oversight

GAO Performance and Accountability Highlights: Fiscal 2002

Published by the Government Accountability Office on 2003-01-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

U . S .   G E N E R A L      A C C O U N T I N G          O F F I C E

S E R V I N G   T H E   C O N G R E S S   A N D   T H E    N A T I O N




                                    Performance and
                                    Accountability
                                    H I G H L I G H T S
                                                           Fiscal 2002




                                                     a
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                         SERVING THE CONGRESS
                                          GAO’S MISSION
            GAO exists 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.




                                          SCOPE OF WORK
      GAO performs a range of oversight-, insight-, and foresight-related engagements, a vast majority
      of which are conducted in response to congressional mandates or requests. GAO's engagements
        include evaluations of federal programs and performance, financial and management audits,
                 policy analyses, legal opinions, bid protest adjudications, and investigations.



                                             CORE VALUES
    ACCOUNTABILITY                                     INTEGRITY                                  RELIABILITY



  We help the Congress oversee               We set high standards for ourselves        We at GAO want our work to be
  federal programs and operations to         in the conduct of GAO’s work. Our          viewed by the Congress and the
  ensure accountability to the               agency takes a professional,               American public as reliable. We
  American people. GAO’s analysts,           objective, fact-based, nonpartisan,        produce high-quality reports,
  auditors, lawyers, economists,             nonideological, fair, and balanced         testimony, briefings, legal opinions,
  information technology specialists,        approach to all activities. Integrity is   and other products and services that
  investigators, and other                   the foundation of reputation, and          are timely, accurate, useful, clear,
  multidisciplinary professionals seek       the GAO approach to work ensures           and candid.
  to enhance the economy, efficiency,        both.
  effectiveness, and credibility of the
  federal government both in fact and
  in the eyes of the American people.

Source: NARA and GAO.
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         From the Comptroller General

                                                 January 31, 2003

                                                 It is indeed a pleasure to present GAO’s performance
                                                 and accountability report for fiscal 2002. In the spirit
                                                 of the Government Performance and Results Act
                                                 (GPRA), this annual report informs the Congress and
                                                 the American people about what we have achieved on
                                                 their behalf. Importantly, we received a clean opinion
                                                 from independent auditors on our financial statements
                                                 for the 16th consecutive year. I am confident that the
                                                 financial information and the data measuring GAO’s
                                                 performance contained in this report are complete
                                                 and reliable.

                                     The year 2002 was marked by certain new and unprecedented
                                     challenges for the federal government. In the aftermath of the
                                     September 11, 2001, terrorist attacks and the delivery of
                                     anthrax spores through the mail, securing the safety of Ameri-
                                     cans at home and abroad became the foremost national priority.
                                     It was also a year of economic challenges: not just falling stock
                                     prices, but diminished public confidence in certain corporate
                                     institutions and in the ability of government to effectively over-
                                     see financial markets. The troubles experienced at Enron and
                                     other corporations and the related conduct of auditors and vari-
                                     ous other parties had far reaching effects.

                                     The threat of terrorism and the damage done to Americans’ eco-
                                     nomic well-being in 2002 were but two challenges among
                                     many—some of them long-standing challenges with which the
                                     Congress continues to grapple. The nation’s changing demo-
                                     graphics, the educational needs of its children, the long-term
                                     viability of Social Security and Medicare, the rising cost of
                                     health care and the millions of Americans who are uninsured,
                                     the vulnerability of the government’s computer systems to sab-
                                     otage, the requirements of the armed forces in the face of new
                                     threats to national security—these and other challenges contin-
                                     ued to engage the attention of the Congress and therefore
                                     helped define the year’s priorities at GAO.



         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                             1
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                              As a key source of objective information and analysis, GAO
                              played a crucial role in supporting congressional decision mak-
                              ing. For example, GAO’s work informed the debate over
                              national preparedness strategy, helping the Congress answer
                              questions about the associated costs and program trade-offs and
                              providing perspectives on how best to organize and manage
                              the new Transportation Security Administration and the new
                              Department of Homeland Security. GAO’s input was a major
                              factor in helping to shape the Sarbanes-Oxley Act, which cre-
                              ated the Public Company Accounting Oversight Board as well as
                              new rules to strengthen corporate governance and ensure audi-
                              tor independence. Further, GAO’s work helped the Congress
                              develop and enact election reform legislation in the form of the
                              Help America Vote Act of 2002.

                              The Congress and the executive agencies took a wide range of
                              actions based on GAO analyses and recommendations. These
                              included reducing improper payments under the Medicare pro-
                              gram, reducing the risks associated with agriculture loan pro-
                              grams, and improving the oversight of contingency
                              appropriations for defense. In total, GAO’s efforts helped the
                              Congress and government leaders achieve $37.7 billion in finan-
                              cial benefits—an $88 return on every dollar invested in GAO.

                              That return on the public’s investment in GAO extends beyond
                              dollar savings to improvements in how the government serves
                              its citizens. Whether by spurring efforts to coordinate emer-
                              gency preparedness by federal, state, and local agencies; by
                              informing the Congress and the public about the risks involved
                              in private pension plans; or by helping federal agencies
                              improve their oversight of the nation’s food safety system, GAO
                              is contributing directly to bettering Americans’ daily lives.
                              Another way we do this is by raising congressional and public
                              awareness of emerging national problems. For example, we
                              underscored for the Congress the prevalence of security weak-
                              nesses at American seaports, the nature and growing cost of
                              identity theft, weaknesses in export controls over sophisticated
                              weapons technologies, inadequacies in nursing home care, and
                              shortages of children’s vaccines. The more the nation’s leaders


2                                     GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                     in the public, nonprofit, and private sectors know about these
                                     growing challenges, the sooner they will be able to craft effec-
                                     tive responses.

                                     Access to the information the Congress wishes to have became
                                     a special issue for GAO during the year when, for the first time
                                     in our history, we used our statutory authority to file suit in
                                     order to obtain certain government records from an executive
                                     branch official. The action came about after we received con-
                                     gressional requests from four Senate Committee Chairs and Sub-
                                     committee Chairs and two House Members for information on
                                     meetings between private-sector individuals and a White House
                                     energy task force chaired by the Vice President on the develop-
                                     ment of the President’s proposed National Energy Policy. Start-
                                     ing in May 2001, we sought limited factual information from the
                                     Vice President in his capacity as chairman of the National
                                     Energy Policy Development Group. He refused to disclose a
                                     range of information, such as the dates, locations, subjects, and
                                     attendees involved in the group’s meetings with external par-
                                     ties. We repeatedly explained our explicit statutory audit and
                                     access authority, streamlined our requests, and offered the
                                     White House flexibility in how the information might be pro-
                                     vided. Furthermore, the administration did not take advantage
                                     of the statutory provision that could have prevented a suit and
                                     did not claim executive privilege. We reluctantly filed suit in
                                     federal district court in February 2002 under the provisions of
                                     GAO’s statutory authorities, asking the court to direct that the
                                     requested records be produced.

                                     In December 2002, the district court dismissed our suit for lack
                                     of standing. In doing so, the court did not address the merits of
                                     the case—including GAO’s fundamental audit or access rights—
                                     but instead ruled that as Comptroller General, I lacked standing
                                     to enforce this agency’s access rights in court. In his ruling, the
                                     judge stated that the issues involved and the nature of the con-
                                     gressional interest in the records were not sufficient to have the
                                     court decide the dispute. We strongly disagree with the court’s
                                     ruling, but as this report goes to press, we are reviewing the
                                     court’s decision and analyzing its basis and potential implica-


         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                             3
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                              tions. Once this review is completed and we have consulted
                              with the Congress’s leadership on a bipartisan basis, I will
                              decide whether to appeal the decision to the circuit court.

                              The value of information in serving our clients is driven home
                              to us every day at GAO. It is not just a matter of obtaining facts
                              from the executive branch but also of observing best practices
                              in and out of government and how they are or can be applied.
                              For instance, how well the government delivers on its promises
                              frequently depends on how well it applies fundamental modern
                              management principles. Strategic planning, organizational
                              alignment, performance management, financial management,
                              information technology, human capital strategy, knowledge
                              management, and change management are key elements in
                              maximizing performance and ensuring accountability. We have
                              significantly increased the amount of our work focused on
                              these areas to enhance the implementation of these principles
                              throughout the federal government.

                              We don’t just preach modern management principles at GAO.
                              We practice what we preach, and we aim to lead by example.
                              We continued this year to make significant progress in improv-
                              ing our human capital programs, our information technology
                              capabilities, and our change management practices. All of these
                              are key areas in which we seek to be a model for other federal
                              agencies.

