U.S. General Accounting Office: The Role of GAO in Assisting
Congressional Oversight (05-JUN-02, GAO-02-816T).
The United States General Accounting Office (GAO) is an
independent, professional, nonpartisan agency in the legislative
branch that is commonly referred to as the investigative arm of
Congress. Congress created GAO in the Budget and Accounting Act
of 1921 in order assist in the discharge of its core
constitutional powers-- the power to investigate and oversee the
activities of the executive branch, the power to control the use
of federal funds, and the power to make laws. All of GAO's
efforts on behalf of Congress are guided by three core values:
(1) Accountability-- GAO helps Congress oversee federal programs
and operations to ensure accountability to the American people;
(2) Integrity-- GAO sets high standards in the conduct of its
work. GAO takes a professional, objective, fact-based,
non-partisan, nonideological, fair, and balanced approach on all
activities; and (3) Reliability-- GAO produces high quality
reports, testimonies, briefings, legal opinions, and other
products and services that are timely, accurate, useful, clear
and candid.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-02-816T
ACCNO: A03507
TITLE: U.S. General Accounting Office: The Role of GAO in
Assisting Congressional Oversight
DATE: 06/05/2002
SUBJECT: Accountability
Agency reports
Congressional oversight
Government facilities
Intergovernmental relations
GAO FraudNET
Joint Financial Management Improvement
Program
Performance and Accountability Series
1999
Performance and Accountability Series
2001
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GAO-02-816T
Testimony Statement before the Group of States Against Corruption (GRECO)
Evaluation Team
United States General Accounting Office
GAO For Release on Delivery Expected at 11: 30 a. m. EDT Wednesday, June 5,
2002 U. S. GENERAL
ACCOUNTING OFFICE The Role of GAO in Assisting Congressional Oversight
Statement of J. Christopher Mihm Director, Strategic Issues
GAO- 02- 816T
Page 1 GAO- 02- 816T
Members of the Evaluation Team of the Group of States Against Corruption:
I am pleased to appear before you today to discuss the role of the United
States General Accounting Office (GAO) in assisting the United States
Congress in conducting oversight of the executive branch. GAO?s mission is
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.
GAO is an independent, professional, nonpartisan agency in the legislative
branch that is commonly referred to as the investigative arm of the
Congress. The Congress created GAO in 1921 in the Budget and Accounting Act
in order to assist it in the discharge of its core constitutional powers-
the power to investigate and oversee the activities of the executive branch,
the power to control the use of all federal funds, and the power to make
laws. We have seen our role evolve over the decades as the Congress has
expanded our statutory authority and called on us with greater frequency for
oversight, insight, and foresight in addressing the growing complexity of
government and our society. All of GAO?s efforts on behalf of the Congress
are guided by three core values:
Accountability: We help the Congress oversee federal programs and operations
to ensure accountability to the American people. GAO?s analysts, auditors,
lawyers, economists, information technology specialists, investigators, and
other multidisciplinary professionals seek to enhance the economy,
efficiency, effectiveness, and credibility of the federal government both in
fact and in the eyes of the American people. GAO accomplishes its mission
through a variety of activities, including financial audits, program
reviews, investigations, legal support, and policy analyses.
Integrity: We set high standards for ourselves in the conduct of GAO?s work.
Our agency takes a professional, objective, fact- based, nonpartisan,
nonideological, fair, and balanced approach to all activities. Integrity is
the foundation of reputation, and the GAO approach to work ensures both.
Reliability: We at GAO want our work to be viewed by the Congress and the
American public as reliable. We produce high quality reports, testimonies,
briefings, legal opinions, and other products and services that are timely,
accurate, useful, clear, and candid.
