GAO audits improve accountability through better financial and information management GAO, long an advocate of financial management reform for the federal government, worked with bipartisan congressional leaders to draft the Chief Financial Officers (CFO) Act, a law that now requires major federal agencies for the first time to prepare financial statements and undergo annual financial audits. The CFO Act was passed after GAO audits found that federal agencies cannot account for tens of billions of dollars, that books cannot be balanced, and that lack of accountability had led to billions of dollars in waste, fraud, abuse and mismanagement. GAO has a continuing responsibility to monitor progress made by agencies in implementing the new law. Beginning in 1997, GAO is also charged with auditing the new consolidated financial report that will show Congress and the American taxpayers the status of federal finances each year. Information gleaned from the CFO audit process will also contribute to successful implementation of another new law, first proposed by the Chairman of this Committee, The Government Performance and Results Act. Besides the resources devoted to the CFO and GPRA laws, GAO is committed to improvements in information management throughout the federal government. The federal government now spends about $25 billion each year on information technology. Billions have been wasted in abortive start-and-stop efforts to modernize government computer systems. Preventing further waste and assuring efficient and cost-effective computer modernization efforts are essential. GAO evaluations identify trends with fiscal, budgetary or oversight consequences for the government GAO was among the first organizations, public or private, to warn that the nation's savings and loan industry faced collapse and that the Federal Deposit Insurance Corporation was rapidly approaching insolvency-developments that ultimately led to the most expensive federal bailout in American history. Months before Orange County, California, declared bankruptcy after officials invested public funds in risky financial instruments known as derivatives, GAO had issued a major report alerting Congress to weakness in the regulation of these products. From an outdated federal food inspection system to the crumbling financial condition of the District of Columbia, from cost overruns in major weapons systems to the deterioration of the nation's plants that produce nuclear weapons, GÃO has issued major reports to alert Members of Congress and other policy makers to crises in the making. GAO believes one of its priorities must always be the identification of trends that could pose major problems for the government. With a multi-disciplinary staff and with access to financial and other records throughout the federal government, no other agency is as well placed as GAO to be the eyes and ears of Congress. Currently, there are several possible developments that could pose future problems of major consequences. GAO is working on them now, in close consultation with the key congressional committees responsible for the areas. For example, • Disability insurance or Supplemental Security Income now costs about $60 billion-a 140 percent increase over the $25 billion spent on these programs 10 years ago. GAO is working with congressional committees to suggest ways to target disability programs to bring mushrooming costs under control. • A trend has emerged in which the Pentagon plans for more programs than it will be able to afford. With diminishing resources, this leads to program instability, stretched-out procurement of weapons systems at extra cost, and other problems. GAO is working with congressional committees to identify ways to reallocate funds to better balance the need for a strong national defense while at the same time holding down the cost of defense spending. • The Energy Department's program to store and dispose of spent radioactive fuel from civilian nuclear power plants has reached the crisis stage. GAO is working with the Congress to assess options to deal with this waste disposal problem. NATURE OF GAO'S WORK As you can see from the above examples, the nature of work we do is planned to achieve one key objective-support the oversight and legislative needs of Congress. I want to reiterate that our work is audit and evaluation. It is fact-based. GAO is often asked by congressional committees to provide information on policy issues before the Congress, such as work we are currently doing for the Senate Agriculture Committee to assess aspects of programs it will consider when the farm bill is up for renewal. We expect all reports resulting from such requests to be based on objective facts and analysis. The testimonies we give each year are all grounded in our audit work and the facts and information we have developed as a result of our ability to examine, in detail, the records of agencies and entities associated with the receipt and expenditure of federal dollars. Let me reemphasize that certain fundamental principles guide GAO in dealing with any issue we examine, including those that have policy implications. First, our role is advisory. Responsibility for deciding policy resides with Members of Congress and executive branch officials. Second, we make recommendations only as they flow from the work we have performed. Third, we always strive to present our findings in a balanced manner. Fourth, any recommendations we make are based on our analysis of the information we gather and never on political or ideological considerations. RESTRUCTURING GAO OPERATIONS AND WORK PROCESSES GAO has recognized over the years that it must continually change if it is to maintain its productivity and usefulness to the Congress. Our planned reduction of staff by 25 percent by 1997 will enable us to achieve that goal. Recently, we have realigned our organization, including developing greater issue-area expertise in our field staff. We have closed half of our 40 field offices. Over the last decade, we have undertaken many initiatives to enhance the skill levels, and motivation of our workforce, including a totally redesigned pay-for-performance system to more effectively reward staff for performance, a revised merit promotion process and an enhanced senior executive selection and development process to prepare senior leaders of GAO. And we want to work with this Committee to make additional changes to our personnel system to enhance our ability to effectively fulfill our mission as we downsize. We have invested substantial resources in modern technology and in training our staff to use such technology. GAO has installed telephone voice mail and video teleconferencing equipment in its headquarters and regional offices to improve communication and reduce travel costs. Computer networks linking all GAO are now being installed, promising easier, faster and more efficient sharing of information. We have implemented a program to systematically obtain feedback from Members of Congress and key staff on the quality of our products. All of these efforts are critical to the successful reengineering of our audit, evaluation and supporting processes to assure that we do our work quicker, cheaper, and consistently