Serving the Congress and the Nation: Performance and
Accountability Highlights (01-APR-01, GAO-01-627SP).
GAO published a document highlighting its performance and
accountability reports for fiscal year 2000 and detailing its
plans for continued progress through fiscal year 2002.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-627SP
ACCNO: A00779
TITLE: Serving the Congress and the Nation: Performance and
Accountability Highlights
DATE: 04/01/2001
SUBJECT: Accountability
Agency missions
Information technology
Internal controls
Investigations into federal agencies
Performance measures
Bosnia
DOE Uranium Enrichment Program
F-22 Aircraft
Kosovo
Medicare Program
Performance and Accountability Series
2001
Social Security Program
******************************************************************
** This file contains an ASCII representation of the text of a **
** GAO Testimony. **
** **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced. Tables are included, but **
** may not resemble those in the printed version. **
** **
** Please see the PDF (Portable Document Format) file, when **
** available, for a complete electronic file of the printed **
** document's contents. **
** **
******************************************************************
GAO-01-627SP
Report to the Chairman, Committee on Foreign Relations, U. S. Senate
United States General Accounting Office
GAO
April 2001 FOREIGN AFFAIRS Changes to Germany's Implementation of the Hague
Child Abduction Convention
GAO- 01- 423
Page i GAO- 01- 423 Parental Child Abduction Letter 1
Appendix I Consular Assistance to Left- Behind Parents 11
Appendix II Scope and Methodology 13
Appendix III GAO Contact and Staff Acknowledgments 14
Tables
Table 1: German Initiatives to Improve Handling of Hague Convention Cases 4
Table 2: Consular Assistance to Left- Behind Parents (FY 1999- 2000) 12
Contents
Page 1 GAO- 01- 423 Parental Child Abduction
April 10, 2001 The Honorable Jesse A. Helms Chairman, Committee on Foreign
Relations United States Senate
Dear Mr. Chairman: Over the past several years, the United States has been
critical of Germany's handling of international parental child abduction
cases that have been filed by U. S. parents. 1 Both the executive and
legislative branches of the U. S. government have criticized Germany for not
fully and consistently following the criteria and procedures established
under the 1980 Hague Convention on the Civil Aspects of International Child
Abduction, 2 which governs such cases. The primary criticisms include the
inappropriate use by German courts of certain provisions of the Hague
Convention to justify retaining an abducted child in Germany, the length of
time it has taken to adjudicate cases, and the failure to enforce left-
behind parents' visitation rights. In September 2000, in response to your
concerns about the rights of left- behind parents, we reported on the status
and outcome of cases that U. S. parents have filed with Germany. 3 This
second report identifies actions that Germany has taken or plans it has
under way to reform its handling of international parental child abduction
cases and how these actions may affect U. S. cases. We also obtained
information about what State Department officers stationed in Germany are
doing to assist left- behind parents. This information is contained in
appendix I.
To identify German actions and plans and how they may affect U. S. cases, we
met with German government officials, judges, and lawyers in seven cities in
Germany during November 2000. We also interviewed Department of State
officials in headquarters and in Germany. In addition, we reviewed the
status and outcome of the 43 U. S. cases that had been opened after German
authorities began changing their handling of Hague Convention
1 International parental child abduction occurs when a parent removes a
child from the United States or retains a child outside the United States,
with the intent to obstruct the parental rights (including visitation
rights) of the left- behind parent. 18 U. S. C. 1204.
2 29 ILM 1501 (1980). 3 Foreign Affairs: Status of U. S. Parental Child
Abductions to Germany, Sweden, and Austria (GAO/ NSIAD- 00- 226BR, Sept. 8,
2000).
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 423 Parental Child Abduction
cases in July 1999. More details about our scope and methodology can be
found in appendix II.
In response to U. S. and other countries' concerns, German authorities have
pledged their commitment to take steps to improve the handling of Hague
Convention cases, and Germany has taken actions to address two of the three
primary criticisms. Germany has established a task force to monitor German
reforms and active cases, initiated efforts to build expertise among judges
deciding Hague Convention cases, and changed its processes to accelerate
case handling. Our analysis of information obtained in Germany and case data
in Washington, D. C., indicates that changes are under way that may
positively affect case handling. However, because many of these reforms are
recent, we believe it will take time for case outcomes to fully reflect
their effect. Despite these reforms, Germany has not acted to improve
enforcement of visitation rights granted by German courts. The German
courts' reluctance to enforce visitation orders is hampering Germany's
efforts to improve its handling of Hague Convention cases.
The 1980 Hague Convention on the Civil Aspects of International Child
Abduction governs how international parental child abduction disputes are
adjudicated. It requires that party states identify a lead government agency
(called a “central authority”) to serve as a central point of
contact and to initiate or facilitate judicial or administrative
proceedings. The State Department's Office of Children's Issues, 4 Bureau of
Consular Affairs, is the central authority for the United States. Germany
has identified the Federal Prosecutor General 5 as its central authority.
The United States and other countries, especially France and the United
Kingdom, have expressed concerns about German authorities' handling of Hague
Convention cases. In May 1999, State reported to Congress that the German
administrative and judicial processing of abduction cases took 18 months or
longer, a period State considered unacceptable. 6 In October
4 State Department's Office of Children's Issues formulates, develops, and
coordinates policies and programs on international parental child
abductions. 5 The German Federal Prosecutor General's office has no
counterpart in the United States.
6 Report on Compliance With the Hague Convention on the Civil Aspects of
International Child Abduction (Washington, D. C.: Department of State, May
1999). Results in Brief
Background
Page 3 GAO- 01- 423 Parental Child Abduction
2000, State further reported that the systemic failure of German courts to
enforce contempt 7 sanctions allowed abducting parents to resist enforcement
of visitation orders indefinitely. 8 In addition, a May 2000 congressional
resolution cited Germany, along with other countries, for not meeting their
commitments under the Hague Convention. 9 Also, media in both the United
States and Germany have actively reported on this issue, focusing on a
number of high- profile, controversial cases. We reported that between
January 1, 1995, and May 15, 2000, there were 257 cases where U. S. parents
sought the return of, or visitation with, their children in Germany.
According to the State Department, there were 17 cases pending German
judicial action as of March 1, 2001.
In June 2000, for the first time since both countries signed (and became
states party to) the Hague Convention, discussion of specific cases was
elevated to the presidential level. At that time, President Clinton and
Chancellor Schroeder, the German head of Government, met in Berlin and,
according to the State Department, discussed a number of high- profile
abduction cases among other bilateral issues. Their meeting resulted in the
establishment of a U. S.- German working group on international parental
child abductions. The working group met on June 27, July 24 and 25,
September 25 and 26, 2000, and January 8 and 9, 2001, to discuss the
concerns of each country and to seek solutions.
Since July 1999, Germany has taken steps designed to improve its handling of
parental child abduction cases under the 1980 Hague Convention. The most
significant actions are summarized in table 1. Our analysis of information
obtained in Germany and case data in Washington, D. C., indicates that these
changes may have a positive effect on current and future cases. Because most
German actions are very recent, however, it will take time for case outcomes
to fully reflect their effect. These changes may not affect cases already
decided by German courts. Although the task force is working to find
acceptable solutions on some closed cases, German authorities said they will
not revisit prior court rulings. State
7 Contempt is the failure to obey a court order issued for another party's
benefit. 8 Report on Compliance With the Hague Convention on the Civil
Aspects of International Child Abduction (Washington, D. C.: Department of
State, Oct. 2000).
9 H. Con. Res. 293. Sweden and Austria were also cited in this resolution.
German Initiatives to
Improve Handling of Hague Convention Cases
Page 4 GAO- 01- 423 Parental Child Abduction
Department officials accepted this position even though they disagreed with
some past decisions.
Table 1: German Initiatives to Improve Handling of Hague Convention Cases
Goal Action Status
Facilitate the resolution of difficult cases and monitor reforms.
Establish 5- member task force within the Ministry of Justice.
Created in October 2000 and funded through September 2003. Enhance expertise
among German judges on Hague Convention provisions and cases.
Reduce the number of courts and judges that hear Hague Convention cases.
Implement judicial training programs sponsored by the Ministry of Justice
nationwide.
Effective July 1999, the number of courts authorized to hear Hague
Convention cases was reduced from 600 to 24.
Courts in Munich and Dusseldorf reduced to two the number of judges that
adjudicate Hague Convention cases in November 2000.
Training seminars conducted in January and February 2001 for 48 family court
judges representing 22 of the 24 German family courts. Additional training
is scheduled for late 2001.
Accelerate case decisions. Reengineer its system for processing cases and
scheduling hearings.
Central Authority implemented reforms in October 2000. Source: GAO synthesis
of information provided by German officials.
Germany established a special task force in October 2000 to lead German
efforts to improve its handling of Hague Convention cases. The task force
has five members, including a family court judge, a family law specialist,
and two senior- level Ministry of Justice officials who joined the task
force for bilateral discussions on parental child abduction cases with the
United States. Based on our discussions with members of the task force, they
appear to understand Germany's obligations under the Hague Convention and
the areas in which German reforms may be needed. The task force has been
funded for 3 years, until September 2003. The task force director explained
that improvements in Germany's handling of these cases should increase over
the life of the task force and that, as a result, there should be no need to
extend the task force beyond that time. The task force has two primary
responsibilities: assisting in the resolution of difficult cases and
facilitating and monitoring reforms in German institutions.
The task force's influence over difficult cases is limited because German
courts, which enjoy substantial independence under Germany's constitution,
make the final decisions on abduction cases. Nevertheless, the director said
that there were a number of actions that the task force planned to take to
help facilitate consistent case outcomes. For example, the task force plans
to provide information to the German youth authority Facilitating the
Resolution
of Difficult Cases and Monitoring Reforms
Page 5 GAO- 01- 423 Parental Child Abduction
on Hague Convention provisions and to left- behind parents and their lawyers
regarding German legal processes and institutions. The task force director
indicated that it also plans to promote out- of- court, nonjudicial
mediation, especially for long- standing, difficult cases, including cases
in which a court has ruled against a left- behind parent. Because the German
task force had been active for only a few months without having concluded
any of its initiatives, we could not determine whether it could affect the
outcome of U. S. cases. As of March 1, 2001, the task force told us that
they were actively involved with six high- profile cases already decided by
German courts.
Regarding the reform process, the task force is monitoring court proceedings
and decisions and collecting data on observations by other governments and
left- behind parents regarding how German authorities are handling these
cases. Using this information, the task force will determine whether and to
what extent it needs to get involved to facilitate the resolution of
specific cases or encourage systemic change. The task force also serves as a
facilitator for the German reforms discussed below.
According to the Permanent Bureau of the Hague Secretariat, which monitors
treaties on private international law, a well- trained and experienced
judiciary is key to effectively implementing the Hague Convention. German
government officials and judges told us that lack of judicial familiarity
with the application of Hague Convention provisions has been a major problem
affecting case decisions. German judges told us that a judge might not be
familiar with the Hague Convention because he or she may not have previously
presided over a Convention case.
The Hague Convention requires that, barring extreme circumstances, children
be returned to their country of habitual residence. Once returned, a court
in that country will decide custody. However, German officials and lawyers
indicated that because of limited experience with Hague Convention
requirements, some German judges may view their role differently. In these
cases, German judges may believe that they are expected to decide the
child's custody, applying German family law, rather than applying Hague
Convention provisions. This could result in a judge ruling in favor of the
abducting parent and denying return. To enhance Hague Convention expertise,
German authorities have limited the number of courts and judges hearing such
cases and have begun training them on the Hague Convention provisions.
Enhancing Hague
Convention Expertise Among German Judges
Page 6 GAO- 01- 423 Parental Child Abduction
To promote judicial expertise in handling Hague Convention cases, the German
parliament enacted legislation in July 1999, limiting the number of courts
with jurisdiction to hear Hague Convention cases from 600 to 24. This
resulted in a reduction in the number of judges with jurisdiction to hear
such cases from approximately 2,000 to 200 judges. This legislative
initiative, supported by the United States, was largely in response to
criticism and pressure from France and the United Kingdom, two Hague
Convention party states with long- standing concerns about German courts'
decisions on Hague Convention cases.
In September 2000, in addition to the nationwide reductions, the German
State Secretary encouraged further reductions in the number of judges
hearing Hague Convention cases. According to a judge with the task force,
the Ministry of Justice cannot order a reduction; it can only be reached and
made effective by the judges themselves. Family courts in Munich and
Dusseldorf have decided to reduce the number of judges hearing such cases to
two- a primary and secondary judge. Other family courts in Germany have
expressed interest in following the Munich and Dusseldorf courts but have
not yet acted.
According to German lawyers handling Hague Convention cases, the
concentration of Hague cases among fewer judges should improve case
handling. For example, they said that the reduction in the number of judges
hearing cases should result in fewer applications of the Article 13b
exception to the Hague Convention. Under this exception, a party state can
deny the return of a child if the return, in the court's opinion, would pose
a grave risk to the child's mental or physical well- being. According to
officials from the Hague Secretariat and the U. S. and German governments,
this exception should be narrowly applied and not liberally used as a
vehicle for denying a child's return. However, according to the State
Department, some German judges have interpreted the exception too liberally
and made “unconscionably broad” use of the Hague Convention
exception in a number of cases. The German task force acknowledged that
German judges used this exception too liberally in some past cases.
In our September 2000 report on the status of U. S. parental child
abductions to Germany, we reported that, for the 172 closed cases where the
child was not returned to the United States, German courts used the Article
13b exception 14 times (or 8 percent). Since September, German courts under
the new 24- court system used the Article 13b exception once. That is, for
cases handled under the new court structure, German courts used the Article
13b exception once in 30 (3 percent) cases, compared with 14 instances in
172 (8 percent) decided cases under the old structure. Limiting the Number
of Courts
and Judges That Adjudicate Hague Convention Cases
Page 7 GAO- 01- 423 Parental Child Abduction
To further familiarize judges with Hague Convention standards and
procedures, the Ministry of Justice coordinated two 3- day training
conferences in January and February 2001. 10 The training conferences were
an effort to enhance common knowledge and expertise about the goals of the
Hague Convention among German judges with jurisdiction over these cases.
These conferences focused on the (1) creation and goals of the Hague
Convention, (2) legal jurisdiction and provisions under the Convention, and
(3) return and access rights and their enforcement under the Convention.
Ministry of Justice officials told us that their role was limited to
facilitating and coordinating the conferences while knowledgeable and
experienced judges and lawyers conducted conference sessions for
participating judges. 11
In addition, Germany, the United States, and the Hague Secretariat have
discussed plans to convene a conference among a number of Hague Convention
party states in late 2001 to promote consistency in Convention
interpretation and foster closer relationships. This conference would cover
such topics as the intent of the Hague Convention, restricted use of
Convention exception provisions, and enforcement of return and access
decisions.
According to the Permanent Bureau of the Hague Secretariat, prompt access to
the courts is a key factor to the effective implementation of the Hague
Convention. The longer a child remains in his environment, and bonds with
the abducting parent, the less willing a court may be to order the child's
return. In its May 1999 report, State cited Germany for lengthy case
processing. We reported in September 2000 that German authorities took a
median of 288 days to process Hague Convention abduction and access cases.
Although Germany has not established a specific time limit for case
adjudication, the German task force acknowledged that German courts have
taken too long to adjudicate abduction cases in the past.
10 The January training conference was conducted in Recklinghausen, Germany,
for 25 family court judges, and the February conference was conducted in Bad
Nauheim, Germany, for 23 family court judges.
11 The U. S. embassy has proposed to support German judicial training by
sponsoring child custody seminars for German family judges. These seminars
would consist of three 1- day events throughout Germany and feature U. S.
and German speakers on Hague Convention implementation issues. Through
State's International Visitor Program, the U. S. embassy plans to sponsor
visits in fiscal years 2001 and 2002 by German judges to the United States
to meet with their U. S. counterparts. Implementing Judicial Training
Programs Nationwide Accelerating Case Decisions Through Reengineered Case
Application Filing Procedures and Court Notification
Page 8 GAO- 01- 423 Parental Child Abduction
Officials from the central authority in Bonn told us that they have changed
their administrative procedures to expedite case application filing and
court notification. In October 2000, the central authority established a
policy to fully process and forward applications to the competent court
within 7 days of receipt of a complete application. Before October 2000, the
central authority took about 30 days. Only one of the cases we reviewed was
opened after October 2000, when the new administrative procedures were put
in place. This case was originally sent to the German central authority,
which promptly transferred the case to French authorities upon learning from
the U. S. left- behind parent that the abducting parent had fled to France.
In addition to lengthy administrative procedures, German Ministry of Justice
officials conceded that German proceedings can be too lengthy, citing some
judges' desire to hear the child's opinion and to request lengthy
psychological reports from German youth authorities. Obtaining a child's
testimony and youth reports are standard practices for deciding domestic
custody cases. Collecting and analyzing all of this evidence before making a
decision takes considerable time. According to one Ministry official, judges
will depend less on psychological reports, which are geared more for
domestic child custody cases, as they become more knowledgeable of Hague
Convention procedures and requirements, which do not require such evidence.
According to U. S. and German central authority officials, Hague Convention
cases in Germany are being processed more expeditiously than before. Of the
43 U. S. cases opened since July 1999, when the number of courts and judges
was reduced, 30 were closed by January 31, 2001. The median duration of
cases was 147 days. For cases closed from January 1, 1995, through June 30,
1999, the median duration case was 304 days.
Despite international criticism, some German courts are still reluctant to
enforce court- ordered visitation rights of left- behind parents. German
Ministry of Justice officials conceded that enforcement remains a problem
and acknowledged that their ministry needs to work with the courts to change
existing practices. The State Department indicated that it is seeking
comprehensive information about German judicial enforcement practices and
exploring options to encourage reforms. State officials told us that failure
to enforce court- ordered visitation undermines the Hague Convention. We
believe that, if this problem persists, the impact of the reforms being
implemented could be undermined. German Courts
Reluctant to Enforce Visitation Orders
Page 9 GAO- 01- 423 Parental Child Abduction
In its October 6, 2000, compliance report to Congress, the State Department
reported that German courts systematically fail to enforce court- ordered
visitation, thus allowing abducting parents to resist enforcement of orders
indefinitely. We identified two cases where leftbehind parents in the United
States were seeking the enforcement of their German court- ordered
visitation rights. In both cases, German judges failed to enforce the orders
when the abducting parent refused to cooperate. According to German judges,
domestic law does not permit the use of physical force 12 to enforce
visitation orders. In addition, they told us that they are reluctant to
employ existing sanctions because they fear that such actions would have a
detrimental affect on the child. For example, incarcerating an abducting
parent, which is one of the enforcement tools available to German judges,
will separate the child from the parent. According to German judges, this
could impact the child psychologically.
State officials are seeking detailed information about Germany's judicial
enforcement mechanisms and exploring ways to encourage German courts to
change existing practices. They indicated that they have raised this issue
at each of the working group meetings since June 2000. Although enforcement
of visitation orders was not on the agenda for Secretary of State Colin
Powell's February 20, 2001, meeting in the United States with Germany's
Foreign Minister Joschka Fischer, the topic was discussed during a U. S.-
German bilateral meeting in the Netherlands on March 29, 2001. State
indicated that it plans to continue raising the issue at all future meetings
with German officials on the task force and at the central authority. State
also plans to reserve positions in the International Visitor Program for
German judges to discuss enforcement of visitation orders, among other
issues. According to State, although the United States can attempt to
influence German actions, only German authorities can make the decision to
act.
Germany's initiatives to enhance judicial expertise and accelerate case
processing are steps that have potential to (1) positively affect German
application of the provisions of the Hague Convention and (2) reduce the
time taken to adjudicate cases. Because the reforms are recent, there are
only a limited number of cases to demonstrate the actual effect of the
initiatives. Germany has not acted, however, to improve its enforcement of
visitation orders. This is a key concern of the State Department. Moreover,
12 Such force would include physically separating a child from the abducting
parent. Conclusions
Page 10 GAO- 01- 423 Parental Child Abduction
we believe that the failure to address the German courts' reluctance to
enforce visitation orders could undermine Germany's efforts to improve its
handling of Hague Convention cases.
We obtained oral comments on a draft of this report from the Department of
State's Office of Children's Issues, Bureau of Consular Affairs, which
agreed with the report's conclusion and provided us with technical comments
that we incorporated as appropriate.
We are sending copies of this report to the Honorable Colin L. Powell, the
Secretary of State, and interested congressional committees. We will make
copies available to others upon request.
Please contact me on (202) 512- 4128 if you or your staff have any questions
about this report. Another GAO contact and staff acknowledgments are listed
in appendix III.
Sincerely yours, Jess T. Ford, Director International Affairs and Trade
Agency Comments
and Our Response
Appendix I: Consular Assistance to LeftBehind Parents
Page 11 GAO- 01- 423 Parental Child Abduction
The State Department's consulate offices can provide a variety of incountry
assistance to left- behind parents involved in child custody conflicts. The
State Department's Office of Children's Issues 1 in Washington, D. C., can
request consular officers to locate and report on the child's welfare,
conduct home visits, and assist in obtaining case status information. In
addition, the U. S. embassy and consulate offices can provide left- behind
parents with information on attorneys who handle Hague Convention cases and
can contact or refer a left- behind parent to German agencies that can
provide assistance.
According to U. S. consular officials in Germany, a common request from
left- behind parents is to obtain the telephone number where the child can
be reached. In more complicated cases where a left- behind parent has had no
contact with the child, consular officials may be asked to write letters to
various registration offices in Germany to locate the child's relatives.
Consular officials can also perform home visits with the child when
requested by a left- behind parent and consented to by the foreign parent.
According to State, consular officers conduct most home visits unless (1)
the foreign parent refuses a visit, (2) a child lives a great distance from
the consular office, or (3) the workload of the consular official prohibits
a personal visit. In addition, U. S. consular officials can obtain from
German authorities information about the status of cases and report this
information to both parents. They can also seek clarification as to how a
particular aspect of a case is proceeding.
According to U. S. consular officials in Germany, 97 inquiries about child
welfare and location and 23 home visits were conducted in fiscal years 1999
and 2000 (see table 2).
1 State Department's Office of Children's Issues provides direction to
foreign service posts on assistance to left- behind parents. Appendix I:
Consular Assistance to LeftBehind
Parents
Appendix I: Consular Assistance to LeftBehind Parents
Page 12 GAO- 01- 423 Parental Child Abduction
Table 2: Consular Assistance to Left- Behind Parents (FY 1999- 2000)
Instances Assistance FY 1999 FY
2000
Inquiries conducted about abducted child's welfare and location 42 55 Visits
requested by Office of Children's Issues on behalf of leftbehind parent 18
28
Residential welfare visits of abducted child conducted 9 14 Visits attempted
but denied by abducting parent a 3 7 Visits not attempted b 6 7 Inquiries
made into case status c 13 17 a German Youth Authority officials may visit
abducted U. S. children when the abducting parent does not permit visits by
consular officials. Also, if an abducting parent denies a consular visit,
then German courts can intervene. However, as explained earlier in this
report, German courts may not intervene; they have been reluctant to enforce
visitation orders for left- behind parents in U. S. cases. b U. S. consular
officers explained that they could not perform requested visits where the
child lived a
great distance from the consular office or when the workload of the consular
official prohibited a personal visit. c U. S. consular officers made
specific inquiries for left- behind parents into the status of their cases.
Source: Information reported by the U. S. consulates in Berlin, Dusseldorf,
Frankfurt, Hamburg, and Munich, Germany.
In addition to citing specific services they provide to left- behind
parents, U. S. consular officials told us that they have been more closely
involved in helping the Office of Children's Issues to monitor the
resolution of U. S. Hague Convention cases since U. S. government attention
on U. S. children abducted to Germany heightened in 2000. During our
fieldwork in November 2000, we found that these officials were involved in
organizing meetings and maintaining communication with the German central
authority and Ministry of Justice on the status of U. S. cases. For example,
consular officials in Berlin provided logistical support for U. S.- German
working group meetings held in July and September 2000.
Appendix II: Scope and Methodology Page 13 GAO- 01- 423 Parental Child
Abduction
Our review focused on congressional concerns about Germany's handling of U.
S. parental child abduction cases under the Hague Convention. To gather
information for our analysis, we interviewed more than 40 key officials and
representatives from the State Department, the German government, the Hague
Secretariat in the Netherlands, and organizations dedicated to researching
and understanding issues associated with international parental child
abduction.
To identify what actions Germany has taken or plans it has under way to
address U. S. concerns about Germany's handling of parental child abduction
cases, we reviewed State Department reports from May 1999 to January 2001
that documented systemic problems with Germany's implementation of the Hague
Convention and identified German actions taken or planned. These reports
also identified State's goals and timetables for Germany to take remedial
measures. To confirm and expand our understanding of information in these
reports, we conducted fieldwork in Berlin, Bonn, Cologne, Dusseldorf,
Frankfurt, Munich, and Potsdam, Germany. We interviewed senior German
justice ministry officials, local family court judges, social workers, and
private attorneys in those cities. We also interviewed officials from the
German central authority, U. S. officials in Germany supporting State
Department efforts to resolve abduction cases, and a French judge, seconded
to the German Ministry of Justice to work on difficult German- French Hague
Convention cases.
To determine how Germany's actions have affected the handling and outcome of
U. S. cases, we reviewed the status, outcome, and other characteristics of
cases adjudicated after German authorities began taking actions. We reviewed
files that State's Office of Children's Issues maintains on cases initiated
by left- behind parents from July 1999, when Germany began to concentrate
the number of family courts hearing international abduction cases under the
Hague Convention, through January 2001. These files included administrative,
judicial, and communicative information related to each case.
We recorded the results of our analysis of State's files in a database and
subsequently performed independent checks to ensure that data for each case
were accurate. We compared the outcomes of cases opened and closed from July
1999 through January 2001 with those outcomes from cases opened and closed
from January 1995 through June 1999.
We performed our work from October 2000 through March 2001 in accordance
with generally accepted government auditing standards. Appendix II: Scope
and Methodology
Appendix III: GAO Contact and Staff Acknowledgments
Page 14 GAO- 01- 423 Parental Child Abduction
John Brummet, (202) 512- 5260 In addition to the contact named above,
Michael Zola, Janice Villar Morrison, and Mark Dowling made key
contributions to this report. Appendix III: GAO Contact and Staff
Acknowledgments GAO Contact Acknowledgments
(711569)
The first copy of each GAO report is free. Additional copies of reports are
$2 each. A check or money order should be made out to the Superintendent of
Documents. VISA and MasterCard credit cards are also accepted.
Orders for 100 or more copies to be mailed to a single address are
discounted 25 percent.
Orders by mail:
U. S. General Accounting Office P. O. Box 37050 Washington, DC 20013
Orders by visiting:
Room 1100 700 4 th St., NW (corner of 4 th and G Sts. NW) Washington, DC
20013
Orders by phone:
(202) 512- 6000 fax: (202) 512- 6061 TDD (202) 512- 2537
Each day, GAO issues a list of newly available reports and testimony. To
receive facsimile copies of the daily list or any list from the past 30
days, please call (202) 512- 6000 using a touchtone phone. A recorded menu
will provide information on how to obtain these lists.
Orders by Internet
For information on how to access GAO reports on the Internet, send an email
message with “info” in the body to:
Info@ www. gao. gov or visit GAO's World Wide Web home page at: http:// www.
gao. gov
Contact one:
? Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm
? E- mail: fraudnet@ gao. gov
? 1- 800- 424- 5454 (automated answering system) Ordering Information
To Report Fraud, Waste, and Abuse in Federal Programs
GAO United States General Accounting Office
Report to the Chairman, Committee on Health, Education, Labor, and Pensions,
U. S. Senate
April 2001 MEDICAL PRIVACY REGULATION
Questions Remain About Implementing the New Consent Requirement
GAO- 01- 584
Page i GAO- 01- 584 Patient Consent Letter 1
Appendix I Selected State Statutes on Consent 10
Appendix II Organizations Interviewed 12 Abbreviations AHA American Hospital
Association AMA American Medical Association HHS Department of Health and
Human Services HPP Health Privacy Project MGMA Medical Group Management
Association Contents
Page 1 GAO- 01- 584 Patient Consent
April 6, 2001 The Honorable James M. Jeffords Chairman, Committee on Health,
Education,
Labor, and Pensions United States Senate
Dear Mr. Chairman: Although there is a strong consensus supporting the
protection of patient confidentiality, views differ as to the best ways in
practice to achieve that goal. Pressures are increasing from insurers,
providers, and researchers to draw on medical records to study treatment
outcomes and monitor expenditures, activities that are becoming increasingly
common as medical records are computerized and large databases compiled. In
recognition of these trends, the Health Insurance Portability and
Accountability Act of 1996 called for the development of comprehensive
privacy standards that would establish rights for patients with respect to
their medical records and define the conditions for using and disclosing
personally identifiable health information. 1 On December 28, 2000, the
Department of Health and Human Services (HHS) issued the final regulation on
privacy, and it is now under review by the Congress and the new Secretary of
HHS. 2
One prominent point of disagreement is whether the federal government should
require health providers to obtain patient consent prior to their use or
disclosure of personal medical information for purposes of treatment,
payment, and routine health care management activities. You asked us to
examine the consent requirement in the federal privacy regulation and assess
(1) how it differs from the types of consent providers currently obtain from
patients and (2) its potential consequences for patients and providers. You
also asked us to review how states that have passed health privacy laws
addressed the patient consent issue, and we have included
1 P. L. 104- 191, sec. 264, 110 Stat. 1936, 2033. 2 65 Fed. Reg. 82,462
(2000). The final regulation was originally set to become effective February
26, 2001, with most entities required to comply no later than February 26,
2003. To comply with the requirements of the Congressional Review Act,
however, HHS changed the effective date to April 14, 2001, with most
entities required to comply no later than April 14, 2003. 66 Fed. Reg.
12,434 (2001). Subsequently, HHS published notice that it would accept
comments on the regulation through March 30, 2001. 66 Fed. Reg. 12, 738
(2001).
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 584 Patient Consent
this information in appendix I. To meet your request, we contacted 18
organizations, including groups representing patients, providers, and health
plans as well as a group practice, an integrated health care system, a large
chain pharmacy, and a regional health plan. (See app. II.) In addition, we
reviewed the regulation and spoke with HHS representatives responsible for
its development. We performed our work in March 2001 in accordance with
generally accepted government auditing standards.
The privacy regulation's consent requirement will be more of a departure
from current practice for some providers than for others. Most health care
providers, with the exception of pharmacists, obtain consent from patients
to release information to insurers for payment purposes. The new requirement
adds pharmacists to those providers obligated to obtain written consent
before they can use or disclose patient information for routine health care
purposes. These purposes now include treatment and a range of health care
management activities as well as payment. Supporters of the requirement
believe that the process of signing a consent form provides an opportunity
to inform and focus patients on their privacy rights. Others, however, are
skeptical and assert that most patients will simply sign the form with
little thought. In addition, provider and other organizations interviewed
are concerned that the new consent requirement poses implementation
difficulties. They contend that it could cause delays in filling
prescriptions for patients who do not have written consents on file with
their pharmacies, impede the ability of hospitals to obtain patient
information prior to admission, hamper efforts to assess health care quality
by precluding the use of patient records from years past, and increase
administrative burdens on providers.
The final medical privacy regulation requires that most providers obtain
patient consent to use or disclose health information before engaging in
treatment, payment, or health care operations. 3 As defined in the
regulation, health care operations include a variety of activities such as
undertaking quality assessments and improvement initiatives, training future
health care professionals, conducting medical reviews, and case
3 The regulation uses the term “consent” when referring to
written permission sought prior to use or disclosure of personal health
information for these purposes. It uses the term “authorization”
when referring to written permission required for nonroutine uses and
disclosures of information, such as releases to a patient's attorney or to
an employer for personnel decisions. Results in Brief
Background
Page 3 GAO- 01- 584 Patient Consent
management and care coordination programs. The consent form must alert
patients to the provider's notice of privacy practices (described in a
separate document) and notify them of their right to request restrictions on
the use and disclosure of their information for routine health care
purposes. Providers are not required to treat patients who refuse to sign a
consent form, nor are they required to agree to requested restrictions. The
consent provision applies to all covered providers that have a direct
treatment relationship with patients. 4 The regulation also specifies
several circumstances where such prior patient consent is not required. 5
The privacy regulation does not require health plans to obtain written
patient consent. 6
This approach to patient consent for information disclosures differs from
that in HHS' proposed privacy regulation, issued for public comment November
3, 1999. The proposed regulation would have permitted providers to use and
disclose information for treatment, payment, and health care operations
without written consent. At the time, HHS stated that the existing consent
process had not adequately informed patients of how their medical records
could be used. Comments HHS received on this provision were mixed. Some
groups approved of this approach, saying it would ensure that covered
entities could share information to provide effective clinical care and
operate efficiently, while not creating administrative requirements that
would add little to individual privacy. However, others wrote that
individuals should be able to control to whom, and under what circumstances,
their individually identifiable health
4 For example, primary care physicians and surgeons have a direct treatment
relationship with patients. In addition, outpatient pharmacists are
generally considered to have such a relationship. They fill prescriptions
written by other providers, but they furnish the prescription and advice
about the prescription directly to the patient, not through another treating
provider. On the other hand, radiologists and pathologists generally have
indirect treatment relationships with patients because they deliver
diagnostic services based on the orders of other providers and the results
of those services are furnished to the patient through the direct treating
provider. Consequently, for these providers, medical records could be used
for management reviews of their performance without patient consent.
5 These include (1) in emergency treatment situations, if the provider
attempts to obtain such consent as soon as reasonably practicable after the
delivery of treatment, (2) if the provider is required by law to treat the
individual, and attempts to obtain consent but is unable to do so, and (3)
if a provider attempts to obtain consent from the individual but is unable
to do so because of communication barriers, and he or she determines that
the individual's consent to receive treatment is clearly implied from the
circumstances.
6 Industry representatives told us that health plans often obtain patient
consent. Plans may ask new enrollees to sign a form that allows access to
their medical records for payment and, sometimes, health care operations.
Page 4 GAO- 01- 584 Patient Consent
information would be disclosed, even for routine treatment, payment, or
health care operations.
The extent to which the privacy regulation's consent requirement will be a
departure from business as usual varies by type of provider. Under current
practices, physicians and hospitals generally obtain consent to use patient
data for processing insurance claims, but they obtain consent substantially
less often for treatment or health care operations. 7 Pharmacists, however,
typically do not have consent procedures in place for any of the routine
purposes included in the regulation. Specifically:
? Most, but not all, physicians get signed written consent to use patient
data for health insurance payment. Exceptions to this practice include
emergency situations and patients who choose to pay for their treatment
“out of pocket” to avoid sharing sensitive information with an
insurer. However, physicians do not typically seek approval to use patient
data to carry out treatment or health care operations.
? Nearly all hospitals routinely obtain written consent at the time of
admission, at least for release of information to insurance companies for
payment purposes. 8 A 1998 study of large hospitals found that 97 percent of
patient consent forms sought release of information for payment, 50 percent
addressed disclosure of records to other providers, and 45 percent requested
consent for utilization review, peer review, quality assurance, or
prospective review- the types of health care management activities
considered health care operations in the federal privacy regulation. 9
? Pharmacies do not routinely obtain patient consent related to treatment
(i. e., before filling a prescription), payment, or health care operations.
However, industry representatives told us that pharmacies conducting disease
management programs (specialized efforts to ensure appropriate
pharmaceutical use by patients with certain chronic conditions) typically
7 It is also common for patients to sign consent forms before undergoing an
invasive procedure. However, these consents have to do with informing the
patient about possible risks and benefits of the treatment, not disclosure
and use of the data.
8 Similar to physician practices, hospital exceptions include patients who
choose to “selfpay”
for treatment, and emergency situations, such as when a patient arrives
unconscious at the emergency room with no one to act on his or her behalf.
9 J. F. Merz, P. Sankar, S. S. Yoo, “Hospital Consent for Disclosure
of Medical Records,” Journal of Law, Medicine and Ethics (Fall 1998),
p. 241. Most Providers
Obtain Consent to Disclose Patient Data for Insurance Payment
Page 5 GAO- 01- 584 Patient Consent
seek consent to share information with physicians about the patients'
condition, medical regimen, and progress.
The new consent requirement makes several important changes to current
practices that have implications for patients and providers. For patients,
they will be made aware that their personal health information may be used
or disclosed for a broad range of purposes including health care operations.
Other provisions of the privacy regulation grant patients additional
protections, including the right to access their records, to request that
their records be amended, to obtain a history of disclosures, and to request
restrictions on how their information is used. For providers directly
treating patients, they will have a legal obligation to obtain prior written
consent and to use a form that meets specific content requirements.
Supporters of the consent requirement argue that the provision gives
patients an opportunity to be actively involved in decisions about the use
of their data. Yet, many groups recognize that signing a provider's consent
form does not, per se, better inform patients of how their information will
be used or disclosed. In addition, most provider organizations we
interviewed told us that the privacy regulation's consent requirement will
be a challenge to implement and may impede some health care operations.
The American Medical Association (AMA), the Bazelon Center for Mental Health
Law, and the Health Privacy Project (HPP) indicated that the consent process
offers important benefits to patients. These groups view the process of
signing a consent form as a critical tool in focusing patient attention on
how personal health information is being used. They assert that only
providing patients with a notice of privacy practices is not sufficient
because most patients are not likely to understand its importance, much less
read it. The patient advocacy groups told us that the act of signing the
consent can help make patients aware of their ability to affect how their
information is used. This heightened awareness, in turn, may make patients
more likely to read the notice of privacy practices or to discuss privacy
issues with their health care provider. HPP cited the process of signing
consent as offering an “initial moment” in which patients have
an opportunity to raise questions about privacy concerns and learn more
about the options available to them. This opportunity may be especially
valuable to patients seeking mental health and other sensitive health care
services. Perceived Benefits for
Patients and Implementation Concerns Among Industry Groups
Consent Requirement Intended to Raise Privacy Awareness
Page 6 GAO- 01- 584 Patient Consent
In contrast, many groups we interviewed question the value of the consent
form for patients. For example, the Medical Group Management Association
(MGMA) and the American Hospital Association (AHA) assert that the process
of signing a consent form may be perfunctory, at best, and confusing, at
worst. To some extent, patient advocacy groups we spoke with agree. They say
that patients will be under pressure to sign the form without reading the
notice, as providers can condition treatment upon obtaining consent. They
contend that many patients may not find the consent process meaningful. They
maintain that nevertheless it should be required for the benefit it offers
patients who may be particularly interested in having a say about how their
health information will be used.
Health plan and provider organizations we interviewed told us that the
consent requirement poses implementation difficulties for patients and
providers both during the regulation's initial implementation and beyond.
The extent of these challenges and their potential implications vary by type
of provider. In general, these organizations do not favor written consents
for routine uses of patient information, although they support the
regulation's requirement to provide patients with privacy notices.
The consent requirement would require pharmacists to change their current
practices. Under the regulation, a patient must sign a consent form before a
pharmacist can begin filling the prescription. According to the American
Pharmaceutical Association and the National Association of Chain Drug
Stores, this requirement would result in delays and inconvenience for
patients when they use a pharmacy for the first time. 10 Also, pharmacies
would not be able to use patient information currently in their systems to
refill prescriptions or send out refill reminders before receiving patient
consent to do so. In addition, patients who spent time in different parts of
the country and were accustomed to transferring their prescriptions to out-
of- state pharmacies would have to provide consent to one or more pharmacies
before their prescriptions could be filled. Pharmacy and other organizations
have suggested that the privacy regulation should recognize a physician-
signed prescription as indicative of patient consent or that pharmacies
could be considered indirect providers and thus not subject to the consent
requirement.
10 These organizations believe that a consent form obtained by one retailer
could serve for others in a chain within the same state. Industry
Representatives
Anticipate Difficulties in Implementing the Consent Requirement
Page 7 GAO- 01- 584 Patient Consent
Hospital organizations also raised concern about disruption of current
practice and some loss of efficiency. AHA and Allina Health System
representatives stated that the consent requirement could impede the ability
of hospitals to collect patient information prior to admission, thus
creating administrative delays for hospitals and inconvenience for some
patients. In advance of nonemergency admissions, hospitals often gather
personal data needed for scheduling patient time in operating rooms,
surgical staff assignments, and other hospital resources. If the regulation
is interpreted to include such activities as part of treatment or health
care operations, hospitals would be required to get the patient's signed
consent before setting the preadmissions process in motion. Either a form
would have to be mailed or faxed to the patient and sent back, or the
patient would have to travel to the hospital to sign it.
