Summary: The federal government spends billions of dollars each year on grants, transfer payments, and the procurement of goods and services. In their fiscal year 1998 financial statements, nine federal agencies reported improper payments totaling $19.1 billion. GAO found that agencies are not performing comprehensive quality control reviews for certain programs to determine the propriety of program spending. As a result, the full extent of the problem--and possible solutions to it--is unknown. GAO believes that inadequate internal control and program design issues are the primary causes of improper payments for many federal programs. Economic and demographic projections suggest that federal outlays in certain programs will rise significantly. With billions of dollars at risk, agencies will need to continually and closely safeguard those resources entrusted to them and make it a priority to reduce fraud, waste, and abuse. A first step for some agencies will be to develop ways to identify, estimate, and report the nature and the extent of improper payments annually. Without this basic knowledge, agencies cannot be fully informed about the magnitude, trends, and types of payment errors being made within their programs.
