White Collar Crime in Government--How We Are Combating It

The extent of fraud against the Federal Government is not known since it is often hidden within apparently legitimate undertakings and can go undetected and unreported. Opportunities for fraud, however, are tremendous when one considers the number of Federal programs, the large number of people involved in spending and controlling the monies, and the size of the annual budget. The large portion of the budget is disbursed in the form of grants, contracts, and payments to individuals. Although good data on the extent of white collar crime are not available, there is enough information to indicate a serious problem. Illegal acts, many of them widely publicized, have been reported in a number of Federal agencies. Many of these illegal acts have involved check disbursement and control policies, as well as various computer fraud schemes. Check disbursement activities have been a prime target for abuse because of inadequate internal controls over accounting and auditing procedures. In addition, computer fraud is occuring because of inadequate management controls over the systems. A number of actions have been taken and are being planned by Congress, the President, and Federal agencies to deter and hopefully prevent fraud and waste in Federal programs. Five actions which should be considered important to stopping white collar crime are: (1) the establishment of Offices of Inspector General in 14 major departments and agencies; (2) the President's creation of an executive group to combat fraud and his related requirement for departments and agencies to assess their vulnerability to fraud, waste, and error; (3) the Department of Justice's program to combat economic crime and expand its training program; (4) the GAO Government-wide study of fraud and abuse; and (5) the proposed passage of legislation that would require agency heads to report on the adequacy of their internal controls. GAO is reexamining the accounting standards which Federal agencies are to follow. At the State and local levels, action is underway to establish a Government Accounting Standards Board to set accounting standards for State and local governments.