Physician and hospital groups expressed concern that the requirement would
hinder their ability to conduct health care management reviews using
archived records. For example, AMA and AHA told us that the regulation will
not permit them to use much of the patient data gathered under previous
consent forms. While the regulation has a transition provision that allows
providers to rely on consents acquired before the regulation takes effect,
the continuing validity of those preexisting consents would be limited to
the purposes specified on the consent form. In most cases, the purposes
specified were either treatment or billing. This means that providers would
not be able to draw on those data for other purposes, including common
health care management functions, such as provider performance evaluations,
outcome analyses, and other types of quality assessments. 11 Moreover, they
said that in many cases it might not be feasible to retroactively obtain
consent from former patients. Some have suggested revising the regulation to
allow providers to use, without consent, all health information created
prior to the regulation's effective date.
All of the organizations representing providers and health plans anticipate
an additional administrative burden associated with implementing the new
consent procedures, but the magnitude of the potential burden is uncertain.
For example, if the use of new forms elicits more questions from patients
about medical records privacy, as the provision's supporters expect will
happen, providers will have to devote more staff time to
11 In commenting on a draft of this report, HHS took issue with this
interpretation of the transition provision. See Agency Comments.
Page 8 GAO- 01- 584 Patient Consent
explaining consent and discussing their information policies. Similarly,
health plan and provider advocates contend that focusing patients' attention
on their right to request restrictions on how their information is used
could result in many more patients seeking to exercise that right. This,
some believe, would require increased staff time for considering,
documenting, and tracking restrictions.
The privacy regulation expands the scope of the consent process to include
the use and disclosure of personal health information for a wide range of
purposes. This may help some patients become aware of how their medical
information may be used. However, in general, provider and health plan
representatives believe that the consent requirement's benefits are
outweighed by its shortcomings, including delays in filling prescriptions,
impediments to hospital preadmission procedures, and difficulty in using
archived patient information. Regardless of the presence of the consent
requirement, providers are obligated under the regulation to protect the
confidentiality of patient information. Moreover, with or without the
consent requirement, patients' rights established by the privacy regulation-
to see and amend their records, to learn of all authorized uses of their
information, and to request restrictions on disclosures- remain unchanged.
HHS provided written technical comments on a draft of this report. In them,
HHS remarked on the consent requirement's applicability to archived patient
medical records. Agency officials explained that a consent for either
treatment, payment, or health care operations acquired before the
regulation's compliance date would be valid for continued use or disclosure
of those data for all three of these purposes after that date. Under this
interpretation, for example, prior consents to disclose patient information
for insurance claims would permit uses for the full range of health care
operations as well, unless specifically excluded in the consent that the
patient signed. In our view, a better understanding of the implications of
this provision may emerge from any revisions to the final regulation.
Referring to material in appendix I, the agency expressed concern that we
overgeneralized current state consent laws, which have complex requirements
and vary significantly from one to another. HHS pointed out that some state
laws require written consent in some circumstances that would be considered
treatment, payment, or health care operations. We recognize that state laws
are complex and vary widely in the type of health Concluding
Observations Agency Comments
Page 9 GAO- 01- 584 Patient Consent
care information that is protected and the stringency of those protections.
While it is difficult to generalize about state laws, we found that the
statutes in the 10 states we examined were fairly consistent in not
requiring written consent for the full range of uses and disclosures of
patient information for treatment, payment, and health care operations.
The agency provided other technical comments that we incorporated where
appropriate.
We are sending copies of this report to the Honorable Tommy G. Thompson,
Secretary of HHS, and others who are interested. We will also make copies
available to others on request.
If your or your staff have any questions, please call me at (312) 220- 7600
or Rosamond Katz, Assistant Director, at (202) 512- 7148. Other key
contributors to this report were Jennifer Grover, Joel Hamilton, Eric
Peterson, and Craig Winslow.
Sincerely yours, Leslie G. Aronovitz, Director Health Care- Program
Administration
and Integrity Issues
Appendix I: Selected State Statutes on Consent
Page 10 GAO- 01- 584 Patient Consent
To examine how state privacy laws address the issue of patient consent to
use health information, we reviewed certain laws in 10 states (Hawaii,
Maine, Maryland, Minnesota, Montana, Rhode Island, Texas, Virginia,
Washington, and Wyoming). 1 We found that none of these state privacy
statutes include a consent requirement as broad as that found in the privacy
regulation. 2 Although they generally prohibit using or disclosing protected
health information without the patient's permission, they include
significant exceptions not present in the federal regulation. Essentially,
none of the state statutes we reviewed requires consent for the full range
of uses and disclosures of patient information for treatment and health care
operations. The Minnesota and Wyoming statutes require consent to use
patient health information for payment purposes. 3
Two states recently attempted to enhance patient control over their personal
health information. In 1996, Minnesota enacted a law that placed stringent
consent requirements on the use of patient data for research. It stipulated
that patient records created since January 1, 1997, not be used for research
without the patient's written authorization. Because such authorization was
not obtained at the start of treatment, researchers had to retroactively
seek permission. They soon found that many patients did not respond to
requests for such authorization, either to approve or to reject the use of
their data. The law was amended to permit the use of records in cases where
the patient had not responded to two requests for
1 These states were suggested to us by privacy law experts. The state laws
reviewed were: Haw. Rev. Stat. sect.sect. 323C- 1 – 323C- 55 (2000); Me. Rev.
Stat. Ann. tit. 22, sect. 1711- C (West 2000); Md. Code Ann., Health- General sect.sect.
4- 301 – 4- 307 (2000); Minn. Stat. sect. 144.335 (2000); Mont. Code Ann.
sect.sect. 50- 16- 501 – 50- 16- 553 (2000); R. I. Code R. sect. 5- 37. 3- 1
– 5- 37. 3- 11; Tex. Health & Safety Code Ann. sect.sect. 241.151 – 241-
156 (West 2000); Va. Code Ann. sect. 32. 1- 127.1: 03 (Michie 2000); Wash. Rev.
Code sect.sect. 70. 02.005 – 70. 02.904 (2000); Wyo. Stat. sect.sect. 35- 2- 605
– 35- 2- 617 (Michie 2000).
2 Some state laws require additional safeguards related to the use or
disclosure of certain types of health care information, such as HIV status
or mental health records. However, none of the laws we examined established
the type of two- tiered system of written permission involving both consent
for treatment, payment, and health care operations and authorization for
most other uses and disclosures. Two recent comprehensive surveys of state
laws related to the protection of health care information are Lisa L. Dahm,
50- State Survey on Patient Health Care Record Confidentiality, Health
Lawyers: Expert Series
(Washington, D. C.: American Health Lawyers Association, June 1999) and Joy
Pritts and others, The State of Health Privacy: An Uneven Terrain
(Washington, D. C.: Health Privacy Project, Institute for Health Care
Research and Policy, Georgetown University, Aug. 1999).
3 The relevant language in the Washington statute is nearly identical to
that in the Wyoming law. According to an official in the Washington attorney
general's office, however, consent is not required to use or disclose health
information for payment purposes in Washington. Appendix I: Selected State
Statutes on
Consent
Appendix I: Selected State Statutes on Consent
Page 11 GAO- 01- 584 Patient Consent
authorization mailed to the patient's last known address. At one major
research institution in Minnesota, the Mayo Clinic, that change decreased
the percentage of patient records that the patient consent requirement made
unavailable for studies from 20.7 percent to 3.2 percent. 4
In late 1998, Maine enacted a comprehensive law requiring specific patient
authorization for many types of disclosures and uses of health information.
The law took effect January 1, 1999, but was soon suspended by the state
legislature in response to numerous complaints from the public. Particularly
problematic was that “hospital directory” information could not
be released without the patient's specific written authorization. Therefore,
until routine paperwork was completed, hospitals could not disclose
patients' room or telephone numbers when friends, family, or clergy tried to
contact or visit them. Based on this experience, the Maine legislature
substantially modified the law, which became effective on February 1, 2000.
Among other changes, the revised law allows a hospital to list current
patients in a publicly available directory unless a patient specifically
requests to be excluded. 5
4 See S. J. Jacobsen and others, “Potential Effect of Authorization
Bias on Medical Record Research,” Mayo Clinic Proceedings, Vol. 74,
No. 3 (April 1999), p. 333. Mayo Clinic researchers remain concerned that
variations in the rate of refusal among different patient groups, for
example, young versus old, may tend to skew the results obtained from these
data.
5 The federal privacy regulation permits hospital directory information to
be disclosed as long as the patient has been given an opportunity to object
to its disclosure and has not done so.
Appendix I: Selected State Statutes on Consent
Page 12 GAO- 01- 584 Patient Consent
Appendix II: Organizations Interviewed Page 12 GAO- 01- 584 Patient Consent
We included the following organizations in our review: Allina Health System
American Association of Health Plans American Cancer Society American
Hospital Association American Medical Association American Pharmaceutical
Association AvMed Health Plan Bazelon Center for Mental Health Law Beaver
Medical Group Blue Cross and Blue Shield Association CVS Pharmacy, Inc.
Health Care Compliance Association Healthcare Leadership Council Health
Privacy Project Margret\ A Consulting, LLC Medical Group Management
Association National Association of Chain Drug Stores National Association
of Public Hospitals and Health Systems Appendix II: Organizations
Interviewed
(290022)
The first copy of each GAO report is free. Additional copies of reports are
$2 each. A check or money order should be made out to the Superintendent of
Documents. VISA and MasterCard credit cards are also accepted.
Orders for 100 or more copies to be mailed to a single address are
discounted 25 percent.
Orders by mail:
U. S. General Accounting Office P. O. Box 37050 Washington, DC 20013
Orders by visiting:
Room 1100 700 4 th St., NW (corner of 4 th and G Sts. NW) Washington, DC
20013
Orders by phone:
(202) 512- 6000 fax: (202) 512- 6061 TDD (202) 512- 2537
Each day, GAO issues a list of newly available reports and testimony. To
receive facsimile copies of the daily list or any list from the past 30
days, please call (202) 512- 6000 using a touchtone phone. A recorded menu
will provide information on how to obtain these lists.
Orders by Internet
For information on how to access GAO reports on the Internet, send an email
message with “info” in the body to:
Info@ www. gao. gov or visit GAO's World Wide Web home page at: http:// www.
gao. gov
Contact one:
? Web site: http:// www. gao. gov/ fraudnet/ fraudnet. htm
? E- mail: fraudnet@ gao. gov
? 1- 800- 424- 5454 (automated answering system) Ordering Information
To Report Fraud, Waste, and Abuse in Federal Programs
1 F RO M T H E C O M P T RO L L E R G E N E R A L
March 30, 2001
I am pleased to present GAO's performance and accountability report, which
combines our assessment of what we were able to accomplish in fiscal year
2000 with our plans for continued progress through fiscal year 2002. This
combined report is a first of its kind for us and represents one more step
in our efforts to lead by example in connection with the Government
Performance and Results Act (GPRA). Following the spirit of the act, this
report describes GAO's performance in a way that gives a more complete and
meaningful picture of how we are carrying out our mission to serve the
Congress and the American people.
Our work resulted in a number of significant improvements that will benefit
all Americans. Among other things, by acting on our recommendations, the
government improved public health and safety, strengthened national
security, better protected consumers, and improved its financial management
and information systems. We also contributed critical information to public
debates on Social Security and Medicare reform and called attention to
looming problems such as the security of government computer systems and the
knowledge and skills needed in the federal workforce in coming years.
Taxpayers benefited from the near- record $23 billion in savings identified
through our work- a $61 return on every dollar invested in GAO.
I am particularly pleased that we were able to achieve these results in the
midst of significant change within GAO. After completing our first strategic
plan last year, we realigned our organization to better meet our goals and
objectives, and we
began to institute new ways of doing business. We also gained new
legislative authorities to help us address our human capital requirements
and help ensure that GAO remains prepared to meet the Congress's needs in
the future.
These needs are formidable. The nation's leaders are faced with complex,
controversial, and multidimensional issues that require a more strategic,
long- range, and integrated perspective than in the past. While record
budget surpluses are projected for the next 10 years, the longterm
obligations associated with our aging population will result in serious and
increasing pressure on future federal budgets. Moreover, changes in
technology, in the nature of threats to national security, and in the
interrelationships of national economies, among other developments, suggest
the need to reassess what government does and how it does it in the 21st
century.
Looking toward fiscal year 2002, we believe the work we plan to undertake
and our efforts to become a model agency will help the Congress address
these challenges. As we move ahead, we look forward to the continued support
of the Congress and to working even more closely with Members and their
staffs. Their support- and the dedication and commitment of our GAO team-
are the driving forces behind our continued success in serving the Congress
and the American people.
DAVID M. WALKER
COMPTROLLER GENERAL OF THE UNITED S TATES
FRO M T H E C O M P T RO L L E R G E N E R A L 2
MANAGEMENT DISCUSSION AND ANALYSIS 5
Agencywide Performance and Plans 7 Fiscal Year 2000 9 Fiscal Year 2001 20
Fiscal Year 2002 22
Strategic Goal 1: Performance and Plans 23
Well- Being and Financial Security of the American People
Fiscal Year 2000 25 Fiscal Years 2001 and 2002 27
Strategic Goal 2: Performance and Plans 28
Changing Security Threats and Challenges of Global Interdependence
Fiscal Year 2000 30 Fiscal Years 2001 and 2002 32
Strategic Goal 3: Performance and Plans 33
Results- Oriented and Accountable Federal Government
Fiscal Year 2000 35 Fiscal Years 2001 and 2002 37
Strategic Goal 4: Performance and Plans 38
GAO as a Model Organization for the Federal Government
Fiscal Year 2000 38 Fiscal Years 2001 and 2002 41
Strategies and Challenges- Achieving Our Goals 42 Coordination to Address
Crosscutting Issues 44 Major Management Challenges- Internal Factors That
Could Affect
Our Performance in Fiscal Year 2002 External Factors That Could Affect
Performance 55 Procedures to Verify and Validate GAO's Performance Data 57
Program Evaluation 67 TABLE OF CONTENTS
3
Highlights of Resources Needed to Achieve Our Fiscal Year 2002 Performance
Goals 69
Organization and Structure 71
Overview of Financial Statements 73
Financial Systems and Internal Controls 74 FINANCIAL STATEMENTS AND NOTES 77
REPORT OF THE AUDIT ADVISORY COMMITTEE 95 INDEPENDENT AUDITOR'S REPORT 96
APPENDIXES
Appendix I: Goal 1 Accomplishments and Performance Goals 100
Appendix II: Goal 2 Accomplishments and Performance Goals 124
Appendix III: Goal 3 Accomplishments and Performance Goals 139
Appendix IV: Goal 4 Accomplishments and Performance Goals 150
TA B L E O F C O N T E N T S 4
MANAGEMENT DISCUSSION AND ANALYSIS
As the investigative arm of the Congress, GAO evaluates the economy,
efficiency, and effectiveness of a wide range of federal policies and
programs. Primarily in response to congressional requests and mandates- but
also through our own targeted research and development efforts- we publish
thousands of reports and other documents each year and provide a number of
related services to support legislative oversight and improve government
operations. By making recommendations to improve the practices and
operations of government agencies, GAO contributes to more effective federal
spending. Our work also helps to raise the public's trust and confidence in
the federal government.
5
6 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Consistent with the spirit of the Government Performance and Results Act of
1993 (GPRA), GAO operates under a broad strategic plan- currently covering
fiscal years 2000 through 2005. To drive our work toward the goals
envisioned in the strategic plan, we also developed detailed strategic
objective plans and report our results yearly to the Congress and the
public. In addition, last year we published our first performance plan for
fiscal year 2001. This year, in response to the Congress's desire to have
financial and performance management information presented in a more
cohesive way, we have merged three documents:
our performance report for fiscal year 2000, our accountability report for
fiscal year 2000, and our performance plan for fiscal year 2002.
This document presents (1) the results GAO achieved in fiscal year 2000, the
first year under our new strategic plan, (2) a status report on what we
expect to accomplish in fiscal year 2001, (3) our performance plan for
fiscal year 2002, and (4) our financial statements and the independent
auditor's report for fiscal year 2000. We will deal first with the agency as
a whole, then discuss our performance and plans by strategic goal, and
finally present assessments of our financial systems and internal controls.
6
7
Agencywide Performance and Plans
Annual Quantitative Performance Measures and Targets, Fiscal Years 1997-
2002
1997 1998 1999 2000 2001 2002 Type Measure Actual Actual Actual Target a
Actual Target Target
Outcome Financial benefits (billions)
Annual $20.9 $19.7 $20.1 $22.0 $23.2 $23.0 $24.0 4- year average $18.4 $18.4
$19.5 $20.7 $21.0 $21.5 $22.6
Other benefits
Annual 391 537 607 620 788 700 b 720 4- year average 266 354 451 539 581 658
704
Recommendations implemented c
4- year implementation rate 74% 69% 70% 73% 78% 75% 75%
Intermediate outcome Testimonies
Annual 182 256 229 230 263 150 b 233 4- year average 208 216 212 224 233 225
219
Recommendations made
Annual 836 987 940 950 1,224 975 1,000 4- year average 946 848 898 928 997
1,032 1,035
Annual Management Measures and Targets, Fiscal Years 1997- 2002 Management
Timeliness
Annual 91% 93% 96% 100% 96% 100% 100% 4- year average d d 88% d 94% d d
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
Performance goals: 94
Expect to meet or exceed 100% Do not expect to meet 0% Not started 0%
Note: Agencywide totals may differ from the sum of the amounts on the tables
for Strategic Goals 1, 2, and 3 because when multiple units participate in
an engagement, credit may be reflected under more than one of the Goals. a
Because GAO did not have a performance plan for fiscal year 2000, the
figures in this column were
referred to in past documents as “estimates.” They served the
same function as the targets we now set in our performance plans. b This is
a revised target. For the original target, please see GAO's revised final
performance plan for
fiscal year 2001, available at www. gao. gov. c This measure gauges the
implementation rate of recommendations made 4 years prior to each
respective fiscal year. d Data were not collected for this measure in fiscal
years 1994 and 1995; a 4- year average could not be
calculated for actual performance. We do not set 4- year average targets for
timeliness.
SERVING THE CONGRESS GAO'S STRATEGIC PLAN FRAMEWORK
TO ADDRESS CURRENT AND EMERGING CHALLENGES TO THE
WELL- BEING AND FINANCIAL SECURITY
OF THE AMERICAN PEOPLE
HELP THE CONGRESS AND THE FEDERAL GOVERNMENT
GAO exists to support the Congress in meeting its Constitutional
responsibilities and to help improve the performance and accountability of
the federal government for the benefit of the American people. MISSION
THEMES
Demographics Security Globalization Quality of Life Security Technology
PROVIDE TIMELY, QUALITY SERVICE TO THE CONGRESS AND THE FEDERAL GOVERNMENT
GOALS CORE VALUES
Accountability Integrity Reliability
Health care needs and financing Retirement income security Social safety net
Education/ workforce issues Effective system of justice Community investment
Natural resources use and environmental protection
Physical infrastructure
OBJECTIVES
TO RESPOND TO CHANGING THREATS TO NATIONAL SECURITY
AND THE CHALLENGES
OF GLOBAL INTERDEPENDENCE
TO A MORE RESULTS- ORIENTED AND ACCOUNTABLE
FEDERAL GOVERNMENT
SUPPORT THE TRANSITION
MAXIMIZE THE VALUE OF GAO
Government Performance and Accountability
BY BEING A MODEL ORGANIZATION
FOR THE FEDERAL GOVERNMENT
Diffuse security threats Military capabilities and readiness
Advancement of U. S. interests
Global market forces Fiscal position of the
government Government financing and accountability
Governmentwide management reforms
Economy, efficiency, and effectiveness improvements in federal agencies
Client relations Strategic and annual planning
Human capital Core business and supporting processes
Information technology services
In fiscal year 2000, GAO achieved more than $23 billion in financial
benefits for the American taxpayer and recorded more than 700 other actions
taken in response to our recommendations to improve how the federal
government operates. We also completed a number of major initiatives to
improve the way GAO itself operates. For example, we issued our first
strategic plan for the 21st century- based on input from the Congress and
supplemented by our own expertise and other outreach efforts- that
established four strategic goals for our agency, as the diagram to the left
shows. Additionally, we established protocols that govern our interaction
with the Congress to ensure greater satisfaction with our work and equitable
treatment of all requesters. We realigned the agency to better support the
Congress and to prepare ourselves to meet the future challenges outlined in
our strategic plan within current and expected resource levels. We also
began implementing a range of new and enhanced human capital and information
technology strategies to better position GAO for future success.
The sections that follow describe GAO's results for fiscal year 2000, the
status of what we expect to accomplish in fiscal year 2001, and our plans
for fiscal year 2002.
Fiscal Year 2000
GAO assesses its performance in two ways: quantitatively and qualitatively.
The quantitative measures tabulate such things as the dollar savings to the
American taxpayer from GAO's work, the number of instances in which our work
led to improvements in government operations or services, and the rate at
which our recommendations are implemented. The quantitative results are
compared with annual targets to determine whether we are performing as well
as planned. The qualitative measures are whether we meet, exceed, or fail to
meet performance goals for which results are assessed every 3 years. For
example, in fiscal year 2000, we began work on a qualitative performance
goal to address the long- term fiscal health
9
10 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
of the federal government. We will assess our efforts to meet that goal at
the end of fiscal year 2002. The 94 qualitative performance goals are listed
in appendixes I through IV.
Quantitative Results
For fiscal year 2000, our performance exceeded all five of our five
quantitative targets. Under a separate management measure of timeliness, we
achieved a 96- percent success rate for delivering our products on time,
falling short of our idealistic 100- percent target. The chart on page 7
shows the trends in quantitative results since 1997 and also provides 4-
year rolling averages that serve to show those trends without the effects of
one- time or unusual circumstances and shifts in congressional priorities
and workloads.
$23.2 Billion in Direct Financial Benefits Were Realized. These results
exceeded our target of $22 billion and were up from the previous year's
results of $20.1 billion.
11
GAO Work at
FRAUDANDABUSEIN MEDICARE
Helping to Prevent
F- 22AIRCRAFTPROGRAM
Cutting Costs of the
HUD FUNDING
Recapturing Excess
GAO had long advocated increased funding specifically for activities to pre
vent fraud and abuse in the Medicare program. In 1996, the Congress passed
the Health Insurance Portability and
Accountability Act, which provided the additional funding. As a result of
these activities, the Medicare program's net savings were about $3 billion
in fiscal year 2000.
In a series of reports beginning in the mid- 1990s, GAO questioned various
aspects of the Air Force's F- 22 aircraft acquisition program. We reported
that the acquisition strategy was risky and that the program was
experiencing cost growth, manufacturing problems with test aircraft, and
testing delays. Our analysis
helped the Congress reduce the final fiscal year 2000 appropriation request
for the F- 22 by about $552 million and to identify conditions that should
be met before the Department of Defense could begin full production.
GAO identified funding from several sources in the Department of Housing
Urban Development's budget, including unexpended balances no longer needed,
that could be recaptured in fiscal years 1998 and 1999. The Congress
rescinded $1.65 billion from the Section 8 housing program's fiscal year
1998 budget authority and rejected $1.3 billion
of HUD's fiscal year 1999 request for housing assistance for a total
reducand tion of $2.95 billion. Subsequently, GAO and HUD worked together to
revise HUD's analysis to show that, by using recaptured funds, HUD had
sufficient funding to meet its needs.
12 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
We achieve our financial benefits when our recommendations are implemented
to make the government more efficient, to improve the budgeting and spending
of tax dollars, and to strengthen the management of federal resources.
Estimated financial benefits include budget reductions, costs avoided,
resources reallocated, and revenue enhancements. Because it takes time for
agencies to implement GAO's recommendations and document savings, the
financial benefits we report in a given year may be based on work we
performed in the current or previous years.
788 Actions Were Taken to Improve Government Operations or Services. Our
results exceeded our target of 620 actions taken and were up from the
previous year's 607 actions taken.
These benefits represent improved government operations and services. We
measure these benefits by tabulating the number of cases in which our
recommendations have prompted federal agencies or the Congress to take
action.
The 788 actions reported for fiscal year 2000 include measures to improve
public safety and consumer protection, to establish more effective and
efficient government operations, and to safeguard the nation's physical and
information infrastructure.
GAO has evaluated the information security programs and controls over
critical systems at numerous federal agencies and recommended numerous
improvements, most recently at three Treasury agencies, the Department of
Energy, the Department of Veterans Affairs, and the Environmental Protection
Agency. In September 2000, GAO issued a governmentwide perspective
on federal information security that covered Inspector General and GAO audit
findings reported since July 1999. We concluded that weak security continues
to be a widespread problem that places critical and sensitive federal
operations at risk of tampering, disruption, and inappropriate disclosure.
The Health Care Financing Administration
(HCFA) and several states- including California, Maryland, and Michigan-
improved their oversight and enforcement of nursing homes' quality of care
standards in response to GAO's recommendations highlighting weaknesses in
existing processes. Improvements included increased funding for nursing home
surveyors,
Our work on human capital issues helped focus the attention of the executive
and legislative branches on the importance of these issues, particularly
their importance in managing for results.We helped spur the administration
to make human capital a priority management objective in the fiscal year
2001 budget submission, and our framework for human capital selfassessment
is being used at agencies,
including the Social Security Administration, the Small Business
Administration, the National Aeronautics and Space Administration, and the
Environmental Protection Agency. This framework is also used throughout GAO
to help guide our research and development work and our congressionally
driven examinations of how well agencies are pursuing strategic human
capital management. more prompt investigation of complaints
alleging serious harm to residents, more immediate enforcement actions for
homes with repeated serious problems, a reorganization of HCFA's regional
staff to improve consistency in oversight, and increased funding for
administrative law judges to reduce the backlog of appealed enforcement
actions.
GAO Work at
NURSINGHOMEQUALITY OFCARE
Improving
HUMANCAPITALPRACTICES
Improving
INFORMATIONSECURITY
Strengthening
13
14 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
78 Percent of the Recommendations We Made 4 Years Ago Were Implemented. Our
results exceeded our target of 73 percent and were up from the previous
year's rate of 70 percent.
We measure our progress in improving the government's accountability,
operations, and services by tracking the percentage of recommendations we
made 4 years ago that have since been implemented. For example, 78 percent
of the recommendations we made in fiscal year 1996 had been implemented by
the end of fiscal year 2000. We use a 4- year interval because our
historical data show that agencies often need this time to take action on
our recommendations. Implemented recommendations correct the underlying
causes of problems, weaknesses in internal controls, failures to comply with
laws and regulations, or other matters impeding effective and efficient
performance.
263 Testimonies Were Given Before the Congress. Our results exceeded our
target of 230 and were up from the previous year's total of 229 testimonies.
Because one of GAO's primary functions is to support the Congress in
carrying out its decision- making and oversight responsibilities, the number
of times our experts testify before congressional panels each year is an
indicator of our responsiveness and the impact, importance, and value of our
work. In fiscal year 2000, GAO witnesses testified before 104 different
congressional committees and subcommittees on a broad range of topics,
including arms control, health care, Social Security, human capital, nuclear
waste cleanup, wildfires, aviation safety and security, international trade,
computer security, financial management reform, and budget issues.
15
16 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
1,224 Recommendations Were Made During the Year. Our results exceeded our
target of 950 recommendations and were up from the previous year's total of
940.
Our investigations and analyses can lead to improved government performance
when we make recommendations to federal agencies. We recommend specific
actions to improve the economy, efficiency, and effectiveness of federal
operations and aim to effect significant financial and other benefits to
taxpayers. We therefore track the number of recommendations contained in the
products we issue each year.
17 96 Percent of Our Products Were Delivered on Time. Our results fell short
of our idealistic
target of 100- percent on- time delivery. In addition to the five measures
already discussed, we use a management measure of timeliness. For our work
to be useful, our congressional clients must have it on a timely basis.
Therefore, we compare actual product delivery dates with the dates we agreed
to with our clients. We set an idealistic target of 100 percent to emphasize
the importance we place on being responsive to our clients. Although we did
not meet this target- and we believe it will remain a challenge because of
our increasing workload and external factors beyond our control- we will
continue to emphasize timeliness. Fully implementing our new matrix and risk
management strategies should help improve our on- time delivery.
Qualitative Results
As of the end of fiscal year 2000, we expected to meet or exceed all 94 of
our 3- year qualitative performance goals, although progress toward some had
been slowed because we did not receive all the resources we requested.
These 94 qualitative performance goals lay out the key efforts and potential
outcomes we hope to achieve for each of our strategic objectives. We will
evaluate whether we met, exceeded, or failed to meet them at the end of
fiscal year 2002. Our performance on these
18 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
goals will meet expectations when we provide information or make
recommendations on the key efforts when viewed collectively. Our performance
will exceed expectations when we provide information or make recommendations
that congressional decisionmakers and others use toward achieving the
potential outcomes listed in the relevant strategic objective plans
(available at www. gao. gov). The performance goals are listed in the
appendixes to this report.
Management Highlights
GAO continued to enhance its effectiveness and efficiency through a variety
of means during fiscal year 2000, including developing a strategic plan,
establishing congressional protocols, realigning the agency, restructuring
the field offices, implementing key human capital initiatives, and
increasing the use of information technology.
To improve the way we serve the Congress, we developed our first strategic
plan for the 21st century and established congressional protocols to govern
our interaction with our congressional clients. The strategic plan describes
our role and mission in the federal government; the trends, conditions, and
external factors underlying our plan; and our goals, objectives, and
strategies for serving the Congress. Over 90 percent of our work is mandated
or requested by congressional Committee and Subcommittee Chairs, Ranking
Members, or individual Members. The congressional protocols, which underwent
a 9- month pilot test, provide clear, transparent, consistently applied
policies and practices for GAO's relations with the Congress to reduce
miscommunication and ensure that all requesters are treated equitably.
To align GAO's structure with the goals in our strategic plan, we
reorganized both our field and headquarters operations. The changes were
primarily designed to
better align resources with our strategic plan, eliminate a layer of
managerial hierarchy,
19
reduce the number of organizational units, increase internal and external
coordination, clarify the roles and responsibilities of management, increase
the number of personnel who perform rather than manage or review work, and
increase the critical mass and enhance the flexibility of field resources.
Working closely with the Congress throughout the year led to the enactment
of the GAO Personnel Flexibility Act (P. L. 106- 103), a major human capital
milestone. The act, signed into law in October 2000, grants the Comptroller
General the authority to establish new senior- level scientific and
technical positions; to offer targeted voluntary early- outs and buyouts;
and to carry out reductions in force to downsize, realign, or correct skills
imbalances within our agency. To gain a fuller understanding of our human
capital resources and needs, we completed our first human capital self-
assessment. We also administered a knowledge and skills inventory and an
employee preference survey. To help attract skilled employees to carry out
GAO's mission in the future, we also significantly increased our recruiting
and college relations efforts on the nation's campuses. To engage our
employees more fully in improving the agency's performance, we established
the Comptroller General's Employee Advisory Council and implemented an
employee suggestion program that received more than 800 submissions in its
first year of operation.
Throughout the year, we continued to improve our use of information
technology, as a tool for productivity and knowledge management. To provide
our teams of analysts with a mechanism for simplifying and standardizing
their work, we launched the EAGLE, a prototype of a comprehensive Web- based
guide to conducting GAO engagements. Finally, we continued to enhance the
capabilities of our computer network and successfully made our systems Y2K
compliant. We also began a number of projects on enabling technologies,
including software upgrades, the deployment of notebook computers, and
improved remote access to allow our teams to work more efficiently in the
field.
20 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Fiscal Year 2001
The nation's leaders continue to be faced with a number of complex,
controversial, and multidimensional issues that require a more strategic,
longer- range, and more integrated approach. The close margins in both the
presidential and congressional elections reinforce the need for a
professional and objective organization such as GAO to gather facts and lay
out options to help policymakers reach timely and informed decisions. As
part of our role in assisting with the presidential transition and the new
Congress, we developed an external Web site with links to GAO contacts and
reports on the major executive branch agencies, which was completed at the
beginning of fiscal year 2001. A top priority in fiscal year 2001 will be
working with leaders on the Hill to help strengthen the Congress's approach
to oversight, with an emphasis on looking hard at what government does, how
it does it, and the long- term consequences of today's policy choices. Our
2001 Performance and Accountability Series and High- Risk Update will serve
as a solid foundation for congressional oversight.
We are also preparing to carry out two new responsibilities assigned by the
106th Congress. We will chair a panel to review the process established
under the Office of Management and Budget's Circular A- 76 to allow the
government to use competitive sourcing to obtain services from the private
sector that would otherwise be performed by federal employees. If the needed
funding is provided, we will also review the costs and benefits of major
regulations under the Truth in Regulating Act (P. L. 106- 312, Oct. 17,
2000).
With our agency's realignment nearing completion and a year's experience
with using our strategic plan to drive our work, we reset some of our
quantitative performance targets for fiscal year 2001 and posted them on the
Web in a revised performance plan. At the agency level, the targets remained
the same, with two exceptions: On the basis of a reassessment of what we
expect to result from our work, we raised our target for other benefits from
640 actions taken on our recommendations to 700. We reduced our target for
the number of times we expect to testify before the Congress from 250 to
150. We made this change for
21
several reasons: First, the number of hearings typically conducted in years
when both a new Congress and a new administration take office is lower than
in other years. Second, the delay in the presidential transition resulted in
fewer congressional hearings being held. Finally, the 50/ 50 split in the
Senate and the change in leadership of many House committees also reduced
the number of hearings being held.
Our other targets for fiscal year 2001 call for GAO to achieve $23 billion
in financial benefits, a 75- percent implementation rate for recommendations
we made 4 years ago, and 975 new recommendations for improved government
operations and services.
For our management measure of timeliness, we will continue to work toward
our idealistic target of delivering 100 percent of our products on time. In
addition, we have adjusted some of our qualitative performance goals now
that we have a clearer understanding of how to put our strategic plan into
action. Later in this report, we cover the targets for each of our four
strategic goals and revisions to the qualitative performance goals.
A number of other plans are under way as this report goes to press. Building
on the success of GAO's congressional protocols, we will now implement an
expanded client feedback system and issue protocols governing our dealings
with federal agencies. We are forming several new high- level advisory
bodies to gain the expertise of business leaders, former Cabinet officials,
and experts on accounting, recruiting, and other key issues. In turn, we
plan to be more active in lending our own expertise to the federal, state,
local, and international accountability communities by convening working
groups and participating in global forums. Internally, we will complete our
realignment of our mission support organization. We will begin promulgating
regulations to implement the human capital legislation passed in fiscal year
2000 and seek authority to help us attract and retain additional skilled and
knowledgeable staff. A new competency- based performance appraisal system
for analysts will be completed along with the staff training needed to
ensure the implementation is effective.
22 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Fiscal Year 2002
For fiscal year 2002, we have set targets that call for GAO to meet or
exceed this year's performance targets. Our targets for fiscal year 2002 are
as follows:
$24 billion in financial benefits, 720 actions taken on our recommendations,
a 75- percent implementation rate for recommendations we made 4 years ago,
233 testimonies given before the Congress, and 1,000 new recommendations
made to improve government operations and services.
We will also continue to pursue our management measure of 100- percent on-
time delivery. We have requested a budget for fiscal year 2002 of about
$430.3 million to maintain current operations and serve the Congress as
outlined in our strategic plan. This funding level will allow us to fully
staff at our total authorized level of 3,275 full- time equivalent (FTE)
personnel. The additional staff will be used to increase program emphasis in
areas of congressional and public interest and concern, such as government
computer security, Social Security solvency, education, economic
development, Medicare reform, and international affairs.
With this budget, we also would continue our human capital and information
technology initiatives. The increased funding will be used, among other
things, to improve our training, performance- based rewards and
compensation, and network operating and application systems that have not
kept pace with the agency's needs and current government and industry
standards. Our request also includes $5.2 million to carry out
responsibilities created by the Truth in Regulating Act to analyze certain
economically significant regulations.
In the next sections of this report, our results for fiscal year 2000 and
performance plan for fiscal year 2002 will be examined for each of our four
strategic goals. Subsequent sections
23
will describe our strategies for meeting those goals, our coordination with
other organizations on crosscutting issues, the major management challenges
GAO faces, the external factors that could affect our performance, the
procedures we use to verify and validate our performance data, and how we
evaluate our performance.
Strategic Goal 1: Performance and Plans
Provide Timely, Quality Service to the Congress and the Federal Government
to Address Current and Emerging Challenges to the Well- Being and Financial
Security of the American People
Annual Quantitative Performance Measures and Targets, Fiscal Years 1997-
2002
1997 1998 1999 2000 2001 2002 Type Measure Actual Actual Actual Target a
Actual Target Target
Outcome Financial benefits (billions)
Annual $8.4 $10.8 $13.8 $13.0 $14.1 $12.65 b $13.00 4- year average $6.8
$7.5 $9.8 $11.5 $11.8 $12.84 $13.39
Other benefits
Annual 116 177 140 140 182 196 b 198 4- year average 88 114 129 143 154 174
179
Recommendations implemented c
4- year implementation rate 70% 69% 72% 73% 72% 75% 75%
Intermediate outcome Testimonies
Annual 99 130 123 115 131 71 b 104 4- year average 105 110 110 117 121 114
107
Recommendations made
Annual 273 285 350 325 435 349 b 357 4- year average 297 245 278 308 336 355
373
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
Performance goals: 42
Expect to meet or exceed 100% Do not expect to meet 0% Not started 0%
a Because GAO did not have a performance plan for fiscal year 2000, the
figures in this column were referred to in past documents as
“estimates.” They served the same function as the targets we now
set in our performance plans. b This is a revised target. For the original
target, please see GAO's revised final performance plan for
fiscal year 2001, available at www. gao. gov. c This measure gauges the
implementation rate of recommendations made 4 years prior to each
respective fiscal year.
24 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
In keeping with our mission to support the Congress in carrying out its
constitutional responsibilities, our first strategic goal focuses on several
of the aspirations of the American people that were defined by the Founders:
to “establish justice, insure domestic tranquility, ... promote the
general welfare, and secure the blessings of liberty to ourselves and our
posterity ....” Our aging and increasingly diverse population, rapid
technological change, and Americans' desire to improve the quality of life
all have major policy and budgetary implications for the federal government.
In particular, growing commitments to the elderly will challenge the
capacity of a smaller generation of workers to finance the competing needs
and wants brought to the federal doorstep. Our first goal, therefore, is to
help the Congress and the federal government address the challenges that
affect the well- being and financial security of the American people,
recognizing the constraints of available resources and economic capacity.
To ensure that we provide timely, quality service to support the decision-
making of the Congress as a whole and of its Committees dealing with the
well- being and financial security of the American people, we have
established eight strategic objectives:
the health care needs of an aging and diverse population, a secure
retirement for older Americans, the social safety net for Americans in need,
an educated citizenry and a productive workforce, an effective system of
justice, investment in communities and economic development, responsible
stewardship of natural resources and the environment, and a safe and
efficient national physical infrastructure.
25
Fiscal Year 2000
In working toward this Strategic Goal in fiscal year 2000, we exceeded four
of our five annual performance targets:
We achieved measurable financial benefits of about $14.1 billion- more than
$1 billion above our target for the year, which was $13 billion.
We recorded 182 actions taken on our recommendations by executive branch
agencies or the Congress to improve government operations or services, again
exceeding the target, which was 140 actions.
The implementation rate for the recommendations we made to executive branch
agencies 4 years ago was 72 percent, just short of our target of 73 percent.
Because the performance target was set at an approximate level and the
deviation from that level was slight, we believe our overall performance was
not affected.
We testified 131 times before the Congress on matters concerning the well-
being and financial security of the American people, exceeding our target of
115 testimonies.
We made 435 new recommendations to executive branch agencies to further
improve their operations and services, a third more than our target of 325
recommendations.
In addition, we expect to meet or exceed all 42 qualitative performance
goals by the end of fiscal year 2002. These performance goals are listed in
appendix I, along with details of our fiscal year 2000 accomplishments in
helping the Congress and the federal government address current and emerging
challenges to the well- being and financial security of the American people.
GAO produced a major body of work analyzing the challenges facing the
longterm financial solvency, stability, and sustainability of the Social
Security program, including developing and applying criteria for evaluating
reform
GAO Work at
SOCIALSECURITY REFORM
Analyzing
AIRLINE COMPETITION
Improving Maximizing
proposals. Our criteria provide a clear, consistent, and objective
analytical framework that the Congress, program officials, and the public
can use in evaluating legislative reforms.
Our congressionally requested work on airline competition paid off, with the
Congress's passing legislation that addressed critical barriers to increased
competition. Our work showed that limitations on the numbers of arrivals and
departures (called slot controls) inhibit the ability of some airlines to
serve new markets.The new law en courages more vigorous competition by
phasing out slot controls at three major
airports, increases slots for new- entrant airlines, increases slots for
airlines with limited access, and requires that the Department of
Transportation grant additional slots to airlines that increase regional jet
service to small- hub airports. Several of those small cities now receive
improved service from airlines operating regional jets.
