    GAO Performance and Accountability Highlights: Fiscal Year 2005
    (01-JAN-06, GAO-06-2SP).

    This report presents the highlights of GAO's fiscal year 2005
    Performance and Accountability report. In short, fiscal year 2005
    was an exceptional year for GAO. For example, we received a clean
    opinion from independent auditors on our financial statements and
    met or exceeded targets for 10 of 14 key performance measures,
    while setting or matching all-time records for 3 measures. We
    documented $39.6 billion in financial benefits--a return of $83
    for every dollar we spent--and over 1,400 nonfinancial
    benefits--a record for us. The work we did to produce these
    benefits helped to shape important legislation, such as the
    Intelligence Reform and Terrorism Prevention Act of 2004 (Pub. L.
    No. 108-458), and increase the efficiency of various federal
    programs, thus improving the lives of millions of Americans. In
    addition, the rate at which our recommendations were implemented
    by the Congress or federal agencies rose to 85 percent in fiscal
    year 2005, and the percentage of our fiscal year 2005 products
    containing recommendations increased to 63 percent--exceeding the
    targets we set for both of these measures this year. In addition,
    in the first year that we are reporting our progress on our 8 new
    measures related to our people, we met or exceeded the targets
    for 6 of them related to retention and employee satisfaction. We
    came close to, but did not achieve, the targeted performance
    related to our new hire rate--the ratio of the number of people
    hired to the number of people we planned to hire--and the
    percentage of people that accepted our employment offers.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-06-2SP
        ACCNO:   A45237
      TITLE:     GAO Performance and Accountability Highlights: Fiscal
    Year 2005
         DATE:   01/01/2006
      SUBJECT:   Accountability
    	     Agency missions
    	     Cost control
    	     Financial management
    	     Internal controls
    	     Performance measures
    	     Productivity in government
    	     Quality control
    	     Strategic planning

    ******************************************************************
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    ** figure captions are reproduced.  Tables are included, but    **
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    ** Please see the PDF (Portable Document Format) file, when     **
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    GAO-06-2SP

         * Front Cover
         * Inside Front Cover
         * From the Comptroller General
         * About GAO
              * GAO's Strategic Plan Framework
              * Examples of How GAO Assisted the Nation
         * GAO's Performance
              * Results Measures
                   * Financial and Other Benefits
                        * Financial Benefits
                        * Other Benefits
                   * Past Recommendations Implemented
                   * New Products Containing Recommendations
              * Client Measures
                   * Testimonies
                        * Selected Testimony Issues
                   * Timeliness
              * People Measures
              * Goal 1 Results
              * Goal 2 Results
              * Goal 3 Results
              * Goal 4 Results
         * 21st Century Challenges
         * GAO's High-Risk Program
         * Strategies for Achieving Our Goals
              * Strategic and Annual Work Planning
              * Collaborating with Others
              * Using Our Internal Experts
         * Addressing Management Challenges That Could Affect Our Performance
              * The Human Capital Challenge
              * The Information Security Challenge
              * The Physical Security Challenge
         * Mitigating External Factors That Could Affect Our Performance
         * Managing Our Resources
              * Resources Used to Achieve Our Fiscal Year 2005 Performance Goals
                   * Audit Advisory Committee
              * Planned Resources to Achieve Our Fiscal Year 2006 Performance
                Goals
         * From the Chief Financial Officer
         * Financial Management Accountability
              * Financial Systems and Internal Controls
              * Limitation on Financial Statements
              * Purpose of Each Financial Statement
         * Independent Auditor's Report
         * Financial Statements
         * From the Inspector General
         * Image Sources
         * Providing Comments on This Report
         * Obtaining Copies of GAO Documents
         * Inside Back Cover
         * Back Cover

    Source: See Image Sources.

    January 2006

    By nearly every measure, GAO has once again produced excellent results in
    serving the Congress and the American people, and this summary performance
    and accountability report highlights our results for fiscal year 2005. Our
    business involves helping to improve performance and ensure accountability
    in connection with a broad range of federal programs, policies, and
    activities. Simply put, we try to help improve the way the federal
    government works for the benefit of all of our nation's citizens both now
    and in the future. To determine our success, we set performance targets
    and follow financial management and quality control practices that help
    ensure that we are making the best use of the federal funds invested in
    us. I am very pleased to report that in addition to strong financial and
    nonfinancial external performance results, GAO received clean opinions
    from external, independent auditors on our financial statements and on our
    performance audit and financial audit quality assurance systems. We also
    identified a broad range of issues that could seriously affect the
    stability and prosperity of the nation in the years to come. The following
    paragraphs highlight our performance in each of these areas.

    With respect to our performance measures, I am especially pleased to
    report that we met or exceeded targets for 10 of our 14 performance
    measures, while setting or matching all-time records for 3 measures. We
    documented $39.6 billion in financial benefits-a return of $83 for every
    dollar we spent-and over 1,400 nonfinancial benefits-a record for us. The
    work we did to produce these benefits helped to shape important
    legislation, such as the Intelligence Reform and Terrorism Prevention Act
    of 2004 (Pub. L. No. 108-458), and increase the efficiency of various
    federal programs, thus improving the lives of millions of Americans. In
    addition, the rate at which our recommendations were implemented by the
    Congress or federal agencies rose to 85 percent in fiscal year 2005, and
    the percentage of our fiscal year 2005 products containing recommendations
    increased to 63 percent-exceeding the targets we set for both of these
    measures this year. Our performance in these two areas set an all-time
    record for recommendations implemented and matched the record we set in
    fiscal year 2004 for the percentage of new products with recommendations.
    We delivered 179 testimonies, slightly missing our target of 185. We also
    missed by just 1 percent our target of providing 98 percent of our
    products to the Congress when promised. In addition, in the first year
    that we are reporting our progress on our 8 new measures related to our
    people, we met or exceeded the targets for 6 of them related to retention
    and employee satisfaction. We came close to, but did not achieve, the
    targeted performance related to our new hire rate-the ratio of the number
    of people hired to the number of people we planned to hire-and the
    percentage of people that accepted our employment offers.

    As in past years, during fiscal year 2005, our work covered a number of
    major topics of concern to the nation and, in some cases, the world. For
    example, we reported on the nation's long-term fiscal challenges, the
    financial condition of the airline industry, spending and reconstruction
    activities related to Iraq and Afghanistan, and strengthening the visa
    process as an antiterrorism tool. We also examined the Department of
    Defense's transformation challenges, base realignment and closure issues,
    increasing the strategic focus of federal acquisitions, protecting against
    identity theft, oversight of electricity markets, zero down payment
    mortgages, and immigration enforcement. We testified many times before the
    Congress, contributing to the public debate on a variety of topics that
    included issues relating to Social Security, national security, homeland
    security, health care, tax policy and administration, and government
    transformation efforts. A list of topics on which we testified appears on
    page 28 of this summary report.

    The American people benefited this year as federal agencies took a wide
    range of actions based on our analyses and recommendations, while our
    efforts also heightened the visibility of issues needing attention. We
    feel fortunate and honored that in a significant majority of cases, our
    clients and federal agencies listen to what GAO has to say and act on our
    recommendations. Furthermore, virtually all of our reports are pub lished
    and available on our Web site (http://www.gao.gov ), keeping us
    accountable to the American people.

    Once again we have received a clean audit opinion on our financial
    statements, and on page 62 of this summary report we have included the
    independent auditor's condensed report stating that we presented our
    financial statements fairly and maintained effective internal control
    processes. The auditors also reported no instances of noncompliance with
    applicable laws and regulations. Additionally, I am most pleased to report
    the results of the first-ever review of our quality assurance system used
    to conduct our performance audits, which involves work performed in
    virtually all parts of GAO. This review- which was performed by an
    international team of auditors from seven countries led by the Office of
    the Auditor General of Canada-assessed whether our quality assurance
    policies and procedures were suitably designed and operating effectively;
    the review resulted in a clean opinion. Their April 2005 audit report also
    cited a number of exemplary practices at GAO, such as our strategic
    planning process, proactive working relationship with the Congress,
    quality assurance framework, audit risk assessment process, and high-risk
    list. The international team also offered us some suggestions for
    improvement, including streamlining certain requirements for low-risk
    assignments, a suggestion that we are already working to implement.
    Similarly, as we have in the past, we received a clean opinion resulting
    from a separate audit of our quality assurance system for our financial
    audits. The auditors concluded that our system of quality control for the
    accounting and auditing practice was designed to meet applicable quality
    control standards and was complied with for the period reviewed, providing
    us reasonable assurance of conforming to applicable professional
    standards.

    In fiscal year 2005, we issued two products that will assist the Congress
    as it addresses a broad range of future challenges. Our report entitled
    21st Century Challenges: Reexamining the Base of the Federal Government
    provides a series of illustrative questions related to 12 areas of federal
    activity as well as our perspective on various strategies and approaches
    that should be considered as a possible means to address the many
    challenges and opportunities that we face in the 21st century. Drawing on
    our institutional knowledge and extensive program evaluation and
    performance assessment work for the Congress, we presented over 200
    specific 21st century questions illustrating the types of hard choices our
    nation needs to face as it reexamines what the federal government should
    do, how it should do it, and how it should be financed. (See p. 33 for
    more information about our 21st century challenges report.) We also issued
    our High-Risk Series: An Update, which identifies federal areas and
    programs at risk of fraud, waste, abuse, and mismanagement and those in
    need of broad-based transformations. The issues affecting many of these
    areas and programs may take years to address, and the report will serve as
    a useful guide for the Congress's future programmatic deliberations and
    oversight activities. The current administration has looked to our
    high-risk program in shaping governmentwide initiatives such as the
    President's Management Agenda, which has at its base many of the areas we
    had previously identified as high risk. The Office of Management and
    Budget, in consultation with us, is currently working to ensure that
    agencies develop detailed action plans to address high-risk areas, with
    the ultimate objective, over time, of seeing these items removed from our
    high-risk list.

    This year we also continued to take steps internally to be a model federal
    agency and a world-class professional services organization. These steps
    helped us to address our three major management challenges-human capital,
    physical security, and information security. Through the GAO Human Capital
    Reform Act of 2004, the Congress granted GAO several additional human
    capital flexibilities that will allow us, among other things, to move to
    an even more performance-oriented and market-based compensation system.
    Our most valuable asset continues to be our people, and the flexibilities
    granted in this act will help us to continue to modernize our
    peo-ple-related policies and strategies, which, in turn, will help to
    ensure that we are well equipped to serve the Congress and the American
    people in the years to come. As a result, we are continuing to take a
    range of actions designed to modernize our human capital policies and
    practices. In fiscal year 2005, we adopted a broad pay band approach and a
    more perfor-mance-oriented pay system for our administrative staff. We
    also made considerable progress in moving to a more mar-ket-based and
    skills-, knowledge-, and performance-oriented classification and pay
    systems for all of our employees.

    In today's world, we should partner for progress with other key players.
    We believe strongly in doing so in order to maximize our value and
    mitigate risk within current and expected resource levels. Fiscal year
    2005 included several major milestones in our outreach efforts. Most
    notably, we led the adoption of the first-ever strategic plans for the
    International Organizational of Supreme Audit Institutions and the
    National Intergovernmental Audit Forum.

    In short, fiscal year 2005 was a very successful year for us. Our complete
    performance and accountability report, which is available on our Web site
    at http://www.gao.gov , describes our many contributions toward improving
    the government. I am confident that the performance data and financial
    information in that report and this summary are complete and reliable. I
    believe that GAO remained true to its core values of accountability,
    integrity, and reliability throughout the year and that

     those who read this report will agree that the taxpayers received an excellent
                           return on their investment in GAO.

    David M. Walker Comptroller General of the United States

    Source: GAO.

    The U.S. Government Accountability Office (GAO) is an independent,
    nonpartisan, professional services agency in the legislative branch of the
    federal government. Commonly known as the "audit and investigative arm of
    the Congress" or the "congressional watchdog," we examine how taxpayer
    dollars are spent and advise lawmakers and agency heads on ways to make
    government work better.

    Our mission is to support the Congress in meeting its constitutional
    responsibilities and to help improve the performance and ensure the
    accountability of the federal government for the benefit of the American
    people. We accomplish our mission by providing reliable information and
    informed analysis to the Congress, to federal agencies, and to the public;
    and we recommend improvements, when appropriate, on a wide variety of
    issues. Three core values-account-ability, integrity, and reliability-form
    the basis for all of our work, regardless of its origin. These are
    described on the inside front cover of this summary.