Page 2 GAO- 02- 816T
GAO examines a broad range of federal activities and programs, publishes
thousands of reports and other documents annually, and provides a number of
other services to the Congress. We also look at national and international
trends and challenges to anticipate their implications for public policy. By
making recommendations to improve the practices and operations of government
agencies, we contribute not only to the increased effectiveness of federal
spending, but also to the enhancement of the taxpayers? trust and confidence
in their federal government. 1 In keeping with our mission and
responsibilities, we have identified four strategic goals and related
objectives that will guide our work to serve the Congress in fiscal years
2002- 2007. 2 Our four strategic goals are as follows:
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;
provide timely, quality service to the Congress and the federal government
to respond to changing security threats and the challenges of global
interdependence;
help transform the federal government?s role and how it does business to
meet 21st century challenges; and
maximize the value of GAO by being a model federal agency and a worldclass
professional services organization.
We develop and present this information in a number of ways to support the
Congress, including: 3
evaluations of federal programs, policies, operations, and performance;
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;
1 U. S. General Accounting Office, Fiscal Year 2003 Budget Request: U. S.
General Accounting Office, GAO- 02- 518T (Washington, D. C.: May 8, 2002).
The testimony and all other products referenced in this statement are
available at www. gao. gov.
2 For GAO?s current strategic plan, which is being updated to reflect the
goals shown above, see U. S. General Accounting Office, Strategic Plan 2000-
2005 (Washington, D. C.: Spring 2000). GAO?s strategic planning and
performance and accountability publications are available at www. gao. gov/
sp. html.
3 For additional information on GAO?s current products and performance, see
U. S. General Accounting Office, Performance and Accountability Highlights
(Washington, D. C.: Spring 2002).
Page 3 GAO- 02- 816T
investigations to assess whether illegal or improper activities are
occurring;
analyses of the financing for government activities;
constructive engagements in which GAO works proactively with agencies,
when appropriate, to help guide their efforts toward achieving positive
results;
legal opinions to determine whether agencies are in compliance with
applicable laws and regulations;
policy analyses to assess needed actions, develop options, and note the
implications of possible actions; and
additional assistance to the Congress in support of its oversight,
appropriations, legislative, and other responsibilities.
The GAO documents that are referenced in the footnotes throughout my
statement provide details on the full scope of our responsibilities,
activities, and accomplishments. Today, I will highlight five specific ways
that we support the Congress and seek to meet our strategic goals that are
most relevant to today?s discussion.
Each year, we issue well over 1, 000 audit and evaluation products to assist
the Congress in its decision making and oversight responsibilities. As one
indicator of the degree to which the Congress relies on us for information
and analysis, GAO officials were called to testify 151 times before
committees of the Congress in fiscal year 2001. Our audit and evaluation
products issued in fiscal year 2001 contained over 1,560 new recommendations
targeting improvements in the economy, efficiency, and effectiveness of
federal operations and programs that could yield significant financial and
other benefits in the future. History tells us that many of these
recommendations will contribute to important improvements. At the end of
fiscal year 2001, 79 percent of the recommendations we made 4 years ago had
been implemented. We use a 4- year interval because our historical data show
that agencies often need this length of time to complete action on our
recommendations.
Actions on the recommendations in our products have a demonstrable effect on
the workings of the federal government. During fiscal year 2001, we recorded
hundreds of accomplishments providing financial and other benefits that were
achieved based on actions taken by the Congress and federal agencies, and we
made numerous other contributions that provided information or
recommendations aiding congressional decision making or informing the public
debate to a significant extent. For example, our findings and
recommendations to improve government Specific
Recommendations for Improvements and Cost Savings
Page 4 GAO- 02- 816T
operations and reduce costs contributed to legislative and executive actions
that yielded over $26.4 billion in measurable financial benefits. We achieve
financial benefits when our findings and recommendations are used to make
government services more efficient, improve the budgeting and spending of
tax dollars, or strengthen the management of federal resources. Not all
actions on our findings and recommendations produce measurable financial
benefits. We recorded 799 actions that the Congress or executive agencies
had taken based on our recommendations to improve the government?s
accountability, operations, or services. The actions reported for fiscal
year 2001 include actions to combat terrorism, strengthen public safety and
consumer protection, improve computer security controls, and establish more
effective and efficient government operations.
