Federal Programs with a Financial Eligibility Component 	 
(14-DEC-05, GAO-06-292R).					 
                                                                 
Each year, federal benefit programs make billions of dollars of  
improper payments, in some cases, due to inaccurate personal and 
financial information provided by applicants. For federal	 
agencies administering those programs, getting reliable personal 
and financial information is vital for making good decisions	 
about whether an individual or business is eligible for federal  
benefits. As one of the largest repositories of personal and	 
financial information in the United States, IRS has a number of  
data-sharing relationships with federal agencies to help verify  
applicant-provided information. This letter conveys information  
Congress requested as a part of work we conducted on verifying	 
financial information at federal agencies, including the IRS. As 
agreed, we (1) compiled a listing of federal benefit programs	 
with a financial eligibility component and (2) described	 
documentation requirements to qualify for these programs.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-06-292R					        
    ACCNO:   A43218						        
  TITLE:     Federal Programs with a Financial Eligibility Component  
     DATE:   12/14/2005 
  SUBJECT:   Eligibility criteria				 
	     Eligibility determinations 			 
	     Erroneous payments 				 
	     Federal aid programs				 
	     Financial management				 
	     Government information				 
	     Information management				 
	     Interagency relations				 
	     GSA Catalog of Federal Domestic			 
	     Assistance 					 
                                                                 

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GAO-06-292R

     

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United States Government Accountability Office Washington, DC 20548

December 14, 2005

The Honorable Charles E. Grassley Chairman The Honorable Max Baucus
Ranking Minority Member Committee on Finance United States Senate

Subject: Federal Programs with a Financial Eligibility Component

Each year, federal benefit programs make billions of dollars of improper
payments,1 in some cases, due to inaccurate personal and financial
information provided by applicants.2 For federal agencies administering
those programs, getting reliable personal and financial information is
vital for making good decisions about whether an individual or business is
eligible for federal benefits. As one of the largest repositories of
personal and financial information in the United States, IRS has a number
of data-sharing relationships with federal agencies to help verify
applicantprovided information. This letter conveys information you
requested as a part of work we conducted on verifying financial
information at federal agencies, including the IRS.3 As agreed with your
offices, we (1) compiled a listing of federal benefit programs with a
financial eligibility component and (2) described documentation
requirements to qualify for these programs.

To identify federal programs with a financial eligibility component, we
searched federal programs found within the General Service
Administration's (GSA) online Catalog of Federal Domestic Assistance
(CFDA).4 The CFDA is a database of federal benefit and service assistance
programs compiled with information self-reported by agencies. We reviewed
the eligibility requirements and financial information of 1,238 financial
assistance programs in the CFDA as of December 2005 to determine if they

1

Improper payments include payments that should not have been made or were
made for incorrect amounts.

2

GAO, Financial Management: Challenges in Meeting Governmentwide Improper
Payment Requirements, GAO-05-907T (Washington, D.C.: July 20, 2005).

3

See GAO, Taxpayer Information: Options Exist to Enable Data Sharing
Between IRS and USCIS but Each Presents Challenges, GAO-06-100
(Washington, D.C.: Oct. 11, 2005); Taxpayer Information: Data Sharing and
Analysis May Enhance Tax Compliance and Improve Immigration Eligibility
Decisions, GAO-04-972T (Washington, D.C.: July 21, 2004); and Taxpayer
Information: Increased Sharing and Verifying of Information Could Improve
Education's Award Decisions, GAO-03-821 (Washington, D.C.: July18, 2003).
4 Users can access the CFDA online at http://www.cfda.gov.

met three criteria we applied for identifying benefit programs with a
financial eligibility component: (1) eligible applicants must have
included an individual, business, or non-profit entity, (2) the applicant
or beneficiary was required to provide financial information as a
condition of eligibility, and (3) the benefit program's fiscal year 2003
financial obligation had to equal or exceed $1 million. We conducted our
work from October 2005 through December 2005 in accordance with generally
accepted government auditing standards.