    The majority of our work is undertaken in response to congressional
    mandates or requests. However, as authorized by our enabling legislation,
    we also independently allocate a lim-

                                     GAO's History

    The Budget and Accounting Act of 1921 required the President to issue an
    annual federal budget and established GAO as an independent agency to
    investigate how federal dollars are spent. In the early years, we mainly
    audited vouchers, but after World War II we started to perform more
    comprehensive financial audits that examined the economy and efficiency of
    government operations. By the 1960s, GAO had begun to perform the type of
    work we are noted for today-program evaluation-which examines whether
    government programs are meeting their objectives.

    ited portion of our resources for work performed under the Comptroller
    Gen-eral's authority. To perform both types of efforts, we maintain a
    workforce of highly trained professionals with degrees in many academic
    disciplines, including accounting, law, engineering, public and business
    administration, economics, and the social and physical sciences. About
    three-quarters of our approximately 3,200 employees are based at our
    headquarters in Washington, D.C.; the rest are deployed in 11 field
    offices across the country. Almost all of our staff are organized into 13
    teams that support our three external strategic goals. Our other staff
    support our fourth strategic goal (an internal goal) and work in various
    staff offices, including General Counsel and Congressional Relations.

    To ensure that we are well positioned to meet the Congress's current and
    future needs, we update our 6-year strategic plan every 3 years,
    consulting extensively during the update with our clients on Capitol Hill
    and with other experts (see our complete strategic plan on the Web at
    www.gao.gov/sp/d04534sp.pdf ). Our strategic plan is based on a hierarchy
    of four elements-strategic goals, strategic objectives, performance goals,
    and key efforts. We use the strategic plan as a blueprint to lay out the
    areas in which we expect to conduct research, audits, analyses, and
    evaluations to meet our clients' needs. This then allows us to allocate
    the resources we receive from the Congress accordingly. Our strategic plan
    framework is shown on page 9 .

    Our work is primarily aligned under the first three strategic goals, which
    span issues that are both domestic and international, affect the lives of
    all Americans, and influence the extent to which the federal government
    serves the nation's current and future interests. The fourth goal is our
    only internal one and is aimed at maximizing our productivity through such
    efforts as investing steadily in information technology to support our
    work; ensuring the safety and security of our people, information, and
    assets; pursuing human capital transformation; and leveraging our
    knowledge and experience. On page 10 , we list by strategic goal some
    examples of the work we performed during fiscal year 2005.

    Each year, we hold ourselves accountable to the Congress and to the
    American people for our performance. As a legislative branch agency, we
    differ in some ways from executive branch agencies. We are, for instance,
    exempt from many laws applicable to the executive branch. However, we hold
    ourselves to the spirit of many of these laws, including 31 U.S.C. 3512
    (commonly referred to as the Federal Managers' Financial Integrity Act),
    the Government Performance and Results Act of 1993, and the Federal
    Financial Management Improvement Act of 1996.

    The pages that follow offer highlights of our performance and
    accountability report for fiscal year 2005. We also present condensed
    financial statements and the independent auditor's opinion on them. If you
    would like additional information, please see the full-length version of
    our performance and accountability report and other perfor-mance-related
    documents at www.gao.gov/sp.html .

                        Examples of How GAO Assisted the Nation

    GAO strategic goal Description In fiscal year 2005, GAO provided
    information that helped to...

    Provide timely, quality service to the Congressand the federal government
    to address current and emerging challenges to the well-being and financial
    security of the American people.

         + Improve the transition from active duty to civilian status for
           veteranswith serious war-related injuries
         + Address long-term health care financing pressures on state and local
           government budgets
         + Identify challenges with transferring the Medicare appeals processfrom
           the Social Security Administration and the Department of Health and
           Human Services
         + Improve patient safety at Department of Veterans Affairs hospitals
         + Improve the security of Social Security numbers
         + Address the challenges of pension reform
         + Strengthen the security screening process for passengersand checked
           baggage at the nation'sairports
         + Improve the oversight of Federal Housing Administration single-family
           and multifamily lenders
         + Improve the oversight of electricity marketsby the Federal Energy
           Regulatory Commission
         + Identify challengesassociated with the Department of Energy'snuclear
           facility designs
         + Monitor the growth in the digital television market
         + Analyze issues contributing to the declining financial condition of
           the airline industry

    Provide timely, quality service to the Congressand the federal government
    to respond to changing security threatsand the challenges of global
    interdependence.

         + Improve the management of funds for the Global War on Terrorism
         + Increase the security of cargo containers to prevent terrorist
           activity
         + Alert the Congress to issuesaffecting the Department of Defense'smajor
           weapon systems
         + Analyze funding options for a new federal foreign assistance
           program-the Millennium Challenge Account
         + Promote government efforts to address threats to the security of the
           nation's information systems
         + Strengthen the visa processasan antiterrorism tool
         + Improve management of the U.S. Coast Guard's Deepwater program
         + Shape the debate on improving military pay and benefits
         + Strengthen the U.S.strategic export control system
         + Identify improvements needed to secure the telecommunicationsand
           information systemsused by U.S. financial markets

    Help transform the federal government's role and how it doesbusiness to
    meet 21st century challenges.

         + Increase the public'sunderstanding of the federal
           government'slong-term fiscal challenges
         + Implement governmentwide civil service reforms
         + Oversee federal tax policy
         + Increase debts collected from criminals
         + Decrease improper payments made by the U.S. Department of
           Agriculture's Food Stamp Program and other federal agencies
         + Manage multibillion-dollar information technology modernizationsand
           investmentsat the Department of Homeland Security and Office of
           Personnel Management
         + Improve agencies' strategic purchasing practices
         + Examine changes in key areas of federal activity that could affect the
           federal government's fiscal future
         + Enhance the knowledge base on comprehensive national indicators

    4       Maximize the       fS Foster among other federal agencies GAO's
                                  innovative human capital
             value of GAO by                   practices, such asbroad pay bands;
                                                  performance-based compensation;
              being a model       and workforce planning and staffing strategies,
                                                          policies, and processes
         federal agency and a     fS Share GAO's model businessand management
         world-classprofessional  processesand other transformation-related
                                  information with counterpart organizations in
                                  the United Statesand abroad
                 services
              organization.

                                   GAO's Performance

    In fiscal year 2005, the Congress focused its attention on a broad array
    of challenging issues affecting the safety, health, and well-being of
    Americans here and abroad, and we were able to provide the objective,
    fact-based information these decision makers needed to stimulate debate,
    change laws, and improve federal programs for the betterment of the
    nation. For example, as the war in Iraq continued, we examined how the
    Department of Defense (DOD) supplied vehicles, body armor, and other
    materiel to the troops in the field; contributed to the debate on military
    compensation; and highlighted the need to improve health, vocational
    rehabilitation, and employment services for seriously injured soldiers
    transitioning from the battlefield to civilian life. We also kept pace
    with the Con-gress's information needs about ways to better protect
    America from terrorism by issuing products and delivering testimonies that
    addressed issues such as security gaps in the nation's passport operations
    that threaten public safety and federal efforts needed to improve the
    security of checked baggage at airports and cargo containers coming
    through U.S. ports. We explored the financial crisis that weakened the
    airline industry and the impact of this situation on the traveling public
    and airline employees' pensions.

    In addition, we helped to focus the attention of the Congress and the
    public on issues affecting the fiscal security and economic stability of
    the nation in the long term. In the second quarter of fiscal year 2005, we
    issued two products that will assist the Congress as it addresses future
    challenges. Our report entitled 21st Century Challenges: Reexamining the
    Base of the Federal Government provides a series of illustrative questions
    related to 12 areas of federal activity as well as our perspective on
    various strategies and approaches that should be considered as possible
    means to address the issues and questions raised in the report. Drawing on
    our institutional knowledge and extensive program evaluation and
    performance assessment work for the Congress, we presented over 200
    specific 21st century questions illustrating the types of hard choices our
    nation needs to face as it reexamines what the federal government does and
    how it does it. We also issued our High-Risk Series: An Update, which
    identifies federal areas and programs at risk of fraud, waste, abuse, and
    mismanagement and those in need of broad-based transformations. The issues
    affecting many areas and programs discussed in these two products may take
    years to address, and these products will serve as a useful guide for the
    Congress's future programmatic deliberations and oversight activities.
    (See pp. 33 and 35 for more information about our 21st century challenges
    and high-risk reports, respectively.) We performed all this work and more
    in accordance with our strategic plan, guided by our core values, and
    consistent with our professional standards.

    As we assisted the Congress in fiscal year 2005, we monitored our
    performance using 14 annual performance measures that capture the results
    of our work; the assistance we provided to our client-the Congress; and
    our ability to attract, retain, develop, and lead a highly professional
    workforce ( see table 1 ). These measures indicate that we had an
    impressive year-we met or exceeded our performance targets for 10 of our
    14 measures. Two of our results measures-financial benefits and other
    benefits-illustrate the outcomes of our work and our value to the nation
    because they track federal dollars saved or better used and programmatic
    improvements implemented as a result of our work. Two additional results
    measures track recommendations implemented and new products with
    recommendations that help us to achieve financial and other benefits. Our
    client measures-testimo-nies and timeliness-indicate how well we, as an
    information provider, serve the Congress, and our people measures reflect
    how well we manage our staff to achieve the results that we do.

    In fiscal year 2005, we accomplished real results for the nation,
    surpassing our financial benefits target for the year and exceeding our
    annual target and all-time record for other (nonfinancial) benefits. Our
    financial benefits of $39.6 billion represent an $83 return on every
    dollar invested in us, and the more than 1,400 other benefits resulting
    from our work helped to improve the efficiency and effectiveness of
    government programs that serve the public. In addition, we exceeded our
    targets for the percentages of past recommendations implemented and new
    products with recommendations by 5 percentage points and 8 percentage
    points, respectively.

    We did not achieve the targets we set for testimonies and timeliness.
    Several testimonies we had scheduled were postponed or canceled so that
    the Congress could turn its attention to the Supreme Court nominations
    and, during the last months of the fiscal year, to Hurricane Katrina and
    its aftermath. However, we believe we served the Congress very well during
    fiscal year 2005. Based on feedback through an electronic survey completed
    by a sample of our congressional clients who requested our testimonies and
    significant products, 96 percent of the responses concerning their overall
    satisfaction with our products were favorable.

               Table 1: Agencywide Summary of Annual Measures and Targets

    Source: GAO.

    Notes: N/A indicates the information is not available or the target is not
    applicable. Our fiscal year 2006 target for the percentage of products
    with recommendations differs from the target we reported for this measure
    in our fiscal year 2006 performance plan posted on our Web page in June
    2005. On the basis of our performance in fiscal year 2005, we increased
    this target by 5 percentage points.

    Concerning our eight people measures, for which we began to hold managers
    accountable in fiscal year 2005, we are happy to report that we met or
    exceeded our annual targets for all but two of them-new hire rate and
    acceptance rate. Our performance in this area indicates that we did a very
    good job developing, productively using, and managing our staff, but need
    to improve our recruiting and hiring processes, which we have taken steps
    to do.

    Results Measures

    Focusing on outcomes and the efficiency of the processes needed to achieve
    them is fundamental to accomplishing our mission. The following measures
    indicate that we have fulfilled our mission and delivered results that
    benefit the nation.

    Financial and Other Benefits

    We describe many of the benefits produced by our work as either financial
    or other (nonfinancial) benefits. Both types of benefits result from our
    efforts to provide information to the Congress that helped to (1) change
    laws and regulations, (2) improve services to the public, and (3) promote
    sound agency and governmentwide management. In many cases, the benefits we
    claimed in fiscal year 2005 are based on work we did in past years because
    it often takes the Congress and agencies time to implement our
    recommendations or to act on our findings. To claim either type of
    benefit, our staff must document the connection between the benefits
    reported and the work that we performed.

      Financial Benefits

    Our findings and recommendations produce measurable financial benefits for
    the federal government when the Congress or agencies act on them and the
    funds are made available to reduce government expenditures or are
    reallocated to other areas. The monetary effect realized can be the result
    of changes in

         + business operations and activities;
         + the structure of federal programs; or
         + entitlements, taxes, or user fees.

    For example, financial benefits could result if the Congress were to
    reduce the annual cost of operating a federal program or lessen the cost
    of a multiyear program or entitlement. Financial benefits could also
    result from increases in federal revenues-due to changes in laws, user
    fees, or asset sales-that our work helped to produce. In fiscal year 2005,
    our work generated $39.6 billion in financial benefits. Of this amount,
    $19 billion (or approximately 48 percent) resulted from changes in laws or
    regulations.