In 1990, we began an effort to identify for the Congress those federal
programs, functions, and operations that are most at risk for waste, fraud,
abuse, and mismanagement. Every 2 years since 1993, with the beginning of
each new Congress, we have published a summary assessment of those high-
risk programs, functions, and operations. In 1999, we added the Performance
and Accountability Series to identify the major performance and management
issues confronting the primary executive branch agencies. 4 In our January
2001 Performance and Accountability Series and High- Risk Update, we
identified 97 major management challenges and program risks at 21 federal
agencies as well as 22 high- risk areas and the actions needed to address
these serious problems. 5 Figure 1 shows the list, as of May 2002, of high-
risk issues including the Postal Service?s transformational efforts and
long- term outlook, which we added to the high- risk list in April 2001.
4 For information on our criteria for identifying high- risk and major
performance and management issues, see U. S. General Accounting Office,
Determining Performance and Accountability Challenges and High Risks, GAO-
01- 159SP (Washington, D. C.: Nov. 2000).
5 U. S. General Accounting Office, 2001Performance and Accountability
Series,
GAO- 01- 242 through 262 (Washington, D. C.: Jan. 2001); U. S. General
Accounting Office,
High- Risk Series: An Update, GAO- 01- 263 (Washington, D. C.: Jan. 2001);
and U. S. General Accounting Office, Major Management Challenges and Program
Risks: A Governmentwide Perspective, GAO- 01- 241 (Washington, D. C.: Jan.
2001). Performance and
Accountability Series and High- Risk Update
Page 5 GAO- 02- 816T
Figure 1: GAO?s High- Risk List as of May 2002 High- risk areas
Year designated high risk Addressing Governmentwide High- Risk Areas
Strategic Human Capital Management 2001 Information Security Weaknesses 1997
Ensuring Major Technology Investments Improve Services
FAA Air Traffic Control Modernization 1995 IRS Tax Systems Modernization
1995 DOD Systems Modernization Efforts 1995
Providing Basic Financial Accountability
DOD Financial Management 1995 Forest Service Financial Management 1999 FAA
Financial Management 1999 IRS Financial Management 1995
Reducing Inordinate Program Management Risks
Medicare 1990 Supplemental Security Income 1997 Earned Income Credit
Noncompliance 1995 Collection of Unpaid Taxes 1990 DOD Infrastructure
Management 1997 DOD Inventory Management 1990 U. S. Postal Service Long-
Term Outlook and Transformation 2001 HUD Single- Family Mortgage Insurance
and Rental Housing Assistance Programs 1994 Student Financial Aid Programs
1990 Asset Forfeiture Programs 1990
Managing Large Procurement Operations More Efficiently
DOD Weapon Systems Acquisition 1990 DOD Contract Management 1992 Department
of Energy Contract Management 1990 NASA Contract Management 1990
Source: GAO.
Congressional leaders, who have historically referred extensively to these
series in framing oversight hearing agendas, have strongly urged the
administration and individual agencies to develop specific performance goals
to address these pervasive problems. In addition, the President?s recently
issued management agenda for reforming the federal government mirrors many
of the issues that GAO has identified and reported on in these series,
including a governmentwide initiative to focus on strategic management of
human capital. We will be issuing a new Performance and
Page 6 GAO- 02- 816T
Accountability Series and High- Risk Update at the start of the new Congress
this coming January.
The Government Management Reform Act of 1994 requires (1) GAO to annually
audit the federal government?s consolidated financial statements and (2) the
inspectors general of the 24 major federal agencies to annually audit the
agencywide financial statements prepared by those agencies. Consistent with
our approach on a full range of management and program issues, our work on
the consolidated audit is done in coordination and cooperation with the
inspectors general. The Comptroller General reported on March 29, 2002, on
the U. S. government?s consolidated financial statements for fiscal years
2001 and 2000. As in the previous 4 fiscal years, we were unable to express
an opinion on the consolidated financial statements because of certain
material weaknesses in internal control and accounting and reporting issues.