Acting on a GAO recommendation, the Congress required the Department of
Energy to recover from commercial customers an appropriate share of the
expected costs for work involving the
decontamination and decommissioning of the Department's uranium enrich ment
plants. More than $731 million in additional collections resulted.
26
THEURANIUM ENRICHMENT PROGRAM
27
on the
Among the current and emerging challenges to the well- being and financial
security of the American people that we testified on:
Air traffic control Airline competition Amtrak's financial condition Gun
control Health care Homelessness Housing programs Intercity passenger rail
Long- term care insurance Medicare Nuclear waste cleanup Nursing homes
Prescription drug benefits Social Security Truck safety Welfare reform
Wildfire dangers Worker protection
Fiscal Year 2001 and 2002
Guided by our final decisions on realigning the agency's structure to the
goals in our strategic plan, we allocated 914 full- time equivalent staff to
Goal 1. We revised some of our quantitative targets to reflect these
decisions as indicated on the table on page 23 and expect to meet our other
quantitative targets for fiscal year 2001. In addition, we revised 18 of our
42 qualitative performance goals to more accurately reflect the scope of
work being done under Goal 1. The tables in appendix I show these changes to
our performance goals.
Looking ahead to fiscal year 2002, we have requested 965 full- time
equivalent staff for Goal 1. The additional staff will be used to increase
emphasis on Social Security solvency, economic development, and Medicare
reform. Given these resources, we set the following targets: GAO Hill
$13 billion in financial benefits, 198 actions taken on our recommendations
to improve government operations or services, and a 75- percent
implementation rate for the recommendations we made 4 years ago.
These performance targets will continue to focus our attention on work that
provides financial benefits and other improvements in government operations.
We also set targets of delivering 104 testimonies and making 357
recommendations to executive agencies, two measures of the value of our work
for congressional decision- making and for identifying opportunities for
improving federal operations that yield benefits to taxpayers. As open
markets and rapidly developing technology create an increasingly
interconnected
28 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Strategic Goal 2: Performance and Plans
Provide Timely, Quality Service to the Congress and the Federal Government
to Respond to Changing Security Threats and the Challenges of Global
Interdependence
Annual Quantitative Performance Measures and Targets, Fiscal Years 1997-
2002
1997 1998 1999 2000 2001 2002 Type Measure Actual Actual Actual Target a
Actual Target Target
Outcome Financial benefits (billions)
Annual $9.5 $5.8 $3.0 $4.0 $5.5 $5.1 b $5.3 4- year average $7.6 $7.4 $6.3
$5.6 $6.0 $4.9 $4.7
Other benefits
Annual 78 73 80 95 129 162 b 163 4- year average 38 50 65 81 90 111 134
Recommendations implemented c
4- year implementation rate 84% 76% 65% 73% 84% 75% 75%
Intermediate outcome Testimonies
Annual 45 45 37 40 56 36 b 62 4- year average 37 38 40 42 46 44 48
Recommendations made
Annual 241 242 255 250 376 283 b 291 4- year average 329 272 266 247 279 289
301
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
Performance goals: 20
Expect to meet or exceed 100% Do not expect to meet 0% Not started 0%
a Because GAO did not have a performance plan for fiscal year 2000, the
figures in this column were referred to in past documents as
“estimates.” They served the same function as the targets we now
set in our performance plans. b This is a revised target. For the original
target, please see GAO's revised final performance plan for
fiscal year 2001, available at www. gao. gov. c This measure gauges the
implementation rate of recommendations made 4 years prior to each
respective fiscal year.
29
world, the United States faces new threats and opportunities. Threats to
national security come from regional instabilities, the spread of terrorism,
and the proliferation of nuclear and other weapons of mass destruction. They
come also from the interdependence of global economic and financial systems
and the vulnerabilities of the information technology used to conduct many
vital functions- from international commerce to warfare.
At the same time, the end of the Cold War and the globalization of markets
have created new opportunities for our nation as a whole and for American
producers and consumers. Consequently, while trying to anticipate and
address the new threats to national security, the federal government also
tries to promote foreign policy goals, trade policies, and other strategies
to help the nations in every corner of the world that are our military
allies and trading partners.
In light of this complex array of global issues, the second goal of our
strategic plan is to help the Congress and the federal government respond to
changing security threats and the challenges of global interdependence. To
ensure that we provide timely, quality service to support the decision-
making of the Congress as a whole and of its Committees dealing with
security and global interdependence issues, we have established four
strategic objectives:
responding to diffuse threats to national and global security, ensuring
military capabilities and readiness, advancing and protecting U. S.
international interests, and responding to the impact of global market
forces on U. S. economic and security interests.
30 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Fiscal Year 2000
In working toward this Strategic Goal in fiscal year 2000, we exceeded all
of our annual performance targets:
We achieved measurable financial benefits of about $5.5 billion- more than
37 percent above our target, which was $4 billion.
We recorded 129 actions taken on our recommendations by executive branch
agencies or the Congress to improve government operations or services, again
exceeding the target, which was 95 cases.
The implementation rate for the recommendations we made to executive branch
agencies 4 years ago was 84 percent, well above our target of 73 percent.
We testified 56 times before the Congress on national security and global
interdependence issues, exceeding our target of 40 testimonies.
We made 376 new recommendations to executive branch agencies to further
improve their operations and services, 50 percent more than our target of
250 recommendations.
In addition, we expect to meet or exceed all 20 qualitative performance
goals by the end of fiscal year 2002. These performance goals are listed in
appendix II, along with details of our fiscal year 2000 accomplishments in
helping the Congress and the federal government respond to changing security
threats and the challenges of global interdependence.
31
GAO Wor k at
NAVY' S IN- TRANSIT INVENTORY
TRADE AGREEMENTS
At the request of several Members of Congress, GAO examined how the Navy
reconciled its in- transit inventory records and found that the Navy had
lost accountability over $3 billion in inventory. In response, the Navy
established a task force that, for fiscal years 1999 and 2000, resolved
errors
GAO identified procedural and structural problems in the government's
monitoring and enforcement of its trade agreements. We found inconsistencies
and weaknesses in trade archiving practices that prevented the government
from determining the number of agreements it is party to. We also identified
human capital and other capacity weaknesses that limited key agencies' trade
monitoring and enforce valued at $802 million. Had this reconciliation
not occurred, the Navy could have bought additional inventory not knowing
that it already had the items in stock.
Despite the presence of two large NATO- led forces, the Balkans remain
volatile. GAO's work has shown that the international operations in Bosnia
and Kosovo face severe obstacles to achieving enduring peace and stability.
Most local leaders and members of their respective ethnic groups have not
embraced the political and social recon ciliation needed to build
multiethnic,
democratic societies. Our work has also shown that the international
community has not provided the resources that the United Nations mission in
Kosovo says it needs. If progress is not made in these matters, violence may
escalate or armed conflict may result.
ment abilities. In response, the key agencies improved the accuracy and
utility of their trade archives and are enhancing efforts to achieve
compliance with trade agreement provisions, to improve coordination and
teamwork in monitoring and enforcement activities across the government, and
to update mechanisms for obtaining private sector input on trade policy.
Revamping Stabilizing Evaluating
THE BALKANS
GAO Hill on the
Fiscal Year 2001 and 2002
Guided by our final decisions on realigning the agency's structure to the
goals in our strategic plan, we allocated 685 full- time equivalent staff to
Goal 2. We revised some of our quantitative targets for fiscal year 2001 to
reflect these decisions, as indicated on the table on page 28, and expect to
meet our quantitative targets for fiscal year 2001. In addition, we revised
4 of our 20 qualitative performance goals to more accurately reflect the
scope of work being done under Goal 2. The tables in appendix II show these
changes to our performance goals.
Looking ahead to fiscal year 2002, we have requested 720 full- time
equivalent staff for this goal. The additional staff will be used to
increase our work on international affairs and trade. Given these resources,
we set the following targets:
$5.3 billion in financial benefits, 163 actions taken on our recommendations
to improve government operations or services, and a 75- percent
implementation rate for the recommendations we made 4 years ago.
These performance targets will continue to focus our attention on work that
provides financial benefits and other improvements in government operations.
We also set targets of delivering 62 testimonies and making 291
recommendations to executive agencies, two measures of the value of our work
for congressional decision- making and in identifying opportunities for
improving federal operations that yield benefits to taxpayers.
Among the changing security threats and challenges of global interdependence
we testified on:
AIDS crisis in Africa Anthrax vaccine immunization Arms control Aviation
security Bosnia Chemical and biological defense Colombian drugs Combating
terrorism Critical infrastructure protection Defense acquisitions Drug
control Export controls I Love You virus International child abductions
Micronesia Military personnel Peacekeeping operations Trade with European
Union United Nations management reforms Weapons of mass destruction World
Trade Organization
32
33
Strategic Goal 3: Performance and Plans
Support the Transition to a More Results- Oriented and Accountable Federal
Government
Annual Quantitative Performance Measures and Targets, Fiscal Years 1997-
2002
1997 1998 1999 2000 2001 2002 Type Measure Actual Actual Actual Target a
Actual Target Target
Outcome Financial benefits (billions)
Annual $8.6 $4.6 $4.5 $5.0 $5.1 $5.25 b $5.7 4- year average $5.2 $5.2 $5.7
$5.7 $5.7 $4.86 $5.1
Other benefits
Annual 216 311 414 415 503 342 b 359 4- year average 145 200 274 339 361 393
405
Recommendations implemented c
4- year implementation rate 69% 65% 78% 74% 77% 75% 75%
Intermediate outcome Testimonies
Annual 57 96 100 85 105 43 b 67 4- year average 66 75 79 84 90 86 79
Recommendations made
Annual 322 460 335 370 413 343 b 352 4- year average 321 332 355 372 383 388
361
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
Performance goals: 15
Expect to meet or exceed 100% Do not expect to meet 0% Not started 0%
a Because GAO did not have a performance plan for fiscal year 2000, the
figures in this column were referred to in past documents as
“estimates.” They served the same function as the targets we now
set in our performance plans. b This is a revised target. For the original
target, please see GAO's revised final performance plan for
fiscal year 2001, available at www. gao. gov. c This measure gauges the
implementation rate of recommendations made 4 years prior to each
respective fiscal year.
As we enter the 21st century, American citizens are increasingly demanding
improved government services and better stewardship of public resources. The
federal government is adopting the principles of performance- based
management in an effort to address these demands. This approach to managing
government integrates thinking about organizational structure; program and
service delivery strategies; and the use of technology, reliable financial
information, and effective human capital strategies into decisions about the
results the government intends to achieve. Many initiatives now under way
across government to improve operations and strengthen accountability are
being driven by management reforms statutorily
34 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
established by the Congress in the 1990s. Yet the reforms did not encompass
all areas of government management, in particular, human capital strategic
planning and management at a governmentwide level.
The reforms that have been adopted have profound implications for what
government does (the products and services it delivers), how it is
organized, and how it performs. Consequently, government decisionmakers and
managers are adopting new ways of thinking, considering different ways of
achieving goals, and using new information to guide decisions. At the same
time, with budget surpluses now projected for the coming years, the U. S.
government faces a new set of challenges, in both the long and near terms,
in making budget decisions.
To ensure that we support the transition to a more results- oriented and
accountable federal government, we have established four strategic
objectives:
analyzing the federal government's long- term and near- term fiscal
position, outlook, and options; strengthening approaches for financing the
government and determining accountability for the use of taxpayer dollars;
facilitating governmentwide management and institutional reforms needed to
build and sustain high- performing organizations and more effective
government; and recommending economy, efficiency, and effectiveness
improvements in federal agency programs.
35
Fiscal Year 2000
In working toward this Strategic Goal in fiscal year 2000, we exceeded all
five of our annual performance targets:
We achieved measurable financial benefits of about $5.1 billion-$ 100
million more than our target of $5 billion.
We recorded 503 actions taken on our recommendations by executive branch
agencies or the Congress to improve government operations or services, again
exceeding the target, which was 415 actions.
The implementation rate for the recommendations we made to executive branch
agencies 4 years ago was 77 percent, exceeding our target of 74 percent.
We testified 105 times before the Congress on making government more results
oriented and accountable, exceeding our target of 85 testimonies.
We made 413 new recommendations to executive branch agencies to further
improve their operations and services- well beyond our target of 370
recommendations.
In addition, we expect to meet or exceed all 15 qualitative performance
goals by the end of fiscal year 2002. These performance goals are listed in
appendix III, along with details of our fiscal year 2000 accomplishments in
supporting the transition to a more results- oriented and accountable
federal government.
GAO Work at
SBA'S DISASTER LOAN PROGRAM ESTIMATES
Improving Informing
THE GOVERNMENT PERFORMANCE AND RESULTS ACT
Implementing
CONGRESSIONAL DELIBERATIONS ON TAX POLICY
In reviewing information the Small Business Administration developed and
used to prepare its financial statements for fiscal years 1997 and 1998, GAO
identified errors in the method SBA used to estimate the cost of the
Disaster Loan Program. In response, SBA developed a
new approach to estimate its program's costs using actual historical data,
which decreased the estimated cost of the loan program. During fiscal years
1999 and 2000, about $609 million in benefits resulted.
The nation's evolving economy and the size and complexity of the current IRS
Code raise policy issues for the Con gress. For example, the rapid develop
ment of electronic commerce has fueled debate about whether online transac
tions should be taxed. During the debate over whether to extend the ban on
state and local sales taxes on electronic commerce, GAO provided the Con
gress with a unique perspective on the potential revenue losses to state and
local governments. In addition, our prior work on better targeting the
Earned Income Credit continued to generate substantial savings of over $600
million.
GAO assisted the Congress and execu tive branch agencies with the difficult
cultural changes needed to create high performing agencies.As part of this
work, we assessed agencies' efforts under GPRA and made specific recom
mendations on how the Congress and the executive branch could work together
to ensure that results- oriented
processes are useful to and used by decisionmakers. We also worked with the
Congress to ensure that agencies resolve management problems that undercut
or undermine programs. Our work for the Senate on the key at tributes of
high- performing organizations is being used as a basis for oversight and
decision- making.
36
$5.7 billion in financial benefits, 359 actions taken on our recommendations
to improve government operations or services, and a 75- percent
implementation rate for the recommendations we made 4 years ago.
37
Among the issues we testified on pertaining to the transition to a more
results- oriented and accountable federal government:
Budget issues Computer security District of Columbia reforms Electronic
government Federal management challenges Financial management reform
Government facility security Government in the 21st century Government
program oversight GPRA congressional oversight Human capital Managing in the
new millennium Money laundering Security breaches at federal agencies U. S.
government financial statement
audit Y2K leadership and partnership
Fiscal Year 2001 and 2002
Guided by our final decisions on realigning the agency's structure to the
goals in our strategic plan, we allocated 942 full- time equivalent staff to
Goal 3. We revised some of our quantitative targets to reflect these
decisions, as indicated on the table on page 33, and are on track to meet
our quantitative targets for fiscal year 2001. In addition, we revised 1 of
our 15 qualitative performance goals to more accurately reflect the scope of
work being done under Goal 3. The tables in appendix III show that change to
the performance goals.
Looking ahead to fiscal year 2002, we have requested 976 full- time
equivalent staff for this goal. The additional staff will be used to
increase our emphasis on federal human capital management, government
computer security, and analyses of economically significant regulations.
Given these resources, we set the following targets: GAO Hill on the
These performance targets will continue to focus our attention on work that
provides financial benefits and other improvements in government operations.
We also set targets of delivering 67 testimonies and making 352
recommendations to executive agencies, two measures of the value of our work
for congressional decision- making and in identifying opportunities for
improving federal operations that yield benefits to taxpayers.
38 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Strategic Goal 4: Performance and Plans
Maximize the Value of GAO by Being a Model Organization for the Federal
Government
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
Performance goals: 17
Expect to meet or exceed 100% Do not expect to meet 0% Not started 0%
To carry out our responsibilities to the Congress and the American people
successfully, GAO must be perceived as credible and must lead by example.
Our fourth strategic goal provides the framework for enhancing and
sustaining our organizational credibility.
To ensure that we maximize the value of GAO by being a model organization
for the federal government, we have established five strategic objectives:
cultivate and foster effective congressional and agency relations, implement
a model strategic and annual planning and reporting process, align human
capital policies and practices to support GAO's mission, develop efficient
and responsive business processes, and build an integrated and reliable
information technology infrastructure.
Fiscal Year 2000
To help guide our efforts in achieving Strategic Goal 4, we originally
established three quantitative annual performance measures and targets:
timeliness, product quality, and multiunit products. In our revised final
fiscal year 2001 performance plan, we made the timeliness measure an overall
GAO management measure. This change will provide greater focus and emphasis
on meeting client needs.
39
We discontinued the product quality measure at the end of the second quarter
of fiscal year 2000 primarily because it did not adequately capture the
evolving environment at GAO. Our increased emphasis on risk management and
matrix management requires us to build quality into our work and products
prior to issuance and to view quality through our clients' eyes. Therefore,
we are developing a new measure of product quality based on client feedback
and new internal assessments.
Eight percent of our products were issued as multiunit products in fiscal
year 2000- that is, they were issued jointly by two or more of GAO's units.
While this was up from our experience of 5 percent in fiscal year 1999, it
was below our target of 9 percent. We have, however, eliminated this measure
for fiscal year 2001 for several reasons. It was originally intended as an
indicator of whether GAO's units were sharing resources with one another.
But the risk management and matrix management strategies we implemented last
year now provide more active senior management and ensure that needed
resources are made available, regardless of where they are housed in the
agency. Moreover, because this measure had relatively little meaning outside
of GAO, we are seeking a better way to measure our matrix management
efforts.
We expect to meet or exceed all 17 qualitative performance goals by the end
of fiscal year 2002. These performance goals are listed in appendix IV,
along with details of our fiscal year 2000 accomplishments in maximizing the
value of GAO as a model organization for the federal government.
GAO Work at
STRATEGICALLY WITH ACCOUNTABILITY
Managing
SERVICE TO THE
Improving
HUMAN CAPITAL
Managing
GAO developed its first strategic plan for the 21st century, based on input
from the Congress and supplemented by GAO's expertise and other out reach
efforts. We subsequently developed our performance plan for fiscal year 2001
to directly link our
strategic goals with what managers and staff do day to day. Also in fiscal
year 2000, GAO issued its first accountability report to the Congress,
documenting our performance and accountability during fiscal year 1999.
In fiscal year 2000, GAO piloted congressional protocols to guide our
interactions with the Congress and to ensure our accountability.The final
protocols have since been issued and reflect refinements made in response to
feedback from Members of the
Congress and their staffs.The protoCONGRESS cols will allow us to better
serve the Congress, improve satisfaction with our work, and ensure equitable
treatment for all congressional requesters.
Because of our work with key committees during fiscal year 2000, the
Congress passed the GAO Personnel Flexibility Act, which provides the
Comptroller General with the authority to better position our workforce for
the future. rately, we completed our first human
concapital self- assessment and a knowlgressional
edge and skills inventory, significantly increased our recruiting and
college relations efforts, and enhanced training opportunities.We also
established an employee advisory council and an Sepaemployee suggestion
program.
40
Fiscal Year 2001 and 2002
For fiscal year 2001, we are continuing to make progress in most areas,
although we received insufficient funds to support several of our
initiatives, such as those for additional enabling technology and human
capital support. We allocated 614 full- time equivalent staff to our work on
Strategic Goal 4. While we are making progress toward our performance goals,
achieving them by the end of fiscal year 2002 will depend on having
sufficient resources for projects delayed by the funding shortfall in fiscal
year 2001. The tables in appendix IV show changes to the performance goals.
For fiscal year 2002, we have again requested 614 full- time equivalent
staff to work on our efforts to maximize the value of GAO as a model
organization for the federal government. We have, however, requested
additional funding to continue our initiatives in human capital, enabling
technology, and several other key efforts. In the human capital area, we
plan to continue our efforts to enhance our performance- based rewards and
compensation program, to improve training to address skill gaps and maximize
productivity, and to increase our ability to attract and retain high-
quality staff by providing benefits comparable to those of other federal
government agencies. Funding to continue technology initiatives will allow
us to upgrade software and hardware to ensure our network's continued
enhancement, to reengineer existing business processes to support our
strategic goals and objectives, and to improve the security of our network.
41
42 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Strategies and Challenges- Achieving Our Goals
The Government Performance and Results Act directs agencies to articulate
not just goals but also strategies for achieving their goals. The strategies
emphasize the need to work with other organizations on crosscutting issues
and to mitigate internal and external factors that could impair performance.
The next sections describe how we plan to approach these opportunities and
challenges. From there, we will turn to how we will assess our efforts
through our performance data and through program evaluations.
For GAO, achieving our strategic goals and objectives rests, for the most
part, on providing professional, objective, fact- based, nonpartisan,
nonideological, fair, and balanced information. We support the Congress in a
variety of ways:
evaluations of federal policies and the performance of agencies and
programs; oversight of government operations through financial and other
management audits to determine whether public funds are spent efficiently,
effectively, and in accordance with applicable laws; investigations to
assess whether illegal or improper activities are occurring; analyses of the
financing for government activities; various engagements in which we consult
proactively with agencies, when appropriate, to help guide their efforts
toward positive results; legal opinions to determine whether agencies are in
compliance with applicable laws and regulations; policy analyses to assess
needed actions and the implications of proposed actions; and additional
assistance to the Congress in support of its oversight and decision- making
responsibilities.
Most of these strategies have long been part of GAO's traditional role as
the Congress's “watchdog” agency. One strategy we are
increasingly emphasizing, however, is that of the
43
constructive engagement, which calls for our staff to consult or collaborate
with agency staff and help them improve their programs and operations.
Ultimately, a high- performing government requires that agencies incorporate
best management practices and use relevant benchmarking information in the
way they conduct their day- to- day business. Rather than waiting for
agencies to produce results that we can analyze to pinpoint weaknesses,
these engagements are designed to help federal agencies obtain positive
results the first time. This approach is yielding results in our oversight
and due diligence responsibilities for ensuring the economy, efficiency, and
effectiveness of government operations. While we are committed to employing
a constructive engagement approach when appropriate, we will do so in a way
that does not compromise our independence.
For example, the Congress mandated that we use a constructive engagement
approach with the Department of Education to evaluate the feasibility of
using various market mechanisms to determine the lender yield for Federal
Family Education Loans under the Higher Education Act of 1965. In response,
during fiscal year 2000, GAO and Education convened the Market Mechanisms
Study Group, which comprised representatives from the Department of
Treasury, OMB, and the Congressional Budget Office, as well as others from
the financial services community and participants in student loan programs.
The group released a draft of its findings for public comment in January
2001 and anticipates releasing the final report in May 2001.
We have also begun to issue assessment guides to help agencies compare their
operations against best practices. Of particular note, using our guide on
assessing the maturity of information technology investments, the
Immigration and Naturalization Service assessed its investment management
capability and then worked with GAO to verify the accuracy of its
assessment. The resulting report describes the maturity of the Service's
current practices, the associated funding risks, and the specific steps
required for improvement. The latest addition to the series of assessment
guides, Human Capital: A Self- Assessment Checklist for Agency Leaders, was
issued in September 2000 and is being used by GAO analysts and planners in
44 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
other agencies. As more is learned from their experiences with the
checklist, we will refine and update the document.
To further encourage constructive engagements and provide clearly defined,
welldocumented, transparent policies and practices for carrying out our work
for the Congress, we are developing protocols that will govern GAO's work at
federal agencies and elsewhere. The protocols identify what GAO expects of
agencies and what agencies can expect from GAO. Our goal is to maximize GAO
and agency interactions and in so doing enable GAO to better meet the needs
of the Congress, improve the performance and accountability of the federal
government for the benefit of the American people, and ensure consistent
treatment of all agencies.
As part of our strategies for achieving our goals and objectives, we are
coordinating our work with the wider accountability community, both
domestically and internationally, and are confronting challenges inside GAO
and in the environment in which we and the Congress operate.
Coordination to Address Crosscutting Issues
Although GAO is unique in the scope of its activities to support the
Congress and to improve the performance and accountability of government, it
shares with other members of the accountability community similar visions
and values. Each member has a different role, responsibility, and expertise,
but collectively, they advance the principles of good government through a
variety of activities.
To take advantage of opportunities to work collaboratively, we continue to
ensure that our work complements the efforts of others and that crosscutting
goals are mutually reinforcing and efficiently implemented. Toward this end,
GAO established the External Liaison office. Its mission is to enhance
proactive working relationships with domestic and international
45
accountability organizations; foreign, state, and local government agencies;
and selected colleges, universities, and not- for- profit entities. The
External Liaison is to provide a cohesive, seamless structure for carrying
out GAO's mission and goals, in concert with those of the other entities, to
advance GAO's goals with the ultimate objective of making government better.
To collaborate more effectively with these organizations, we conduct four
types of activities:
develop and promote standards for government auditing, federal accounting,
and federal financial management systems; identify and promote “best
practices” in public management; leverage resources and services to
better identify opportunities for collaboration to improve government
operations; and convene and participate in forums, boards, councils, and
other bodies to share knowledge.
Develop and Promote Standards for Government Auditing and Federal Accounting
In consultation with others in the accountability community, we update
government auditing standards for addressing emerging issues; participate in
the development of federal accounting standards; and as required by law,
issue and update standards for internal controls in the federal government.
Of particular note, GAO and the President's Council on Integrity and
Efficiency (PCIE) worked cooperatively during fiscal year 2000 to
ACCOUNTABILITY COMMUNITY
Organizations we work with include:
Association of Government Accountants Chief Financial Officers Council Chief
Information Officers Council Congressional Budget Office Congressional
Research Service Domestic Working Group Executive Council on Integrity and
Efficiency Federal Accounting Standards Advisory Board Financial Accounting
Standards Board Global Working Group Government Accounting Standards Board
Inspectors General Intergovernmental Audit Forum International Auditor
Fellowship Program International Organization of Supreme Audit
Institutions Joint Financial Management Improvement
Program Office of Management and Budget President's Council on Integrity and
Efficiency Private Sector Council State and Local Auditors
46 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
develop a draft- for- comment of the Financial Audit Manual for performing
financial statement audits of federal entities. The benefits of a unified
manual are significant. Its adoption should relieve some of the burden that
agencies face in staying current with ever- changing audit requirements and
expectations. The manual will also improve consistency among agency audits.
The most important outcome of this process will be financial statement
audits of the highest quality and the greatest usefulness that provide the
best possible accountability over taxpayer- provided resources. GAO and PCIE
issued the draft manual in December 2000 and will issue the final version in
May 2001.
We coordinate closely with the Office of Management and Budget (OMB) and the
Department of the Treasury in developing federal accounting standards and
preparing and auditing the U. S. government's financial statements. Since
1990, GAO, OMB, and Treasury have jointly developed federal accounting
principles through an advisory committee- the Federal Accounting Standards
Advisory Board (FASAB). In October 1999, the American Institute of Certified
Public Accountants recognized FASAB as the source of generally accepted
accounting principles (GAAP) for federal entity financial statements. This
recognition means that for the first time, federal entities have a body of
GAAP on which to base financial statements. Maintaining GAAP through this
partnership with the executive branch and with adequate representation of
the public interest improves federal accountability.
GAO also coordinates with OMB on the guidance for agencies' GAAP- based
financial reports. That guidance is contained in OMB's bulletins on the form
and content of financial statements and on auditing requirements. GAO
consults with OMB on the technical aspects of this crucial guidance. In
addition, we maintain effective liaison with the Financial Accounting
Standards Board (FASB), which issues accounting standards for the private
sector, and the Government Accounting Standards Board (GASB), which issues
accounting standards for state and local entities.
To help ensure that the generally accepted government auditing standards the
Comptroller General issues continue to meet the needs of the auditing
community and the public it
47
serves, the Comptroller General appointed the Advisory Council on Government
Auditing Standards to review the standards and recommend necessary changes.
The Council consists of experts in financial and performance auditing drawn
from all levels of government, private enterprise, public accounting, and
academia. These standards are widely used by government and private sector
auditors in audits of federal, state, and local government programs as well
as in audits of entities receiving federal assistance. In addition, to
ensure a better understanding and consistent application of the standards,
GAO staff provide technical advice and outreach to the audit community by
responding to requests for guidance, conducting training at regional and
national conferences, and maintaining an Internet site on the standards and
the process used to set them.
Internationally, GAO is a member of the International Organization of
Supreme Audit Institutions (INTOSAI). The Comptroller General is a member of
INTOSAI's Board of Governors and chairs INTOSAI's committee on accounting.
GAO is an active member of INTOSAI's audit standards, internal control
standards, information technology, and public debt committees. The
Comptroller General also chairs the executive committee of the national
intergovernmental audit forum.
Identify and Promote Best Practices in Public Management
To facilitate governmentwide management and institutional reforms, we will
continue to develop and promote best practices to build and sustain high-
performing organizations. For example, we developed an executive guide to
help federal agencies maximize the success of their Chief Information
Officers (CIO), who were assigned responsibility by the ClingerCohen Act to
promote the effective design and operation of all major information
resources for the executive agencies. The guide offers a generic framework
of core principles and critical success factors for agency executives to
follow in supporting their CIOs. We also issued an executive guide that
highlighted best practices in creating value through world- class financial
management.
48 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
GAO is also collaborating with the Chief Information Officers Council to
develop guidance defining the practical steps involved in developing,
implementing, and maintaining an enterprise architecture. Enterprise
architecture- the roadmap that shows how an entity can move, in terms of
both business and technology, from its current operation to its desired
operation in the future- is required by legislation and by OMB.
In addition, we assisted the CIO Council, OMB, and the National Institute of
Standards and Technology in developing an Information Technology Security
Assessment Framework to aid in conducting assessments of agencies' security
programs and in measuring incremental progress. By collaborating with other
organizations in the development of the framework, we helped to ensure
consistency between executive branch guidance and GAO's audit criteria.
Leverage Resources and Services Through Collaboration to Improve Government
Operations
We recognize that we can meet our goals and strategic objectives more
efficiently and effectively if our work complements that of others. To
ensure that we target the right issues, provide balanced perspectives, and
develop practical recommendations, we work with members of the
accountability community, including federal, state, and international audit
organizations; academic and professional organizations; agency Inspector
General (IG) offices; and our sister agencies, the Congressional Budget
Office (CBO) and the Congressional Research Service (CRS). In addition, we
are exploring new ways of working with other federal, state, local, and
international accountability organizations to better serve our respective
clients. These efforts will include a domestic working group of
representatives from federal IG and state and local government audit offices
and a global working group of the Comptroller General's international
counterparts.
In addition to GAO, CBO and CRS support the Congress and may assist it in
connection with the same agency, program, and policy areas as GAO. Senior
mangers from all three agencies meet quarterly to identify opportunities to
work together to better serve the
49
Congress. For example, we recently provided CBO, CRS, and congressional
staff with electronic access to our active assignment list to help keep them
informed of our ongoing work. We also worked with CRS staff to hold a
conference on ways to conduct oversight of federal agencies and programs.
We also collaborate with executive branch agencies. For example, our
Physical Infrastructure team has a continuing, reciprocal relationship with
the Federal Aviation Administration (FAA) to enhance both agencies'
expertise. At FAA's request, GAO developed and piloted training in fiscal
years 1999 and 2000 for aviation safety inspectors on conducting effective
internal audits. In fiscal year 2001, FAA will assume responsibility for
conducting the training on its own. FAA, meanwhile, admits our analysts to
its courses and has loaned us, on a long- term basis, one of its
instructional platforms with over 100 computer- based aviation classes on
topics such as the air traffic control system and new navigational systems
that help aircraft avoid crashes.
Our Office of Special Investigations (OSI) regularly collaborates with other
organizations to improve government operations. Because of its
investigations related to international money laundering, OSI will meet with
Delaware officials in the coming year to discuss potential weaknesses in the
state's incorporation laws governing non- U. S. entities. OSI is also
collaborating with federal agencies to reduce potential weaknesses found in
security procedures at various federal facilities. OSI and the Department of
Defense's IG plan to collaborate on several investigative efforts to test
the security of military materiel and weapons. Through GAO's FraudNET- a
system for reporting fraud, waste, abuse, or mismanagement of federal funds-
OSI collaborates with IGs at other agencies and with law enforcement
agencies. OSI evaluates allegations received by FraudNET and, when
appropriate, conveys information to IGs or regulators for follow- up. With
the transition to an online system, the quality of the allegations FraudNET
receives has improved, and opportunities for coordinating work and referring
investigative findings have increased.
50 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
In addition, GAO's Applied Research and Methods team helps other agencies
improve their analytic capacities by reviewing federal agencies' information
development activities, developing methodologies, and fostering knowledge
transfer in the federal and professional evaluation communities.
Convene and Participate in Forums, Boards, Councils, and Other Bodies to
Share Knowledge
To advance principles of improved performance and accountability, we help
convene and participate in related forums with other government audit
organizations. For example, INTOSAI- the professional organization of 179
national audit offices from around the world- holds triennial congresses to
share experiences, discuss issues, and recommend ways of improving
government accountability worldwide. The 17th International Congress of
Supreme Audit Institutions will take place in Seoul, Korea, in October 2001.
The United States will chair one of the major themes- the contributions of
supreme audit agencies to public management reforms.
In addition, in January 2001, the Comptroller General hosted the second
annual informal global working group meeting, where the heads of 11 of GAO's
counterparts from the G- 7 and other selected countries met at GAO to
discuss emerging issues of mutual concern and to hear each other's
experiences. To further promote knowledge sharing internationally, GAO
publishes the International Journal of Government Auditing on behalf of
INTOSAI and sponsors the annual International Auditor Fellowship Program.
In March 2001, the Comptroller General hosted and chaired, for the first
time, an informal domestic working group, consisting of six federal IG, six
state, and six local government audit officials, to discuss matters of
mutual concern. This group will supplement the intergovernmental audit forum
and will meet annually to share knowledge through informal exchanges.
51
The Comptroller General is also initiating a Comptroller General's Advisory
Board of widely recognized experts in areas pertaining to each of GAO's
strategic objectives. Among its other responsibilities, the advisory board
will assist GAO in developing a revised strategic plan for fiscal years 2002
through 2007. The board's first annual meeting is scheduled for April 2001.
We also coordinate with the Chief Financial Officers Council to address
crosscutting accounting, financial systems, internal control, and financial
reporting issues and with the Chief Information Officers Council to address
governmentwide matters concerning information technology issues, including
investment, management, evaluation, and security. With the Joint Financial
Management Improvement Program, we participate in the development of federal
financial systems' standards and requirements and other initiatives to
improve government management.
Major Management Challenges- Internal Factors That Could Affect Our
Performance in Fiscal Year 2002
Like any organization, GAO faces major management challenges in
accomplishing our strategic goals and objectives. With the vast majority of
our resources devoted to staff salary and benefits, the area of human
capital presents a major challenge. A significant percentage of our current
workforce is nearing retirement age. Moreover, marketplace, demographic,
economic, and technological changes indicate that competition for skilled
workers will be greater in the future. Another major management challenge is
to build an integrated and reliable information technology infrastructure
that supports the achievement of our goals.
52 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Human Capital
GAO has completed a comprehensive assessment of its human capital and has
identified succession planning, skill imbalances, and other issues that need
to be addressed. We found, for instance, that a third of our analysts and
related staff will be eligible to retire by the end of fiscal year 2004,
along with more than half of our senior managers. We found that as a result
of a 5- year hiring freeze, which began in 1992 to downsize GAO and was then
extended to achieve mandated funding reductions, we have a lot fewer
analysts at the entry- level than at the senior and management levels.
Maintaining adequate skills also was identified as a key human capital
issue, especially the need to train senior executives in key competencies
such as leadership, communications, and conflict resolution. Because of
resource constraints, training for executives had been drastically reduced
for a number of years after fiscal year 1993. In addition, technical skills,
such as actuarial and information technology skills, were not sufficiently
available within GAO for us to effectively assist the Congress in meeting
its oversight responsibilities.
We have made progress in assessing many of our human capital challenges. For
example, we recently realigned the agency and reallocated resources to
better support the Congress and meet the future challenges outlined in our
strategic plan. We also completed a first- ever electronic knowledge and
skills assessment and inventory that will be used to staff engagements more
effectively and help identify skill gaps and succession planning needs
within the agency. In addition, staff recently completed an employee
assignment preference survey, the results of which, along with the knowledge
and skills inventory, will be used to help us accommodate staff preferences
when making work assignments to meet our institutional needs. We also
revised performance standards for all staff to
incorporate GAO's core values and strategic goals; update descriptions of
performance to better reflect the current nature of GAO's work; and to
include key management and performance concepts, such as leadership by
example, client service, and measurable results.
53
We have begun a major initiative to develop a competency- based performance
model and to update performance standards for analysts to reflect prevailing
best practices. Similarly, we plan to update the performance systems for our
attorneys and mission support staff in fiscal year 2001. We have
reestablished and are expanding training opportunities for our senior
executives. In addition, we have significantly revised and enhanced our
recruitment and college relations program. Efforts at colleges and
universities are under way to recruit diverse, high- caliber staff with the
skills and abilities GAO needs to achieve our strategic goals and
objectives. To engage our employees more fully in improving the agency's
performance, we established the Comptroller General's Employee Advisory
Council and implemented an employee suggestion program that received more
than 800 submissions in its first year of operation. And lastly, the
Congress has provided us with legislative authority that gives us greater
flexibility to manage our human capital more effectively.
While we are making progress, we need to continue many of these efforts and
initiate others to successfully address our human capital challenges. To
provide greater recruitment and retention incentives, we need to enrich our
performance- based rewards, compensation, and employee benefit programs,
such as transportation subsidies, to make them comparable to those offered
in the executive branch and the private sector. We also need to update our
training curriculum and professional development programs to address the
organizational, change management, and technical needs, both of individuals
and of the agency. In addition, as we expand our recruitment effort, we need
to continue enhancing training for new entrylevel staff.
Information Technology
We have greatly improved our information technology (IT) infrastructure
during the past year, but other challenges remain. During fiscal year 2000,
we initiated a comprehensive review of our IT infrastructure to identify
opportunities to increase our efficiency, effectiveness, and productivity.
We also began an effort to map our business processes to the IT architecture
and to link future IT investments to our business goals. We designed and
54 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
implemented several software tools and products to streamline access to data
and report processing, which included providing better access to online
policy, protocols, and procedures for managing the engagement process; to
legal and other resources at the desktop; and to enhanced software and
graphics capability. In addition, we developed a number of Web- based
knowledge- sharing applications, such as a productivity and knowledge
management tool that provides a one- stop guide to conducting GAO
engagements. We also recently completed development of a Web site that
provides information for the congressional and presidential transitions
(www. gao. gov/ transition/). Numerous subscriptions and databases,
previously available only in hardcopy, are now available through our
agency's network. In addition, we continued systemic upgrades of network
software, hardware, and communications tools to ensure quick response times
and increased productivity.
While many gains have been made, we face several IT challenges. We need to
continue initiatives designed to increase employee productivity, maximize
the use of technology, and enhance the tools available at the desktop. For
example, we have aging agencywide management information systems that need
to be replaced with integrated, Web- based applications centered around a
common data model; these systems were developed in- house over two decades
ago and are obsolete and incapable of interfacing within our network
environment. Our network operating and applications systems are outdated
versions and must be upgraded soon to ensure continued vendor support and
compatibility with industry standards and with the software used by other
federal agencies. Also, to increase productivity and facilitate greater
interaction among our staff, federal agencies, and other external contacts,
our videoconferencing capability needs to be extended to the agencywide
network. That capability will allow us to conduct training seminars,
conferences and engagement interviews with federal agency officials, and to
transmit telecasts to GAO staff. In addition, we need to strengthen the
security of our network operating environment by implementing features such
as network intrusion detection software, secure communication devices, and
automated system monitoring tools. Finally, we need to upgrade our computer
security facility to ensure GAO's continued ability (1) to conduct effective
testing of complex, diverse, and interconnected executive branch systems and
(2) to attract and retain skilled, technical staff.
55
External Factors That Could Affect Performance
Several external factors could affect the achievement of our performance
goals, including national and international upheavals, changes in political
leadership, the resources we receive, and limitations imposed on our work by
other organizations or limitations on the ability of other federal agencies
to make the improvements we recommend. For example, as the Congress focuses
on unpredictable events, such as domestic or international economic crises,
election controversies, wars, or natural disasters, the mix of work we are
asked to undertake could change, diverting our resources from some of our
strategic objectives and performance goals. We can and do mitigate the
impact of these events on the achievement of our goals by
being alert to possibilities that could shift the Congress's, and therefore
our, priorities; continuing to identify in our products and meetings with
the Congress conditions that could trigger new priorities; and quickly
redirecting our resources, as appropriate, so that we can deal with major
changes that do occur.