The types of financial assistance offered by agencies included grants,
loans, direct payments, and insurance. As defined within the CFDA,

     o Grants include fellowships, scholarships, and a variety of grants for
       research, training, technical assistance, surveys, and construction
       with funding for fixed periods for specific projects.
     o Loans include direct loans and guaranteed/insured loans. Direct loans
       are for a specific period of time with an expectation of repayment.
       They may or may not require the payment of interest. The federal
       government arranges to indemnify a lender against part or all of any
       defaults by those responsible for repayment of a guaranteed/insured
       loan.
     o Direct payments are provided directly to recipients from the federal
       government, and there may or may not be restrictions imposed on the
       recipient as to how the money is spent.
     o Insurance is a type of financial assistance provided to assure
       reimbursement for losses sustained under specified conditions. The
       coverage may be provided directly by the federal government or through
       private carriers and may or may not involve the payment of premiums by
       recipients.

                                Results in Brief

We found 74 federal benefit programs that met our criteria. The financial
obligations for fiscal year 2003 varied by financial assistance type with
approximately $16 billion in grants, approximately $158 billion in loans,
approximately $62 billion in direct payments, and approximately $3 billion
in insurance.5 More than half of these programs were offered by the U.S.
Department of Agriculture (USDA). Federal benefit programs varied in the
level of documentation required to support financial eligibility. Most
required applicants or beneficiaries to provide financial information on
an application plus additional supporting documentation. They generally
allowed discretion in the type of supporting documentation applicants or
beneficiaries could provide such as financial statements, payroll
documents, and/or tax documents according to the eligibility requirements
reported in the CFDA. One agency, the Small Business Administration (SBA),
required applicants to complete an IRS form

In this report, a financial obligation is different from a budgetary
obligation. In the CFDA, financial obligations for grants and direct
payments represent the dollar amounts provided to awardees in fiscal year
2003 according to a GSA official and a Department of Commerce official.
Insurance amounts represent the federal government's maximum coverage or
commitment to those who file a claim. There is no insurance payment unless
a claim is filed and an amount is paid out. The dollar amounts of loans
represent either amounts that have been paid out to recipients or amounts
of loans for which the federal government has guaranteed repayment.

requesting that tax information be sent directly to the agency in addition
to providing other financial documentation.

Over Seventy Federal Benefit Programs Had a Financial Eligibility Component and
                     Each Varied in Required Documentation

Of the 74 programs with a financial eligibility component, USDA accounted
for the most with 38 programs or 51 percent, and the U.S. Department of
Housing and Urban Development (HUD) offered the second largest number with
9 programs or 12 percent. Fiscal year 2003 obligations for the programs
ranged from about $1 million to $69 billion, as shown in table 1. Table 1
also shows the type of documentation required. In addition to completing
an application, a majority of programs allowed applicants to provide
financial documents and/or information provided at their discretion
(indicated with a letter A in table 1); some programs required applicants
to provide specified documents and/or information (indicated with a letter
S in table 1); and a few programs required applicants to fill out an IRS
form in addition to other documents in some cases (indicated with a letter
I in table 1).

Table 1: Federal Benefit Programs with a Financial Eligibility Component,
Fiscal Year 2003

