GAO Finds State and Federal Agencies Need to Do More to Prevent Fraud
Federal programs administered by state and local governments distribute an estimated $1.2 trillion annually. An August 7, 2026, Government Accountability Office (GAO) report found significant fraud risks in the 20 largest of these programs.
The report was a revision to GAO’s July 23, 2026, report. The 20 federal programs constituted 9.8 percent of the 203 programs that cost more than $100 million and are administered by states and other governments, but they accounted for $1.1 trillion, or 92 percent, of the $1.1 trillion spent on those programs in fiscal year (FY) 2025.
The report found that the decentralized nature of these programs, which can involve state agencies, contractors, and other subrecipients, creates opportunities for fraud. The scams included falsified permits for a $4.3 million Airport Improvement Program project, Section 8 Housing Choice Voucher recipients underreporting income, landlords receiving payments for vacant units, and the submission by one individual of fraudulent student financial aid applications involving more than 1,200 people and more than 100 schools in 24 states.
Only five of the 20 programs reviewed had documented evidence of identifying fraud risks and assessing their likelihood to prioritize action. Federal agencies can improve the identification and assessment of risks by implementing GAO’s Fraud Risk Framework recommendations.
GAO’s April 2024 report on fraud management estimated that federal government loses between $233 billion and $521 billion every year to fraud. GAO’s recommendations to reduce fraud and improve program integrity included better use of data analytics, greater transparency through reporting and data, and approaches tailored to evolving fraud threats.
CAGW has repeatedly called for stronger safeguards against improper payments and fraud. Congress, federal agencies, and state agencies should act on GAO’s recommendations to protect taxpayers from fraudsters and ensure that federal assistance reaches the people for whom it was intended.