During fiscal year 2001, both a new Congress and a new administration are
beginning work. Consequently, we are strengthening existing ties and quickly
establishing working relationships with the new leaders and Members of
Congress and with key department and agency heads to ensure the continued
relevance and effectiveness of our work. Maintaining and strengthening these
relationships in fiscal year 2002 is essential to successfully completing
our strategic objectives and performance goals. Realistically, the extended
transition associated with this new administration and the 107th Congress,
the 50/ 50 split in the Senate, and the many new committee chairs in the
House may reduce the opportunities we have to provide testimony at
congressional hearings and limit the responsiveness of agencies to our
recommendations. In addition, achieving our strategic goals will depend on
having sufficient budgetary resources available. Many of these external
factors are beyond our control; however, we will take action to continue to
enhance our overall performance and the related results.
56 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Certain externally imposed limitations could also affect our achievement of
specific performance goals. For example, because we do not have audit
authority with respect to foreign government entities and international
institutions, our ability to conduct thorough analyses of some issues is
affected by the level of openness and voluntary cooperation we can obtain.
Also, the sensitivity of overall foreign policy concerns and the need to
ensure the safety of GAO personnel may cause us to restrict the scope of our
work in some instances. Regardless, we will continue to monitor
international events, to work closely with our congressional clients, and to
maintain broad- based staff expertise so that we can quickly adjust the
focus of our work to meet emerging needs.
In some situations GAO needs access to records in the private sector or at
the state or local level that we do not have a statutory right to obtain.
When this occurs, our ability to thoroughly analyze issues is affected by
the level of voluntary cooperation we receive.
Our efforts to improve the government's performance and accountability could
be hampered if agencies lack the capacity to develop and effectively use
performance and cost information to make improvements. It will be important
for the Congress and top agency managers to sustain the current strong
commitment to reforming federal management and to addressing major
management challenges and high- risk areas. We will continue to work closely
with agency heads and program managers of OMB and the Department of the
Treasury, chief financial officers, and the IG community to foster improved
performance and accountability.
Also, we will continue providing management leadership and technical
assistance and will help build capacity by working proactively with agencies
and participating in forums and on interagency and intergovernmental boards,
councils, and other information- sharing organizations. Moreover, through
our frequent contacts with a range of congressional committees, we will
continue to stress the importance of this effort and the role of improved
performance and financial information in more effectively, efficiently, and
economically managing government operations and providing needed
accountability.
57
Procedures to Verify and Validate GAO's Performance Data
We emphasize the importance of reliable and valid information in our work
through (1) standards, policies, and procedures; (2) management's use of
performance information; and (3) independent reviews of our work. First, our
standards, policies, and procedures provide guidance on assessing the
reliability and validity of performance information. Specifically, our
Government Auditing Standards (often referred to as generally accepted
government auditing standards) contain the core standards governing our
work. Our Policy and Procedures Manual provides additional guidance,
including procedures on verifying and validating the information used in
specific performance measures. We reinforce the content and application of
these standards, policies, and procedures by training all staff conducting
GAO work. Second, management's use of our performance information on a
routine basis further helps to ensure its reliability and validity. Data are
provided to managers for decisionmaking, and their feedback on these data
helps to ensure that the data are properly recorded.
Third, additional reviews- conducted by both internal and external groups-
help ensure that all of our work is consistent with generally accepted
government auditing standards and with our policies and procedures. We are
also in the process of identifying possible external entities to conduct a
peer review of our performance auditing. These reviews include the
following:
internal reviews of management controls to ensure compliance with provisions
of 31 U. S. C. 3512, formerly the Federal Managers' Financial Integrity Act;
internal reviews to determine how well selected GAO work and products comply
with our core values and professional standards; internal inspections of
quality controls for our financial auditing; reviews by our Office of the
Inspector General to assess key performance measures; peer reviews of our
financial audits by a public accounting firm; and
58 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
audits of our financial statements by a public accounting firm that reviews
internal controls relevant to these financial statements and the compliance
of our financial management system with the Federal Financial Management
Improvement Act.
Data Limitations and Responses
Generally, our measures are better suited to examining trends in performance
over a number of years than to making conclusions about our overall level of
performance in any given year. We rely on trends for several reasons. The
benefits our work produces may not be realized for a number of years because
of the complexity of issues we address and the schedules during which the
Congress and the executive branch may act on our recommendations. Also,
opportunities to produce benefits vary and can influence the volume of
accomplishments recorded in any given year.
To provide a clear indication of trends, we report results that are averaged
over a 4- year period. However, we also report yearly totals to allow
comparisons between any 2 specific years and to more readily identify
underlying factors affecting trends. We also ensure that our criteria are
consistently applied each year to allow these comparisons. In addition,
because a simple enumeration of our performance does not adequately capture
the breadth and depth of our work, we provide each year a qualitative
assessment of the extent to which we have successfully met our multiyear
performance goals. This assessment considers how our work contributes to the
potential outcomes identified in our strategic objective plans.
Current Performance Measures
Financial Benefits
Background and Context: Our findings and recommendations directly or
indirectly contribute to congressional decision- making and executive branch
actions that result in significant financial benefits to taxpayers. These
benefits include budget reductions, costs avoided,
59
resources reallocated, and revenue enhancements that are documented as
either directly attributable to, or significantly influenced by, our work.
The funds made available in response to our findings and recommendations may
be used to reduce government expenditures or may be reinvested in other
areas.
Data Limitations: Not every financial benefit from our work can be readily
estimated or directly attributed to GAO. Estimates are based on both
objective and subjective data, and as a result, judgment is required. We use
data provided by an agency or an independent third party- such as the
Congressional Budget Office or a congressional committee- to make our
estimates. Moreover, GAO's policy requires conservative estimation of
financial benefits. Therefore, we believe that the total of the estimated
benefits from our findings and reommendations understates our overall
contribution to congressional decision- making and executive branch actions.
Verification/ Validation: Policies and procedures guide the estimation of
financial benefits and their attribution to GAO. We require estimates to be
based on independent sources, reduced by any identifiable offsetting costs,
and limited to the first 2 years of implementation. Benefits are estimated
in internal written reports that are formally reviewed to ensure they meet
the same documentation and quality standards as any external GAO product. In
addition, our Quality and Risk Management office reviews benefit claims in
excess of $100 million, and our Office of the Inspector General reviews
claims in excess of $1 billion. Benefits are revised if new information
significantly affects the estimated values.
Data Sources: Internal listing of accomplishment reports.
Other Benefits
Background and Context: Our findings and recommendations also contribute to
congressional decision- making and executive branch actions that result in
significant improvements to agency management or performance- for example,
by strengthening internal control processes- but do not have directly
measurable financial benefits. This measure is the
60 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
number of actions that the Congress or agencies have taken in response to
our findings and recommendations.
Data Limitations: Other benefits vary in significance. Also, because not all
benefits can be directly attributed to our findings and recommendations or
documented, this measure understates our overall contribution toward
improving government.
Verification/ Validation: Policies and procedures require internally written
reports to record the other benefits of our findings and recommendations.
These reports are formally reviewed within GAO to ensure the appropriateness
of the claimed accomplishment, including attribution to GAO's work. These
reports must meet the same documentation and quality standards as any GAO
product.
Data Sources: Internal listing of accomplishment reports.
Recommendations Implemented
Background and Context: As part of our audit responsibilities under
generally accepted government auditing standards, we follow up and report
yearly to the Congress on the status of actions taken by the Congress and
agencies in response to our recommendations. This measure is the percentage
rate of implementation of recommendations made 4 years prior to a given
fiscal year. For example, the fiscal year 2002 implementation rate is the
percentage of recommendations made in fiscal year 1998 that were implemented
by fiscal year 2002. Prior experience has shown that if a recommendation has
not been implemented within 4 years, it is not likely to be implemented.
Data Limitations: Because the measure is based on the implementation of
recommendations made 4 years prior to any given fiscal year, the measured
value for any given year will not reflect the results of GAO's activities
undertaken within that year. In addition, this measure may not include all
actions proposed or initiated by agencies. Specifically, agencies may
61
report actions in response to our recommendations, but we may determine that
these actions are insufficient or do not adequately implement our
recommendations. In these cases, recommendations will be recorded as not
implemented even though the agency has proposed or taken some actions.
Verification/ Validation: GAO policies and procedures specify that staff
must verify with sufficient supporting documentation that an agency's
reported actions are adequately being implemented. Our staff may interview
agency officials, obtain agency documents, access agency databases, or
obtain information from the agency's Office of the Inspector General.
Internal review procedures are intended to ensure that claims regarding the
implementation of recommendations are consistent and meet our quality
requirements. Information on recommendations implemented is maintained in a
database managed by an external contractor that routinely conducts software-
based checks of data consistency and completeness and annually performs more
exhaustive checks for data integrity.
Data Sources: The percentage of recommendations implemented is derived from
GAO's document database. Information entered into the database is collected
through our recommendation follow- up system.
Testimonies
Background and Context: The Congress may request that GAO testify at
hearings on various issues. Testimony is one of our most important forms of
communication with the Congress, and the total number of testimonies
reflects the importance and value of our institutional knowledge in
assisting congressional decision- making.
Data Limitations: The number of testimonies in any given year may reflect
congressional interest in work completed that year, in the previous year,
and work in progress. Additionally, the number each year depends on the
Congress's agenda. Therefore, year- to- year variations in the total number
of testimonies may be influenced by factors other than the quality of our
performance in any specific year.
62 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Verification/ Validation: Teams are responsible for notifying GAO's
Congressional Relations office of upcoming hearings. Notices of these
hearings are entered into a tracking system. Staff are assigned
responsibility for monitoring the progress and status of planned hearings
within their teams.
Data Sources: Internal listing of hearings planned and held.
Recommendations Made
Background and Context: Recommendations in our products help to ensure that
benefits will result from our work. These recommendations reflect specific
actions that can be taken to improve federal programs. Where appropriate, we
strive for recommendations that are directed at resolving the cause of
identified problems; that are addressed to parties who have the authority to
act; and that are specific, feasible, and cost- effective to the extent
practical.
Data Limitations: We provide a variety of products and services that meet
the needs of our congressional clients but may not lead to recommendations.
For example, the Congress may require descriptive information on federal
programs or analyses of the potential consequences of alternative program
design options. This information is intended to assist the Congress in its
oversight of federal agencies or in its formulation of policy and
legislation but does not lend itself to recommendations. Consequently, this
measure underestimates the extent to which GAO assists the Congress and
federal agencies.
Verification/ Validation: An external contractor reviews all GAO products
distributed through a formal process, prepares summaries that identify
products containing recommendations, and verifies this information through
our recommendation follow- up system. Also, GAO managers are provided with
reports on the recommendations being tracked to help ensure that the
contractor has correctly identified the recommendations contained in
reports.
Data Sources: GAO's document database.
63 Timeliness
Background and Context: The likelihood that GAO's products will be used is
enhanced if they are produced when needed to support congressional and
agency decision- making about government programs. We monitor the extent to
which our products are completed by dates agreed to with our clients. This
measure is the proportion of GAO's products that are issued by the date to
which we have formally committed. In our revised final fiscal year 2001
performance plan, we made the timeliness measure an overall GAO measure.
This will provide greater focus and emphasis on meeting client needs.
Data Limitations: We measure the timeliness of key external products but
exclude internal products.
Verification/ Validation: Aggregate and job- specific timeliness data are
given to managers monthly, who advise of any anomalies. The software used to
prepare the monthly reports is verified by comparing job- specific detail
from the reports with the same detail on original data files maintained by
an external contractor. At job completion, data on job target and completion
dates are reported to the manager, who reviews and signs the report to
confirm its accuracy.
Data Sources: Our automated Mission and Assignment Tracking System, which is
used to monitor job progress on an ongoing basis.
Qualitative Performance Measures
Background and Context: Our work is of value to different audiences and is
used in a variety of ways that may not be reflected in our quantitative
performance measures. For this reason, we complement our quantitative goals
with qualitative goals to be achieved over a 3- year period, currently from
fiscal year 2000 through fiscal year 2002. These goals are listed in
appendixes I through IV, by strategic goal and objective.
64 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
The qualitative measures are whether we meet, exceed, or fail to meet the
performance goals for which results are assessed every 3 years. Our
performance meets expectations when we provide information or make
recommendations on the key efforts when viewed collectively. Our performance
exceeds expectations when we provide information or make recommendations
that congressional decisionmakers and others use toward achieving the
potential outcomes described in the relevant strategic objective plan. The
key efforts and potential outcomes are listed in the relevant strategic
objective plans covering fiscal years 2000 through 2002.
Gauges of “use” include, among other things, congressional
decisionmakers' requests for other support, such as assisting in the
development of oversight agendas, commenting on bills, helping to craft
hearings, or providing questions for deliberations; citations in
congressional documents, such as bills, laws, committee reports, or the
Congressional Record; and information showing how agencies use our products.
We also plan to develop a congressional feedback system and to track
references to our work by the media, universities, and other organizations.
We have provided an assessment of progress toward these goals in this report
and will do so again next year. Our performance report for fiscal year 2002
will provide a final assessment of the extent to which performance has met,
exceeded, or failed to meet expectations for each of these goals over the 3-
year period.
Data Limitations: Because our use of qualitative goals is new, we do not yet
have sufficient experience to determine their limitations. Success will
depend upon the continued refinement of the goals, definitions of key terms,
and standards for making assessments.
Verification/ Validation: The assessments of progress against each 3- year
goal will be supported by specific examples in internal written reports,
receive formal internal review, and meet the same documentation and quality
standards as any external GAO product. In addition,
65
GAO's Quality and Risk Management office will review the reports for
consistency and ensure that requirements are met.
Data Sources: GAO managers' assessments of success in meeting goals,
supported by documented examples of accomplishments.
Revising GAO's Performance Measures
In fiscal year 2001, as laid out in our strategic plan, we began assessing
our performance measures and, as appropriate, began developing new measures
to track progress toward our strategic goals and annual targets. We believe
this assessment is appropriate, given that we have a new strategic plan, a
newly realigned organization that is consistent with our strategic goals and
objectives, and two new management strategies to improve how we accept and
manage engagements. The assessment will focus on how we can establish a
“balanced scorecard” of performance measures to evaluate our
performance in three key areas:
Clients: What feedback do we receive from our clients about the services we
are providing? Results: Are we producing the desired results- supporting the
Congress and improving government outcomes- in an efficient manner? People:
Are we successfully attracting, retaining, supporting, developing,
deploying, leading, and recognizing our staff?
To move to a balanced scorecard, GAO will be developing new measures based
on client feedback and our performance in key human capital activities. For
the “results” category, we will refine a number of our current
measures, for example, financial benefits, other benefits, and timeliness.
Most of the new measures and the refinements to existing measures are
scheduled to be implemented in fiscal year 2002, which means we will report
results in our fiscal year 2002 performance report.
66 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Discontinued Measures
Quality Review Scores
Our final performance plan for fiscal year 2001 included a performance
measure of how well GAO's products adhered to applicable auditing policies
and procedures. At the end of the second quarter of fiscal year 2000,
however- after the plan was published- we discontinued this measure. As a
post- issuance measure, it did not reflect the evolving environment at GAO,
where the increased emphasis on risk and matrix management requires building
quality into our work and products prior to issuance. These management
strategies emphasize a more proactive and systematic method to ensure that
our products comply with GAO's core values, applicable professional
standards, and reporting requirements. In addition, while this measure
attempted to put a quantitative value on quality, the results were very
similar for all of our operating units, meaning that it was not very useful
in our efforts to improve our products and increase our ability to serve our
clients.
A measure of product quality should look at our products through the eyes of
their users. Thus, we are developing a mechanism to obtain client feedback
on our products as part of our balanced scorecard strategy. We will,
however, continue our quality control practice of having senior managers
review a statistically valid sample of products to make sure they comply
with our core values and professional standards. The results will be one of
the inputs used to continuously build quality into our products.
Multiunit Products
Our final performance plan for fiscal year 2001 included a performance
measure for multiunit products. This was our first attempt at measuring
matrix management by focusing on published products issued jointly by more
than one of our teams and offices. We decided not to use this performance
measure in fiscal year 2001 for three reasons. First, we were concerned that
it did not adequately capture the extensive collaboration needed within and
across units, which goes beyond that required to simply produce a published
report. Second,
67
instead of just measuring the extent to which matrix management is
occurring, we need to assess how well it is working. Finally, and most
importantly, the new risk and matrix management strategies we implemented
last year provide more proactive senior management involvement in our work
processes. For instance, the new engagement acceptance meetings and
engagement review meetings we conduct involve senior managers early in key
decisions, such as whether to accept an engagement and what resources to
allocate to it and determining the level of senior management involvement.
As a result, we believe we have a more proactive approach to ensuring that
the appropriate resources are devoted to each engagement regardless of where
in our agency those resources are housed. Moreover, because this measure had
relatively little meaning outside of GAO, we are seeking a better way to
measure matrix management efforts.
Program Evaluation
To assess the extent to which our work improves the performance and
accountability of the federal government, we track agencies' implementation
of our recommendations. Much of the benefit from GAO's work results from
agencies' responding to our recommendations by taking specific actions to
improve their performance and accountability. GAO's continued attention to
whether our recommendations are being implemented helps ensure that the
benefits of our audit work are realized. A recommendation is closed when it
has been implemented, when actions have been taken that essentially meet the
recommendation's intent, or when circumstances have changed and the
recommendation is no longer valid. The results of our evaluations of actions
taken in response to our recommendations are reported quantitatively in our
performance reports as the implementation rate.
Each GAO team is responsible for actively tracking the status of open
recommendations. The primary sources of information on their status are the
agencies themselves. We verify the information they supply to ensure that
the recommended actions are being taken and, to the
68 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
extent possible, that the desired results are being achieved. We use the
results of our analysis to determine the need for further work in an area.
If, for example, an agency has not undertaken a recommended action that we
consider to be still valid and worthwhile, we may decide to pursue further
action with agency officials or undertake additional work.
Early each calendar year, we provide a report to the House and Senate
Appropriations Committees on the status of GAO's open recommendations. The
report is intended for use by congressional oversight and authorization
committees, as well as by the Appropriations Committees, in preparing for
hearings and budget deliberations. The report's database describes the most
recent actions taken on open recommendations and is on the Internet.
Separately, title 31 U. S. C. 720 requires agencies to submit, within a
specific period, written statements to the House and Senate Committees on
Appropriations, the House Committee on Government Reform, and the Senate
Committee on Governmental Affairs explaining actions taken or planned in
response to GAO recommendations made to heads of agencies.
Additional reviews- conducted by internal and external groups- help ensure
that our work is consistent with generally accepted government auditing
standards and with our policies and procedures. The reviews include internal
reviews of management controls and business processes, annual internal
inspections of the quality control system for our financial auditing
practice, peer reviews of the quality control system for our financial audit
practice by a public accounting firm (conducted every 3 years), and reviews
by our Office of the Inspector General. For example, the team that inspected
our quality controls for financial auditing for the period from January 1,
2000, through September 30, 2000, rendered an unqualified opinion and found
no matters requiring a letter of comment. We are pursuing ways to expand the
use of peer review to our performance audits. Also, the Quality and Risk
Management office is developing additional methods to evaluate our ability
to build quality into products and to ensure compliance with our core values
and applicable professional standards.
69
Highlights of Resources Needed to Achieve Our Fiscal Year 2002 Performance
Goals
GAO has requested a budget of $430.3 million for fiscal year 2002 to support
the Congress as outlined in our strategic plan and to maintain current
operations. This funding level will allow us to fully staff at our
authorized level of 3,275 full- time equivalent personnel.
More than 80 percent of GAO's budget will be used to compensate and provide
benefits to its human capital- our greatest asset. The next largest
proportion of its budget- about $51.2 million- is for contract services
supporting both GAO's mission- direct work and administrative operations,
including information technology, training, and building operation and
maintenance services. About $12.3 million will be spent on travel and
transportation, critical components to accomplishing and ensuring the
quality of GAO's mission- direct activities. The remainder will be used for
office equipment and space rentals; telephone, videoconferencing, and data
communications services; and other operating expenses, including supplies
and materials, printing and reproduction, and furniture and equipment. Our
request includes $5.2 million to carry out responsibilities created by the
Truth in Regulating Act.
During fiscal year 2002, we plan to increase our investments in human
capital and information technology to help maximize the productivity and
impact of our current workforce. To help ensure our ability to attract,
retain, and reward high- quality staff, we plan to devote additional
budgetary resources to our performance- based rewards and recognition and
training programs. For example, increased resources will be targeted to
continue an initiative begun in fiscal year 2000 to address skill gaps,
maximize staff productivity and effectiveness, update our training
curriculum to address organizational and technical needs, and provide
training to new staff. Major efforts are also planned and under way to
revise our performance
70 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
appraisal system for our analyst, legal, and mission support staff. We will
continue to focus our hiring efforts in fiscal year 2002 on recruiting
entry- level staff to help reshape the organization's human capital profile.
On the information technology front, we plan to continue our technology
initiatives designed to increase employee productivity, facilitate
knowledge- sharing, maximize the use of technology, and enhance employee
tools available at the desktop. We will also upgrade to Microsoft Office
2000 to ensure continued vendor maintenance, support, and compatibility with
industry standards. Additional resources also are targeted to revamping the
information technology systems supporting our engagement tracking system and
implementing system features necessary to ensure a secure network operating
environment.
The following table provides an overview of how our budgetary and human
capital resources will be allocated among the four strategic goals and by
budget program activity.
Strategic Dollars in Full- time
goal thousands equivalent staff
Goal 1
Provide timely, quality service to the Congress and the federal $100,737 965
government to address current and emerging challenges to the well- being and
financial security of the American people
Goal 2
Provide timely, quality service to the Congress and the federal 78,936 720
government to respond to changing security threats and the challenges of
global interdependence
Goal 3
Support the transition to a more results- oriented and accountable 112,814
976 federal government
Goal 4
Maximize the value of GAO by being a model 137,808 614 organization for the
federal government
Total $430,295 3,275
71
Organization and Structure
Created in 1921 as a result of the Budget and Accounting Act, GAO is
headquartered in downtown Washington, D. C., at 441 G Street, Northwest, in
a building placed on the National Register of Historic Places as a symbol of
what in 1951 represented a new age in federal office design. It is across
the street from the Pension Building (now the National Building Museum),
which served as GAO's home prior to the construction of the GAO building in
the late 1940s. Over 70 percent of GAO's approximately 3,200 employees are
located at the headquarters building, with the remaining staff located in
field offices throughout the United States.
During fiscal year 2000, GAO began to realign its structure to better
support the Congress and to prepare the agency to meet the future challenges
outlined in GAO's strategic plan. At headquarters, staff formerly arrayed
mainly in 5 divisions and 31 issue areas were restructured into 13 teams
focused on research, audit, and evaluation work: Acquisition and Sourcing
Management; Applied Research and Methods; Defense Capabilities and
Management; Education, Workforce, and Income Security; Financial Management
and Assurance; Financial Markets and Community Investment; Health Care;
Information Technology; International Affairs and Trade; Natural Resources
and Environment; Physical Infrastructure; Strategic Issues; and Tax
Administration and Justice. Smaller specialized units support the teams and
the agency as a whole. The Office of General Counsel, for instance, provides
legal services to the Comptroller General and GAO's teams. Mission offices,
including Quality and Risk Management, Product and Process Improvement,
Congressional Relations, Public Affairs, and mission support offices, such
as human capital and the controller, support the agency in achieving its
goals and objectives.
72 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
In the field, the realignment better aligned resources with the strategic
plan, concentrated field resources in fewer locations with greater critical
mass, and clarified the roles and responsibilities of field management,
among other things. Five of our 16 field offices- Kansas City, Portland,
Raleigh, Sacramento, and St. Louis- closed in November 2000, affecting about
4 percent of GAO's workforce. Employees at those locations had the
opportunity to apply for jobs within GAO and were given assistance in
finding jobs with other employers.
Like any organization that seeks to be a model for others, GAO cannot remain
static in the face of rapid change and evolving client needs. Through the
realignment and other initiatives, we have eliminated a layer of management,
reduced the number of internal “silos” and field offices,
increased our client focus, adopted formal core values for the agency,
implemented more effective matrix management techniques, placed stronger
emphasis on our human capital, and improved the alignment of programmatic
capabilities with our new strategic plan.
East Central
Atlanta Boston Dayton Hunstville Norfolk
Chicago Dallas Denver
Los Angeles Seattle San Francisco
Chief Mission Support & Chief Financial Officer
CMSO/ CFO Field Office
FO
Legal Services and Ethics Counselor
Comptroller General CG- CEO
Chief Operating Officer COO
Inspector General IG LSE CMSO/ MPA
Quality & Risk Management
QRM General Counsel
GC
Opportunity & Inclusiveness
West
Managing Directors for
Operations
MDO
Controller/ Adminstrative
Services Office
CASO
Knowledge Services
KSO
Human Capital
Officer
HCO
Information Systems
and Technology
Services
ISTS IAT
FMA EWIS FMCI HC
NRE PI TAJ
IT ASM DCM
Goal 2 Goal 3 Goal 1
Goal 4 Goal 2
Goal 3 Goal 1
Financial Markets & Community
Investment
FMCI
Financial Management &
Assurance
FMA
Information Technology
IT
Physical Infrastructure
PI
Natural Resources & Environment
NRE
Education, Workforce & Income Security
Strategic Issues & Methods
ARM
Applied Research Budget and
Appropriations Law
BAL
Office of Special Investigations
Tax Administration
& Justice
TAJ
Acquisition & Sourcing Management
ASM
International Affairs &
Trade
IAT
Defense Capabilities & Management
DCM
Health Care
HC
Mission and Operations M& O
Office of Special Investigations GCOSI
Procurement Law PL
Customer Relations CMSO/ CR Management and
Policy Analysis
PA
Applied Research and Methods
Product and Process Improvement Strategic Issues
Congressional Relations
External Liaison Public Affairs
PPI SI
CR ARM EL
O& I GCOSI Attorneys
SI EWIS
73
Overview of Financial Statements
GAO's financial statements and accompanying notes begin on page 76. Our
financial statements for the fiscal year ended September 30, 2000, were
audited by an independent auditor, Clifton Gunderson, LLP. The independent
auditor rendered an unqualified opinion on GAO's financial statements and an
unqualified opinion on the effectiveness of GAO's internal controls over
financial reporting and compliance with laws and regulations. In addition,
the independent auditor found no reportable instances of noncompliance with
selected provisions of laws and regulations. In the opinion of the
independent auditor, the financial statements are presented fairly in all
material respects and are in conformity with generally accepted accounting
principles.
The net cost of operating GAO during fiscal years 2000 and 1999 was
approximately $404 million and $390 million, respectively. Expenses for
salaries and related benefits continue to account for about 75 percent of
GAO's net cost of operations. Activities in the issue areas related to
justice, tax policy, financial institutions, and general management, along
with those related to education and employment, health care, and income
security, were responsible for most of the increase. For fiscal year 2001
reporting, GAO plans to report our net cost of operations according to our
four major Strategic Goals, an appropriate measure of cost consistent with
our new strategic planning process.
74 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
Financial Systems and Internal Controls
GAO recognizes the importance of strong financial systems and internal
controls to ensure our accountability, integrity, and reliability. To
achieve a high level of quality, management maintains a quality control
program and seeks advice and evaluation from both internal and external
sources. Specifically, through internal reviews and peer review activities,
we obtain reasonable assurances that our audit and evaluation work conforms
with all applicable professional requirements, including generally accepted
government auditing standards.
GAO's Inspector General (IG) conducts audits and investigations and
functions as an independent fact- gathering and technical adviser to the
Comptroller General. This year, as a result of IG efforts, we have
strengthened our policies and internal controls on information technology
contractor oversight, accountable personal property, charge card usage, and
processing classified information on computers. We have also improved
enforcement of requirements for filing annual financial disclosure
statements and maintaining GAO building parking privileges.
GAO utilizes an Audit Advisory Committee, which assists the Comptroller
General in overseeing the effectiveness of our financial reporting and audit
processes, internal controls over financial operations, and processes to
ensure compliance with laws and regulations relevant to GAO's financial
operations. The Committee consists of the following three distinguished
individuals:
Sheldon S. Cohen (Chairman) is a certified public accountant and practicing
attorney in Washington, D. C.; former Commissioner and Chief Counsel of the
Internal Revenue Service; and Senior Fellow of the National Academy of
Public Administration.
75
Alan B. Levenson is a practicing attorney in Washington, D. C., and a former
senior official at the Securities and Exchange Commission.
Katherine D. Ortega is a certified public accountant, former Treasurer of
the United States, former Commissioner of the Copyright Royalty Tribunal,
and a former member of the President's Advisory Committee on Small and
Minority Business.
GAO is committed to fulfilling the internal control objectives of 31 U. S.
C. 3512, formerly the Federal Managers' Financial Integrity Act (FMFIA).
Although GAO is not subject to FMFIA, we comply voluntarily with the act's
requirements. Our internal controls are designed to provide reasonable
assurance that obligations and costs are in compliance with applicable laws
and regulations; funds, property, and other assets are safeguarded against
loss from unauthorized acquisition, use, or disposition; and revenues and
expenditures applicable to GAO's operations are properly recorded and
accounted for to enable our agency to prepare reliable accounts and
financial reports and maintain accountability over our assets.
GAO's management assesses compliance with these controls through a series of
comprehensive internal reviews, applying the evaluation criteria in OMB's
guidance (Circular A- 123, Management Accountability and Control) for
implementing FMFIA. The results of these reviews are discussed with GAO's
Audit Advisory Committee, and action is taken to correct deficiencies as
they are identified.
GAO has assessed our internal controls as of September 30, 2000, based on
the criteria mentioned above for effective internal controls in the federal
government. On the basis of this assessment, we believe that we have
effective internal controls in place, as of September 30, 2000.
Additionally, GAO's independent auditors have provided an unqualified
opinion on GAO's internal controls over financial reporting and compliance
with all applicable laws and regulations. Consistent with GAO's evaluation,
the auditor found no material internal control weaknesses.
76 M A N AG E M E N T D I S C U S S I O N A N D A N A LYSI S
In addition, GAO is committed to fulfilling the objectives of the Federal
Financial Management Improvement Act (FFMIA) of 1996. Although not subject
to FFMIA, GAO voluntarily complies with its requirements. We believe that we
have implemented and maintained financial systems that comply substantially
with federal financial management systems requirements, applicable federal
accounting standards, and the United States Government Standard General
Ledger at the transaction level as of September 30, 2000, and for the fiscal
year then ended. GAO made this assessment based on criteria established
under FFMIA and guidance issued by OMB. Also, in their testing, GAO's
auditors did not identify any instances of substantial noncompliance with
FFMIA.
U. S. GENERAL ACCOUNTING OFFICE BALANCE SHEET AS OF SEPTEMBER 30, 2000 AND
1999
Dollars in Thousands 2000 1999
Assets
Intragovernmental Funds with the U. S. Treasury $55,115 $53,343 Accounts
receivable 487 1,222 Other 369 382 Property and equipment, net 74, 863 62,
617
Total Assets $130,834 $117,564 Liabilities Liabilities Covered by Budgetary
Resources
Intragovernmental Accounts payable $5, 801 $5, 909 Salaries and benefits
2,502 2,292 Other liabilities 1,042 986 Salaries and benefits 15, 094 13,
982 Employee travel 663 657 Accounts payable 7,041 7,986
Total liabilities covered by budgetary resources 32, 143 31, 812 Liabilities
Not Covered by Budgetary Resources
Accrued annual leave and other 27, 573 26, 334 Workers' compensation 10, 121
10, 150 Comptrollers General retirement plan 2,441 2,492 Capital leases
7,730 6,671 Deferred lease revenue 8,550
Total liabilities not covered by budgetary resources 56, 415 45, 647 Total
Liabilities $88,558 $77,459
Net Position
Unexpended appropriations $23,515 $22,777 Cumulative results of operations
18, 761 17, 328
Total net position 42, 276 40, 105 Total Liabilities and Net Position
$130,834 $117,564
The accompanying notes are an integral part of these statements.
77 F I N A N C I A L S TAT E M E N T S
U. S. GENERAL ACCOUNTING OFFICE STATEMENT OF NET COST FOR FISCAL YEARS ENDED
SEPTEMBER 30, 2000 AND 1999
Dollars in Thousands 2000 1999
Net Costs by Program Area
National Defense, Security and International Relations, and Other Related
Issues $87,094 $84,942
Less reimbursable services Net program cost 87, 094 84, 942
Financial Audits, Systems, Information Management and Technology Issues 83,
937 84, 617
Less reimbursable services (778) (997) Net program cost 83, 159 83, 620
Energy, Agriculture, Environment, Housing, Transportation, and Natural
Resources Issues 75, 927 73, 815
Less reimbursable services Net program cost 75, 927 73, 815
Justice, Tax Policy, Financial Institutions, and General Management Issues
63, 750 57, 718
Less reimbursable services (6) Net program cost 63, 750 57, 712
Education and Employment, Health Care and Income Security Issues 58, 989 55,
148
Less reimbursable services (33) Net program cost 58, 989 55, 115
Legal Services 26, 017 24, 461 Less reimbursable services Net program cost
26, 017 24, 461
Special Investigations and Investigative Support 6,275 6,288 Less
reimbursable services Net program cost 6,275 6,288
Senior management and staff 3,627 4,778 Less reimbursable services not
attributable to programs (712) (456)
Net Cost of Operations $404,126 $390,275
The accompanying notes are an integral part of these statements.
78
U. S. GENERAL ACCOUNTING OFFICE STATEMENT OF CHANGES IN NET POSITION FOR
FISCAL YEARS ENDED SEPTEMBER 30, 2000 AND 1999
Dollars in Thousands 2000 1999
Net Cost of Operations $404,126 $390,275 Financing Sources (other than
reimbursable services)
Appropriations used 376,640 365,009 Federal employee retirement benefit
costs
paid by OPM and imputed to GAO 19, 009 19, 839 Amortization of deferred
lease revenue 503 Intragovernmental transfer of property and equipment (556)
(1,176)
Total Financing Sources 395,596 383,672 Net Results of Operations (8,530)
(6,603) Net Increase (Decrease) in Unexpended Appropriations 738 (10,003)
Change in Net Position (7, 792) (16,606) Net Position - Beginning of Fiscal
Year 40, 105 56, 711 Reinstatement of the GAO Building and Land as
a Multi- Use Heritage Asset 9,963 Net Position - End of Fiscal Year $42,276
$40,105
The accompanying notes are an integral part of these statements.
79 F I N A N C I A L S TAT E M E N T S
U. S. GENERAL ACCOUNTING OFFICE STATEMENT OF BUDGETARY RESOURCES FOR FISCAL
YEARS ENDED SEPTEMBER 30, 2000 AND 1999
Dollars in Thousands 2000 1999
Budgetary Resources Made Available
Current year appropriations $377,561 $354,268 Transfers of budget authority,
net 125 1,000 Unobligated appropriations, beginning of fiscal year 4,477
2,166 Reimbursable services 1,490 1,492 Cost sharing and pass- through CPA
contract reimbursements 7,000 9,669
Total Budgetary Resources Made Available $390,653 $368,595 Status of
Budgetary Resources
Obligations incurred $386,081 $363,856 Unobligated appropriations, end of
fiscal year 4,264 4,477 Lapsed budget authority 308 262
Total Status of Budgetary Resources $390,653 $368,595 Outlays
Obligations incurred $386,081 $363,856 Less: Reimbursable services (1, 490)
(1,492)
Cost sharing and pass- through CPA contract reimbursements (7,000) (9,669)
Obligated balance, net - beginning of fiscal year 48, 866 55, 632 Less:
Obligated balance, net - end of fiscal year (50, 851) (48,866)
Total Outlays $375,606 $359,461
The accompanying notes are an integral part of these statements.
80
U. S. GENERAL ACCOUNTING OFFICE STATEMENT OF FINANCING FOR FISCAL YEARS
ENDED SEPTEMBER 30, 2000 AND 1999
Dollars in Thousands 2000 1999
Obligations and Nonbudgetary Resources
Obligations incurred $386,081 $363,856 Less: Reimbursable services (1, 490)
(1,492)
Cost sharing and pass- through CPA contract reimbursements (7,000) (9,669)
Financing imputed from OPM for federal
employee benefit cost subsidies 19, 009 19, 839 Amortization of deferred
lease revenue 503 Intragovernmental transfer of property and equipment (556)
(1,176)
Total obligations as adjusted, and nonbudgetary resources 396,547 371,358
Resources That Do Not Fund Net Cost of Operations
Net (increase) decrease in unliquidated obligations (951) 12,314 Costs
capitalized on the balance sheet (9,204) (8,425) Expenses to be funded by
future appropriations 1,159 215
Total resources that do not fund net cost of operations (8,996) 4,104 Costs
That Do Not Require Resources
Depreciation 16, 575 14, 813
Net Cost of Operations $404,126 $390,275
The accompanying notes are an integral part of these statements.
81 F I N A N C I A L S TAT E M E N T S
82 NOT E S TO F I N A N C I A L S TAT E M E N T S
Notes to Financial Statements Note 1. Summary of Significant Accounting
Policies
Reporting Entity
The accompanying financial statements present the financial position, net
cost of operations, changes in net position, budgetary resources, and
financing of the United States General Accounting Office (GAO), an agency of
the legislative branch of the federal government. The financial activity
presented relates primarily to the execution of GAO's congressionally
approved budget. GAO's budget consists of an annual appropriation covering
salaries and expenses and a building expenditure fund. The financial
statements, except for federal employee benefit costs paid by the Office of
Personnel Management (OPM) and imputed to GAO, do not include the effects of
centrally administered assets and liabilities related to the federal
government as a whole, such as interest on the federal debt, which may in
part be attributable to GAO; they also do not include activity related to
GAO's trust function described in Note 11.
Basis of Accounting
The Federal Accounting Standards Advisory Board (FASAB) was established in
October 1990 by the Secretary of the Treasury, the Director of the Office of
Management and Budget (OMB), and the Comptroller General (FASAB Principals).
The mission of FASAB is to recommend proposed accounting standards to the
Principals after considering the financial and budgetary information needs
of the congressional oversight groups, executive agencies, and the needs of
other users of federal financial information. When FASAB has developed a
proposed concept or standard, FASAB will submit it to the Principals, who
will have 90 days to review the statement or concept and communicate any
objections. If none of the Principals objects, the statement or concept will
become final guidance for federal financial reporting entities.
83
In April 2000, the American Institute of Certified Public Accountants
(AICPA) recognized FASAB as the body that promulgates generally accepted
accounting principles (GAAP) for federal reporting entities. These
principles differ from budgetary reporting principles. The differences
relate primarily to the capitalization and depreciation of property and
equipment, as well as the recognition of other long- term assets and
liabilities in the accompanying financial statements. Also, for purposes of
the financial statements, budgetary appropriations are recognized as a
financing source when goods and services are received or benefits are
provided.
Basis of Presentation
GAO's 2000 financial statements have been prepared on the accrual basis of
accounting in conformity with GAAP for the federal government and OMB
Bulletin 97- 01, Form and Content of Agency Financial Statements, as
amended. Accordingly, revenues are recognized when earned and expenses are
recognized when incurred, without regard to receipt or payment of cash,
respectively.
Funds With the U. S. Treasury
GAO's receipts and disbursements are processed by the U. S. Treasury. Funds
with the U. S. Treasury represent appropriated funds available to pay
liabilities and to finance authorized purchase commitments.
Accounts Receivable
GAO's accounts receivable are due principally from federal government
corporations and other federal agencies for audit and other reimbursable
services.
Property and Equipment
On October 28, 1988, Public Law 100- 545 transferred control of the GAO
building and land in Washington, D. C., from the General Services
Administration (GSA) to GAO without a monetary exchange. At the time of
transfer, the depreciated value of the building was
84 NOT E S TO F I N A N C I A L S TAT E M E N T S
$15,664,000 and the book value of land was $1,191,000. GAO recorded the
building and the land as assets at the values stated above. The GAO building
is listed in the National Register of Historic Places and has been
designated as, and is GAO's only heritage asset. Maintenance of the building
has been kept on a current basis. Beginning with the 1996 financial
statements, the GAO building and land were removed from the Balance Sheet
and reported in a separate supplementary section of annual stewardship
information under the requirements of Statement of Federal Financial
Accounting Standards (SFFAS) Nos. 6 and 8 then in effect.
SFFAS No. 16, effective for periods beginning after September 30, 1999, was
issued to amend the measurement and reporting requirement for multi- use
heritage assets as originally prescribed in SFFAS Nos. 6 and 8. SFFAS No. 16
calls for accounting for multi- use heritage assets as general property,
plant, and equipment to be included in the balance sheet and depreciated.
Therefore, the GAO building and land have been recorded on the 2000
financial statements at their value set on the day of transfer from GSA.
