Fraud, Waste, and Abuse:

The Cost of Mismanagement

AIMD-98-265R: Published: Sep 14, 1998. Publicly Released: Sep 14, 1998.

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Pursuant to a congressional request, GAO provided information on examples of the cost of fraud, waste, abuse, or mismanagement in major federal programs.

GAO noted that: (1) fraud and abuse in the Department of Agriculture's Food Stamp Program generally occurs in the form of either overpayments to recipients or trafficking, that is, exchanging food stamps for cash or other nonfood items; (2) forgone revenue, inefficiency, and waste throughout the Forest Service's operations and organization have cost taxpayers hundreds of millions of dollars; (3) GAO identified errors in the Forest Service's data on most of the contracts reviewed; (4) GAO's work has shown some cases in which the Department of Defense (DOD) had inventory on order for which current requirements no longer exist; (5) GAO's analysis of selected DOD inventory reports as of September 30, 1996, showed that $1.6 billion of the $8.6 billion on order exceeded then-current operating and war reserve requirements; (6) the lack of integrated financial management systems and the lack of reliable inventory data have been major contributing factors to DOD's inability to account for and control its inventory; (7) in April 1998, GAO reported that the Navy did not always have valid requirements to support inventory purchases; (8) DOD has made hundreds of millions of dollars in overpayments to contractors, some undetected for years, because it uses nonintegrated computer systems that require manual entry of data that is often erroneous or incomplete and a burdensome document-matching process; (9) in a January 1997 audit, the Department of Education's Office of the Inspector General found that for award year 1995-96, 102,000 students were over-awarded approximately $109 million in Pell grants because they either failed to report or underreported their income on their student aid applications; (10) GAO has reported on Medicare as one of several government programs highly vulnerable to waste, fraud, abuse, and mismanagement; (11) the Medicare and Medicaid programs are inherently at risk for exploitation because of their size and complexity; (12) GAO reported that the Social Security Administration had over $1 billion in newly detected overpayments for fiscal year 1997; (13) the Inspectors General audit report on the 1997 financial statements of the Federal Aviation Administration (FAA) identified serious deficiencies in FAA's reporting of operating materials and supplies and of property and equipment; and (14) GAO reported in 1997 that over the past 6 years, federal agencies had obligated over $145 billion to build up and maintain their information technology infrastructure; however, the benefits from this vast expenditure have frequently been disappointing.

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