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United States Government Accountability Office: 

Performance & Accountability Report: 

Fiscal Year 2008: 

Serving the Congress and the Nation: 

Accountability: 
Integrity: 
Reliability: 

Figure: Serving The Congress: 

[Refer to PDF for image] 

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. 

Accountability: 

We help the Congress oversee federal programs and operations to ensure 
accountability to the American people. GAO’s analysts, auditors, 
lawyers, economists, information technology specialists, investigators, 
and other multidisciplinary professionals seek to enhance the economy, 
efficiency, effectiveness, and credibility of the federal government 
both in fact and in the eyes of the American people. 

Integrity: 

We set high standards for ourselves in the conduct of GAO’s work. Our 
agency takes a professional, objective, fact-based, nonpartisan, 
nonideological, fair, and balanced approach to all activities. 
Integrity is the foundation of our reputation, and the GAO approach to 
work ensures it. 

Reliability: 

We at GAO want our work to be viewed by the Congress and the American 
public as reliable. We produce high-quality reports, testimonies, 
briefings, legal opinions, and other products and services that are 
timely, accurate, useful, clear, and candid. 

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. 

Source: See Image Sources. 

[End of figure] 

Contents: 

Abbreviations: 

How to Use This Report: 

Introduction: 

From the Acting Comptroller General: 

Financial Reporting Assurance Statements: 

About GAO: 

Mission: 

Strategic Planning and Management Process: 

Organizational Structure: 

Strategies for Achieving Our Goals: 

How We Measure Our Performance: 

Part I: Management’s Discussion and Analysis: 

Implementing Our Strategies for Serving the Congress and the Nation: 

Focusing on Results: 

Focusing on Our Client: 

Focusing on Our People: 

Focusing on Our Internal Operations: 

GAO’s High-Risk Program: 

General Counsel Decisions and Other Legal Work: 

Assisting with the Upcoming Transition: 

Managing Our Resources: 

Strategic and Annual Work Planning: 

Internal Management Challenges and Mitigating External Factors That 
Could Affect Our Performance: 

Part II: Performance Information: 

Performance Information by Strategic Goal: 

Goal 1 Overview: Provide timely, quality service to the Congress and 
the federal government to address current and emerging challenges to 
the well-being and financial security of the American people: 

Financial Benefits: 

Nonfinancial Benefits: 

Testimonies: 

Goal 2 Overview: Provide timely, quality service to the Congress and 
the federal government to respond to changing security threats and the 
challenges of global interdependence: 

Financial Benefits: 

Nonfinancial Benefits: 

Testimonies: 

Goal 3 Overview: Help transform the federal government’s role and how 
it does business to meet 21st century challenges: 

Financial Benefits: 

Nonfinancial Benefits: 

Testimonies: 

Goal 4 Overview: Maximize the value of GAO by being a model federal 
agency and a world-class professional services organization: 

Data Quality and Program Evaluation: 

Verifying and Validating Performance Data: 

Program Evaluation: 

Part III: Financial Information: 

From the Chief Financial Officer: 

Overview of Financial Management and Controls: 

Financial Systems and Internal Controls: 

Audit Advisory Committee’s Report: 

Independent Auditor’s Report: 

Purpose of Each Financial Statement: 

Financial Statements: 

Notes to Financial Statements: 

Part IV: From the Inspector General: 

From the Inspector General: 

Part V: Appendixes: 

1. Accomplishments and Contributions: 

2. GAO’s Report on Personnel Flexibilities: 

3. GAO’s FISMA Efforts: 

Image Sources: 

Providing Comments on This Report: 

Obtaining Copies of GAO Documents: 

[End of Table of Contents] 

Abbreviations: 

A&O: administrative and operating: 

AGA: Association of Government Accountants: 

BRAC: Base Realignment and Closure: 

BSA: Iraqi Board of Supreme Audit: 

CAO: Chief Administrative Officer and Chief Administrative Office: 

CBP: U.S. Customs and Border Protection: 

CFO: Chief Financial Officer: 

CFTC: Commodity Futures Trading Commission: 

CMO: chief management officer: 

CMS: Centers for Medicare & Medicaid Services: 

CSRS: Civil Service Retirement System: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

DOE: Department of Energy: 

DOT: Department of Transportation: 

DTV: digital television: 

EAC: Employee Advisory Council: 

EHS: environmental, health, and safety: 

EPA: Environmental Protection Agency: 

ERMS: Electronic Records Management System: 

ESC: Enterprise Service Center: 

ESRD: end-stage renal disease: 

FAA: Federal Aviation Administration: 

FCC: Federal Communications Commission: 

FDA: Food and Drug Administration: 

FEGLIP: Federal Employees Group Life Insurance Program: 

FEHBP: Federal Employees Health Benefits Program: 

FEMA: Federal Emergency Management Agency: 

FERS: Federal Employees Retirement System: 

FFELP: Federal Family Education Loan Program: 

FFMIA: Federal Financial Management Improvement Act: 

FFS: fee-for-service: 

FHL: Federal Home Loan system: 

FICA: Federal Insurance Contributions Act: 

FISMA: Federal Information Security Management Act: 

FMFIA: Federal Managers’ Financial Integrity Act: 

FNS: Food and Nutrition Service: 

FPS: Federal Protective Service: 

FSI: Forensic Audits and Special Investigations: 

FTE: full-time equivalent: 

FWS: Federal Wage System: 

GAO: Government Accountability Office: 

GS: General Schedule: 

GSA: General Services Administration: 

GSE: government-sponsored enterprise: 

GWOT: Global War on Terrorism: 

HAI: health-care-associated infection: 

HHS: Department of Health and Human Services: 

HSPD-12: Homeland Security Presidential Directive 12: 

HUBZone: historically underutilized business zone: 

ICWG: Internal Control Working Group: 

IFPTE: International Federation of Professional and Technical 
Engineers: 

IG: Inspector General: 

INTOSAI: International Organization of Supreme Audit Institutions: 

IRS: Internal Revenue Service: 

IS: information security: 

ISTS: Information Systems and Technology Services: 

IT: information technology: 

JCT: Joint Committee on Taxation: 

MA: Medicare Advantage: 

MCC: Millennium Challenge Corporation: 

MHz: megahertz: 

MMS: Minerals Management Service: 

MOU: memorandum of understanding: 

MOX: mixed oxide: 

MSHA: Mine Safety and Health Administration: 

NASA: National Aeronautics and Space Administration: 

NFC: National Finance Center: 

NFIP: National Flood Insurance Program: 

NFPA: National Fire Protection Association: 

NIAF: National Intergovernmental Audit Forum: 

NIST: National Institute of Standards and Technology: 

NNI: National Nanotechnology Initiative: 

NNSA: National Nuclear Security Administration: 

NORTHCOM: U.S. Northern Command: 

OIG: Office of Inspector General: 

OMB Office of Management and Budget: 

OPM: Office of Personnel Management: 

PAR: performance and accountability report: 

PBC: performance-based compensation: 

PBGC: Pension Benefit Guaranty Corporation: 

PRISM: Program Review Instrument for Systems Monitoring: 

QCI: Quality and Continuous Improvement: 

SAI: supreme audit institution: 

SAT: Senior Assessment Team: 

SBA: Small Business Administration: 

SBI: Secure Border Initiative: 

SEC: Securities and Exchange Commission: 

SES: Senior Executive Service: 

SIP: Shelter in Place: 

SL: senior level: 

SPR: Strategic Petroleum Reserve: 

TARP: Troubled Asset Relief Program: 

TBI: traumatic brain injury: 

TPI: Total Positive Income: 

TSA: Transportation Security Administration: 

TVA: Tennessee Valley Authority: 

USACE: U.S. Army Corps of Engineers: 

USDA: United States Department of Agriculture: 

USERRA: Uniformed Services Employment and Reemployment Rights Act of 
1994: 

USPS: United States Postal Service: 

VA: Department of Veterans Affairs: 

[End of Abbreviations] 

How to Use This Report: 

This report describes the U.S. Government Accountability Office’s (GAO) 
performance measures, results, and accountability processes for fiscal 
year 2008. In assessing our performance, we compared actual results 
against targets and goals that were set in our annual performance plan 
and performance budget and were developed to help carry out our 
strategic plan. Our complete set of strategic planning and performance 
and accountability reports is available on our Web site at [hyperlink, 
http://www.gao.gov/sp.html]. 

This report has an introduction, four major parts, and supplementary 
appendixes as follows: 

Introduction: 

This section includes the letter from the Acting Comptroller General 
and a statement attesting to the reliability of our performance and 
financial data in this report and the effectiveness of our internal 
control over our financial reporting. This section also includes a 
summary discussion of our mission, strategic planning process, 
organizational structure, and process for assessing our performance. 

Management’s Discussion and Analysis: 

This section discusses our agencywide performance results and use of 
resources in fiscal year 2008. It also includes information on the 
strategies we use to achieve our goals and the management challenges 
and external factors that affect our performance. 

Performance Information: 

This section includes details on our performance results by strategic 
goal in fiscal year 2008 and the targets we are aiming for in fiscal 
year 2009. It also includes an explanation of how we ensure the 
completeness and reliability of the performance data used in this 
report. 

Financial Information: 

This section includes details on our finances in fiscal year 2008, 
including a letter from our Chief Financial Officer, audited financial 
statements and notes, and the reports from our external auditor and 
Audit Advisory Committee. This section also includes information on our 
internal controls and an explanation of the kind of information each of 
our financial statements conveys. 

From the Inspector General: 

This section includes our Inspector General’s assessment of our 
agency’s management challenges. 

Appendixes: 

These sections include detailed write-ups about our most significant 
accomplishments and contributions recorded in fiscal year 2008 and 
information on certain human capital management flexibilities and on 
information security management efforts. 

[End of How to Use This Report] 

Introduction: From the Acting Comptroller General: 

November 14, 2008: 

It is my pleasure to present GAO’s performance and accountability 
report for fiscal year 2008. This report conveys the outstanding 
achievements of the GAO team in serving the Congress and helping to 
improve government as well as summarizes actions to address the 
challenges facing our organization. I am confident that the financial 
and performance information included in this report is complete and 
reliable and meets our high standards for accuracy and transparency. 
Once again we received an unqualified or “clean” opinion from 
independent auditors on our financial statements for fiscal year 2008. 
Also, two separate independent peer review teams gave us unqualified 
opinions on the quality assurance systems used to produce our products 
and testimonies that examine the performance and ensure the 
accountability of a broad range of federal programs, policies, and 
activities. 

We experienced heavy demand from the Congress for our work during 
fiscal year 2008 and issued over 1,200 products on a variety of topics, 
including the progress on U.S. counterterrorism measures and efforts in 
Iraq, Afghanistan, and Pakistan; the need for stronger regulation over 
FannieMae and FreddieMac; aviation emissions and noise issues; health 
reassessments for veterans; federal actions needed to help some youth 
reconnect with education and employment; and disaster preparedness, 
response, and reconstruction. Our products also focused on federal 
programs and areas that we consider at high risk for fraud, waste, 
abuse, mismanagement, or transformation, such as the Department of 
Defense’s weapon systems acquisition processes and contract management, 
the Medicare and National Flood Insurance Programs, the federal 
government’s oversight of food safety, and the 2010 Census. GAO senior 
executives and I testified at over 300 hearings before the Congress—our 
second highest performance in over 25 years. Our clients who responded 
to our survey indicated that 95 percent of the products we prepared for 
them were received or delivered on time, allowing us to solidly achieve 
the timeliness target we set. 

It has been my privilege to lead GAO since becoming Acting Comptroller 
General in March 2008 when former Comptroller General David M. Walker 
resigned. I want to express my pride in GAO’s many accomplishments and 
underscore the dedication and commitment of our workforce. We met or 
exceeded all of our mission-related targets. Specifically, in fiscal 
year 2008 we documented $58.1 billion in financial benefits—a return of 
$114 for every dollar we spent—and nearly 1,400 nonfinancial benefits. 
The work we did to produce these benefits helped to shape important 
legislation, such as the Housing and Economic Recovery Act of 2008 
(Pub. L. No. 110-289) and the Medicare Improvements for Patients and 
Providers Act of 2008 (Pub. L. No. 110-275), and increase the 
efficiency and effectiveness of various federal programs thus improving 
the lives of millions of Americans. Also, the rate at which our 
recommendations were implemented by federal agencies or the Congress 
rose to 83 percent in fiscal year 2008, and over two-thirds of the 
products we issued contained recommendations. These two “pipeline” 
measures are very important; when entities act on our recommendations 
their actions often lead to financial and nonfinancial benefits that 
change laws, improve services for citizens, save money, and promote 
better management throughout government. 

In addition, we planned how we will support the 111th Congress and the 
next administration with their transition after the presidential 
election and assist the Congress with overseeing the new Troubled Asset 
Relief Program (TARP). While we have traditionally served as a resource 
for new Congresses by providing insight into the issues upon which we 
focused our work, the 2000 amendments to the Presidential Transition 
Act specifically identified GAO as a source for information concerning 
key management challenges and risks to help new presidential appointees 
make the leap from campaigning to governing. We synthesized the 
hundreds of reports and testimonies we issue every year so we could 
help as new policymakers quickly zero in on critical issues during the 
first days of the new Congress and administration. Concerning our 
responsibilities related to TARP—the centerpiece of the Emergency 
Stabilization Act of 2008 enacted by the Congress in response to the 
ongoing financial and credit crisis—we began to plan how we will 
monitor its implementation in the coming months in accordance with the 
law. 

To continue to achieve this level of performance and fulfill our 
mission of serving the Congress and the public, it is critical that we 
invest in every one of our employees and provide the developmental and 
leadership experiences that they need to grow professionally. We 
measure how well we do this by using eight people measures—new hire 
rate, acceptance rate, retention rate with retirements, retention rate 
without retirements, staff development, staff utilization, leadership, 
and organizational climate. We exceeded the fiscal year 2008 targets we 
set for all but one of these measures, and the results for 
organizational climate, staff development, staff utilization, and 
leadership were the highest in the last 6 years. Because we lost more 
staff than expected for reasons other than retirement, we were slightly 
under the target we set for retention rate without retirements. 

We also reached a tentative agreement on the first-ever interim 
collective bargaining agreement between GAO management and the new 
employees union—the GAO Employees Organization, International 
Federation of Professional and Technical Engineers (IFPTE). I am very 
pleased that we were able to quickly reach a good agreement that covers 
such matters as official time and grievance procedures. We will 
continue to work hard to build and maintain open, constructive union 
and management relations as we address other issues affecting our 
employees. We also reconstituted the Employee Advisory Council to 
ensure that the views of nonbargaining unit employees are represented 
and took steps to implement several key recommendations resulting from 
an independent study of our employees’ performance appraisals over time 
that addressed the issues related to certain ratings disparities for 
African American analysts. These first steps included developing a 
Workforce Diversity Plan; convening an agencywide Diversity Committee, 
which includes representatives from the interim council of the IFPTE, 
other employee interest organizations, and management; and issuing 
interim guidelines for reviewing performance ratings to be used for the 
2008 performance appraisal cycle. These actions are a good start, but I 
am committed to doing more to ensure that every person is treated 
fairly and equitably. In addition, the GAO Act of 2008 was signed into 
law on September 22, 2008. The law (Pub. L. No. 110-323) includes, 
among other things, provisions designed to benefit our employees’ pay; 
help continue to attract, retain, and reward a top-flight workforce; 
and replace our administrative Inspector General with a statutory one. 
We will implement this act expeditiously and continue to address other 
human capital challenges along with our physical and information 
security challenges consistent with our bargaining obligations with the 
IFPTE. 

In closing, the GAO team remains committed to achieving its mission to 
provide accurate, objective, nonpartisan, and constructive information 
to the Congress to help it confront difficult challenges facing our 
nation and to help improve government for the benefit of the American 
people. 

Signed by: 

Gene L. Dodaro: 
Acting Comptroller General of the United States: 

[End of From the Acting Comptroller General] 

Financial Reporting Assurance Statements: 

November 14, 2008: 

We, as GAO’s executive committee, are responsible for preparing and 
presenting the financial statements and other information included in 
this performance and accountability report. The financial statements 
included herein are presented in conformity with U.S. generally 
accepted accounting principles; incorporate management’s reasonable 
estimates and judgments, where applicable; and contain appropriate and 
adequate disclosures. Based on our knowledge, the financial statements 
are presented fairly in all material respects, and other financial 
information included in this report is consistent with the financial 
statements. 

We are also responsible for establishing and maintaining adequate 
internal control over financial reporting. We conducted an assessment 
of the effectiveness of our internal control over financial reporting 
consistent with the criteria in 31 U.S.C. 3512 (c), (d) (commonly 
referred to as the Federal Managers’ Financial Integrity Act (FMFIA) 
and in Appendix A of Office of Management and Budget (OMB) Circular No. 
A-123, Management’s Responsibility for Internal Control. Based on the 
results of this assessment, we have reasonable assurance that internal 
control over financial reporting as of September 30, 2008, was 
operating effectively and that no material weaknesses exist in the 
design or operation of the internal control over financial reporting. 

On the basis of our comprehensive management control program, we are 
pleased to certify, with reasonable assurance, the following: 

* Our financial reporting is reliable—transactions are properly 
recorded, processed, and summarized to permit the preparation of 
financial statements in conformity with U.S. generally accepted 
accounting principles, and assets are safeguarded against loss from 
unauthorized acquisition, use, or disposition. 

* We are in compliance with all applicable laws and regulations— 
transactions are executed in accordance with laws governing the use of 
budget authority and other laws and regulations that could have a 
direct and material effect on the financial statements. 

* Our performance reporting is reliable—transactions and other data 
that support reported performance measures are properly recorded, 
processed, and summarized to permit the preparation of performance 
information consistent with the criteria set forth in the Government 
Performance and Results Act of 1993 and related OMB guidance. 

We also believe that (1) these same systems of accounting and internal 
controls provide reasonable assurance that we are in compliance with 
the spirit of FMFIA and (2) we have implemented and maintained 
financial systems that comply substantially with federal financial 
management systems requirements, applicable federal accounting 
standards, and the U.S. Government Standard General Ledger at the 
transaction level consistent with the requirements in the Federal 
Financial Management Improvement Act and OMB guidance. These are 
objectives that we set for ourselves even though, as part of the 
legislative branch of the federal government, we are not legally 
required to do so. 

Signed by: 

Gene L. Dodaro: 
Acting Comptroller General of the United States: 

Signed by: 

Sallyanne Harper: 
Chief Financial Officer: 

Signed by: 

Gary L. Kepplinger: 
General Counsel: 

[End of Financial Reporting Assurance Statements] 

About GAO: 

We exist 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. 

GAO is an independent, nonpartisan professional services agency in the 
legislative branch of the federal government. Commonly known as the 
audit and investigative arm of the Congress or the “congressional 
watchdog,” we examine how taxpayer dollars are spent and advise 
lawmakers and agency heads on ways to make government work better. As a 
legislative branch agency, we are exempt from many laws that apply to
the executive branch agencies. However, we generally hold ourselves to 
the spirit of many of the laws, including 31 U.S.C. 3512 (commonly 
referred to as the Federal Managers’ Financial Integrity Act), the
Government Performance and Results Act of 1993, and the Federal 
Financial Management Improvement Act of 1996.[Footnote 1] Accordingly, 
this performance and accountability report for fiscal year 2008 
provides what we consider to be information that is at least equivalent 
to that supplied by executive branch agencies in their annual 
performance and accountability reports. 