                                                Visitors to GAO headquarters may have felt, as I
                                                           do, that the building itself somehow
                                                                conveys a sense of solidity and
                                                                         purpose. There is a new
                                                                               plaque in the lobby
                                                                               of GAO headquar-
                                                                               ters that commem-
                                                                               orates another
                                                                               quality of the orga-
                                                                               nization and its
                                                                               people: a readiness
                                                                               to contribute in


4                                     GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                     whatever way may be needed to support our country, the Con-
                                     gress, and the continuity of representative government. On
                                     October 23, 2001, with only 3 days’ notice, we opened our
                                     doors to the 435 members of the House of Representatives and
                                     selected members of their staffs. As they set up quarters at
                                     GAO, their Capitol Hill offices were checked for traces of
                                     anthrax. It was the first time since the War of 1812, when the
                                     Capitol and the White House were burned, that the House of
                                     Representatives sought alternative housing.

                                     Working with congressional and contractor staff, we were able
                                     to provide the telecommunications, computer, and other ser-
                                     vices needed to conduct the business of the House as 1,200
                                     members of our staff shifted to alternative locations. Through it
                                     all, our work went on, and we continued to issue reports and to
                                     testify on issues important to the Congress and the public. I am
                                     very proud of how, in a time of uncertainty, the people of GAO
                                     responded with a positive attitude in doing whatever their
                                     country required and an unwavering resolve to continue their
                                     work. Knowing this organization as I do, I was not surprised.

                                     In summary, fiscal 2002 was truly an exceptional year. I believe
                                     that those who read this report will agree with me that taxpay-
                                     ers receive an excellent return on their investment in GAO.




                                     David M. Walker
                                     Comptroller General
                                     of the United States




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                          5
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              In fiscal 2002, GAO served the Congress

■   Create a national preparedness strategy at the federal, state, and local
    levels that will make Americans safer from terrorism

■   Devise election reforms to restore voter confidence

■   Protect investors through better oversight of the securities industry
    and the accounting profession

■   Ensure a safer national food supply

■   Expose the inadequacy of nursing home care

■   Make income tax collection fair, effective, and less painful to
    taxpayers

■   Strengthen public schools’ accountability for educating children

■   Keep sensitive American technologies out of the wrong hands

■   Protect American armed forces confronting chemical or biological
    weapons

■   Identify the risks to employees in private pension programs

■   Identify factors causing the shortage of children’s vaccines

■   Assist the postal system in addressing anthrax and various
    management challenges
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         and the American people by helping to —

         ■   Identify security risks at ports, airports, and transit systems

         ■   Save billions by bringing sound business practices to the Department
             of Defense

         ■   Foster human capital strategic management to create a capable,
             effective, well-managed federal workforce

         ■   Ensure that the armed forces are trained and equipped to meet the
             nation’s defense commitments

         ■   Enhance the safety of Americans and foreign nationals at U.S.
             installations worldwide

         ■   Assess ways of improving border security through biometric
             technologies and other means

         ■   Reduce the international debt problems faced by poor countries

         ■   Reform the way federal agencies manage their finances

         ■   Protect government computer systems from security threats

         ■   Enhance the transition to e-government—the new “electronic
             connection” between government and the public
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Introduction

The U.S. General Accounting Office is an                     To accomplish our mission, we rely on a
independent, nonpartisan, professional                       workforce of highly trained professionals
services agency in the legislative branch                    who hold degrees in many academic dis-
that is commonly regarded as the audit,                      ciplines, including accounting, law, engi-
evaluation, and investigative arm of the                     neering, public and business
Congress. Created in 1921 as a result of                     administration, economics, computer
the Budget and Accounting Act, GAO’s                         science, and the social and physical sci-
“watchdog” role has evolved over the                         ences. They are arrayed in 13 research,
decades as the Congress expanded our                         audit, and evaluation teams and one tem-
statutory authority and called on us with                    porary or “virtual” team on national pre-
increasing frequency for support in car-                     paredness. These teams are backed by
rying out its legislative and oversight                      staff offices and mission support units.
responsibilities.                                            About three-quarters of our approxi-
                                                             mately 3,200 employees are based at our
Today, we examine the full breadth and                       headquarters in Washington, D.C.; the
scope of federal activities and programs,                    rest are deployed in 11 field offices.
publish thousands of reports and other
documents annually, and provide a num-                       On the pages that follow, we summarize
ber of related services intended to aid                      our performance for fiscal 2002. We also
decision makers and the general public                       present condensed financial statements
alike. We also study national and global                     and the independent auditor’s opinion
trends to anticipate their implications for                  on them. If you would like additional
public policy. By making recommenda-                         information, please see the full-length
tions to improve the accountability,                         version of our performance and account-
operations, and services of government                       ability report at www.gao.gov/sp.html.
agencies, GAO contributes not only to                        Our performance plan for fiscal 2004
the increased effectiveness of federal                       will be available through that same page
spending, but also to the enhancement                        as soon as the budget process permits.
of the taxpayers’ trust and confidence in
their government.




8                                     GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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         GAO’s Performance

         Fiscal 2002 was a year of challenges, not              We were, for instance, asked to assist
         just for GAO but also for the Congress                 with the deliberations over the Depart-
         and the nation GAO serves. The nation’s                ment of Homeland Security’s formation
         vulnerabilities were exposed in a series               by looking into questions involving flexi-
         of crises—America’s vulnerability to                   bilities for managing human capital,
         sophisticated terrorist networks,Amer-                 information sharing, management,
         ica’s vulnerability to bioterrorism waged              acquisition, budget and program transfer
         through mechanisms as mundane as the                   authorities; and lessons available from
         daily mail, and America’s vulnerability to             other reorganizations in the public and
         corporate misconduct capable of wiping                 private sectors. Teams with different
         out jobs, pensions, and investments vir-               specialties from across GAO collabo-
         tually overnight.                                      rated on that effort and also pursued spe-
                                                                cific aspects of national preparedness.
         As the Congress’s priorities evolved to                For example, building on an extensive
         meet these crises, GAO’s challenge was                 body of completed work, we provided
         to respond quickly and effectively to our              important information to the Congress
         congressional clients’ changing needs.                 as it drafted the Aviation and Transporta-
         Under our original strategic plan, pub-                tion Security Act, while providing con-
         lished in spring 2000, we had already                  tinuing assistance with information on
         streamlined and realigned GAO’s struc-                 aviation, port, and transit security.
         ture and resources to better serve the
         Congress in its legislative, oversight, and            Building on our previous work on the
         investigative roles. The new human cap-                outbreak of West Nile virus and our
         ital initiatives we had begun, including               examination of state and local efforts to
         recruiting, hiring, and professional                   meet the challenges all epidemics
         development, equipped us to operate in                 pose—those of detection and treat-
         a constantly changing knowledge envi-                  ment—we aided the Congress’s decision
         ronment. The steps that we took to                     making about how to equip and orga-
         enhance our information technology                     nize the Department of Homeland Secu-
         capabilities served to increase our pro-               rity to prepare for and respond to
         ductivity, consistency, and responsive-                bioterrorism.
         ness. And with work already under way
         across a spectrum of critical policy and               We were also deeply involved in con-
         performance issues, we had a head start                gressional efforts to address terrorism
         toward meeting the Congress’s needs in                 insurance issues—raising alternative
         a year of unexpected and often tumultu-                strategies and suggesting guiding princi-
         ous events.                                            ples based on past efforts to assist indus-
                                                                tries and firms in times of crisis, such as



