More than two years after the first relief funds became available, hundreds of billions of dollars of federal funds have been subject to misappropriation through improper spending, waste, suspicious activity and outright fraud. Some pandemic programs have reported fraud rates ranging from 10%–41%, which adds up to hundreds of billions of taxpayer dollars.1,2
US government watchdogs are on the lookout for misuse of funds across these programs and have established the Pandemic Response Accountability Committee (PRAC) to provide independent oversight and support to the Inspectors General community. Agencies found to be misusing funds or noncompliant with program requirements face funding reductions and clawbacks. The EY Forensic & Integrity Services team can help government agencies understand the program risks, put controls in place to comply with regulatory funding requirements and to monitor for/or detect fraud, waste and abuse.
Preparing for the challenges that increase the risk of fraud
Government agencies have experienced a significant increase in fraud risk driven by an influx of federal funding, combined with pressure to issue funds quickly. In response, many agencies have relaxed or removed controls completely, which significantly increases the risk of fraud. The nature of operating a federally funded program in the current environment has created several challenges for agencies that amplify fraud risk even further.