Mission: 

Our mission is 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. The strategies and means that we use to accomplish 
this mission are described in the following pages. In short, we 
accomplish our mission by providing objective and reliable information 
and informed analysis to the Congress, to federal agencies, and to the
public, and we recommend improvements, when appropriate, on a wide 
variety of issues. Three core values—accountability, integrity, and 
reliability—form the basis for all of our work, regardless of its 
origin. These are described on the inside front cover of this report. 

GAO’s History: 

The Budget and Accounting Act of 1921 required the President to issue 
an annual federal budget and established GAO as an independent agency 
to investigate how federal dollars are spent. In the early years, we 
mainly audited vouchers, but after World War II we started to perform 
more comprehensive financial audits that examined the economy and 
efficiency of government operations. By the 1960s, GAO had begun to 
perform the type of work we are noted for today—program evaluation— 
which examines whether government programs are meeting their 
objectives. 

Strategic Planning and Management Process: 

To accomplish our mission, we use a strategic planning and management 
process that is based on a hierarchy of four elements (see fig. 1), 
beginning at the highest level with the following four strategic goals: 

* Strategic Goal 1: Provide Timely, Quality Service to the Congress and 
the Federal Government to Address Current and Emerging Challenges to 
the Well-Being and Financial Security of the American People. 

* Strategic Goal 2: Provide Timely, Quality Service to the Congress and 
the Federal Government to Respond to Changing Security Threats and the 
Challenges of Global Interdependence. 

* Strategic Goal 3: Help Transform the Federal Government's Role and 
How It Does Business to Meet 21st Century Challenges. 

* Strategic Goal 4: Maximize the Value of GAO by Being a Model Federal 
Agency and a World-Class Professional Services Organization. 

Our audit, evaluation, and investigative work is primarily aligned 
under the first three strategic goals, which span issues that are both 
domestic and international, affect the lives of all Americans, and 
influence the extent to which the federal government serves the 
nation’s current and future interests (see fig. 2). 

Figure 1: GAO's Strategic Planning Hierarchy: 

[Refer to PDF for Image] 

A four level pyramid that shows GAO's strategic planning hierarchy. 

Level 1: Strategic Goals (4); 
Level 2: Strategic Objectives (21); 
Level 3: Performance goals (93); 
Level 4: Key Efforts (300+). 

Source: GAO. 

[End of Figure] 

An Example of Our Strategic Planning Elements: 

Strategic Goal 1: Provide Timely, Quality Service to the Congress and 
the Federal Government to Address Current and Emerging Challenges to 
the Well-Being and Financial Security of the American People. 

Strategic Objective: Lifelong Learning to Enhance U.S. Competitiveness. 

Performance Goal: Identify Opportunities to Improve Programs that 
Target Federal Resources to Activities that Support Lifelong Learning. 

Key Efforts: 

* Evaluate the cost, coordination, and availability of child care and 
early childhood education; 

* Assess whether federal resources provided under the No Child Left 
Behind Act are appropriately targeted to designated beneficiaries in K-
12 education programs; 

* Assess the efficiency and effectiveness of programs designed to 
promote access to and affordability of postsecondary education. 

Figure 2: How GAO Assisted the Nation: Fiscal Year 2008: 

Strategic Goal 1: Provide timely, quality service to the Congress and 
the federal government to address current and emerging challenges to 
the well-being and financial security of the American people: 

* identify shortcomings in processes for providing health care to 
servicemembers and veterans; 

* reduce food stamp payment errors; 

* highlight challenges in the Food and Drug Administration’s inspection 
programs for drugs made overseas for the U.S. market; 

* strengthen higher education access and affordability; 

* identify information gaps for 401(k) participants related to their 
fund allocations and fees; 

* focus attention on challenges transportation systems face as demand 
and congestion grow; 

* outline progress made as the nation transitions to digital 
television; 

* recommend ways to improve safety on U.S. highways and airport 
runways; 

* highlight oversight deficiencies in the Small Business 
Administration’s Historically Underutilized Business Zone program. 

Strategic Goal 2: Provide timely, quality service to the Congress and 
the federal government to respond to changing security threats and the 
challenges of global interdependence: 

* assess military readiness and operations in Iraq and Afghanistan; 

* oversee U.S. efforts to fight terrorism in Pakistan and secure and 
rebuild Iraq and Afghanistan; 

* realign funds for a U.S. program that helps Russia dispose of nuclear 
materials; 

* improve the monitoring and assessment of nonemergency food aid 
programs; 

* enhance the Department of Defense’s (DOD) preparedness for homeland 
security missions; 

* identify ways to improve DOD’s acquisition management process; 

* identify implementation challenges with the U.S. Secure Border 
Initiative; 

* define the federal role in sustaining centers that promote homeland 
security information sharing; 

* improve the National Flood Insurance Program’s data and analyses; 

* reform the federal housing government sponsored enterprises 
regulatory structure; 

* bring attention to the need for governmentwide action to better 
protect personally identifiable information. 

Strategic Goal 3: Help transform the federal government’s role and how 
it does business to meet 21st century challenges: 

* identify the risks of relying on private contractors for defense and 
homeland security functions; 

* improve accountability for excess DOD parts and equipment that can be 
improperly sold to the public; 

* refer for prosecution individuals who fraudulently accepted federal 
disaster assistance payments; 

* identify border security vulnerabilities through undercover 
investigations; 

* strengthen DOD business systems modernization management; 

* improve the cost-effectiveness of filling the Strategic Petroleum 
Reserve; 

* identify incremental approaches for reducing the tax gap; 

* monitor the development of the 2010 Census; 

* improve federal human capital management practices; 

* enlighten the public about the nation’s long-term fiscal challenge. 

Strategic Goal 4: Maximize the value of GAO by being a model federal 
agency and a world-class professional services organization: 

* increase understanding between the United States and the Iraqi 
Supreme Audit Institution (SAI) through our assistance with building 
the Iraqi Board of Supreme Audit’s capacity to improve accountability 
for Iraq’s expenditures; 

* enhance communications with and service to our external clients 
through refinements to our external Web site; 

* strengthen public sector financial management and accountability at 
the global level through GAO’s partnership with the World Bank and the 
International Organization of Supreme Audit Institutions Development 
Initiative to design, develop, and deliver the SAI Transformation 
Seminar. 

[End of Figure 2] 

The fourth goal is our only internal one and is aimed at maximizing our 
productivity through such efforts as investing steadily in information 
technology to support our work; ensuring the safety and security of our 
people, information, and assets; pursuing human capital transformation; 
and leveraging our knowledge and experience. We revisit the focus and 
appropriateness of these four strategic goals each time that we update 
our strategic plan. We last updated our strategic plan in March 2007. 
These four broad outcome goals are an outgrowth of our mission 
statement and explain our major focus areas and the long-term results 
they are intended to achieve. Each of our strategic goals is supported 
by four to eight strategic objectives that elaborate on each strategic 
goal. We list the strategic goals and strategic objectives under each 
one in figure 3, our strategic planning framework for serving the 
Congress. Several multiyear performance goals define a specific level 
of achievement for each strategic objective, and at the base of our 
strategic planning hierarchy, key efforts describe a body of work that 
operationalizes each performance goal. Complete descriptions of the 
steps in our strategic planning and management process are included in 
our strategic plan for fiscal years 2007 through 2012, which is 
available on our Web site at [hyperlink, http://www.gao.gov]. This site 
also provides access to our annual performance plans since fiscal year 
1999 and our performance and accountability reports since fiscal year 
2001.To ensure that we are well positioned to meet the Congress’s 
current and future needs, we update our 6-year strategic plan every 3 
years, consulting extensively during the update with our clients on 
Capitol Hill and with other experts (see our complete strategic plan on 
[hyperlink, http://www.gao.gov/sp/d04534sp.pdf]). Using the plan as a 
blueprint, we lay out the areas in which we expect to conduct research, 
audits, analyses, and evaluations to meet our clients’ needs, and we 
allocate the resources we receive from the Congress accordingly. Given 
the increasingly fast pace with which crucial issues emerge and evolve, 
we design a certain amount of flexibility into our plan and staffing 
structure so that we can respond readily to the Congress’s changing 
priorities. When we revise our plan or our allocation of resources, we 
disclose those changes in annual performance plans, which are 
posted—like our strategic plan—on the Web for public inspection 
[hyperlink, http://www.gao.gov/sp.html]. 

We revised our strategic plan in fiscal year 2007 for the third time 
since we first issued a strategic plan in 2000. The broad goals and 
objectives of our strategic plan for 2007-2012 did not change 
significantly since our last update, but events such as the continuing 
war in Iraq and recent natural disasters account for some modification 
in emphasis. Seven broad issues or “themes” provide the context for our 
strategic plan (see fig. 3), many of which were raised repeatedly by 
our client and other stakeholders during our outreach efforts and 
discussions we initiated while preparing the plan. For more information 
about the themes see Forces That Will Shape America’s Future: The 
Themes from GAO’s Strategic Plan, March 2007. 
[hyperlink, http://www.gao.gov/products/GAO-07-467SP] 

Figure 3: GAO's Strategic Plan Framework: 

[Refer to PDF for Image] 

Serving the Congress and the Nation: 

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: 

* Changing Security Threats; 

* Sustainability Concerns; 

* Economic Growth and Competitiveness; 

* Global Interdependency; 

* Societal Change; 

* Quality of Life; 

* Science & Technology; 

Goals & Objectives: 

Provide Timely, Quality Service to the Congress and the Federal 
Government to: 

1) Address Current and Emerging Challenges to the Well-being and 
Financial Security of the American People related to: 

* Health care needs; 

* Lifelong learning; 

* Work benefits and protections; 

* Financial security; 

* Effective system of justice; 

* Viable communities; 

* Natural resources use and environmental protection; 

* Physical infrastructure; 

2) Respond to Changing Security Threats and the Challenges of Global 
Interdependence involving: 

* Homeland security; 

* Military capabilities and readiness; 

* Advancement of U.S. interests; 

* Global market forces. 

3) Help Transform the Federal Government’s Role and How It Does 
Business to Meet 21st Century Challenges by assessing: 

* Roles in achieving federal objectives; 

* Government transformation; 

* Key management challenges and program risks; 

* Fiscal position and financing of the government; 

4) Maximize the Value of GAO by Being a Model Federal Agency and a 
World-Class Professional Services Organization in the areas of: 

* Client and customer satisfaction; 

* Strategic leadership; 

* Institutional knowledge and experience; 

* Process improvement; 

* Employer of choice. 

Core Values: 

* Accountability; 

* Integrity; 

* Reliability. 

Source: GAO. 

[End of Figure 3, GAO's Strategic Plan Framework] 

Each year, we hold ourselves accountable to the Congress and to the 
American people for our performance, primarily through our annual 
performance and accountability report. 

We have included some information about future plans in this report to 
provide as cohesive a view as possible of what we have done, what we 
are doing, and what we expect to do to support the Congress and to 
serve the nation. Last year, the Association of Government Accountants 
awarded us for the seventh consecutive year its Certificate of 
Excellence in Accountability Reporting for our fiscal year 2007 
performance and accountability report. According to the association, 
this certificate means that we produced an interesting and informative 
report that achieved the goal of complete and fair reporting. We also 
received an award from Graphic Design USA for the Highlights version of 
our fiscal year 2007 performance and accountability report. (See fig. 
4.) 

Figure 4: GAO's Performance and Accountability Report Awards: 

[Refer to PDF for Image] 

Scanned copies of: 

1. AGA Certificate of Excellence in Accountability Reporting, presented 
to the U.S. Government Accountability Office. 

In recognition of your outstanding efforts preparing GAO's Performance 
and Accountability Report for the fiscal year ended September 30, 2007. 

A Certificate of Excellence in Accountability is presented by AGA to 
federal government agencies whose annual Performance and Accountability 
Reports achieve the highest standards demonstrating accountability and 
communicating results. 

Signed by: 

John H Hammel, CGFM: 
Chair, Certificate of Excellence in Accountability Reporting Director: 

Signed by: 

Relmond P. Van Daniker, DBA, CPA: 
Executive Director, AGA: 

2. 2008 Graphic Design USA presents an: American Inhouse Design Award 
to Government Accountability Office for Performance and 
Accountability Highlights Report 2007. 

3. Cover of the Government Accountability Office's Performance and 
Accountability Report for Fiscal Year 2007. 

4. Cover of the Government Accountability Office's Performance and 
Accountability Highlights for Fiscal Year 2007. 

Source: GAO. 

[End of Figure] 

Organizational Structure: 

As the Acting Comptroller General of the United States, Gene L. Dodaro 
is the head of GAO. On March 13, 2008, he succeeded David L. Walker who 
resigned before the end of his 15-year term that began in 1998. Mr. 
Dodaro previously served as GAO’s Chief Operating Officer for 9 years, 
and he retained this position after assuming the top post. Two other 
executives join Acting Comptroller General Dodaro to form our Executive 
Committee: Chief Administrative Officer/Chief Financial Officer 
Sallyanne Harper and General Counsel Gary Kepplinger. Mr. Dodaro will 
serve as Acting Comptroller General until the President nominates and 
the Senate confirms a successor from a list of candidates proposed by 
the Congress. 

To achieve our strategic goals, our staff is organized as shown in 
figure 6. For the most part, our 13 evaluation, audit, and research 
teams perform the work that supports strategic goals 1, 2, and 3—our 
three external strategic goals—with several of the teams working in 
support of more than one strategic goal. Also, our Forensic Audits and 
Special Investigations (FSI) unit, within our Financial Management and 
Assurance team, provides the Congress with high-quality forensic 
audits; investigates fraud, waste, and abuse; evaluates security 
vulnerabilities; and conducts other appropriate investigative services 
as part of its own assignments or in support of other teams. In 
addition, FSI follows up on engagements and referrals from our other 
teams when its special services are required to help determine whether 
legislative or administrative actions are necessary. FSI is composed of 
investigators, analysts, auditors who have experience with forensic 
audits, and staff in General Counsel who work with FraudNet—our online 
system designed to facilitate follow-up on allegations of fraud, waste, 
abuse, or mismanagement of federal funds. 

Senior executives in charge of the teams manage a mix of engagements to 
ensure that we meet the Congress’s need for information on quickly 
emerging issues as we also continue longer-term work that flows from 
our strategic plan. To serve the Congress effectively with a finite set 
of resources, senior managers consult with our congressional clients 
and determine the timing and priority of engagements for which they are 
responsible. 

As described below, General Counsel supports the work of all of our 
teams. In addition, the Applied Research and Methods team assists the 
other teams on matters requiring expertise in areas such as economics, 
research design, and statistical analysis. Staff in many offices, such 
as Strategic Planning and External Liaison, Congressional Relations, 
Opportunity and Inclusiveness, Quality and Continuous Improvement, 
Public Affairs, and the Chief Administrative Office, support the 
efforts of the teams. This collaborative process, which we refer to as 
matrixing, increases our effectiveness, flexibility, and efficiency in 
using our expertise and resources to meet congressional needs on 
complex issues. 

General Counsel is structured to facilitate the delivery of legal 
services to the teams and staff offices that support our four strategic 
goals. This structure allows General Counsel to (1) provide legal 
support to our staff offices and audit teams concerning all matters 
related to their work and (2) produce legal decisions and opinions for 
the Comptroller General. Specifically, the goal 1, goal 2, and goal 3 
groups in General Counsel are organized to provide each of the audit 
teams with a corresponding team of attorneys dedicated to supporting 
each team’s needs for legal services. In addition, these groups prepare 
advisory opinions to committees and members of the Congress on agency 
adherence to laws applicable to their programs and activities. General 
Counsel’s Legal Services group provides in-house support to our 
management on a wide array of human capital matters and initiatives and 
on information management and acquisition matters and defends the 
agency in administrative and judicial forums. Finally, attorneys in the 
Procurement Law and the Budget and Appropriations Law groups prepare 
administrative decisions and opinions adjudicating protests to the 
award of government contracts or opining on the availability and use of 
appropriated funds. 

For strategic goal 4—our fourth and only internal strategic goal—staff 
in our Chief Administrative Office take the lead. They are assisted on 
specific key efforts by the Applied Research and Methods team and by 
staff offices such as Strategic Planning and External Liaison, 
Congressional Relations, Opportunity and Inclusiveness, Quality and 
Continuous Improvement, and Public Affairs. In addition, attorneys in 
General Counsel, primarily in the Legal Services group, provide legal 
support for goal 4 efforts. 

We maintain a workforce of highly trained professionals with degrees in 
many academic disciplines, including accounting, law, engineering, 
public and business administration, economics, and the social and 
physical sciences. About three-quarters of our approximately 3,100 
employees are based at our headquarters in Washington, D.C.; the rest 
are deployed in 11 field offices across the country (see fig. 5). Staff 
in these field offices are aligned with our research, audit, 
investigative, and evaluation teams and perform work in tandem with our 
headquarters staff in support of our external strategic goals. 

Figure 5: GAO’s Office Locations: 

[Refer to PDF for Image] 

This figure is a map of the United States depicting the following GAO 
Office Locations: 

Atlanta, Georgia: 
Boston, Massachusetts: 
Chicago, Illinois: 
Dallas, Texas: 
Dayton, Ohio: 
Denver, Colorado: 
Huntsville, Alabama: 
Los Angeles, California: 
Norfolk, Virginia: 
San Francisco, California: 
Seattle, Washington: 
Washington, D.C. 

Source: See Image Sources. 

[End of figure] 

Figure 6: Organizational Structure: 

[Refer to PDF for Image] 

This organizational chart depicts GAO’s basic structure. The agency’s 
top level of organization is the Comptroller General, with 
responsibilities for: 
Public Affairs; 
Strategic Planning and External Liaison; 
Congressional Relations; 
Opportunity and Inclusiveness; and: 
Inspector General. 

The next level on the chart includes the Chief Operating Officer, the 
Chief Administrative Officer/Chief Financial Officer, and the General 
Counsel. Twenty-three units report directly to the Comptroller General 
and the Chief Operating Officer. The units included the following staff 
offices: Public Affairs, Strategic Planning and External Liaison, 
Congressional Relations, Opportunity and Inclusiveness, and Inspector 
General, which report to the Comptroller General; and Quality and 
Continuous Improvement, which reports to the Chief Operating Officer. 

Other units that report to the Chief Operating Officer include teams 
and field operations that conduct audits, evaluations, and research. 
These teams perform work primarily supporting one of our three external 
strategic goals but several teams perform work in support of multiple 
strategic goals. Generally the teams fall under the following goals: 

Goal 1: 

Provide timely, quality service to the Congress and the federal 
government to address current and emerging challenges to the well-being 
and financial security of the American people. 

* Education, Workforce, and Income Security; 
* Financial Markets and Community Investment; 
* Health Care; 
* Homeland Security and Justice; 
* Natural Resources and Environment; 
* Physical Infrastructure; 

Goal 2: 

Provide timely, quality service to the Congress and the federal 
government to respond to the changing security threats and the 
challenges of global interdependence. 