         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                               9
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GAO’S PERFORMANCE




the savings and loan industry and, more                       number of systemic issues, including
recently, the aviation industry.                              concerns related to employee
                                                              pension and savings plans. And we
As we gathered information and con-                           alerted the Congress to weaknesses
ducted analyses for the Congress, devel-                      that may exist in the legal protections
oped recommendations for                                      for employee pensions. We
improvements, and detailed the poten-                         highlighted the ways in which
tial ramifications of policies to address                     employers’ stock investment
the national problems the Congress was                        decisions can increase the risks to
confronting, we continued work on the                         which employees’ pension plans are
issues that the Congress had faced                            exposed and recommended
before homeland security gripped the                          improvements to the information
nation’s attention. Among these was a                         employees must receive. We also
wide range of issues that also directly                       issued a guide for Members of
affect the lives of Americans:                                Congress, their staffs, and the public
                                                              called Answers to Key Questions
■    We, for instance, helped policymakers                    about Private Pension Plans
     probe the issues behind the shortages                    (www.gao.gov/cgi-bin/getrpt?rptno=
     in the supplies of vaccines for                          GAO-02-745sp), which explains in
     childhood illnesses, such as measles,                    easy-to-understand terms the
     mumps, rubella, and tetanus,                             concepts and rules that last year
     clarifying the variety of contributing                   became sharply relevant to the future
     factors and exploring the key                            economic security of millions of
     questions, such as how more                              Americans.
     manufacturing and competition can                    ■   Our work on the elections process
     be encouraged, how adequate                              contributed to reform legislation
     oversight can be provided, and how                       drafted in response to the voting
     stockpiles can be amassed.                               problems that came to national
■    Our work also helped policymakers—                       prominence in the November 2000
     and the public—understand private                        presidential election. A series of our
     pension issues in the wake of the                        reports disclosed major challenges
     Enron bankruptcy and other                               involving the people, processes, and
     corporate failures, including the                        technology used at each stage of the
     questions they raised for workers                        election process—registering voters,
     nationwide. For instance, in early                       absentee and early voting, preparing
     2002, the Comptroller General                            for and conducting election day
     convened a forum on corporate                            activities, and tabulating votes in the
     governance, transparency, and                            10,000 local election jurisdictions
     accountability that highlighted a                        nationwide. The legislation passed by


10                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                      GAO’S PERFORMANCE




            Selected Public Laws to Which GAO Contributed During
            Fiscal 2002 Included —
            ■ Prescription Drug User Fee Amendments of 2002, P.L. 107-188

            ■ Best Pharmaceuticals for Children Act, P.L. 107-1092

            ■ No Child Left Behind Act of 2001, P.L. 107-110

            ■ Food Stamp Reauthorization Act of 2002, P.L. 107-171

            ■ Help America Vote Act of 2002, P.L. 107-252

            ■ Homeland Security Act of 2002, P.L. 107-296

            ■ Public Health Security and Bioterrorism Preparedness and Response Act of
                2002, P.L. 107-188
            ■ Aviation and Transportation Security Act, P.L. 107-71

            ■ Department of Defense Appropriation Act, 2003, P.L. 107-248

            ■ Department of Defense and Emergency Supplemental Appropriations for
                Recovery From and Response to Terrorist Attacks on the United States Act,
                2002, P.L. 107-117
            ■ Bob Stump National Defense Authorization Act for Fiscal Year 2003, P.L.
                107-314
            ■ Foreign Relations Authorization Act, Fiscal Year 2003, P.L. 107-228

            ■ Small Business Paperwork Relief Act of 2002, P.L. 107-198

            ■ Federal Information Security Management Act of 2002, P.L. 107-347

            ■ Sarbanes-Oxley Act of 2002, P.L. 107-204

            ■ National Defense Authorization Act for Fiscal Year 2002, P.L. 107-107

            ■ Legislative Branch Appropriations, Fiscal Year 2002, P.L. 107-68

            ■ Improper Payments Information Act of 2002, P.L. 107-300

            ■ Trade Act of 2002, P.L. 107-210

            ■ Terrorism Risk Insurance Act of 2002, P.L. 107-297

            ■   E-Government Act of 2002, P.L. 107-347




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                 11
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GAO’S PERFORMANCE




     the Congress addresses federal
     subsidies for voting machinery,
     standards for the equipment,
     improved voter registration rolls, and
     improved access for voters with
     disabilities.
By year’s end, we had testified 216 times
before the Congress, sometimes on as lit-
tle as 24 hours’ notice, on a range of
issues, including those listed on the next
page. We had filled hundreds of urgent
requests for information. We had devel-
oped 1,950 recommendations for
improving the government’s operations,
including, for example, those we made
to the Secretary of State calling for the
development of a governmentwide plan
to help other countries combat nuclear
smuggling and those we made to the
Chairman of the Federal Energy Regula-
tory Commission calling for his agency
to develop an action plan for overseeing
competitive energy markets. We also
had continued to track the recommenda-
tions we had made in past years, check-
ing to see that they had been
implemented and, if not, whether we
needed to do follow-up work on prob-
lem areas. We found, in fact, that 79 per-
cent of the recommendations we had
made in fiscal 1998 had been imple-
mented, a significant step when the
work we have done for the Congress
becomes a catalyst for creating tangible
benefits for the American people.




12                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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 ISSUES ON WHICH GAO TESTIFIED DURING FISCAL 2002

           GOAL 1                                     GOAL 2                           GOAL 3
     Well-Being and Financial               Changing Security Threats and        Transforming the Federal
  Security of the American People            Challenges of Globalization            Government’s Role


  Aviation security                        A-76 competitive sourcing         Contract management
  Bioterrorism                             Anthrax vaccine                   Contracting for services
  Blood supplies                           Ballistic missile defense         Corporate governance and
  Child Welfare                            Chemical and biological              accountability

  Childhood vaccines                         preparedness                    Debt collection

  Coast Guard’s security missions          Combating terrorism               DOD financial management

  Customs’ cargo inspections               Compact with Micronesia           Electronic Government Act of 2002

  Disability programs                      Conflict diamonds                 Electronic-government security

  EPA cabinet status                       Debt relief for poor countries    Enterprise architecture

  FBI reorganization                       Encroachment on training ranges   Federal budget issues

  Federal property management              Export controls                   Federal building security
     reform                                Food aid                          Federal financial management
  Food safety                              Foreign language needs               reform

  Highway trust fund                       Gulf War illnesses                Federal rulemaking requirements

  Housing                                  Information security aspects      Freedom to Manage Act

  HUD management reform                        of homeland security          Human capital strategy

  Identity theft                           International trade               Illegal tax schemes and scams

  Immigration enforcement                  Nuclear smuggling                 Intergovernment aspects of
                                           Organizational aspects of             homeland security
  Indian tribal recognition
                                              homeland security              IRS modernization
  Intercity passenger rail
                                           SEC’s human capital               Medicaid financial management
  Long-term care                             challenges
                                                                             NASA’s management challenges
  Medicare payments                        Strategic seaport protection
                                                                             President’s Management Agenda
  Nuclear waste storage                    Terrorism insurance
                                                                             Purchase card controls
  Nursing homes                            U.S. overseas presence
                                                                             Securing America’s borders
  Postal Service challenges                Weapons of mass destruction
                                                                             U.S. government’s financial
  Public health aspects of                                                      statements
     homeland security
  Retiree health insurance
  SBA’s human capital challenges
  Social Security reform
  Transit safety and security
  VA health care
  Welfare reform
  Wildfire threats
  Workforce development


Source: GAO.
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 GAO’S PERFORMANCE




In fiscal 2002, we recorded 906
instances in which our work led to                        Other Benefits
improvements in government opera-                          Number of actions
tions or programs. For example, by act-                    1000                                   906
                                                            900
ing on GAO’s findings or                                                   788     799     770
                                                            800
recommendations, the federal govern-                        700    607
                                                            600
ment has taken important steps toward                       500
enhancing aviation safety, improving                        400
                                                            300
pediatric drug labeling based on                            200
research, better targeting of funds to                      100
                                                              0
high-poverty school districts, greater                             1999   2000     2001   2002    2002
accountability in the federal acquisition                                 Actual          Target Actual
process, and more effective delivery of                   Source: GAO.
disaster recovery assistance to other                     In another 115 instances, federal action
nations, among other achievements.                        on GAO’s findings or recommendations
                                                          produced financial benefits for the
                                                          American people: a total of $37.7 billion
Financial Benefits                                        was achieved by making government
     Dollars in billions                                  services more efficient, improving the
     40                                     37.7
                                                          budgeting and spending of tax dollars,
     30
                                   30.0                   and strengthening the management of
                           26.4
                   23.2                                   federal resources. Increased funding for
          20.1
     20                                                   improved safeguards against fraud and
                                                          abuse helped the Medicare program to
     10                                                   better control improper payments of
                                                          $8.1 billion over 2 years, for instance,
      0
          1999    2000     2001    2002  2002             and better policies and controls reduced
                 Actual           Target Actual           losses from farm loan programs by about
Source: GAO.                                              $4.8 billion across 5 years. Altogether,
Note: Changes GAO made to its methodology                 GAO’s fiscal 2002 financial benefits
for tabulating financial benefits caused the fiscal       translate into a financial return on invest-
2002 results to increase about 11 percent. See
the full-length version of this report at
                                                          ment of $88 for every dollar budgeted
www.gao.gov/sp.html for details.                          for GAO.