CFDA Identifying     Eligible        Assistance Assistance      Documents  
Number and Program   Applicant       Type       Amount          Requireda  
Name                                                            
USDA                                                            
10.054 Emergency     Individuals     Direct      $4,071,721,000 A          
Conservation Program                 payments                   
10.056 Farm Storage  Individuals and Loans         $140,480,633 S          
Facility Loans       businesses                                 
10.064 Forestry      Individual,     Direct          $1,877,013 A          
Incentives Program   group,          payments                   
                        association,                               
                        corporation                                
10.066 Livestock     Individuals     Grants        $429,867,460 A          
Assistance Program                                              
10.073 Crop Disaster Individuals     Direct      $1,808,000,000 A          
Program                              payments                   
10.077 Livestock     Individuals and Grants       $886,000,000b A          
Compensation Program businesses                                 
10.081 Lamb Meat     Individuals and Direct         $10,000,000 A          
Adjustment           businesses      payments                   
Assistance Program                                              
10.404 Emergency     Individuals and Loans          $95,698,000 A          
Loans                businesses                                 
10.405 Farm Labor    Individuals and Grants          $4,382,000 A          
Housing Loans and    businesses                                 
Grants                                                          
                                        Loans          $55,862,000 
10.406 Farm          Individuals and Loans      $1,974,658,000b A          
Operating Loans      businesses                                 
10.407 Farm          Individuals and Loans      $1,448,170,000b A          
Ownership Loans      businesses                                 
10.410 Very Low to   Individuals and Loans      $4,124,628,459b A          
Moderate Income      households                                 
Housing Loans                                                   
10.411 Rural Housing Nonprofits      Loans           $1,165,000 A          
Site Loans and                                                  
Self-Help Housing                                               
Land Development                                                
Loans                                                           

CFDA Identifying    Eligible         Assistance       Assistance Documents 
Number and          Applicant                                    
Program Name                         Type                 Amount Requireda 
10.415 Rural Rental Individuals,     Loans          $115,857,000 A         
Housing                                                          
Loans               cooperatives,                                
                       nonprofits,                                  
                       corporations,                                
                       trusts,                                      
                       partnerships                                 
10.417 Very Low     Individuals      Grants          $31,135,058 A         
Income                                                           
Housing Repair                                                   
Loans and                                                        
Grants                               Loans           $31,036,185 
10.427 Rural Rental Individuals/     Direct         $721,148,000 A         
Assistance Payments organizations    payments                    
10.438 Section 538  Businesses       Loans          $101,751,499 A         
Rural Rental                                                     
Housing Guaranteed                                               
Loans                                                            
10.441 Technical    Nonprofits,      Grants           $1,113,282 A         
and Supervisory     agencies,                                    
Assistance Grants   institutions,                                
                       organizations,                               
                       and other                                    
                       associations                                 
10.444 Direct       Individuals      Grants           $1,942,110 A         
Housing-Natural                                                  
Disaster Loans and                                               
Grants                                                           
10.446 Rural        Organizations    Grants           $6,000,000 A         
Community                                                        
Development                                                      
Initiative                                                       
10.451 Noninsured   Individuals and  Direct         $176,500,000 A         
Assistance          businesses       payments                    
10.551 Food Stamps  Individuals      Direct      $24,606,021,000 A         
                                        payments                    
10.600 Foreign      Nonprofit        Direct          $34,500,000 S         
Market                               payments                    
Development                                                      
Cooperator                                                       
Program                                                          
10.606 Food for     Organization/    Grants          $86,000,000 S         
Progress            agency                                       
10.607 Section      Organization/    Grants         $332,274,620 S         
416(B)              agency                                       
10.608 Food for     Organization/    Grants         $100,000,000 S         
Education           agency                                       
10.760 Water and    Not-for-profit   Grants         $496,311,592 A         
Waste                                                            
Disposal Systems    corporations                                 
for Rural                                                        
Communities                          Loans         $767,174,249b 
10.766 Community    Corporations     Grants          $18,486,513 A         
Facilities Loans                                                 
and Grants                                                       
                                        Loans         $414,515,275b 
10.768 Business and Cooperative,     Loans          $906,501,963 A         
Industry                                                         
Loans               corporation,                                 
                       partnership,                                 
                       trust                                        
10.769 Rural        Nonprofits       Grants          $51,403,000 A         
Business Enterprise                                              
Grants                                                           
10.771 Rural        Nonprofits and   Grants           $6,332,000 A         
Cooperative                                                      
Development Grants  institutions of                              
                       higher education                             
10.773 Rural        Nonprofits and   Grants           $3,109,000 A         
Business            cooperatives                                 
Opportunity Grants                                               
10.775 Renewable    Individuals and  Loans           $21,707,000 S         
Energy                                                           
Systems and Energy  businesses                                   
Efficiency                                                       
Improvements                                                     
Program                                                          
10.855 Distance     Organizations    Grants          $33,507,000 A         
Learning and                                                     
Telemedicine Loans                                               
and Grants                                                       