Accumulated depreciation has been adjusted to reflect the depreciation
charges not taken in 1996 through 1999. The building is depreciated on a
straight- line basis over 25 years. The amounts reinstated are as follows:
Dollars in Thousands Building acquisition value $15,664 Land acquisition
value 1,191
Total 16,855
Less accumulated depreciation through September 30, 1999 (6,892)
Addition to Total Assets and Net Position $9, 963
Property and equipment costing more than $5,000 is capitalized at cost. Bulk
purchases of lesser- value items that aggregate more than $100,000 are also
capitalized at cost. These assets are depreciated on a straight- line basis
over the estimated useful life of the property, ranging from 2 to 20 years.
85 Liabilities
Liabilities represent the amounts that are likely to be paid by GAO as a
result of transactions that have already occurred; however, no liability is
paid by GAO absent an appropriation. Liabilities for which an appropriation
has not been enacted are, therefore, classified as liabilities not covered
by budgetary resources. Although future appropriations to fund these
liabilities are likely and anticipated, it is not certain that
appropriations will be enacted to fund these liabilities.
Federal Employee Benefits
SFFAS No. 5, Accounting for Liabilities of the Federal Government, requires
that GAO recognize its share of the cost of providing future pension
benefits to eligible employees over the period of time that services are
rendered. The pension expense recognized in the financial statements equals
the current service cost for GAO's employees for the accounting period less
the amount contributed by the employees. The measurement of the service cost
requires the use of an actuarial cost method and assumptions, with the
factors applied by GAO provided by OPM, the agency that administers the
plan. The excess of the recognized pension expense over the amount
contributed by GAO represents the amount being financed directly through the
Civil Service Retirement and Disability Fund administered by OPM. This
amount is considered imputed financing to GAO.
The standard also requires that GAO recognize a current- period expense for
the future cost of post- retirement health benefits and life insurance for
its employees while they are still working. GAO accounted for and reported
this expense in its financial statements in a manner similar to that used
for pensions, with the exception that employees and GAO do not make current
contributions to fund these future benefits.
Annual Leave, Sick and Other Leave
Annual leave is recognized as an expense and a liability as it is earned;
the liability is reduced as leave is taken. The accrued leave liability is
principally long- term in nature. Sick leave and other types of leave are
expensed as leave is taken.
86 NOT E S TO F I N A N C I A L S TAT E M E N T S
Contingencies
GAO has certain claims and lawsuits pending against it. When claims are
expected to result in payments, and the payment amounts can be reasonably
estimated, appropriate provision is included in the accompanying financial
statements. In the opinion of management and legal counsel, the resolution
of other claims and lawsuits will not materially affect the financial
position or operations of GAO.
Reclassifications
Certain amounts for 1999 have been reclassified to conform with the 2000
presentation of those amounts.
Note 2. Property and Equipment, Net
The composition of property and equipment as of September 30, 2000, is as
follows:
Dollars in Thousands
Acquisition Accumulated Book Classes of Property and Equipment Value
Depreciation Value
Building $15,664 $7,519 $8,145 Land 1,191 - 1,191 Building improvements
97,757 56,132 41,625 Computer and other equipment, and software 46,973
31,226 15,747 Leasehold improvements 4,888 4,510 378 Assets under capital
lease 14,916 7,139 7,777
Total Property and Equipment $181,389 $106,526 $74,863
87
The composition of property and equipment as of September 30, 1999, is as
follows:
Dollars in Thousands
Acquisition Accumulated Book Classes of Property and Equipment Value
Depreciation Value
Building improvements $85,852 $48,026 $37,826 Computer and other equipment,
and software 46,379 28,673 17,706 Leasehold improvements 4,797 4,376 421
Assets under capital lease 11,030 4,366 6,664
Total Property and Equipment $148,058 $85,441 $62,617
Note 3. Lease of Space to U. S. Army Corps of Engineers
The U. S. Army Corps of Engineers (COE) entered into an agreement with GAO
to lease the entire third floor of the GAO building. COE provided all
funding for the third floor renovation. Occupancy began August 3, 2000, for
an initial period of 3 years, with options to renew on an annual basis for 7
additional years. Total rental revenue to GAO includes a base rent, which
remains constant for the entire 10- year period, plus the lease agreement
calls for operating expense reimbursements at a fixed amount for the first 3
years, with escalations from year 4 through year 10.
In addition, COE paid for the design, construction, and renovation of one-
half of the sixth floor to be occupied by GAO. The renovations have been
capitalized by GAO at a cost of $9,052,612. GAO will repay COE for the
entire cost of the renovations in the form of rental credits during the
first 3 lease years. Rental credits have been recorded as deferred lease
revenue and will be amortized over a 3- year lease term. The current year
amortization of deferred lease revenue is reported on the Statement of
Changes in Net Position as a financing source and on the Statement of
Financing as a nonbudgetary resource.
The net amount of rental revenue due to GAO each year is the total revenue
less the amortization of the deferred lease revenue. Fiscal year 2000 rents
received by GAO, net of the deferred lease revenue amortization, amounted to
$189,000. This amount is included in
88 NOT E S TO F I N A N C I A L S TAT E M E N T S
Reimbursable Services on the Statements of Budgetary Resources and
Financing. Net rental revenue for the 10- year period is as follows:
Dollars in Thousands
Amortization Fiscal Year Ending Total Rental of Deferred Rental Revenue
September 30 Revenue Lease Revenue Received or Due
2000 $692 $503 $189 2001 4,189 3,018 1,171 2002 4,189 3,018 1,171 2003 4,214
2,514 1,700 2004 4,345 - 4,345 2005 4,398 - 4,398 2006- 2010 22,064 - 22,064
Total $44,091 $9,053 $35,038
Note 4. Net Position
GAO's operations do not require permanent capital and are not expected to
generate an operating surplus or deficit. Net Position is composed of two
elements- unexpended appropriations and cumulative results of operations.
Unexpended appropriations includes appropriations not yet obligated or
expended, i. e., unobligated appropriations and unliquidated obligations.
Unobligated appropriations were $4,264,000 as of September 30, 2000, and
$4,477,000 as of September 30, 1999; unliquidated obligations were
$19,251,000 as of September 30, 2000, and $18,300,000 as of September 30,
1999. Cumulative results of operations includes the amounts accumulated over
the years by GAO from its financing sources less its expenses, including
donations and transfers of capitalized assets and an amount representing
GAO's liabilities not covered by budgetary resources. The former represents
GAO's investment in capitalized assets, including supplies, net of capital
lease liability and deferred lease revenue liability.
Liabilities not covered by budgetary resources represent aggregate amounts
of congressionally authorized long- term liabilities (annual leave, workers'
compensation, retirement benefits for Comptrollers General and severance
pay) that are expected to be funded by future years' appropriations.
89
Note 5. Net Cost of Operations
The Statement of Net Cost shows the full and net operating costs of GAO's
major programs. Expenses for salaries and related benefits for fiscal years
2000 and 1999 amounted to $302,985,000 and $291,860,000, respectively, which
were about 75 percent of GAO's annual net cost of operations. Included in
the net cost of operations are federal employee benefit costs paid by OPM
and imputed to GAO of $19,009,000 in fiscal year 2000 and $19,839,000 in
fiscal year 1999. Revenues from reimbursable services earned by a program
area are shown as an offset against the full cost of the program to arrive
at its net cost. These revenues consist primarily of billings to federal
government corporations for financial statement audits performed by GAO and
to federal agencies for detailed GAO employees performing GAO mission-
related work. Earned revenues that are insignificant or cannot be associated
with a major program area are shown in total. Revenues from reimbursable
services for fiscal years 2000 and 1999 amounted to $1,490,000 and
$1,492,000, respectively. The net cost of operations represents GAO's
operating costs that must be funded by financing sources other than revenues
earned from reimbursable services. These financing sources are presented in
the Statement of Changes in Net Position.
Note 6. Net Financing Sources
GAO's financing sources, other than reimbursable services, consist of
appropriations used, imputed financing and amortization of deferred lease
revenue, less transfers- out. Appropriations are considered used as a
financing source when goods and services are received or benefits are
provided. This is true whether the goods, services, and benefits are paid
prior to the reporting date or are payable as of that date, and whether the
appropriations are used for items that are recorded as expenses or are
capitalized. Imputed financing is the offset to the federal employee benefit
costs paid by OPM and imputed to GAO that are reported on the Statement of
Net Cost. Amortization of deferred lease revenue represents the current
year, nonbudgetary financing source used to cover the sixth floor
renovation. Transfers- out
90 NOT E S TO F I N A N C I A L S TAT E M E N T S
represent the book value of capitalized assets transferred from GAO to other
federal agencies without reimbursement.
Note 7. Spending Authority From Budget Transfers and Reimbursements
Budgetary resources made available to GAO include spending authority from
budget transfers and reimbursements arising from both revenues earned by GAO
from providing services to other federal entities for a price (reimbursable
services) and cost sharing and pass- through contract arrangements with
other federal entities. Fiscal year 2000 budget transfers consisted of
budget authority transferred in from OMB for a management review of the
operations of the Office of National Drug Control Policy. Budget transfers
in fiscal year 1999 consisted of budget authority transferred in from the U.
S. Agency for International Development for assessing disaster recovery
assistance related to Hurricane Mitch and from the Department of Health and
Human Services for specified studies of the Organ Procurement and
Transplantation Network. Reimbursements from cost sharing and pass- through
contract arrangements consisted primarily of collections from other federal
entities for the support of FASAB and collections from other federal
entities that utilize standing GAO contracts for obtaining accounting and
auditing services from CPA firms. The costs and reimbursements for these
activities are not included in the Statement of Net Cost.
Note 8. Leases
Capital Leases
GAO has entered into capital leases for office and computer equipment under
which the ownership of the equipment covered under the leases transfers to
GAO when the leases expire. When GAO enters into these leases, the present
value of the future lease payments is capitalized, net of imputed interest,
and recorded as a liability. The acquisition value and accumulated
depreciation of GAO's capital leases are shown in Note 2, Property and
Equipment, Net. As of September 30, 2000 and 1999, the capital leases
liability was $7,730,000 and $6,671,000, respectively.
91
The lease agreements are written as annual fiscal- year contracts that are
subject to the availability of funding. The agreements contain a lease- to-
purchase provision, and there is no penalty for cancelling the lease and
returning the equipment before the end of the lease term. GAO's estimated
future minimum lease payments under the terms of the leases are as follows:
Dollars in Thousands
Fiscal Year Ending September 30 Total
2001 $4,655 2002 2,472 2003 1,360 2004 116 2005 0 Total Estimated Future
Lease Payments $8,603 Less: Imputed Interest ( 873)
Net Capital Lease Liability $7,730 Operating Leases
GAO leases office space from GSA and has entered into various other
operating leases for office communication and computer equipment. Lease
costs for office space and equipment for fiscal years 2000 and 1999 amounted
to approximately $7,800,000 and $7,483,000, respectively. GAO's estimated
future minimum lease payments are as follows:
Dollars in Thousands
Fiscal Year Ending September 30 Total
2001 $6,421 2002 5,078 2003 3,606 2004 1,665 2005 1,337 Thereafter 114
Total Estimated Future Lease Payments $18,221
Note 9. Federal Employee Benefits
All permanent employees participate in the contributory Civil Service
Retirement System (CSRS) or the Federal Employees Retirement System (FERS),
which became effective
92 NOT E S TO F I N A N C I A L S TAT E M E N T S
January 1, 1987. Temporary employees and employees participating in FERS are
covered under the Federal Insurance Contributions Act (FICA). GAO makes
contributions to CSRS, FERS, and FICA and matches employee contributions to
the thrift savings component of FERS up to 5 percent of basic pay. The
pension expense recognized in GAO's financial statements for fiscal years
2000 and 1999 amounted to approximately $35,061,000 and $34,906,000,
respectively. These amounts include pension costs financed by OPM and
imputed to GAO of $11,285,000 and $11,899,000, respectively. To the extent
that employees are covered by FICA, the taxes they pay to the program and
the benefits they will eventually receive are not recognized in GAO's
financial statements. However, the payments to FICA that GAO makes are
recognized as operating expenses. These payments amounted to approximately
$10,314,000 and $9,765,000 during fiscal years 2000 and 1999, respectively.
Similarly, to the extent that GAO employees are covered by the thrift
savings component of FERS, GAO payments to the plan are operating expenses.
GAO's costs associated with the thrift savings component of FERS during
fiscal years 2000 and 1999 amounted to approximately $5,010,000 and
$4,535,000, respectively.
In addition, all permanent employees are eligible to participate in the
contributory Federal Employees Health Benefit Program (FEHBP) and Federal
Employees Group Life Insurance Program (FEGLIP) and may continue to
participate after retirement. GAO makes contributions to FEHBP and FEGLIP
for active employees to pay for their current benefits. GAO's contributions
for active employees are recognized as operating expenses and, during fiscal
years 2000 and 1999, amounted to approximately $9,881,000 and $9,349,000,
respectively. Using the cost factors supplied by OPM, GAO has also
recognized an expense in its financial statements for the future cost of
post- retirement health benefits and life insurance for its employees. These
costs amounted to approximately $7,724,000 and $7,940,000 during fiscal
years 2000 and 1999, respectively, and are financed by OPM and imputed to
GAO.
Comptrollers General and their surviving beneficiaries who qualify and so
elect to participate are paid retirement benefits by GAO under a separate
retirement plan. These benefits are
93
paid from current year appropriations and amounted to approximately $251,700
and $246,700 during fiscal years 2000 and 1999, respectively. Since GAO is
responsible for future payments under this plan, the estimated present value
of accumulated plan benefits is recorded as an unfunded liability. The
estimated present value of accumulated plan benefits was $2,441,000 as of
September 30, 2000, and $2,492,000 as of September 30, 1999.
Note 10. Workers' Compensation
The Federal Employees' Compensation Act (FECA) provides income and medical
cost protection to covered federal civilian employees injured on the job,
employees who have incurred a work- related occupational disease, and
beneficiaries of employees whose death is attributable to a job- related
injury or occupational disease. Claims incurred for benefits for GAO
employees under FECA are administered by the Department of Labor (DOL) and
are ultimately paid by GAO. GAO recorded an estimated liability for claims
incurred as of September 30, 2000 and 1999, and expected to be paid in
future periods. The total liability also includes amounts paid to claimants
by DOL as of September 30, 2000 and 1999 of $2,113,000 and $2,146,000,
respectively, but not yet reimbursed to DOL by GAO.
Note 11. Davis- Bacon Act Trust Function
GAO is responsible for administering for the federal government the trust
function of the Davis- Bacon Act receipts and payments. GAO maintains this
fund to pay claims relating to violations of the Davis- Bacon Act and
Contract Work Hours and Safety Standards Act. Under these acts, DOL
investigates violation allegations to determine if federal contractors owe
additional wages to covered employees. If DOL concludes that a violation has
occurred, GAO collects the amount owed from the contracting federal agency,
deposits the funds into an account with the U. S. Treasury, and remits
payment to the employee. GAO is accountable to the Congress and the public
for the proper administration of the assets held in the trust. Trust assets
under GAO's administration totaled approximately $4,878,000 on
94
September 30, 2000. These assets are not the assets of GAO or the federal
government and are held for distribution to appropriate claimants. During
fiscal year 2000, receipts and disbursements in the trust amounted to
$2,197,000 and $2,088,000, respectively. Since the trust assets and related
liabilities are not assets and liabilities of GAO, they are not included in
the accompanying financial statements.
The Audit Advisory Committee assists the Comptroller General in overseeing
the U. S. General Accounting Office's (GAO) financial operations. As part of
that responsibility, the Committee meets with agency management and its
internal and external auditors to review and discuss GAO's external
financial audit coverage, the effectiveness of GAO's internal controls over
its financial operations, and its compliance with certain laws and
regulations that could materially impact GAO's financial statements. The
Committee reviews the findings of the internal and external auditors, and
GAO's responses to those findings, to ensure that GAO's plan for corrective
action includes appropriate and timely follow- up measures. In addition, the
Committee reviews and comments on the draft Performance and Accountability
Report, including its financial statements. The Committee met twice during
fiscal year 2000. During these sessions, the Committee met with the internal
and external auditors without GAO management being present.
Sheldon S. Cohen Chairman Audit Advisory Committee
95
Report of the Audit Advisory Committee
96
Independent Auditor's Report
97
98 I N D E P E N D E N T AU D I TO R ' S R E P O RT
99
APPENDIX I
GOAL 1 ACCOMPLISHMENTS AND PERFORMANCE GOALS
Provide Timely, Quality Service to the Congress and the Federal Government
to Address Current and Emerging Challenges to the Well- Being and Financial
Security of the American People
This appendix provides details of selected accomplishments during fiscal
year 2000, categorized by strategic objective. The performance goals we set
for fiscal years 2000 through 2002 for each objective and any revisions to
them follow each set of accomplishments.
Strategic Objective 1.1
The Health Care Needs of an Aging and Diverse Population Helping to Prevent
Fraud and Abuse in Medicare: GAO had long advocated increased funding for
activities to prevent fraud and abuse in the Medicare program, and in 1996,
the Congress passed the Health Insurance Portability and Accountability Act,
which provided the additional funding. As a result of these activities, the
Medicare program's net savings were about $3 billion in fiscal year 2000.
Improving Management and Oversight of Medicare Operations: In response to
our work on oversight of Medicare operations, the Health Care Financing
Administration (HCFA) overhauled its program for evaluating the performance
of its claims administration contractors, representing nearly 60 companies.
As we recommended, HCFA instituted a targeted and nationally uniform
approach to contractor evaluation that should provide the agency with a
clearer and more informative picture of contractors' performance in
processing claims and conducting program integrity activities. Also, in
response to our work, HCFA made major changes to its
100
101
regional and central office reporting structure to better hold officials
accountable for their oversight of Medicare's contractor- managed day- to-
day operations.
Informing the Debate on Medicare Reform: Mindful of the need to ensure the
Medicare program's long- term sustainability, the Congress relied on an
ensemble of GAO reports to identify directions for Medicare reform. For
example, our work on long- term budget projections and program management
inefficiencies alerted policymakers to the need for significant program
changes. At the same time, our analyses showing excess payments to managed
care plans, factors contributing to their declining participation in
Medicare+ Choice, and the implementation challenges embedded in program
reform proposals alerted the Congress to the complexities and trade- offs
associated with largescale reform and benefit expansions.
Improving Medicare's Payment Policies: Medicare has implemented several new
provider payment methods intended to slow spending growth while maintaining
access to care. Our reports and testimonies consistently state the need for
Medicare payment policies to ensure that provider payments are adequate,
that payments reflect differences in beneficiary needs, and that providers
have the appropriate incentives to deliver services in a costeffective
manner. Under the payment method for home health care, for example, we noted
that provider payments could go up, while services delivered to
beneficiaries could actually decline. The Congress delayed further
reductions in home health payments until we complete a mandated study on
this topic. Under the payment method for skilled nursing facility services,
we determined that even though aggregate spending appears adequate, payment
rates for the highest- cost cases might be too low, which could impair
access to care. The Congress mandated that we evaluate the impact of
targeted payment increases and the overall financial health of the nursing
home industry. Regarding payments for physician services, we identified
several components of Medicare's method that need refinement to improve the
equity of payments. The Congress mandated that we investigate specific
modifications to the payments for oncology services and delayed changes to
the payments for the pharmaceuticals they provided until we have completed
another mandated study on drug pricing.
Improving Private Health Insurance Coverage: GAO's work on strengthening
consumer protections for and improving access to private health insurance
contributed to congressional consideration of several proposed reforms. Our
report and testimony on the Mental Health Parity Act highlighted ways in
which employers have continued to provide limited coverage for mental health
as the Congress considered whether to reauthorize the 1996 law. In addition,
several of our reports were used during Conference Committee consideration
of major provisions of the patient protection and access legislation (H. R.
2990), including our findings on (1) the number and characteristics of
individuals likely to be
102 A P P E N D I X I
eligible for the proposed health insurance tax deduction; (2) the experience
of existing small business health insurance purchasing cooperatives as
models of the proposed HealthMarts; and (3) the federal government's
enforcement of the Health Insurance Portability and Accountability Act of
1996, the same model proposed for federal enforcement of the patient
protection legislation.
Sharing VA and DOD's Health Resources: To save federal dollars, the
Department of Veterans Affairs (VA) and the Department of Defense (DOD) have
sought ways to share excess health care resources. VA and DOD officials have
found that by sharing resources, better use of their local facilities,
staff, and equipment; in some cases, beneficiary access and patient
satisfaction have improved. However, most sharing is occurring between a
small number of VA and DOD facilities. GAO identified and reported on the
barriers inhibiting sharing and made a number of recommendations to overcome
them. As a result, both agencies have refocused efforts to increase
cooperation. Also, additional opportunities exist for VA and DOD to jointly
purchase pharmaceuticals and obtain greater discounts from manufacturers. In
fiscal year 2000, the two agencies will save an estimated $32 million from
jointly awarded national committed- use contracts with suppliers. GAO's
analysis showed that more could be saved by expanding the use of these
contracts. As a result of our recommendation, DOD and VA have increased
joint pharmaceutical contracting, thereby reducing drug costs by millions of
dollars.
Analyzing VA's Infrastructure: As much as 25 percent of VA's annual health
care budget is spent to operate, maintain, and improve roughly 4,700
buildings and 18,000 acres of property- including unused and underused
hospitals and other facilities. Without a major restructuring of capital
assets, billions of dollars will be used in the operation of hundreds of
unneeded or underused VA buildings over the next few years. We reported that
VA had made limited progress toward implementing a capital asset realignment
process and estimated the opportunity cost of delay was as high as $1
million a day. GAO recommended that VA develop asset- restructuring plans
for all health care markets to guide investment decision- making. To respond
to this recommendation, VA will soon implement its Capital Asset Realignment
Services (CARES) program- to be carried out in three phases over 3 years-
which involves assessing each network's health care requirements,
identifying service delivery options to meet these requirements, and
realigning capital assets accordingly. Successful implementation of CARES
could result in significant savings for VA.
Preventing TRICARE Fraud and Abuse: GAO has identified significant
shortcomings in DOD's efforts to identify and prevent fraud and abuse. GAO's
analyses validated that DOD and its contractors have paid little attention
to fraud and abuse issues and that DOD could be losing hundreds of millions
of dollars because of fraudulent activities.
103
GAO's recommendations for improving the programs resulted in DOD's agreeing
to include in its military health system strategic plan how DOD will combat
fraud and abuse and designate employees to oversee the implementation of new
fraud prevention requirements.
Budgeting DOD's Custodial Care Benefit: During GAO's efforts to evaluate the
reasonableness of the Defense Health Care Program's budget request for
fiscal years 2000- 2001, significant issues arose concerning the basis for
DOD's estimates for expanding the custodial care benefit. GAO's analyses of
DOD's historical and current spending patterns for this type of care
indicated that its request of $100 million annually was overstated. As a
result of GAO's work, DOD reduced its budget request to $20 million.
Improving TRICARE Claims Processing: As part of its assessment of health
care claims processing, GAO reported that increasing electronic claims
submission and Web- based services would reduce claims processing costs and
improve customer service. GAO's analyses found that processing DOD claims
cost several times as much as processing Medicare claims-$ 7.50 compared
with $1.78 per claim on average. As a result of GAO's analyses, the Congress
instructed DOD to increase electronic claims submission with the goal of
saving hundreds of millions of dollars.
Learning Public Health Lessons From the West Nile Virus Outbreak: In fall
1999, the mosquito- borne West Nile virus- a virus never before seen in this
hemisphere- killed seven people in the New York City area and made dozens
more very sick. Even though this was a natural occurrence, it can serve as a
source of lessons about detecting and responding to an act of biological
terrorism. GAO investigated this outbreak and established a thorough
chronological account of the significant events and communications that
occurred, from doctors and others who first saw the symptoms and from the
officials mounting a response. From these efforts, GAO was able to identify
lessons learned for public health and bioterrorism preparedness.
Analyzing Biomedical Research: GAO found that the National Institutes of
Health (NIH) had made less progress in implementing a requirement that
certain clinical trials be designed and carried out to permit valid analysis
by sex than it had in implementing other aspects of its policy to ensure the
inclusion of women in clinical research. NIH quickly took several actions in
response to GAO's findings and recommendations. It revised its guidelines on
conducting and reporting on analyses of differences in Phase III clinical
trials outcomes by sex and race/ ethnicity; required grant recipients to
describe plans to conduct such analyses, as appropriate, and report on the
results in Progress Reports and Competitive Renewal Applications; and
developed instructions for reviewers and scientific review administrators.
In addition, the Department of Health and Human Services
104 A P P E N D I X I
We revised the goal to reflect the broader nature of the work, which will
look at access, quality, and costeffectiveness in addition to infrastructure
issues.
(HHS) held a symposium on issues pertaining to analysis of study results by
sex, which focused on GAO's findings.
Minimizing Foodborne Illnesses: At a time when increased public awareness of
foodborne illnesses has heightened concerns about the federal government's
effectiveness in ensuring the safety of the nation's food supply, GAO's work
has been used extensively during congressional consideration of food safety
issues. In particular, GAO has served as an honest broker of information on
the shortcomings of the federal food safety system. GAO's analyses and
recommendations for improving food safety have been directed at the Food and
Drug Administration and the Department of Agriculture (USDA). For example,
our work resulted in USDA's agreeing to create a new scientific, risk- based
food safety inspection system referred to as the Hazard Analysis and
Critical Control Point system. In implementing the system, USDA agreed to
better clarify food inspectors' roles, responsibilities, and training needs.
Strategic Objective 1.1
Health Care Needs and Financing, Progress Toward FY 2000- 2002 Performance
Goals
Progress assessment Performance goal Comment
Evaluate Medicare reform, financing, and operations
Assess trends and issues in private health insurance coverage
Assess actions and options for improving the Department of Veterans Affairs'
and the Department of Defense's health care facilities and services,
including realigning capital assets to reduce unneeded physical
infrastructure
Evaluate the effectiveness of federal programs to promote and protect the
public health
Assess the effectiveness of federal food safety programs
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
105 Strategic Objective 1.2
A Secure Retirement for Older Americans Analyzing Social Security Reform:
GAO produced a major body of work analyzing the challenges facing the long-
term financial solvency, stability, and sustainability of the Social
Security program, including developing and applying criteria for evaluating
reform proposals. Our criteria provide a clear, consistent, and objective
analytical framework that the Congress, program officials, and the public
can use in evaluating legislative reforms.
Improving SSA's Customer Service: The Social Security Administration (SSA)
has improved service to its customers as a result of GAO's work and
recommendations. Subsequent to a GAO recommendation, the agency has taken
steps to expand its automated 800 number service. It has also significantly
improved the clarity and readability of the benefit statement it mails to
almost every U. S. worker each year. In addition, GAO found that several
types of letters SSA sends to the public each year did not clearly
communicate key points about the recipient's eligibility for benefits, and
the agency has begun a major initiative to improve these letters. Finally,
GAO has stressed the importance of developing a plan to meet the increasing
demands expected for service in the future, and the SSA has recently
developed a formal vision for service in the year 2010.
Evaluating Proposed Pension Reforms: GAO provided useful and timely
information to aid congressional consideration of various pension reforms.
Our work on “top- heavy” pension rules and on cash balance
pension plans helped foster a greater understanding of the way pension
coverage is provided and identified areas where protections of workers'
benefits may be weak. In response to our recommendations, the Department of
Labor is considering changes to its disclosure requirements for companies
converting to cash balance plans.
Improving PBGC's Contract Management: GAO's evaluation of the Pension
Benefit Guaranty Corporation's (PBGC) contracting management has fostered
change in the way the corporation does business. In response to our
recommendations, the corporation is beginning the process of better linking
its organizational structure, staffing, and contracting decisions to its
long- term strategic planning process and is taking actions to improve
competition and oversight in its contracting process. These changes, taken
together, will improve efficiency and cost- effectiveness, which in turn
will improve service to beneficiaries.
106 A P P E N D I X I
Strategic Objective 1.2
Retirement Income Security, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Assess the implications of various Social Security reform proposals within a
developed framework and evaluation criteria
Identify opportunities to foster greater pension coverage, increase private
savings, participation and ensure adequate retirement income levels by
private pension systems
The wording was revised slightly to better articulate the focus of the goal.
Identify opportunities to improve the ability of the Pension Benefit
Guaranty Corporation's and the Department of Labor's Pension and Welfare
Benefits Administration's programs federal agencies and programs to
administer and protect workers'
retirement benefits in private pension systems
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 1.3
The Social Safety Net for Americans in Need Better Understanding the Status
of Welfare Recipients: Our work continues to provide an objective source of
information to the Congress on the results of the sweeping changes that it
made to the nation's cash assistance program for needy families with
children. For example, our report on sanctions under welfare reform provided
the first national picture of the extent to which welfare recipients
received benefit reductions or terminations for not complying with work or
other requirements. Congressional and federal agency officials have cited
our comprehensive review of studies of families that have left welfare as an
authoritative source of information. Our report on work- site activities for
welfare recipients recommended that the Department of Health and Human
Services identify and disseminate information on promising work- site
approaches used by states and localities. The Department agreed with this
recommendation.
Improving Nursing Home Quality of Care: HCFA and several states- including
California, Maryland, and Michigan- improved their oversight and enforcement
of nursing homes' quality care standards in response to GAO's
recommendations highlighting weaknesses in existing processes. These
improvements included increased funding for nursing home surveyors, more
prompt investigation of complaints alleging serious harm to nursing home
residents, more immediate enforcement actions for homes with repeated
serious problems, a reorganization of HCFA's regional staff to improve
consistency in nursing home over
The goal was broadened to acknowledge the pivotal role played in this area
by federal agencies other than the Department of Labor and the Pension
Benefit Guaranty Corporation (e. g., the Treasury Department and the
Internal Revenue Service).
107
sight, and increased funding for administrative law judges to reduce the
backlog of appealed enforcement actions pending on nursing homes.
Financing Health Care for Low- Income Populations: GAO reported and
testified on several aspects of Medicaid and the State Children's Health
Insurance Program, including extending Medicaid coverage to children with
disabilities and delivering on statutory managed care protections for
children with special needs. We also testified on two different financing
schemes or unacceptable practices that states are using to inappropriately
maximize federal funding and supplant the statutorily required state or
local share of program expenditures. In the case of school- based Medicaid
services, HCFA acted promptly to disallow over $100 million in improper
payments in one state alone. HCFA and the Congress also implemented our
recommendations to close another existing loophole that at present allows
states to draw down and retain excessive federal payments for Medicaid-
covered services in local government facilities. HCFA estimates that these
actions will save the federal government more than $55 billion over 10
years.
More Accurately Budgeting the Food Stamp Program: Because of declining
participation rates and a strong national economy, GAO questioned the
Agriculture Department's budget requesting $18.4 billion for benefits and $1
billion in contingency funds for the Food Stamp program. We pointed out that
only about $17 billion in benefits had been provided to recipients in 1998
and that the participation rate for the first half of 1999 had continued to
decline. Following our work, the Congress provided $17.1 billion for
benefits and $100 million for contingencies- a difference of $2.2 billion.
Improving Rural Housing Assistance: In response to a congressional request,
we reviewed rural housing assistance programs run by the departments of
Agriculture and Housing and Urban Development. We found that these programs
serve similar markets and provide similar products. To optimize the federal
role in rural housing, we suggested that the Congress consider requiring
that these agencies examine their single- family insured lending programs to
take advantage of the best practices of each, while ensuring that targeted
populations are not adversely affected. The departments agreed that ways of
improving rural housing opportunities should be explored.
Helping to Prevent Disability Program Overpayments: GAO found that
inattention by SSA in verifying recipients' eligibility for the Supplemental
Security Income (SSI) program had contributed to fraud, waste, abuse, and
overpayments. Subsequently, in response to GAO's designation of the SSI
program as high risk, SSA developed a strategy that included processing more
SSI financial redeterminations. Increasing these redeterminations prevented
$592 million in overpayments in fiscal year 1999.
108 A P P E N D I X I
Helping People With Disabilities Return to Work: Based in part on a body of
GAO work that identified opportunities to improve federal disability
programs' efforts to return people with disabilities to the workplace, the
Congress passed the Ticket to Work and Work Incentives Improvement Act,
which included
expanding the availability of health care services for people with
disabilities who work; expanding beneficiaries' access to vocational
rehabilitation, employment, or other support services from an employment
network of their choice; and establishing an outreach program to provide
accurate information on work incentives to disabled beneficiaries.
Improving VA's Disability Claims Processing: VA provides over $20 billion a
year in disability compensation and pension benefits to more than 3 million
veterans, family members, and survivors. In March 1999, we reported that
while VA has taken steps to measure the accuracy of its claims- processing
decisions, additional measures were needed to ensure that error- prone cases
are identified and procedures for reviewing the accuracy of claims meet the
government's internal control standards. GAO recommended, among other
things, that VA implement a claims- processing accuracy review function that
meets the government's internal control standard on separation of duties and
the program performance audit standard on organizational independence. On
the basis of our work, the Congress passed legislation requiring VA to
establish a quality assurance program that meets generally applicable
governmental standards for independence and internal controls.
109 Strategic Objective 1.3
Social Safety Net, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Analyze the results of welfare reform Evaluate federal and state program
strategies for financing and overseeing chronic and long- term health care
Assess states' experiences in providing health insurance coverage for
previously uninsured lowincome children populations
Identify opportunities to provide more costeffective food assistance
programs and housing assistance programs
Identify ways to improve federal disability programs support for people with
disabilities
Analyze the effectiveness and efficiency of child support enforcement and
child welfare programs in serving their target populations
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 1.4
An Educated Citizenry and a Productive Workforce Seeking Ways to Make Early
Childhood Programs More Effective: GAO issued several reports and testified
on what is known about the effectiveness of early childhood programs. To
assist the continuing congressional interest in these programs, we also
updated our report on the multiplicity of early childhood programs and what
issues would need to be addressed to ascertain if opportunities for
efficiency existed through consolidation.
Strengthening Accountability in Educating Disadvantaged Students: GAO found
accountability was lacking in the nation's $8 billion Title I program, which
is intended to meet the needs of economically and educationally
disadvantaged students. In particular, GAO found that most states are not
positioned to hold schools and school districts accountable for the
educational outcomes of disadvantaged students. GAO recommended, among other
things, that the Department of Education help the states improve the quality
of assessment data to better determine whether the Title I program is
effective and whether students are making educational progress.
We modified the wording of the goal to broaden the focus beyond children.
We revised the goal to broaden the scope of our work to include access
issues.
We added this goal addressing child welfare and child support issues because
of the intense concern the Congress has shown about these issues.
110 A P P E N D I X I
Managing High- Risk Student Financial Assistance Programs: In reviewing the
Department of Education's performance plans, GAO noted that there were no
goals or objectives that directly address one of the key outcomes that the
Department identified as an important mission area- less fraud, waste, and
error in student assistance programs. We concluded that because the
vulnerabilities of the student financial assistance programs place the
federal government at risk of incurring high costs, the Department should
have goals and objectives that directly address the need to improve
management and oversight of these programs. We expressed concern that the
Office of Student Financial Assistance- the newly established performance-
based organization that administers the programs- did not have a goal or
objective to address the issues needed to remove the programs from GAO's
high- risk list. After GAO issued its report, the Department revised its
strategic plan to include a performance goal of improving the integrity of
its financial aid program and a number of strategies that could potentially
address GAO's concern.
Enhancing the Understanding of the Workforce Investment Act's Implementation
and Impact:
To assist the Congress in assessing the need for amendments to the
legislation, GAO has begun monitoring the implementation of the act and the
progress states have made to integrate employment and training services. In
evaluating states' readiness to implement the act, we found mixed progress,
and not all states were fully ready to implement the act on July 1, 2000,
when it took full effect. States and localities confronted several
challenges as they tried to integrate their services, including developing
the infrastructure to support an integrated program and developing an
integrated approach while responding at the same time to the requirements of
the individual federal programs. In addition, we identified several
integrated service delivery approaches that showed promise. In an
examination of employment and training programs, we noted that multiple
programs exist to serve similar target populations and that policymakers
might consider taking advantage of the opportunity the act provides to
integrate or consolidate program services.
Adjusting to a Changing Workforce: Changing patterns of work, new workforce
arrangements, tight labor markets, and short supplies of skilled workers
have focused the Congress's attention on the nation's laws governing the
workforce. The Congress used GAO's work during its consideration of issues
related to the white collar designation in the Fair Labor Standards Act, the
use of workplace protections offered to contingent workers, and the increase
in the use of skilled foreign workers to temporarily fill skilled worker
shortages.
Increasing the Labor Market Participation of Dislocated Workers: GAO has
begun a comprehensive examination of dislocated worker programs to assist
the Congress in addressing these issues. Recently completed work focused on
federal assistance to trade- displaced
111
workers, highlighting recent trends in worker certifications, the extent to
which program services and benefits have been used, and the reemployment and
wage outcomes for workers served by the programs. We recommended changes to
the program structure and management, including improved performance
measurement systems and more effective internal controls. In addition, in an
examination of the foreign guest worker program targeted at highly skilled
workers, we found inadequacies in the law and operations that (1) limit the
ability to ensure that these workers meet program requirements and (2)
increase the program's vulnerability to abuse. We recommended that the
Congress consider legislative changes to address these problems. We also
identified ways that the government and employers are working to improve the
information technology skills of the nation's workforce.
Strategic Objective 1.4
Education/ Workforce Issues, Progress Toward FY 2000- 2002
Progress assessment Performance goal Comment
Analyze the efectiveness and efficiency of early childhood care and
education programs in serving their target populations
Assess options for federal, state, and local programs to effectively address
demographic changes the educational and the infrastructure needs of the
education system elementary and secondary students
Assess opportunities to better manage
postsecondary, vocational, and adult education programs costs and better
target federal aid to the neediest students and deliver more effective
services
Analyze the impact of programs designed to raise worker skills and ensure
employers have the workers they need the recently enacted Workforce
Investment Act on the delivery of employment and training services
This goal was combined with the one directly below because implementation of
the Workforce Investment Act is part of the larger issue of analyzing the
impact of federal job training issues.
Analyze programs designed to raise worker skills and ensure employers have
the skilled workers they need
The revised goal clarifies that it is addressing postsecondary school
students and broadens the scope to include focusing on more efficient ways
of providing effective services. The goal was revised to clearly indicate
that it is
related to elementary and secondary students rather than to higher education
and to broaden the scope of our work to encompass overall educational needs.
This goal was merged with the goal immediately above.
Assess the success of various enforcement strategies to protect workers
while minimizing employers' burden in the changing environment of work
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
112 A P P E N D I X I
Strategic Objective 1.5
An Effective System of Justice Strengthening the Crime Prevention Grant
Program: GAO made multiple recommendations to improve the Department of
Justice's Weed and Seed program- a program intended to “weed”
out drugs and crime in infested neighborhoods and “seed” those
locales with programs to foster community development. The assistance is
intended to end when grantees are likely to be able to sustain themselves.
As we recommended, the Department improved the program's internal controls
and monitoring and developed criteria for determining when grantees are
self- sustaining so that the program can reduce or withdraw funding as soon
as it is appropriate to do so. These actions can enhance the efficiency of
program operations and ensure that funds are spent only where they are
needed.
Helping to Prevent Drug Abuse: GAO recommended to HHS that drug court
programs funded by discretionary and block grants collect and maintain
follow- up data on their participants' criminal recidivism and drug use
relapses. In response, (1) discretionary grant recipients underwent process
and impact evaluations and participated in a national crosssite evaluation
that included the collection of follow- up data, and (2) HHS obtained
clearance from the Office of Management and Budget to include voluntary
performance measures in the annual Substance Abuse Prevention and Treatment
Block Grant application.
Assessing the Impact of INS Detention Policy: The Immigration and
Naturalization Service (INS) is to detain aliens who attempt to enter the
country by engaging in fraud or misrepresentation and those who arrive with
fraudulent, improper, or no documentation. If an INS officer determines that
they have a credible fear of persecution or torture (if returned to their
home country) and do not pose a risk of flight or a danger to the community,
they can be released from INS custody to await a hearing before an
immigration judge. Our review of 2,351 cases in which aliens were released
and subsequently received an immigration judge's decision showed that 40
percent of them had not appeared for their scheduled removal hearing. The
Department of Justice estimates that, over time, the failure to appear rate
will be about 25 percent. We recommended that INS reevaluate its policy of
favoring the release of aliens found to have a credible fear of persecution.
Evaluating Customs' Search Practices: Of about 140 million international
airline passengers entering the United States during fiscal years 1997 and
1998, Customs inspectors selected 102,000 for some form of personal search
for contraband. Only 5 percent of the searched passengers were subjected to
strip- searches or an X- ray. Our analysis showed that searched passengers
of particular races and gender were more likely than other passengers to be
strip- searched or X- rayed. However, in some cases, those types of
passengers were
113
not as likely to be found carrying contraband. We recommended that Customs
analyze its personal search data to better target passengers carrying
contraband. As a result of the attention focused on this issue, Customs has
changed some of its selection practices.