                                                          Of our seven agencywide annual perfor-
                                                          mance targets (see the table), only one
                                                          was not met: timeliness. While we pro-
                                                          vided 96 percent of our products to
                                                          their congressional requesters by the


14                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                                      GAO’S PERFORMANCE




         date promised, we did not hit this mea-                    ify aspects of our interactions with the
         sure’s target of 98 percent on-time deliv-                 agencies we evaluate and audit and,
         ery. The year’s turbulent events played a                  thus, expedite our work in ways that
         part in our missing the target, causing us                 could improve the timeliness of our final
         to delay work in progress when                             products. We also believe that our con-
         higher-priority requests came in from                      tinuing investments in human capital
         the Congress. We know we will con-                         and information technology will
         tinue to face factors beyond our control                   improve our timeliness while allowing
         as we strive to improve our performance                    us to maintain our high level of produc-
         in this area. But we believe the agency                    tivity and performance overall.
         protocols we are piloting will help clar-
          Annual Measures and Targets
                                                                               2002           4-year
                                          1999       2000         2001                          avg.    2003
          Performance measure            Actual     Actual       Actual   Target   Actual     Actual   Target

          Financial benefits
          (billions)                      $20.1       $23.2       $26.4   $30.0    $37.7a      $26.9   $32.5b

          Other benefits                    607         788        799      770        906      775     800b

          Past recommendations
          implemented                      70%         78%         79%     75%         79%      N/A      77%

          New recommendations
          made                              940       1,224       1,563   1,200       1,950    1,419   1,250b

          New products with
          recommendations                  33%         39%         44%     45%         53%      42%      50%

          Testimonies                       229         263        151      200        216      215     180b

          Timeliness                       96%         96%         95%     98%         96%      96%      98%

          aChanges    GAO made to its methodology for tabulating financial benefits caused the fiscal 2002
          results to increase about 11 percent. See the full-length version of this report at
          www.gao.gov/sp.html for details.

          bFour  targets published in GAO’s performance plan for fiscal 2003 were subsequently revised
          based on more current information. Two were raised; two were lowered. The original targets were
          financial benefits, $35 billion; other benefits, 785; recommendations made, 1,200; and testimonies,
          210.

          N/A = not applicable




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                                     15
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GAO’S PERFORMANCE




At the beginning of fiscal 2002, as we                    only way a knowledge-based, multidisci-
prepared an updated draft of our strate-                  plinary professional services organiza-
gic plan for congressional comment—                       tion such as GAO can be effective is to
extending the plan to fiscal 2007 and fac-                be flexible and capable of responding
toring in developments that had                           quickly to change. As a result, we have
occurred since we first issued it in fiscal               sought more cooperative, partnerial
2000—it was clear that the world had                      approaches that maximize the skills and
changed considerably. When the origi-                     expertise of people working together
nal plan was issued, the nation had been                  toward the same ends.
enjoying a period of peace and prosper-
ity, with large budget surpluses pro-                     In later sections of this booklet, we high-
jected into the future. When the                          light our performance under each of our
updated plan went onto the Web in                         strategic goals and the strategies and
2002, the nation was at war against ter-                  challenges involved in achieving those
rorism, both within and outside its bor-                  goals—including the management chal-
ders. The economic outlook had                            lenges and external factors we face. We
become difficult to predict. And the fed-                 also summarize how we used our
eral government faced the return of seri-                 resources in fiscal 2002, including our
ous, long-range budget deficits and the                   costs by strategic goal.
burden they impose on the nation’s
future prosperity.

The updated plan carried forward the
four strategic goals we had already estab-
lished as the organizing principles for a
body of work that is as wide-ranging as
the interests and concerns of the Con-
gress itself. While these strategic goals,
shown on page 18 with their strategic
objectives, help us plan our work and
assess our progress in fulfilling our mis-
sion to serve the Congress and the
nation, they are not separate endeav-
ors. We developed them with the inten-
tion of moving away from “siloed”—or
compartmentalized—approaches to
doing business on a matrixed basis. As
the challenges facing policymakers grow
more complex and interdependent, the


16                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                             GAO’S PERFORMANCE




                 Helping the Government Improve Performance and
                 Accountability

                 Every 2 years, with the start of each new Congress, GAO issues an update
                 of the high-risk series, which identifies and reports on federal programs
                 and operations that have greater vulnerabilities to waste, fraud, abuse, and
                 mismanagement or that have major challenges associated with their
                 economy, efficiency, or effectiveness.

                 Lasting solutions to high-risk problems offer the potential to save billions of
                 dollars, dramatically improve service to the American public, strengthen
                 public confidence and trust in the performance and accountability of the
                 national government, and ensure the ability of government to deliver on its
                 promises.

                 Since 1990, the Congress’s and federal agencies’ commitment to resolving
                 serious, long-standing high-risk problems has paid off—the root causes of
                 half the 14 high-risk areas on our original list have been addressed. This
                 sustained commitment continues to produce results. In 2001, GAO identi-
                 fied 23 high-risk areas. Since then, demonstrable progress has been made
                 in virtually all of them.

                 GAO has increasingly used the high-risk designation to draw attention to
                 the challenges faced by government programs and operations in need of
                 broad-based transformation. Three of the new high-risk areas on the 2003
                 list fall into that category, while a fourth new area involves fraud, waste,
                 abuse, and mismanagement, the type of problem GAO continues to
                 identify.

                 To learn more about these new high-risk areas, to review the full list of
                 high-risk areas, or to download the update in full, go to
                 www.gao.gov/pas/2003/.




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                        17
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                             SERVING THE CONGRESS
                         GAO’S STRATEGIC PLAN FRAMEWORK
                                                     MISSION
                       GAO exists 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.

        THEMES                                       GOALS & OBJECTIVES


                            Provide Timely, Quality Service to the Congress and the
           Security
                            Federal Government to . . .
             and                Address Current and Emerging Challenges to the Well-Being and
        Preparedness
                                Financial Security of the American People related to . . .

                              Health care needs and financing          Effective system of justice
        Globalization         Education and protection of children     Viable communities
                              Work opportunities and worker            Natural resources use and
                                protection                                 environmental protection
                              Retirement income security               Physical infrastructure
          Changing
          Economy
                                Respond to Changing Security Threats and the Challenges of
                                Global Interdependence involving . . .
        Demographics
                              Diffuse security threats                 Advancement of U.S. interests
                              Military capabilities and readiness      Global market forces

           Science           Help Transform the Federal Government
                                                        Government’ss Role and How It
             and             Does Business to Meet 21st Century Challenges by assessing . . .
         Technology

                              Roles in achieving federal               Progress toward results-oriented,
                                objectives                                 accountable, and relevant government
                              Human capital and other capacity for     Fiscal position and financing of the
           Quality
             of                 serving the public                         government
            Life
                             Maximize the Value of GAO by Being a Model Federal Agency and
                             a World-Class Professional Services Organization in the areas of . . .
         Governance
                              Client and customer service              Process improvement
                              Leadership and management focus          Employer of choice
                              Institutional knowledge and experience


                                              CORE VALUES
        Accountability                                 Integrity                                   Reliability

                                                                                                Fiscal 2002-2007
     Source: GAO.




18                                  GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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    Goal 1                                                           Goal 1’s Cost:
                                                                     39% of GAO’s Total
                                                                                               $178.3 Million




                     Goal 1                              Goal 2                       Goal 3           Goal 4

         Well-being and financial
       security of American people

                     Results

                $24.1 billion in financial benefits
                -Safeguarding Medicare from fraud and abuse, $8.1 billion
                -Improving HUD’s budget practices, $4.9 billion
                -Reducing losses from farm loans, $4.8 billion
                -Reducing costs of hazardous waste cleanup at Hanford, $1.5 billion
                -Additional financial benefits, $4.8 billion


                226 other benefits
                -Improving pediatric drug research and labeling
                -Simplifying requirements for food stamp eligibility and benefits
                -Better targeting education funds to high-poverty school districts
                -Protecting taxpayers from faulty analyses of major public works programs
                -222 additional benefits


                524 new recommendations made
                -Develop strategy for expanding stockpiles of childhood vaccines
                -Develop an action plan for overseeing competitive energy markets
                -522 additional improvements recommended


                111 testimonies
                -Aviation security
                -Bioterrorism
                -Food safety
                -Nursing homes
                -107 additional hearings on topics of national importance


 Source: GAO.
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   Goal 2                                                               Goal 2’s Cost:
                                                                        24% of GAO’s Total
                                                                                                $110.5 Million




                      Goal 1                                Goal 2                     Goal 3            Goal 4

                                                      Changing security
                                                    threats and challenges
                                                        of globalization
                                                           Results