* Acquisition and Sourcing Management; 
* Defense Capabilities and Management; 
* International Affairs and Trade. 

Goal 3: 

Help transform the federal government’s role and how it does business 
to meet 21st century challenges. 

* Applied Research and Methods; 
* Financial Management and Assurance; 
- Forensic Audits and Special Investigations; 
* Information Technology; 
* Strategic Issues. 

Goal 4: 

Maximize the value of GAO by being a model federal agency and a world-
class professional services organization. 

* Controller; 
* Human Capital Office: 
- Chief Human Capital Officer; 
* Information Systems and Technology Services: 
- Chief Information Officer; 
* Knowledge Services: 
- Chief Knowledge Services Officer; 
* Professional Development Program. 

General Counsel's structure largely mirrors the agency's goal 
structure, and attorneys assigned to a goal work with teams on specific 
engagements. General Counsel has support or advisory relationship with 
the goals and teams rather than a direct reporting relationship. 
General Counsel: 

* provides audit and other legal support services for all goals and 
staff offices; and: 

* manages GAO’s procurement law and bid protest work. 

Source: GAO. 

Note: General Counsel's structure largely mirrors the agency's goal 
structure, and attorneys who are assigned to goals work with the teams 
on specific engagements. Thus, the dotted lines in this figure indicate 
General Counsel's support of or advisory relationship with the goals 
and teams rather than a direct reporting relationship. 

[End of Figure] 

[End of Organizational Structure] 

Strategies for Achieving Our Goals: 

The Government Performance and Results Act directs agencies to 
articulate not just goals, but also strategies for achieving those 
goals. As detailed in part I of this report, we emphasize two 
overarching strategies for achieving our goals: (1) providing 
information from our work to the Congress and the public in a variety 
of forms and (2) continuing and strengthening our human capital and 
internal operations. Specifically, our strategies emphasize the 
importance of working with other organizations on crosscutting issues 
and effectively addressing the challenges to achieving our agency’s 
goals and recognizing the internal and external factors that could 
impair our performance. Through these strategies, which have proven 
successful for us for a number of years, we plan to achieve the level 
of performance that is needed to meet our performance measures and 
goals. This level of performance, in turn, will allow us to achieve our 
four, broad strategic goals. 

Attaining our three external strategic goals (goals 1, 2, and 3) and 
their related objectives rests, for the most part, on providing 
professional, objective, fact-based, nonpartisan, nonideological, fair, 
and balanced information to support the Congress in carrying out its 
constitutional responsibilities. To implement the performance goals and 
key efforts related to these three goals, we develop and present 
information in a number of ways, including: 

* evaluations of federal policies, programs, and the performance of 
agencies; 

* oversight of government operations through financial and other 
management audits to determine whether public funds are spent 
efficiently, effectively, and in accordance with applicable laws; 

* investigations to assess whether illegal or improper activities are 
occurring; 

* analyses of the financing for government activities; 

* constructive engagements in which we work proactively with agencies, 
when appropriate, to provide advice that may assist their efforts 
toward positive results; 

* legal opinions that determine whether agencies are in compliance with 
applicable laws and regulations; 

* policy analyses to assess needed actions and the implications of 
proposed actions; and: 

* additional assistance to the Congress in support of its oversight and 
decision-making responsibilities. 

We conduct specific engagements as a result of requests from 
congressional committees and mandates written into legislation, 
resolutions, and committee reports. In fiscal year 2008, we devoted 94 
percent of our engagement resources to work requested or mandated by 
the Congress. We initiated the remaining 6 percent of the engagement 
work under the Comptroller General’s authority to self-initiate 
engagements. Much of this work addressed various challenges that are of 
broad-based interest to the Congress, such as the Global War on 
Terrorism and the cost and status of both security stabilization and 
reconstruction efforts in Iraq.[Footnote 2] Also covered by this work 
were government programs and operations that we have identified as at 
high risk for fraud, waste, abuse, and mismanagement as well as reviews 
of agencies’ budget requests to help support congressional decision 
making. By making recommendations to improve the accountability, 
operations, and services of government agencies, we contribute to 
increasing the effectiveness of federal spending and enhancing the 
taxpayers’ trust and confidence in their government. 

Our staff are responsible for following high standards for gathering, 
documenting, and supporting the information we collect and analyze. 
More often than not, this information is documented in a product that 
is made available to the public. In some cases, we develop products 
that contain classified or sensitive information that cannot be made 
available publicly. We generally issue around 1,200 to 1,300 products 
each year, primarily in an electronic format. In addition, we publish 
about 250 to 350 legal decisions and opinions each year. Our products 
include the following: 

* reports and written correspondence; 

* testimonies and statements for the record, where the former are 
delivered orally by one or more of our senior executives at a hearing 
and the latter are provided for inclusion in the congressional record; 

* briefings, which are usually given directly to congressional staff 
members; and: 

* legal decisions and opinions resolving bid protests and addressing 
issues of appropriations law, as well as opinions on the scope and 
exercise of authority of federal officers. 

We also produce special publications on specific issues of general 
interest to all Americans, such as our report on key issues requiring 
greater stewardship by the federal government and highlights of a forum 
on the sustainability of our natural resources.[Footnote 3] Our 
publication, Principles of Federal Appropriations Law, is viewed both 
within and outside of the government as the primary resource on federal 
case law related to the availability, use, and control of federal 
funds. In addition, we maintain the government’s repository of reports 
on Antideficiency Act violations and make available on our Web site 
various information extracted from those reports. Collectively, our 
products always contain information and often conclusions and 
recommendations that allow us to achieve our external strategic goals. 

Another means of ensuring that we are achieving our goals is through 
examining the impact of our past work and using that information to 
shape our future work. Consequently, we evaluate actions taken by 
federal agencies and the Congress in response to our past 
recommendations. The results of these evaluations are reported in terms 
of the financial benefits and nonfinancial benefits that reflect the 
value of our work. We actively monitor the status of our open 
recommendations—those that remain valid but have not yet been 
implemented—and report our findings annually to the Congress and the 
public. 
[hyperlink, http://www.gao.gov/openrecs.html] 

Similarly, we use our biennial high-risk report, most recently issued 
in January 2007, to provide a status report on major government 
operations that we consider high risk because they are vulnerable to 
fraud, waste, abuse, and mismanagement or are in need of broad-based 
transformation. We also use our report on 21st century challenges, 
which was issued in February 2005, to alert the nation’s leaders to 
current and emerging issues facing the nation, including the long-range 
budget challenge, the human capital crisis, postal reform, and the 
federal government’s financial management efforts. These reports are 
valuable planning tools because they help us to identify those areas 
where our continued efforts are needed to maintain the focus on 
important policy and management issues that the nation faces. 

To attain our fourth strategic goal—an internal goal—and its five 
related objectives, we conduct surveys of our congressional clients and 
internal customers to obtain feedback on our products, processes, and 
services and perform studies and evaluations to identify ways in which 
to improve them. 

Because achieving our strategic goals and objectives also requires 
strategies for coordinating with other organizations with similar or 
complementary missions, we: 

* use advisory panels and other bodies to inform our strategic and 
annual work planning and: 

* maintain strategic working relationships with other national and 
international government accountability and professional organizations, 
including the federal inspectors general, state and local audit 
organizations, and other national audit offices. 

These two types of strategic working relationships allow us to extend 
our institutional knowledge and experience; leverage our resources; and 
in turn, improve our service to the Congress and the American people. 
Our Strategic Planning and External Liaison office takes the lead and 
provides strategic focus for the work with external partner 
organizations, while our research, audit, and evaluation teams lead the 
work with most of the issue-specific organizations. 

How We Measure Our Performance: 

To help us determine how well we are meeting the needs of the Congress 
and maximizing our value as a world-class organization, we assess our 
performance annually using a balanced set of quantitative performance 
measures that focus on four key areas—results, client, people, and 
internal operations.[Footnote 4] These categories of measures are 
briefly described below. 

* Results: Focusing on results and the effectiveness of the processes 
needed to achieve them is fundamental to accomplishing our mission. To 
assess our results, we measure financial benefits, other (nonfinancial) 
benefits, recommendations implemented, and percentage of new products 
with recommendations. 

Financial benefits and nonfinancial benefits provide quantitative and 
qualitative information, respectively, on the outcomes or results that 
have been achieved from our work. They often represent outcomes that 
occurred or are expected to occur over a period of several years. The 
remaining measures are intermediate outcomes in that they often lead to 
achieving outcomes that are ultimately captured in our financial and 
nonfinancial benefits. For financial benefits and nonfinancial 
benefits, we first set targets for the agency as a whole, and then we 
set targets for each of the external goals—that is, goals 1, 2, and 
3—so that the sum of the targets for the goals equals the agencywide 
targets. For past recommendations implemented and percentage of 
products with recommendations, we set targets and report performance 
for the agency as a whole because we want our performance on these 
measures to be consistent across goals. We track our performance by 
strategic goal in order to understand why we meet or do not meet the 
agencywide target. We also use this information to provide feedback to 
our teams on the extent to which they are contributing to the overall 
target and to help them identify areas for improvement. 

* Client: To judge how well we are serving our client, we measure the 
number of times we are asked to present expert testimony at 
congressional hearings as well as our timeliness in delivering products 
to the Congress. Our strategy in this area draws upon a variety of data 
sources (e.g., our client feedback survey and in-person discussions 
with congressional staff) to obtain information on the services we are 
providing to our congressional clients. 

We set a target at the agencywide level for the number of testimonies 
and then assign a portion of the testimonies as a target for each of 
the external goals—that is, goals 1, 2, and 3—based on each goal’s 
expected contribution to the agencywide total. As in measuring the 
results of our work, we track our progress on this measure at the goal 
level in order to understand why we met or did not meet the agencywide 
target. We set an agencywide target for timeliness because we want our 
performance on this measure to be consistent across goals. 

* People: As our most important asset, our people define our character 
and capacity to perform. A variety of data sources, including an 
internal survey, provide information to help us measure how well we are 
attracting and retaining high-quality staff and how well we are 
developing, supporting, using, and leading staff. We set targets for 
these measures at the agencywide level. 

* Internal operations: Our mission and people are supported by our 
internal administrative services, including information management, 
building management, knowledge services, human capital, and financial 
management services. Through an internal customer satisfaction survey, 
we gather information on how well our internal operations help 
employees get their jobs done and improve employees’ quality of work 
life. Examples of surveyed services include providing secure Internet 
access and voice communication systems, performance management, and 
benefits information and assistance. Fiscal year 2008 is the third year 
in which we reported how well we performed against the targets we set 
for our internal operations measures. We set targets for these measures 
at the agencywide level. 

Setting Performance Targets: 

To establish targets for all of our measures, we examine what we have 
been able to achieve in the past (for example, by looking at our 4-year 
rolling averages) for most of our results measures (see p. 24) and the 
external factors that influence our work (see p. 58). The teams and 
offices that are directly engaged in the work discuss their views of 
what must be accomplished in the upcoming fiscal year with our top 
executives, who then establish targets for the performance measures. 

Once approved by the Comptroller General, the targets become final and 
are presented in our annual performance plan and budget.[Footnote 5] We 
may adjust these targets after they are initially published when our 
expected future work or level of funding provided warrants doing so. If 
we make changes, we include the changed targets in later documents, 
such as this performance and accountability report, and indicate that 
we have changed them. In part II, we include detailed information on 
data sources that we use to assess each of these measures, as well as 
the steps we take to verify and validate the data. 

On the pages that follow, we assess our performance for fiscal year 
2008 against our previously established performance targets. We also 
present our financial statements, the independent auditor’s report, and 
a statement from GAO’s Inspector General. 

[End of About GAO] 

[End of Introduction] 

Part I: Management’s Discussion and Analysis: 

Implementing Our Strategies for Serving the Congress and the Nation: 

We achieve our strategic goals and objectives by providing to the 
Congress and the public objective, fact-based, nonpartisan information 
based on our reviews and analyses and by continually striving to 
strengthen our human capital programs and internal operations. In 
fiscal year 2008, we monitored our performance using 16 annual 
performance measures, and they indicate that we had an impressive 
year—we met or exceeded our performance targets for all but one of our 
16 measures (see table 1). We accomplished real results for the nation, 
surpassing our financial benefits target for the year by 45 percent and 
exceeding our annual target for nonfinancial benefits by 248. Our 
financial benefits of $58.1 billion represents a $114 return on every 
dollar invested in us, and nearly 1,400 benefits resulting from our 
work helped to improve the efficiency and effectiveness of federal 
government programs that serve the public. In addition, we also 
exceeded our targets for past recommendations implemented and new 
products with recommendations by 3 percentage points and 6 percentage 
points, respectively. In addition, we exceeded by about 38 percent our 
target of 220 hearings at which we were asked to testify and met the 
target for delivering our products and testimonies to our clients in a 
timely manner. 

We also met or exceeded our annual targets for seven of our eight 
people measures. We did not meet our target for retention rate without 
retirements because we lost more staff than expected for reasons other 
than retirement. Successfully meeting or exceeding our targets in this 
area indicates that our efforts under goal 4 to attract, retain, and 
develop staff paid off. We discuss these actions in appendix 1 of this 
report. 

Concerning our two internal operations measures, we will assess our 
performance related to how well our internal administrative services 
(e.g., computer support, mail service, and Internet service) help 
employees get their jobs done or improve employees’ quality of work 
life once data from our November 2008 annual customer satisfaction 
survey have been analyzed. These measures are directly related to our 
goal 4 strategic objectives of continuously enhancing our business and 
management processes and becoming a professional services employer of 
choice. There will always be a lag in reporting on this measure because 
our customer feedback survey is distributed after we issue the 
performance and accountability report. In fiscal year 2007, we exceeded 
our target of 4.0 (a composite score based on employees’ responses from 
an internal survey) for help get job done and slightly missed our 
target for our quality of work life measure. These scores indicate that 
our employees were very satisfied with the internal administrative 
services they used during their workday. The survey asked staff to rank 
the importance of each service to them and indicate their satisfaction 
with it on a scale from 1 to 5. 

Table 1: Agencywide Summary of Annual Measures and Targets: 

Performance Measure: Results: Financial benefits (dollars in billions); 
2004 Actual: $44.0 billion; 
2005 Actual: $39.6 billion; 
2006 Actual: $51.0 billion; 
2007 Actual: $45.9 billion; 
2008 Target: $40.0 billion; 
2008 Actual: $58.1 billion; 
Met/Not Met: Met; 
2009 Target: $42.0 billion. 

Performance Measure: Results: Nonfinancial benefits; 
2004 Actual: 1,197; 
2005 Actual: 1,409; 
2006 Actual: 1,342; 
2007 Actual: 1,354; 
2008 Target: 1,150; 
2008 Actual: 1,398; 
Met/Not Met: Met; 
2009 Target: 1,200. 

Performance Measure: Results: Past recommendations implemented; 
2004 Actual: 83%; 
2005 Actual: 85%; 
2006 Actual: 82%; 
2007 Actual: 82%; 
2008 Target: 80%; 
2008 Actual: 83%; 
Met/Not Met: Met; 
2009 Target: 80%. 

Performance Measure: Results: New products with recommendations; 
2004 Actual: 63%; 
2005 Actual: 63%; 
2006 Actual: 65%; 
2007 Actual: 66%; 
2008 Target: 60%; 
2008 Actual: 66%; 
Met/Not Met: Met; 
2009 Target: 60%. 

Performance Measure: Client: Testimonies; 
2004 Actual: 217; 
2005 Actual: 179; 
2006 Actual: 240; 
2007 Actual: 276; 
2008 Target: 220; 
2008 Actual: 304; 
Met/Not Met: Met; 
2009 Target: 200. 

Performance Measure: Client: Timeliness[A]; 
2004 Actual: 92%; 
2005 Actual: 92%; 
2006 Actual: 93%; 
2007 Actual: 95%; 
2008 Target: 95%; 
2008 Actual: 95%; 
Met/Not Met: Met; 
2009 Target: 95%. 

Performance Measure: People: New hire rate; 
2004 Actual: 98%; 
2005 Actual: 94%; 
2006 Actual: 94%; 
2007 Actual: 96%; 
2008 Target: 95%; 
2008 Actual: 96%; 
Met/Not Met: Met; 
2009 Target: 95%. 

Performance Measure: People: Acceptance rate; 
2004 Actual: 72%; 
2005 Actual: 71%; 
2006 Actual: 70%; 
2007 Actual: 72%; 
2008 Target: 72%; 
2008 Actual: 77%; 
Met/Not Met: Met; 
2009 Target: [B]. 

Performance Measure: People: Retention rate: With retirements; 
2004 Actual: 90%; 
2005 Actual: 90%; 
2006 Actual: 90%; 
2007 Actual: 90%; 
2008 Target: 90%; 
2008 Actual: 90%; 
Met/Not Met: Met; 
2009 Target: 90%. 

Performance Measure: People: Retention rate: Without retirements; 
2004 Actual: 95%; 
2005 Actual: 94%; 
2006 Actual: 94%; 
2007 Actual: 94%; 
2008 Target: 94%; 
2008 Actual: 93%; 
Met/Not Met: Not met; 
2009 Target: 94%. 

Performance Measure: People: Staff development[C]; 
2004 Actual: 70%; 
2005 Actual: 72%; 
2006 Actual: 76%; 
2007 Actual: 76%; 
2008 Target: 76%; 
2008 Actual: 77%; 
Met/Not Met: Met; 
2009 Target: 76%. 

Performance Measure: People: Staff utilization[D]; 
2004 Actual: 72%; 
2005 Actual: 75%; 
2006 Actual: 75%; 
2007 Actual: 73%; 
2008 Target: 75%; 
2008 Actual: 75%; 
Met/Not Met: Met; 
2009 Target: 75%. 

Performance Measure: People: Leadership; 
2004 Actual: 79%; 
2005 Actual: 80%; 
2006 Actual: 79%; 
2007 Actual: 79%; 
2008 Target: 80%; 
2008 Actual: 81%; 
Met/Not Met: Met; 
2009 Target: 80%. 

Performance Measure: People: Organizational climate; 
2004 Actual: 74%; 
2005 Actual: 76%; 
2006 Actual: 73%; 
2007 Actual: 74%; 
2008 Target: 75%; 
2008 Actual: 77%; 
Met/Not Met: Met; 
2009 Target: 75%. 

Performance Measure: Internal operations[E]: Help get job done; 
2004 Actual: 4.01; 
2005 Actual: 4.10; 
2006: Actual: 4.10; 
2007: Actual: 4.05; 
2008 Target: 4.00; 
2008 Actual: N/A; 
Met/Not Met: N/A; 
2009 Target: 4.00. 

Performance Measure: Internal operations[E]: Quality of work life; 
2004 Actual: 3.96; 
2005 Actual: 3.98; 
2006 Actual: 4.00; 
2007 Actual: 3.98; 
2008 Target: 4.00; 
2008 Actual: N/A; 
Met/Not Met: N/A; 
2009 Target: 4.00. 

Source: GAO. 

Note: Information explaining all of the measures included in this table 
appears in the Data Quality and Program Evaluations section in part II 
of this report. 

