UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE

In 2004 the U.S. Congress changed the name of the U.S. government financial management oversight office to the Government Accountability Office (GAO). Since 1921 this nonpartisan office of Congress had been the General Accounting Office (so it retained its initialism, GAO), even though the office did not keep accounts or establish accounting rules. Initially, the GAO did actually review government vouchers and receipts. For decades, though, the GAO's work has been primarily review of federal government financial transactions, covering programs, projects, and activities within the United States and abroad. The GAO does serve, however, as the principal auditor for the U.S. government's annual consolidated financial statements, and in 2005 devoted 15 percent of its workload to financial audits.

The GAO's chief officer is the comptroller general of the United States, who is appointed by the president for a single term of fifteen years with the advice and consent of the Senate. Removal of the comptroller general from office requires the passage of a joint resolution of Congress signed by the president. The protection of office afforded to the comptroller general strengthens the independence of the GAO.

Much of the work that the GAO performs originates as requests from committees of Congress or from members of Congress. Other work fulfills GAO mandates or legislative requirements.

HISTORY AND ESTABLISHMENT BY CONGRESS

The GAO was established by the Budget and Accounting Act of 1921, which transferred powers previously held by the U.S. Department of Treasury to the GAO. This transfer of powers from the executive branch represented a substantial change in federal financial management. As the presidency became the dominant focus of government in the twentieth century, the GAO became a powerful investigative office of Congress, with authority to audit the financial operations of government and to examine matters related to the receipt and disbursement of public funds.

EVOLVING NATURE OF RESPONSIBILITIES

The GAO has broad responsibility for oversight of financial activities in the executive branch and wide discretion in the application of its responsibilities. Over time, the GAO's interpretation of its responsibility has evolved through four phases of dominant orientation: bookkeeping, auditing, evaluation, and systems development. Until the end of World War II (1939–1945), the GAO had a bookkeeping orientation. Its work consisted of checking the accuracy and the legality of transactions. Operations were centralized, and personnel lacked professional credentials.

Following World War II, responsibility for bookkeeping practices was transferred to executive agencies, and the GAO's orientation shifted to auditing. It began to conduct financial audits of government corporations, such as the Tennessee Valley Authority, and to perform economy and efficiency audits of activities within selected agencies. Additionally, the GAO was aggressive in auditing defense contracts for cost overruns. Many of the auditors were military veterans who were educated in accounting.

Starting about 1965 with the adoption of Great Society programs, the GAO's orientation shifted to program evaluation and service to Congress. Staff members with a variety of educational backgrounds were recruited for their expertise in a number of fields, including accounting, information systems, and law.

From the early 1980s, the GAO's focus centered on the development of financial and management systems. As a means of improving management of the government, resources were directed to improving internal control systems, financial reporting systems, and performance-based management systems.

NATURE OF RESPONSIBILITIES AND ACTIVITIES

The GAO has broad responsibilities as noted in 2004 by David Walker, the comptroller general:

The scope of GAO's work today includes virtually everything the federal government is doing and thinking about doing anywhere in the world.… GAO has become a modern, multidiscipline professional services organization whose 3,200 employees include economists, social scientists, engineers, attorneys, actuaries, and computer experts as well as specialists in areas from health care to homeland security. (Walker, 2004)

Nevertheless, the GAO's authority over the executive branch is limited. In Bowsher v. Synar (1986), the U.S. Supreme Court held that the comptroller general could not exercise executive branch decision-making authority. And, in Walker v. Cheney (2002), the District Court for the District of Columbia held that the GAO lacked the standing to sue to compel the vice president to disclose information.

Accounting and Auditing

The scope of GAO audits may be broader or narrower than the scope of financial audits in the private sector. To provide the necessary expertise, personnel on GAO audit teams often have disciplinary backgrounds other than accounting. Also, GAO audits tend to be initiated by request and usually are not performed on a routine periodic basis. The GAO is responsible, however, for the annual audit of consolidated government-wide financial statements. Although the number of agencies receiving unqualified audit opinions has increased since government-wide statements were initiated in 1997, material weaknesses at the U.S. Department of Defense and other agencies have precluded the issuance of an unqualified opinion on the consolidated government-wide financial statements (as of the end of fiscal year 2004).

The GAO, although not directly responsible, participates in the development of accounting principles and standards and advises federal agencies about fiscal policies and procedures. Additionally, through the publication Government Auditing Standards, commonly known as the Yellow Book, and other directives, the GAO proscribes standards for auditing and evaluating government programs, including standards for governmental entities subject to the Single Audit Act of 1984 (and its amendments of 1996). The GAO's auditing standards have been revised from time to time with the latest revision in June 2003.

Legal Advice

The GAO provides legal advice to Congress, reviews legislative proposals, and assists with drafting legislation. Its staff investigates possible civil and criminal misconduct discovered during audits and evaluations. Within its judicial functions, the GAO resolves bid protests that challenge government contract awards, interprets laws governing public expenditure, and adjudicates claims for and against the government.

Reporting

Findings and recommendations of the GAO are published as reports to Congress, delivered as testimony to Congress, or conveyed in oral briefings. Additionally, the GAO publishes comptroller general decisions. All unclassified reports are available to the public and are generally posted at the GAO Web site (http://www.gao.gov) promptly upon publication.

Improvement of Performance

To motivate improvements in the performance of federal agencies, the GAO has developed the High Risk Series and the Performance and Accountability Series. Begun in 1990, the High Risk Series identifies programs that are vulnerable to waste, fraud, abuse, and mismanagement. The 1999 Performance and Accountability Series provides a general report and separate reports on each cabinet department and most other major independent agencies. This series is oriented to understanding ways performance-based management can be applied to achieve economy, efficiency, and effectiveness in government operations.

ROLE ENVISIONED

At the GAO's Web site are the words accountability, integrity, and reliability. These words are the fundamental concepts that guide the work of the agency. The GAO stated mission is "to support Congress in meeting its constitutional responsibilities and to help improve the performance and ensue the accountability of the federal government for the benefit of the American people."

Walker's comment reflected the mission statement when he wrote:

At today's GAO, measuring the government's performance and holding it accountable for results is central to who we are and what we do. We continue to believe that the public deserves the facts on all aspects of government operations—from spending to policy making. (Walker, 2004)

see also Chief Financial Officers Act of 1990 and Federal Financial Management Act of 1994 ; Government Accounting

bibliography

Trask, Roger R. (1991). GAO History 1921–1991. Washington, DC: General Accounting Office.

Trask, Roger R. (1996). Defender of the public interest: The General Accounting Office, 1921–1966. Washington, DC: General Accounting Office.

Walker, David M. (2004, July 19). GAO answers the question: What's in a name? Roll Call. Retreived from http://www.gao.gov/about/rollcall07192004.pdf January 6, 2006.

Walker, David M. (2005, July). Audit profile: Government Accountability Office of the United States. International Journal of Government Auditing, 32 (3), 18–22.

Jean E. Harris