               $8.4 billion in financial benefits
               -Reducing DOD’s foreign currency exchange estimates, $1.5 billion
               -Consolidating and modernizing DOD's computer center activities, $859 million
               -Reducing funding for the V-22 development program, $763.8 million
               -Better management of DOD’s satellite capacity, $702 million
               -Additional financial benefits, $4.6 billion


               218 other benefits
               -First steps toward unifying homeland security efforts
               -Stronger measures to prevent unapproved export of missile parts
               -More effective delivery of disaster recovery assistance to other nations
               -Improving Peace Corps’ safety and security practices
               -214 additional benefits


               618 new recommendations made
               -Develop governmentwide plan to help other countries combat nuclear smuggling
               -Make engineering and manufacturing investments in technologies proven to be mature
               -Develop overall investment plan for the National Security Space Strategy
               -615 additional improvements recommended


               38 testimonies
               -Combating terrorism
               -Chemical and biological preparedness
               -Conflict diamonds
               -Foreign language needs
               -34 additional hearings on topics of national importance
Source: GAO.
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   Goal 3                                                                       Goal 3’s Cost: $141 Million
                                                                                31% of GAO’s Total




                   Goal 1                              Goal 2                         Goal 3         Goal 4

                                                                                Transforming the
                                                                              federal government’s
                                                                                       role
                                          Results

               $5.2 billion in financial benefits
               -Improving Defense Department’s computer centers’ operations, $859 million
               -Improving collection of nontax debts owed to the U.S. government, $300 million
               -Additional financial benefits, $4 billion

               462 other benefits
               -Greater accountability in the federal acquisition process
               -Improved implementation of Paperwork Reduction Act
               -Data stewardship strategies to protect individuals’ privacy
               -Audit testing approach for forensic audits to identify fraud, waste, and abuse
               -Improved government debt management
               -457 additional benefits

               808 new recommendations made
               -Better protect government credit cards from misuse
               -Audit agencies’ compliance with cost accounting standards
               -Reassess the requirements for recertifying eligibility for the Earned Income
                  Tax Credit
               -805 additional improvements recommended

               65 testimonies
               -Intergovernmental aspects of homeland security
               -Contract management
               -Corporate governance and accountability
               -Human capital
               -Illegal tax schemes and scams
               -U.S. government's financial statements
               -59 additional hearings on topics of national importance
Source: GAO.
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   Goal 4                                                                  Goal 4’s Cost: $25.3 Million
                                                                           6% of GAO’s Total




                  Goal 1                              Goal 2                     Goal 3          Goal 4

                                                                                              Maximize the
                                                                                              value of GAO

                                       Results

         Sharpen focus on clients’ and customers’ requirements
         -Piloted Web-based feedback system for congressional clients
         -Provided emergency relocation support
         -Developing agency and international protocols


         Enhance leadership and promote management excellence
         -Increased security of GAO’s facilities and information systems
         -Maintained integrity in financial management
         -Continued to provide leadership in human capital strategy and management


         Leverage institutional knowledge and experience
         -Improved management of agency records
         -Piloted knowledge-sharing among GAO units
         -Increased capacity through knowledge-sharing and collaboration


         Continuously improve business and management processes
         -Improved guidance and tracking for GAO engagements
         -Developed “highlights” page to encapsulate information from a GAO report on a single page
         -Donated excess computer equipment to schools


         Become professional services employer of choice
         -Implemented competency-based performance system for analysts, specialists, and attorneys
         -Developed new training process and expanded executive training opportunities
         -Continued recruitment focus on diversity




Source: GAO.
P&AHighlights.book Page 23 Thursday, January 30, 2003 10:54 AM




         Strategies and Challenges

         As the audit, evaluation, and investiga-                ■   conducting constructive engagements
         tive arm of the Congress, GAO has a                         in which we work proactively with
         unique role to play. Within the legisla-                    agencies, when appropriate, to
         tive branch, we are the only agency with                    provide advice that may assist their
         staff in the field, conducting perfor-                      efforts toward positive results;
         mance analyses and financial account-                   ■   providing legal opinions that
         ing among other congressionally                             determine whether agencies are in
         requested activities, and reporting our                     compliance with applicable laws and
         findings not only to our congressional                      regulations;
         clients but also to the American public.
         While we work with the Inspectors Gen-                  ■   conducting policy analyses to assess
         eral at every federal agency, our engage-                   needed actions and the implications
         ments differ from theirs in that ours are                   of proposed actions; and
         often more strategic and longer-range in                ■   providing additional assistance to the
         nature, governmentwide in scope, and                        Congress in support of its oversight
         initiated by requests from the Congress.                    and decision-making responsibilities.
                                                                 Because achieving our strategic goals
         Achieving our goals and objectives rests,               and objectives also requires strategies for
         for the most part, on providing profes-                 coordinating with other organizations
         sional, fact-based, balanced, nonpartisan               with similar or complementary missions,
         information.We develop and present                      we
         this information in a number of ways to
         support the Congress in carrying out its                ■   use advisory panels and other bodies
         constitutional responsibilities, including                  to inform GAO’s strategic and annual
         the following:                                              work planning, and
                                                                 ■   initiate and support collaborative
         ■   evaluating federal policies and the
             performance of agencies;                                national and international audit,
                                                                     technical assistance, and other
         ■   overseeing government operations                        knowledge-sharing efforts.
             through financial and other
             management audits to determine                      Those two types of strategic working
             whether public funds are spent                      relationships allow us to extend our
             efficiently, effectively, and in                    institutional knowledge and experience
             accordance with applicable laws;                    and, in turn, to improve our service to
                                                                 the Congress and the American people.
         ■   investigating whether illegal or                    Our External Liaison office takes the lead
             improper activities are occurring;                  and provides strategic focus for the work
         ■   analyzing the financing for                         with crosscutting organizations, while
             government activities;                              our research, audit, and evaluation teams


         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                               23
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STRATEGIES AND CHALLENGES




lead the work with most of the issue-spe-                 Joint Financial Management Improve-
cific organizations.                                      ment Program, who are actively foster-
                                                          ing financial management reform
Among these efforts is our work with                      governmentwide.
the International Organization of
Supreme Audit Institutions (INTOSAI)—                     Addressing Management
the professional organization of the                      Challenges That Could Affect
national audit offices of 184 countries.                  Our Performance
During fiscal 2002, GAO led a 10-nation                   GAO has three management challenges
task force in developing a strategic plan-                that may affect our performance.Two of
ning framework for the organization that                  the challenges—human capital and phys-
was approved in October 2002. In fiscal                   ical security—were identified in our pre-
2003, the task force will expand the                      vious performance and accountability
framework into a comprehensive strate-                    report.We have made progress in
gic plan. The Comptroller General also                    addressing each of these challenges, but
leads the Global Working Group, in                        we still have work to do.The third chal-
which the heads of GAO’s counterparts                     lenge, information security, will replace
from 15 countries discuss mutual chal-                    our previous challenge of information
lenges, share experiences, and identify                   technology.With the establishment of a
opportunities for collaboration with one                  stable and reliable computer network
another. GAO also chairs INTOSAI’s                        and institutionalized standard routine
accounting standards committee and is                     updates of network and desktop operat-
an active member of the auditing stan-                    ing systems and equipment, we will
dards, internal control standards, and                    have completed our work on the origi-
public debt committees.                                   nal management challenge. However,
                                                          independent reviews of our information
Domestically, the Comptroller General                     security program indicate a need for fur-
chairs the National Intergovernmental                     ther improvement.
Audit Forum, and through 10 regional
intergovernmental audit forums, GAO                       Given GAO’s role as a key provider of
consults regularly with federal inspec-                   information and analyses to the Con-
tors general and state and local audi-                    gress, maintaining the right mix of tech-
tors. In addition, through the Domestic                   nical knowledge and expertise as well as
Working Group, the Comptroller Gen-                       general analytical skills is vital to achiev-
eral and the heads of 18 federal, state,                  ing our mission.We spend about 80 per-
and local audit organizations exchange                    cent of our resources on our people, but
information and seek opportunities to                     without excellent human capital man-
collaborate. The Comptroller General is                   agement, we could still run the risk of
also one of the four principals of the                    being unable to deliver what the Con-


24                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                      STRATEGIES AND CHALLENGES




         gress and the nation expect from us. In                 advantage of technology.We will also
         1999, after an extended hiring freeze,                  ensure that our staff have the needed
         GAO’s workforce was sparse at the entry                 skills and training to function in this
         level, and we faced succession planning                 reengineered environment. In addition,
         issues as a large number of our senior                  we are developing a competency-based
         managers and analysts became eligible                   performance system for our mission sup-
         to retire.The development and training                  port employees.
         of our senior executives had been cur-
         tailed for funding reasons.And at the                   During the 108th Congress, we will
         same time, more of our staff needed                     work with our appropriations and over-
         enhanced technical skills if they were to               sight committees to achieve enactment
         assist the Congress effectively. In all                 of legislation to support our continuing
         those respects, GAO was little different                efforts to be a leader in federal human
         from the government as a whole. In the                  capital management and a world-class
         years since, we have addressed these                    organization. To build on the human
         issues in a variety of ways and are con-                capital flexibilities provided by the Con-
         tinuing to do so. For example, we devel-                gress in 2000, we will identify opportu-
         oped a recruitment program that                         nities for additional flexibilities that
         allowed us to hire 430 permanent staff                  would, among other things, facilitate
         during fiscal 2002, revamped and mod-                   GAO’s continuing efforts to develop a
         ernized the performance appraisal sys-                  more performance-based compensation
         tem for analysts and attorneys, and                     system, realign our workforce, and pro-
         implemented a succession-planning pro-                  vide greater opportunities for staff to
         gram.                                                   phase into retirement.