CFDA Identifying    Eligible         Assistance       Assistance Documents 
Number and          Applicant                                    
Program Name                         Type                 Amount Requireda 
10.912              Individuals      Direct         $39,820,568b S         
Environmental                        payments                    
Quality Incentives                                               
Program                                                          
                                        Grants         $164,470,000 
10.918 Ground and   Individuals      Direct           $9,130,000 A         
Surface                              payments                    
Water Conservation-                                              
Environmental                                                    
Quality Incentives                                               
Program                              Grants          $44,814,000 
10.919 Klamath      Individuals      Direct           $1,724,800 A         
Basin-                               payments                    
Environmental                                                    
Quality Incentives                                               
Program                              Grants          $10,635,900 
10.961 Scientific   Institutions of  Direct           $2,500,000 A         
Cooperation                          payments                    
and Research        higher learning                              
                       and                                          
                       nonprofits                                   
Commerce                                                         
11.112 Export       Nonprofits and   Grants           $2,000,000 S         
Promotion Market    trade                                        
Development         associations                                 
Cooperation                                                      
11.415 Fisheries    Individuals and  Loans          $62,300,000b S         
Finance Program     businesses                                   
Housing and Urban                                                
Development                                                      
14.157 Supportive   Nonprofits       Direct         $783,286,000 A         
Housing for the                      payments                    
Elderly                                                          
14.167 Mortgage     Businesses       Loans            $3,820,000 S         
Insurance-Two                                                    
Year Operating Loss                                              
Loans,                                                           
Section 223 (D)                                                  
14.181 Supportive   Nonprofit        Direct         $250,515,000 S         
Housing for Persons                  payments                    
with Disabilities                                                
14.195 Section 8    Individuals/     Direct       $4,718,248,246 A         
Housing                              payments                    
Assistance Payments Businesses                                   
Program-                                                         
Special Allocations                                              
14.197 Multifamily  Individuals/     Direct         $504,373,000 A         
Assisted                             payments                    
Housing Reform and  Businesses                                   
Affordability                                                    
Act                                                              
14.235 Supportive   Nonprofits       Grants         $816,286,711 S         
Housing Program                                                  
14.850 Public and   Public Housing   Direct       $3,616,858,036 A         
Indian Housing      Agencies         payments                    
14.865 Public and   Individuals      Loans           $40,305,000 S         
Indian              (Native                                      
Housing-Indian Loan American)                                    
Guarantee                                                        
Program                                                          
14.871 Section 8    Public Housing   Direct      $11,272,905,390 A         
Housing Choice      Agencies         payments                    
Vouchers                                                         
Interior                                                         
15.113 Indian       Individuals      Direct          $63,534,180 A         
Social Services-                     payments                    
Welfare Assistance                                               
Labor                                                            
17.262 Employment   Open             Grants           $9,038,863 A         
and Training                                                     
Administration                                                   
Evaluations                                                      
State                                                            
19.425 Benjamin     Individuals,     Direct           $1,575,000 A         
Gilman                               payments                    
International       nonprofits,                                  
Scholarship                                                      
                       institution/                                 
                       organizations                                
Transportation                                                   