[A] In our timeliness calculations for fiscal years 2004 through 2007, 
we inadvertently included nonresponses to the timeliness questions in 
our client feedback survey—the data source for our timeliness measure. 
We therefore recalculated the survey results for these fiscal years and 
fiscal year 2008. The numbers shown reflect the correct calculation. 

[B] Considering the challenging hiring environment due to uncertain 
budgets and high competition for talent, measuring our acceptance rate 
is less meaningful to us. Therefore, we will eliminate this measure 
beginning in fiscal year 2009. 

[C] Beginning in FY 2006 we changed the way that the staff development 
people measure was calculated. Specifically, we dropped one question 
regarding computer-based training because we felt such training was a 
significant part of (and therefore included in) the other questions the 
survey asked regarding training. We also modified a question on 
internal training and changed the scale of possible responses to that 
question. We show the FY 2004 and 2005 data on a separate line so as to 
indicate that those data are not comparable to the data beginning in FY 
2006. 

[D] Our employee feedback survey asks staff how often the following 
occurred in the last 12 months (1) my job made good use of my skills, 
(2) GAO provided me with opportunities to do challenging work, and (3) 
in general, I was utilized effectively. 

[E] For our internal operations measures, we will report actual data 
for fiscal year 2008 once data from our November 2008 internal customer 
satisfaction survey have been analyzed. N/A indicates that the data are 
not available yet. 

[End of table] 

To help us examine trends over time, we also look at 4-year averages 
for our results and client measures except the percentage of past 
recommendations implemented—because it is a composite that is drawn 
from a number of years rather than an annual percentage—and 
timeliness—because we have no trend data for our current timeliness 
measure. Calculating 4-year rolling averages for the other measures 
minimizes the effect of an atypical result in any given year. We 
consider this calculation, along with other factors, when we set our 
performance targets. Table 2 shows that from fiscal year 2004 through 
fiscal year 2008 financial benefits, nonfinancial benefits, and new 
products with recommendations have increased steadily. The average 
number of hearings at which we testified has climbed since 2004 with a 
significant increase from fiscal year 2006 to 2008. 

Though we consider our 4-year rolling averages and our past performance 
when setting our target for the number of hearings at which our senior 
executives testify, we base our testimonies target largely on the 
cyclical nature of the congressional calendar. Our experience has shown 
that during the fiscal year in which an election occurs, generally the 
Congress holds fewer hearings because the congressional members are 
reorganizing during the months after the election. This situation 
provides fewer opportunities for us to be invited to testify. However, 
in fiscal year 2008—the year after an election—the new Congress held 
many more hearings than we anticipated and seemed especially interested 
in our work. 

Table 2: Four-Year Rolling Averages for Selected GAO Measures: 

Performance measure: Results: Financial benefits (billions); 
2004: $35.9 billion; 
2005: $39.2 billion; 
2006: $43.0 billion; 
2007: $45.1 billion; 
2008: $48.7 billion; 

Performance measure: Results: Nonfinancial benefits; 
2004: 986; 
2005: 1,139; 
2006: 1,248; 
2007: 1,325; 
2008: 1,376. 

Performance measure: Results: New products with recommendations; 
2004: 54%; 
2005: 58%; 
2006: 61%; 
2007: 64%; 
2008: 65%. 

Performance measure: Client: Testimonies; 
2004: 193; 
2005: 200; 
2006: 206 
2007: 228; 
2008: 250. 

Source: GAO. 

[End of Table] 

Focusing on Results: 

Focusing on outcomes and the efficiency of the processes needed to 
achieve them is fundamental to accomplishing our mission. The following 
four annual measures—financial benefits, nonfinancial benefits, past 
recommendations implemented, and new products containing 
recommendations—indicate that we have fulfilled our mission and 
delivered results that benefit the nation. 

Financial Benefits and Nonfinancial Benefits: 

We describe many of the results produced by our work as either 
financial or nonfinancial benefits. Both types of benefits result from 
our efforts to provide information to the Congress that helped to (1) 
change laws and regulations, (2) improve services to the public, and 
(3) promote sound agency and governmentwide management. In many cases, 
the benefits we claimed in fiscal year 2008 are based on work we did in 
past years because it often takes the Congress and agencies time to 
implement our recommendations or to act on our findings. 

To claim either type of benefit, our staff must document the connection between the benefits reported and the work that we performed. We can claim benefits within 2 years of when the Congress or an agency takes action on our recommendations. 

Financial Benefits: 

Our findings and recommendations produce measurable financial benefits 
for the federal government after the Congress acts on or agencies 
implement them and the funds are made available to reduce government 
expenditures or are reallocated to other areas. The monetary effect 
realized can be the result of: 

* changes in business operations and activities; 

* the restructuring of federal programs; or; 

* modifications to entitlements, taxes, or user fees. 

Financial benefits result if, for example, the Congress reduces the 
annual cost of operating a federal program or lessens the cost of a 
multiyear program or entitlement. Financial benefits could also result 
from increases in federal revenues—because of changes in laws, user 
fees, or asset sales—that our work helped to produce. 

In fiscal year 2008, our work generated $58.1 billion in financial 
benefits (see fig. 7), exceeding our target by $18.1 billion or 45 
percent. We exceeded the target primarily as a result of a few 
unexpected and large financial accomplishments along with several large-
dollar accomplishments with multiyear effects. Of the total amount 
documented in fiscal year 2008, about $31.6 billion (or approximately 
54 percent) resulted from changes in laws or regulations (see fig. 8). 

Our fiscal year 2009 target for financial benefits is higher than the 
target we reported for this measure in our fiscal year 2009 performance 
plan in January 2008. Specifically, we increased our financial benefits 
target by $2 billion to $42.0 billion based on our current assessment 
of our past recommendations that are likely to be implemented by 
federal agencies and the Congress in the coming fiscal year. We did not 
increase our financial benefits target for 2009 above our fiscal year 
2008 actual because our historical data indicate that our financial 
benefits have declined the year after the installation of the last 
three Congresses. Also, in fiscal year 2008, two of our large 
accomplishments (related to the spectrum auction and the strategic 
petroleum reserve) were unanticipated and accounted for much of the 
amount above our target. Moreover, many of the resources we use to 
follow up on congressional and agency actions in response to our 
recommendations will be focused on a variety of mandates, including the 
Troubled Asset Relief Program (TARP), that are unlikely to yield 
financial benefits. Thus, we believe our target of $42 billion for 
fiscal year 2009 (shown on p. 23) is reasonable and achievable. 

Figure 7: Financial Benefits GAO Recorded: 

[Refer to PDF for image] 

Vertical bar graph with six items: 

2004 Actual: $44.0 billion; 
2005 Actual: $39.6 billion; 
2006 Actual: $51.0 billion; 
2007 Actual: $45.9 billion; 
2008 Target: $40.0 billion; 
2008 Actual: $58.1 billion. 

Source: GAO. 

[End of Figure] 

Figure 8: Types of Financial Benefits Recorded in Fiscal Year 2008 from 
Our Work: 

[Refer to PDF for image] 

This figure is a pie chart representing the following data: 

Financial Benefits, Total: $58.1 billion; 
* Agencies acted on GAO information to improve services to the public: 
$11.7 billion (20%); 
* Information GAO provided to the Congress resulted in statutory or 
regulatory changes: $31.6 billion (54%); 
* Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO’s work: $14.8 billion (26%). 

Source: GAO. 

[End of figure] 

Financial benefits included in our performance measures are net 
benefits—that is, estimates of financial benefits that have been 
reduced by the estimated costs associated with taking the action that 
we recommended. We convert all estimates involving past and future 
years to their net present value and use actual dollars to represent 
estimates involving only the current year. Financial benefit amounts 
vary depending on the nature of the benefit, and we can claim financial 
benefits over multiple years based on a single agency or congressional 
action. To help ensure conservative estimates of net financial 
benefits, reductions in operating cost are typically limited to 2 years 
of accrued reductions, but up to 5 fiscal years of financial benefits 
can be claimed if the reductions are sustained over a period longer 
than 2 years. Multiyear reductions in long-term projects, changes in 
tax laws, program terminations, or sales of government assets are 
limited to 5 years. Estimates used to calculate our financial benefits 
come from non-GAO sources. These non-GAO sources are typically the 
agency that acted on our work, a congressional committee, or the 
Congressional Budget Office. 

To document financial benefits, our staff complete reports documenting 
accomplishments that are linked to specific recommendations or actions. 
Each accomplishment reports for financial benefits is documented and 
reviewed by (1) another GAO staff member not involved in the work and 
(2) a senior executive in charge of the work. Also, a separate unit, 
our Quality and Continuous Improvement office, reviews all financial 
benefits and approves benefits of $100 million or more, which amounted 
to about 96 percent of the total dollar value of benefits recorded in 
fiscal year 2008. The GAO Inspector General (IG) also performed an 
independent review of all accomplishment reports claiming benefits of 
$500 million or more in fiscal year 2008. 

Figure 9 lists several of our major financial benefits for fiscal year 
2008 and briefly describes some of our work contributing to each 
financial benefit. 

Figure 9: GAO’s Selected Major Financial Benefits Reported in Fiscal 
Year 2008: 

Description: Improved spectrum management by extending auction 
authority. Since 1993, the Federal Communications Commission has 
conducted auctions to assign spectrum licenses to commercial users; 
these licenses permit companies to use a portion of the spectrum to 
provide various wireless communications services, such as mobile voice 
and data services. Some parties have raised concerns about the use of 
auctions, contending that the auctions raise consumer prices. In 
December 2005, we reported that auctions appeared to have little or no 
impact on end-user prices, infrastructure deployment, and competition, 
and that they mitigated the problems associated with comparative 
hearings and lotteries, which the commission previously used to assign 
licenses. We therefore recommended that the Congress extend the 
commission’s auction authority beyond the scheduled expiration date of 
September 30, 2007. In the Deficit Reduction Act of 2005, the Congress 
extended the commission’s auction authority and in March 2008, the 
commission completed the auction of the 700 megahertz (MHz) spectrum. 
The 700 MHz auction generated $19.1 billion, greatly exceeding previous 
estimates, and a portion of the proceeds will be used to support public 
safety and digital television transition initiatives. The net present 
value of the financial benefits associated with the legislation and the 
associated 700 MHz auction is $8.6 billion. (Goal 1) 
Amount: $8.6 billion. 

Description: Encouraged the Department of Defense (DOD) to reexamine 
cost estimates for a new military concept. We issued a report 
discussing our analysis of joint seabasing—one of DOD’s evolving 
concepts for projecting and sustaining forces for joint military 
operations without relying on immediate access to nearby land bases. 
The military services are either considering or actively pursuing new 
ships and weapon systems to support seabasing. For example, the Navy 
and Marines planned to acquire the Maritime Prepositioning Force 
(Future)—a squadron of ships to transport and deliver the personnel, 
combat power, and logistic support of the Marine Expeditionary 
Brigade—along with several supporting sealift vessels and aircraft. We 
recommended, among other things, that DOD conduct additional 
experimentation and evaluation of joint seabasing options and 
synchronize cost estimates for joint seabasing options so that decision 
makers have sufficient information to use in making investment 
decisions on seabasing initiatives. DOD stated that it would develop 
cost estimates as part of the DOD Planning, Programming, Budgeting and 
Execution and acquisition processes. Since the issuance of our report, 
DOD has reduced the number of Maritime Prepositioning Force (Future) 
ships that it plans to procure from eight ships to two ships during 
fiscal years 2009 through 2011. The claimed financial benefit—$2.0 
billion—represents the net present value of the reductions for fiscal 
years 2009, 2010 and 2011. (Goal 2) 
Amount: $2.0 billion. 

Description: Realized savings from suspending the royalty-in-kind oil 
program. We testified that since the Strategic Petroleum Reserve (SPR) 
had reached sufficient size to address near-term supply disruptions 
that suspending the fill of the SPR would also have a dampening effect 
on gasoline prices because more supply would be available. At the time 
of our testimony the SPR was being filled with oil obtained from the 
royalty-in-kind program operated by the Department of Interior’s 
Minerals Management Service (MMS). (Through the royalty-in-kind 
program, MMS receives oil as payments of royalties from companies that 
lease federal property for oil development.) Subsequently, DOE decided 
to suspend the SPR fill through the remainder of calendar year 2008 and 
sell the oil obtained from the royalty-in-kind program. Congress passed 
legislation halting the fill with royalty-in-kind oil until crude oil 
fell to $75 a barrel, on average, for a 90-day period. In May 2008, MMS 
estimated the value of 16.1 million barrels of royalty-in-kind oil at 
about $1.89 billion. According to the Program Director, this represents 
MMS’s best estimate of the Treasury revenue gain stemming from DOE’s 
decision to suspend the SPR fill and selling the royalty-in-kind oil 
through the rest of calendar year 2008. In net present value terms, the 
$1.89 billion revenue gain is $1.86 billion. (Goal 1) 
Amount: $1.9 billion. 

Description: Encouraged DOD to scale back a costly satellite program. 
We examined the adequacy of DOD’s decision to proceed with the 
Alternative Infrared Satellite System as an alternative to the Space 
Based Infrared System program and whether DOD is attaining the 
knowledge it needs to position the program for success. We reported 
that the program was pursuing a higher risk effort in order to advance 
capability and recommended that DOD reassess its investment in the 
Alternative Infrared Satellite System and alternative ways of reducing 
risk. DOD agreed and, consistent with the report’s recommendation, 
reexamined the Alternative Infrared Satellite System to clarify program 
objectives. As a result, DOD realigned the program and renamed it the 
Third Generation Infrared Surveillance program. In DOD’s 2009 budget 
request DOD redirected the Alternative Infrared Satellite System 
resources to pursue risk reduction, system definition, and ground tests 
under the Third Generation Infrared Surveillance program resulting in a 
reduction in funding from fiscal years 2008 to 2012 of about $1.6 
billion. The net present value is about $1.5 billion. (Goal 2) 
Amount: $1.5 billion. 

Description: Analyzed the fiscal year 2008 appropriation for the 
Millennium Challenge Corporation (MCC). We concluded that MCC could 
operate with a smaller-than-requested fiscal year 2008 appropriation 
because, based on historical experience, the corporation would not 
obligate the balance of its prior years’ appropriations until the 
fourth quarter of fiscal year 2008. Specifically, our work showed that 
MCC had disbursed only about $68 million of the $2.1 billion obligated 
for compact assistance and could have significant undisbursed balances 
when compacts expired. We reported that MCC’s portrayal of projected 
compact impact did not reflect underlying data and identified five key 
risks that could affect project impact. Our work supported and informed 
appropriations and authorizing committees’ decisions about MCC funding 
for fiscal year 2008, and contributed to a congressional appropriation 
of about $1.6 billion for MCC for fiscal year 2008, a reduction of 
about $1.4 billion from the President’s $3 billion request. (Goal 2) 
Amount: $1.4 billion. 

Source: GAO. 

[End of figure] 

Nonfinancial Benefits: 

Many of the benefits that result from our work cannot be measured in 
dollar terms. During fiscal year 2008, we recorded a total of 1,398 
nonfinancial benefits (see fig. 10). We significantly exceeded our 
target by almost 22 percent because of actions taken as a result of our 
bid protest work and by agencies in response to our recommendations 
dealing with governmentwide information technology (IT) and accounting 
issues. Our fiscal year 2009 target for nonfinancial benefits differs 
from the target we reported for this measure in January 2008 in our 
fiscal year 2009 performance budget. Specifically, we increased our 
nonfinancial benefits target from 1,150 to 1,200 (see p. 23) in 
anticipation of additional nonfinancial benefits resulting from our 
increasing bid protest work. 

Figure 10: Nonfinancial Benefits GAO Recorded: 

[Refer to PDF for Image] 

Vertical bar graph with six items: 

2004 Actual: 1,197; 
2005 Actual: 1,409; 
2006 Actual: 1,342; 
2007 Actual: 1,354; 
2008 Target: 1,150; 
2008 Actual: 1,398. 

Source: GAO. 

[End of Figure] 

In fiscal year 2008 we documented 628 instances where federal agencies 
used our information to improve services to the public, 77 instances 
where the information we provided to the Congress resulted in statutory 
or regulatory changes enacted in fiscal year 2008, and 693 instances 
where agencies improved core business processes or governmentwide 
reforms as a result of our work. (See fig. 11.) These actions covered a 
variety of issues such as ensuring that banks uniformly disclose to 
consumers fees for checking and savings accounts, improving the Mine 
Safety and Health Administration’s process for approving emergency 
response plans for underground coal mines, and mitigating risks in the 
U.S. visa waiver program. In figure 12, we provide examples of some of 
the nonfinancial benefits we claimed as accomplishments in fiscal year 
2008. 

Figure 11: Types of Nonfinancial Benefits Documented in Fiscal Year 
2008 from Our Work: 

[Refer to PDF for image] 

This figure is a pie chart representing the following data: 

Nonfinancial Benefits, Total: 1,398; 
* Agencies acted on GAO information to improve services to the public: 
628 (44.9%); 
* Information GAO provided to the Congress resulted in statutory or 
regulatory changes: 77 (5.5%); 
* Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO’s work: 693 (49.6%). 

Source: GAO. 

[End of figure] 

Nonfinancial Benefits: 

Figure 12: GAO’s Selected Nonfinancial Benefits Reported in Fiscal Year 
2008: 

Nonfinancial benefits that helped to change laws: 

* The Consolidated Appropriations Act, 2008, Pub. L. No. 110-161: 
Prohibited tax debtors from receiving large federal contracts. Several 
of our reviews identified federal tax debtors that also received 
contractor payments from the DOD, the General Services Administration, 
and several other civilian federal agencies. Specifically, we found 
that thousands of contractors had not paid federal income, Social 
Security, and Medicare taxes withheld from their own employees. In our 
reports and testimonies, we stated that federal law does not preclude 
contractors that do not pay their taxes from receiving federal 
contracts. This law requires prospective contractors for federal 
contracts greater than $5 million (using appropriated funds under 
provisions of this act) to certify in writing that they have filed all 
federal tax returns required during the 3 years preceding the 
certification; have not been convicted of a criminal offense under the 
Internal Revenue Code of 1986; and have not, more than 90 days prior to 
the certification, been notified of any unpaid federal tax assessment 
for which the liability remains unsatisfied. 

* Food, Conservation and Energy Act of 2008, Pub. L. No. 110-246: 
Increased penalties to deter food stamp fraud. We found that the Food 
Stamp Program, administered by the Department of Agriculture’s (USDA) 
Food and Nutrition Service (FNS), remains vulnerable because retailers 
can enter the program intending to traffic without fear of severe 
penalties, and current penalties may not be sufficient to deter 
traffickers. Generally the most severe penalty most traffickers face is 
disqualification from the program eventually. We recommended that FNS 
develop a strategy to increase the penalties for trafficking, working 
with the Office of Inspector General (OIG) as needed. We also 
recommended that if these penalties entail additional authority, the 
agency should consider developing legislative proposals for program 
reauthorization in 2007. This law includes a provision that raises 
civil penalties from $10,000 to $100,000 and a provision to allow USDA, 
in consultation with its OIG, to immediately suspend flagrant retailers 
from the program pending administrative action. 