         Over the next several years, we need to                 In the aftermath of the September 11 ter-
         continue to address skill gaps, maximize                rorist attacks and subsequent anthrax
         staff productivity and effectiveness, and               incidents, our ability to provide a safe
         reengineer our human capital processes                  and secure workplace emerged as a chal-
         to make them more user-friendly.We                      lenge for our agency. Protecting our peo-
         plan to address skill gaps by further                   ple and our assets is critical to our ability
         refining our recruitment and hiring strat-              to carry out our mission.We devoted
         egies to target gaps identified through                 additional resources to this area and
         our workforce planning efforts, while                   implemented measures such as reinforc-
         taking into account the significant per-                ing vehicle and pedestrian entry points,
         centage of our workforce eligible for                   installing an additional x-ray machine,
         retirement.We will reengineer our                       adding more security guards, reinforcing
         human capital systems and practices to                  windows, and relocating air sources.We
         increase their efficiency and to take full              are in the process of researching and


         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                                25
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STRATEGIES AND CHALLENGES




designing other projects to better con-                   intruders on all our internal servers,
trol building access and security around                  completing the implementation of a
the building.We plan to implement                         secure user authentication process, and
these projects over the next several                      refining the disaster recovery plan we
years.                                                    developed last year.

Ensuring information systems security                     At GAO, management challenges are
and disaster recovery systems that allow                  identified by the Comptroller General
for continuity of operations is a critical                and the agency’s senior executives
requirement for the agency, particularly                  through the agency’s strategic planning,
in light of the events of September 11                    management, and budgeting processes.
and the anthrax incidents.The risk is                     Our progress in addressing the chal-
that our information could be compro-                     lenges is monitored through our annual
mised and that we would be unable to                      performance and accountability process.
respond to the needs of the Congress in                   Under strategic goal 4, we establish per-
an emergency. In light of this risk, and in               formance goals focused on each of our
keeping with our goal of being a model                    management challenges and track our
federal agency, we are implementing an                    progress in completing the key efforts
information security program consistent                   for those performance goals quarterly.
with the requirements in the Govern-                      The performance goals are assessed and
ment Information Security Reform provi-                   updated each year.
sions (commonly referred to as “GISRA”)
enacted in the Floyd D. Spence National                   GAO’s Inspector General reviews man-
Defense Authorization Act for Fiscal Year                 agement’s assessment of the challenges
2001.We have made progress through                        and the agency’s progress in addressing
our efforts to, among other things,                       them. The memorandum on the Inspec-
implement a risk-based, agencywide                        tor General’s findings is reprinted at the
security program; provide security train-                 end of this report.
ing and awareness; and develop and
implement an enterprise disaster recov-                   Mitigating External Factors
ery solution.                                             That Could Affect Our
                                                          Performance
However, we need to complete certain                      Several external factors could affect the
key actions to be better able to detect                   achievement of our performance goals,
intruders in our systems, identify our                    including national and international
users, and recover in the event of a disas-               developments and the resources we
ter.Among our current efforts and plans                   receive. Limitations imposed on our
for these areas are completing the instal-                work by other organizations or limita-
lation of software that helps us detect                   tions on the ability of other federal agen-


26                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                      STRATEGIES AND CHALLENGES




         cies to make the improvements we                        way to meet our 2-year performance
         recommend are other factors that could                  goals are contingent on receiving the
         affect the achievement of our goals.                    resources we are requesting from the
                                                                 Congress. Once actual funding is
         As the Congress focuses on unpredict-                   known, we may adjust our targets and
         able events—such as the global threat                   performance goals to ensure that key
         posed by sophisticated terrorist net-                   congressional priorities are met.
         works, international financial crises, or
         natural disasters—the mix of work we                    A final external factor is the extent to
         are asked to undertake may change,                      which GAO can obtain access to certain
         diverting our resources from some of                    types of information. Most notably,
         our strategic objectives and perfor-                    recent developments have raised con-
         mance goals.We can and do mitigate the                  cerns about whether records access
         impact of these events on the achieve-                  challenges are likely to increase in the
         ment of our goals in various ways:                      future. First, in December 2002, a dis-
                                                                 trict court dismissed a lawsuit GAO filed
         ■   We are alert to possibilities that could            to obtain information about meetings
             shift the Congress’s and, therefore,                held with private-sector individuals by
             our priorities.                                     the Vice President, in his capacity as
         ■   We continue to identify in our                      chairman of the National Energy Policy
             products and meetings with the                      Development Group, and the group’s
             Congress conditions that could trigger              members and staff. The court did not
             new priorities.                                     address the merits of the case, but rather
                                                                 stated that the Comptroller General
         ■   We quickly redirect our resources,                  lacked standing in the matter. Second,
             when appropriate, so that we can                    the current administration has shown a
             deal with major changes that do                     tendency to not readily share certain
             occur.                                              information with GAO and the Congress
         ■   We maintain broad-based staff                       that both have received in the past.
             expertise so that we can readily
             address emerging needs.                             In addition, with concerns about opera-
         As this report goes to press, the uncer-                tional security being unusually high at
         tainty about our fiscal 2003 funding lev-               home and abroad, GAO may have more
         els was affecting when we will                          difficulty obtaining information and
         complete—and, in some cases, begin—                     reporting on sensitive issues. Histori-
         initiatives to address our management                   cally, our auditing and information gath-
         challenges and other issues. Meeting the                ering has been limited whenever the
         fiscal 2003 performance targets in this                 intelligence community is involved. Nor
         report and completing the work under                    have we had the authority to access or


         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                              27
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STRATEGIES AND CHALLENGES




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
homeland security issues may be ham-
pered, and because some of our reports
may be subjected to greater classification
reviews than in the past, their public dis-
semination may be limited. We will
work with the Congress to identify both
legislative and nonlegislative opportuni-
ties for strengthening GAO’s access
authority as necessary and appropriate.




28                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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         Managing Our Resources

         GAO’s financial statements for fiscal                   tively simple picture of a small agency in
         2002 received an unqualified opinion                    the legislative branch that has most of its
         from an independent auditor. No mate-                   financial activity focused on the execu-
         rial weaknesses in internal control were                tion of its congressionally approved bud-
         identified, and the auditor reported sub-               get and most of its resources devoted to
         stantial compliance with the require-                   the human capital needed for its mission
         ments in the Federal Financial                          of supporting the Congress with infor-
         Management Improvement Act of 1996                      mation and analysis.
         (the Improvement Act) for financial sys-
         tems. The auditor found no instances of                 GAO’s budget consists of an annual
         noncompliance with the laws or regula-                  appropriation covering salaries and
         tions in the areas they tested. The state-              expenses and revenue from reimburs-
         ments and their accompanying notes,                     able audit work and rental income. For
         along with the auditor’s report, appear                 fiscal 2002, GAO’s total budgetary
         later in this report. The table below sum-              resources increased by $49.7 million
         marizes key data.                                       from fiscal 2001. This increase consists
                                                                 primarily of additional current year
         Compared with the statements of large                   appropriations to meet continuing pro-
         and complex agencies in the executive                   gram requirements and $7.6 million in
         branch, GAO’s statements present a rela-                transfers of budget authority to conduct

          GAO’s Financial Highlights: Resource Information
          Dollars in millions

                                                                                   Fiscal 2001   Fiscal 2002
          Total budgetary resources                                                    $392.9        $442.6
          Total outlays                                                                $387.2        $427.8
          Net cost of operations
               Goal 1: Well-being and financial security of the American people        $161.1        $178.3
               Goal 2: Changing security threats and challenges of globalization         93.4         110.5
               Goal 3: Transforming the federal government’s role                       139.5         141.0
               Goal 4: Maximizing the value of GAO                                       20.7          25.3
               Less reimbursable services not attributable to goals                      (1.6)         (2.1)
          Total net cost of operations                                                 $413.1        $453.0
          Actual full-time equivalents                                                  3,110         3,210

          Note: The 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 or total
          outlays.


