A federal watchdog warned on Monday that the Department of Commerce must strengthen its oversight and fraud risk management for the CHIPS for America Fund, as the program continues to distribute billions in federal awards to bolster domestic semiconductor manufacturing.
The Government Accountability Office’s (GAO) audit of several major federal award programs created or expanded under recent legislation found that most did not fully incorporate key requirements and leading practices designed to prevent fraud, waste, and abuse.
The CHIPS for America Fund, administered by the Department of Commerce,?oversees approximately $50 billion of the funding appropriated by the CHIPS and Science Act to support U.S. semiconductor manufacturing, research, and workforce development.
While the Commerce Department established a dedicated entity – the CHIPS Program Office – to lead fraud risk management activities, it did not consistently document or fully implement other effective fraud risk management elements, GAO’s report found.
For example, GAO said Commerce relied primarily on pre-award risk documentation and did not maintain documented, program-specific fraud risk profiles to guide ongoing oversight.
GAO said the lack of documented monitoring procedures makes it harder to assess whether controls remain effective over time, adding that monitoring is essential because “internal control is a dynamic process that must be adapted continually to the risks and changes an entity faces.”
GAO also found that Commerce did not evaluate the CHIPS program for recovery audits, despite Office of Management and Budget guidance requiring agencies to consider them for programs expending $1 million or more annually. The report noted that recovery audits are “a detective and corrective control” designed to identify overpayments after funds have been disbursed.
The agency warned that the gaps create ongoing exposure as the program scales.
“Until agencies establish, document, and implement procedures to fully address these requirements and leading practices, the programs will continue to face increased risks of fraud, waste, and abuse,” the report said.