CFDA Identifying       Eligible      Assistance Assistance       Documents 
Number and Program     Applicant     Type       Amount           Requireda 
Name                                                             
20.802 Federal Ship    Individuals   Loans           $20,655,270 A         
Financing Guarantees                                             
20.901 Payments for    Air carriers  Direct         $113,000,000 S         
Essential Air Services               payments                    
National Foundation on                                           
the Arts and                                                     
Humanities                                                       
45.301 Museum for      Museum        Grants          $15,381,000 S         
America Grants                                                   
Railroad Retirement                                              
Board                                                            
57.001 Social          Individuals   Direct       $9,063,000,000 A         
Insurance for Railroad               payments                    
Services                                                         
Small Business                                                   
Administration                                                   
59.002 Economic Injury Businesses    Loans          $100,565,000 I         
Disaster Loans                                                   
59.008 Physical        Individuals,  Loans            $7,339,000 I         
Disaster Loans         businesses,                               
                          charitable,                               
                          and                                       
                          nonprofits                                
59.012 Small Business  Businesses    Loans       $12,703,000,000 S         
Loans                                                            
59.016 Bond Guarantees Businesses    Insurance      $593,572,000 A         
for Surety Companies                                             
59.049 Office of Small Businesses    Loans            $4,750,000 I         
Disadvantaged Business                                           
Certification and                                                
Eligibility                                                      
Veterans                                                         
64.104 Pension for     Individuals   Direct       $2,463,890,000 A         
Non-Service-Connected                payments                    
Disability for                                                   
Veterans                                                         
64.114 Veterans        Individuals   Loans       $40,129,134,594 A         
Housing-Guaranteed and                                           
Insured Loans                                                    
Overseas Private                                                 
Investment Corporation                                           
70.002 Foreign         Individual,   Loans        $1,151,000,000 S         
Investment Financing   corporation,                              
                          partnership,                              
                          or other                                  
                          association                               
Education                                                        
84.007 Federal         Higher        Grants         $760,028,000 A         
Supplemental           education                                 
Educational            institutions                              
Opportunity Grants                                               
84.032 Federal Family  Individuals   Loans       $68,726,000,000 A         
Education Loans                                                  
84.033 Federal         Higher        Direct       $1,004,428,000 A         
Work-Study Program     education     payments                    
                          institutions                              
84.038 Federal Perkins Higher        Direct          $99,350,000 A         
Loan Program-Federal   education     payments                    
Capital Contributions  institutions                              
84.063 Federal Pell    Individuals   Grants      $11,364,646,000 A         
Grant Program                                                    
84.268 Federal Direct  Individuals   Loans      $25,283,000,000b A         
Student Loans                                                    
Pension Benefit                                                  
Guaranty Corporation                                             
86.001 Pension Plan    Businesses    Insurance    $2,272,000,000 A         
Termination Insurance  and                                       
                          organizations                             
Health and Human                                                 
Services                                                         

CFDA Identifying Number Eligible       Assistance Assistance    Documents  
and Program Name        Applicant      Type       Amount        Requireda  
93.924 Ryan White       Nonprofit      Direct        $9,702,200 A          
HIV/AIDS Dental         schools of     payments                 
Reimbursements          dentistry and                           
                           dental hygiene                          
Social Security                                                 
Administration                                                  
96.020 Special Benefits Individuals    Direct        $9,238,000 A          
for Certain World War                  payments                 
II Veterans                                                     
Homeland Security                                               
97.048 Federal          Individuals    Direct      $202,758,829 A          
Assistance to           and households payments                 
Individuals and                                                 
Households - Housing                                            

Source: CFDA, December 2005.

a

In addition to completing an application, programs with the letter A
allowed applicants to provide financial documents and/or other information
at their discretion; programs with the letter S required applicants to
provide specified documents and/or information; and programs with the
letter I required applicants to fill out an IRS form in addition to other
documents, in some cases.

b

In cases where agencies reported two or more types of financial
obligations for grants, loans, and direct payments, we summed the amounts
for reporting purposes.

Documentation requirements related to an applicant's income information
differed among agencies and programs. We grouped benefit programs into
three broad categories wherein (1) the applicant or beneficiary was
required to provide supporting documentation at their discretion to
support their financial status, (2) the applicant was required to provide
one or more specified documents to support their financial status, and (3)
the applicant was required to fill out an IRS form in addition to
providing other financial documentation to support their financial status.