         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                               29
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MANAGING OUR RESOURCES




safety and security efforts to respond to
the events of September 11. GAO’s total                   Net Cost of Operations
assets were $126.8 million, consisting                        FY 2002 total $453 million
mostly of property and equipment
                                                                   Goal 4
(including the headquarters building,                                         6%
land, and improvements and computer
                                                                                          Goal 1
equipment and software) and funds with                                                     39%
                                                                         Goal 3
the Treasury. Our total liabilities of                                    31%
roughly $91.7 million were composed                                                Goal 2
largely of employees’ accrued annual                                                24%
leave, amounts owed to other govern-
ment agencies, accounts payable, and
                                                          Source: GAO.
workers’ compensation liability.
                                                          For fiscal 2003, GAO has requested a
                                                          budget of $457.8 million to maintain cur-
GAO reports net costs by strategic goal
                                                          rent operations to support the Congress
to align our net costs with our strategic
                                                          as outlined in our strategic plan. This
plan. As the figure indicates, our first
                                                          funding level—which is 6 percent above
goal, under which we organize our work
                                                          our 2002 funding level—would allow us
on challenges to the well-being and
                                                          to support our authorized level of 3,269
financial security of the American peo-
                                                          full-time-equivalent personnel and
ple, accounted for the largest share of
                                                          includes $4 million to meet nonrecur-
the costs. We expect this goal to con-
                                                          ring requirements to enhance the safety
tinue to represent the largest share of
                                                          and security of GAO’s staff.
our costs.
                                                          The following table provides an over-
                                                          view of how our budgetary and human
                                                          capital resources will be allocated
                                                          among GAO’s four strategic goals.


GAO’s Revised Fiscal 2003 Budget
                                                                            Dollars in             Full-time
Strategic Goal                                                               millions        equivalent staff
Goal 1: Well-being and financial security of the American people               $177.6                  1,275
Goal 2; Changing security threats and challenges of globalization                 119.5                  854
Goal 3: Transforming the federal government’s role                                141.0                  985
Goal 4: Maximizing the value of GAO                                                19.7                 1555
Total                                                                          $457.8                  3,269



30                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                 MANAGING OUR RESOURCES




         Almost 80 percent of GAO’s fiscal 2003
         budget will provide for employee com-
         pensation and benefits.The next largest
         portion of our budget—about $55 mil-
         lion—is for contract services supporting
         both GAO’s mission work and adminis-
         trative operations, including informa-
         tion technology, training, security, and
         building maintenance and operations
         services. During fiscal 2003, we plan to
         increase our investments in human capi-
         tal, information technology and security,
         and the safety and security of GAO’s peo-
         ple, facilities, and other assets.




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                           31
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Overview of Financial Statements

GAO recognizes the importance of                          reporting and compliance with laws and
strong financial systems and internal                     regulations. Consistent with GAO’s eval-
controls to ensure our accountability,                    uation, the auditor found no material
integrity, and reliability.To achieve a high              internal control weaknesses.
level of quality, management maintains a
quality control program and seeks                         GAO’s Audit Advisory Committee assists
advice and evaluation from both internal                  the Comptroller General in overseeing
and external sources.                                     the effectiveness of our financial report-
                                                          ing and audit processes, internal con-
GAO is committed to fulfilling the inter-                 trols over financial operations, and
nal control objectives of 31 U.S.C. 3512,                 processes to ensure compliance with
formerly the Federal Managers’ Finan-                     laws and regulations relevant to GAO’s
cial Integrity Act (the Integrity Act) and                financial operations.As of September 30,
the Federal Financial Management                          2002, the committee consisted of
Improvement Act of 1996 (the Improve-
ment Act). Although GAO is not subject                    ■   Sheldon S. Cohen (Chairman), a
to the acts, we comply voluntarily with                       certified public accountant and
the acts’ requirements. GAO’s manage-                         practicing attorney in Washington,
ment assesses compliance with these                           D.C., former Commissioner and Chief
controls through a series of comprehen-                       Counsel of the Internal Revenue
sive internal reviews, applying the evalu-                    Service, and Senior Fellow of the
ation criteria in the Office of                               National Academy of Public
Management and Budget’s guidance for                          Administration;
implementing the Integrity Act.The                        ■   Alan B. Levenson, a practicing
results of these reviews are discussed                        attorney in Washington, D.C., and a
with GAO’s Audit Advisory Committee,                          former senior official at the Securities
and action is taken to correct deficien-                      and Exchange Commission; and
cies as they are identified.
                                                          ■   Katherine D. Ortega, a certified public
GAO has assessed our internal controls                        accountant, former Treasurer of the
as of September 30, 2002, based on the                        United States, former Commissioner
criteria mentioned above for effective                        of the Copyright Royalty Tribunal, and
internal controls in the federal govern-                      a former member of the President’s
ment. On the basis of this assessment,                        Advisory Committee on Small and
we believe that we have effective inter-                      Minority Business.
nal controls in place, as of September                    Condensed financial statements for GAO
30, 2002.Additionally, an independent                     follow. Our detailed statements with
auditor found that GAO maintained                         their accompanying notes appear in the
effective internal controls over financial                full-length version of this report. Our


32                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                 FINANCIAL STATEMENTS




         financial statements for the fiscal year
         ended September 30, 2002, were
         audited by an independent auditor, Cot-
         ton & Co., LLP, which rendered unquali-
         fied opinions on our statements and on
         the effectiveness of our internal controls
         over financial reporting and compliance
         with laws and regulations. The auditor
         also reported that we had substantially
         complied with the applicable require-
         ments of the Improvement Act and
         found no reportable instances of non-
         compliance with selected provisions of
         laws and regulations. In the opinion of
         the auditor, the financial statements are
         presented fairly in all material respects
         and are in conformity with generally
         accepted accounting principles.




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                         33
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FINANCIAL STATEMENTS




U.S. General Accounting Office
Condensed Balance Sheet
As of September 30, 2002 and 2001
(Dollars in thousands)
                                                                            2002       2001
Assets
       Intragovernmental assets including funds with the U.S. Treasury    $62,442    $56,736
       Property and equipment, net                                         63,888     66,318
       Other                                                                 486        401
                                                                         $126,816   $123,455
Total Assets


Liabilities
       Intragovernmental liabilities                                      $16,845    $17,062
       Accounts payable and salaries and benefits                          23,227     28,636
       Accrued annual leave and other                                      29,357     27,836
       Workers' compensation                                               12,331      7,954
       Capital leases                                                       9,968      5,360

Total Liabilities                                                         $91,728    $86,848


Net Position
       Unexpended appropriations                                          $29,925    $21,258
       Cumulative results of operations                                     5,163     15,349

Total net position                                                         35,088     36,607
                                                                         $126,816   $123,455
Total Liabilities and Net Position




34                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                            FINANCIAL STATEMENTS




          U.S. General Accounting Office
          Condensed Statement of Net Cost
          For Fiscal Years Ended September 30, 2002 and 2001
          (Dollars in thousands)
                                                                                  2002       2001

          Net Costs by Goal
                 Goal 1: Well-being/financial security of American people      $178,381   $161,112


                 Goal 2: Changing security threats/challenges of global
                          Interdependence                                       110,537     93,440


                 Goal 3: Transforming the federal government's role             140,967    139,459


                 Goal 4: Maximize the value of GAO                               25,278     20,695


                 Less: reimbursable services not attributable to goals          (2,128)    (1,652)


                                                                               $453,035   $413,054
                 Net Cost of Operations




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                     35
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FINANCIAL STATEMENTS




U.S. General Accounting Office
Condensed Statement of Changes in Net Position
For Fiscal Years Ended September 30, 2002 and 2001
(Dollars in thousands)




                                    2002                                    2001
                                 Cumulative            2002               Cumulative        2001
                                  Results of        Unexpended            Results of     Unexpended
                                 Operations        Appropriations         Operations    Appropriations
Balances, Beginning of
   Fiscal Year                        $15,349               $21,258          $18,761          $23,515


Budgetary Financing
   Sources
     Current year
       appropriations                         -             421,844                 -         384,020
     Appropriations used              419,046             (419,046)          387,148         (387,148)
     Other                                    -                   5,869             -             871