These conditions prevented us from being able to provide the Congress and
the American citizens an opinion as to whether the consolidated financial
statements are fairly stated in conformity with U. S. generally accepted
accounting principles.
While significant and important progress is being made in addressing the
impediments to an opinion on the U. S. government?s consolidated financial
statements, fundamental problems continue to (1) hamper the government?s
ability to accurately report a significant portion of its assets,
liabilities, and costs, (2) affect the government?s ability to accurately
measure the full costs and financial performance of certain programs and
effectively manage related operations, and (3) significantly impair the
government?s ability to adequately safeguard certain significant assets and
properly record various transactions.
In August 2001, the principals of the Joint Financial Management Improvement
Program (JFMIP)- Secretary of the Treasury O?Neill, Office of Management and
Budget Director Daniels, Office of Personnel Management Director James, and
Comptroller General Walker, head of GAO and chair of the group- began a
series of periodic meetings that have resulted in unprecedented substantive
deliberations and agreements focused on key financial management reforms
issues such as better defining measures for financial management success.
These measures include being able to routinely provide timely, accurate, and
useful financial information and having no material internal control
weaknesses or material noncompliance with applicable laws, regulations, and
requirements. In addition, the JFMIP principals have agreed to (1)
significantly accelerate financial statement reporting so that the Audit of
the
Consolidated Financial Statements of the United States Government
Page 7 GAO- 02- 816T
government?s financial statements are more timely and (2) discourage costly
efforts designed to obtain unqualified opinions on financial statements
without addressing underlying systems challenges. For fiscal year 2004,
audited agency financial statements are to be issued no later than November
15, with the U. S. government?s audited consolidated financial statement
becoming due by December 15. 6
GAO also issues a wide range of standards, guidance, and management tools
intended to assist the Congress and agencies in putting in place the
structures, processes, and procedures needed to help avoid problems before
they occur or develop into full- blown crises. For example, the Federal
Managers? Financial Integrity Act of 1982 (FMFIA) requires GAO to issue
standards for internal control in government. 7 Internal control is an
integral part of an organization?s management that provides reasonable
assurance that the following objectives are being achieved: effectiveness
and efficiency of operations, reliability of financial reporting, and
compliance with applicable laws and regulations. As such, the internal
control standards that GAO issues provide an overall framework for
establishing and maintaining internal control, and identifying and
addressing major performance and management challenges and areas at greatest
risk to waste, fraud, abuse, and mismanagement. A positive control
environment is the foundation for the standards. Management and employees
should establish and maintain an environment throughout the organization
that sets a positive and supportive attitude toward internal control and
conscientious management. One factor is the integrity and ethical values
maintained and demonstrated by management and staff. Agency management plays
a key role in providing leadership in this area, especially setting and
maintaining the organization?s ethical tone, providing guidance for proper
behavior, removing temptations for unethical behavior, and providing
discipline when appropriate. In addition to setting standards for internal
control, GAO participates in the setting of the federal government?s
accounting standards and is responsible for
6 U. S. General Accounting Office, U. S. Government Financial Statements: FY
2001 Results Highlight the Continuing Need to Accelerate Federal Financial
Management Reform,
GAO- 02- 599T (Washington, D. C.: Apr. 9, 2002). 7 U. S. General Accounting
Office, Standards for Internal Control in the Federal Government, GAO/ AIMD-
00- 21. 3. 1 (Washington, D. C.: Nov. 1999). Standards Setting,
Guidance, and Management Tools
Page 8 GAO- 02- 816T
setting the generally accepted government auditing standards for auditors of
federal programs and assistance. 8
GAO also assists congressional and executive branch decision makers by
issuing guides and tools for effective public management. For example, in
addition to setting standards for internal control, we have issued detailed
guidance and management tools to assist agencies in maintaining or
implementing effective internal control and, when needed, to help determine
what, where, and how improvements can be made. 9 We have also issued
guidance for agencies to address the critical governmentwide high- risk
challenge of computer security. 10 This work draws on lessons from leading
public and private organizations to show the Congress and federal agencies
the steps that can be taken to protect the integrity, confidentiality, and
availability of the government?s data and the systems it relies on.