    Financial benefits included in our performance measures are net benefits-
    that is, estimates of financial benefits that have been reduced by the
    costs associated with taking the action that we recommended. We convert
    all estimates involving past and future years to their net present value
    and use actual dollars to represent estimates involving only the current
    year. Financial benefit amounts vary depending on the nature of the
    benefit, and we can claim financial benefits over multiple years based on
    a single agency or congressional action. To ensure conservative estimates
    of net financial benefits, reductions in operating cost are typically
    limited to 2 years of accrued reductions. Multiyear reductions in
    long-term projects, changes in tax laws, program terminations, or sales of
    government assets are limited to 5 years. Estimates come from non-GAO
    sources and are reduced by any identifiable offsetting costs. These
    non-GAO sources are typically the agency that acted on our work, a
    congressional committee, or the Congressional Budget Office.

    To document financial benefits, our staff complete reports documenting
    accomplishments that are linked to specific products or actions. All
    accomplishment reports for financial benefits are documented and reviewed
    by

    (1) another GAO staff member not involved in the work and (2) a senior
    executive in charge of the work. Also, a separate unit reviews all
    financial benefits and approves benefits of $100 million or more, which
    amounted to 94 percent of the total dollar value of benefits recorded in
    fiscal year 2005. Additionally, our Inspector General (IG) performs an
    independent review of all accomplishment reports claiming benefits of $500
    million or more, which represented about 78 percent in fiscal year 2005.

    Figure 1 lists several of our major financial benefits reported in fiscal
    year 2005 and briefly describes some of our work contributing to financial
    benefits.

        Figure 1: GAO'sSelected Major Financial Benefits Reported in Fiscal Year

                               Source: See Image Sources.

    Source: GAO.

      Other Benefits

    Many of the benefits that result from our work cannot be measured in
    dollar terms. During fiscal year 2005, we recorded a total of 1,409 other
    benefits. We documented 75 instances where the information we provided to
    the Congress resulted in statutory or regulatory changes, 595 instances
    where federal agencies used our information to improve services to the
    public, and 739 instances where agencies improved core business processes
    or governmentwide reforms as a result of our work. These actions spanned
    the full spectrum of issues, from identifying that some soldiers had not
    been reimbursed for military-related travel costs they personally incurred
    to highlighting weaknesses in the Social Security Administration's
    policies for verifying birth certificates when issuing replacement Social
    Security cards. In figure 2 we provide examples of some of the other
    benefits we claimed as accomplishments in fiscal year 2005. The laws that
    we cite in the first section of this figure were passed in fiscal year
    2005.

    Figure 2: GAO'sSelected Other (Nonfinancial) Benefits Reported in Fiscal
    Year 2005

                               Source: See Image Sources.

    Ronald W.       We assisted the Congress in crafting major improvements to
                       a program
    Reagan National intended to compensate individuals who worked in DOE
    Defense         facilities and developed illnesses related to radiation
    Authorization   and hazardous materials exposure. In a 2004 report, we
                       identified features of the originally enacted program that
    Act for Fiscal  would likely lead to inconsistent benefit outcomes for
    Year 2005 (Pub. claimants, in part because the program depended on the
    L.              varying state workers compensation systems to provide some
                       benefits. We also presented several options for
    No. 108-375)    improving the consistency of benefit outcomes and a
                       framework for
                       assessing these options. When the Congress enacted the
                       Ronald W. Reagan
                       National Defense Authorization Act for Fiscal Year 2005,
                       it revamped this
                       energy employees benefit program. Among other changes,
                       this law
                       federalized the payment of worker compensation benefits
                       for eligible energy
                       contractor employees and provided a schedule of uniform
                       benefit payments.
                       (Goal 1)

    Consolidated AppropriationsAct, 2005 (Pub. L. No. 108-447)

    At the time of our August 2003 report, the original 1999 expiration date
    for the franchise fund pilots operating at six federal agencies had been
    extended three times. These franchise funds, authorized by the Government
    Management Reform Act of 1994, are part of a group of 34 intragovernmental
    revolving funds that were created to provide common administrative support
    services required by many federal agencies, including, for example,
    information technology (IT) infrastructure support services. We concluded
    that increasing the period of authorization would help ease concerns of
    current and potential clients about franchise fund stability and might
    allow franchise funds to add new business lines, and we suggested that the
    authorizations be extended for longer periods. The Congress provided
    permanent authority to the Treasury franchise fund in the Consolidated
    Appropriations Act, 2005, passed on December 8, 2004. (Goal 3)

    Also in 2003, we reported that most agencies could not retain the proceeds
    from the sale of unneeded property and this acted as a disincentive to
    disposing of unneeded property. We stated in our high-risk report on
    federal real property that it may make sense to permit agencies to retain
    proceeds for reinvestment in real property where a need
    exists.Subsequently, in the Consolidated Appropriations Act, 2005, the
    Congress authorized the Administrator of GSA to retain the net proceeds
    from the conveyance of real and related personal property. These proceeds
    are to be deposited into the Federal Buildings Fund and are to be used as
    authorized for GSA's real property capital needs. (Goal 1)

    In December 2003, we reported that 184 out of 213 Alaska Native villages
    are affected, to some extent, by flooding and erosion. However, these
    villages often have difficultyqualifying for federal assistance to combat
    their flooding and erosion problems. In our report, we recommended that
    the Denali Commission adopt a policy to guide investment decisions and
    project designs in villages affected by flooding and erosion. In this
    legislation, the Congress provided the Secretary of the Army authority to
    carry out "structural and non-structural projects for storm damage
    prevention and reduction, coastal erosion, and ice and glacial damage in
    Alaska, including relocation of affected communities and construction of
    replacement facilities." (Goal 1)

    To improve the federal government's ability to collect billions of dollars
    of outstanding criminal debt, we recommended in a 2001 report, that the
    Department of Justice work with other agencies involved in criminal debt
    collection to develop a strategic plan that would improve interagency
    processes and coordination with regard to criminal debt collection
    activities. The conference report that accompanied the Consolidated
    Appropriations Act, 2005, directed the Attorney General to assemble an
    interagency task force for the purpose of better managing, accounting for,
    reporting, and collecting criminal debt. (Goal 3)

    Encouraged the  For the 2000 Census, the United States Census Bureau
                       (Bureau) printed
    Census Bureau   material used to train census workers only in English,
                       except in Puerto Rico
    to produce      where training materials were available in Spanish.
                       However, to better
    training        prepare census workers-some of whom speak Spanish as their
                       first
    materials in    language-to locate migrant farm workers and other
                       hard-to-count groups,
    other languages we recommended that the Bureau consider providing training
                       materials in
                       languages other than English to targeted areas. In
                       response to our
                       recommendation, the Bureau is researching foreignlanguage
                       data collection
                       methods as part of its preparations for the 2006 Census
                       test and, more
                       generally, plans to identify areas and operations that
                       will require in-language
                       training materials for areas with very large, new migrant
                       populations where it
                       will not be possible to hire bilinguals. Moreover, the
                       Bureau's June 2005
                       request for proposals for a Field Data Collection
                       Automation System includes
                       a requirement for the contractor to provide training
                       applications and materials
                       in English and Spanish for the handheld computers
                       enumerators are to use
                       to count nonrespondents. (Goal 3)

    Source: GAO.

    In addition to the financial and other benefits claimed in fiscal year
    2005 from our work, we also achieved the following results.

    Past Recommendations Implemented

    One way we measure our effect on improving the government's
    accountability, operations, and services is by tracking the percentage of
    recommendations that we made 4 years ago that have since been implemented.
    At the end of fiscal year 2005, 85 percent of the recommendations we made
    in fiscal year 2001 had been implemented, primarily by executive branch
    agencies. Putting these recommendations into practice will generate
    tangible benefits for the nation in the years ahead. The 85 percent
    implementation rate for fiscal year 2005 exceeded our target for the year
    by 5 percentage points as well as our actual performance for the last 4
    years. Because agencies need time to act on recommendations, we assess
    recommendations implemented after 4 years, the point at which experience
    has shown that if a recommendation has not been implemented, it is not
    likely to be.

    New Products Containing Recommendations

    This year, about 63 percent of the 637 written products we issued
    (excluding testimonies) contained recommendations. We track the percentage
    of new products with recommendations because we want to encourage staff to
    develop recommendations that when implemented by the Congress and
    agencies, produce financial and other benefits for the nation. However, by
    setting our target at 55 percent, we recognize that our products do not
    always include recommendations and that the Congress and agencies often
    find such informational reports just as useful as those that contain
    recommendations. Our informational reports have the same analytical rigor
    and meet the same quality standards as those with recommendations and,
    similarly, can help to bring about significant financial and other
    benefits. Hence, this measure allows us ample leeway to respond to
    requests that result in reports without recommendations.

    Client Measures

    To fulfill the Congress's information needs, we strive to deliver the
    results of our work orally as well as in writing at a time agreed upon
    with our clients.

    Testimonies

    Our clients often invite us to testify on our current and past work when
    it addresses issues that congressional committees are examining through
    the hearing process. During fiscal year 2005, experts from our staff
    testified at 179 congressional hearings covering a wide range of complex
    issues. For example, our senior executives testified on improving the
    security of nuclear material, federal oversight of mutual funds, and the
    management and control of DOD's excess property. ( See p. 28 for a summary
    of issues we testified on by strategic goal in fiscal year 2005.) Over 70
    of our testimonies were related to high-risk areas and programs, which are
    discussed on page 35 .

    However, in spite of our willingness to testify for our clients, we did
    not meet our fiscal year 2005 target of 185 testimonies, primarily because
    congressional committees either canceled or postponed several hearings at
    which our senior executives were scheduled to testify to focus instead on
    key events such as Hurricane Katrina.

    Timeliness

    We track the percentage of our products that are delivered on or before
    the day we agreed to with our clients because it is critical that our work
    be done on time for it to be used by policymakers. In fiscal year 2005 we
    missed our target of providing 98 percent of them by the promised date.

    As part of its periodic review of our performance measures, the IG
    independently examined our process for calculating product timeliness and
    found evidence that some staff may be inconsistently applying the policy
    for changing a committed issue date, which ultimately affects the
    reliability of this measure. The IG also noted that the internal reporting
    approach may not adequately represent the most complete assessment of the
    requesters' satisfaction with our ability to deliver products when our
    clients need them. The IG recommended that GAO management strengthen the
    guidance for determining timeliness and consider developing an
    alternative, more independent measure to gauge performance in this area.
    Therefore, begin-ning in fiscal year 2006, we will use the results of our
    client feedback survey as a barometer for how well we are getting our
    products to the Congress when it needs them. We will use this survey as
    the primary data source for our external timeliness measure because the
    responses come directly from our clients and are free from significant
    input by our staff. However, we will continue to use our current process
    as a supplemental check for determining timeliness. For further
    information about this measure, see page 87 in our full performance and
    accountability report.

    People Measures

    We could not have performed as well as we did in fiscal year 2005 without
    the support and commitment of our highly professional, multidisciplinary
    staff. Our ability to hire, develop, retain, and lead staff is critical to
    fulfilling our mission of serving the Congress and the American people.
    Since 2002, we have refined our processes for measuring how well we manage
    our human capital and have benchmarked our performance in this area.
    Fiscal year 2005 was the first year we held our managers accountable for
    our eight people measures, and we met six of them-slightly missing our
    targets for new hire rate and acceptance rate by only a few percentage
    points. These measures are directly linked to our goal 4 strategic
    objective of becoming a professional services employer of choice.

    On the pages that follow our selected list of testimonies, we highlight
    our performance under each of our strategic goals; discuss our 21st
    century challenges report and high-risk update; and describe strategies
    for achieving those strategic goals, our management challenges, the
    external factors we face, and the resources we used to achieve our
    performance results.