* Medicare Improvements for Patients and Providers Act of 2008, Pub. L. 
No. 110-275: 
Eliminated incentives to misuse Medicare funds. The Centers for 
Medicare and Medicaid Services (CMS) in the Department of Health and 
Human Services (HHS) divides Medicare payment for end-stage renal 
disease (ESRD) items and services into two groups: (1) dialysis and 
associated routine services which are paid under a single rate and (2) 
injectable drugs and certain laboratory tests which are paid for 
separately on a per-service basis. We reported that dialysis facilities 
have been relying on Medicare’s generous payments for the first payment 
group of items/services and that payments for one drug in the second 
payment group had created an incentive for facilities to potentially 
use more of it than necessary. We recommended that the Congress 
consider establishing one payment system for all ESRD services as soon 
as possible. This law includes a provision that requires the Secretary 
of HHS to implement a fully bundled payment method for all ESRD items 
and services beginning January 1, 2011. 

* Housing and Economic Recovery Act of 2008, Pub. L. No. 110-289: 
Identified need for a single regulator for the federal housing finance 
system. We reported that while government-sponsored enterprises (GSE) 
such as FannieMae, FreddieMac, and the Federal Home Loan Bank System 
play a critical role in the U.S. housing finance system—by buying 
mortgages from and making loans to lenders—they also pose potentially 
significant risks to taxpayers. We also reported that the fragmented 
federal regulatory oversight structure for GSEs was inadequate to 
monitor these large, complex financial institutions and lacked key 
regulatory authorities, such as the ability to take enforcement actions 
when GSE capital levels declined or to place insolvent institutions 
into receivership. We recommended that the Congress establish a single 
regulator to ensure the safety, soundness, and oversight of the housing 
GSEs with sufficient legal authority to carry out its responsibilities. 
Among its other provisions, this law establishes a single GSE regulator 
whose responsibilities are consistent with our recommendation. 

Nonfinancial benefits that helped to improve services to the public: 

* Increased requirements for water sprinklers in nursing homes: 
Our review of nursing homes found weaknesses in federal fire safety 
standards for nursing homes, how the standards are applied in 
facilities without sprinklers, and in federal and state oversight. We 
recommended that the Administrator of CMS work with the National Fire 
Protection Association (NFPA) to strengthen fire safety standards for 
nursing homes without sprinklers and to explore the feasibility of 
requiring sprinklers in all nursing homes. Subsequently, the NFPA 
adopted an automatic sprinkler requirement for all nursing homes in its 
Life Safety Code, and CMS published a final rule adopting this NFPA 
requirement. All nursing homes participating in the Medicare and 
Medicaid programs must install and maintain automatic sprinkler systems 
by August 13, 2013. 

* Improved mail delivery standards: 
We assessed the U.S. Post Service’s (USPS) standards for the timely 
delivery of mail. Our work found that USPS had delivery standards for 
its major types of mail, but some standards had not been updated in a 
number of years to reflect changes in how mail is currently prepared 
and delivered. These outdated standards were unsuitable as benchmarks 
for setting realistic expectations for timely mail delivery; measuring 
delivery performance; or improving service, oversight, and 
accountability. We recommended that USPS modernize delivery standards 
for all major types of mail. Subsequently, USPS updated all of its 
delivery performance standards, including those for Standard Mail, 
Periodicals, and Package Services. 

* Encouraged EPA to clarify definition of mercury debris: 
We reported that the Environmental Protection Agency (EPA), states, and 
industry do not share a common understanding of the types of mercury-
containing wastes that can be treated and disposed of as debris. 
Consequently, businesses may be treating and disposing of mercury-
contaminated waste (e.g., intact containers) as debris, even though 
these items may contain high levels of mercury and should be disposed 
of as hazardous waste. We recommended that EPA clarify and better 
describe the types of waste that can and cannot be reported under the 
“debris” reporting category and include the definition of debris in the 
instructions for the Hazardous Waste Report. Based upon our work, EPA 
clarified the definition for contaminated debris in the Hazardous Waste 
Report instructions for the reporting cycle that followed the issuance 
of our report. 

* Improved screening of the Army’s contract security guards: 
We reported that the Army’s procedures did not provide assurance that 
contract security guards at U.S. military installations were adequately 
screened, putting the Army at risk of staffing its gates with contract 
security guards who were not qualified for the job. For example, we 
found that contract security guard applicants with criminal histories, 
including felons, had been employed as guards. We recommended that 
DOD’s revised antiterrorism standards be implemented into Army policy 
for screening of contract security guards as deemed suitable. DOD 
revised the antiterrorism standards, and the Army subsequently 
incorporated the language into the Army Civilian Police and Security 
Guard Program. 

Nonfinancial benefits that helped to promote sound agency and 
governmentwide management: 

* Identified individuals who fraudulently accepted disaster assistance 
payments: 
During our work related to the Federal Emergency Management Agency’s 
(FEMA) response to hurricanes Katrina and Rita, we found evidence 
indicating that thousands of individuals may have fraudulently 
registered for and received FEMA disaster assistance payments. We 
referred this information to appropriate federal agencies for further 
review and prosecution. As a result, over 50 individuals were found 
guilty of crimes, such as defrauding the United States or theft of 
government property. 

* Assisted taxpayers and preparers: 
In April 2006, GAO testified about the serious problems that taxpayers 
can face if they use commercial tax preparation chains. In a limited 
study that included an undercover investigation, we found that paid tax 
preparers employed by national tax preparation chains made mistakes in 
all 19 of our undercover visits. Some of the mistakes were substantial, 
resulting in refund claims that were thousands of dollars higher than 
they should have been and exposing taxpayers to Internal Revenue 
Service (IRS) enforcement action. Other mistakes reduced taxpayers’ 
refunds below what they should have been, sometimes by large amounts. 
Dissemination of our research results to the paid preparer community 
led to the major chains adding to their training programs discussions 
of the issues GAO identified, according to the IRS office responsible 
for oversight and liaison with the paid preparer community. 

* Enhanced U.S. border security: 
We identified border security vulnerabilities both at U.S. ports of 
entry and at unmanned and unmonitored land border locations between 
ports of entry. In particular, we successfully used fraudulent 
documents to enter the United States at several U.S. Customs and Border 
Protection (CBP) checkpoints on both the northern and southern borders. 
CBP recently reported that it took actions to address a number of the 
vulnerabilities highlighted by our work, including enhanced training 
for its agents and the installation of additional fraudulent document 
detection equipment at U.S. ports of entry. Further, to address 
vulnerabilities in areas between border ports of entry, CBP has 
installed new sensor equipment technologies. These actions should 
enable CBP to more effectively identify attempts to illegally penetrate 
our nation’s borders. 

Source: GAO. 

[End of figure] 

Past Recommendations Implemented: 

One way we measure our effect on improving the government’s 
accountability, operations, and services is by tracking the percentage 
of recommendations that we made 4 years ago that have since been 
implemented. At the end of fiscal year 2008, 83 percent of the 
recommendations we made in fiscal year 2004 had been implemented (see 
fig. 13), primarily by executive branch agencies. Putting these 
recommendations into practice generates tangible benefits for the 
nation. 

Figure 13: Percentage of Past Recommendations Implemented: 

[Refer to PDF for Image] 

Vertical bar graph with six items. 

Four-year implementation rate: 

2004 Actual: 83%; 
2005 Actual: 85%; 
2006 Actual: 82%; 
2007 Actual: 82%; 
2008 Target: 80%; 
2008 Actual: 83%. 

Source: GAO. 

[End of Figure] 

The 83 percent implementation rate for fiscal year 2008 exceeded our 
target for the year by 3 percentage points and exceeded our performance 
in the 2 preceding fiscal years. However, over the last 3 fiscal years 
we have not been able to achieve the level of performance we did in 
fiscal year 2005 because, in some cases, we were unable to obtain the 
agency data that would allow us to fully document that our 
recommendations had been implemented. As figure 14 indicates, agencies 
need time to act on recommendations. Therefore, we assess 
recommendations implemented after 4 years, the point at which 
experience has shown that if a recommendation has not been implemented, 
it is not likely to be. 

Figure 14: Cumulative Implementation Rate for Recommendations Made in 
Fiscal Year 2004: 

[Refer to PDF for Image] 

Vertical bar graph with four items: 

After 1 year: 13%; 
After 2 years: 25%; 
After 3 years: 42%; 
After 4 years: 83%. 

Source: GAO. 

[End of Figure] 

New Products Containing Recommendations: 

In fiscal year 2008, about 66 percent of the 629 written products we 
issued (excluding testimonies) contained recommendations. (See fig. 
15.) We track the percentage of new products with recommendations 
because we want to encourage staff to develop recommendations that when 
implemented by the Congress and agencies, produce financial and 
nonfinancial benefits for the nation. 

We exceeded our target of 60 percent by 6 percentage points because our 
audit teams are better emphasizing the need to identify possible 
recommendations as they plan and carry out their work. However, we set 
our target again in fiscal year 2009 at 60 percent because we recognize 
that our products do not always include recommendations and that the 
Congress and agencies often find informational reports just as useful 
as those that contain recommendations. Our informational reports have 
the same analytical rigor and meet the same quality standards as those 
with recommendations and, similarly, can help to bring about 
significant financial and nonfinancial benefits. Hence, this measure 
allows us ample leeway to respond to requests that result in reports 
without recommendations. 

Figure 15: Percentage of New Products with Recommendations: 

[Refer to PDF for Image] 

Vertical bar graph with six items. 

2004 Actual: 63%; 
2005 Actual: 63%; 
2006 Actual: 65%; 
2007 Actual: 66%. 
2008 Target: 60%; 
2008 Actual: 66%. 

Source: GAO. 

[End of Figure] 

Focusing on Our Client: 

To fulfill the Congress’s information needs, we strive to deliver the 
results of our work orally as well as in writing at a time agreed upon 
with our client. Our performance this year indicates that we assisted 
the Congress extremely well, by significantly exceeding our target on 
the number of hearings we participated in and delivering many of our 
products on time based on the feedback from our client. 

Testimonies: 

Our clients often invite us to testify on our current and past work 
when it addresses issues that congressional committees are examining 
through the hearing process. During fiscal year 2008, experts from our 
staff testified at 304 congressional hearings covering a wide range of 
complex issues, and we significantly exceeded our target of 220 
hearings at which we testify (see fig. 16). (See fig. 17 for a summary 
of issues we testified on by strategic goal in fiscal year 2008.) Over 
100 of our testimonies were related to high-risk areas and programs, 
which are listed on page 42. 

In fiscal year 2008, we surpassed our performance on this measure over 
the last 4 years. In fact, only one time in the last 25 fiscal years 
have we delivered testimonies at more hearings. The Congress was 
extremely interested in our past and current work on a variety of 
issues and asked us to testify at 84 more hearings than we anticipated. 
The Congress asked our executives to testify in fiscal year 2008 more 
than 40 times on homeland security issues, more than 10 times on the 
Iraq conflict and Afghanistan, and 8 times on military and veterans’ 
health care and disability benefits. Though lower than our actual 
performance on this measure in 2008, we believe that our fiscal year 
2009 target of testimonies at 200 hearings is challenging and reflects 
a more typical estimate of the number of hearings we are likely to 
attend after a presidential election. 

Figure 16: Testimonies: 

[Refer to PDF for Image] 

Vertical bar graph with six items. 

Hearings at which GAO testified: 

2004 Actual: 217; 
2005 Actual: 179; 
2006 Actual: 240; 
2007 Actual: 276. 
2008 Target: 220; 
2008 Actual: 304. 

Source: GAO. 

[End of Figure] 

Figure 17: Selected Testimony Issues: Fiscal Year 2008: 

Goal 1: Address Challenges to the Well-Being and Financial Security of 
the American People: 

* Oversight of youth residential facilities; 

* Improving compliance with the Fair Labor Standards Act; 

* DOD and VA care management for servicemembers; 

* Small Business Administration’s (SBA) monitoring of HUBZone 
businesses; 

* Progress made in DTV transition; 

* Drug-testing for commercial truck drivers; 

* Aviation runway and ramp safety; 

* Federal oversight of food safety; 

* Cost effectiveness of filling the Strategic Petroleum Reserve. 

Goal 2: Respond to Changing Security Threats and the Challenges of 
Globalization: 

* Rebuilding readiness of the military’s ground forces; 

* Accountability in DOD’s acquisition environment; 

* Challenges facing the National Flood Insurance Program; 

* Weaknesses in traveler inspections at U.S. ports of entry; 

* Department of Homeland Security’s biosurveillance initiatives; 

* Oversight of Pakistan reimbursement claims; 

* U.S. food aid challenges; 

* Rebuilding the capacity of the Iraqi ministries; 

* Protecting personally identifiable information; 

* Transforming the nuclear weapons complex; 

* Defense business transformation; 

* A single regulator for housing GSEs. 

Goal 3: Help Transform the Federal Government’s Role and How It Does 
Business: 

* Risk assessment and oversight of contractors used for homeland
security; 

* VA and DOD electronic medical records; 

* Long-term fiscal outlook; 

* Status of the 2010 Census; 

* Diversity issues and the federal workforce; 

* Impact of multiple higher education tax incentives; 

* Automation program problems increase risks for 2010 Census; 

* Federal improper payments; 

* Vulnerabilities in TSA’s airline passenger screening process; 

* Tax compliance by U.S. businesses. 

Source: GAO. 

[End of figure] 

Timeliness: 

To be useful to the Congress, our products must be available when our 
clients need them. We used the results of our client feedback survey as 
a barometer for how well we are getting our products to our 
congressional clients when they need the information. We used this 
survey as the primary data source for our external timeliness measure 
because the responses come directly from our clients. We tally 
responses from the surveys we send to key congressional staff working 
for the requesters of our testimony statements and more significant 
written products (e.g., engagements assigned an interest level of 
“high” by our senior management[Footnote 6] and those requiring an 
investment of 500 staff days or more), which represented about 65 
percent of the congressionally requested written products we issued in 
fiscal year 2008. Because our products usually have multiple 
requesters, we often survey more than one congressional staff person 
per testimony or product. Each survey asks the client whether the 
product was provided or delivered on time. In fiscal year 2008, we had 
a 25 percent response rate from the congressional staff surveyed, which 
provided us with feedback on 56 percent of the products for which we 
sent surveys. In our timeliness calculations for fiscal years 2004 
through 2007, we inadvertently included nonresponses to the timeliness 
question in our client feedback survey. We therefore recalculated the 
survey results for these fiscal years and for fiscal year 2008. The 
numbers shown in figure 18 reflect the corrected calculations. 

In fiscal year 2008 we met our timeliness target of 95 percent. We have 
always set our target for timeliness high because it is important for 
us to meet congressional needs when they occur. Therefore, we will 
continue to emphasize to our audit teams the importance of 
communicating with the requesters of our work to determine when they 
will need testimony statements and products and delivering these 
statements and products when agreed to allow the requesters enough time 
to prepare for hearings and other congressional activities. We 
anticipate that these actions will enable us to meet our fiscal year 
2009 target of 95 percent. To increase the response rate to our client 
feedback survey, we will continue to send electronic surveys that can 
be responded to via Blackberry devices and follow up with 
nonrespondents to our surveys by e-mail and telephone and in meetings. 

Figure 18: Timeliness: 

[Refer to PDF for Image] 

Vertical bar graph with six items. 

Percentage of products on time: 

2004 Actual: 92%; 
2005 Actual: 92%; 
2006 Actual: 93%; 
2007 Actual: 95%; 
2008 Target: 95%; 
2008 Actual: 95%. 

Source: GAO. 

Note: In our timeliness calculations for fiscal years 2004 through 
2007, we inadvertently included nonresponses to the timeliness 
questions in our client feedback survey—the data source for our 
timeliness measure. We therefore recalculated the survey results for 
these fiscal years and for fiscal year 2008. The numbers shown reflect 
the corrected calculations. 

[End of figure] 

Focusing on Our People: 

Our highly professional, multidisciplinary staff were critical to the 
level of performance we demonstrated in fiscal year 2008. Our ability 
to hire, develop, retain, and lead staff is a key factor to fulfilling 
our mission of serving the Congress and the American people. 

Over the last 5 fiscal years, we have refined our processes for 
measuring how well we manage our human capital. In fiscal year 2008, we 
met or exceeded all but one of our eight people measure. All eight 
measures are directly linked to our goal 4 strategic objective of 
becoming a professional services employer of choice. For more 
information about our people measures, see Verifying and Validating 
Performance Data on page 76 of this report. 

New Hire Rate and Acceptance Rate: 

Our new hire rate is the ratio of the number of people hired to the 
number we planned to hire. Annually, we develop a workforce plan that 
takes into account strategic goals, projected workload changes, and 
other changes such as retirements, other attrition, promotions, and 
skill gaps. The workforce plan for the upcoming year specifies the 
number of planned hires. The plan is conveyed to each of our units to 
guide hiring throughout the year. The Chief Operating Officer, the 
Chief Administrative Officer, the Deputy Chief Administrative Officer, 
the Chief Human Capital Officer, and the Controller meet monthly to 
monitor progress toward achieving the workforce plan. 

Adjustments to the workforce plan are made throughout the year, if 
necessary, to reflect changing needs and conditions. In fiscal year 
2008, our adjusted plan was to hire 356 staff. We were able to bring on 
board 343 staff by year-end. Our acceptance rate measure is a proxy for 
our attractiveness as an employer and an indicator of our 
competitiveness in bringing in new talent. It is the ratio of the 
number of applicants accepting offers to the number of offers made. 
Table 3 shows that we exceeded by 1 percentage point the target we set 
for our new hire rate and exceeded our acceptance rate target by 5 
percentage points. Due to the challenging hiring environment caused by 
uncertain budgets and high competition for talent, measuring our 
acceptance rate is less meaningful to us. Therefore, we will eliminate 
this measure beginning in fiscal year 2009. 

Table 3: Actual Performance and Targets Related to Our New Hire Rate 
and Acceptance Rate Measures: 

Performance measures: People: New hire rate; 
2004 Actual: 98%; 
2005 Actual: 94%; 
2006 Actual: 94%; 
2007 Actual: 96%; 
2008 Target: 95%; 
2008 Actual: 96%. 

Performance measures: People: Acceptance rate; 
2004 Actual: 72%; 
2005 Actual: 71%; 
2006 Actual: 70%; 
2007 Actual: 72%; 
2008 Target: 72%; 
2008 Actual: 77%. 

Source: GAO. 

[End of Table] 

Retention Rate: 

We continuously strive to make GAO a place where people want to work. 
Once we have made an investment in hiring and training people, we would 
like them to stay with us. This measure is one indicator of whether we 
are attaining this objective. We calculate this measure by taking 100 
percent minus the attrition rate, where attrition rate is defined as 
the number of separations divided by the average onboard strength. We 
calculate this measure with and without retirements. Table 4 shows that 
we have consistently performed at the 90 percent level for retention 
rate with retirements for the last 5 fiscal years, and that in fiscal 
year 2008 we missed our target for retention without retirements by 1 
percentage point because we lost employees for reasons other than 
retirements. 

