FOREWORD

The Senate Governmental Affairs Committee asked the National Academy of Public Administration (NAPA) to conduct this study of the roles, mission, and operations of the U.S. General Accounting Office (GAO), as part of the committee's general legislative and oversight authority over GAO.

In recent years, several members of Congress have introduced proposals to amend the legislation authorizing GAO, to change the way GAO works, or to review its role and operations. In 1992, the Senate Appropriations Committee earmarked $2 million for a comprehensive outside audit of GAO, but a conference committee dropped the proposal in favor of a $5 million cut in GAO's appropriation. Eventually, the fiscal year 1994 Legislative Appropriations Act mandated that GAO undertake a $500,000 review of its structure, skills and staffing, systems, and execution of its statutory and assigned responsibilities (separate from the Academy's study).'

The Governmental Affairs Committee asked NAPA to conduct an objective, non-partisan analysis of the agency and report back to the committee. Specifically, the committee requested that NAPA review GAO's capacity to fulfill its mission and effectively conduct its operations. The committee asked that NAPA examine such key topics as:

the spectrum of issues that GAO now addresses and its competence to do so;

executive branch capacities for audit, investigation, and program evaluation, and their effects on GAO's roles;

GAO's basic functions and performance, focusing on:

- audits of economy and efficiency in government;

- reviews of program results, program evaluation, and general management reviews;

- policy analyses and assistance in drafting legislation; and

- budget and financial management roles; and

key elements of GAO's internal operations, such as:

- who or what is driving Congress's increasing requests for GAO's work

and GAO's responsiveness to them;

- GAO's internal priority setting;

- GAO's performance measures and accomplishments;

- GAO's internal oversight and peer review; and

- impacts of information technology on GAO's roles and mission.

'In May 1994, GAO published a request for proposals to conduct this study, to begin by September 1994 and be completed by September 30, 1995.

This report is the work of a NAPA panel formed to conduct this study. The panel included former House and Senate members of both parties; former staff to and experts on Congress; the financial management and auditing profession; and experienced practitioners and professors of public management and public policy. The panel members, whose biographies are included in Appendix I,

The panel met formally five times (September 24, November 10 and December 8-9, 1993, and January 26 and April 18, 1994) and convened in smaller groups several other times. Panel members read GAO reports and testimony as well as general materials by and about GAO; they participated in focus group discussions and individual interviews.

Annmarie Walsh of the Institute of Public Administration served as project director. Project staff members are listed in Appendix II. The project staff conducted research and prepared background materials for the panel, reviewing hundreds of GAO studies and other products, earlier studies of GAO, and legislation and other materials related to GAO's roles, mission, and operations. The panel members and staff held more than 100 in-depth interviews and meetings with GAO managers and employees; congressional members and staffs; executive agency officials, including chief financial officers and inspectors general; and outside experts on government programs, management, and auditing issues. GAO gave the staff orientations on its mission, organization, personnel, policies, and current issues. The project staff also spoke with GAO staff in three regional offices.

Discussions covered management systems; processes for defining and planning for work; personnel requirements in terms of staff numbers, skills and training; operating practices and internal reviews aimed at assuring fairness, accuracy, and product quality; systems to track performance; use of information technology; relationships between GAO and other government audit and investigative agencies; and relationships among GAO, the Congressional Budget Office, Congressional Research Service, and Office of Technology Assessment.

From these information sources and independent research, the staff prepared issue papers and case studies on the topics requested by the committee and the panel, including general areas of GAO's work and GAO's specific work products and activities. These materials formed the basis of panel deliberations on the issues and its development of findings and recommendations presented in this report.

I. GAO'S HISTORY AND STATUTORY BASE

GAO has always had a broad mandate to examine and report on activities using federal funds, but GAO's roles and mission have evolved with changes in the federal government and in response to specific statutes.'

The Budget and Accounting Act of 19212 created the Bureau of the Budget (now the Office of Management and Budget) in the executive branch and GAO as an agency independent of the executive branch. The law consolidated federal budget formulation activities in the new executive agency and created GAO to "...investigate all matters relating to the receipt, disbursement, and application of public funds...." That law also required that GÃO settle all claims and demands by the government or against it. In addition, the enabling legislation provided that the comptroller general shall:

"Make recommendations looking to greater economy or efficiency in public expenditures," either in an annual report or in special reports, as well as make recommendations concerning legislation he may deem necessary to achieve those purposes;'

Prescribe the forms, systems, and procedure for administrative appropriation and fund accounting in the several departments and establishments; and

Make investigations and furnish reports ordered by the House or Senate or any congressional committee with jurisdiction over revenue, appropriations or expenditures, and give that committee any help and information it requests.'

'GAO has documented this evolution. The panel made extensive use of the reports in GAO's history program, notably Harry S. Havens, The Evolution of the General Accounting Office: From Voucher Audits to Program Evaluations, GAO-OP-2-HP, January 1990, and Roger R. Trask, GAO History 1921-1991, GAO-OP-3-HP, November 1991, as well as other background information provided by former Comptroller General Elmer Staats.

242 Stat.20 (See, 31 U.S.C. §§ 501, 502, 521, 522, 701-704, 711, 712, 716, 719, 731, 771779, 1101, 1104-1108, 1111, 1113, 3301, 3323, 3324, 3521, 3522, 3526, 3529, 3531, 3541, 3702).