For 54 of the 74 benefit programs, the eligibility requirements reported
in the CFDA did not specify the type of financial documents the applicant
needed to submit to support his/her application. Thus, it was the
applicant's discretion on which financial documents to provide. For
example, USDA's Very Low Income Housing Repair Loans and Grants program
required applicants to provide evidence of their income and debts without
specifying which documents to provide. Also, the U.S. Department of
Interior's social services program for American Indians required
individuals to provide proof of their income/resources to qualify for
financial assistance. Like the USDA program, it did not specify which
financial documents the applicant must provide, only that the applicant
must prove its sources of income.

For 17 of the 74 benefit programs, the applicant was required to provide a
specific document/information or one or more documents/information
indicated from a specified list. These benefit programs outlined which
documents to submit from financial statements to tax-related documents.
For instance, the U.S. Department of Commerce required applicants to
submit audited financial statements when applying for the Export Promotion
Market Development Cooperation program. Additionally, USDA's Foreign
Market Development Cooperator Program required applicants to submit their
IRS tax exempt identification number along with their application. HUD
required applicants to submit documentation such as pay stubs, W-2 forms,
and other evidence of assets such as bank accounts to support their
ability to obtain and repay the loan from the Indian Loan Guarantee
Program.

Three SBA programs required applicants to fill out IRS forms to enable
officials to contact IRS directly to obtain their tax information. These
programs required applicants to submit a signed IRS Form 8821 Tax
Information Authorization or IRS Form 4506 Request for Copy of Tax Return
to enable SBA to obtain tax information directly from IRS for previous
years. Form 8821 allows a third party such as SBA to inspect taxpayer
information, receive taxpayer information, or both relating to the
specific tax matters listed on the form. Form 4506 allows taxpayers to
request that IRS directly provide a copy of their tax returns to SBA (at a
cost of $39 to the taxpayer per copy). Also, two of the three SBA programs
required these IRS forms in addition to financial statements.

                             Scope and Methodology

To identify federal programs with a financial eligibility component, we
reviewed federal programs found within the GSA's online Catalog of Federal
Domestic Assistance. The CFDA is a government-wide compendium of federal
programs, projects, services, and activities that provides assistance or
benefits to the American public. It contains agency self-reported
information on 15 types of financial and nonfinancial assistance programs
administered by departments and establishments of the federal government.
We focused on the financial assistance programs because of the potential
benefits of increased data sharing by verifying applicant-provided
information that can reduce fraud among federal benefit programs. The
programs listed in table 1 are limited to those in the CFDA database as of
December 2005.

We relied on all program descriptions found within the CFDA. We reviewed
the eligibility requirements and financial information of 1,238 financial
assistance programs to determine if they met three criteria we applied for
identifying benefit programs with a financial eligibility component:

(1)
           The applicant must have been an individual, business, or
           non-profit entity.

(2)
           The applicant or beneficiary was required to provide financial
           information as a condition of eligibility. For the purposes of
           this report, we considered a social security number to be an
           identification number and not a document or source of information
           to qualify for assistance.

(3)
           The benefit program's fiscal year 2003 financial obligation had to
           equal or exceed $1 million.

To assess the reliability of the CFDA data, we reviewed GSA responses to
questions about the process of collecting and checking the data. We
determined the data to be sufficiently reliable for the purpose of
illustrating the range of programs with a financial eligibility component
and the documentation requirements for qualification.

As agreed with your office, unless you publicly release its contents
earlier, we plan no further distribution of this report until 30 days from
the date of this letter. At that time, we will make copies available to
others on request.

This letter will be available on GAO's home page at http://www.gao.gov. If
you or your staff have any further questions about this report, please
contact me at (202) 512-9110 or [email protected]. Contact points for our
Offices of Congressional

Relations and Public Affairs may be found on the last page of this report.
GAO staff who made major contributions to this letter were Signora J. May,
Assistant Director; Michele Fejfar, Jyoti Gupta, Shirley Jones, Amy
Rosewarne, and Tina L. Younger.

                  Director, Tax Issues, Strategic Issues Team

(450442)
*** End of document. ***