OVERVIEW The General Accounting Office was created to help ensure that taxpayers' dollars are wisely spent. We seek to fulfill this mission by encouraging honest, efficient management and full accountability of resources throughout the federal government. We serve the public interest by providing the Congress, other policymakers, and other interested parties with accurate information, unbiased analyses, and objective recommendations on the use of public resources. The issues that GAO examines span the breadth of national concerns, including health care financing, financial management and accountability, law enforcement and banking, information technology, national security, energy and the environment, aviation safety and security, defense procurement, education and employment, transportation, tax administration, income security, housing, and many others. Ninety-one percent of the reports and testimonies that GAO issued during fiscal year 1997 were produced for or addressed to the Congress. In recent years, congressional legislation has increased mandates for GAO audits and evaluations. Public Law 67-13 requires GAO to do work requested by committee chairs, and as a matter of policy, GAO assigns equal status to requests from ranking minority members. To the extent possible within resource constraints, GAO also responds to requests from individual members of the Congress. Finally, GAO undertakes assignments independently in accordance with its basic legislative responsibilities. While audits and evaluations are the most visible aspects of GAO's work and absorb the largest share of its resources, GAO has other important functions. For example, GAO prescribes accounting standards for the entire federal government, in cooperation with the Office of Management and Budget and the Department of the Treasury, and issues generally accepted auditing standards for all levels of government entities. GAO also issues legal decisions on matters involving government revenues and expenditures, such as protests against the award of federal government contracts. FISCAL YEAR 1997 HIGHLIGHTS AND ACCOMPLISHMENTS In fiscal year 1997, GAO added 5 new high-risk areas to the 20 high-risk areas that GAO is continuing to audit. These five areas are defense infrastructure, information security, the year 2000 problem, supplemental security income, and the 2000 decennial census. In reviewing these issues, GAO's objective was to identify the root causes of and meaningful solutions to the problems plaguing high-risk areas. Also in fiscal year 1997, GAO issued its fourth annual report on the budgetary implications of its work. The report contains 147 options for use by the Congress in making tough decisions on how to reduce spending and/or increase revenues. The report is used extensively by the House and Senate Budget Committees to formulate budget resolutions and by the Appropriations Committees to achieve spending reductions each year. GAO also issued a guide for the Congress and agencies to use in reviewing agency strategic plans to ensure compliance with the Government Performance and Results Act (GPRA). The guide provides a series of key questions that will be helpful in ensuring that strategic plans serve their intended purpose of improving decisionmaking in both the legislative and executive branches. GAO also issued a guide to help agencies evaluate information technology (IT) investments and to ensure that IT decisions are well-justified and focused on supporting mission needs and objectives. In addition, GAO issued a progress report on GPRA implementation based on the assessment of more than 70 performance planning and reporting pilot projects, a survey of federal managers and executives, and related work by issue areas throughout GAO, as well as a large body of GAO continued to analyze financial operations of individual agencies and worked with Chief Financial Officers (CFO) and Inspectors General (IG) throughout the federal government in preparation for the audit of the fiscal year 1997 governmentwide financial statements. GAO continued to work with CFOs and IGs to resolve accounting and auditing issues that have precluded agencies from providing meaningful and reliable financial information. Benefits Attributable to the Work of GAQ In fiscal year 1997, GAO recommendations contributed to legislative and executive actions that yielded over $20.9 billion in measurable financial benefits. During the last 5 years, financial benefits totaled $44 for every dollar appropriated to GAO. These recommendations cited specific actions that the Congress and federal agencies could undertake to improve government operations and reduce costs. Both the number and dollar amount of GAO accomplishments increased significantly over fiscal year 1996. The number of accomplishments increased 30 percent over fiscal year 1996's total of 385; the dollar amount of benefits increased 21 percent over fiscal year 1996's total of $17.2 billion. Sources of these benefits were diverse, as shown in Table 1. Table 1: Measurable Financial Benefits Attributable to the Work of GAO in Fiscal Year 1997, by Issue Area Examples of GAO's work that resulted in important financial accomplishments follow: After GAO reported that the Savings Association Fund was seriously undercapitalized, the Congress authorized the Federal Deposit Insurance Corporation to make a special assessment of thrifts to fully capitalize the Fund. The benefits are expected to total about $4.5 billion. Because GAO identified a funding shortfall in the airport and airway trust fund that was bigger than expected, the Congress reinstated the excise tax to fund the shortfall earlier than had been planned. The estimated financial benefits of this legislation were $2.6 billion in fiscal year 1997. The Department of Defense has instituted several initiatives to deal with inventory management problems that GAO reported. Additional financial benefits generated from a reduction in Defense inventories will save $2.5 billion over a 2-year period. GAO reported that Medicare and CHAMPUS were paying different rates for the same services. Acting on these findings, the Congress authorized CHAMPUS to pay Medicare physicians' rates, which were substantially lower in many cases. The cost reductions associated with this authorization are expected to yield $1.4 billion in fiscal years 1997 and 1998. GAO reported that the Housing and Urban Development's (HUD) mortgage assignment program--a program intended to help homeowners retain their property after defaulting on their mortgages--was not very successful and was costly to run. Acting on GAO's recommendations, the Congress terminated the program and authorized HUD's Secretary to assist borrowers in default. The estimated benefits over 2 years are about $1.3 billion. Following GAO's report on difficulties in using the individualized functional assessment to determine disabled children's benefits under the Supplemental Security Income (SSI) Program, the Congress eliminated the use of such assessments in the Welfare Reform Act. Cost reductions associated with this action are expected to be $1.1 billion for fiscal years 1997 and 1998. The Small Business Protection Act of 1996 phased out a tax credit for certain income earned by corporations in Puerto Rico. GAO's work was used during the congressional deliberations. The benefits are expected to total $1.1 billion over fiscal years 1997 and 1998. GAO Work Leading to Significant Improvements in Government Operations Many other GAO recommendations and audit findings resulted in or contributed to improvements in the effectiveness and efficiency of government operations and services. GAO documented over 390 such accomplishments in fiscal year 1997, a 45-percent increase over the 265 accomplishments in fiscal year 1996. These contributions cannot be measured in dollars but have considerable potential to increase the taxpayers' trust in their government by improving practices or operations. Examples of GAO work leading to significant improvements in government operations follow: The Federal Aviation Administration is increasing its inspections of foreign air carriers to ensure that they comply with international safety standards. The Department of State is taking steps to sell unneeded property overseas in response to GAO recommendations. On the market are high-valued property in the Bahamas, Japan, Germany, and Morocco, among others. GAO reports and testimonies were extensively used by the Congress for enactment of legislation establishing a $40-billion fund to enable states to provide health insurance for children. Computer matches of prison rolls and food-stamp participant lists are being made to ensure that inmates are not counted in qualifying a family to receive food stamps. The Social Security Administration is redesigning the form it sends each year to individuals to inform them of what they have paid into social security and what they can expect to receive in payments upon retirement. The U.S. Postal Service established a separate Office of the Inspector General after GAO pointed out that the dual responsibilities of the Chief Postal Inspector did not ensure the necessary degree of independence. Federal agencies, as well as federal grantees, are being required to purchase more products made from |