                               Selected Testimony Issues

      Fiscal Year 2005

    GOAL 1:

    Address Challenges to the Well-Being and Financial Security of the
    American People

         + Head Start grants management
         + Preparing for an influenza pandemic
         + Overseeing the U.S. food supply
         + Retirement options for seniors
         + Long-term health care costsand government budgets
         + Energy demand in the 21st century
         + Postal service reform legislation
         + Veterans' disability claims
         + Social Security reform
         + Wildland fire management
         + Medicaid financing issues
         + Meeting the future demand for energy in the United States
         + National air traffic system
         + Amtrak's Acela train
         + Protecting nuclear material handled at science and environmental sites
         + Providing services to seriously injured veterans
         + Rural housing service
         + Federal real property
         + Endangered Species Act
         + Federal oversight of the E-rate program

    GOAL 2:

    Respond to Changing Security Threats and the Challenges of Globalization

         + Army's modular forces
         + U.S. passport fraud
         + Cargo security strategies
         + Acquisition challenges facing the Navy's DD(X) destroyer program
         + Tactical aircraft modernization
         + DOD security clearances
         + Oil for Food program
         + Unmanned aerial vehicles
         + Condition of Coast Guard aircraft and shipsused in deep waters
         + Managing violations of restricted air space
         + Federal oversight of mutual funds to ensure investor security
         + Portsecurity
         + Protecting U.S. officials overseas from terrorist attacks
         + DOD'sbusinesstransformation
         + Transportation security issues
         + Implementing laws that protect the security of information
         + DOD's national security personnel system
         + Acquisition challenges facing the Army's future combat systems

    GOAL 3:

    Help Transform the Federal Government's Role and How It Does Business

         + Long-term fiscal issuesaffecting the federal government
         + Gaps in military pay and benefits
         + 21st century challenges for the federal government
         + Air Force procurement protests
         + Human capital transformation at DHS
         + Preparing for emergenciesat federal agencies
         + Space shuttle workforce issues
         + Reducing the tax gap
         + U.S. government financial statements
         + Management and control of DOD's excess property
         + Pricing federal multiple award contracts
         + Performance budgeting
         + High-risk federal programs
         + Army National Guard travel reimbursement issues
         + Space acquisitionsand investment planning
         + Improper Payments Information Act
         + Agencies' continuity of operations plans
         + DHS's Student and Exchange Visitor Information System

    Source: See Image Sources.

        Financial Benefits: $15.6 Billion (Target: $19.6 Billion)

         o Reducing nuclear waste cleanup costs: Financial benefits valued at
           $4.5 billion arose from costsavoided after the implementation of our
           recommendation that DOE seek legislation to allow more economical
           treatment and disposal of high-level nuclear wastes.
         o Improving air traffic control systems: The Federal Aviation
           Administration (FAA) reviewed itsFacilitiesand Equipment account and
           reduced its initial budget request by $393 million for several air
           traffic systems that had experienced chronic delaysand cost overruns,
           largely by targeting vulnerabilities that we had identified in our
           analysesand by using management processes we recommended based our
           past work.
         o Identifying funds to address hazardous waste sites: Our work hasbeen
           instrumental in the Environmental Protection Agency's efforts to
           identify, deobligate, and reuse $189.3 million in unspent funds from
           expired projects in the Superfund program, which has offset the need
           for additional appropriations.
         o Identifying a potentially duplicative structure for job training
           funding: We suggested that the Department of Labor's (DOL) proposal
           for a new $250 million program for community-based jobtraining grants
           would create a new administrative structure for allocating training
           funds to community collegesand may duplicate the system currently in
           place. Based on our work, the Congressappropriated $125 million
           instead of DOL's initial request.

        Other Benefits: 277 (Target: 240 Other Benefits)

         o Paying properly for power wheelchairs for Medicare beneficiaries: On
           the basis of our finding that the information provided to Medicare
           contractors that process wheelchair claims-one of the program's most
           expensive items-provided insufficient detail, new requirements were
           established to make more information available.
         o Monitoring states' inventories of childhood vaccines: The Centers for
           Disease Control and Prevention implemented our recommendation to
           develop astrategic plan that includessteps to monitor childhood
           vaccine supplies in state depots, which should help ensure that the
           adequate inventoriesare available.
         o Estimating tobacco retailer violation rates: Our work led the
           Department of Health and Human Services (HHS) to increase oversight of
           states' monitoring of tobacco retailers; for example, HHS now
           visitsstates to help assessthe accuracy and completeness of tobacco
           outlet listsand works with states to improve standardization of
           inspection protocols.

    Sources: GAO, United States Mint coin image.

    Source: See Image Sources.

        Financial Benefits: $13.0 Billion (Target: $9.4 Billion)

         o Improving DOD's missile defense system acquisitions: A financial
           benefit of about $4.7 billion stemmed from our findings that the
           Missile Defense Agency could scale back itssystem development
           effortsuntil required technologiesare more mature.
         o Improving management of funds for officers' housing: In May 2004, we
           reported that 13renovation projects for general and flag officer
           quarters-6 Navy and 7 Marine Corps-exceeded the services' cost
           estimatesand that about 45 percent of the increased costs were related
           to customer-driven changes. The Congresssubsequently reduced the
           services' (Army, Navy, Air Force, and Marines) family housing
           operationsand maintenance budget requestsby about $10.8 million in
           total citing our work on thissubject.

        Other Benefits:365 (Target:300 Other Benefits)

         o Improving controls covering technology exports: We found that a gap in
           control regulationscovering exports with both militaryand civilian
           applications could enable individuals in most countries to legally
           obtain these items without any U.S. government review and that these
           itemscould be used to help makea cruise missile or unmanned aerial
           vehicle. The Department of Commerce subsequently proposed
           modifications to its regulations to help close the regulatory gap.
         o Strengthening the visa process as an antiterrorism tool: Using our
           work asa primary guide, the Department of State strengthened the visa
           processasan antiterrorism tool by,among other things, issuing guidance
           emphasizing national security as the department's first priority in
           the visaprocess; developing over 80 standard operating procedures to
           ensure that consular officersproperly review visaapplicationsand
           effectively fulfill their national security responsibilities; and
           developing and enhancing training on analytic interviewing techniques,
           fraud prevention, counterterrorism, and use of a name check system for
           passportsand visaapplications.
         o Ensuring decisions to transfer U.S. weapons and technologies to
           foreign governments are adequately informed: We found that the
           National Disclosure Policy Committee-which approves or denies requests
           for exceptions to the criteriaused to determine if classified weapons
           or technologies can be released to the requesting country-was
           operating with outdated Central Intelligence Agency risk assessments.
           Acting on our recommendations, the committee'sExecutive Secretariat
           requested that the Central Intelligence Agency provide updated risk
           assessments for 23 countries, and those assessmentsare under way.

                      Sources: GAO, United States Mint coin image.

    Source: See Image Sources.

        Financial Benefits: $11.0 Billion (Target: $8.5 Billion)

         o Improving IRS's methodology for pursuing delinquent taxes: A financial
           benefit of about $1.8billion stemmed from our findings that led IRS to
           increase revenue collectionsby improving itscapacity to assess the
           collectibility of delinquent taxesand to decide on which debts to
           focuscollection efforts.
         o Avoiding costs associated with the Small Business Administration's
           (SBA) loan monitoring system: We recommended that SBA perform
           benefit-cost analyses for systemsalternatives to better ensure that
           the agency would meet its needs for a new loan monitoring system at
           the lowest cost. Asa result, SBA stopped its in-house system
           development work and contracted with a firm to perform its loan
           monitoring services. Consequently, we were able to document cost
           avoidances that led to $5.6 million in financial benefits this fiscal
           year.

        Other Benefits: 767 (Target: 460 Other Benefits)

    o  Adding rigor to the Coast Guard's oversight of Deepwater program
    contractors: We found that

    (1) the Coast Guard's evaluation of a contractor responsible for
    developing and delivering assets for the Deepwater program-established to
    modernize the Coast Guard'saging fleet of shipsand aircraft-lacked the
    necessary rigor to be effective and (2) two subcontractors were solely
    responsible for deciding whether to compete assets or make the assets
    themselves. Based on our recommendations, the Coast Guard improved the
    criteria for assessing the system integrator'sperformance and required the
    subcontractors to provide notification of decisions to make assetsvalued
    at $10 million or more.

         o Preventing improper sales of sensitive clothing and textile items: On
           the basis of our findingsthat it improperly sold over the Internet
           excess clothing with reflectant properties that prevent detection with
           infrared technologies, DOD issued a more stringent policy, which
           determined that these itemsare of asufficiently critical and sensitive
           nature to require total destruction-an action that should help prevent
           thissensitive technology from falling into the wrong hands.
         o Improving accountability at DOL: We recommended that the Office of
           Management and Budget (OMB) revise itsaudit guidance related to
           testing to be able to positively state whether agency financial
           management systems comply with requirements (positive assurance).
           DOL's IG advised us that it had followed our advice and became the
           first federal agency to provide positive assurance.
         o Improving NASA's cost-estimating processes: Acting on our
           recommendations, NASA hasremoved barriers to cost estimation-such as
           the lack of reliable financial and performance dataand the lack of
           incentives to measure and monitor cost trends-and improved its
           cost-estimating practice. Sources: GAO, United States Mint coin image.

    Source: See Image Sources.

         o Improving dissemination of GAO products: We continued our pilot to
           produce and disseminate GAO reports in an electronic format, and based
           on the positive client feedback we received on the approximately 25
           reports we provided in electronic format, we plan to make the use of
           electronic products routine. We also improved the process for creating
           and posting to our Website the electronic supplements to our reports,
           enabling our staff to view all features of asupplement before it is
           posted on the Internet, easing navigation within the electronic
           supplement, and more readily identifying the product asa GAO product.
         o Enhancing our classification and compensation systems: We directly
           linked the process for determining compensation to an individual's
           performance, as reflected on the appraisal, and used amarket-based
           compensation study that allowsus to design a competitive, fair, and
           equitable compensation program that isaligned with competitive labor
           markets in which we compete for talent. In addition, our
           administrative and professional support staff completed their first
           year under abroadband pay system and a competency-based performance
           system.
         o Improving engagement support services: We revised the Audit
           Documentation Set to help ensure that our engagementsare consistent
           with the generally accepted auditing standardsand our Quality
           Assurance Framework and that our work and engagement-related decisions
           havebeen systematically documented. The streamlined and simplified
           document eliminates duplicate requirementsand documentation of steps,
           thereby saving staff time.
         o Improving customer service through use of Web-based technology: We
           upgraded our Web-based time and attendance system and our automated
           competency-based performance system, developed and implemented a
           Web-based request system for scheduling GAO vansand drivers that
           transport our staff to official meetings, redesigned the Web-based
           phone book, and deployed a major enhancement to our Web-based employee
           locator system.
         o Ensuring our IT security: We installed personal firewall software,
           implemented changes to ensure desktop security and foil spyware, and
           implemented an integrated security approach for our Web-based systems.
         o Ensuring our physical security: We enhanced our physical security by
           completing perimeter security efforts, including installation of
           high-speed rollup doors, guard booths, undervehicle cameras, pop-up
           barriers, and a perimeter plinth wall.

                      Sources: GAO, United States Mint coin image.

                                21st Century Challenges

    We have long had a statutory responsibility for monitoring the condition
    of the nation's finances. Recently, in our role as the auditor of the U.S.
    govern-ment's consolidated financial statements, we included an emphasis
    paragraph in our audit report for the fiscal year ended September 30,
    2005, expressing our concern that the nation's current fiscal path is
    unsustainable and that tough choices by the President and the Congress are
    necessary in order to address the nation's large and growing long-term
    fiscal imbalance. This conclusion is based on the results of our long-term
    budget model, which we have used since 1992.

    Over the long term, the nation's growing fiscal imbalance stems primarily
    from the aging of the population, rising health care costs, and lower
    federal revenues as a percentage of the economy. These trends are
    compounded by the presence of near-term deficits arising from new
    discretionary and mandatory spending as well as lower revenues as a share
    of the economy. Absent significant changes on the spending side, the
    revenue side, or both sides of the budget, these long-term deficits will
    encumber a growing share of federal resources and test the capacity of
    current and future generations to afford both today's and tomorrow's
    commitments. Continuing on this unsustainable path will gradually erode,
    if not suddenly damage, our economy, our standard of living, and
    ultimately our national security.

    Addressing the nation's long-term fiscal imbalances constitutes a major
    transformational challenge that may take a generation to resolve. Given
    the size of our projected deficit, we will not be able to grow our way out
    of this prob-lem-tough choices will be required. In addition, traditional
    incremental approaches to budgeting will need to give way to more
    fundamental and periodic reexaminations of the base of government,
    ultimately covering discretionary and mandatory programs as well as the
    revenue side of the budget. The nature and magnitude of the fiscal,
    security, economic, and other adjustments that need to be considered are
    not amenable to "quick fixes;" rather they will likely require an
    iterative, thoughtful process of disciplined changes and reforms over many
    years.