Other Financing Sources
     Employee benefit costs
       imputed to GAO                  21,007                         -       19,681                 -
     Other                              2,796                         -        2,813                 -


Total Financing Sources               442,849                     8,667      409,642           (2,257)



Net Cost of Operations              (453,035)                         -     (413,054)                -


Balances, End of Fiscal
                                       $5,163               $29,925          $15,349          $21,258
   Year




36                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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                                                                        FINANCIAL STATEMENTS




          U.S. General Accounting Office
          Condensed Statement of Budgetary Resources
          For Fiscal Years Ended September 30, 2002 and 2001
          (Dollars in thousands)

          Budgetary Resources                                                  2002       2001
                 Current year appropriations                               $421,844    $384,020
                 Transfers of budget authority                                7,600        983
                 Unobligated appropriations, beginning of fiscal year         7,512       4,264
                 Reimbursements                                               5,687       3,676


                                                                           $442,643    $392,943
          Total Budgetary Resources


          Status of Budgetary Resources
                 Obligations incurred                                      $426,714    $385,319
                 Unobligated appropriations, end of fiscal year              14,198       7,512
                 Lapsed budget authority                                      1,731        112


                                                                           $442,643    $392,943
          Total Status of Budgetary Resources


          Relationship of Obligations to Outlays
                 Obligations incurred                                      $426,714    $385,319
                 Obligated balance, net - beginning of fiscal year           48,970      50,851
                 Less: Obligated balance, net - end of fiscal year          (47,856)   (48,970)
                                                                           $427,828    $387,200
          Total Outlays


          Outlays
                 Disbursements                                             $427,828    $387,200
                 Collections                                                 (5,687)    (3,676)


                                                                           $422,141    $383,524
          Net Outlays




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                  37
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FINANCIAL STATEMENTS




U.S. General Accounting Office
Condensed Statement of Financing
For Fiscal Years Ended September 30, 2002 and 2001
(Dollars in thousands)

Resources Used to Finance Activities                                          2002       2001
Budgetary Resources Obligated
       Obligations incurred                                                $426,714   $385,319
       Less: Reimbursements                                                 (5,687)    (3,676)
       Net Obligations                                                      421,027    381,643
Other Resources
       Employee benefit costs imputed to GAO                                 21,007     19,681
       Other                                                                  2,796      2,813
       Net other resources used to finance activities                        23,803     22,494


       Total resources used to finance activities                           444,830    404,137


Resources Used to Finance Items Not Part of the Net Cost of
   Operations
       Net (increase) decrease in unliquidated obligations                  (1,980)      5,505
       Costs capitalized on the balance sheet                              (13,180)   (13,983)
       Total resources used to finance items not part of the net cost of
          operations                                                       (15,160)    (8,478)
       Total resources used to finance the net cost of operations           429,670    395,659


Costs That Require Resources in Future Periods
       Expenses to be funded by future appropriations                         6,213       298


Costs That Do Not Require Resources
       Depreciation                                                          17,152     17,097


                                                                           $453,035   $413,054
Net Cost of Operations




38                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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         Independent Auditor’s Report




                 DAVID L. COTTON, CPA, CFE, CGFM  CHARLES HAYWARD, CPA, CFE, CISA  MICHAEL W. GILLESPIE, CPA, CFE  CATHERINE L. NOCERA, CPA, CISA

                           MATTHEW H. JOHNSON, CPA, CGFM  SAM HADLEY, CPA, CGFM  COLETTE Y. WILSON, CPA  ALAN ROSENTHAL, CPA


                                                                  Independent Auditor’s Report

                             We audited the General Accounting Office’s (GAO) Balance Sheets as of September 30, 2002, and 2001, and the
                   related Statements of Net Cost, Changes in Net Position, Budgetary Resources, and Financing for the years then ended. In
                   our report dated December 11, 2002, we stated that we found:

                            •         The 2002 and 2001 financial statements referred to above are fairly presented, in all material respects, in
                                      conformity with U.S. generally accepted accounting principles,

                            •         GAO maintained effective internal control over financial reporting (including safeguarding of assets)
                                      and compliance with laws and regulations as of September 30, 2002,

                            •         GAO’s financial management systems substantially complied with the applicable requirements of the
                                      Federal Financial Management Improvement Act of 1996 (FFMIA), and

                            •         No reportable noncompliance with laws and regulations tested.

                             In our opinion, the information set forth in the accompanying condensed financial statements is fairly presented,
                   in all material respects, in relation to the financial statements from which it has been derived.

                            We performed our audit and examinations in accordance with Government Auditing Standards, U.S. generally
                   accepted auditing standards, the American Institute of Certified Public Accountants’ attestation standards, and Office of
                   Management and Budget (OMB) Bulletin No. 01-02, Audit Requirements for Federal Financial Statements.

                             With respect to our opinion on internal control, misstatements, losses, or noncompliance may nevertheless occur
                   and not be detected because of inherent limitations in internal control. Also, projections of any evaluation of internal
                   control to future periods are subject to the risk that internal control may become inadequate as the result of changes in
                   conditions, or that the degree of compliance with the policies or procedures may deteriorate.

                            With respect to our opinion on GAO’s financial management systems’ compliance with FFMIA, our examination
                   does not provide a legal determination of GAO’s financial management systems compliance with specified requirements.

                              We are responsible for testing compliance with selected provisions of laws and regulations that have a direct and
                   material effect on the financial statements. We did not test compliance with all laws and regulations applicable to GAO.
                   We limited our tests of compliance to those laws and regulations required by OMB audit guidance that we deemed
                   applicable to the financial statements for the fiscal year ended September 30, 2002. We caution that noncompliance may
                   occur and not be detected by these tests and that such testing may not be sufficient for other purposes. Our conclusion on
                   compliance with laws and regulations is intended solely for the information and use of the management of GAO, OMB, and
                   Congress and is not intended to be, and should not be, used by anyone other than these specified parties. However, this
                   report is a matter of public record and its distribution is not limited.

                                                                             COTTON & COMPANY LLP




                                                                             Charles Hayward, CPA
                   Alexandria, Virginia
                   December 11, 2002




                                                                           established 1981
                                             333 NORTH FAIRFAX STREET ♦ SUITE 401♦ ALEXANDRIA, VIRGINIA 22314
                                      703/836/6701♦ FAX 703/836/0941♦ WWW.COTTONCPA.COM ♦ DCOTTON@COTTONCPA.COM



         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                                                                            39
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           Memorandum
           Date:            November 27, 2002

           To:              Comptroller General

           From:            Inspector General – Frances Garcia

           Subject:         Management Challenges

           We have reviewed management’s assessment of the
           management challenges. Based on our work and
           institutional knowledge, we agree that human capital,
           physical security, and information security are the
           management challenges that may affect our performance.
           We are in agreement with management’s assessment of
           progress made in addressing these challenges.

           In addition, we reviewed all fiscal 2002 accomplishment
           reports claiming financial benefits of $1 billion or more
           and found that GAO has a reasonable basis for claiming
           these benefits. We plan to review the internal controls for
           several key performance measures in fiscal 2003.




40                                 GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002
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         Image Sources

                                     This section contains credit and copyright information for
                                     images and graphics in this product, as appropriate, when that
                                     information was not listed adjacent to the image or graphic
                                     where presented.

                                     Front cover: GAO (flag), Digital Stock (Capitol), Library of Con-
                                     gress’s Historic American Engineering Record by Jet Lowe (Statue
                                     of Liberty).

                                     Inside front cover: U.S. National Archives and Records Adminis-
                                     tration (Bill of Rights, Constitution, Declaration of Independence
                                     documents); GAO (Capitol, flag).

                                     Pages 6 & 7 (background images): GAO (flag, Capitol); © 1999
                                     Corel Corp. All rights reserved (Statue of Liberty).

                                     Pages 6 & 7 (left to right): © 1996 Stock Photography Online
                                     (classroom); GAO (password screen); © 1999 Getty Images, Inc.
                                     (vaccination); GAO (security scan); Amtrak (Acela train); GAO
                                     (security gate and nest egg); © 1999 Getty Images, Inc. (voters);
                                     © 1999 PhotoDisc, Inc. (powerlines); Dept. of Defense (missile,
                                     soldier).




         GAO PERFORMANCE AND ACCOUNTABILITY HIGHLIGHTS 2002                                           41
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      ACCOUNTABILITY                                   INTEGRITY                               RELIABILITY

Source: GAO.
www.gao.gov/cgi-bin/g etrpt?rptno=GAO-03-306sp




             a