Improving TANF Fraud Risk Management and Transparency

Transparency in TANF Spending

• 🔍 TANF expenditures are not being reported completely by states, with many lacking transparent reporting on subgrantees.
• 📊 Seven out of 31 states provided incomplete narrative explanations for non-assisted spending in FY2022, creating a "black box" for understanding how funds are used.
• 💡 Legislative recommendations suggest giving HHS authority to collect information on non-assistance spending to improve oversight and estimate improper payments.

Child Welfare Spending and Data Gaps

• 📈 TANF now accounts for approximately one-quarter of total federal child welfare spending, surpassing state funding for programs like Title IV-B.
• 🧩 While states may collect demographic data on children in foster care, this information is not consistently reported to HHS, especially for non-assistance TANF funding.
• ⚠️ A statutory change is recommended to give HHS more oversight authority, including more robust reporting requirements for non-assistance spending.

Audit Findings and Improper Payments

• ⚠️ Nearly one-third of TANF audit findings are characterized as material weaknesses, the most severe category.
• 💰 Applying improper payment reporting to TANF could help address material weaknesses related to financial implications and dollars spent.
• 🛠️ However, material weaknesses related to a lack of internal controls would not fall under improper payment analysis.

Key Components of Fraud Risk Management

• 🎯 Efficient fraud risk management requires a lead entity to conduct assessments, define the likelihood and impact of risks, craft a strategy, implement it, and measure effectiveness.
• 💻 Technology, such as deep data analytics, can assist agencies in performing comprehensive fraud risk assessments.
• 📊 GAO's fraud risk framework, which has been in place for about 10 years, benchmarks fraud risk management at agencies and includes these fundamental components.