    We produced the 21st century challenges report (see 21st Century
    Challenges: Reexamining the Base of the Federal Government, GAO-05-325SP )
    to help the Congress review and reconsider the base of federal spending
    and tax programs. It is intended as one input among many that the Congress
    will receive as it decides what its agenda will be for oversight and
    program review. We have framed the issues presented as illustrative
    questions for policymakers to consider as a supplement to their own
    efforts. The questions are drawn from our issued work, our strategic plan
    prepared in consultation with the Congress, input from several IGs, and
    the institutional knowledge of our staff. They cover discretionary
    spending; mandatory spending, including entitlements; and tax policies and
    programs. While answers to these questions may draw on our work and that
    of others, only elected officials can and should decide which questions to
    address as well as how and when to address them.

    Having identified the major fiscal challenge facing the nation, and given
    our role in supporting the Congress, we believe that we also have an
    obligation to provide policymakers with support in identifying issues and
    options that could help to address these fiscal pressures. In our 21st
    century challenges report, we built on our past and pending work-about 90
    percent of which was requested by the Congress or required by law-to
    provide policymakers with a comprehensive compendium of those areas
    throughout government that could be ripe for reexamination and review. The
    report is consistent with our other products, such as our high-risk
    reports (discussed on p. 35 ), in that it pulls together our insights and
    previous work for the Congress to help with its budget and programmatic
    deliberations and oversight activities.

    In developing the 21st century questions posed in the report, we reflected
    on the inventory of future forces working to reshape American society, our
    place in the world, and the various roles and responsibilities of the
    federal government that were presented in our strategic plan. The specific
    questions raised for each area were informed by a set of generic
    evaluation criteria that are useful in evaluating any government program,
    policy, function, or activity. The criteria are framed as questions and
    are designed to address the legislative basis for the program, its purpose
    and continued relevance, its effectiveness in achieving goals and
    outcomes, its efficiency and targeting, its affordability, its
    sustainability, and its management. We used these criteria to generate
    specific 21st century questions about those programs and priorities
    already identified. The 21st century questions illustrate the kinds of
    issues that a reexamination and review initiative needs to address.

                                GAO's High-Risk Program

    Issued to coincide with the start of each new Congress, our high-risk
    update has helped sustain attention from members of the Congress who are
    responsible for oversight and from executive branch officials who are
    accountable for performance. Our high-risk program focuses on major
    government programs and operations that need urgent attention or
    transformation to ensure that our government functions in the most
    economical, efficient, and effective manner possible. Overall, our
    high-risk program has served to identify and help resolve a range of
    serious weaknesses that involve substantial resources and provide critical
    services to the public. Our latest report, released in January 2005,
    highlights 25 troubled areas across government. Of the 43 areas that have
    appeared on our high-risk list since 1990, 16 have improved enough to be
    removed from the list and 2 have been consolidated with other areas.

    Our high-risk program includes the following four high-risk areas added in
    fiscal year 2005:

         + establishing appropriate and effective information-sharing mechanisms
           to improve homeland security,
         + DOD approach to business transformation,
         + DOD personnel security clearance program, and

    fS management of interagency contracting.

    We also removed the high-risk designation from three areas: Education's
    student financial aid programs, FAA's financial management, and USDA's
    Forest Service financial management.

    In fiscal year 2005, excluding our high-risk update report and its
    companion testimony, we issued 183 reports and delivered 75 testimonies
    related to our high-risk areas and documented related financial benefits
    totaling about $26 billion. For example, we examined challenges in the
    implementation and transformation of DHS, such as strengthening internal
    controls and addressing weaknesses in financial systems, fully
    establishing and institutionalizing a departmentwide strategic framework
    for managing information, and addressing systematic problems in human
    capital and acquisition systems, resulting in 19 reports and 11
    testimonies. We also evaluated the Medicare program and found weaknesses
    in program management and oversight of patient safety and care,
    inefficient payment policies, and areas vulnerable to fraud and abuse. Our
    work in this area resulted in approximately $3.9 billion in financial
    benefits for fiscal year 2005. Our efforts continue to bring attention to
    areas in urgent need of improvement and to help the Congress and federal
    government institute reforms to address these high-risk areas.

    To learn more about our work on the go to http://www.gao.gov/ high-risk
    areas shown in table 2 or to docsearch/featured/highrisk.html . download
    the high-risk update in full,

    Table 2: GAO's 2005 High-Risk List

                Year GAO'sdesignated strategic 2005 high-risk area high-risk goal

                  Addressing challenges in broad-based transformations

                       Strategic Human Capital Managementa 2001 3

    2001 1

    U.S. PostalService Transformation Efforts and Long-Term Outlooka

                         Managing Federal Real Propertya 2003 1

    Protecting the Federal Government's Information Systems and the 1997 3
    Nation's Critical Infrastructures

    Implementing and Transforming the Department of Homeland 2003 2 Security

    Establishing Appropriate and Effective Information-Sharing 2005 3
    Mechanisms to Improve Homeland Security

                    DOD Approach to Business Transformationa 2005 2

                        DOD BusinessSystems Modernization 1995 3

                    DOD Personnel Security Clearance Program 2005 2

                      DOD Support Infrastructure Management 1997 2

                            DOD Financial Management 1995 3

    DOD Supply Chain Management (formerly Inventory 1990 2 Management)

                         DOD Weapon Systems Acquisition 1990 2

                     Managing federal contracting more effectively

                             DOD Contract Management 1992 2

                             DOE Contract Management 1990 1

                            NASA Contract Management 1990 2

                      Management of Interagency Contracting 2005 2

    Assessing the efficiency and effectiveness of tax law administration
    Enforcement of Tax Lawsa,b                                      1990     3
    IRS Business Systems Modernizationc                             1995     3
    Modernizing and safeguarding insurance and benefit programs
    Modernizing Federal Disability Programsa                        2003     1
    Pension Benefit Guaranty Corporation Single-Employer Insurance  2003     1
    Programa
    Medicare Programa                                               1990     1
    Medicaid Programa                                               2003     1
    HUD Single-Family Mortgage Insurance and Rental Housing         1994     1
    Assistance Programs
    Other
    FAA Air Traffic Control Modernization                           1995     3

    Source: GAO. aLegislation is likely to be necessary as a supplement to
    actions by the executive branch, in order to effectively address this
    high-risk area. bTwo high-risk areas-collection of unpaid taxes and earned
    income credit noncompliance-have been consolidated to make this area. cThe
    IRSfinancial management high-risk area has been incorporated into this
    high-risk area.

                           Strategies for Achieving Our Goals

    The Government Performance and Results Act directs agencies to articulate
    not just goals, but also strategies for achieving those goals. As detailed
    in the following sections, our strategies primarily emphasize providing
    information from our work to the Congress and the public in a variety of
    forms and continuing and strengthening our internal operations. Our
    strategies also emphasize the importance of two overarching approaches:
    (1) working with other organizations on crosscutting issues and (2)
    effectively addressing the challenges to achieving our agency's goals and
    recognizing the internal and external factors that could impair our
    performance. Through these strategies, which have proven successful for us
    for a number of years, we plan to achieve the level of performance that is
    needed to meet our performance measures and our multiyear performance
    goals that in turn will allow us to achieve our strategic goals.

    In fiscal year 2005, we devoted 87 percent of our engagement resources to
    work requested or mandated by the Congress. We initiated the remaining 13
    percent of the engagement work under the Comptroller General's authority.
    Much of this work was related to government programs and operations that
    we have identified as high risk for fraud, abuse, and mismanagement;
    reviews of agencies' budget requests; and various emerging challenges that
    are of broad-based interest to the Congress, such as the cost of the
    Global War on Terrorism and the status of the reconstruction efforts in
    Iraq.1 By making recommendations to improve the accountability,
    operations, and services of government agencies, we contribute to
    increasing the effectiveness of federal spending and enhancing the
    taxpayers' trust and confidence in their government. Collectively, our
    products always contain information and often conclusions and
    recommendations that allow us to achieve our external strategic goals.

    Another means of ensuring that we are achieving our goals is to examine
    the impact of our past work and use that information to shape our future
    work. We evaluate actions taken by federal agencies and the Congress in
    response to our past recommendations by monitoring the status of our open
    recommendations and reporting our findings annually to the Congress and
    the public ( http://www.gao.gov/ openrecs.html). Similarly, we will use
    our biennial high-risk report, most recently issued in January 2005, to
    provide a status report on major government operations that we consider
    high risk because they are vulnerable to waste, fraud, abuse, and
    mismanage

    1In fiscal years 2003 and 2004, the work performed under the Comptroller
    General's authority represented 8 percent and 10 percent, respectively, of
    our engagement efforts.

    ment or are in need of broad-based transformation. And we will use our
    report on 21st century challenges, which was issued in February 2005, to
    alert the nation's leaders to current and emerging issues facing the
    nation, including the long-range budget challenge, the human capital
    crisis, postal reforms, and the federal government's financial management
    efforts.

    Achieving our strategic goals and objectives also requires strategies for
    coordinating with other organizations with similar or complementary
    missions; we use advisory panels and other bodies to inform our strategic
    and annual work planning. We also initiate and support collaborative
    national and international audit, technical assistance, and other
    knowledge-sharing efforts.

    Strategic and Annual Work Planning

    Through a series of forums, advisory boards, and panels; periodic
    environmental scans; and our speakers' series, we gather information and
    perspectives for our strategic and annual planning efforts. In fiscal year
    2005, the Comptroller General convened various experts from the public,
    private, and nonprofit sectors in a series of forums and panels intended
    to enhance our understanding of emerging issues and to identify
    opportunities for action.

         + In December 2004, we hosted a forum on long-term fiscal challenges and
           issued a report summarizing the discussion in February 2005.
         + In February 2005, we convened a forum on defined benefits pension
           plans, the results of which were reported in June 2005.
         + In March 2005, we convened a roundtable involving the accountability
           community on long-term fiscal challenges, the results of which were
           summarized and shared with the participants.
         + Throughout 2005, we held five sessions of our speakers' series,
           Conversations on 21st Century Challenges, wherein prominent leaders
           discuss emerging themes and their implications for public policy. In
           2005, we also initiated the Auditors General Speakers' Series that
           provides unique international perspectives in support of our work;
           speakers included the auditors general of China, Ireland, South Korea,
           and Saudi Arabia.

    Advisory boards and panels also support our strategic and annual work
    planning by alerting us to issues, trends, and lessons learned across the
    national and international audit communities that we should factor into
    our work. These groups include the Comptroller General's Advisory Board
    whose 40 members from the public and private sectors have broad expertise
    in areas related to our strategic objectives.

    Through the National Intergovernmental Audit Forum, chaired by the
    Comptroller General and 10 regional intergovernmental audit forums, we
    consult regularly with federal inspectors general and state and local
    auditors. In addition, through the Domestic Working Group, the Comptroller
    General and the heads of 18 federal, state, and local audit organizations
    exchange information and seek opportunities to collaborate.

    We also work with a number of issue-specific and technical panels to
    improve our strategic and annual work planning, including the following:

         + The Advisory Council on Government Auditing Standards provides us
           guidance on promulgating auditing standards. These standards
           articulate auditors' responsibilities when examining government
           organizations; programs; activities; functions; and government
           assistance received by contractors, nonprofits, and other
           nongovernmental organizations. The council's work ensured that the
           revised standards would be generally accepted and feasible.
         + The Accountability Advisory Council, made up of experts in the
           financial management community, advises us on audits of the U.S.
           government's consolidated financial

    statements and emerging issues involving financial management and
    accountability reporting.

         + The Executive Council on Information Management and Technology, whose
           19 members are experts from the public and private sectors and
           representatives of related professional organizations, helps us to
           identify high-risk and emerging issues in the IT arena.
         + The Comptroller General's Educators' Advisory Panel, composed of
           deans, professors, and other academics from prominent universities
           across the United States, advises us on recruiting, retaining, and
           developing staff and on strategic planning matters.

    Internationally, we serve on the board and have several leadership roles
    in the International Organization of Supreme Audit Institutions
    (INTOSAI)-the professional organization of the national audit offices of
    186 countries. During the fall of 2004, the INTOSAI Congress unanimously
    adopted a 5-year strategic plan-the first in INTOSAI's 50-year
    history-that was developed by a 10-nation task force chaired by the
    Comptroller General. This plan has provided the foundation for the
    Governing Board to engage member institutions in advancing professional
    audit standards and promoting knowledge sharing.

