of Agencies' Efforts to Address Improper Payment and Recovery Auditing Requirements

GAO-08-819R, June 20, 2008

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Improper Payments: Agencies' Fiscal Year 2005 Reporting under the Improper Payments Information Act Remains Incomplete

GAO-07-92, November 14, 2006

Summary (HTML)   Highlights Page (PDF)   Full Report (PDF, 83 pages)   Accessible Text   Recommendations (HTML)