Table 4: Actual Performance and Targets Related to Our Retention Rate 
Including and Excluding Retirements: 

Performance measures: People: Retention rate: With retirements; 
2004 Actual: 90%; 
2005 Actual: 90%; 
2006 Actual: 90%; 
2007 Actual: 90%; 
2008 Target: 90%; 
2008 Actual: 90%. 

Performance measures: People: Retention rate: Without retirements; 
2004 Actual: 95%; 
2005 Actual: 94%; 
2006 Actual: 94%; 
2007 Actual: 94%. 
2008 Target: 94%; 
2008 Actual: 93%. 

Source: GAO. 

[End of table] 

Staff Development and Utilization, Leadership, and Organizational 
Climate: 

One way that we measure how well we are supporting our staff and 
providing an environment for professional growth and improvement is 
through our annual employee feedback survey. This Web-based survey, 
which is conducted by an outside contractor to ensure the 
confidentiality of every respondent, is administered to all of our 
employees once a year. Through the survey, we encourage our staff to 
indicate what they think about our overall operations, work 
environment, and organizational culture and how they rate our 
managers—from their immediate supervisors to the Executive Committee—on 
key aspects of their leadership styles. The survey consists of over 100 
questions. In fiscal year 2008, to better ensure confidentiality of 
individual responses, we used the same outside contractor that 
administered the survey to also analyze the data. 

This fiscal year about 76 percent of our employees completed the 
survey—a 4 percentage point increase over last year’s response rate—and 
we met or exceeded all four targets (see table 5). The organizational 
climate measure showed the greatest increase among these measures, 
exceeding the fiscal year 2008 target by 2 percentage points and 
beating our fiscal year 2007 performance by 3 percentage points. Staff 
development, staff utilization, and leadership also increased 1 or 2 
percentage points over last fiscal year’s results. Given our less-than-
steady performance on these measures over the last 5 years, we decided 
to retain our fiscal year 2008 targets for fiscal year 2009. 

Table 5: Actual Performance and Targets Related to Our Measures of 
Employee Satisfaction with Staff Development, Staff Utilization, 
Leadership, and Organizational Climate: 

Performance Measures[A]: People: Staff development[B]; 
2004 Actual: 70%; 
2005 Actual: 72%; 
2006 Actual: 76%; 
2007 Actual: 76%. 
2008 Target: 76%; 
2008 Actual: 77%. 

Performance Measures[A]: People: Staff utilization; 
2004 Actual: 72%; 
2005 Actual: 75%; 
2006 Actual: 75%; 
2007 Actual: 73%. 
2008 Target: 75%; 
2008 Actual: 75%. 

Performance Measures[A]: People: Leadership; 
2004 Actual: 79%; 
2005 Actual: 80%; 
2006 Actual: 79%; 
2007 Actual: 79%. 
2008 Target: 80%; 
2008 Actual: 81%. 

Performance Measures[A]: People: Organizational Climate; 
2004 Actual: 74%; 
2005 Actual: 76%; 
2006 Actual: 73%; 
2007 Actual: 74%. 
2008 Target: 75%; 
2008 Actual: 77%. 

Source: GAO. 

[A] Certain portions of a Web-based survey are used to develop these 
four measures. For example, the leadership measure is based on staff’s 
responses to questions about their immediate supervisors’ leadership. 

[B] Beginning in fiscal year 2006 we changed the way that the staff 
development people measure was calculated. Specifically, we dropped one 
question regarding computer-based training because we felt such 
training was a significant part of (and therefore included in) the 
other questions the survey asked regarding training. We also modified a 
question on internal training and changed the scale of possible 
responses to that question. We show the fiscal year 2004 and 2005 data 
on a separate line so as to indicate that those data are not comparable 
to the data beginning in fiscal year 2006. 

[End of table] 

Focusing on Our Internal Operations: 

Our mission and people are supported by our internal administrative 
services, including information management, facility management, 
knowledge services, human capital, financial management, and other 
services. To assess our performance related to how well our internal 
administrative services help employees get their jobs done or improve 
employees’ quality of work life, we use information from our annual 
customer satisfaction survey to set targets and assess our performance 
for both of these measures, which are shown in table 6, along with 
baseline data that we recorded for them in fiscal year 2004. We asked 
staff to rank 29 internal services available to them and to indicate on 
a scale from 1 to 5 their satisfaction with each service. Our internal 
operations measures are directly related to our goal 4 strategic 
objectives of continuously enhancing our business and management 
processes and becoming a professional services employer of choice. The 
first measure encompasses 18 services that help employees get their 
jobs done, such as Internet access, desktop computer equipment, voice 
and video communication systems, shared service centers for copying and 
courier assistance, travel services, and report production. The second 
measure encompasses another 11 services that affect quality of work 
life, such as assistance related to pay and benefits, building security 
and maintenance, and workplace safety and health. Using survey 
responses, we calculate a composite score for each service category 
that reflects employee ratings for (1) satisfaction with the service 
and (2) importance of the service. 

Table 6: Actual Performance and Targets Related to Our Internal 
Operations Measures: 

Performance measures: Internal operations: Help get job done; 
2004 Actual: 4.01; 
2005 Actual: 4.10; 
2006 Actual: 4.10; 
2007 Actual: 4.05; 
2008 Target: 4.00; 
2008 Actual: N/A. 

Performance measures: Internal operations: Quality of work life; 
2004 Actual: 3.96; 
2005 Actual: 3.98; 
2006 Actual: 4.00; 
2007 Actual: 3.98; 
2008 Target: 4.00; 
2008 Actual: N/A. 

Source: GAO. 

Note: We will report actual data for fiscal year 2008 once the data 
from our November 2008 internal operations survey have been analyzed. 
N/A indicates that the data are not available yet. 

[End of table] 

GAO’s High-Risk Program: 

Since 1990, our high-risk program has highlighted long-standing 
challenges facing the federal government. Increasingly, the program has 
focused on those major programs and operations that are in urgent need 
of broad-based transformation and congressional as well as executive 
branch action, to ensure that our national government functions in the 
most economical, efficient, and effective manner possible. Our latest 
regular update, released in January 2007, highlights 27 troubled areas 
across government. Many of these areas involve critical public service 
providers, such as USDA, IRS, and CMS, which provides services to 
Medicare and Medicaid recipients. 

In March 2008 we added the 2010 Census to the list because of the 
survey’s impact on everything from the apportionment of congressional 
seats to the distribution of billions of dollars of federal funds. 

Issued to coincide with the start of each new Congress, our high-risk 
updates have helped sustain attention from members of the Congress who 
are responsible for oversight and from executive branch officials who 
are accountable for performance. Our focus on high-risk problems 
contributed to the Congress enacting a series of governmentwide reforms 
to address critical human capital challenges, strengthen financial 
management, improve IT practices, and instill a more results-oriented 
government. Overall, our high-risk program has served to identify and 
help resolve serious weaknesses in areas that involve substantial 
resources and provide critical services to the public. 

In fiscal year 2007, we determined that sufficient progress was made to 
merit removing the high-risk designation from two areas—the U.S. Postal 
Service transformation efforts and long-term outlook and the Department 
of Housing and Urban Development’s single-family mortgage insurance and 
rental housing assistance programs. We also designated three new areas 
as high risk: financing the nation’s transportation system, ensuring 
the effective protection of technologies critical to U.S. national 
security interests, and transforming federal oversight of food safety. 
We added the upcoming census to the high-risk list in fiscal year 2008 
because of a combination of long-standing deficiencies and emerging 
challenges, including shortcomings in the U.S. Census Bureau’s (Bureau) 
management of information technology, weak performances by technology 
that the Bureau plans to use for data collection, uncertainty of cost 
estimates, and the elimination of several dress rehearsals activities. 

Since our program began, the government has taken high-risk problems 
seriously and has made progress toward correcting them. The original 
high-risk list included 14 areas, but over the past 17 years, 33 areas 
were added, 18 areas were removed, and 2 were consolidated to reach the 
current 27 areas. DOD continues to dominate the list with 8 high-risk 
areas of its own and shared responsibility for 7 more. Table 7 lists 
each current high-risk area and the year it was placed on the high-risk 
list. 

Our high-risk list work in fiscal year 2008: 
* 227 reports; 
* 128 testimonies; 
* $26.1 billion in financial benefits. 

In fiscal year 2008, we issued 227 reports, delivered 128 testimonies 
to the Congress, and documented financial benefits totaling 
approximately $26.1 billion related to our high-risk areas. Included in 
these results are reviews we completed that examined how the IRS could 
better enforce tax laws. For example, we made recommendations on how to 
increase IRS’s ability to collect outstanding amounts owed by 
taxpayers, to improve the accuracy of taxpayer accounts, to reduce the 
potential for a taxpayer burden, and to reduce the cost associated with 
interest IRS must pay on refunds issued to taxpayers. Our work 
analyzing the enforcement of tax laws has resulted in approximately 
$5.8 billion in financial benefits. Additionally, we evaluated the 
implementation and transformation of the Department of Homeland 
Security (DHS). Some of our significant work in this area includes 
reviewing the amount of passenger and property screening costs incurred 
by airports, air carriers, and private contractors in 2000, and 
evaluating DHS’s progress in implementing requirements to reduce 
improper over payments to agencies within DHS. Our work in evaluating 
the implementation and transformation of DHS resulted in nearly $1 
billion in financial benefits. To learn more about our work on the high-
risk areas or to download our January 2007 high-risk update in full, go 
to [hyperlink, http://www.gao.gov/docsearch/featured/highrisk.html]. 

Table 7: GAO’s High-Risk List as of September 2008: 

Addressing Challenges to Broad-Based Transformation: 

High-risk area: Strategic Human Capital Management[A]; 
Year designated high risk: 2001. 

High-risk area: Managing Federal Real Property[A]; 
Year designated high risk: 2003. 

High-risk area: Protecting the Federal Government's Information 
Systems and the Nation's Critical Infrastructures; 
Year designated high risk: 1997. 

High-risk area: Implementing and Transforming the Department of 
Homeland Security; 
Year designated high risk: 2003. 

High-risk area: Establishing Appropriate and Effective Information-
Sharing Mechanisms to Improve Homeland Security; 
Year designated high risk: 2005. 

High-risk area: DOD Approach to Business Transformation[A]; 
Year designated high risk: 2005. 

High-risk area: DOD Approach to Business Transformation[A]: DOD 
Business Systems Modernization; 
Year designated high risk: 1995. 

High-risk area: DOD Approach to Business Transformation[A]: DOD 
Personnel Security Clearance Program; 
Year designated high risk: 2005. 

High-risk area: DOD Approach to Business Transformation[A]: DOD Support 
Infrastructure Management; 
Year designated high risk: 1997. 

High-risk area: DOD Approach to Business Transformation[A]: DOD 
Financial Management; 
Year designated high risk: 1995; 

High-risk area: DOD Approach to Business Transformation[A]: DOD Supply 
Chain Management; 
Year designated high risk: 1990. 

High-risk area: DOD Approach to Business Transformation[A]: DOD Weapon 
Systems Acquisition; 
Year designated high risk: 1990. 

High-risk area: FAA Air Traffic Control Modernization; 
Year designated high risk: 1995. 

High-risk area: Financing the Nation's Transportation System[A]; 
Year designated high risk: 2007. 

High-risk area: Ensuring the Effective Protection of Technologies 
Critical to U.S. National Security Interests[A]; 
Year designated high risk: 2007. 

High-risk area: Transforming Federal Oversight of Food Safety[A]; 
Year designated high risk: 2007. 

High-risk area: The 2010 Census; 
Year designated high risk: 2008. 

Managing federal contracting more effectively: 

High-risk area: DOD Contract Management; 
Year designated high risk: 1992. 

High-risk area: DOE Contract Management; 
Year designated high risk: 1990. 

High-risk area: National Aeronautics and Space Administration 
Contract Management; 
Year designated high risk: 1990. 

High-risk area: Management of Interagency Contracting; 
Year designated high risk: 2005. 

Assessing the efficiency and effectiveness of tax law administration: 

High-risk area: Enforcement of Tax Laws[A]; 
Year designated high risk: 1990. 

High-risk area: IRS Business Systems Modernization; 
Year designated high risk: 1995. 

Modernizing and safeguarding insurance and benefit programs: 

High-risk area: Modernizing Federal Disability Programs[A]; 
Year designated high risk: 2003. 

High-risk area: Pension Benefit Guaranty Corporation Single- 
Employer Insurance Program[A]; 
Year designated high risk: 2003. 

High-risk area: Medicare Program[A]; 
Year designated high risk: 1990. 

High-risk area: Medicaid Program[A]; 
Year designated high risk: 2003. 

2007 High-risk area: National Flood Insurance Program[A]; 
Year designated high risk: 2006. 

Source: GAO. 

[A] Legislation is likely to be necessary as a supplement to actions by 
the executive branch, in order to effectively address this high-risk 
area. 

[End of Table] 

General Counsel Decisions and Other Legal Work: 

In addition to benefiting from our audit and evaluation work, the 
Congress and the public also benefited from some of our other 
activities in fiscal year 2008 in the following ways: 

* We handled more than 1,500 protests filed by parties who challenged 
the way individual federal procurements and contracts were handled, and 
we issued decisions on more than 250 protests addressing a wide range 
of issues involving compliance with, and the interpretation of, 
procurement statutes and regulations. For example, we issued decisions 
concerning the Air Force’s contract for aerial refueling tankers 
[Footnote 7] and the Army’s $150 billion Logistics Civil Augmentation 
Program acquisition[Footnote 8] and a number of decisions concerning 
the Navy’s acquisition of shipyard services.[Footnote 9] 

* We issued appropriations law and other legal decisions on, among 
other things, the purposes for which appropriated funds may be used, 
potential Antideficiency Act violations, statutory construction of 
provisions in appropriation acts, and accountability for the use of 
public funds. Three decisions and opinions stand out. One decision 
cleared the way for federal agencies to enter into contracts with 
vendors who provide services at no cost to the government and laid out 
the necessary provisions for and considerations in using such 
contracts.[Footnote 10] Another decision addressed the Antideficiency 
Act’s apportionment requirement and reminded federal agencies of the 
need to maintain sound administrative systems of funds control to 
ensure compliance with apportionment.[Footnote 11] The third opinion 
addressed the Federal Aviation Administration’s (FAA) plan to auction 
off airport takeoff and landing slots. We found that FAA lacked auction 
authority under its property disposition, user fee, and other 
authority, and that if FAA goes forward and uses auction proceeds, this 
will violate the Antideficiency Act.[Footnote 12] 

* For fiscal year 2008, we received 20 Antideficiency Act reports for 
our repository and made selected information from these reports 
publicly available on our Web site. Since Congress amended the 
Antideficiency Act in December 2004 requiring agencies to send us a 
copy of reports of Antideficiency Act violations, we have maintained 
the official repository of Antideficiency Act reports. This year’s 
reports, which also report violations from earlier fiscal years, 
include a violation reported by the DOE that was first identified in a 
GAO opinion.[Footnote 13] 

* We continued to report under the Congressional Review Act to the 
standing committees of jurisdiction of both Houses of Congress on major 
rules proposed by federal agencies. In addition, in April 2008, we 
opined that an August 2007 letter issued by CMS, the agency that 
administers the State Children’s Health Insurance Program, was a rule 
under the Congressional Review Act and could not take effect until it 
was submitted to the Congress and GAO in accordance with the act’s 
provisions.[Footnote 14] In May 2008, we testified about the legal 
opinion before the House Committee on Energy and the Subcommittee on 
Health, House Committee on Commerce. 

* In fiscal year 2008 we issued our second report on presidential 
signing statements to the Senate Committee on Appropriations and the 
House Committee on the Judiciary.[Footnote 15] The report examined 10 
provisions of law identified by the committees to which the President 
took exception in signing statements. The President’s objections 
related to the Fifth Amendment and the Appointments Clause of the U.S. 
Constitution, the President’s theory of the unitary executive, and 
powers of the Commander in Chief. We found that except in two 
instances, agencies had either executed, or were planning to execute, 
the provisions as written; in two instances, the provisions were not 
triggered. In March 2008, the General Counsel testified on our signing 
statement reports at a hearing of the Subcommittee on Oversight and 
Investigations, House Committee on Armed Services. 

* In 2008, the Congress established a ¦permanent Contract Appeals Board 
to resolve appeals on claims by contractors under contracts with 
legislative branch agencies, such as the Government Printing Office and 
the Architect of the Capitol. The board is staffed by GAO attorneys, 
has published and finalized its rules of procedures, and is fully 
operational. 

In 2008 we issued our annual update of volumes I and II of the third 
edition of Principles of Federal Appropriations Law, commonly known as 
the Red Book. The Red Book is available to the public on GAO’s Web site 
and is considered the primary resource for appropriations law guidance 
in the federal financial community. Volumes I and II of the Red Book 
each average more than 30,000 inquiries per week on the GAO Web site as 
attorneys, budget analysts, financial managers, project managers, 
contracting officers, and accountable officers from all three branches 
of the government access it to research questions about budget and 
appropriations law. The third edition will be complete with publication 
of volume III at the end of 2008. In addition, General Counsel taught a 
2-½-day course on appropriations law 24 times this fiscal year to 12 
agencies and a number of congressional staff. The course explains the 
analytical framework for analyzing appropriations law issues to ensure 
that funds are available for obligation with regard to purpose, amount, 
and time. To further communication within the appropriations law 
community across all agencies and within the three branches of 
government, we hosted our fourth annual appropriations law forum in 
March 2008, with an analysis of significant decisions and opinions of 
2007 and interactive sessions on no-cost contracts and interagency 
transactions. 

* We were also instrumental in drafting ¦the provisions of the 
Government Accountability Office Act of 2008, which contains important 
provisions that will help GAO with a variety of human capital and 
administrative matters. We worked with congressional staff in refining 
various provisions of the act and detailed explanatory materials for 
the legislative history. 

Assisting with the Upcoming Transition: 

While we, as a legislative branch agency, have extensive experience 
helping each new Congress, the Presidential Transition Act points to us 
as a resource to incoming administrations as well. The act specifically 
identifies GAO as a source of briefings and other materials to help 
presidential appointees make the leap from campaigning to governing by 
informing them of the major management issues, risks, and challenges 
they will face. 

The goal of our transition planning, begun in fiscal year 2008, is to 
look across the work we have done and across the scope and breadth of 
the federal government’s responsibilities to offer insights into areas 
needing immediate attention. We therefore plan to highlight issues that 
the new President, his appointees, and the Congress will confront from 
day one. These include immediate challenges ranging from national and 
homeland security to oversight of financial institutions and markets to 
a range of public health and safety issues. Our analysis, incorporating 
our institutional memory across numerous administrations, will be ready 
by the time the election results are in and transition teams begin to 
move out. 

By the close of the fiscal year, our transition planning efforts 
focused on providing congressional and executive branch policymakers 
with a comprehensive snapshot of how things are working across 
government and emphasizing the need to update some federal activities 
to better align them with 21st century realities and bring about 
government transformation. In keeping with our mission, we will be 
providing the Congress and the executive branch with clear facts and 
constructive options and suggestions that elected officials can use to 
make policy choices in this pivotal transition year. We believe the 
nation’s new and returning leaders will be able to use such information 
to help meet both the nation’s urgent issues as well as its long-term 
challenges so that our nation stays strong and secure now and for the 
next generations to follow. 