'See 31 U.S.C. § 712(1).

'See 31 U.S.C. § 719(b)(2).

'See 31 U.S.C. § 719(a)(1).

'See 31 U.S.C. §3511 which now authorizes prescribing "accounting principles, standards and procedures."

'See 31 U.S.C. § 712(4), (5).

Congress has not substantively altered that original statutory language. But the interpretation of GAO's mission (by GAO, Congress, the courts, and others), its mix of work, and its roles have changed significantly with the addition of new statutory responsibilities and specific legislative mandates, court decisions, and the comptroller general's priorities.

Congressional debates over creating GAO referred both to what GAO calls "compliance auditing" -- helping Congress to determine whether money has been spent for the purposes for which it was appropriated -- and to "performance auditing" -- assuring that federal funds were spent wisely, economically, and efficiently. GAO's activities in the first several decades emphasized strict compliance with laws governing the federal spending process. In its first quarter century, GAO focused on detailed reviews of all individual vouchers for spending by executive agencies, along with assessments of the validity of government contracts and advice to the executive branch on the legality of its expenditures. GAO did not make use of its full statutory authority to review broader questions of government management systems and performance.

In and out of GAO, questions arose during the 1930s and 1940s as to whether it was exercising the independence Congress intended. That debate culminated in the Reorganization Act of 1945, which stated that GAO was "part of the legislative branch of government. " The Legislative Reorganization Act of 1946 authorized and directed the comptroller general to "analyze expenditures of each executive agency as the Comptroller General believes will help Congress decide whether public money has been used and expended efficiently."9

As federal activities expanded in the New Deal and World War II, the burden of auditing individual vouchers for the entire government grew beyond the capacity of even GAO's 14,000 audit clerks. Comptroller General Lindsay Warren (1940-1954) worked with Congress to develop a new role for GAO. By necessity, during and after the war, GAO began to rely on executive agencies to do their own accounting and auditing of vouchers prior to payment and retained for itself primarily an oversight role to prescribe accounting and auditing principles and to review the adequacy of financial management processes. GAO also reserved authority to exercise post-expenditure audits. In the Accounting and Auditing Act of 1950, Congress endorsed and formalized this approach.10 That act shifted GAO's mission to a review and monitoring function, referred to as "comprehensive auditing." As a result of this shift in roles and functions, GAO employment dropped from about 15,000 at the end of World War II to about 6,000 by 1954. GAO also shifted its recruiting focus from audit clerks to accountants, investigators, and program analysts.

$59 Stat. 613, Ch. 582 § 7.

'60 Stat. 812 (See particularly 31 U.S.C. § 712(3)).

1964 Stat. 834-38 (See 31 U.S.C. §§ 713, 714, 718, 719, 3326, 3501, 3511-3514, 3521, 3523, 3524).

Two trends arose in the 1960's:

1.

2.

GAO began more aggressive compliance audits, such as a series of reports on overpayments to defense contractors. These reports led to the so-called "Holifield Hearings," by the House Government Operations Subcommittee on Military Operations, which produced a committee report critical of how GAO treated the defense industry. This report, together with creation of the Defense Contract Audit Agency, reduced GAO's involvement in individual contract audits."

GAO developed a new role in evaluating government programs, beginning with an 18month evaluation of economic opportunity programs that Congress mandated in 1967.12

Comptroller General Elmer Staats -- a former Bureau of the Budget official whom President Johnson appointed to head GAO in 1966 -- stressed program results audits, calling for analytical techniques that related plans, policies, budgets, actual expenditures, and program outcomes. In this work, GAO began to rely less on the measurement of dollars and legality of contracts and vouchers, and more on the evaluation of outcomes or results. The Legislative Reorganization Act of 1970 recognized and codified this approach." That law directed the comptroller general to "review and evaluate the results of a program or activity carried on under existing law, including the making of cost benefit studies, when ordered by either House of Congress, or upon his own initiative, or when requested by any committee...." This provision created a direct relationship between GAO and the authorizing committees (in addition to the revenue and appropriations committees with which it was directed to work in the 1921 act).

The Congressional Budget and Impoundment Control Act of 197415 took several additional steps affecting GAO. The Congressional Budget Act of 1974, which established the Congressional Budget Office (CBO), also authorized the establishment of an Office of Program Review and Evaluation at GAO. The Impoundment Control Act of 1974 empowered GAO to review each

"Harry S. Havens, The Evolution of the General Accounting Office: From Voucher Audits

to Program Evaluations (GAO/OP-2-HP), January 1990, pp. 5-6 and p. 10.

12 Review of Economic Opportunity Programs (GAO Report B130515), March 18, 1969.

1384 Stat. 1104 (See 31 U.S.C. §§ 702, 717, 719, 720, 731, 734, 1105, 1106, 1112, 1113). "Cf. 31 U.S.C. § 717(b).

1588 Stat. 297. The act had two parts, the Congressional Budget Act of 1974, Pub. L. 93344, Titles I-IX, 88 Stat. 297 to 332, and the Impoundment Control Act of 1974, Pub. L. 93344, Title X, 88 Stat. 332.

1688 Stat. 326.