    Collaborating with Others

    By collaborating with others, we have strengthened professional standards,
    provided technical assistance, leveraged resources, and developed best
    practices. In our work with INTOSAI, we chair the accounting and reporting
    committee, and we are an active member of INTOSAI's auditing standards,
    internal control and accounting standards, and other technical committees.
    We publish INTOSAI's quarterly International Journal of Government
    Auditing in five languages to foster global understanding of standards,
    best practices, and technical issues. To help ensure that the public
    sector's perspectives are reflected in the International Federation of
    Accountants Standards Development project, we are working as a member of
    INTOSAI's Professional Standards Committee as it collaborates closely with
    the International Auditing Assurance Standards Board and the World Bank to
    develop international auditing standards.

    To build capacity in national audit offices around the world, we conduct
    an international audit fellows program for mid- to senior-level staff from
    other countries. In 2005, 20 audit fellows from Africa, Asia, Europe,
    Latin America, and the Middle East spent about 4 months at GAO learning
    how we are organized to do our work, how we plan our work, and what
    methodologies we use, particularly for performance audits. As part of our
    strategy to promote continuous learning and sustainability once the
    fellows return to their countries, we are working with major donors-such
    as the World Bank and the U.S. Agency for International Development-to
    identify or support relevant capacity-building projects in fellows'
    institutions. Six current and seven former auditors general as well as
    several deputy auditors general, including the current chair of INTOSAI,
    are graduates of this program.

    Other collaborative activities undertaken by our staff during 2005
    included the following:

    fS Conferring with the Partnership for Public Service (Partnership), a
    nonprofit, nonpartisan public service organization committed to making the
    government an employer of choice for talented, dedicated Americans through
    educational outreach, research, legislative advocacy, and hands-on
    partnerships with agencies on workforce management issues. In late 2004,
    the Partnership merged with the Private Sector Council, another external
    partner organization dedicated to helping the federal government improve
    its efficiency, management, and productivity through the cooperative
    sharing of knowledge. During 2005, the Partnership has collaborated with
    us on a human capital symposium focused on performance management best
    practices and

    assisted us on a number of

    engagements.

         + Actively participating in four Domestic Working Group collaborative
           efforts of federal, state, and local audit officials to address issues
           regarding access to records, grants management, long-term fiscal
           challenges, and governance. Collaborative efforts with the Domestic
           Working Group and the National Association of State Auditors,
           Comptrollers, and Treasurers facilitated our work involving the states
           by fostering a cooperative working relationship with the state
           auditors on over a dozen engagements.
         + Implementing the National Intergovernmental Audit Forum (Forum)
           strategic plan that was adopted in December 2004. This plan was
           developed by a task force composed of federal, state, and local
           auditors and an independent public accountant. The newly established
           committees have begun organizing to implement the plan, which seeks to
           maximize the Forum's effectiveness in promoting good government and
           accountability at all levels of government. In addition, 21 regional
           Forum meetings were held, which brought together auditors at all
           government levels.

    Using Our Internal Experts

    We coordinated extensively within our own organization on our strategic
    and annual performance planning efforts, as well as on the preparation of
    our performance and accountability reports. Our efforts are completed
    under the overall direction of the Comptroller General and the Chief
    Operating Officer. We relied on our Chief Administrative Officer/Chief
    Financial Officer and her staff to provide key information, such as the
    financial information that is included on page 51 of this report. Her
    staff also coordinated with others throughout the agency to provide the
    information on goal 4's results (which appears in condensed form on page
    32 of this summary report), and provided input on other efforts dealing
    with issues that include financial management, budgetary resources,
    training, and security. We obtained input on all aspects of our strategic
    and annual performance planning and reporting efforts from each of our
    engagement teams and organizational units through their respective
    managing directors, as well as other staff responsible for planning or
    engagement activities in the teams. Staff from Quality and Continuous
    Improvement prepared the report, ensuring, among other things, that the
    report addressed comments and suggestions received from the Association of
    Government Accountants and other reviewers. In short, we involved
    virtually every part of GAO and used our internal expertise in our
    planning and reporting efforts.

           Addressing Management Challenges That Could Affect Our Performance

    At GAO, management challenges are identified by the Comptroller General,
    the Executive Committee, and the agency's senior executives through the
    agency's strategic planning, management, and budgeting processes. Our
    progress in addressing the challenges is monitored through our annual
    performance and accountability process. Under strategic goal 4, we
    establish performance goals focused on each of our management challenges,
    track our progress in completing the key efforts for those performance
    goals quarterly, and report each year on our progress toward meeting the
    performance goals. Each year we ask our IG to examine management's
    assessment of the challenges and the agency's progress in addressing them.
    (See p. 68 for the IG's assessment.)

    For fiscal year 2005, we continued to address three management
    chal-lenges-human capital, information security, and physical security. We
    anticipate that we may need to continue to address these management
    challenges in future years because they are evolving and will require us
    to continuously identify ways to adapt and improve. We revisit the
    challenges each year and refine them when appropriate, and when we believe
    we have sufficiently addressed these challenges we will remove them from
    our list. We will report any changes as we monitor and report on our
    progress in addressing the challenges through our annual performance and
    accountability process. The following sections describe our recent and
    planned efforts to address these challenges.

    The Human Capital Challenge

    Given our role as a key provider of professional and objective information
    and analyses to the Congress, maintaining the right mix of technical
    knowledge and expertise as well as general analytical skills is vital to
    achieving our mission. We spend about 80 percent of our resources on our
    people, but without excellent human capital policies and management
    practices, we could run the risk of being unable to lead by example and
    meet the expectations of the Congress and the American people. Our ability
    to meet the needs of the nation could also be impaired if we do not
    receive the funding that we need to adequately staff the agency, invest to
    support our people, and reward our top perform-ers-a mitigating external
    factor that we discuss below and on page 48 .

    To recruit, reward, and retain a highly qualified, high-performing, and
    diverse workforce remains one of our most important challenges. We
    employed a number of strategies to improve our recruitment efforts and
    support our workforce plan, including increasing the use of short-term and
    time-limited appointments and direct-hire authorities and implementing a
    pilot program for undergraduate cooperative educa-tion program
    participants. We also developed our fiscal year 2006 recruitment strategy
    to more directly support the agency's workforce plan. The strategy
    includes enhancements or expansions of existing programs, such as the
    capability to offer internships in the fall and spring as well as the
    summer and using special teams to employ targeted recruiting for special
    skill sets, hard-to-fill positions, and diversity recruiting.

    We continued to enhance our performance management and compensation
    systems through new and enhanced policies and processes. To improve our
    performance-based compensation system, with the help of a well-regarded
    consulting firm, we implemented a revised process for determining
    perfor-mance-based compensation that more directly links an individual's
    performance, as reflected by his or her appraisal, with his or her
    compensation. In June 2005, our administrative and professional support
    staff completed their first year under a broadband pay system and a
    competency-based performance system. To ensure that these staff understood
    the new process and to foster staff acceptance, we employed an aggressive
    communication strategy that included meetings with staff as well as
    Web-based guides and questions and answers. To design a competitive, fair,
    and equitable compensation program aligned with competitive labor markets
    in which we compete for talent, we worked with the same consulting firm to
    perform a market-based compensation study. Based on the results of the
    market-based compensation survey, we have invested significantly in
    restructuring our analyst and ana-lyst-related specialist Band II pay band
    into two pay levels to better align individual staff with our
    institutional compensation policies. We expect many of these compensation
    system changes to be implemented in fiscal year 2006.

    Finally, we continued providing our staff with courses and opportunities
    to develop their knowledge and expertise, build their competency, and
    strengthen their leadership skills. We designed and delivered 13 new
    com-petency-building courses and implemented an adjunct faculty program to
    increase the number of our subject matter experts available to develop
    content for new courses, expand the range of courses available, and
    provide training throughout the year. Among other efforts, we also
    established a group of analysts-in-charge representing various teams
    supporting goals 1 through 3 to discuss best practices related to managing
    engagements. To deliver required core courses to Band I analyst staff in
    field offices, we redistributed and realigned course delivery among three
    learning hubs rather than centralizing course delivery in headquarters. We
    estimate that this decision will result in a cost avoidance of $500,000 in
    travel and per diem, as well as other benefits, such as networking among
    and across teams, a sustained focus on learning, larger classes that make
    more effective use of adjunct faculty time, and the opportunity to
    strengthen matrixed work relationships through shared learning
    experiences.

    While we have made progress in addressing the human capital challenge,
    more work remains to be done. Some of the largest efforts planned in this
    area for fiscal year 2006 include

         + implementing the market-based compensation ranges for our analyst and
           analyst-related staff,
         + determining the market-based compensation ranges for our
           administrative professional and support staff,
         + implementing changes necessary to restructure our analyst Band II
           staff,
              * continuing to strengthen our recruiting processes to better meet
                the needs of the agency and support our strategic goals,
              * fS obtaining a better understanding of the retention factors
                affecting GAO, and
         + identifying an appropriate methodology to successfully implement the
           Comptroller General's authority to determine the amount of annual pay
           adjustments.

    The Information Security Challenge

    Information system security is a critical activity in ensuring our
    information system assets are safe and free from compromise. To address
    the increasing threats due to compromised information or information
    systems, we implemented a wide range of initiatives to strengthen and
    protect the security of our information systems and data.

    We enhanced the security of our users' workstations by installing personal
    firewall software to prevent download of viruses, anti-spyware to identify
    and eliminate malicious programs, and automatic activation of the
    screensaver. We also locked the GAO intranet home page as the default home
    page to prevent spyware from hijacking the default home page and
    downloading more spyware.

    In support of the requirements in the Federal Information Security
    Management Act, we completed remediation of several key weaknesses and
    vulnerabilities during fiscal year 2005. These included ensuring that risk
    assessments, system security plans, reviews performed under National
    Institute of Standards and Technology special publication 800-26, and
    letters for authorization to operate were in place and that system test
    and evaluation reviews and certifications and accreditations were
    developed and completed as necessary.

    Finally, we continued to implement initiatives and improvements to our
    Disaster Recovery Program. Our most significant accomplishment was the
    completion of our vision of the Disaster Recovery Program/Continuity of
    Operations, which was approved and signed by the Comptroller General and
    the Chief Administrative Officer on May 31, 2005. In support of the
    program we also developed emergency preparedness training video material
    for headquarters staff and installed an emergency voice and text
    notification system on the network.

    We anticipate that information security will continue to be one of our
    management challenges in the future. In fiscal year 2006, we will further
    address that challenge by completing implementation of centralized
    auditing of network servers and devices to better secure our computing
    assets within GAO, refining our network monitoring procedures to include
    the use of correlation products to automate the detection of potentially
    harmful threats to our network, implementing improvements to our disaster
    recovery operations, and improving our ability to respond and recover in
    the event of a disruption by implementing additional technologies to
    lessen our risks.

    The Physical Security Challenge

    The challenge of providing a safe and secure work environment for
    employees remains a constant in light of domestic and international events
    that can have a profound impact on the way we conduct business in the
    United States and around the world. Protecting our people and our assets
    is paramount to agency operations. In fiscal year 2005, we initiated
    actions to enhance our communication with external agencies, improve our
    internal communications and operations, and strengthen the technical and
    physical aspects of our emergency preparedness efforts.

    Externally, we established or enhanced contacts and procedures with local
    agencies to enable us to receive detailed intelligence that would not
    necessarily be provided through normal communication channels and to
    ensure coordination with the legislative branch in case of emergency. For
    example, we established emergency notification procedures with the Federal
    Bureau of Investigation Joint Terrorism Task Force; enhanced relocation
    procedures and improved relations with the U.S. Capitol Police, the House
    Sergeant at Arms, and the Emergency Preparedness Office; and made
    arrangements with the District of Columbia government to receive
    up-to-date emergency notifications. We are also an active member of the
    Legislative Branch Continuity of Operations Plan Working Group, and we
    coordinated and participated in a legislative branch tabletop exercise
    involving a simulation of a crisis requiring the House of Representatives
    to vacate and relocate elsewhere.

    Internally, we took several steps to support our goal of providing a safe
    and secure work environment. To ensure that our staff know what to do in
    case of an emergency, we conducted our first shelter in place drill for
    headquarters, and distributed shelter in place plans for the majority of
    our field offices and an emergency preparedness brochure for all staff. To
    reduce the agency's security risk, we installed an electronic fingerprint
    system that improves the speed with which we can obtain screening through
    the Federal Bureau of Investigation, including immediate reports if prints
    are not acceptable.

