U.S. Federal and Local Government Agencies Have Grown More Susceptible to Fraud During Pandemic, Survey Finds

WASHINGTON/ALEXANDRIA, VA – Sept. 21, 2021 - Agencies at all levels of government have grown more susceptible to fraud since the beginning of the covid-19 pandemic, and alarmingly lack the budgets or talent needed to combat increasingly sophisticated criminals. These are the top findings of a new survey and corresponding report jointly issued today by Guidehouse, a leading global provider of consulting services to the public and commercial markets, and the Association of Government Accountants (AGA), the member organization for financial professionals in government.

The survey of 308 government professionals, conducted in the spring of 2021, outlines fraud trends and recommendations for improvement. In a finding that should be worrying both for government finance professionals and taxpayers, 53% of respondents indicated that the risk for fraud has increased since the beginning of the pandemic.

“This survey illustrates the importance of people, processes, and technology working in concert to prevent and detect fraud at government agencies. In their responses, agencies indicated they have significant resource constraints and may be unable to timely adopt anti-fraud technologies,” added Ellen Zimiles, a Partner and the Financial Services Segment Leader at Guidehouse. “Agencies are trying to find the right balance to run a successful fraud risk management program.”

Attempts at fraud and abuse are most prevalent in benefit payments, payroll and vendor purchases of personal protective equipment; however, actual instances of fraud, according to government entities, most frequently occur through security breaches and misrepresentation of facts. Vendors in particular are a pain point, with fraudulent vendor payments being cited by 89% of respondents as a source of risk.

“As our public sector clients grapple with the evolving fraud landscape, Guidehouse felt it was important to bring insightful and actionable data and solutions to fraud practitioners through the 2021 AGA fraud survey” said Caitlin McGurn, a partner in the Financial Services practice

Despite a widespread recognition that governments are challenged in efforts to combat fraud, professionals reported a shortfall in the resources needed to do their jobs. Seventy percent report resource constraints as the most significant challenge in combating fraud, and over a third of respondents have not implemented any technology solutions to face down the threat.

Beyond resources, government agencies remain siloed and rarely collaborate to combat threats of fraud. Nearly half of respondents (47%) highlighted a lack of cooperation among groups within their agencies as one of the biggest obstacles to effective fraud prevention and detection.

“While government agencies can leverage various technologies in the war against fraud, technology itself is not a silver bullet. With increasing and more sophisticated fraud risks resulting from the pandemic, agencies should take this opportunity to reexamine their fraud prevention and detection programs,” said AGA CEO Ann Ebberts. “We teamed with Guidehouse to examine how agencies prioritize emerging risks, learn about their biggest challenges, and hear how they are combatting fraud today and what their focus will be for the foreseeable the future.” Those interested in exploring the full survey results and recommendations to combat fraud can visit: Guidehouse.com/AGAFraudSurvey2021.

About Guidehouse

Guidehouse is a leading global provider of consulting services to the public and commercial markets with broad capabilities in management, technology, and risk consulting. We help clients address their toughest challenges and navigate significant regulatory pressures with a focus on transformational change, business resiliency, and technology-driven innovation. Across a range of advisory, consulting, outsourcing, and digital services, we create scalable, innovative solutions that prepare our clients for future growth and success. The company has more than 10,000 professionals in over 50 locations globally. Guidehouse is a Veritas Capital portfolio company, led by seasoned professionals with proven and diverse expertise in traditional and emerging technologies, markets, and agenda-setting issues driving national and global economies. For more information, please visit: www.guidehouse.com.

About AGA

AGA is the member organization for financial professionals in government. We lead and encourage change that benefits our field and all citizens. Our networking events, professional certification, publications, and ongoing education help members build their skills and advance their careers. For more information, visit www.agacgfm.org