Getting Payments Right in Times of Crisis

Social welfare payment systems face their greatest tests during crises, when demand surges dramatically and the pressure to distribute benefits quickly can overwhelm existing verification and control mechanisms. The COVID-19 pandemic provided a stark illustration of this challenge, as governments worldwide rapidly expanded eligibility for unemployment benefits, emergency relief payments, and business support grants. While speed was essential to prevent economic hardship, the relaxation of normal controls created opportunities for fraud and error on an unprecedented scale, with billions of dollars in improper payments documented across OECD countries.

Auditors play a vital role in helping governments maintain payment integrity during crises without creating bottlenecks that delay assistance to those who genuinely need it. This requires a nuanced approach that recognises the tension between speed and control, and that develops practical solutions for maintaining reasonable assurance even when normal verification processes cannot be fully implemented. Risk-based approaches, post-payment verification strategies, and data analytics for fraud detection are among the tools that auditors have found most effective in crisis payment environments.

The OECD Auditors Alliance has compiled lessons from member countries' experiences with crisis payment programmes, identifying common vulnerabilities and effective mitigation strategies. Identity verification emerged as a critical control point, with countries that had invested in robust digital identity infrastructure before the crisis experiencing significantly lower rates of fraudulent claims. Similarly, countries with established data-matching capabilities between government agencies were better able to detect duplicate claims and ineligible recipients in real time.

Building resilient social welfare payment systems requires investment in infrastructure, technology, and institutional capacity long before a crisis occurs. Auditors can support this preparedness by evaluating the robustness of payment systems during normal times and recommending improvements that will prove their value when the next crisis strikes.