    To help ensure continued operations, we have completed initiatives in the
    areas of technical and physical security. We increased our network access
    potential by installing and reactivating additional local area network
    ports. This will provide for efficient and effective use of space in the
    event that congressional staff need to relocate to our headquarters
    building in an emergency.

    We plan to continue to assess our security operations to ensure our
    ability to meet ever-changing challenges to our security posture. In
    fiscal year 2006 we will be completing work on the Integrated Electronic
    Security System, which includes installation of turnstiles at
    headquarters, implementation of smart card technology, and upgrading
    access control and intrusion detection systems for headquarters and the
    field offices. Other efforts to meet this continuing challenge include
    procurement of an emergency notification system, and designing and
    disseminating a more robust security education and awareness program for
    headquarters and the field offices.

             Mitigating External Factors That Could Affect Our Performance

    Several external factors could affect the achievement of our performance
    goals, including the amount of resources we receive, shifts in the content
    and volume of our work, and various national and international
    developments. Limitations imposed on our work by other organizations or
    limitations on the ability of other federal agencies to make the
    improvements we recommend are additional factors that could affect the
    achievement of our goals.

    The external factors that could have the most significant adverse affect
    on us are the constrained budget environment in which we currently work
    and the uncertain budget future we face. We are experiencing heavy demand
    from the Congress for work in a number of subject areas, especially in
    disaster recovery and preparedness in the aftermath of Hurricanes Katrina
    and Rita and in health care. Given the across-the-board funding reductions
    that the Congress is considering for fiscal year 2006, large current
    federal budget deficits, and the nation's long-range fiscal imbalance, the
    Congress is likely to place an increasing emphasis on fiscal constraint.
    While it is unclear how we will ultimately be affected, it is reasonable
    to assume that any attempt to exercise additional budgetary discipline in
    the legislative branch will include our agency. As a result, while we
    believe that we submit reasonable and responsible budget requests and we
    know that the return on investment that we generate is unparalleled, we
    must plan and prepare for the possibility of significant and recurring
    constraints on the resources made available to us. In addition, because
    about 80 percent of our budget is composed of people-related costs, any
    serious budget situation will have an adverse impact on our human capital
    policies and practices and related investment practices. This, in turn,
    will have an adverse impact on our ability to serve the Congress and meet
    our performance targets. While, as we noted above, the nature and extent
    of any such budget constraints cannot be determined at the present time,
    our executive team is prudently engaged in a range of related planning
    activities that will help us to manage small reductions in our funding
    levels and still perform the high-quality work for the Congress that we
    are known for. We sincerely strive to lead by example, and are hopeful
    that our modest budget requests supported by our sound business case and
    proven performance results will encourage the Congress to provide
    additional resources to us and other high-performing entities. If the
    Congress employs such an approach, we should be in a good position to
    continue to provide a high rate of return on the resources invested in the
    agency. However, employing an across-the-board cut or other nontargeted
    approaches would greatly impede our ability to do our work and may create
    perverse incentives for those agencies that are trying to model our
    priorities and practices.

    A growing area for us also involves our work on bid protests. As required
    by law, General Counsel prepares Comptroller General procurement law
    decisions that resolve protests filed by disappointed bidders. These
    bidders challenge the way individual federal procurements are being
    conducted or how the contracts were awarded. In recent years, we have
    experienced an increase in the number of bid protests that have been
    filed. There is a possibility of a further increase if the executive
    branch undertakes a significant number of public or private competitions
    under OMB Circular A-76, particularly if statutory changes allow
    representatives of employees to protest when the private sector wins these
    competitions. We will continue to monitor our workload in this area to
    ensure that we meet our statutory responsibilities with minimal negative
    impact on our other work.

    In addition to current and future budget constraints, another external
    factor is the extent to which we can obtain access to certain types of
    information. With concerns about operational security being unusually high
    at home and abroad, we may have more difficulty obtaining information in a
    timely manner and reporting on sensitive issues. Historically, our
    auditing and information gathering have been limited whenever the
    intelligence community is involved. In addition, we have not had the
    authority to access or inspect records or other materials held by other
    countries or, generally, by the multinational institutions that the United
    States works with to protect its interests. Consequently, our ability to
    fully assess the progress being made in addressing national and homeland
    security issues may be hampered. Also, we anticipate that more of our
    reports may be subject to classification reviews than in the past, which
    means that the public dissemination of these products may be limited. We
    plan to work with the Congress to identify both legislative and
    nonlegislative opportunities for strengthening our access authority as
    necessary and appropriate.

    As the Congress focuses on unpredictable events-such as natural disasters,
    possible public health pandemics, and the global threat posed by
    sophisticated terrorist networks-the mix of work we are asked to undertake
    may change, diverting our resources from some strategic objectives and
    performance goals. We can and do mitigate the impact of these events on
    the achievement of our goals in various ways. For example in fiscal year
    2005, we

    fS stayed abreast of current events (such as the airline industry's
    financial crisis and gasoline prices) and communicated frequently with our
    congressional clients in order to be alert to possibilities that could
    shift the Congress's priorities or trigger new priorities;

         + quickly redirected our resources when appropriate (e.g., on the cost
           and recovery efforts related to Hurricane Katrina) so that we could
           deal with major changes as they occur;
         + maintained broad-based staff expertise (e.g., in our Social Security,
           health care financing, and homeland security areas) so that we could
           readily address emerging needs; and

    fS initiated research under the Comptroller General's authority on a
    limited number of selected topics, such as U.S. tsunami detection and
    preparedness efforts, the status of Iraq's reconstruction, and our 21st
    century challenges and high-risk work.

    Our ability to effectively manage the demands on our resources could have
    an impact on our ability to meet our performance targets. However, we will
    continue to manage the congressional requests we receive and the work we
    do under the Comptroller General's authority in order to minimize any
    negative impact it may have on our ability to meet the needs of the
    Congress and the American people.

                                 Managing Our Resources

    Resources Used to Achieve Our Fiscal Year 2005 Performance Goals

    Our financial statements for fiscal year 2005 received an unqualified
    opinion from an independent auditor. The auditor found our internal
    controls to be effective-which means that no material weaknesses were
    identified- and the auditor reported substantial compliance with the
    requirements for financial systems in the Federal Financial Management
    Improvement Act of 1996. The auditor also found no instances of
    noncompliance with the laws or regulations in the areas tested.

    Compared with the statements of large and complex agencies in the
    executive branch, our statements present a relatively simple picture of a
    small yet important agency in the legislative branch. We focus most of our
    financial activity on the execution of our congressionally approved budget
    with most of our resources devoted to the human capital needed for our
    mission of supporting the Congress with professional, objective,
    fact-based, nonpartisan, nonideological, fair, and balanced information
    and analysis. Table 3 summarizes key data from the financial statements.

    Table 3: GAO's Financial Highlights: Resource Information (Dollars in
    millions)

    Source: GAO. aThe net cost of operations figures include nonbudgetary
    items, such as imputed pension and depreciation costs, which are not
    included in the figures for total budgetary resources (which include
    current and prior year carryover authority) or total outlays.

    Our budget consists of an annual appropriation covering salaries and
    expenses and revenue from reimbursable audit work and rental income. For
    fiscal year 2005, our total budgetary resources increased by $6.3 million
    from fiscal year 2004. This increase consists of funds needed to cover
    mandatory and uncontrollable costs and a onetime transfer of budgetary
    authority from DHS for a review of TSA's calendar year 2000 costs for
    screening passengers and property.

    Our total assets were $114.4 million, consisting mostly of property and
    equipment (including the headquarters building, land and improvements, and
    computer equipment and software) and funds with the U.S. Treasury. The
    largest dollar change in our assets was in the net value of property and
    equipment, which decreased in fiscal year 2005 as a result of normal
    depreciation amounts being greater than asset purchases. Total liabilities
    of $94.9 million were composed largely of employees' accrued annual leave,
    amounts owed to other government agencies, accounts payable, and
    employees' salaries and benefits. The greatest changes in the liabilities
    were increases in intragovernmental accounts payable and capital lease
    liabilities. The increase in intragovernmental accounts payable relates to
    amounts due to GSA accrued at the end of the year. The increase in capital
    lease liability during fiscal year 2005 is primarily the result of
    entering into new leases for the replacement of substantially all the
    notebook computers and copiers at GAO headquarters.

    The net cost of operating GAO during fiscal year 2005 and fiscal year 2004
    was approximately $506 million and $490 million, respectively. Expenses
    for salaries and related benefits accounted for 78 and 79 percent of our
    net cost of operations in fiscal years 2005 and 2004, respectively. Figure
    3 shows how our fiscal year 2005 costs break down by category.

    We report net cost of operations according to our four strategic goals,
    consistent with our strategic plan. Goal 2 accounted for the greatest
    dollar increase in our net cost of operations from fiscal year 2004
    through fiscal year 2005. The increase is due to the continued efforts in
    homeland security. Costs in goal 4 decreased in fiscal year 2005 as a
    result of several goal 4 key efforts being completed during fiscal year
    2004, the first year of the 2-year strategic plan period. Examples include
    the implementation of the Travel Manager System completed in fiscal year
    2004 as well as the development phase efforts for both the
    performance-based compensation system and the compe-tency-based appraisal
    system.

    Figure 3: Use of Fiscal Year 2005 Figure 5: Net Cost by Goal, Funds by
    Category Adjusted for Inflation

    Figures 4 and 5 show our net costs by goal for fiscal year 2002 through
    fiscal year 2005. Figure 4 shows costs unadjusted for inflation, while
    figure 5 shows the same costs in 2005 dollars, that is, adjusted for
    inflation.

      Figure 4: Net Cost by Goal, Unadjusted for Inflation

    Audit Advisory Committee

    Assisting the Comptroller General in overseeing the effectiveness of GAO's
    financial operations is a three-member external Audit Advisory Committee.
    The committee's report for fiscal year 2005 appears after our financial
    statements and accompanying notes. Current members of the committee are

         + Sheldon S. Cohen (Chairman), CPA 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.
         + Edward J. Mazur, CPA, member of the Governmental Accounting Standards
           Board, former State

                          Comptroller of Virginia, and former

                          Controller of the Office of Federal

                              Financial Management in OMB.

    fS Charles O. Rossotti, Senior Advisor at The Carlyle Group; former
    Commissioner of Internal Revenue; and founder and former Chief Executive
    Officer and Chairman of American Management Systems, Inc., an
    international business and IT consulting firm.

    Planned Resources to Achieve Our Fiscal Year 2006 Performance Goals

    GAO's resources include budget authority of $490 million for fiscal year
    2006 to maintain current operations for serving the Congress as outlined
    in our strategic plan and allow us to continue to enhance our
    productivity, and maintain the progress we have made in technology and
    other transformation areas. This funding level supports 3,217 full-time
    equivalent personnel. Our resources include $483 million in direct
    appropriations and estimated revenue of $7 million from reimbursable audit
    work and rental income. Our fiscal year 2006 resources represent a modest
    3 percent increase over fiscal year 2005 resources-primarily to fund
    mandatory pay and uncontrollable costs. Following the catastrophic events
    of Hurricanes Katrina and Rita, the Congress is considering governmentwide
    across-the-board funding reductions that might reduce fiscal year 2006
    spending levels, and this could affect our resources. The nature and
    extent of any potential funding reduction is unknown.

    Our resources support three broad program areas: human capital, mission
    operations, and critical infrastructure. We will also continue to address
    our major management challenges, which are human capital, information
    security, and physical security. For example, on the human capital front,
    to ensure our ability to attract and retain a highly qualified,
    high-performing, and diverse workforce, our fiscal year 2006 recruitment
    strategy enhances or expands existing programs for internships and
    professional development, and provides targeted recruiting for special
    skill sets and hard-to-fill positions, and to enhance the agency's
    diversity recruiting.

    In fiscal year 2006, we plan to implement recommendations resulting from
    an assessment of our compensation system being conducted by a
    well-regarded consulting firm, to ensure that our compensation is fair and
    equitable and aligned with competitive labor markets.

    On the information security front, to address the increasing threats due
    to compromised information or information systems, we will complete an
    audit of network servers and refine monitoring techniques. To extend our
    ability to securely access and transmit classified data and information,
    we completed installation of security features in seven of our field
    offices and plan to continue installation at the remaining field offices
    in fiscal year 2006.

    On the physical security front, we are working to enhance our
    communication with external agencies, improve our internal communications
    and operations, and strengthen the technical and physical aspects of our
    emergency preparedness efforts.