Implementing an Innovative Contracting Approach: Following a GAO
recommendation, the Bureau of Prisons implemented an innovative contracting
approach to use Medicarebased benchmarking for competing bids. The
benchmarking approach allowed contracting officials to (1) identify the best
value among competing bids, (2) solicit lower prices through enhanced
competition, and (3) provide for more accurate payment of medical bills.
Strategic Objective 1.5
Effective System of Justice, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Identify ways to improve federal agencies' response to crime
Assess the effectiveness of federal programs to control illegal drug use
Identify ways to administer our nation's immigration laws more efficiently
and effectively
Assess the administrative efficiency and effectiveness of the federal court
and prison systems
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 1.6
Investment in Communities and Economic Development Recapturing Excess HUD
Funding: GAO identified funding from several sources in the Department of
Housing and Urban Development's (HUD) budget, including unexpended balances
no longer needed, that could be recaptured in fiscal years 1998 and 1999.
The Congress rescinded $1.65 billion from the Section 8 fiscal year 1998
budget authority and rejected $1.3 billion of HUD's fiscal year 1999 request
for housing assistance, for a total reduction of $2.95 billion.
Subsequently, GAO and HUD worked together to revise HUD's analysis to show
that, by using recaptured funds, HUD had sufficient funding to meet its
needs.
114 A P P E N D I X I
Improving HUD's Monitoring of Lenders and Management of Foreclosed
Properties: In response to our recommendations that it more effectively
monitor lender performance, HUD implemented procedures for targeting high-
risk lenders for quarterly on- site reviews. In our congressionally
requested review, we found, among other things, that HUD did not focus its
monitoring process on the riskiest lenders. Also in response to a
congressional request, we reviewed HUD's procedures for managing and
reducing its inventory of properties that it acquires through foreclosures.
We found that many contractors who maintain these properties did not provide
adequate maintenance and security, leading to declining property values in
the surrounding community. Additionally, real estate contractors were
focusing their sales efforts on properties that had recently been added to
the inventory, resulting in an increase in the number of properties in the
inventory over 6 months. We recommended that HUD implement more effective
methods such as instituting a system of incentives and penalties to
encourage contractors to reduce the number of properties that are in the
inventory over 6 months. We believe that the incentives and penalties should
encourage the contractors to reduce the number of older properties and also
maintain those properties while in inventory.
Enhancing Tracking of Community and Support Service Outcomes: GAO reported
that collection of data on community and support services at certain (HOPE
VI) urban revitalization sites was inconsistent. In response to our
recommendations, HUD hired a contractor to devise a tracking system so HUD
could collect accurate baseline data and outcomebased measures. HUD now
requires housing authorities with HOPE VI developments to supply data
quarterly showing community and support service progress, including data on
residents completing job training, being placed in jobs, and participating
in family counseling and substance abuse programs.
Enhancing Fair Lending Practices: Our report on fair lending documented that
lenders were against conducting self- testing of their lending practices
because the results of those tests could be used as evidence of lending
discrimination. The Congress removed this potential by creating a legal
privilege for voluntary self- testing, and the Federal Reserve and HUD
issued implementing regulations.
Developing Options to Manage Urban Growth: In response to a congressional
request, GAO examined how federal programs and policies influence the
ability of states and local communities to plan for and manage growth. Our
report discussed ways to improve coordination among federal agencies and
presented options for changes to federal programs that invest in local
infrastructure, revitalize neighborhoods, develop downtown areas, and
preserve farmland and open space. We provided the Congress with policy
options across a range of federal programs as well as ideas for improving
interagency coordination on crosscutting issues. In addition, our survey of
nearly 2,000 cities and
115
counties across the United States created a comprehensive national database;
one that captured the growth- related concerns and priorities of America's
communities and their views on the influence of a broad range of federal
policies and practices. These survey results created a springboard for
further study and analysis and are available publicly on GAO's Web site.
Improving USDA's Farm Loan Programs: In 1990, we classified USDA's farm loan
programs as high- risk programs because they entailed significant risk to
the government of major financial losses. Since then, the Congress and USDA
have taken a number of corrective actions, partly as a result of GAO's work,
that have improved the financial condition of the farm loan programs. The
unpaid principal on USDA's loan portfolio held by delinquent borrowers was
reduced by about $600 million between September 1998 and September 2000.
This progress provides the basis for GAO to remove the program's high- risk
designation (see High- Risk Series: An Update, GAO- 01- 263, Jan. 2001,
available at www. gao. gov). However, we noted that because of an unpaid
principal of about $16.6 billion in active direct and guaranteed farm loans,
the Congress and USDA need to continue monitoring to ensure that
improvements in the financial integrity of the farm loan programs continue.
Investigating “Cramming” Complaints: We testified and reported
on “cramming”- the inclusion of unauthorized, misleading, or
deceptive charges on residential and business telephone bills. Despite an
overall decline in complaints nationally, 15 states reported increases in
consumer complaints about cramming. Also, 22 states received complaints from
small businesses about a new form of cramming, involving unauthorized
charges for Internet Web page design and services. In response, federal and
state regulators are taking additional enforcement actions against crammers.
Improving Airline Competition: Our congressionally requested work on airline
competition paid off, with the Congress passing legislation that addressed
critical barriers to increased competition. Our work showed that limitations
on the numbers of arrivals and departures (called slot controls) inhibit the
ability of some airlines to serve new markets. The new law encourages more
vigorous competition by phasing out slot controls at three major airports,
increases slots for new- entrant airlines, increases slots for airlines with
limited access, and requires that the Department of Transportation (DOT)
grant additional slots to airlines that increase regional jet service to
small- hub airports. Several of those smaller cities now receive improved
service from airlines operating regional jets.
Analyzing Space Shuttle Safety: As the nation's only launch system capable
of carrying people to and from space, the space shuttle is critical to the
National Aeronautics and Space Administration's (NASA) space programs such
as the multibillion- dollar
116 A P P E N D I X I
International Space Station. GAO testified and reported on the negative
effects of downsizing the shuttle workforce by one- third. Examples include
insufficient staffing in key areas, overwork and fatigue, and a demographic
shape and skill mix that jeopardize the shuttle program's ability to
“hand off ” leadership roles to the next generation and achieve
a higher flight rate to support assembly of the International Space Station.
NASA is using GAO's human capital self- assessment checklist in ongoing
workforce planning and discussions with the Office of Management and Budget.
Improving the Services Provided by SBA's 8( a) Program: GAO's work on the
Small Business Administration's (SBA) business development program provided
the Congress and SBA with the first customer feedback on the program and
insights into weaknesses in the program's information system. We found that
almost all firms joined the program to obtain 8( a) contracts, wanted SBA to
provide contracting assistance, and were more satisfied with the program if
they had received a contract. Yet, access by firms to 8( a) contracts- long
considered the program's biggest benefit- remains a problem, and SBA's 8( a)
information system does not meet the needs of headquarters or district
officials. We recommended that SBA take a number of actions to better meet
the purpose of the program, the needs and expectations of the firms, and its
ability to determine how well the program is working. As a result of our
work, SBA is implementing changes to target business development and
procurement assistance to the needs of particular 8( a) firms and to produce
better information on the program's performance.
Budgeting Disaster Relief Funds More Accurately: In response to a
congressional request, we reported that the Federal Emergency Management
Agency (FEMA) uses inaccurate data to compute the remaining costs for past
disasters. The inaccuracies stemmed from a mistake in the process that FEMA
used in extracting data from its financial information system. FEMA has
taken steps to correct this problem. We also found that to estimate the
remaining need for disaster funds in a calendar year, FEMA uses a constant
rate of decline starting in October, even though hurricanes, which typically
occur in late summer and early fall, cause a major draw on FEMA funds. We
recommended changes in how FEMA estimates the timing and cost of future
disasters. FEMA officials acknowledged that some inaccuracies have occurred
in reports but have not yet informed us of their plans to respond to them.
Helping to Prevent Insurance Fraud: GAO found that state insurance
regulators were not prepared to prevent or detect a $200 million investment
scam perpetrated among multiple insurers for nearly an 8- year period. Among
the regulatory weaknesses cited, GAO found that inadequate professional
skepticism and long- standing information- sharing issues among federal and
state financial regulators delayed detection of the scam for years. GAO made
recommendations to state insurance commissioners, the National Association
117
of Insurance Commissioners, and the U. S. Attorney General to shore up
regulatory weaknesses and develop more routine processes for sharing and
coordinating information on common regulatory oversight matters.
Improving Mutual Fund Disclosures: Mutual funds experienced incredible
growth since the 1980s and held $5.5 trillion of assets at the end of 1998.
With 44 percent of U. S. households owning mutual funds, transparent
information on the fees these funds charge is important to investors.
However, GAO found that competition between firms and the fee disclosures
they make may not be sufficiently influencing the level of fees mutual funds
charge. In response to GAO's recommendation, the Securities and Exchange
Commission is planning to expand these disclosures to provide investors with
more information.
Strategic Objective 1.6
Community Investment, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Identify how federal agencies can streamline and improve their programs to
facilitate the delivery of grants, loans, and other types of economic
assistance to communities
Assess how the federal government can minimize financial risk in mortgage
assistance
housing finance
Assess the effectiveness of current federal farm subsidies and the extent to
which the 1996 Farm Bill has programs and policies to reduced agriculture's
dependence on federal subsidies and improved its competitiveness
Assess the impact of transportation, telecommunications, and postal policies
on competition and consumers
Assess the costs and outcomes of the federal investment in science and
technology programs
Identify cost- effective and efficient ways to assist small and minority-
owned businesses
Determine how federal disaster assistance costs can be reduced and targeted
to the most costeffective mitigation measures
Assess the regulatory effectiveness of programs and policies in ensuring
access to financial services and deterring fraud and abuse
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
The wording of the goal was revised to clarify the broader scope of the work
we are doing.
The wording of the goal was changed to better articulate the scope of the
work we are doing.
The wording of the goal was changed to expand its focus beyond subsidies and
the 1996 Farm Bill.
118 A P P E N D I X I
Strategic Objective 1.7
Responsible Stewardship of Natural Resources and the Environment
Strengthening the Land Exchange Process: Land exchanges- trading federal
land for nonfederal land of similar market value- have long been used by the
Bureau of Land Management and the Forest Service to supplement funds that
are appropriated to purchase nonfederal land. GAO reported numerous land
exchanges in which the agencies gave more than market value for nonfederal
land they acquired and received less than market value for federal land they
conveyed, totaling about $28 million in losses to taxpayers. In addition,
GAO found that the Bureau- under the umbrella of its land exchange program-
illegally sold federal land and retained at least $17 million in proceeds
and interest to buy nonfederal land; these cash proceeds instead should have
been deposited into the Treasury and subject to congressional appropriation.
In response to our work, both agencies immediately increased management
oversight of their ongoing exchanges. In addition, the Bureau identified
cash balances of about $4 million and deposited them into the Treasury, took
steps to initiate a financial audit of these unauthorized cash transactions,
and clarified its policies and guidance on land exchanges.
Managing Wildfire Prevention: “Federal Experts Saw Massive Wildfires
Coming” read an August 7, 2000, news headline. The article was
referring to GAO's April 1999 report on wildfires. Since then, GAO has used
the increased risk of uncontrollable and often catastrophic wildfires as an
example of the need for “strategic budgeting” to address issues
that are not aligned with the current budget and organizational structures
of the four major federal land management agencies. Responding to the
wildfires that burned over 6.5 million acres of public and private land in
2000, the Congress appropriated an additional $240 million in fiscal year
2001 to reduce hazardous fuels in high- risk locations where wildlands and
urban areas meet. GAO testified on the need for the four land management
agencies to act quickly to develop a framework to spend funds effectively
and to account accurately for what they accomplish with the funds.
Addressing Energy Policy Issues: GAO provided impartial analyses and
commentary on energy price increases and related issues that were used by
the Congress in addressing (1) disproportionate increases in gasoline prices
on the West Coast compared with the rest of the United States, (2) the
limited role of alternative fuel vehicles in reducing the nation's
dependence on petroleum, (3) the value in a $1.25 billion government-
industry partnership to develop a highly efficient automobile, and (4)
opportunities for increasing the federal government's $3.2 billion in oil
and gas royalties.
Improving Water Pollution Monitoring: GAO has played a significant role in
providing impartial research and analyses that were used by the Congress as
it considered how to
119
best address the complex and controversial aspects of controlling water
pollution, particularly concerning the issue of nonpoint sources of
pollution. In fiscal year 2000, GAO issued several key reports and testified
before House and Senate committees with jurisdiction over water issues. For
example, the Congress used our reports on water quality data gaps in
assessing whether water quality data were sufficient to support significant
policy decisions. The monitoring weaknesses identified by GAO were cited in
the report accompanying the Senate's fiscal year 2001 appropriations bill
for the Environmental Protection Agency (EPA), which called on EPA to
address these weaknesses, and were also cited in a legislative proposal
calling for increased funding for nonpoint source pollution control.
Restoring the Florida Everglades: Restoring the South Florida ecosystem,
which includes the Everglades, is one of the most significant and
complicated environmental initiatives ever undertaken. GAO found that the
ability to accomplish the ecosystem's restoration in a timely and efficient
manner was at risk unless a strategic plan to guide the restoration and a
mechanism to resolve the inevitable conflicts were developed. The Congress
directed the South Florida Ecosystem Restoration Task Force, a multiagency
group responsible for coordinating and facilitating the restoration effort,
to develop a strategic plan as outlined by GAO. GAO's analyses and
recommendations for improving the planning and management of the restoration
effort also resulted in congressional direction to the task force to develop
(1) a conflict resolution process, (2) an estimate of the total costs to
restore the ecosystem, and (3) a land acquisition plan to supplement the
strategic plan.
Improving Superfund Program Management: Given the environmental and public
health importance of cleaning up the nation's tens of thousands of abandoned
hazardous waste sites and the large financial commitment involved, improving
the management of EPA's Superfund program has been an area of ongoing
congressional interest, including recent congressional attention to the
program's future policy direction. For over a decade, GAO has designated the
program as being at high risk because recurring management problems
heightened the potential for waste, fraud, abuse, and mismanagement. GAO's
numerous recommendations have provided a detailed framework to assist the
Congress and EPA in their efforts to strengthen Superfund program
management. In recent years, the agency has made significant progress
implementing GAO's recommendations and is doing a better job in such areas
as considering human health and environmental risks in setting its clean- up
funding priorities and attempting to recover more costs from parties
responsible for site contamination. This progress provides the basis for GAO
to remove the program's high- risk designation (see High- Risk Series: An
Update, GAO- 01- 263, Jan. 2001, available at www. gao. gov).
Maximizing the Uranium Enrichment Program: Acting on a GAO recommendation,
the Congress required the Department of Energy to recover from commercial
customers an
120 A P P E N D I X I
appropriate share of the expected costs for work that involved the
decontamination and decommissioning of the Department's uranium enrichment
plants. More than $731 million in additional collections resulted.
Strategic Objective 1.7
Natural Resources Use and Environmental Protection, Progress Toward FY 2000-
2002 Performance Goals
Progress assessment Performance goal Comment
Assess the costs and outcomes of federal strategies for managing federally
owned lands and the adequacy of legislative and regulatory guidance for
resolving conflicts and making choices among competing land uses
Assess the impact of energy and environmental policies and regulations on
the availability of secure and reliable sources of energy
Assess the costs and outcomes of federal pollution control strategies and
opportunities for more cost- effective approaches
Assess opportunities to improve the management and cleanup of hazardous and
nuclear waste sites
Assess U. S. efforts to address global and international environmental
challenges
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 1.8
A Safe and Efficient National Physical Infrastructure Focusing on
Infrastructure Needs: To help the Congress understand the full range of
infrastructure investment needs and spending trends on highways, airports,
and federal facilities, GAO laid out a series of best practices that could
help ensure that infrastructure investments produce the maximum benefits.
Our work has increased awareness and helped focus attention on new
infrastructure requirements and on major gaps in needed maintenance for
existing infrastructure. We also reported that the Federal Buildings Fund
does not provide sufficient revenues to meet the billions of dollars needed
for repairs and alterations in buildings the General Services Administration
(GSA) manages. GSA is moving to implement our recommendations to improve the
overall management and oversight of its repairs and alterations program.
121
Eliminating High- Speed Rail Project: Florida's governor canceled a planned
$6 billion- to$ 8 billion high- speed rail project as a result of concerns
GAO raised about the cost estimates, financing requirements, ridership, and
the project's extremely ambitious construction schedule. The governor's
action eliminated the need for a $295 million federal obligation to cover
the cost of federal credit. The project's sponsors had planned to seek a $2
billion loan through the Transportation Infrastructure Finance and
Innovation Act of 1998. The $295 million would have consumed over half of
the funds authorized by the act to cover the cost of federal loans.
Assessing the Challenges Involved in Expanding Airport Capacity: In response
to a congressional request, we found that the greatest environmental
challenge facing airports now and in the future as they attempt to grow and
balance their growth with its effects on the environment is noise. Balancing
growth with ensuring water quality and air quality also presents challenges.
We recommended that the Administrator of the Federal Aviation Administration
(FAA) communicate with airports about the requirements for environmental
reviews and document the results of the reviews and communicate these
results to airport officials. We also recommended that the Administrator,
EPA, in coordination with FAA, clarify guidance for determining that airport
expansion projects conform to requirements of the Clean Air Act and provide
airport officials with the expertise necessary to meet air quality
requirements.
Ensuring the Safety of Our Drinking Water: In a nationwide survey done for
several congressional requesters, GAO identified serious shortfalls in the
funding available to help local drinking water systems comply with public
health regulations- considering needed investments in both physical
infrastructure and essential quality assurance activities, such as training
water system operators. As a result of reports by GAO and others,
congressional leaders expect to consider a major water infrastructure bill
in the upcoming session.
Improving Aviation Inspections: During the course of a congressionally
requested review of FAA's safety program, GAO learned of serious concerns
about inspector staffing deficiencies at a field office that could have
jeopardized FAA's ability to ensure safety compliance for a major carrier
that had a record of safety compliance problems. Inspector turnover at that
field office had reduced the number of inspectors familiar with the troubled
carrier. In addition, airline expansion plans within the field office's
territory, combined with another airline's plans to relocate within the
territory, further exacerbated the staffing situation. At the time of our
review, FAA management was unaware of the potential problem. However, the
week after we highlighted these concerns, FAA sent a team to assess the
field office's staffing. FAA confirmed the problem, assigned additional
staff on a temporary basis, and made further plans to reevaluate staffing
needs at the field office.
122 A P P E N D I X I
Strengthening Aviation Safety and Security Enforcement: Responding to a
congressional request on FAA's safety and inspection program, GAO reported
that FAA had not established guidance on allocating its enforcement
resources to cases with the most significant safety implications. GAO
recommended that FAA develop guidance for its inspectors to help them
distinguish major from minor violations, which would facilitate FAA's
efforts to better focus its resources. In response to our recommendation,
FAA revised its enforcement guidance to focus resources and efforts on
identified areas of critical safety and security noncompliance.
Reducing FAA's Funding: As a result of our review of FAA's fiscal year 2000
budget request, the Congress reduced FAA's appropriation by $38.5 million.
By interviewing FAA officials and examining project schedules and other
documents, we identified several projects and an operations account line
item as candidates for budget reductions.
Assessing Amtrak's Financial Viability: In response to a congressional
request, we reported on Amtrak's operating and capital costs and the
availability of federal and nonfederal funds for Amtrak's capital
investments. Similar to our past reports, we found that Amtrak's costs are
growing and far exceed the expected funds available. We recommended that
Amtrak develop measures of productivity for its different lines of business
and that it adopt a multiyear capital spending plan that identifies its
capital investment needs for at least 5 years, prioritizes these needs in
accordance with corporate goals and strategies, establishes specific
measurable benefits from these investments, and identifies specific funding
sources to meet these needs.
123
The wording was revised to better articulate the scope of the work it
covers.
The wording was changed to show that the focus is wider than transportation
projects.
The wording was revised to reflect that our focus is on all infrastructure
projects' impacts on the environment and the economy, not just the impact of
transportation projects.
The goal was deleted because its issues will be addressed under the first
goal above and under the performance goal- assess the costs and outcomes of
federal pollution control strategies and opportunities for more cost-
effective approaches- found in the previous strategic goal.
The wording was changed to show that the goal extends to other agencies'
efforts as well (e. g., the National Transportation Safety Board's).
This goal was eliminated because financing is the key issue facing Amtrak,
and we will do the work under the broader scope of the revised second
performance goal: “Assess alternative methods for financing
infrastructure needs.” This goal was deleted because these issues will
be covered under our performance goals related to the federal investment in
science and technology under strategic objective 1.6 and in the new
performance goal listed at the bottom of this chart.
This goal was added to guide our work on the Postal Service's
infrastructure, regulatory oversight, quality of service, and human capital
programs.
This goal was added to encompass work on the nonmilitary federal facilities
portfolio, including the national laboratories.
Strategic Objective 1.8
Physical Infrastructure, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Identify the full range of infrastructure investment needs and spending
trends at the federal, state, and local levels; best practices; and
potential solutions for improved decision- making on infrastructure
investments
Assess alternative methods for financing transportation projects
infrastructure needs
Analyze the environmental and economic impact of transportation facilities
infrastructure
on surrounding communities and alternatives for reducing congestion and
delays
Assess the investments required to meet federal safe drinking water and
wastewater treatment standards and the alternatives for cost- effectively
maintaining, repairing, and replacing communities' drinking water,
wastewater, and solid waste infrastructure
Assess the Department of Transportation's efforts to reduce accidents,
injuries, and fatalities
improve safety in all transportation modes Assess Amtrak's financial
viability
Assess the cost- effectiveness of upgrading and maintaining the nation's
federal laboratories
Assess the viability of the Postal Service and its mission
Assess the stewardship of the federal facilities portfolio
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
APPENDIX II
GOAL 2 ACCOMPLISHMENTS AND PERFORMANCE GOALS
Provide Timely, Quality Service to the Congress and the Federal Government
to Respond to Changing Security Threats and the Challenges of Global
Interdependence
This appendix provides details of selected accomplishments during fiscal
year 2000, categorized by strategic objective. The performance goals we set
for fiscal years 2000 through 2002 for each objective and any revisions to
them follow each set of accomplishments.
Strategic Objective 2.1
Responding to Diffuse Threats to National and Global Security Strengthening
Security at Federal Buildings and Airports: At the request of a House
Judiciary Subcommittee, GAO assessed the potential risks to the security of
federal buildings and airports from the use of counterfeit law enforcement
badges and credentials, which are readily available publicly and through the
Internet. During the investigation, GAO's special agents posed as plain-
clothed law enforcement officers and successfully breached security at 19
secure federal buildings and two airports. By displaying fake badges and
credentials, the agents were able to enter agency buildings while claiming
to be armed, carried briefcases that were never searched, and, in one case,
drove a rental van into the courtyard of a federal building without
inspection. At the two airports, agents obtained boarding passes and
firearms permits to carry weapons aboard flights for which they had
purchased tickets. As a result of the Subcommittee's hearing on GAO's
investigation and report, the Enhanced Federal Security Act of 2000 was
passed, making it a federal crime to enter, or attempt to enter, federal
property or the secure area of an airport under false pretenses.
124
125
Supporting Legislative Reforms to Combat Terrorism: GAO supported
congressional decision- making on proposed reforms to programs to combat
terrorism. For example, we formally commented on a bill to change the
management of selected counterterrorism programs. In addition, we monitored
a congressionally mandated, national- level counterterrorism exercise to see
if it met its objectives. Aside from specific legislative reforms, GAO
supported congressional hearings by testifying five times on programs to
combat terrorism.
Safeguarding Nuclear Material: A primary national security concern of the
United States and Russia is the 650 metric tons of highly enriched uranium
and plutonium in Russia that are highly attractive to theft and that have
weak security controls. GAO has reported that this program has placed only a
small amount of material under improved security controls and that the
Department of Energy (DOE) has already spent more than its original cost
estimate for the entire program. We recommended, and the Secretary of Energy
agreed to develop, new cost estimates and time frames for completing the
program.
Assessing Biological Weapons Risks: The former Soviet Union covertly
developed the world's largest offensive biological weapons program, using a
network of research institutes. After the fall of the Soviet Union, Russia
cut funding for these institutes. However, the United States remains
concerned about Russia's biological weapons capability. The U. S. response
has been to fund collaborative research activities with the institutes to
(1) reduce their incentives to work with hostile states and groups and (2)
increase their openness to the West. The executive branch has sought a 10-
fold increase in funding to achieve these objectives. GAO concluded, through
an evaluation of the U. S. efforts, that expanding the program will pose
certain risks to the United States. The key risks include sustaining
Russia's existing biological weapons infrastructure, maintaining or
advancing Russian scientists' skills to develop offensive biological
weapons, and the potential misuse of U. S. assistance for offensive
research. GAO's conclusions have resulted in the Congress's raising serious
questions with the executive branch concerning the program's advisability.
Curtailing Ineffective Chemical Weapons Program: In 1995, GAO first raised
concerns about a pilot chemical weapons elimination facility to be built in
Russia in a report on weapons of mass destruction. A year later, in 1996,
GAO issued a second report, and as a result, the Department of Defense (DOD)
and the Congress restricted the use of funds for the pilot project. In its
most recent report in 1999, GAO reported that the pilot facility would be
unlikely to achieve its intended result of accelerating Russian chemical
elimination without billions more being spent on infrastructure and four
additional facilities. As a matter for consideration, GAO suggested that the
Congress have DOD identify sources for the additional funding. Subsequently,
the House Armed Services Committee in its fiscal year 2000 report barred DOD
from spending any future funds on
125
126 A P P E N D I X I I
the pilot project. The final law barred DOD from funding the project-
avoiding costs of about $493 million for fiscal years 2000 through 2003.
Strengthening Nuclear Nonproliferation Efforts: Nuclear nonproliferation and
safety continue to be among the highest national security concerns of the
Congress and the administration. GAO's work in these areas has had a major
impact, including a redirection of DOE's international nonproliferation and
safety assistance programs so that they more effectively and efficiently
achieve U. S. national security goals. Specifically, the Congress has
legislatively mandated the implementation of our numerous report
recommendations, and DOE and other agencies have acted on them. In the case
of DOE's program to employ Russian weapons scientists, our recommendations
have greatly improved what was a faltering program. Similarly, U. S. nuclear
safety assistance is now targeted to the most pressing safety concerns with
Soviet- designed reactors, and real safety improvements are being achieved.
Enhancing DOE's Security: Over the last few years, reports by independent
commissions, congressional committees, and the intelligence community have
identified pervasive weaknesses in DOE's security. GAO has played a
significant role in bringing these weaknesses to national attention. For
example, the President's Foreign Intelligence Advisory Board relied heavily
on GAO's work in reporting on loosely controlled programs for thousands of
foreign visitors to DOE's national laboratories and inadequate systems for
controlling classified documents. This past year, GAO's work for the
Congress included reporting on more than 75 incidents of attempted espionage
against DOE laboratories' personnel traveling overseas and Internet- based
computer attacks that disrupted research activities at some DOE national
laboratories. GAO also testified numerous times before the Congress on the
overall security situation at DOE and pointed out that sustained management
will be needed to improve it.
Reducing Information Security Risks: In October 2000, legislation was
enacted (as part of the Defense Authorization Bill) that included several
provisions for strengthening federal information security that had been
developed based on GAO's best practices and audit work. During fiscal years
1999 and 2000, GAO worked with congressional staff to develop these and
other provisions for consideration by the Congress. This new legislation
requires each federal agency to implement an updated framework for managing
its information security risks and requires annual independent audits for an
initial period of 2 years.
Strengthening Information Security: GAO has evaluated the information
security programs and controls over critical systems at numerous federal
agencies and made numerous recommendations for improvement. During fiscal
year 2000, these agencies included
127
Treasury's Internal Revenue Service, Financial Management Service, and
Bureau of Public Debt; the Department of Energy; the Department of Veterans
Affairs; and the Environmental Protection Agency. In addition, in September
2000, GAO issued a summary report that provided a governmentwide perspective
on the status of federal information security. This report, which covered
Inspector General and GAO audit findings reported since July 1999, concluded
that weak information security continues to be a widespread problem that
places critical and sensitive federal operations at risk of tampering,
disruption, and inappropriate disclosure.
Increasing Information Technology Infrastructure Protection: GAO examined
the national strategy for Critical Infrastructure Protection (CIP), which is
described in Presidential Decision Directive 63 (PDD 63), and provided
comments on the implementation guidance in the National Plan for Information
Systems Protection. GAO identified the need for the National Security
Council and the Office of Management and Budget to more clearly define roles
and responsibilities in responding to information- based attacks. We also
provided comments on proposed legislation (H. R. 4246) intended to
facilitate the exchange of information between government and industry. At
the request of Members of the Congress, GAO identified key challenges to
monitoring threats and determining when an attack is under way, including
issues related to collecting, correlating, analyzing, and disseminating
warning information in a timely manner. In May 2000, GAO responded quickly
to congressional requests for testimony on the “I love you”
virus and provided a comprehensive assessment of the impact of the virus on
federal agencies. GAO also reported on opportunities for applying lessons
learned from remediating the Year 2000 problem to critical infrastructure
protection.
Improving Battlefield Automation: The Army expects that providing
information technologies to soldiers operating in the battlefield will
increase survivability, lethality, and tempo of operations. In response to a
congressional request, we continued to review key critical Army digitization
systems. The $2.1 billion Land Warrior system will allow soldiers to know
precisely where they are on the battlefield, where friendly forces are, and
where enemy forces and obstacles are. We found that DOD's oversight of the
program was insufficient; that the current configuration was not able to
operate with another key digitized battlefield system; and that the program
had not resolved technical and human factor problems that may render the
system ineffective, such as overweight equipment. We made several
recommendations directed at improving program monitoring, oversight,
testing, and operability with other key Army digitized battlefield systems.
128 A P P E N D I X I I
Strengthening Aviation Security: Based in part on our testimony on airport
screeners, legislation has been recently enacted that significantly expands
the training and testing requirements for airport security checkpoint
screeners. Additionally, we reported in June 2000 that long- standing
problems continue to reduce the effectiveness of airport screeners and,
although the Federal Aviation Administration (FAA) has established
performance improvement goals for screeners, it has not developed adequate
plans or performance measures. We recommended that FAA (1) complete and
implement an integrated plan to tie its various efforts to improve
screeners' performance to the achievement of its goals and (2) establish
additional performance goals to better measure and ensure the success of its
improvement efforts. FAA agreed with our recommendations and is taking
action to implement them.
Strategic Objective 2.1
Diffuse Security Threats, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Analyze the effectiveness of federal agencies' programs to combat terrorism
Assess the effectiveness of U. S. programs and agreements to prevent the
proliferation of nuclear, biological, and chemical weapons
Assess U. S. efforts to protect computer- supported critical infrastructure
for business and government
Assess the Department of Defense's ability to retain information superiority
on the battlefield
Assess the effectiveness of the Department of Transportation's oversight of
domestic and internationaL aviation security
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 2.2
Ensuring Military Capabilities and Readiness Retargeting Defense Spending:
GAO examined DOD's funding for contingency operations and reported in
September 1999 that since combat operations in Kosovo ended earlier than
anticipated, as much as $475 million in fiscal year 1999 funding could be
made available to reduce fiscal year 2000 funding. GAO also reported that
additional amounts- which at the time were unquantifiable- could also become
available. Subsequently, the conferees on the fiscal year 2000 defense
appropriations reduced the contingency operations funding by $665 million.
This goal has been moved to Strategic Objective 2.2 because it is more
relevant to ensuring military capabilities and readiness.
129
Lowering DOD's Funding: GAO reviewed the reasonableness of DOD's budget
requests for fiscal year 2000 to assist subcommittees in their appropriation
and authorization deliberations. On the basis of GAO's findings, the
Congress reduced (1) the military personnel request by $334.7 million; (2)
the operation and maintenance request by $417.6 million; and (3) the
procurement and research, development, test, and evaluation request by $500
million. The reductions did not affect readiness because DOD did not have as
many personnel onboard as expected, the foreign currency exchange rates for
programs outside the United States (most of the operations and maintenance
funds) were more favorable than expected, and procurement funds were
available because programs' schedules slipped or they had performance
problems.
Reducing the Vulnerability of Navy Ships: GAO reported on the vulnerability
of Navy ships to cruise missile attacks and the lack of a comprehensive
strategy to address shortfalls in ship self- defense capability. The Navy
agreed with the findings and is currently developing a strategy as
recommended in the GAO report.
Correcting Deficiencies in the Anthrax Immunization Program: Concerns have
been raised about DOD's anthrax immunization program since the Department
began immunizing its 2.4 million U. S. military personnel- including active
and reserve component personnel. For example, some Gulf War veterans are
suffering from unexplained illnesses that they believe might have been
caused by anthrax vaccine shots that they received during the war. Also,
some active duty and reserve members have expressed concerns about the
safety and efficacy of the vaccine. In response to various congressional
requests, we have reported and testified three times on (1) the need for a
six- shot regimen and annual booster shots; (2) the short- and long- term
safety of the vaccine; (3) the efficacy of the vaccine; (4) the extent to
which problems the Food and Drug Administration found in the vaccine
production facility in Michigan could compromise the safety, efficacy, and
quality of the vaccine; and (5) the impact of the vaccination program on
retention among Guard and Reserve pilots and other crew members. In
addition, we assessed the State Department's efforts to administer anthrax
vaccine at U. S. diplomatic missions overseas. Both DOD and the State
Department have concurred with our findings and have agreed to institute
measures to correct the deficiencies we identified.
Identifying Gaps in Knowledge About Gulf War Illnesses: Many of the
approximately 700,000 veterans of the Persian Gulf War have reported
illnesses since the war's end in 1991, and over 10 percent have sought and
completed health examinations through the Department of Veterans Affairs
(VA) or DOD. We reported that while the federal government has expended
substantial resources on research and the investigation of this matter, many
basic questions remain. Answers to more complex questions about the causes
of Gulf War veterans' increased rates of reporting ill health are difficult
to derive, in part because
130 A P P E N D I X I I
problems in identifying veterans' specific exposures persist. In addition,
we testified about weaknesses in contracting for services supporting these
investigations and some duplication of effort across the agencies. Both VA
and DOD concurred with our recommendation that the interagency coordinating
group report its progress in addressing the research objectives identified
in 1995.
Assessing Satisfaction With Military Life: GAO testified before the House
Armed Services Committee on the preliminary results of DOD's 1999 survey of
66,000 active duty military members. The survey results indicate that more
military personnel are satisfied with their way of life (about 50 percent)
than are dissatisfied (about 29 percent). Personnel who spent 5 months or
more away from home (about 19 percent) were less satisfied than those who
spent less time away. Lastly, more than half of all military personnel (53
percent) reported being financially secure. However, some enlisted personnel
(about 22 percent) reported financial difficulties. The Congress found this
information useful as it planned continuing increases in military pay and
retirement benefits and considered funding increases for military health
care and housing.
Cutting Costs of F- 22 Aircraft Program: In a series of reports beginning in
the mid- 1990s, GAO questioned various aspects of the Air Force's F- 22
aircraft acquisition program. We reported that the acquisition strategy was
risky and that the program was experiencing cost growth and manufacturing
problems with test aircraft as well as testing delays. Our analysts helped
the Congress reduce the final fiscal year 2000 appropriation request for the
F- 22 by about $552 million and identify conditions that should be met
before the Department of Defense can begin production.
Identifying Best Practices: GAO's body of work on best practices has shown
that leading commercial firms have reduced the time and cost of developing
new, more sophisticated products by separating technology development from
product development and by insisting that technology be demonstrably mature
before applying it to a product. GAO showed that DOD's successful programs
employed similar practices, whereas its problematic programs attempted to
develop technology and the weapon system at the same time. GAO recommended
that DOD adopt these practices to improve the outcomes of its weapon system
programs. In October 2000, DOD embraced these practices in a major revision
of the policies and procedures that guide weapon system acquisitions.
Improving Joint Strike Fighter Program: At the request of the House
Government Reform Subcommittee on National Security, Veterans' Affairs and
International Relations, GAO reviewed the Joint Strike Fighter tactical
aircraft program and found that it was following DOD's traditional approach
of maturing technology at the same time the weapon system is being
developed. Our previous work on best commercial practices showed that
leading
131
commercial firms and successful DOD programs matured key technologies before
product development began. Employing standards developed by National
Aeronautics and Space Administration (NASA) and used to a limited extent by
DOD, GAO determined that eight critical Joint Strike Fighter technologies
were at unacceptably low levels of maturity given the stage of the program.
GAO recommended that DOD mature these technologies before beginning the
engineering and manufacturing development of the Joint Strike Fighter to
avoid future cost growth and schedule delays. The Congress directed the
program to delay the engineering and manufacturing development decision date
by 3 months and reduced funding for that phase by $150 million so that these
technologies could be matured to acceptable levels.
Reducing Antitank Weapon Procurements: The Congress has expressed concern
that although the number of potential enemy tanks and armored vehicles has
been reduced by 80 percent since the end of the Cold War in 1990, DOD has
continued to invest billions to maintain and improve its inventory of
weapons for attacking tank and armored vehicles. GAO reported that DOD's
master plan for spending $17 billion acquiring new weapons to attack tanks
and other armored targets overstates requirements, does not reflect reduced
threats, and lacks the supporting data and analysis the Congress requires.
On the basis of GAO's report, the Congress reduced DOD's annual funding
requests for several such weapons by over $100 million.
Revising Acquisition Strategy for High- Mobility Trailers: GAO reported on
Army contracting procedures that resulted in the award of a 5- year contract
to acquire 7,563 highmobility trailers without testing to ensure they met
requirements. After receiving 6,700 trailers, Army testing found that they
were not usable because of safety problems and because they damaged the
vehicles towing them. Following GAO's report, the Army revised its
acquisition strategy for acquiring over 18,000 additional trailers.
Modernizing DOD's Logistics: GAO reviewed DOD's plans for reengineering and
modernizing its logistics program. The reengineering efforts goal is to
increase efficiency, improve performance, and reduce logistics system
operations costs of about $84 billion. Despite progress the Department has
made with its restructuring effort, our recent review identified several
concerns or uncertainties about incompleteness, overly optimistic
implementation schedules, the potential for savings associated with specific
initiatives, the effect of the initiatives on combat forces, and other
factors. To enhance reengineering efforts, we have recommended that DOD (1)
develop an overarching plan that integrates the individual service and
defense agency logistics plans; (2) reassess its schedule for testing,
evaluating, and implementing the initiatives; (3) establish a methodology
showing the savings or improvements that come from reengineering concepts;
and (4) reassess its approach for addressing various combat command
concerns, such as the presence of increasing
132 A P P E N D I X I I
numbers of contractor personnel on the battlefield. On the basis of our
recommendations, DOD is reviewing service reengineering plans for
consistency with DOD- wide Logistics Strategic Planning objectives and will
tie various service initiatives into an overarching plan.
Revamping Navy's In- Transit Inventory: At the request of several Members of
the Congress, GAO examined how the Navy reconciled its in- transit inventory
records and found that the Navy had lost accountability over $3 billion in
in- transit inventory. In response, the Navy established a task force that,
for fiscal year 2000, resolved errors valued at $650 million. Had this
reconciliation not occurred, the Navy could have bought additional inventory
not knowing that it already had the items in stock. The task force also
corrected errors totaling about $152 million for fiscal year 1999. Total
costs avoided were about $802 million over the 2 fiscal years.
Improving the Management of a Key Nuclear Project: In response to a
congressional request, GAO examined the status of DOE's National Ignition
Facility. The facility is an important component of an integrated program to
maintain the safety and reliability of the nation's nuclear arsenal. DOE
estimates that this facility will eventually cost about $3.5 billion and be
completed in 2008- over a $1 billion increase in cost and 6 years later than
originally estimated. These cost increases and schedule delays have been
attributed to poor contractor management and inadequate DOE oversight,
including inadequate technical and management skills to oversee the project.
We recommended that DOE arrange for an independent scientific and technical
review of the facility's remaining technical challenges as they related to
the project's cost and schedule. We also recommended that the Secretary of
Energy not reallocate funds from the nuclear weapons program to the facility
until the impact of various options on the overall program were examined. As
a result, the Congress has made half of its fiscal year 2001 $130 million
appropriation for the facility contingent on DOE's meeting certain
conditions. DOE must certify that the facility has been rebaselined and is
within cost and schedule through the second quarter of fiscal year 2001. The
Congress also required GAO to analyze the facility's new baseline and DOE's
progress with keeping the project on cost and schedule and to report on the
facility's role in the nuclear weapons program.
