Strengthening Fraud Risk Management in the Temporary Assistance for Needy Families (TANF) Program
The United States Government Accountability Office (GAO) recently published a report addressing fraud risk management in the Temporary Assistance for Needy Families (TANF) program, administered by the U.S. Department of Health and Human Services (HHS). This program distributes $16.5 billion annually to states for cash assistance and services aimed at supporting low-income families. While crucial to supporting vulnerable populations, the program has faced vulnerabilities to fraud and misuse, as highlighted in recent cases of significant fund misappropriation.
In July 2024, HHS completed its first TANF fraud risk assessment using its Fraud Risk Assessment Portal, identifying 21 specific fraud risks categorized into nine broad types. However, the GAO report underscores that HHS’s assessment process fails to align fully with leading practices for fraud risk management. Key deficiencies include the absence of clear guidance for conducting regular assessments, insufficient engagement with state and local stakeholders, and limitations in the Fraud Risk Assessment Portal's ability to evaluate the likelihood and impact of fraud risks.
One major shortfall is HHS’s lack of finalized, standardized guidance for planning and executing fraud risk assessments. Although initial steps have been taken to assess risks, HHS has not ensured regular or adaptive reviews to address programmatic changes. The GAO also found that HHS does not engage directly with state and local TANF administrators—critical stakeholders responsible for managing and auditing the program. Instead, HHS has relied on indirect methods like reviewing media reports and state audits, which are insufficient to capture the full spectrum of fraud risks.
Another significant gap is the portal’s design, which lacks functionality to determine the likelihood and impact of identified risks or assess additional emerging risks. Without this capability, HHS cannot prioritize resources effectively or focus on high-impact vulnerabilities. For instance, the GAO identified additional fraud risks not considered in HHS’s assessment, including the misuse of electronic benefit transfer (EBT) cards by beneficiaries and state employees, and accounting irregularities by subrecipients managing TANF funds. These risks highlight opportunities for both internal and external actors to exploit the program.
The GAO’s report illustrates the implications of these weaknesses for federal contractors and stakeholders engaged in TANF-related activities. Contractors must navigate an environment where inadequate fraud risk management could lead to inefficiencies, increased scrutiny, and reputational harm. Strengthening fraud prevention measures will not only protect program funds but also enhance trust in contractors managing these services. Effective collaboration between federal, state, and local entities, as well as contractors, is essential to mitigating risks and ensuring resources reach their intended recipients.
To address these issues, the GAO has made seven recommendations to HHS. These include developing clear guidance for conducting regular risk assessments, enhancing the Fraud Risk Assessment Portal, and fostering direct communication with state and local stakeholders. Implementing these measures will help HHS build a more robust fraud risk management framework, ensuring that TANF funds are safeguarded against misuse.
This blog post summarizes findings from the GAO-25-107290 report authored by Seto J. Bagdoyan. For further details, you can access the full report on the GAO’s website.
Disclaimer: This post provides a general summary of the GAO’s findings and is not guaranteed to be accurate or comprehensive. It does not constitute legal advice.