    Source: See Image Sources.

    January 2006

    I am pleased to report that in fiscal year 2005 the U.S. Government
    Accountability Office continued to set the standard for excellence in
    government financial management. For the 19th consecutive year,
    independent auditors gave our financial statements an unqualified opinion
    with no material weaknesses and no major compliance problems. The
    financial statements that follow were prepared, audited, and made publicly
    available as an integral part of this performance and accountability
    report 45 days after the end of the fiscal year. In addition, for the
    fourth year in a row, the Association of Government Accountants awarded us
    a certificate of excellence in accountability reporting for our fiscal
    year 2004 annual performance and accountability report.

    During fiscal year 2005 we continued to make strides toward our strategic
    goal of becoming a model federal agency and a world-class professional
    services organization. We are leading the way in performance management
    through new and enhanced policies and processes. With the help of a
    consultant, we analyzed and designed a competitive, fair, and equitable
    compensation program aligned with the labor markets in which GAO competes
    for talent. Further, we invested significantly in restructuring our
    analysts' and specialists' pay bands to better align compensation with
    responsibilities. In June, our administrative staff completed their first
    cycle under a similar competency-based system designed to establish a
    clear link between employee performance and GAO's mission, core values,
    and strategic goals and objectives. This system will enable fair, honest,
    and properly applied measures of performance based on standards that are
    reasonable, appropriate, and clear to employees. Having a consistent
    competency-based performance management system throughout the agency will
    help to ensure that the work of all our staff is aligned with our core
    values and strategic direction.

    We also performed an extensive review of agency operations during fiscal
    year 2005 for potential cost savings, outsourcing, streamlining, and other
    opportunities to increase operational efficiency and effectiveness, as the
    result of a mandate in House Report 108-577. We had previously decided to
    cease operations of our internal print plant as a result of a reduced
    demand for printed products. The closing of the print plant was completed
    in October 2004, and all our printing needs are now met through contracts.
    Another area affected by our streamlining efforts this fiscal year was our
    accounting branch within the Office of Financial Management. Aiming to
    focus our financial management staff on greater value-added input to GAO
    activities, we have begun to shift the efforts of our staff away from
    routine transaction processing and toward a greater role in strategic
    business decision analysis and support. This shift will occur through a
    combination of automation, reallocation of resources within GAO, and
    outsourcing some data entry functions. Last year's implementation of the
    Travel Manager system has enabled us to streamline the auditing of our
    travel vouchers and transfer the remaining efforts from financial
    management to field office staff, more efficiently using administrative
    resources available throughout the agency. We cross-serviced the accounts
    payable function to the Department of the Interior's National Business
    Center. This center performs invoice receipt, processing, and payment
    activities for a number of other agencies; by utilizing the cen-ter's
    services, we will realize savings through eliminating data entry positions
    and focusing the efforts of the remaining staff on higher end financial
    analysis and decision support.

    To improve our operations through the use of new technology, we have
    embarked on an extensive effort to replace our current financial
    management system. Although our current system has served us well over the
    years, upgrades are no longer offered and technical support has become
    increasingly difficult to find. We have adopted, and are following, best
    practice processes to select and implement our next generation financial
    management system. This is part of a larger enterprise architecture effort
    that will improve integration of all our systems that interact with our
    financial data. We also improved our internal communications by
    implementing a new system for electronic dissemination and storage of
    agencywide communications, a new administrative services Web site, and a
    searchable administrative services directory.

    Looking forward to fiscal year 2006, we realize that there are many
    challenges ahead. In addition to our work on the new financial system, we
    continue to voluntarily implement the additional requirements of OMB's
    revised Circular A-123, which requires management to specifically
    document, assess, and attest to the effectiveness of internal controls
    over financial reporting beginning in fiscal year 2006. In addition to
    these efforts, we will continue to investigate and implement new
    approaches to improve the efficiency and effectiveness of our preparation
    of quality products for our clients in the Congress and the American
    people.

    Sallyanne Harper Chief Financial Officer

                          Financial Management Accountability

    Our condensed financial statements begin on page 63 . Our financial
    statements for the fiscal years ended September 30, 2005 and 2004, were
    audited by an independent auditor, Cotton & Co., LLP (see part III of our
    fiscal year 2005 performance and accountability report for our complete
    financial statements and the auditor's full report at
    http://www.gao.gov/sp.html ).

    Cotton & Co., LLP, rendered an unqualified opinion on our financial
    statements and an unqualified opinion on the effectiveness of our internal
    controls over financial reporting and compliance with laws and
    regulations. The auditor also reported that we have substantially complied
    with the applicable requirements of the Federal Financial Management
    Improvement Act (Improvement Act) of 1996 and 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.

    Financial Systems and Internal Controls

    We recognize 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.

    We are committed to fulfilling the internal control objectives of 31
    U.S.C. 3512, commonly referred to as the Federal Managers' Financial
    Integrity Act (Integrity Act). Although we are not subject to the act, we
    comply voluntarily with its 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 our
    operations are properly recorded and accounted for to enable our agency to
    prepare reliable financial reports and maintain accountability over our
    assets.

    Our management assesses compliance with these controls through a series of
    comprehensive internal reviews, applying the evaluation criteria in OMB's
    guidance for implementing the Integrity Act. The results of these reviews
    are discussed with our Audit Advisory Committee, and action is taken to
    correct deficiencies as they are identified.

    We assessed our internal controls as of September 30, 2005, based on the
    criteria mentioned above for effective internal controls in the federal
    government. On the basis of this assessment, we believe that as of
    September 30, 2005, we have effective internal controls in place.
    Additionally, our independent auditor found that we maintained effective
    internal controls over financial reporting and compliance with laws and
    regulations. Consistent with our evaluation, the auditor found no material
    internal control weaknesses.

    In addition, we are committed to fulfilling the objectives of the
    Improvement Act, which is also covered within 31

    U.S.C. 3512. Although we are not subject to the act, we voluntarily comply
    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, 2005. We made this assessment based on criteria
    established under the Improvement Act and guidance issued by OMB. Also,
    our auditor reported that we had substantially complied with the
    applicable requirements of the Improvement Act as of September 30, 2005.

    GAO's IG also conducts audits and investigations that are internally
    focused, functions as an independent fact-gathering adviser to the
    Comptroller General, and reviews all accomplishment reports totaling $500
    million or more. During fiscal year 2005, the IG examined compliance with
    our policy and procedures for conflict-of-interest determinations,
    recruiting and hiring, performance evaluations, career advancement,
    professional development, continuing professional education, GAO's
    information security program and practices, the performance-based
    compensation process for analysts and attorneys, and benefits for transit
    and parking. In addition, the IG independently tests our compliance with
    procedures related to our performance data on a rotating basis over a
    3-year period. No material weaknesses were reported by the IG. During
    fiscal year 2005, we completed actions related to 12 IG recommendations,
    none of which affected the financial statements. There are no unresolved
    issues.

    Limitation on Financial Statements

    Responsibility for the integrity and objectivity of the financial
    information presented in the financial statements in this report rests
    with our managers. The statements were prepared to report our financial
    position and results of operations, consistent with the requirements of
    the Chief Financial Officers Act, as amended (31 U.S.C. 3515). The
    statements were prepared from our financial records in accordance with the
    formats prescribed in OMB Circular A-136, Financial Reporting
    Requirements. These financial statements differ from the financial reports
    used to monitor and control our budgetary resources. However, both were
    prepared from the same financial records. Our financial statements should
    be read with the understanding that as an agency of a sovereign entity,
    the U.S. government, we cannot liquidate our liabilities (i.e., pay our
    bills) without legislation that provides resources to do so. Although
    future appropriations to fund these liabilities are likely and
    anticipated, they are not certain.

    Purpose of Each Financial Statement

    The condensed financial statements present the following information:

    fS A balance sheet presents the combined amounts we had available to use
    (assets) versus the amounts we owed (liabilities) and the residual amounts
    after liabilities were subtracted from assets (net position).

         + A statement of net cost presents the annual cost of our operations.
           The gross cost less any offsetting revenue earned from our activities
           is used to arrive at the net cost of work performed under our four
           strategic goals.
         + A statement of changes to net position presents the accounting items
           that caused the net position section of the balance sheet to change
           from the beginning to the end of the fiscal year.
         + A statement of budgetary resources presents how budgetary resources
           were made available to us during the fiscal year and the status of
           those resources at the end of the fiscal year.
         + A statement of financing reconciles the resources available to us with
           the net cost of operating the agency.

                              Independent Auditor's Report

    U.S. Government Accountability Office

    Condensed Balance SheetsAs ofSeptember 30, 2005 and 2004

    (Dollars in thousands)

    2004 Assets

    Intragovernmental assets including funds with the U.S. Treasury

    $68,670 Property and equipment, net

    49,180 Other 382

    $118,232

    Total Assets

      Liabilities

    Intragovernmental liabilities

    $11,248 Accounts payable and salaries and benefits

    27,784 Accrued annual leave and other

    29,958 Workers' compensation

    9,819 Capital leases

    5,934

    84,743

    Total Liabilities

      Net Position

    Unexpended appropriations

    34,621 Cumulative results of operations

    (1,132)

    33,489

    Total Net Position

    $118,232

    Total Liabilities and Net Position U.S. Government Accountability Office

    CondensedStatementsof Net Cost For Fiscal Years Ended September 30, 2005
    and 2004

    (Dollars in thousands)

      Net Costs by Goal

    Goal 1: Well-being/financial security of American people

    $194,731

    Goal 2: Changing security threats/challenges of global interdependence

    131,660 Goal 3: Transforming the federal government's role

    145,761 Goal 4: Maximize the value of GAO

    23,410 Less: reimbursable services not attributable to goals

    (5,493) $490,069

    Net Cost of OperationsU.S. Government Accountability Office
    CondensedStatements of Changes in Net Position For Fiscal Years Ended
    September 30, 2005 and 2004

    (Dollars in thousands)

    2004

    Cumulative Results of Unexpended OperationsAppropriations

    Balances, Beginning of Fiscal Year

    $2,338 $40,327

    Budgetary FinancingSources

    Current year appropriations

    - 457,606 Appropriations used

    461,503 (461,503) Other - (1,809)

    Other FinancingSources

    Employee benefit costs imputed to GAO

    25,884 -Other (788) -

    Total FinancingSources

    486,599 (5,706)

    (490,069) -

    Net Cost of Operations

    Balances, End of Fiscal

    ($1,132) $34,621

      Year U.S. Government Accountability Office CondensedStatements of Budgetary
      ResourcesFor Fiscal Years Ended September 30, 2005 and 2004

    (Dollars in thousands)

      Budgetary Resources

    Current year appropriations

    $457,606 Transfers of budget authority

    -Unobligated appropriations, beginning of fiscal year

    18,895 Reimbursements

    11,021 $487,522

    Total Budgetary Resources

      Status of Budgetary Resources

    Obligations incurred

    $471,647 Unobligated appropriations, end of fiscal year

    14,066 Lapsed budget authority

    1,809 $487,522

    TotalStatus of Budgetary Resources

      Relationship of Obligations to Outlays

    Obligations incurred

    $471,647 Obligated balance, net - beginning of fiscal year

    50,487 Less: Obligated balance, net - end of fiscal year

    (53,103) $469,031

    Total Outlays

      Outlays

    Disbursements

    $469,031 Collections

    (11,021)

    $458,010

    Net OutlaysU.S. Government Accountability Office CondensedStatements of
    FinancingFor Fiscal Years Ended September 30, 2005 and 2004

    (Dollars in thousands)

    2004 Resources Used to Finance ActivitiesBudgetary Resources Obligated

    Obligations incurred

    $471,647 Less: Reimbursements

    (11,021) Net obligations 460,626

      Other Resources

    Employee benefit costs imputed to GAO

    25,884 Other

    (788) Net other resources used to finance activities

    25,096

    485,722

      Total resources used to finance activities

    Resources Used to Finance Items Not Part of the Net Cost of Operations

    Net decrease in unliquidated obligations

    876 Costs capitalized on the balance sheet

    (11,703)

    Total resources used to finance items not part of the net cost of
    operations

    (10,827)

    474,895

      Total resources used to finance the net cost of operations

    Components That Require/Generate Resources in Future Periods

    Increase/(decrease) in workers' compensation, accrued annual leave, and
    other liabilities

    (1,630)

    Costs That Do Not Require Resources

    Depreciation 16,804

    $490,069

    Net Cost of Operations

                               From the Inspector General

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