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.
P&AHighlights.book Page 1 Thursday, January 30, 2003 10:54 AM
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
P&AHighlights.book Page 8 Thursday, January 30, 2003 10:54 AM
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.
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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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Front cover: GAO (flag), Digital Stock (Capitol), Library of Con-
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Inside front cover: U.S. National Archives and Records Adminis-
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documents); GAO (Capitol, flag).
Pages 6 & 7 (background images): GAO (flag, Capitol); © 1999
Corel Corp. All rights reserved (Statue of Liberty).
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(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
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a
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)