Objectives for GAO’s Transition Efforts: 

* Provide insight into pressing national issues. 

* Highlight the growing need for innovative, integrated approaches to 
solve national and global challenges. 

* Document targeted opportunities to conserve resources that can be 
applied to new initiatives. 

* Underscore critical capacity-building needs in individual agencies 
that will affect implementation of whatever new priorities are pursued. 

* Help inform the management improvement agendas of the Congress and 
the new administration. 

* Monitor the implementation of the Presidential Transition Act 
provisions and identify potential improvements for future transitions. 

Managing Our Resources: 

Resources Used to Achieve Our Fiscal Year 2008 Performance Goals: 

Our financial statements for fiscal year 2008 received an unqualified 
opinion from an independent auditor. The auditor found our internal 
controls to be effective—which means that no material weaknesses were 
identified—and the auditor reported substantial compliance with the 
requirements for financial systems in the Federal Financial Management 
Improvement Act of 1996. In addition, the auditor also found no 
instances of noncompliance with the laws or regulations in the areas 
tested. The statements and their accompanying notes, along with the 
auditor’s report, appear later in this report. Table 8 summarizes key 
data. Compared with the statements of large and complex agencies in the 
executive branch, our statements present a relatively simple picture of 
a small yet very important agency in the legislative branch. 

We focus most of our financial activity on the execution of our 
congressionally approved budget with most of our resources devoted to 
the human capital needed for our mission of supporting the Congress 
with professional, objective, fact-based, nonpartisan, nonideological, 
fair, and balanced information and analysis. 

Table 8: GAO’s Financial Highlights: Resource Information (Dollars in 
millions): 

Total budgetary resources[A]; 
Fiscal year 2008: $519.0 million; 
Fiscal year 2007: $498.9 million. 

Total outlays[A]; 
Fiscal year 2008: $500.4 million; 
Fiscal year 2007: $490.5 million. 

Net cost of operations: Goal 1: Well-being and Financial security of 
the American people; 
Fiscal year 2008: $201.2 million; 
Fiscal year 2007: $177.4 million. 

Net cost of operations: Goal 2: Changing security threats and 
challenges of globalization; 
Fiscal year 2008: $161.1 million; 
Fiscal year 2007: $157.5 million. 

Net cost of operations: Goal 3: Transforming the federal government's 
role; 
Fiscal year 2008: $150.6 million; 
Fiscal year 2007: $146.6 million. 

Net cost of operations: Goal 4: Maximizing the value of GAO; 
Fiscal year 2008: $22.6 million; 
Fiscal year 2007: $23.9 million. 

Net cost of operations: Less reimbursable services not attributable to 
goals; 
Fiscal year 2008: ($5.9 million); 
Fiscal year 2007: ($5.7 million). 

Total net cost of operations[A]; 
Fiscal year 2008: $529.6 million; 
Fiscal year 2007: $499.7 million. 

Actual FTEs: 
Fiscal year 2008: 3,081; 
Fiscal year 2007: 3,152. 

Source: GAO. 

[A] 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. 

[End of Table] 

Our budget consists of an annual appropriation covering salaries and 
expenses and revenue from reimbursable audit work and rental income. 
Our total assets were $111.3 million, consisting mostly of property and 
equipment (including the headquarters building, land and improvements, 
and computer equipment and software) and funds with the U.S. Treasury. 
Our annual appropriation for fiscal year 2008 of $501 million was $15 
million greater than fiscal year 2007. Total liabilities of $108.4 
million were composed largely of employees’ accrued annual leave, 
amounts owed to other government agencies, accounts payable, and 
employees’ salaries and benefits. The greatest change in our 
liabilities is an increase of $5 million in intragovernmental accounts 
payable as a result of timing differences of billings from government 
entities. Also, our capital leases increased by $2.5 million due to new 
lease purchases, including updated laptop computers. 

The net cost of operating GAO during fiscal year 2008 and fiscal year 
2007 was approximately $530 million and $500 million, respectively. 
Expenses for salaries and related benefits accounted for 78 and 81 
percent of our net cost of operations in fiscal years 2008 and 2007, 
respectively. Figure 19 shows how our fiscal year 2008 costs break down 
by category. 

We report net cost of operations according to our four strategic goals, 
consistent with our strategic plan. Overall, our net costs of 
operations increased by $30 million, due primarily to increases in 
salaries and benefits as well as IT services and maintenance contract 
activity. 

Our strategic goal 1 (the well-being and financial security of the 
American people) showed an increase in net costs of $24 million in 
fiscal year 2008 compared to fiscal year 2007. This increase in goal 1 
net costs reflects additional goal 1 efforts by the following teams: 
Natural Resources & Environment; Physical Infrastructure; Health Care; 
and, Education, Workforce, & Income Security. 

Figure 19: Use of Fiscal Year 2008 Funds by Category: 

[Refer to PDF for Image] 

Pie chart: 

Percentage of Total Net Costs: 
Salaries and benefits: 78.2%; 
Building and hardware maintenance services: 12.53%; 
Rent (space and hardware): 2.3%; 
Depreciation: 2.1%; 
Other: 4.9%. 

Source: GAO. 

[End of Figure] 

Figures 20 and 21 show our net costs by goal for fiscal year 2005 
through fiscal year 2008. Figure 20 shows costs unadjusted for 
inflation, while figure 21 shows the same costs in 2008 dollars, that 
is, adjusted for inflation. 

Figure 20: Net Cost by Goal, Unadjusted for Inflation: 

[Refer to PDF for Image] 

Vertical bar chart with 4 groups of 4 items each. 

Goal 1; 
2005: $197.7 million; 
2006: $191.9 million; 
2007: $177.4 million; 
2008: $201.2 million. 

Goal 2; 
2005: $144.2 million; 
2006: $154.7 million; 
2007: $157.5 million; 
2008: $161.1 million. 

Goal 3; 
2005: $147.3 million; 
2006: $146.8 million; 
2007: $146.6 million; 
2008: $150.6 million. 

Goal 4; 
2005: $22.0 million; 
2006: $23.7 million; 
2007: $23.9 million; 
2008: $22.6 million. 

Source: GAO. 

[End of Figure] 

Figure 21: Net Cost by Goal, Adjusted for Inflation: 

[Refer to PDF for Image] 

Vertical bar chart with 4 groups of 4 items each. 

Goal 1; 
2005: $214.8 million; 
2006: $201.7 million; 
2007: $181.5 million; 
2008: $201.2 million 

Goal 2; 
2005: $156.7 million; 
2006: $162.6 million; 
2007: $161.1 million; 
2008: $161.1 million. 

Goal 3; 
2005: $160.1 million; 
2006: $154.3 million; 
2007: $150.0 million; 
2008: $150.6 million. 

Goal 4; 
2005: $23.9 million; 
2006: $24.9 million; 
2007: $24.4 million; 
2008: $22.6 million. 

Source: GAO. 

[End of Figure] 

Limitation on Financial Statements: 

Responsibility for the integrity and objectivity of the financial 
information presented in the financial statements in this report rests 
with our managers. The statements were prepared to report our financial 
position and results of operations, consistent with the requirements of 
the Chief Financial Officers Act, as amended (31 U.S.C. 3515). The 
statements were prepared from our financial records in accordance with 
the formats prescribed in Office of Management and Budget (OMB) 
Circular No. A-136, Financial Reporting Requirements. These financial 
statements differ from the financial reports used to monitor and 
control our budgetary resources. However, both were prepared from the 
same financial records. 

Our financial statements should be read with the understanding that as 
an agency of a sovereign entity, the U.S. government, we cannot 
liquidate our liabilities (i.e., pay our bills) without legislation 
that provides resources to do so. Although future appropriations to 
fund these liabilities are likely and anticipated, they are not 
certain. 

Planned Resources to Achieve Our Fiscal Year 2009 Performance Goals: 

As we go to press on this report, the Congress has not completed action 
on our fiscal year 2009 budget request. We, as well as most of the 
federal government, are operating under a continuing resolution 
appropriation at fiscal year 2008 levels through March 6, 2009, pending 
enactment of the remaining fiscal year 2009 appropriations bills for 
the federal government. 

Our fiscal year 2009 budget request to the Congress for $546 million 
would allow us to continue to perform a range of oversight-, insight-, 
and foresight-related engagements to support the Congress in meeting 
the full range of its constitutional responsibilities and to meet the 
performance goals outlined in our Strategic Plan. The requested 
resources will allow us to rebuild our workforce to a level that will 
position us to better respond to increasing supply and demand 
imbalances in responding to congressional requests, cover mandatory pay 
and uncontrollable cost increases, continue to be regarded as an 
employer of choice, undertake critical investments in technology 
improvements and other transformational areas, and ensure that we can 
effectively support the Congress’s legislative agenda. Our request 
represents an increase of about 7.5 percent over our fiscal year 2008 
funding level. Table 9 reflects our requested funding level and full-
time equivalent (FTE) figures to support the Strategic Plan. We will 
update our fiscal year 2009 funding and FTE numbers when the final 
appropriation has been approved by the Congress. 

Table 9: Requested Fiscal Year 2009 Budgetary Resources by Strategic 
Goal: 

Strategic Goal: Goal 1: Address challenges to the well-being and 
financial security of all Americans; 
FTEs: 1,148; 
Amount: $195 million. 

Strategic Goal: Goal 2; Respond to changing security threats of 
globalization; 
FTEs: 1,073; 
Amount: $162 million. 

Strategic Goal: Goal 3; Help transform the federal government's role; 
FTEs: 898; 
Amount: $139 million. 

Strategic Goal: Goal 4; Maximize the value of GAO; 
Amount: $50 million. 

Total; 
FTEs: 3,251; 
Amount: $546 million. 

Source: GAO. 

[End of Table] 

Our fiscal year 2009 budget request aligns the budget in support of 
three broad program areas: human capital, engagement support and 
infrastructure operations. These program areas align with all four of 
our strategic goals in support of the Congress and the American people. 
Our budget request will support activities in the following areas: 

* Human capital: Provides resources to support our most important 
asset—our employees—and cover salaries and benefits; training and 
development; awards and recognition; and recruitment and retention 
programs, such as transit subsidy and student loan repayment programs. 
Human capital costs represent about 80 percent of our total budgetary 
resources. For fiscal year 2009, we are requesting funds to support an 
increase to achieve a staffing level of 3,251 FTEs which will allow us 
to fill critical vacancies, meet succession-planning needs, rebuild our 
capacity, and address supply and demand imbalances in responding to 
congressional requests. 

* Engagement support: Provides resources ¦for contractual services and 
staff travel needed to perform engagements resulting from requests from 
congressional committees, mandates written into legislation, and work 
initiated under the Comptroller General’s authority to support the 
Congress’s legislative agenda, restore travel to more normal levels, 
and increase our oversight in the Middle East to provide more timely 
and responsive information on U.S. activities in the area. 

* Infrastructure operations: Provides resources to support operational 
services, such as network and Web support, telecommunications, building 
management, space lease costs, library and research services, and 
payroll processing. We plan to allocate 18 percent of our total budget 
request for infrastructure operations and critical infrastructure 
initiatives. 

Our fiscal year 2009 budget request seeks necessary resources to 
rebuild and enhance our workforce, knowledge capacity, employee 
programs, and infrastructure. In the years ahead our support to the 
Congress will likely prove even more critical based on pressures 
created by our nation’s current and projected budget deficit and 
growing long-term fiscal imbalances. 

Strategic and Annual Work Planning: 

Through forums and a number of ongoing advisory boards and panels, we 
gather information and perspectives for our strategic and annual 
performance planning efforts. In fiscal year 2008, the Comptroller 
General convened various experts from the public, private, and 
nonprofit sectors in forums and panels intended to enhance our 
understanding of emerging issues and to identify opportunities for 
action. The forums included discussions on strategies for improving 
federal financial management, the use of risk management in homeland 
security, and future prospects for our nation’s children. 

In addition to the forums, our Conversations on 21st Century Challenges 
speaker series continued to provide us with information from 
distinguished leaders on issues affecting the United States and its 
place in the world. Topics covered by the 2008 speakers series included 
discussion on how demographic, social, and economic forces are bringing 
America to important crossroads. 

Advisory boards and panels also support our strategic and annual work 
planning by alerting us to issues, trends, and lessons learned across 
the national and international audit community that we should factor 
into our work. These groups include the Comptroller General’s Advisory 
Board, whose 40 members from the public and private sectors have broad 
expertise in areas related to our strategic objectives, and the 
National Intergovernmental Audit Forum (NIAF). Through the NIAF, 
chaired by the Comptroller General, and partnering with 10 regional 
intergovernmental audit forums, we consult regularly with federal 
inspectors general and state and local auditors. In May 2008, GAO, 
through the NIAF, collaborated with the Mid-Atlantic Forum to cohost 
the Biennial Forum of Government Auditors that promoted discussion of 
challenges facing the domestic audit and accountability community and 
served to enhance capacity within that community. Furthermore, through 
the Domestic Working Group, the Comptroller General and the heads of 18 
federal, state, and local audit organizations exchange information, 
experiences, and best practices and seek opportunities to collaborate. 

Internationally, the Global Working Group, comprising the Comptroller 
General and 18 heads of national audit offices, serves the same purpose 
as the Domestic Working Group through its annual meeting. In addition, 
our leadership role in the International Organization of Supreme Audit 
Institutions (INTOSAI)—the professional organization of the national 
audit offices in 186 countries—provides further opportunities for us to 
benefit from international perspectives, insights, and contacts. 

To prepare ourselves for the development of GAO’s upcoming 2010 through 
2015 Strategic Plan, our Strategic Planning and External Liaison office 
will work closely with our Information Systems and Technology Services 
team, audit teams, and staff offices to develop and incorporate new 
approaches into our strategic planning process. Building on our 
existing strategic planning approach, the target results of these 
changes will help us: 

* increase awareness and shared ownership of the Strategic Plan 
throughout GAO; 

* increase utilization of the Strategic Plan as a management tool 
within audit teams and with clients; 

* enhance resource utilization through shared commitment and 
implementation across GAO; 

* enhance coordination, communication, and collaboration across teams 
on targeted cross cutting issues;; 

* enhance links between the Strategic Plan, performance measures, and 
performance management systems; and: 

* improve alignment with the Government Performance and Results Act. 

Collaborating with Others: 

By collaborating with others, we have strengthened professional 
standards, provided technical assistance, leveraged resources, and 
developed best practices. In our work with INTOSAI, we chair the 
accounting and reporting subcommittee and are an active member of 
INTOSAI’s auditing standards, internal control, and other technical 
subcommittees. In addition, we publish INTOSAI’s quarterly 
International Journal of Government Auditing in five languages to 
foster global understanding of standards, best practices, and technical 
issues. In fiscal year 2008, the journal’s expanded Web presence 
continues to make the publication more useful to INTOSAI members and 
more accessible to our global readership. 

To build capacity in national audit offices around the world, we 
conduct an annual International Auditor Fellowship Program for mid- to 
senior-level staff from other countries. The program is in its 29th 
year, and is designed to strengthen the ability of national audit 
offices to fulfill their missions and to enhance accountability and 
governance worldwide. The fellows spend about 4 months with us learning 
how we are organized to do our work; how we plan our work; and what 
methodologies we use, particularly for performance audits. Through this 
program, GAO instructors, mentors, and sponsors become part of a global 
network that helps support GAO engagements. Also the goodwill 
engendered by the program supports public diplomacy. Since the 
program’s inception, over 400 mid- to senior-level officials from 
counterpart offices of more than 101 countries have graduated. Many of 
them have become auditors general, deputy auditors general, or 
government ministers. 

Other collaborative activities undertaken by our staff this year are as 
follows: 

* We partnered with the World Bank and the INTOSAI Development 
Initiative to design, develop, and deliver the Supreme Audit 
Institution (SAI) Transformation Seminar in November 2007. The seminar 
brought together auditors general from over 29 developing countries to 
share knowledge, experience, and best practices on how they can lead 
transformation efforts to strategically position their institutions to 
meet evolving challenges. This successful partnership provided us with 
an opportunity to strengthen public sector financial management and 
accountability at the global level and provided a prototype seminar 
that will be replicated regionally by the initiative. 

* Under a memorandum of understanding (MOU) with the State Department’s 
(State) Bureau for International Narcotics and Law Enforcement Affairs, 
we assisted in building the Iraqi Board of Supreme Audit’s capacity by 
sponsoring a modified version of the course of study offered to 
auditors from around the world through the International Auditor 
Fellowship Program. In addition, the MOU with State resulted in an 
Arabic translation of the latest edition of the Yellow Book and related 
forms and templates used by GAO to assist the Board of Supreme Audit in 
its efforts to carry out financial and performance audits and fight 
corruption. Translated documents will also be used by the 19 member 
SAIs of the Arabic speaking Arab Office of Supreme Audit Institutions. 
This program resulted in increased understanding between the U.S. and 
Iraq’s SAI, and opened doors to positive relations between the two as 
they work to increase accountability for public funds spent in Iraq. 
Furthermore, this strategic partnership with State provides the 
foundation for future partnerships with the agency. 

* Working in collaboration with the Institute of Internal Auditors, we 
participated in an IIA-sponsored webcast on professional audit 
standards. In doing so, we were able to educate a much broader audience 
domestically and internationally on GAO’s revised Yellow Book standards 
than we otherwise could have using our existing resources. 

Using Our Internal Experts: 

We coordinated extensively within our own organization on our strategic 
and annual performance planning efforts, as well as on the preparation 
of our performance and accountability reports. Our efforts are 
completed under the overall direction of the Comptroller General and 
the Chief Operating Officer. We relied on our Chief Administrative 
Officer/Chief Financial Officer and her staff to provide key 
information, such as the financial information that is included in part 
III of this report. Her staff also coordinated with others throughout 
the agency to provide the information on goal 4’s results, which 
appears in part II of this report, and provided input on other efforts 
dealing with issues that include financial management, budgetary 
resources, training, and security. We obtained input on all aspects of 
our strategic and annual performance planning and reporting efforts 
from each of our engagement teams and organizational units through 
their respective managing directors, as well as other staff responsible 
for planning or engagement activities in the teams. Staff from Quality 
and Continuous Improvement office prepared the report, ensuring, among 
other things, that the report responded to comments and suggestions 
received from the Association of Government Accountants and other 
reviewers. In short, we involved virtually every part of our agency and 
used our internal expertise in our planning and reporting efforts. 

Internal Management Challenges and Mitigating External Factors That 
Could Affect Our Performance: 

At GAO, management challenges are identified by the Comptroller 
General, the Executive Committee, and the agency’s senior executives 
through the agency’s strategic planning, management, and budgeting 
processes. Our progress in addressing the challenges is monitored 
through our annual performance and accountability process. Under 
strategic goal 4, we establish performance goals focused on each of our 
management challenges, track our progress in completing the key efforts 
for those performance goals quarterly, and report each year on our 
progress toward meeting the performance goals. Each year we ask our IG 
to examine management’s assessment of the challenges and the agency’s 
progress in addressing them. (See part IV for the IG’s assessment.) 