Similarly, we have published guidance for the Congress and managers on
dealing with the other governmentwide high- risk issue- human capital. 11
These guides on human capital are assisting managers in adopting a more
strategic approach to the use of their organization?s most important asset-
its people. Overall, GAO has undertaken a major effort to identify ways
agencies can effectively implement the statutory framework
8 See, for example, U. S. General Accounting Office, Government Auditing
Standards,
GAO/ OCG- 94- 4 (Washington, D. C.: June 1994). 9 U. S. General Accounting
Office, Internal Control Management and Evaluation Tool,
GAO- 01- 1008G (Washington, D. C.: Aug. 2001). The tool also provides
citations of related documents we have issued to assist agencies in
improving or maintaining effective operations. For an example of GAO
guidance to address a specific internal control issue, see U. S. General
Accounting Office, Strategies to Manage Improper Payments: Learning from
Public and Private Sector Organizations, GAO- 02- 69G (Washington, D. C.:
Oct. 2001).
10 See, for example, U. S. General Accounting Office, Executive Guide:
Information Security Management, Learning From Leading Organizations, GAO/
AIMD- 98- 68 (Washington, D. C.: May 1998).
11 U. S. General Accounting Office, A Model of Strategic Human Capital
Management,
GAO- 02- 373SP (Washington, D. C.: Mar. 15, 2002) and U. S. General
Accounting Office,
Human Capital: A Self- Assessment Checklist for Agency Leaders, GAO/ OCG-
00- 14G (Washington, D. C.: Sept. 2000).
Page 9 GAO- 02- 816T
that the Congress has put in place to create a more results- oriented and
accountable federal government. 12
GAO has an investigations unit that focuses on investigating and exposing
potential criminal misconduct and serious wrongdoing in programs that
receive federal funds. The primary mission of this unit is to conduct
investigations of alleged violations of federal criminal law and serious
wrongdoing and to review law enforcement programs and operations, as
requested by the Congress and the Comptroller General. Through
investigations, our special investigations team develops examples of
misconduct and wrongdoing that illustrate program weaknesses, demonstrate
potential for abuse, and provide supporting evidence for GAO recommendations
and congressional action. Investigators often work directly with other GAO
teams on collaborative efforts that enhance the agency?s overall ability to
identify and report on wrongdoing. Key issues in the investigations area
are:
fraudulent activity and regulatory noncompliance in federal procurement/
contract administration systems;
unethical conduct by federal employees and government officials, as well
as organizational misconduct;
fraud and misconduct in grant, loan, and entitlement programs;
adequacy of federal agencies? security systems, controls, and property as
tested through proactive special operations; and
integrity of federal law enforcement and investigative programs. 12 For
example, for results- oriented management, see U. S. General Accounting
Office,
Agencies? Annual Performance Plans Under the Results Act: An Assessment
Guide to Facilitate Congressional Decisionmaking, GAO/ GGD/ AIMD- 10. 1. 18
(Washington, D. C.: Feb. 1998); U. S. General Accounting Office, Agencies?
Strategic Plans Under GPRA: Key Questions to Facilitate Congressional
Review, GAO/ GGD- 10. 1. 16 (Washington, D. C.: May 1997); and U. S. General
Accounting Office, Executive Guide: Effectively Implementing the Government
Performance and Results Act, GAO/ GGD- 96- 118 (Washington, D. C.: June
1996). For financial management, see U. S. General Accounting Office, The
Chief Financial Officers Act: A Mandate for Federal Financial Management
Reform, GAO/ AIMD/ 12. 19. 4 (Washington, D. C.: Sept. 1991) and U. S.