133 Strategic Objective 2.2
Military Capabilities and Readiness, Progress Toward FY 2000- 2002
Performance Goals
Progress assessment Performance goal Comment
Assess development of an appropriate and ready force structure of people,
weapons, and facilities equipment for the post- Cold War period
Assess improvements in personnel recruiting, retention, and quality of life
Assess modernization of the Department of Defense's ability to acquire and
modernize
weapons systems cost- effectively and revisions of acquisition practices
Assess improvements in the responsiveness and effectiveness of the
logistical support systems and support infrastructure
Assess the Department of Energy's efforts to maintain a safe and reliable
nuclear weapons stockpile
Assess the Department of Defense's ability to retain information superiority
on the battlefield
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 2.3
Advancing and Protecting U. S. International Interests Stabilizing the
Balkans: Despite the presence of two large forces led by the North Atlantic
Treaty Organization (NATO), the Balkans remain volatile. GAO's work has
shown that the international operations in Bosnia and Kosovo face severe
obstacles to achieving enduring peace and stability. Most local leaders and
members of their respective ethnic groups have not embraced the political
and social reconciliation needed to build multiethnic, democratic societies.
Our work has also shown that the international community has not provided
the resources that the United Nations (UN) mission in Kosovo says it needs,
particularly for building a civilian police force. If progress is not made
with these matters, violence may escalate or armed conflict may result.
Evaluating Economic Assistance: GAO evaluated $1.6 billion in U. S. economic
assistance provided to the Federated States of Micronesia and the Republic
of the Marshall Islands over 13 years and determined that the funding has
had little impact on the economic development of the two island nations. GAO
also determined that little accountability had
“Equipment” has been substituted for the word
“facilities” here because infrastructure issues are more clearly
addressed in the fourth performance goal below.
The original wording of this goal was revised to better articulate our
emphasis on cost- effectiveness.
The words “and support infrastructure” were added to this goal
to clearly reflect that this goal was meant to include infrastructure
issues.
This goal was moved from Strategic Objective 2.1 because it relates more
closely to Strategic Objective 2.2, Ensuring Military Capabilities and
Readiness. The goal itself is unchanged.
134 A P P E N D I X I I
been exercised over the funding by either Micronesian nation or the United
States. As a result of GAO's work, the Committee responsible for approving
U. S. assistance is requiring that strengthened control and accountability
measures be applied to all future funding.
Assessing UN Peacekeeping: UN peacekeeping is a controversial issue, and the
United States pays 25 percent of its cost. During the past year, GAO worked
closely with the House Committee on International Relations and the Senate
Committee on Foreign Relations to develop more effective policies on
peacekeeping. GAO provided these committees with briefings, reports,
information, and analysis about the cost and effectiveness of UN
peacekeeping operations and the limits of UN capability. As a result of this
work
State modified its position on several ongoing and planned peacekeeping
operations and agreed to provide more realistic briefings to the Congress on
proposed operations; and
the Senate Foreign Relations Committee organized historic meetings with the
UN Security Council, partly structured around information provided by GAO.
Assessing UN Reforms: Over the past several years, GAO has examined the UN's
reform efforts as well as its peacekeeping operations. A key issue has been
the payment of U. S. arrears. In part because of our effort, the Congress
enacted legislation that enumerated several preconditions- which GAO had
advocated- for such payments. More specifically, the legislation requires
that the President consult with the Congress on each new peacekeeping
operation and provide annually to the Secretary General of the UN data on
all costs incurred by the United States in support of Security Council
resolutions and that the UN develop a standardized methodology for the
evaluation of its programs.
Culling the State Department's Excess Property: The State Department owns
more than $10 billion in real estate at 200 locations overseas. GAO reviewed
the State Department's efforts to identify and sell excess or underused real
estate and to use the proceeds for other high- priority real property needs.
GAO identified real estate at locations that could be sold to provide money
to meet other real estate needs, described problems that State has had in
deciding which properties to dispose of, and explained how State uses the
proceeds from the properties it does sell. As a result, the State Department
sold
the Consulate General's residence in Bermuda for $12.5 million; the
Consulate Compound in Tangier, Morocco, for $1.2 million; and vacant lots in
Budapest, Hungary, for $326,000.
135
Responding to International Child Abductions: GAO had examined international
parental child abduction- where one parent takes a child from the United
States or keeps a child overseas, violating the parental rights, including
visitation, of the parent left behind- and concluded that gaps existed in
the federal government's response to the threat. This situation has occurred
even though the Congress passed legislation in 1993 that allows the Justice
Department to criminally prosecute abducting parents. In response, the
departments of State and Justice developed an action plan with specific
objectives, measurable goals, and specific time frames for implementing the
initiatives. Funding for implementing the action plan was to begin in fiscal
year 2001.
Strategic Objective 2.3
Advancement of U. S. Interests, Progress Toward FY 2000- 2002 Performance
Goals
Progress assessment Performance goal Comment
Analyze the plans, strategies, costs, and results achieved from U. S.
interventions
Analyze the effectiveness and management of foreign aid programs and the
tools to carry them out
Analyze the costs and implications of U. S. military alliances and
commitments
Evaluate the efficiency and accountability of the United Nations and related
multilateral organizations and the extent to which they are serving U. S.
interests
Assess the strategies used to manage U. S. foreign affairs functions and
activities
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 2.4
Responding to the Impact of Global Market Forces on U. S. Economic and
Security Interests Evaluating Trade Agreements: GAO identified procedural
and structural problems in how the government monitors and enforces its
trade agreements. For example, we found inconsistencies and weaknesses in
trade archiving practices that prevented the government from determining how
many agreements it is party to. We also identified human capital and other
capacity weaknesses that limited key agencies' trade monitoring and
enforcement abilities. In response to our recommendations, the key federal
trade policy agencies improved the accuracy and utility of their trade
archives and are enhancing efforts to achieve compliance with trade
agreement provisions, to improve coordination and teamwork on monitoring and
enforcement activities across the government, and to update mechanisms for
obtaining private sector input on trade policy.
136 A P P E N D I X I I
Assessing WTO's Dispute Settlements: Member countries of the World Trade
Organization (WTO) have actively used its dispute settlement system during
the first 5 years. GAO's work showed that the United States and the European
Union were the most active participants, both as plaintiffs and defendants.
GAO's analysis showed that the United States has gained more than it has
lost using the dispute resolution system, and while WTO's cases have
resulted in a large number of changes in foreign trade practices, their
effect on U. S. laws and regulations to date has been minimal. Using this
information as well as other data, the House of Representatives defeated a
resolution requiring the United States to withdraw from WTO.
Analyzing U. S.- China Trade: In response to congressional concerns about U.
S.- China trade relations, GAO was asked to analyze ongoing negotiations
over China's joining WTO as well as issues pertaining to the Congress's
granting China permanent normal trade relations status. GAO's reports and
numerous briefings helped the Congress assess the status of these
negotiations and the implications of granting this status if China became a
WTO member. GAO reported that U. S. trade negotiators had generally achieved
their objectives in a number of areas despite ongoing differences with
Chinese negotiators in other areas. GAO also reported that certain policy
options being debated by the Congress could put U. S. business interests at
a competitive disadvantage because of limitations in existing trade
agreements between the United States and China. GAO's independent
assessments helped the Congress conclude that China's membership in the
World Trade Organization would benefit the commercial interests of U. S.
firms and that China's tentative commitments warranted passing legislation
granting it permanent normal trade relations once China became a WTO member.
The President signed the legislation passed by the Congress.
Improving Export Promotion Programs: GAO examined the federal government's
export promotion programs. Exports as a share of U. S. gross domestic
product rose from 6.4 percent in 1988 to 7.9 percent ($ 672 billion) in
1998. The U. S. government runs several programs to help businesses promote
their goods and services overseas, yet GAO reported that the participating
agencies differed in how they defined export promotion and consequently
differed in what they characterized as export- promoting activities. In
response, the agencies involved agreed upon a common definition and what
would be characterized as an export- promoting activity.
Analysis of the Defense Trade Security Initiative: In response to industry
and foreign government concerns about the U. S. export control system, the
administration announced 17 proposals, collectively known as the Defense
Trade Security Initiative, in May 2000 to reform that system. The proposals
included providing arms export licensing exemptions to
137
certain countries. The Initiative was intended to ensure that U. S. defense
companies successfully compete abroad, improve interoperability in coalition
warfare scenarios, and reduce a gap in military capabilities between the
United States and its allies. After analyzing the Initiative and the
decision- making behind it, GAO found that the effects of the Initiative are
uncertain. Specifically, we reported that there is little assurance that
underlying problems with the U. S. export control system have been
sufficiently analyzed to determine what the causes of the problems are or
that the Initiative will remedy the problems that exist. We found past
problems with arms export licensing exemptions and cautioned against
extending similar exemptions to countries until the proper analysis has been
completed. Our report served as the basis for new statutory requirements for
the extension of arms export licensing exemptions. The law now requires a
legally binding agreement between the United States and a foreign country,
which requires that country to establish export controls that are comparable
to those of the United States, prior to the granting of an exemption.
Evaluating Initiative for Heavily Indebted Poor Countries: GAO's analysis
showed that the enhanced Heavily Indebted Poor Country Initiative, a
comprehensive approach to debt relief undertaken by the World Bank and the
International Monetary Fund, will provide significant relief to recipient
countries. But, given the continued fragility of these countries, the
initiative is not likely to end the recipient countries' debt problems
unless they achieve strong, sustained economic growth. GAO noted that the
Bank's and Fund's assumptions about future economic growth for these
countries were very optimistic. GAO's analysis also showed that the decline
in debt service for recipient countries will only “free up”
resources for poverty reduction if countries continue to borrow at the same
level and concessional terms as in the years prior to their qualifying for
debt relief. GAO's analysis has informed both the congressional and
international debate on debt relief matters.
Reducing Global Lending Risks: In 1998, the near collapse of Long Term
Capital Management, a large hedge fund, posed a significant threat to global
financial markets already unsettled by the Asian crisis and Russian debt
moratorium. The Federal Reserve perceived the threat to global markets to be
so great that it mediated a $3.6 billion private sector capital infusion by
some of the world's largest investment and commercial banks to prevent the
collapse of the fund. GAO's work for the Congress identified regulatory gaps
that impeded effective oversight and the need for greater regulatory
coordination to identify potential systemic threats that cross institutions
and markets before they reach crisis proportions.
138 A P P E N D I X I I
Decimalizing Equity Markets: The United States was the only country left in
the world that priced and traded securities in fractions rather than
decimals. GAO's work highlighted the technological challenges industry
segments face in terms of computing and communications capacity to handle
increased loads when moving from trades and quotes in fractions to decimals.
During the course of GAO's continued monitoring and evaluation efforts on
behalf of the Congress, the New York Stock Exchange began trading in decimal
prices, and the NASDAQ is expected to do so in spring 2001.
Improving Online Trading Disclosures: Innovations in information technology
and financial products have raised the specter that regulators and
securities industry players may not be able to keep pace. Individual
investors can now trade without having to use a broker and can place orders
directly in the marketplace. GAO's work for the Congress suggested ways for
regulators to ensure that investors were aware of online trading firms'
technological capacity to handle their orders and provided reliable
information on day trading based on a review of firms responsible for 95
percent of day trading volume.
Strategic Objective 2.4
Global Market Forces, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Analyze how key trade agreements and programs serve U. S. interests
Improve understanding of the effects of globalization on the defense
industry
Assess how the United States can influence improvements in the world
financial system and address crises
Assess the ability of the financial services industry and its regulators to
maintain a stable and efficient financial system in an era of global
electronic commerce
Evaluate how prepared financial regulators are to respond to change and
innovation
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
The goal was revised to clarify that our focus will be on significant trade
agreements and programs.
APPENDIX III
GOAL 3 ACCOMPLISHMENTS AND PERFORMANCE GOALS
Support the Transition to a More Results- Oriented and Accountable Federal
Government
This appendix provides details of selected accomplishments during fiscal
year 2000, categorized by strategic objective. The performance goals we set
for fiscal years 2000 through 2002 for each objective and any revisions to
them follow each set of accomplishments.
Strategic Objective 3.1
Analyze the Federal Government's Long- Term and Near- Term Fiscal Position,
Outlook, and Options
Analyzing Budget Issues: As the Congress debated how to use the budget
surplus, our work helped inform these deliberations on several fronts.
First, our work using long- term fiscal simulations continued to focus
attention on the long- term budget outlook for the nation. This work showed
that, despite current surpluses, the aging of our nation will heighten
fiscal pressures and eventually reduce our flexibility to respond to other
emerging national needs over the longer term. These simulations played a key
role in the ongoing Social Security and Medicare reform debates by
illustrating the fiscal and economic consequences of the profound
demographic changes forecast for our nation. Second, by capturing the
budgetary implications of our work, we helped the Congress identify new,
performance- oriented approaches to improve the allocation of resources to
existing claims and programs in the budget. Finally, our work on performance
budgeting has prompted the Office of Management and Budget (OMB) to make
changes that clarified and strengthened its guidance to agencies. This
resulted in improved linkages between agencies' performance plans and their
budget presentations.
139
140 A P P E N D I X I I I
Strategic Objective 3.1
Fiscal Position of the Federal Government, Progress Toward FY 2000- 2002
Performance Goals
Progress assessment Performance goal Comment
Address the long- term fiscal health of the federal government
Analyze the structure and information for budgetary choices
Promote effective management of resources Identify budget implications of
various governmental tools using third parties in federal programs
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 3.2
Strengthen Approaches for Financing the Government and Determining
Accountability for the Use of Taxpayer Dollars
Assessing IRS' Computer Modernization: GAO fulfilled its legislative mandate
to support the House and Senate Appropriations committees in overseeing the
Internal Revenue Service's (IRS) high- risk business systems modernization
program. During this fiscal year, GAO assessed the progress of IRS'
modernization and its capacity to manage modernization. GAO also provided
real- time analysis and reporting on four separate IRS requests for release
of modernization funding. This work enabled the committees to (1) reduce
IRS' planned modernization spending by about $30 million, (2) avoid
potentially hundreds of millions of dollars in wasteful spending by not
allowing funds to be spent on new systems before IRS established the
required modernization management and technical controls, and (3) direct
specific actions to bolster IRS' modernization management and technical
controls and ensure the establishment of the requisite institutional
capability to modernize effectively.
Supporting Oversight of IRS: GAO continued to support congressional
oversight of IRS' operations, including IRS' implementation of the 1998 IRS
Restructuring and Reform Act, its budget requests, and its administration of
various tax functions. For example, our testimony on IRS' broad- based
modernization efforts provided an integrated assessment of the challenges
IRS continues to face in its tax enforcement and customer service operations
and its modernization of performance management, information systems, and
business practices. At the same time, our work generated savings and
potential reductions in taxpayer burden. Our work on the improved use of
information returns in IRS' tax
The performance goal was revised to reflect that we will be examining issues
that have implications beyond the budgetary arena.
140
141
enforcement operations yielded $83 million in savings this year. IRS also
agreed to begin tracking information that has the potential of clarifying
its notices to taxpayers and easing their task in complying with those
notices.
Informing Congressional Deliberations on Tax Policy: The nation's evolving
economy and the size and complexity of the current IRS Code raise policy
issues for the Congress. For example, the rapid development of electronic
commerce has fueled debate about whether online transactions should be
taxed. During the debate over whether to modify states' authority to require
out- of- state retailers, including Internet retailers, to collect the taxes
due on their sales, GAO provided the Congress with a unique perspective on
the potential revenue losses to state and local governments. In addition,
our prior work on better targeting the Earned Income Credit continued to
generate substantial savings of over $600 million.
Auditing Financial Statements: As required by the expanded Chief Financial
Officers (CFO) Act of 1990, in fiscal year 2000, GAO reported on its audit
of the U. S. government's consolidated financial statements for fiscal year
1999. As in the past 2 years, GAO reported that an opinion could not be
given on the reliability of those statements because of significant
financial systems weaknesses, problems with fundamental recordkeeping and
financial reporting, and weak internal controls. Such deficiencies affect
the government's ability to accurately measure the full cost and financial
performance of its programs and effectively manage its operations.
GAO's financial statement audit work has helped to provide momentum in
individual agencies' progress in achieving positive financial audit results-
the number of agencies receiving unqualified audit opinions on financial
statements is steadily increasing from 6 of the 24 CFO Act agencies in
fiscal year 1996 to 18 in fiscal year 2000. During fiscal year 2000, GAO
also reported on its audits of fiscal year 1999 financial statements of
selected agencies and operations with the following results:
At IRS, GAO pinpointed specific problems, fostered efforts to improve
financial management systems and operations, and advanced the ability to
produce reliable financial statements such as those related to custodial
activities covering virtually all of the government's revenue-$ 1.9 trillion
of tax revenue.
At Treasury's Bureau of the Public Debt, GAO helped assure the Congress
about the reliability of the reported over $3.6 trillion of federal debt
held by the public and $2 trillion held by federal entities.
142 A P P E N D I X I I I
For the Federal Deposit Insurance Corporation, GAO audited and expressed an
unqualified opinion on financial statements for the Bank Insurance Fund, the
Savings Association Insurance Fund, and the FSLIC Resolution Fund.
Ultimately, these efforts are aimed at developing good financial information
with which to manage operations more efficiently day to day and to achieve
greater budgetary savings, which is the CFO Act's end goal. Also, GAO issued
modifications to the government auditing standards that auditors and audit
organizations use in auditing federal government activities, including
financial statement audits. In addition, GAO participated in the development
of Federal Accounting Standards Advisory Board standards.
Improving SBA's Disaster Loan Program Estimates: In reviewing information
the Small Business Administration developed and used to prepare its
financial statements for fiscal years 1997 and 1998, GAO identified errors
in the method SBA used to estimate the cost of the Disaster Loan Program. In
response, SBA developed a new approach to estimate its program's costs using
actual historical data, which decreased the estimated cost of the loan
program. During fiscal years 1999 and 2000, about $609 million in benefits
resulted.
Strengthening Internal Controls: As required by 31 U. S. C. 3512 (formerly
the Federal Managers' Financial Integrity Act), GAO issued updated standards
for internal control in the federal government, which form the foundation
for effectively establishing and maintaining internal control for all
federal agencies and activities. GAO has identified and recommended
solutions to internal control weaknesses at major agencies. These agencies
include
the Department of Defense (DOD), which has, for instance, taken action to
(1) improve accountability over its available funding, (2) provide better
control practices related to sensitive items such as handheld rockets, and
(3) improve control over costs charged to foreign countries for foreign
military sales for a savings of $350 million;
the Department of Health and Human Services (HHS), where GAO identified
major internal control weaknesses that place at risk billions of dollars
expended each year for the Medicare program;
the Department of Housing and Urban Development (HUD), where GAO's work
identified an error in the method HUD uses to reestimate net revenues of the
Mutual Mortgage Insurance Fund, making it appear that HUD had more funding
than was actually available, and the government avoided a potential cost of
about $1.2 billion;
143
the Internal Revenue Service (IRS), where GAO identified and recommended
solutions to serious internal control deficiencies that affect management of
unpaid tax assessments, resulting in unpaid taxes and significant taxpayer
burden;
the Treasury, where the Financial Management Service upgraded its cash
controls to help ensure that agencies' requests to cancel previously
authorized checks and electronic fund transfers are properly processed; and
the Federal Bureau of Investigation (FBI) and the Drug Enforcement
Administration, where GAO identified and recommended improvements needed in
controls over seized drugs and weapons.
Strategic Objective 3.2
Government Financing and Accountability, Progress Toward FY 2000- 2002
Progress assessment Performance goal Comment
Support congressional oversight of the Internal Revenue Service's
modernization and reform efforts
Contribute to congressional deliberations on tax policy
Strengthen accountability for the federal government's assets and operations
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 3.3
Facilitate Governmentwide Management and Institutional Reforms Needed to
Build and Sustain High- Performing Organizations and More Effective
Government
Implementing the Government Performance and Results Act: GAO assisted the
Congress and executive branch agencies with the difficult cultural changes
needed to create highperforming agencies. As part of this work, we assessed
agencies' efforts under the act and made specific recommendations on how the
Congress and the executive branch could work together to ensure that
results- oriented processes are useful to and used by decisionmakers. We
also worked with the Congress to ensure that agencies resolve management
problems that undercut or undermine programs. Our work for the Senate on the
key attributes of high- performing organizations is being used as a basis
for oversight and decision- making.
144 A P P E N D I X I I I
Improving Financial Management: GAO developed an Executive Guide on world-
class financial management practices used by leading private sector and
state government organizations, which agencies across the federal government
are using to help guide major financial management reform efforts. GAO's
work has resulted in many improvements in financial management systems and
controls at agencies such as DOD and IRS and has resulted in the
identification of many more long- term actions now under way across the
government that will have a lasting improvement when fully implemented.
GAO's efforts to issue requirements for agencies' financial systems and to
fulfill its statutory requirement to report on the compliance of agencies'
financial management systems with federal accounting standards and other
requirements under the Federal Financial Management Improvement Act of 1996
have provided important impetus for agencies to (1) more fully recognize
serious weaknesses with such systems and (2) modernize these systems. These
initiatives are directed at developing the information needed for the day-
to- day management and oversight of programs and operations, which
represents the Congress's overarching expectation for the CFO Act. Moreover,
GAO's analyses have helped prompt OMB and the agencies to pay closer
attention and place greater priority on preventing billions of dollars in
improper payments reported by agencies and the Treasury to take corrective
actions that will help maximize the collection of billions of dollars of
delinquent debt through its governmentwide cross- servicing initiative. Our
analyses of financial information, such as for the Power Marketing
Administration's rate setting, provided important assistance to the Congress
in its oversight of key government activities.
Assessing Year 2000 Lessons Learned: GAO played a crucial role in the
government's preparation for, and ability to successfully meet, the Year
2000 (Y2K) computing challenge. To help agencies mitigate their Y2K risks,
GAO produced a series of guides providing systematic approaches to
enterprise readiness, business continuity and contingency planning, testing,
and day one planning. Federal agencies and other organizations widely used
these guides to help organize and manage their Y2K programs. In addition,
GAO issued over 160 reports and testimony statements detailing specific
findings and recommendations on the Y2K readiness of both the government as
a whole and of a wide range of specific federal agencies. GAO worked with
OMB and the President's Council on Year 2000 Conversion to emphasize the
need for agencies to focus significant attention on resolving the Y2K
problem. As a result, by December 1999, OMB reported that 99.9 percent of
the mission- critical systems in the 24 major federal departments and
agencies were Y2K compliant. During the century change and leap day
rollover, most Y2K errors were minor and did not affect operations or the
delivery of services; for the several significant problems that were
encountered, quick action was taken to fix the problems or to implement
contingency plans. The results of these efforts provide the basis for GAO to
remove the high- risk designation for this area (see High- Risk Series: An
Update,
GAO- 01- 263, Jan. 2001, available at www. gao. gov).
145
Implementing IT Investment Management Processes: GAO has led development of
and significantly influenced the government's approach to managing and
controlling its information technology (IT) investments. To assist
government agencies in effectively implementing the Clinger- Cohen Act, we
defined a set of critical processes that promote successful information
technology investment management (ITIM). We produced guidance that
prioritized these ITIM critical processes. We also developed a method to
effectively assess an agency's implementation of ITIM. The guidance and
method were used during our assessment of IT performance and accountability
at the Small Business Administration, the Coast Guard, and the Immigration
and Naturalization Service.
Improving Agencies' IT Modernization Efforts: GAO has produced improvements
in IT management in agencies throughout the federal government, creating
stronger institutional IT management processes and controls, and individual
system development and acquisition projects that are more likely to provide
expected value and be delivered on time and within budget. For example, our
work on institutional IT management processes and controls has provided the
Immigration and Naturalization Service with a roadmap for developing and
implementing both mature IT investment management processes and an
enterprise architecture. In addition, our work on individual system projects
greatly reduced the risks related to the Customs Service's efforts to
acquire a new import processing system while producing cost avoidance
savings of about $30 million. Moreover, the progress made by the National
Weather Service in addressing concerns with its modernization provided the
basis for GAO to remove the high- risk designation for this area (see
High- Risk Series: An Update, GAO- 01- 263, Jan. 2001, available at www.
gao. gov). Also, our work on key decennial census systems contributed to the
successful deployment and operations of one system and alerted the Census
Bureau and the Congress to profound risks on another. We reviewed the
Department of Veterans' Affairs' implementation of our previous
recommendations focused on the Clinger- Cohen Act's provisions. On the basis
of that review, we issued additional recommendations to VA, which it is in
the process of implementing. We recommended that the Social Security
Administration (SSA) institutionalize the evaluation of IT investments
through post- implementation reviews and collection of cost, benefit, and
performance data. SSA subsequently performed these recommendations for its
Intelligent Workstation/ Local Area Network project. We also provided input
to OMB on its Circular A- 130 revision and to the Chief Information Officers
(CIO) Council on its guidance for establishing and maintaining information
technology enterprise architectures.
Aiding Clinger- Cohen Act Compliance: GAO continued to collaborate with OMB
and the CIO Council in developing practical guidance to assist agencies in
complying with the Clinger- Cohen Act and advancing the government's
capacity to manage IT investments to improve performance. For example, GAO
contributed to a CIO Council Guide for
146 A P P E N D I X I I I
assessing IT investments' compliance with agency enterprise architectures,
and GAO is partnering with the CIO Council and OMB in developing a guide for
developing, implementing, and maintaining enterprise architectures.
Assessing Internet Privacy: GAO reported on Internet privacy- a critical
issue that must be addressed if the government is to fully realize the
potential of the Internet and successfully implement e- government
initiatives. GAO's report on federal agencies' Web site privacy policies
identified the progress agencies have made in posting appropriate policies
but also pointed out that agencies were not consistently posting Privacy Act
notices on Web pages where they collect substantial amounts of personal
information from visitors. This report made specific recommendations to OMB
to strengthen its guidance and oversight. GAO also responded quickly to
congressional requests for a comparison of federal Web site privacy policies
with the standards the Federal Trade Commission has proposed for commercial
Web sites. The resulting report and testimony aided continuing congressional
debate on the privacy standards needed for both the public and private
sectors in the electronic age.
Improving the Success of the 2000 Decennial Census: GAO's work on the
preparation and conduct of the 2000 Decennial Census continued to provide
the Congress with “realtime” information on the status of census
operations. Our work paid particular attention to the consistency of the
application of the Census Bureau's quality control efforts and the
efficiency and effectiveness of the Bureau's efforts to follow up on over 40
million households that did not mail back a census form. In addition, we
provided the Congress with perspective on the Bureau's plans to adjust the
census counts for over- and undercounts of the population. Also, our work on
key decennial census systems contributed to the successful deployment of one
system and alerted the Bureau and the Congress to profound risks with
another. The completion of much of the work associated with the decennial
census provides the basis for GAO to remove the high- risk designation for
this area (see HighRisk Series: An Update, GAO- 01- 263, Jan. 2001,
available at www. gao. gov).
Analyzing Electronic Government Initiatives: GAO's overview assessment of
federal electronic government initiatives in May 2000 noted progress in
areas of information dissemination over the Internet and the evolution of
citizen interaction with government into an “online”
environment. It also highlighted some significant challenges confronting
government in making the transition to full electronic service and delivery,
including (1) effective executive leadership and management; (2) developing
and sustaining a “citizen as customer” focus; (3) security and
privacy issues, including the successful adoption of Public Key
Infrastructure technology; (4) adequate technical infrastructures; and (5)
sufficient IT human resources to develop and manage Web- based Internet
applications and solutions. We have reiterated these same concerns in our
review of OMB's guidance to federal
147
agencies on the implementation of the Government Paperwork Elimination Act
and our review of FirstGov, a Web site intended to serve as a portal to all
of the federal government's publicly available online information and
services.
Assessing DOD's Electronic Commerce: GAO examined DOD's management of its
electronic commerce program in fiscal year 2000 and found a number of
program management weaknesses related to organizational placement,
authority, and funding of the electronic commerce program management office.
Moreover, we found that the Department's vision of using electronic commerce
technologies to transform and streamline its business processes was at risk
because key elements of its overall electronic commerce road map- an
implementation plan and an electronic commerce architecture, i. e.,
information systems blueprint- had not been completed. Without these
elements, the Department did not have the unifying direction needed to carry
out its electronic commerce program. Subsequently, DOD initiated actions to
strengthen the role of the program office, move forward on developing an
electronic commerce architecture, and improve the use of performance
measures to gauge the success of its electronic commerce initiatives. The
Department has acted to strengthen the position of the Director of the Joint
Electronic Commerce Program Office and to charter an Electronic Business
Board of Directors.
Improving Human Capital Practices: Our work on human capital issues helped
focus the attention of the executive and legislative branches on the
importance of these issues, in particular, on their importance in managing
for results. Our efforts, involving speeches by the Comptroller General as
well as other GAO staff presentations and written products, helped spur the
administration to make human capital a priority management objective in the
fiscal year 2001 budget submission. Our framework for human capital self-
assessment is now being used in strategic human capital planning efforts at
several agencies, including the Social Security Administration, the Small
Business Administration, the National Aeronautics and Space Administration,
and the Environmental Protection Agency. It is also used throughout GAO to
help guide our research and development work and our congressionally driven
examinations of how well agencies are pursuing strategic human capital
management in support of their missions and goals. In addition, our report
on retirement trends in the Senior Executive Service underscored the
importance of succession planning.
Ensuring Competitiveness of DOD's Information Technology Contracts: Our work
disclosed that DOD purchased more than $400 million worth of information
technology products and services without competition. Competition helps
federal agencies ensure the best value is obtained in awarding contracts. On
the basis of our work, and because of concerns that agencies could waste
taxpayer dollars in the absence of competition, the
148 A P P E N D I X I I I
Congress legislated that the Office of Federal Procurement Policy issue
regulations to ensure that agencies seek competition when buying information
technology products and services.
Strategic Objective 3.3
Governmentwide Management Reforms, Progress Toward FY 2000- 2002 Performance
Goals
Progress assessment Performance goal Comment
Analyze and support efforts to instill results- oriented management across
the government
Identify needed improvements to the government's financial management
infrastructure
Help build the government's capacity to manage information technology to
improve performance
Enhance efforts to manage the collection, use, and dissemination of
government information in an era of rapidly changing technology
Identify and facilitate the implementation of human capital practices that
will improve federal economy, efficiency, and effectiveness
Improve acquisition policies and practices
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 3.4
Recommend Economy, Efficiency, and Effectiveness Improvements in Federal
Agency Programs
Highlighting Criteria for Determining Performance and Accountability
Challenges and High Risks: GAO completed an assessment of, and issued a
publicly available exposure draft on, the methodologies and criteria used to
determine performance and accountability challenges and those federal
government programs and functions that should be designated as high risk.
The criteria consider qualitative and quantitative factors and agencies'
corrective measures. It also includes criteria for determining
governmentwide high risk and for removing high- risk designations. The final
document will be used by GAO auditors in making these determinations and by
the Congress and the executive branch agencies in understanding our basis
for reporting in these areas.
Reviewing Agency Budget Requests: GAO's reviews of agencies' budget requests
(budget scrubs) provide objective analyses of the President's proposed
budget for selected programs, activities, or line items. This work has
helped the Congress in its budget
149
deliberations by identifying billions of dollars in proposed financial
savings that could be used to reduce resources or redirect funding to higher
priorities. For example, in its fiscal year 2000 budget scrub on HUD, GAO
identified some programs for which the need for carrying unobligated
balances was questionable. Taking steps to make more productive use of
unobligated balances is important for HUD because these balances have grown
over the past 3 years for some of its programs, such as Homeless Assistance
($ 45 million) and Urban Empowerment Zones ($ 105 million), for which HUD
has requested $234 million in increased funding for fiscal year 2000.
Improving U. S. Postal Service's E- Commerce Reporting: GAO's work found
deficiencies in the financial information the Postal Service provided for
its e- commerce initiatives that raised concerns about the accuracy and
completeness of the information. As a result of GAO's recommendation that it
provide complete and accurate information on its e- commerce costs and
revenues, the Postal Service stated that it is instituting standard
reporting procedures in this area.
Strategic Objective 3.4
Economy, Efficiency, and Effectiveness Improvements in Federal Agencies,
Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Highlight the specific major management challenges confronting agencies and
those federal operations at highest risk of fraud, waste, abuse, and
mismanagement
Review the economy, efficiency, and effectiveness of key federal agencies
and activities
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
APPENDIX IV
GOAL 4 ACCOMPLISHMENTS AND PERFORMANCE GOALS
To Maximize the Value of GAO by Being a Model Organization for the Federal
Government
This appendix provides details of selected accomplishments during fiscal
year 2000, categorized by strategic objective. The performance goals we set
for fiscal years 2000 through 2002 for each objective and any revisions to
them follow each set of accomplishments.
Strategic Objective 4.1
Cultivate and Foster Effective Congressional and Agency Relations Improving
Service to the Congress: In fiscal year 2000, GAO piloted congressional
protocols to guide our interactions with the Congress and to ensure our
accountability. The final protocols have since been issued and reflect
refinements made in response to feedback from Members of the Congress and
their staffs. The protocols will allow us to better serve the Congress,
improve satisfaction with our work, and ensure equitable treatment for all
congressional requesters.
Strengthening Congressional Relationships: The Comptroller General and
senior GAO officials have continued outreach efforts to understand how best
to meet congressional needs and to assist the Congress in using GAO's
resources and services. During fiscal year 2000, we met with the leadership
of the Senate and House, Committee Chairs and Ranking Minority Members, and
Members of our oversight and appropriations committees to increase our
understanding of their needs and to obtain feedback on our performance.
150
Improving Communication With the Congress: Responding to congressional
concerns that GAO's activities needed to be more transparent, we made our
active engagement list available to Members of the Congress and their staffs
as part of the Comptroller General's commitment to effectively serve the
Congress for the benefit of the American people. Congressional Members and
staff, as well as staff in the Congressional Budget Office and the
Congressional Research Service, are able to access the list through the
House and Senate's internal online systems.
Strategic Objective 4.1
Client Relations, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Strengthen communications with our congressional clients
Implement clearly defined, consistently applied, well documented, and
transparent policies and protocols for working with the Congress and
agencies
Improve internal processes to help GAO's senior executives and staff better
serve the Congress
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 4.2
Implement a Model Strategic and Annual Planning and Reporting Process
Conducting Strategic Planning: In spring 2000, GAO developed its first
strategic plan for the 21st century based on input from the Congress,
supplemented by GAO's own expertise and other outreach efforts. Our plan
focuses on how we intend to support the Congress and help shape a more
efficient and effective government. Factoring in global changes that are
having an impact on society at a variety of levels, our strategic plan
provides a comprehensive and focused structure of goals and objectives to
support the Congress in its legislative, oversight, appropriations, and
investigative roles. We worked closely with the Congress's leadership,
committee leadership, individual Members, and staff in developing this
strategic plan.
Improving Performance Planning: In fiscal year 2000, we produced a
performance plan for fiscal year 2001 to provide direct linkage between the
strategic goals identified in our strategic plan and what managers and staff
do day to day. Our performance plan contains the fiscal year 2001
quantitative and qualitative performance goals and targets we will use to
gauge our progress toward accomplishing our strategic goals and objectives.
151
152 A P P E N D I X I V
Increasing GAO's Accountability: GAO issued its first accountability report
to the Congress in 2000, discussing our performance and accountability in
serving the Congress and the American people in fiscal year 1999. The report
reviews GAO's accomplishments in meeting our mission and sustaining our core
values of accountability, integrity, and reliability. The report takes the
place of the annual report issued in previous years. The shift to an
accountability report is part of GAO's overall effort, consistent with the
Government Performance and Results Act (GPRA), to strengthen our performance
and to hold our agency accountable.
Realigning Agency to Strategic Plan: The Comptroller General decided, after
15 months of due diligence and internal and external consultation, to
realign the agency to respond to significant environmental changes, address
key business imperatives, and increase flexibility, capacity, and
effectiveness in serving the Congress as outlined in our strategic plan.
This realignment is designed to help GAO better support the Congress and
proactively prepare to meet future challenges within current and expected
resource levels. To align GAO's structure with the goals in our strategic
plan, we reorganized both our field and our headquarters operations.
Strategic Objective 4.2
Strategic and Annual Planning, Progress Toward FY 2000- 2002 Performance
Goals
Progress assessment Performance goal Comment
Use a strategic planning process that meets the intent of the Government
Performance and Results Act
Develop a performance tracking system and publish annual performance plans
and reports
Realign organizational structure and resources to the strategic goals and
objectives
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
153 Strategic Objective 4.3
Align Human Capital Policies and Practices to Support GAO's Mission
Establishing Human Capital Baseline: In fiscal year 2000, GAO completed a
selfassessment of its human capital program to provide a baseline evaluation
of its human capital management strategies, organizational alignment,
leadership and special skill resources, and performance culture. This self-
assessment provides the basis for the key initiatives described below to
improve our human capital policies and practices.
Expanding Human Capital Tools and Authorities: During fiscal year 2000, we
worked with key congressional committees in drafting legislation that was
enacted in October 2000 and that provides GAO greater flexibility in
managing its workforce to meet our strategic goals and objectives and to
better serve the Congress and the American people. This human capital
legislation provides the Comptroller General with the authority to take the
following actions:
Establish senior- level positions to meet GAO's critical scientific,
technical, or professional needs. The staff serving in senior- level
positions receive the same pay, rights, and benefits that members of GAO's
Senior Executive Service (SES) receive. Existing members of the SES may be
transferred to senior- level positions.
Offer voluntary early retirement to an employee or groups of employees for
the purpose of realigning GAO's workforce, correcting skill imbalances, and
reducing certain high- grade positions. No more than 10 percent of GAO's
employees may receive an early retirement in a fiscal year.
Offer separation pay incentives to an employee or groups of employees for
the same purposes that voluntary early retirement may be offered. No more
than 5 percent of GAO's employees may receive a separation pay incentive in
any fiscal year.
Separate employees during a reduction in force or other adjustment in force
under regulations that consider the following factors in order of priority:
tenure, military preference, veterans' preference, performance ratings,
length of service, and other objective factors such as skills and knowledge.
Updating Appraisal Systems: In fiscal year 2000, we revised the performance
standards for all staff to incorporate GAO's core values and strategic
goals, to update descriptions of performance to better reflect the current
nature of GAO's work, and to include key management and performance concepts
of the Comptroller General, such as leadership by example, client service,
and measurable results. Also, during fiscal year 2000, we began a major
initiative to develop a competency model and update the performance
standards for analysts to reflect prevailing best practices.
154 A P P E N D I X I V
Improving Recruitment: GAO executives are actively engaged at more than 50
universities concentrating on attracting productive, motivated people who
have the right skills to do our work. During fiscal year 2000, recruiting
brochures and materials were updated to enhance GAO's image in career fairs,
interviews, and other presentations.
Matching Staff Knowledge and Skills to Strategic Goals and Objectives:
During fiscal year 2000, GAO developed a process for gathering and assessing
information on our staff 's knowledge and skills. All staff completed this
inventory, which was based on the knowledge and skills needed to implement
our strategic plan. Staff also completed an employee preference survey
indicating their placement interests. The information is being used to
identify skill gaps and succession planning needs within the agency and to
match employees' interests with the agency's needs.
Strategic Objective 4.3
Human Capital, Progress Toward FY 2000- 2002 Performance Goals
Progress assessment Performance goal Comment
Develop and implement a strategic human capital plan
Implement an approach to assessing and inventorying knowledge and skills
needed to meet our strategic goals and objectives
Update appraisal systems to support the agency's core values, strategic
plan, and performance goals
Improve recruitment, training/ development, and recognition/ reward programs
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 4.4
Develop Efficient and Responsive Business Processes Inaugurating New
Management Strategies: We implemented two new management strategies- matrix
management and risk management- in fiscal year 2000. Matrix management is an
operational approach that brings together key stakeholders throughout an
engagement to transcend traditional organizational boundaries, thereby
maximizing institutional values and minimizing related risks. Risk
management uses risk to determine the level and degree of involvement
management and stakeholders must have from an engagement's initiation
through the issuance of the product. Ensuring that the appropriate
stakeholders and managers are involved at the right points in time is the
key principle behind both of these strategies.
155
Improving Engagement Management Processes: To effectively implement matrix
and risk management, we initiated two key management meetings. GAO conducts
an engagement assignment meeting weekly to review all new congressional
requests, mandates, and proposals for research and development assignments
to determine whether the work should be done and, based on risk, the
appropriate level of Office of Comptroller General involvement. In addition,
we match critical skills and expertise to our work to ensure that all staff
contribute regardless of the team designated to lead the work. We then hold
biweekly engagement review meetings to discuss our progress on high- and
medium- risk assignments and upcoming reports.