with the highest quality. All of these efforts are designed to provide us better assurance that we can carry out work supporting the oversight and legislative needs of the Congress more efficiently. LEGISLATIVE PROPOSALS TO HELP DOWNSIZE I would like to discuss two areas that I know are of interest to the Committee. The first has to do with managing our downsizing efforts as efficiently as possible to minimize disruptions while maintaining productivity. As you are aware, our plan allows that downsizing to occur over a reasonable period of time so GAO can retain its ability to effectively respond to the oversight and legislative needs of Congress. You requested that we propose legislation that would allow GAO to efficiently carry out a reduction-in-force. Should a RIF be necessary, we believe several legislative provisions would mitigate its effect. First, GAO should be allowed to formulate its own RIF regulations to more effectively consider staff performance, skills and expertise in making difficult RIF decisions. Second, separation incentives and penalty reductions would facilitate voluntary retirements and resignations Part of the reason we need more flexibility is that, even as we downsize, we need to maintain our skills and capacity to carry out specific, increasingly sophisticated responsibilities in the financial and information management areas as a result of the CFO legislation. Requiring GAO to reduce its resources by 25 percent immediately would force us to terminate more than one quarter of our staff (1600 people) within the next 6 months. While legislative changes to facilitate such a RIF would help, the overall consequences of such drastic action would greatly disrupt our operations and our ability to meet our congressional responsibilities and obligations. INITIATIVES TO IMPROVE OUR WORK PROCESSES We know we must improve the way we do the work. We must be able to produce high-quality products on time, every time, and have processes in place to make that possible. We initiated a number of efforts within the past several years to improve our procedures. These included adoption of goals to lessen "rework" of our products, guidelines for issuing briefing reports within 7 days after the oral briefing to congres sional committees were provided, initiation of efforts to improve our ability to predict the issuance date of our reports, and efforts to reduce "cycle time" in producing reports. The key effort that holds the most promise to reduce the costs of our jobs and the time to complete them is our effort to reengineer our job management process. We have set a stretch goal of reducing the amount of rework in our jobs by 50 percent over the next 2 years. And we know that to achieve that goal we have to change the way we plan and manage our work, including who gets involved in the jobs and when they get involved. We have to streamline our structure and we are planning to do it. A senior level task team was established in October 1994 to identify and accelerate the GAO-wide implementation of "best practices" in units to improve GAO's entire job management process. A number of efforts were identified that can significantly improve how GAO begins assignments, plans their approach, gathers the data, and develops, reviews and issues its products. A new, full-time senior team will now take those efforts, develop a detailed new framework for our reengineered job management process, test it this year and put it in place GAO-wide in early 1996. A key to this new process will be use of a job "risk assessment" done at the beginning of a job that will guide decisions on staffing, supervision, and product review. In addition, GAO will improve its processes for obtaining early agreement with congressional requesters on the objectives, scope and approach to the jobs and expedite its process for obtaining comments on its reports from agency officials. One of our issue areas, Agriculture, has also reassessed all its processes, from top to bottom, to reengineer our job management and support processes using our most advanced technologies. The goal of this prototype is to test how redesigned processes can enable us to deliver timely, high quality reports on time, every time, at reduced cost to congressional requesters. Results from the prototype will be incorporated into the GAO-wide approach in 1996. These efforts to reengineer our job management process are among the most innovative GAO has undertaken since the 1950's. The effort could be jeopardized by a widespread RIF that would disrupt GAO. In closing, I would like to thank you, Mr. Chairman, and the other Members of this Committee for the support and encouragement you have provided to GAO over the years. That support has allowed us to strengthen our capabilities and provide higher quality and more timely assistance to the Congress. Today, events are unfolding in the United States and around the world at an unprecedented pace. The worldwide political and economic restructuring has important implications for how the government responds to various economic issues and for defense force reduction and realignment. At the same time, problems associated with the budget deficit continue to challenge the nation's ability to provide programs and services in an effective, cost-efficient way. As the Congress deals with these and other issues, an independent GAO can be a strong ally by providing a focus and counterweight to the vast array of information you receive from the executive branch and the private sector. Working together, we can help you identify ways to cut the size of government and reorganize government to better assure that programs that are needed are delivered efficiently. GAO is uniquely qualified to analyze federal financial records and performance data for the accuracy that is essential for oversight and decision-making. At the same time, we can continue to monitor and warn you of major financial risks such as those in the financial markets and pension areas. We card watch for accelerating costs in big programs. However, GAO must retain the resources it needs to carry out its mission. That requires your continued support. By the end of fiscal year 1994, GAO had reduced its size by over 10 percent and by 1997 under its current plan will have reduced its staff by 25 percent from the 1992 level. GAO is now at its lowest staff level in a quarter of a century. And we are committed to managing this reduction so that the quality and impact of our work are not compromised. But, based on my years of experience as an auditor in the public and private sectors, I firmly believe that reducing GAO much below the level of 4,000 staff would be very risky. At levels lower than that neither I, my successor, or the staff of GAO will be able to provide the Congress assurance that its auditor is able to adequately cover the operations of the federal government and that proper accountability exists over the expenditure of federal dollars. If that occurs, there will be a grave danger that the Congress will not be alerted quickly enough to potential problems having serious financial consequences. We should not allow that to happen. This concludes my prepared remarks. I will be happy to answer any questions you may have. |