General Accounting Office, Core Financial System Requirements: Checklist for
Reviewing Systems Under the Federal Management Improvement Act, GAO/ AIMD-
00- 21. 2. 2 (Washington, D. C.: Feb. 2000). For information technology, see
U. S. General Accounting Office, Executive Guide: Maximizing the Success of
Chief Information Officers: Learning From Leading Organizations,
GAO- 01- 376G (Washington, D. C.: Feb. 2001) and U. S. General Accounting
Office, Executive Guide: Measuring Performance and Demonstrating Results of
Information Technology Investments, GAO/ AIMD- 98- 89 (Washington, D. C.:
Mar. 1998). Special Investigations
Page 10 GAO- 02- 816T
One example of these collaborations between our investigations team and
audit and evaluations teams is the use of forensic audit techniques to
identify instances of fraud, waste, and abuse at various agencies. This
approach combines financial auditor and special investigator skills with
data mining and file comparison techniques to identify unusual trends and
inconsistencies in agency records that may indicate fraudulent or improper
activity. For example, by comparing a list of individuals who received
government grants and loans to a list of people whose social security
numbers indicate they have died, we identified people improperly receiving
benefits. Data mining techniques have also been used to identify unusual
government purchase card activity that, upon further investigation, were
determined to be abusive and improper purchases. 13
Overall, in 2001 GAO referred 61 matters to the Department of Justice and
other law enforcement and regulatory agencies for investigation, and its
special investigations accounted for $1. 8 billion in financial benefits.
GAO also maintains a system for receiving reports from the public on waste,
fraud, and abuse in federally funded programs. Known as the GAO FraudNET,
the system received more than 800 cases in 2001. Reports of alleged
mismanagement and wrongdoing covered topics as varied as misappropriation of
funds, security violations, and contractor fraud. Most of the matters
reported to GAO were referred to inspectors general of the executive branch
for further action or information. Other matters that indicate broader
problems or systemic issues of congressional interest are referred to GAO?s
investigations unit or other GAO teams.
In summary, as a congressional ?watchdog,? GAO has broad responsibilities
for assisting the Congress in its oversight of executive branch activities.
We are pleased and honored that for over 80 years, the
13 For recent examples of work on these topics, see U. S. General Accounting
Office,
Education Financial Management: Weak Internal Controls Led to Instances of
Fraud and Other Improper Payments, GAO- 02- 406 (Washington, D. C.: Mar. 28,
2002); U. S. General Accounting Office, Financial Management: Internal
Control Weaknesses Leave Department of Education Vulnerable to Improper
Payments, GAO- 01- 585T (Washington, D. C.: Apr. 3, 2001); U. S. General
Accounting Office, Financial Management: Poor Internal Control Exposes
Department of Education to Improper Payments, GAO- 01- 997T (Washington, D.
C: July 24, 2001); U. S. General Accounting Office, Financial Management:
Poor Internal Controls Expose Department of Education to Improper Payments,
GAO- 01- 1151 (Washington, D. C.: Sept. 28, 2001); and U. S. General
Accounting Office,
Purchase Cards: Control Weaknesses Leave Two Navy Units Vulnerable to Fraud
and Abuse, GAO- 02- 32 (Washington, D. C.: Nov. 30, 2001).
Page 11 GAO- 02- 816T
Congress has relied on GAO for help in meeting its constitutional
responsibilities and we look forward to continuing to work with and support
the Congress in its efforts to improve the performance and accountability of
the federal government for the benefit of the American people.
This concludes my statement. I would be pleased to respond to any questions
that the Evaluation Team may have.
For further information on this statement, please contact J. Christopher
Mihm, Director, Strategic Issues on (202) 512- 6806 or at mihmj@ gao. gov.
Individuals making key contributions to this statement included Dan Blair,
Rebecka Derr, Sandy McGraw, Dottie Self, and Lisa Shames. Contact and
Acknowledgments
*** End of document. ***