Strategic Objective 4.4
Core Business and Supporting Processes, Progress Toward FY 2000- 2002
Performance Goals
Progress assessment Performance goal Comment
Continue improving the Job Management Process and other business processes
to be more responsive to our clients' needs, reduce administrative burden,
and expedite product issuance
Reengineer our product and service lines Enhance coordination with the
Congressional Budget Office and the Congressional Research Service to
increase opportunities for collaboration and consultation
Develop and implement a managerial accounting system
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
Strategic Objective 4.5
Build an Integrated and Reliable Information Technology Infrastructure
Completing Y2K Transition: In fiscal year 2000, GAO successfully completed
the Y2K efforts that ensured that our systems continued to function through
the century change. We replaced or repaired systems under our direct control
and worked closely with service providers to test and certify systems that
run at other government computer sites.
Improving Network Security: We also continued progress on initiatives to
achieve full compliance with the information security requirements in the
Office of Management and Budget's (OMB) Circular A- 130, including
establishing security plans for major systems, developing a disaster
recovery plan, and testing disaster recovery capabilities.
We dropped this goal to participate in the development of a financial
management system that will serve all of the agencies in the legislative
branch.
156 A P P E N D I X I V
Assessing Current Information Technology: During fiscal year 2000, we
initiated a comprehensive review of our information technology (IT) to
identify additional opportunities for increasing our efficiency,
effectiveness, and productivity. As part of this assessment, a concept of
operations is being developed to guide future technology plans. In addition,
GAO contracted for a “total cost of ownership” assessment that
will provide both performance and cost metrics to be compared with other
like government and private institutions. We also initiated an effort to map
our business processes to the IT architecture and link future investments to
our business goals.
Improving Online Access to Information: Several software tools and products
designed to streamline data access and report processing were implemented,
including access to online policy, protocols, and procedures for managing
the engagement process; access to legal and other resources from the
desktop; and enhanced software and graphics capability. For example, to
provide our teams of analysts with a mechanism for simplifying and
standardizing their work, we launched the prototype of a comprehensive, Web-
based guide to conducting GAO assignments, known as the EAGLE. As part of
our role in assisting with the presidential transition, we developed an
external Internet site with links to GAO contacts and reports on the major
executive branch agencies, which was completed at the beginning of fiscal
year 2001. Finally, we continued to improve the capabilities of our computer
network and began a number of projects on enabling technologies, including
software upgrades, the deployment of notebook computers, and improved remote
access to allow our teams to work more efficiently on the road.
Strategic Objective 4.5
Information Technology Services, Progress Toward FY 2000- 2002 Performance
Goals
Progress assessment Performance goal Comment
Develop a long- term, comprehensive plan for an integrated information
technology approach
Develop and implement a short- term, cost- effective approach that begins to
satisfy GAO's information needs quickly
Establish performance and cost metrics addressing the quality and value of
information technology services
Ensure the availability of required information technology skills
Legend
Expect to meet.
May not be met until after FY 2002. Not applicable. New wording for a
performance goal is bolded; deleted wording is strike out.
1 F ROM THE COMPTROLLER GENERAL
SPRING 2001
I am pleased to present the highlights of GAO's performance and
accountability report, which combines our assessment of what we were able to
accomplish in fiscal year 2000 with our plans for continued progress through
fiscal year 2002. Looking back at last year, I am proud to say that we
served the Congress and the American people well.
Our work resulted in a number of significant improvements to government that
will benefit all Americans. Among other things, by acting on our
recommendations, the government improved public health and safety,
strengthened national security, better protected consumers, and improved its
financial management and information systems. We also contributed critical
information to public debates on Social Security and Medicare reform and
called attention to looming problems such as the security of government
computer systems and the knowledge and skills needed in the federal
workforce in coming years. Taxpayers benefited from the near-
2
record $23 billion in savings identified through our work- a $61 return on
every dollar invested in GAO.
I am particularly pleased that we were able to achieve these results in the
midst of significant change within GAO. After completing our first strategic
plan last year, we realigned our organization to better meet our goals and
objectives, and we began to institute new ways of doing business. We also
gained new legislative authorities that will help us address our human
capital requirements and help ensure that GAO remains prepared to meet the
Congress's needs in the future.
These needs are formidable. The nation's leaders are faced with a range of
complex, controversial, and multidimensional issues that require a more
strategic, long- range, and integrated perspective than in the past. Looking
toward fiscal year 2002, we believe the work we plan to undertake and our
efforts to become a model agency will help the Congress address those
challenges.
As we move ahead, we look forward to the continued support of the Congress
and to working even more closely with Members and their staffs. Their
support- and the dedication and commitment of our GAO team- are the driving
forces behind our continued success in serving the Congress and the American
people.
DAVID M. WALKER
COMPTROLLER GENERAL OF THE UNITED STATES
2 F ROM THE COMPTROLLER GENERAL
3
As the investigative arm of the Congress, GAO evaluates the economy,
efficiency, and effectiveness of a wide range of federal policies and
programs. Primarily in response to congressional requests and mandates- but
also through our own targeted research and development efforts- we publish
thousands of reports and other documents each year and provide a number of
related services to support legislative oversight and improve government
operations. By making recommendations to improve government programs and
services, GAO contributes to more effective federal spending. Our work also
helps to raise the public's trust and confidence in the federal government.
3
4
Consistent with the spirit of the Government Performance and Results Act
(GPRA) of 1993, GAO operates under a broad strategic plan, one that
currently covers fiscal years 2000 through 2005. To drive our work toward
the goals envisioned in the strategic plan, we developed detailed strategic
objective plans and report our results yearly to the Congress and the
public. In addition, we publish an annual performance plan to guide our day-
to- day efforts to meet our strategic goals and objectives. This year, in
response to the Congress's desire to have financial and performance
management information presented in a more cohesive format, we have merged
three documents into one:
our performance report for fiscal year 2000, our accountability report for
fiscal year 2000, and our performance plan for fiscal year 2002.
The combined, full- length report, available at www. gao. gov, represents
one more step in GAO's efforts to lead by example. These highlights present
(1) our performance in fiscal year 2000, (2) a brief look ahead at fiscal
years 2001 and 2002, (3) the strategies we will employ and the challenges we
face in meeting our strategic goals, and (4) condensed financial statements
and the accompanying independent auditor's report for fiscal year 2000.
I N T R O D U C T I O N 4
5
In fiscal year 2000, GAO achieved more than $23 billion in financial
benefits for the American taxpayer and recorded more than 700 actions taken
in response to our recommendations to improve how the federal government
operates. We also completed a number of major initiatives to improve the way
GAO itself operates, among them, our first strategic plan for the 21st
century. Based on input from the Congress and supplemented by our own
expertise and other outreach efforts, the plan established four strategic
goals for our agency. Each of the four goals is supported by a set of
strategic objectives that guide GAO's work, as the diagram on the next page
shows.
5
TO RESPOND TO CHANGING SECURITY THREATS
AND THE CHALLENGES
OF GLOBAL INTERDEPENDENCE
TO A MORE RESULTS- ORIENTED AND ACCOUNTABLE
FEDERAL GOVERNMENT
BY BEING A MODEL ORGANIZATION
FOR THE FEDERAL GOVERNMENT
Diffuse security threats Military capabilities and readiness
Advancement of U. S. interests
Global market forces Fiscal position of the
government Government financing and accountability
Governmentwide management reforms
Economy, efficiency, and effectiveness improvements in federal agencies
Client relations Strategic and annual planning
Human capital Core business and supporting processes
Information technology services
SERVING THE CONGRESS GAO'S STRATEGIC PLAN FRAMEWORK
TO ADDRESS CURRENT AND EMERGING CHALLENGES TO THE
WELL- BEING AND FINANCIAL SECURITY
OF THE AMERICAN PEOPLE
GAO exists to support the Congress in meeting its Constitutional
responsibilities and to help improve the performance and accountability of
the federal government for the benefit of the American people. MISSION
THEMES GOALS
Health care needs and financing
Retirement income security Social safety net Education/ workforce issues
Effective system of justice Community investment Natural resources use and
environmental protection
Physical infrastructure
OBJECTIVES
Government Performance and Accountability
SUPPORT THE TRANSITION
MAXIMIZE THE VALUE OF GAO PROVIDE TIMELY, QUALITY SERVICE TO THE CONGRESS
AND THE FEDERAL GOVERNMENT
Demographics Globalization Quality of Life Security Technology
CORE VALUES
Accountability Integrity Reliability
qualitative performance goals, we expect to meet or exceed all 94 by the end
of fiscal year 2002.
The chart below shows the trends in our annual results since 1997 and also
provides 4- year rolling averages that serve to show those trends without
the effects of one- time or unusual circumstances and shifts in
congressional priorities and workloads.
P E R F O R M A N C E
Our performance for the year exceeded all five of our annual quantitative
targets for financial benefits, other benefits, recommendations implemented,
testimonies given, and new recommendations made. Under a separate management
measure of timeliness, we achieved a 96- percent success rate for delivering
our products on time but fell short of our idealistic 100- percent target.
As for our 3- year
Charting Agencywide
7 Annual Quantitative Performance Measures, Fiscal Years 1997- 2000
1997 1998 1999 2000 Type Measure Actual Actual Actual Target Actual
Outcome Financial benefits (billions)
Annual $20.9 $19.7 $20.1 $22.0 $23.2 4- year average $18.4 $18.4 $19.5 $20.7
$21.0
Other benefits
Annual 391 537 607 620 788 4- year average 266 354 451 539 581
Recommendations implemented
4- year implementation rate 74% 69% 70% 73% 78% Intermediate Testimonies
outcome Annual 182 256 229 230 263 4- year average 208 216 212 224 233
Recommendations made
Annual 836 987 940 950 1,224 4- year average 946 848 898 928 997
Annual Management Measure, Fiscal Years 1997- 2000
Management Timeliness
Annual 91% 93% 96% 100% 96% 4- year average - - 88% - 94%
3- Year Qualitative Performance Goals, Fiscal Years 2000- 2002 Qualitative
measure Expect to meet Do not expect Not started
or exceed to meet
Performance goals: 94 100% 0% 0% Note: The full report provides details
about the data in this table.
8 $23.2 Billion in Direct Financial Benefits Were Realized. These results
exceeded our target of $22 billion and were up from the previous year's
results of $20.1 billion.
We achieve our financial benefits when our recommendations are implemented
to make government services more efficient, to improve the budgeting and
spending of tax dollars, and to strengthen the management of federal
resources. Estimated financial benefits include budget reductions, costs
avoided, resources reallocated, and revenue enhancements. Because it takes
time for agencies to implement GAO's recommendations and document savings,
the financial benefits we report in a given year may be based on work we
performed in the current or previous years.
G A O ' S P E R F O R M A N C E
9
GAO had long advocated increased funding specifically for activities to
prevent fraud and abuse in the Medicare program. In 1996, the Congress
passed the Health Insurance Portability
and Accountability Act, which provided the additional funding. As a result
of these activities, the Medicare program's net savings were about $3
billion in fiscal year 2000.
delays. Our analysis helped the Congress reduce the final fiscal year 2000
appropriation request for the F- 22 by about $552 million and to identify
conditions that should be met before the Department of Defense could begin
full production.
GAO identified funding from several sources in the Department of Housing and
Urban Development's budget, including unexpended balances no longer needed,
that could be recaptured in fiscal years 1998 and 1999. The Congress
rescinded $1.65 billion from the Section 8 housing program's fiscal year
1998 budget authority and rejected
$1.3 billion of HUD's fiscal year 1999 request for housing assistance for a
total reduction of $2.95 billion. Subsequently, GAO and HUD worked together
to revise HUD's analysis to show that, by using recaptured funds, HUD had
sufficient funding to meet its needs. In a series of reports beginning
in the mid- 1990s, GAO questioned various aspects of the Air Force's F- 22
aircraft acquisition program. We reported that the acquisition strategy was
risky and that the program was experiencing cost growth, manufacturing
problems with test aircraft, and testing
10 788 Actions Were Taken to Improve Government Operations or Services.
Our results exceeded our target of 620 actions taken and were up from the
previous year's total of 607 actions taken.
These benefits represent improved government operations and services. We
measure these benefits by tabulating the number of cases in which our
recommendations have prompted federal agencies or the Congress to take
action. The 788 actions reported for fiscal year 2000 include measures to
improve public safety and consumer protection, to establish more effective
and efficient government operations, and to safeguard the nation's physical
and information infrastructure.
G A O ' S P E R F O R M A N C E
11
critical information systems at federal agencies and recommended numerous
improvements, most recently at three Treasury agencies, the Department of
Energy, the Department of Veterans Affairs, and the Environmental Protection
Agency. In September 2000, GAO issued a governmentwide perspective on
federal information security that The Health Care Financing Administration
(HCFA) and several states- including California, Maryland, and Michigan-
improved their oversight and enforcement of nursing homes' quality of care
standards in response to GAO's recommendations highlighting weaknesses in
existing processes. Improvements included increased funding for nursing home
surveyors,
helped focus the attention of the executive and legislative branches on the
importance of these issues, particularly in managing for results. We helped
spur the administration to make human capital a priority management
objective in the fiscal year 2001 budget submission, and our framework for
human capital self- assessment is being used at other agencies, including
the Social Security Administration, the Small Business Administration, the
National
Aeronautics and Space Administration, and the Environmental Protection
Agency. The framework is also used throughout GAO to help guide our research
and development work and our congressionally driven examinations of how well
agencies are pursuing strategic human capital management. GAO has evaluated
the security of more prompt investigation of
complaints alleging serious harm to residents, more immediate enforcement
actions for homes with repeated serious problems, a reorganization of HCFA's
regional staff to improve consistency in oversight, and increased funding
for administrative law judges to reduce the backlog of appealed enforcement
actions. Our work on human capital issues
covered Inspector General and GAO audit findings reported since July 1999.
We concluded that weak security continues to be a widespread problem that
places critical and sensitive federal operations at risk of tampering,
disruption, and inappropriate disclosure.
12 78 Percent of the Recommendations We Made 4 Years Ago Were
Implemented. Our results exceeded our target of 73 percent and were up from
the previous year's rate of 70 percent.
We measure our progress in improving the government's accountability,
operations, and services by tracking the percentage of recommendations we
made 4 years ago that have since been implemented. For example, 78 percent
of the recommendations we made in fiscal year 1996 had been implemented by
the end of fiscal year 2000. We use a 4- year interval because our
historical data show that agencies often need this time to take action on
our recommendations. Implemented recommendations correct the underlying
causes of problems, weaknesses in internal controls, failures to comply with
laws or regulations, or other matters impeding effective and efficient
performance.
G A O ' S P E R F O R M A N C E
13 263 Testimonies Were Given Before the Congress. Our results exceeded our
target of 230 and were up from the previous year's total of 229 testimonies.
Because one of GAO's primary functions is to support the Congress in
carrying out its decision- making and oversight responsibilities, the number
of times our experts testify before congressional panels each year is an
indicator of our responsiveness and the impact, importance, and value of our
work. In fiscal year 2000, GAO witnesses testified before 104 different
congressional committees and subcommittees on a broad range of topics,
including arms control, health care, Social Security, human capital, nuclear
waste cleanup, wildfires, aviation safety and security, international trade,
computer security, financial management reform, and budget issues.
14 1,224 Recommendations Were Made During the Year. Our results exceeded
our target of 950 recommendations and were up from the previous year's total
of 940.
Our investigations and analyses can lead to improved government performance
when we make recommendations to federal agencies. We recommend specific
actions to improve the economy, efficiency, and effectiveness of federal
operations and aim to effect significant financial and other benefits to
taxpayers. We therefore track the number of recommendations contained in the
products we issue each year.
96 Percent of Our Products Were Delivered on Time. While our results fell
short of our idealistic target of 100- percent on- time delivery, we
delivered the vast majority of our products on time.
In addition to the five performance measures already discussed, we monitor
timeliness through a management measure. For our work to be useful, our
congressional clients must have it on a timely basis. Therefore, we compare
actual product delivery dates with the dates we agreed to with our clients.
We set an idealistic target of 100 percent to emphasize the importance we
place on being responsive to our clients. Although we did
14 G A O ' S P E R F O R M A N C E
15
not meet this target- and we believe it will remain a challenge because of
our increasing workload and external factors beyond our control- we will
continue to emphasize timeliness. Fully implementing our new matrix and risk
management strategies should help improve our on- time delivery.
100 Percent of Our Qualitative Performance Goals Are on Track. As of the end
of fiscal year 2000, we expected to meet or exceed all 94 of our 3- year
performance goals, although progress toward some had been slowed because we
did not receive all the resources we requested. We will evaluate our success
at the end of fiscal year 2002.
These 94 qualitative performance goals lay out the key efforts and potential
outcomes we hope to achieve for each of our strategic objectives. Our
performance on these goals will meet expectations when we provide
information or make recommendations on the key efforts when viewed
collectively. Our performance will exceed expectations when we provide
information or make recommendations that congressional decisionmakers and
others use toward achieving the potential outcomes. Our performance goals
are listed in the full- length version of this report.
16
To present a fuller picture of how we served the Congress in fiscal year
2000, the following pages provide details on each of our four strategic
goals. They present the goals' strategic objectives, additional examples of
our fiscal year 2000 accomplishments, and some of the issues we testified on
at the request of our congressional clients.
17
Provide Timely, Quality Service to the Congress and the Federal Government
to Address Current and Emerging Challenges to the Well- Being and Financial
Security of the American People
Strategic Objectives
The health care needs of an aging and diverse population A secure retirement
for older Americans The social safety net for Americans in need An educated
citizenry and a productive workforce An effective system of justice
Investment in communities and economic development Responsible stewardship
of natural resources and the environment A safe and efficient national
physical infrastructure
Selected Accomplishments
Analyzing Social Security Reform
GAO produced a major body of work analyzing the challenges facing the long-
term financial solvency, stability, and sustainability of the Social
Security program, including developing and applying criteria for evaluating
reform proposals. Our criteria provide a clear, consistent, and objective
analytical framework that the Congress, program officials, and the public
can use in evaluating legislative reforms.
Improving Airline Competition
Our congressionally requested work on airline competition paid off, with the
Congress passing legislation that addressed critical barriers to increased
competition. Our work showed that limitations on the numbers of arrivals and
departures (called slot controls) inhibit the ability of some airlines to
serve new markets. The new law encourages more vigorous competition by
phasing out slot controls at three major airports, increases slots for new-
entrant airlines, increases slots for airlines with limited access, and
requires that DOT grant additional slots to airlines that increase regional
jet service to small- hub airports. Several of those smaller cities now
receive improved service from airlines operating regional jets.
Maximizing the Uranium Enrichment Program
Acting on a GAO recommendation, the Congress required the Department of
Energy to recover from commercial customers an appropriate share of the
expected costs for work involving the decontamination and decommissioning of
the Department's uranium enrichment plants. More than $731 million in
additional collections resulted.
Congressional Testimonies
Issues we testified on included:
Air traffic control Airline competitiveness Amtrak's financial condition Gun
control Health care Homelessness Housing programs Intercity passenger rail
Long- term care insurance Medicare Nuclear waste cleanup Nursing homes
Prescription drug benefits Social Security Truck safety Welfare reform
Wildfire dangers Worker protection
18
Provide Timely, Quality Service to the Congress and the Federal Government
to Respond to Changing Security Threats and the Challenges of Global
Interdependence
Strategic Objectives
Responding to diffuse threats to national and global security Ensuring
military capabilities and readiness Advancing and protecting U. S.
international interests Responding to the impact of global market forces on
U. S. economic and security interests
Congressonal Testimonies
Issues we testified on included:
AIDS crisis in Africa Anthrax vaccine immunization Arms control Aviation
security Bosnia Chemical and biological defense Colombian drugs Combating
terrorism Critical infrastructure Defense acquisitions Drug control Export
controls I Love You virus International child abductions Micronesia Military
personnel Peacekeeping operations Trade with European Union United Nations
management
reforms Weapons of mass destruction World Trade Organization
Selected Accomplishments
Revamping Navy's In- Transit Inventory
At the request of several Members of Congress, GAO examined how the Navy
reconciled its in- transit inventory records and found that the Navy had
lost accountability over $3 billion in inventory. In response, the Navy
established a task force that, for fiscal years 1999 and 2000, resolved
errors valued at about $802 million. Had this reconciliation not occurred,
the Navy could have bought additional inventory not knowing that it already
had the items in stock.
Stabilizing the Balkans
Despite the presence of two large NATO- led forces, the Balkans remain
volatile. GAO's work has shown that the international operations in Bosnia
and Kosovo face severe obstacles to achieving enduring peace and stability.
Most local leaders and members of their respective ethnic groups have not
embraced the political and social reconciliation needed to build
multiethnic, democratic societies. Our work has also shown that the
international community has not provided the resources that the United
Nations mission in Kosovo says it needs. If progress is not made in these
matters, violence may escalate or armed conflict may result.
Evaluating Trade Agreements
GAO identified procedural and structural problems in the government's
monitoring and enforcement of its trade agreements. We found inconsistencies
and weaknesses in trade archiving practices that prevented the government
from determining the number of agreements it is party to. We also identified
human capital and other capacity weaknesses that limited key agencies' trade
monitoring and enforcement abilities. In response, the key agencies improved
the accuracy and utility of their trade archives and are enhancing efforts
to achieve compliance with trade agreement provisions, to improve
coordination and teamwork in monitoring and enforcement activities across
the government, and to update mechanisms for obtaining private sector input
on trade policy.
19
Support the Transition to a More Results- Oriented and Accountable Federal
Government
Strategic Objectives
Analyzing the federal government's long- term and near- term fiscal
position, outlook, and options Strengthening approaches for financing the
government and determining accountability for the use of taxpayer dollars
Facilitating governmentwide management and institutional reforms needed to
build and sustain high- performing organizations and more effective
government Recommending economy, efficiency, and effectiveness improvements
in federal agency programs
Congressonal Testimonies
Among the issues we testified on:
Budget issues Computer security District of Columbia reforms Electronic
government Federal management
challenges Financial management reform Government facility security
Government in the 21st
century Government program
oversight GPRA congressional oversight Human capital Managing in the new
millennium
Money laundering Security breaches at federal
agencies U. S. government financial
statement audit Y2K leadership and
partnership
Selected Accomplishments
Improving SBA's Disaster Loan Program Estimates
In reviewing information the Small Business Administration developed and
used to prepare its financial statements for fiscal years 1997 and 1998, GAO
identified errors in the method SBA used to estimate the cost of the
Disaster Loan Program. In response, SBA developed a new approach to estimate
its program's costs using actual historical data, which decreased the
estimated cost of the loan program. During fiscal years 1999 and 2000, about
$609 million in benefits resulted.
Informing Congressional Deliberations on Tax Policy
The nation's evolving economy and the size and complexity of the current IRS
Code raise policy issues for the Congress. For example, the rapid
development of electronic commerce has fueled debate about whether online
transactions should be taxed. During the debate over whether to modify
states' authority to require out- of- state retailers, including Internet
retailers, to collect taxes due on their sales, GAO provided the Congress
with a unique perspective on the potential revenue losses to state and local
governments. In addition, our prior work on better targeting the Earned
Income Credit continued to generate substantial savings of over $600
million.
Implementing the Government Performance and Results Act
GAO assisted the Congress and executive branch agencies with the difficult
cultural changes needed to create high- performing agencies. As part of this
work, we assessed agencies' efforts under GPRA and made specific
recommendations on how the Congress and the executive branch could work
together to ensure that results- oriented processes are useful to and used
by decisionmakers. We also worked with the Congress to ensure that agencies
resolve management problems that undercut or undermine programs. Our work
for the Senate on the key attributes of high- performing organizations is
being used as a basis for oversight and decision- making.
20
Maximize the Value of GAO by Being a Model Organization for the Federal
Government
Strategic Objectives
Cultivate and foster effective congressional and agency relations Implement
a model strategic and annual planning and reporting process Align human
capital policies and practices to support GAO's mission Develop efficient
and responsive business processes Build an integrated and reliable
information technology infrastructure
Selected Accomplishments
Managing Strategically With Accountability
GAO developed its first strategic plan for the 21st century, based on input
from the Congress and supplemented by GAO's expertise and other outreach
efforts. We subsequently developed our performance plan for fiscal year 2001
to directly link our strategic goals with what managers and staff do day to
day. Also in fiscal year 2000, GAO issued its first accountability report to
the Congress, documenting our performance and accountability during fiscal
year 1999.
Improving Service to the Congress
In fiscal year 2000, GAO piloted congressional protocols to guide our
interactions with the Congress and to ensure our accountability. The final
protocols have since been issued and reflect refinements made in response to
feedback from Members of the Congress and their staffs. The protocols will
allow us to better serve the Congress, improve satisfaction with our work,
and ensure equitable treatment for all congressional requesters.
Managing Human Capital
Because of our work with key congressional committees during fiscal year
2000, the Congress passed the GAO Personnel Flexibility Act, which provides
the Comptroller General with the authority to better position our workforce
for the future. Separately, we completed our first human capital self-
assessment and a computerized knowledge and skills inventory, significantly
increased our recruiting and college relations efforts, and enhanced
training opportunities. We also established an employee advisory council and
an employee suggestion program.
Other actions in fiscal year 2000 included:
realigning our operations to better support the Congress, eliminate a layer
of management, reduce the number of internal “silos” and field
offices, and better align resources with our strategic plan;
continuing to improve our information technology and knowledge- sharing
applications; and
organizing a global working group of 14 nations' chief accountability
officers who met for the first time to discuss emerging issues.
21
In fiscal year 2001, our work will continue to focus on the major issues
facing the Congress, including Social Security solvency, education, economic
development, Medicare reform, national security, international affairs, and
government management reforms and computer security. Our teams are in the
field, gathering facts, providing analyses, and developing recommendations
to assist congressional decisionmakers.
21
22
Note: We reset our originally published fiscal year 2001 targets for other
benefits and testimonies. The full- length report discusses these revisions.
Another top priority in fiscal year 2001 will be working with leaders on the
Hill to help the Congress strengthen its approach to oversight, with an
emphasis on looking hard at what government does, how it does it, and the
long- term consequences of today's policy choices. GAO's 2001 Performance
and Accountability Series and High- Risk Update will serve as a solid
foundation for congressional oversight. We also have several key initiatives
in progress to improve how we serve the Congress, among them:
Annual Quantitative PerformanceTargets, Fiscal Years 2001- 2002 Type Measure
2001 2002
Outcome Financial benefits (billions)
Annual $23.0 $24.0 4- year average $21.5 $22.6
Other benefits
Annual 700 720 4- year average 658 704
Recommendations implemented
4- year implementation rate 75% 75% Intermediate Testimonies
outcome Annual 150 233 4- year average 225 219
Recommendations made
Annual 975 1,000 4- year average 1,032 1,035
Annual Management Target, Fiscal Years 2001- 2002
Management Timeliness
Annual 100% 100% 4- year average --
L O O K I N G A H E A D
23
an expanded client feedback system; protocols governing our dealings with
federal agencies; and new high- level advisory bodies to gain the expertise
of business leaders, former Cabinet officials, and other experts and to open
new avenues for sharing our own expertise with other accountability
organizations.
We are also preparing to carry out two new responsibilities assigned by the
previous Congress. We will chair a panel to review the government's A- 76
process for obtaining services through competitive sourcing. If the needed
funding is provided, we will also review the costs and benefits of major
regulations under the Truth in Regulating Act (P. L. 106- 312, Oct. 17,
2000).
To continue our efforts to support the Congress and maintain current
operations, we have requested a budget for fiscal year 2002 of about $430.3
million. This funding level will allow us to fully staff at our authorized
total level of 3,275 full- time equivalent personnel. We will increase
24 L O O K I N G A H E A D
our emphasis on areas of congressional and public interest and, internally,
will continue initiatives addressing our two major management challenges:
human capital and information technology. Our request includes $5.2 million
to carry out responsibilities created by the Truth in Regulating Act.
Dollars in Full- time Strategic goal thousands equivalent staff Goal 1
Provide timely, quality service to the Congress $100,737 965
and the federal government to address current and emerging challenges to the
well- being and financial security of the American people
Goal 2 Provide timely, quality service to the Congress 78,936 720 and the
federal government to respond to changing security threats and the
challenges of global interdependence
Goal 3 Support the transition to a more results- 112,814 976 oriented and
accountable federal government
Goal 4 Maximize the value of GAO by being a model 137,808 614 organization
for the federal government
Total $430,295 3,275
25
The Government Performance and Results Act directs agencies to articulate
not just goals, but also strategies for achieving their goals. The
strategies emphasize the need to work with other organizations on
crosscutting issues and to mitigate internal and external factors that could
impair performance. For GAO, achieving our strategic goals and objectives
rests, for the most part, on providing professional, objective, fact- based,
nonpartisan, nonideological, fair, and balanced information. We support the
Congress in a variety of ways:
25
26
evaluations of federal policies and the performance of agencies; oversight
of government operations through financial and other management audits to
determine whether public funds are spent efficiently, effectively, and in
accordance with applicable laws; investigations to assess whether illegal or
improper activities are occurring; analyses of the financing for government
activities; various engagements in which we consult proactively with
agencies, when appropriate, to help guide their efforts toward positive
results; legal opinions to determine whether agencies are in compliance with
applicable laws and regulations; policy analyses to assess needed actions
and the implications of proposed actions; and additional assistance to the
Congress in support of its oversight and decision- making responsibilities.
As part of these strategies, we are coordinating with the wider
accountability community, both domestically and internationally, and are
confronting challenges inside GAO and in the environment in which we and the
Congress operate.
S T R AT E G I E S A N D C H A L L E N G E S
27
Although GAO is unique in the scope of its activities to support the
Congress and to improve the performance and accountability of government, it
shares similar visions and values with other members of the accountability
community. To coordinate more effectively with these organizations on
crosscutting domestic and international issues, we conduct four types of
activities:
In consultation with other accountability organizations, we update
government auditing standards to address emerging issues; participate in the
development of federal accounting and financial management systems
standards; and, as required by the law, issue and update standards for
internal controls in the federal government. For example, GAO and the
President's Council on Integrity and Efficiency will soon issue a jointly
developed manual on performing federal financial statement audits.
I S S U E S Coordination to Address Crosscutting
28
We develop and promote best practices to build and sustain high- performing
organizations throughout the government. For example, federal agencies are
using an executive guide we developed to maximize the success of their chief
information officers, positions created by the Congress to promote the
efficient design and operation of all major information resources for
executive branch agencies.
We leverage our resources and services by working with accountability
organizations at every level, local to international; our sister
congressional agencies; and executive branch agencies. For example, the
Federal Aviation
Accountability Community
Organizations we work with include:
Association of Government Accountants
Chief Financial Officers Council Chief Information Officers Council
Congressional Budget Office Congressional Research Service Domestic Working
Group Executive Council on Integrity and
Efficiency Federal Accounting Standards
Advisory Board Financial Accounting Standards
Board Global Working Group Government Accounting Standards
Board Inspectors General Intergovernmental Audit Forum International Auditor
Fellowship
Program International Organization of
Supreme Audit Institutions Joint Financial Management
Improvement Program Office of Management and Budget President's Council on
Integrity and
Efficiency Private Sector Council State and Local Auditors
S T R AT E G I E S A N D C H A L L E N G E S
29
Administration (FAA) is presenting the training we developed at its request
to prepare safety inspectors to conduct effective internal audits. In
return, FAA has loaned us one of its training platforms to help our analysts
gain a fuller understanding of the air traffic control system, new
navigational systems, and other topics.
We help convene and participate in forums, boards, and councils to share
knowledge with other government audit organizations, including international
congresses and a new informal domestic working group launched by the
Comptroller General in March 2001 that includes federal inspectors general
and state and local auditors. We also coordinate with the Chief Financial
Officers Council to address crosscutting accounting, financial systems,
internal control, and financial reporting issues and with the Chief
Information Officers Council to address governmentwide information
technology issues.
30
Like any organization, GAO faces major management challenges in
accomplishing our strategic goals and objectives. With most of our resources
devoted to staff salary and benefits, the area of human capital presents a
major challenge. A significant percentage of our workforce is nearing
retirement age while marketplace, demographic, economic, and technological
changes indicate that competition for skilled workers will be greater in the
future. With our agency realigned to facilitate our work for the Congress
and new legislative authority in hand to manage our workforce more
effectively, we are pursuing several initiatives to strengthen our human
capital. For example, we are recruiting diverse, high- caliber staff with
the skills and abilities we need to achieve our strategic goals and
objectives. We will be putting into place a competencybased performance
appraisal system and using the results of our staff knowledge and skills
inventory to help us in workforce planning. We have also reestablished and
are expanding training opportunities for our staff- from the senior
executives to the new hires.
Major Management Challenges- Internal Factors
S T R AT E G I E S A N D C H A L L E N G E S T H AT C O U L D A F F E C T O
U R P E R F O R M A N C E
31
Another major management challenge is building an integrated and reliable
information technology (IT) infrastructure that supports the achievement of
our goals. We are conducting a comprehensive review to identify
opportunities to increase our efficiency, effectiveness, and productivity.
We are mapping our business processes to our IT architecture and will link
future IT investments to our business goals. We plan to continue initiatives
to increase our employees' productivity, maximize the use of technology, and
enhance the Web- based knowledge- sharing applications on the desktop. We
must also increase the security of our network.
A number of external factors could affect our ability to meet our goals and
objectives. Among them are emerging national issues, international
developments, and the resources we receive. For instance, during fiscal year
2001, both a new Congress and a new administration are beginning work. The
many new committee chairs in the House, a 50/ 50 split in the Senate, and
the extended transition in progress may affect our planned work. The
priorities set under the previous Congress may change, new
External Factors T H AT C O U L D A F F E C T O U R P E R F O R M A N C E
32
issues may emerge, and the number of requests we receive for testimony and
other work may be lower than expected.
At the international level, to protect the safety of GAO employees, we may
have to restrict the scope of work on certain issues. Moreover, because we
do not have audit authority with respect to foreign government entities, our
ability to conduct thorough analyses of some issues is affected by the level
of openness and voluntary cooperation we can obtain. In addition, while we
continue to make progress toward our strategic goals, achieving them will
depend on having sufficient budgetary resources available, particularly for
technology and process improvements that support our goal to serve as a
model agency.
Although these external factors are beyond our control, we will continue to
work closely with our congressional clients, to monitor domestic and
international events, and to maintain broad- based staff expertise so that
we can quickly adapt to meet emerging needs.
S T R AT E G I E S A N D C H A L L E N G E S
33
Condensed financial statements for GAO appear at the end of these
highlights. Our detailed statements with their accompanying notes appear in
the full- length version of this report. Our financial statements for the
fiscal year that ended September 30, 2000, were audited by an independent
auditor, Clifton Gunderson LLP. The independent auditor rendered an
unqualified opinion on GAO's financial statements and an unqualified opinion
on the effectiveness of GAO's internal controls over financial reporting and
compliance with laws and regulations. In addition, the independent auditor
found no reportable instances of noncompliance with selected provisions of
laws and regulations. In the opinion of the independent auditor, the
financial statements are presented fairly in all material respects and in
conformity with generally accepted accounting principles.
33
34
Financial Systems and Internal
GAO recognizes the importance of strong financial systems and internal
controls to ensure our accountability, integrity, and reliability. To
achieve a high level of quality, management maintains a quality control
program and seeks advice and evaluation from both internal and external
sources. Specifically, through internal and peer reviews, GAO obtains
reasonable assurances that our audit and evaluation work conforms to all
applicable professional requirements, including generally accepted
government auditing standards. Additionally, GAO's Inspector General
conducts audits and investigations, and an Audit Advisory Committee assists
the Comptroller General in overseeing the effectiveness of our financial
reporting and audit processes, internal controls, and processes to ensure
compliance with laws and regulations.
GAO is committed to fulfilling the internal control objectives of 31 U. S.
C. 3512, formerly the Federal Managers' Financial Integrity Act, and the
objectives of the Federal Financial Management Improvement Act (FFMIA) of
1996. We assessed our internal controls as of September 30,
C O N T R O L S C O N D E N S E D F I N A N C I A L S TAT E M E N T S
35
2000, and we believe we had effective controls in place as of that date. In
addition, on the basis of assessments of our financial systems, we believe
GAO has implemented and maintained financial systems that comply
substantially with the objectives of FFMIA for the fiscal year that ended
September 30, 2000.
36
Dollars in Thousands 2000 1999
Assets
Intragovernmental funds with the U. S. Treasury $55,115 $53,343 Property and
equipment, net 74,863 62, 617 Other assets 856 1,604
Total Assets $130,834 $117,564 Liabilities
Accounts payable and payroll $32,143 $31,812 Accrued annual leave 27,573
26,334 Workers' compensation and retirement 12,562 12,642 Capital leases
7,730 6,671 Deferred lease revenue 8,550
Total Liabilities 88,558 77,459 Net Position
Unexpended appropriations $23,515 $22,777 Cumulative results of operations
18,761 17,328
Total net position 42,276 40,105 Total Liabilities and Net Position $130,834
$117,564
F I N A N C I A L S TAT E M E N T S CONDENSED BALANCE SHEET As of September
30, 2000 and 1999
UNITED STATES GENERAL ACCOUNTING OFFICE
37 F I N A N C I A L S TAT E M E N T S
CONDENSED STATEMENT OF NET COST For Fiscal Years Ended September 30, 2000
and 1999
UNITED STATES GENERAL ACCOUNTING OFFICE
Dollars in Thousands 2000 1999
Net Costs by Program Area
National Defense, Security and International Relations, and Other Related
Issues $87,094 $84,942
Financial Audits, Systems, Information Management and Technology Issues
83,159 83,620
Energy, Agriculture, Environment, Housing, Transportation, and Natural
Resources Issues 75,927 73,815
Justice, Tax Policy, Financial Institutions, and General Management Issues
63,750 57,712
Education and Employment, Health Care and Income Security Issues 58,989
55,115
Legal Services 26,017 24,461 Special Investigations and Investigative
Support 6,275 6,288 Senior management and staff 3,627 4,778 Less
reimbursable services not attributable to programs (712) (456)
Net Cost of Operations $404,126 $390,275
38
Dollars in Thousands 2000 1999
Net Cost of Operations $404,126 $390,275 Financing Sources (other than
reimbursable services)
Appropriations used 376,640 365,009 Employees benefit costs imputed to GAO
19,009 19,839 Other (53) (1,176)
Total Financing Sources 395,596 383,672 Net Results of Operations (8,530)
(6,603) Net Increase (Decrease) in Unexpended Appropriations 738 (10,003)
Change in Net Position (7,792) (16,606) Net Position - Beginning of Fiscal
Year 40,105 56,711 Reinstatement of the GAO Building and Land as a Multi-
Use
Heritage Asset 9,963 Net Position - End of Fiscal Year $42,276 $40,105
F I N A N C I A L S TAT E M E N T S CONDENSED STATEMENT OF CHANGES IN NET
POSITION
For Fiscal Years Ended September 30, 2000 and 1999
UNITED STATES GENERAL ACCOUNTING OFFICE
39 F I N A N C I A L S TAT E M E N T S
CONDENSED STATEMENT OF BUDGETARY RESOURCES For Fiscal Years Ended September
30, 2000 and 1999
UNITED STATES GENERAL ACCOUNTING OFFICE
Dollars in Thousands 2000 1999
Budgetary Resources Made Available
Current year appropriations and transfers $377,686 $355,268 Unobligated
appropriations, beginning of fiscal year 4,477 2,166 Reimbursements 8,490
11,161
Total Budgetary Resources Made Available $390,653 $368,595 Status of
Budgetary Resources
Obligations incurred $386,081 $363,856 Unobligated appropriations, end of
fiscal year 4,264 4,477 Lapsed budget authority 308 262
Total Status of Budgetary Resources $390,653 $368,595 Outlays
Obligations incurred $386,081 $363,856 Less: Reimbursements (8,490) (11,161)
Obligated balance, net - beginning of fiscal year 48,866 55,632 Less:
Obligated balance, net - end of fiscal year (50,851) (48,866)
Total Outlays $375,606 $359,461
40 F I N A N C I A L S TAT E M E N T S
UNITED STATES GENERAL ACCOUNTING OFFICE
CONDENSED STATEMENT OF FINANCING For Fiscal Years Ended September 30, 2000
and 1999
Dollars in Thousands 2000 1999
Obligations and Nonbudgetary Resources
Obligations incurred $386,081 $363,856 Less: Reimbursements (8,490) (11,161)
Employee benefit costs imputed to GAO 19,009 19,839 Other (53) (1,176)
Total obligations as adjusted, and nonbudgetary resources 396,547 371,358
Resources That Do Not Fund Net Cost of Operations
Net (increase) decrease in unliquidated obligations (951) 12,314 Costs
capitalized on the balance sheet (9,204) (8,425) Expenses to be funded by
future appropriations 1,159 215
Total resources that do not fund net cost of operations (8,996) 4,104 Costs
That Do Not Require Resources
Depreciation 16,575 14,813
Net Cost of Operations $404,126 $390,275
41
*** End of document ***