For fiscal year 2008, we continued to address three management 
challenges—physical security, information security, and human capital. 
We anticipate that we will continue to need to address all three 
challenges in future years because they are evolving and will require 
us to continually identify ways to adapt and improve. We will report 
any changes as we monitor and report on our progress in addressing the 
challenges through our annual performance and accountability process. 
The following sections describe our recent and planned efforts to 
address these challenges. 

Physical Security Challenge: 

The impact of domestic and international events, both ongoing and 
anticipated, continues to present us with a physical security 
challenge, including emergency preparedness issues, now and in the 
foreseeable future. To strengthen our ability to protect our people and 
our assets, we must constantly assess our physical security profile and 
continuity of operations programs vis-à-vis the domestic and 
international climate. Our Office of Emergency Preparedness and our 
Office of Security have built and will continue to build on our 
previous efforts, identifying and implementing improvements and 
pursuing new initiatives to protect our workers and assets and ensure 
continuity of operations. During fiscal year 2008, we: 

* strengthened our continuity of operations program by documenting 
policy and program requirements; 

* staffed a number of new continuity components, including a command 
and control team, an evacuation/Shelter in Place (SIP) Team, and an 
Information Systems and Technology Services (ISTS) contingency team to 
handle information technology failures; 

* conducted a security assessment (through an independent contractor) 
on a full range of security disciplines to examine the effectiveness of 
recent improvements and provide recommendations for future 
enhancements; 

* strengthened our emergency readiness in ¦headquarters through 
training, exercises, and drills (e.g., evacuations, SIP drills, and 
tests of the Web Emergency Operation Center administration); 

* enhanced security in our field offices through training for staff on 
continuity and the GAO automated phone notification system; 

* enhanced communications with our workforce (e.g., updated/revised 
information on posters, reference guides, Web sites, and labels 
designating SIP areas; sponsored the national preparedness month fair; 
and implemented emergency e-mail and automated phone notification 
capabilities); 

* coordinated emergency preparedness activities with a number of 
federal and local entities; 

* completed a multiyear project with the General Services 
Administration’s Federal Systems Integration and Management Center 
involving Integrated Electronic Security System upgrades (e.g., 
installing upgraded cameras, card readers, and electronic turnstiles); 
and: 

* launched a new building access card system as our first step toward 
Homeland Security Presidential Directive 12 (HSPD-12) compliance. 

To continue to improve our physical security profile, strengthen our 
efforts to become a model security agency, and address the continuing 
and future issues that will challenge us in upcoming years, in fiscal 
year 2009 we will: 

* assess the results of the independent security assessment, vet the 
recommendations, and implement changes as necessary; 

* assess the results of the field office security survey and plan for 
the logical integration of physical security systems from the field 
offices to headquarters’ integrated electronic security system; and: 

* continue our incremental implementation ¦of HSPD-12 with the 
completion of contractor and employee personnel security 
investigations. 

Information Security Challenge: 

Given the constantly evolving nature of threats to information and 
information system assets, information security will continue to be a 
management challenge for us and all government and private sector 
entities in the foreseeable future. While we are not required by law to 
comply with the Federal Information Security Management Act (FISMA), we 
have adopted FISMA requirements to help us meet the challenges posed in 
ensuring information system security. 

Our overall goal is to ensure that information protection requirements 
extend across the life cycle of documentation: from data collection, 
report production, and data transmission and storage to the eventual 
archiving and disposal of data. In support of this goal, Information 
Security in the Office of Security and Information Systems Security in 
ISTS manage the Information Security Program and the Information 
Systems Security Program, respectively. These programs work together to 
address the full range of requirements  associated with  securely 
accessing, handling, storing, and disposing of classified and sensitive 
national security information stored electronically and on paper. They 
also work hand-in-hand to educate staff on handling sensitive 
information and raise awareness of the need to maintain appropriate 
security to reduce  the risk of compromise of such information. 

In fiscal year 2008, we strengthened our information security by: 

* partnering several of our units to develop and deliver an integrated 
information security awareness education and training program to staff; 

* establishing a dedicated Information Security Branch responsible for 
general information security support, security education, security 
inspections, and the newly certified Sensitive Compartmented 
Information Facility, and a formal agencywide Security Manager Program 
intended to focus and improve security education and awareness at the 
team level; 

* enhancing our inventory controls over physical IT assets and 
improving our processes and procedures to manage receipt, storage, and 
issuance of equipment; 

* improving our assessment of systems operated on behalf of GAO by 
third parties by developing guidance and testing our procedures for 
conducting site visits and validating the protection of GAO information 
based upon established standards from OMB, the National Institute of 
Standards and Technology, and the Federal Information Security and 
Management Act; 

* reinforcing oversight, review, and remediation of potential 
weaknesses identified during audits and the certification of 
information systems; 

* implementing encryption in the images of our new workstations to 
protect data on our laptops and on mobile media, such as USB flash 
drives; 

* consolidating disparate workstation security applications with an 
integrated software suite to improve standards and provide for more 
effective enterprisewide systems security management; 

* increasing our capability to screen Internet traffic for potential 
threats and remove those threats before they infect our workstations; 
and: 

* improving our network monitoring capability to detect unauthorized 
intrusions and our ability to effectively monitor information system 
assets by upgrading our enterprise event correlation application. 

We will further strengthen our information security programs in fiscal 
year 2009 to ensure our capability to address continuing and future 
issues by: 

* enhancing the security education and awareness programs by adding 
security awareness training for staff that includes recurring 
presentations by senior management and focused role-based instructions; 

* identifying additional data protection encryption and identity 
management options to provide better control of access to the GAO 
network and information; 

* providing increased vigilance in the ¦centralized auditing of network 
servers and devices through additional auditing staff resources, 
automated tools, and notebook computer security controls; 

* implementing new and updated security guidance from the National 
Institute of Standards and Technology and OMB; 

* refining our security processes and procedures, enhancing our 
contingency operations, and identifying and implementing appropriate 
new technologies to improve our ability to respond to changing threats; 

* integrating our privacy program privacy assessments into the systems 
security assessment process; and: 

* refining the information systems inventory based upon the 
requirements from multiple programs, such as security, privacy, and 
enterprise architecture to facilitate the varied perspectives of our 
information system protection requirements. 

Human Capital Challenge: 

As a leader in human capital management in the federal government, 
GAO’s human capital programs are scrutinized by others seeking to learn 
from our experience and expertise. We strive to ensure that the design 
and implementation of our programs are consistent with four key 
elements we have identified as critical to human capital 
management—leadership; strategic human capital planning; acquiring, 
developing and retaining talent; and results-oriented organizational 
culture—and that we follow our own advice and guidance. It is a high 
bar for success and presents added challenges and opportunities in 
developing, implementing and managing human capital programs and 
initiatives, particularly those involving significant change management 
such as pay and performance. We expect that human capital will remain a 
management challenge for 2009 and into the foreseeable future. 

We depend on a talented and diverse, high-performing, knowledge-based 
workforce to accomplish our work and carry out our mission in support 
of the Congress. Attracting and retaining the best is a top priority 
and a key challenge as we look for opportunities to improve our 
strategies and leverage what works well during this period of steadily 
rising competition for talent among knowledge-based organizations. 
While we continue to be highly successful in attracting talent and our 
attrition rates remain steady, we are beginning to see the impact of 
changing demographics and workplace expectations. Younger staff appear 
to be less likely to make a long-term workplace commitment, while at 
the same time mid- and senior-level staff with great institutional 
knowledge are becoming retirement eligible in greater numbers. We 
recognize that one of our current and future challenges is to continue 
to reexamine our recruitment and retention strategies and 
flexibilities. 

This past year we contracted with the Ivy Planning Group to examine the 
differences in average performance appraisals between African American 
and Caucasian analysts. The Ivy Planning Group delivered its report in 
April 2008; the report included over 25 recommendations and many 
helpful insights. The Acting Comptroller General expressed his 
commitment to addressing each of the recommendations, with immediate 
attention to creating a more inclusive work environment for all staff, 
reassessing how we evaluate performance, and refining recruiting and 
hirning practices. Specific actions that we have taken in 2008 and plan 
to take in 2009 are described later in this section. 

This past year was our first in a labor relations environment. Upon the 
establishment of the GAO Employee Organization, International 
Federation of Professional and Technical Engineers (IFPTE), we 
committed to bargain in good faith and establish and maintain a 
positive working relationship with the union. Our first challenge was 
to successfully negotiate the first pay agreement affecting 2008 
salaries with the union’s Interim Council and to reach an interim 
collective bargaining agreement. Our demonstrated commitment to a 
mutually cooperative working relationship has positioned us well as we 
begin negotiations on the first formal collective bargaining agreement. 

Also this year, we have worked closely with our congressional oversight 
committee on compensation issues and other agency management issues. 
The GAO Act of 2008, which passed in September 2008, contains important 
provisions that will help GAO with a variety of human capital and 
administrative matters. We are currently working to implement the 
provisions, several of which specifically deal with pay issues from 
prior years. For example, the Act establishes a floor guarantee for all 
staff (except those in the developmental pay plans and Senior Executive 
Service/Senior Level (SES/SL)) that provides that staff will, at a 
minimum, receive the General Schedule (GS) pay increase for the 
locality in which their office is located; provides for certain of our 
employees to receive retroactive lump sum payments and pay adjustments 
if they did not receive at least 2.6 percent and 2.4 percent base pay 
increases in 2006 and 2007, respectively; and authorizes us to increase 
the highest basic pay rate paid to our employees—other than those in 
the SES/SL cadre—from GS-15, step 10, to Executive Level III for 
certain positions. 

To further address these and other human capital issues, we continued 
to strengthen our human capital programs and processes this fiscal 
year, by: 

* Conducting an analysis of the agency’s diversity profile and programs 
and issuing the 2008 Workforce Diversity Plan. The plan recognizes that 
our workforce is diverse, and we have made gains in many areas, such as 
in the number of women and African Americans at senior levels which 
exceeded the civilian labor force levels and among our predominant 
occupations, where diversity exceeded the relevant civilian labor force 
levels. The plan also identifies a number of priority action steps for 
2008 and 2009 grouped around three goals: recruiting more Hispanics, 
African Americans, and staff with disabilities; enhancing staff 
development opportunities that prepare staff for upper level positions; 
and creating a more inclusive environment. 

* Initiating a full, systematic, and inclusive review of the 
performance appraisal system. In looking to identify what works, what 
does not, and what could be done better, the assessment addresses 
concerns raised by the Ivy Planning Group and will look for both long- 
and short-term improvements. As an interim measure for the fiscal year 
2008 performance appraisal cycle, we implemented a number of 
improvements that the Ivy Planning Group had recommended, including 
developing standard guidelines for team/unit performance appraisal 
reviews and requiring training for all our designated performance 
managers. 

* Developing a framework for management improvement initiatives 
identified to address the Ivy Planning Group recommendations, as well 
as recommendations we received from our partners and managers for 
creating a more inclusive work environment. We established a 
coordinating committee of GAO executives to oversee the efforts to 
reassess how we evaluate performance, refine our recruiting and hiring 
practices, manage workload, streamline processes, enhance staffing 
practices, and develop the workforce. 

* Establishing the GAO Diversity Committee, in conjunction with the GAO 
Employee Organization, IFPTE, and the Employee Advisory Committee, to 
provide a forum for raising and addressing the diversity issues and 
concerns of the staff. 

* Implementing a new integrated leadership program for managers that 
provides a systematic process for developing critical dimensions of 
leadership identified in an internal 2007 study. 

* Developing feedback tools for all levels of management and linking 
feedback to specific developmental programs designed to improve 
performance in critical dimensions of leadership. 

* Initiating a study to identify the cost of new staff turnover and any 
systemic issues that could impact our ability to balance a growing 
workload with our staffing resources. 

Significant efforts planned for continuing to meet this challenge in 
fiscal year 2009 include: 

* implementing initiatives identified in our framework for management 
improvement in the areas of recognizing and valuing diversity, 
addressing workload demands and staffing practices, and strengthening 
our recruitment and retention programs; 

* enhancing leadership, supervisory, coaching, and development skills 
of staff; 

* implementing the provisions of the GAO Act of 2008; 

* implementing the action items identified in GAO’s Workforce Diversity 
Plan and updating the plan for 2009; 

* completing an agencywide review of our performance appraisal system 
and developing and implementing an action plan for additional short- 
and long-term improvements; 

* reviewing our compensation programs including performance-based 
compensation approaches and market-based pay; 

* working cooperatively and productively with the GAO Employee 
Organization, IFPTE, to negotiate the first collective bargaining 
agreement; and: 

* improving the efficiency and effectiveness of the Human Capital 
Office to support our human capital initiatives. 

Mitigating External Factors: 

Several external factors could affect the achievement of our 
performance goals, including the amount of resources we receive, shifts 
in the content and volume of our work, and national and international 
developments. Limitations imposed on our work by other organizations or 
limitations on the ability of other federal agencies to make the 
improvements we recommend are additional factors that could affect the 
achievement of our goals. 

As the Congress focuses on unusual events, the mix of work we are asked 
to undertake may change, diverting our resources from some strategic 
objectives and performance goals. We can and do mitigate the impact of 
these events on the achievement of our goals in various ways. For 
example in fiscal year 2008, we: 

* continued to track current events (such as vulnerabilities in the 
nation’s food supply system, gas and oil price increases, and the 
quality of health facilities and services for soldiers returning from 
military conflicts abroad) and communicated frequently with our 
congressional clients in order to be alert to possibilities that could 
shift the Congress’s priorities or trigger new priorities; 

* quickly redirected our resources when appropriate (i.e., to respond 
to a record number of requests for our senior executives to testify on 
our current and past work covering a wide range of topics, such as the 
Global War on Terrorism) so that we could deal with major changes as 
they occurred; 

* maintained broad-based staff expertise (i.e., in our financial 
markets, accounting, economics, Social Security, health care financing, 
and homeland security areas) so that we could readily address emerging 
needs; and: 

* initiated evaluations under the Comptroller General’s authority to 
self-initiate engagements on a limited number of selected topics, 
including the status of Iraq’s reconstruction efforts and high-risk 
list update work. 

However, congressional demand for our analysis and advice is strong and 
will likely increase. The total number of requests in fiscal year 2007 
was up 14 percent from the preceding year, and this increase remained 
about the same from fiscal year 2007 through fiscal year 2008. As an 
indicator of future congressional demand, potential mandates for our 
work being included in proposed legislation as of September 30, 2008, 
totaled over 800, a 40 percent increase from a similar period in the 
109th Congress. For example: 

* Over 160 new mandates for our reviews were imbedded in law, including 
the Consolidated Appropriations Act of 2008 and the Defense 
Appropriations Act of 2008. 

* New recurring responsibilities were given to us under the Honest 
Leadership and Open Government Act of 2007 to report annually on 
lobbyists’ compliance with registration and reporting requirements. 
Also, the Emergency Economic Stabilization Act directs us to report to 
the Congress every 60 days findings from our oversight of the 
activities and performance of TARP and to conduct an annual financial 
audit of the program. The act also mandates a one-time report to the 
Congress on the role that leveraging and sudden deleveraging of 
financial institutions played in the nation’s financial crisis spurred 
by subprime home loans. 

* Expanded bid protest provisions applied to us that (1) allow federal 
employees to file protests concerning competitive sourcing decisions (A-
76), (2) establish exclusive bid protest jurisdiction at GAO over 
issuance of task and delivery orders valued at over $10 million, and 
(3) provide GAO bid protest jurisdiction over contracts awarded by the 
Transportation Security Administration. Further evidence of our help in 
providing important advice to the Congress is found in the increased 
numbers of GAO appearances at hearings on topics of national 
significance and keen interest. 

Our staff are stretched in striving to meet Congress’s increasing 
needs. Given the difficult federal budget decisions that lie ahead, the 
Congress is likely to place increasing emphasis on fiscal constraint. 
While it is unclear how we will ultimately be affected, it is 
reasonable to assume that any attempt to exercise additional budgetary 
discipline in the legislative branch will include our agency. As a 
result, while we believe that we submit reasonable and responsible 
budget requests, and we know that the return on investment that we 
generate is unparalleled, we must plan and prepare for the possibility 
of significant and recurring constraints on the resources made 
available to us. In addition, as we stated previously, almost 80 
percent of our budget is composed of people-related costs, and any 
serious budget situation will have an impact on our human capital 
policies and practices. This, in turn, will have an impact on our 
ability to serve the Congress and meet our performance targets. While, 
as noted above, the nature and extent of any such budget constraints 
cannot be determined at the present time, our executive team is engaged 
in a range of related planning activities. 

Another external factor that affects our ability to serve the Congress 
is the extent to which we can obtain access to information that plays 
an essential role in our ability to report on issues of importance to 
the Congress and the American people. Most departments and agencies are 
very cooperative with our requests for information. However, our 
experience with some agencies, such as the Department of Homeland 
Security (DHS), CMS, and the Department of Justice, has proven more 
challenging. For instance, unlike our interactions with many other 
agencies, most of our interactions with DHS are layered and time-
consuming. DHS’s processes for working with us include extensive 
coordination among program officials, liaisons, and attorneys at the 
departmental and component levels and centralized control for all 
incoming GAO requests for information and outgoing documents.[Footnote 
16] In response to a fiscal year 2008 appropriations restriction 
[Footnote 17] directing DHS to revise its departmental guidance to 
include expedited time frames, providing us timely and complete access 
to records and interviews, DHS revised its departmental guidance 
concerning relations with us in July 2008. While GAO does not view the 
revised procedures as constituting a “significant streamlining” of the 
process, we will closely monitor how the revised procedures are 
implemented. We appreciate the interest of the Congress in helping to 
ensure that we obtain access to information and the efforts by agencies 
to cooperate with our requests. We will continue to work to identify 
opportunities for strengthening our access to information as necessary 
and appropriate. 

[End of Nonfinancial Benefits]

[End of Part I, Management's Discussion and Analysis] 

Part II: Performance Information: 

Performance Information by Strategic Goal: 

In the following sections, we discuss how each of our four strategic 
goals contributed to our fiscal year 2008 performance results. 
Specifically, for goals 1, 2, and 3—our external goals—we present 
performance results for the three annual measures that we assess at the 
goal level. Most teams and units also contributed toward meeting the 
targets for the agencywide measures that were discussed in part I of 
this report. 

Goal 1: Overview: Provide timely, quality service to the Congress and 
the federal government to address current and emerging challenges to 
the well-being and financial security of the American people. 

Our first strategic goal upholds our mission to support the Congress in 
carrying out its constitutional responsibilities by focusing on work 
that helps address the current and emerging challenges affecting the 
well-being and financial security of the American people and American 
communities. Our multiyear (fiscal years 2007-2012) strategic 
objectives under this goal are to provide information that will help 
address: 

* the health needs of an aging and diverse population; 

* lifelong learning to enhance U.S. competitiveness; 

* benefits and protections for workers, families, and children; 

* financial security for an aging population; 

* a responsive, fair, and effective system of justice; 

* the promotion of viable communities; 

* responsible stewardship of natural resources and the environment; 
and: 

* a safe, secure, and effective national physical infrastructure. 

These objectives, along with the performance goals and key efforts that 
support them, are discussed fully in our strategic plan, which is 
available on our Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives was performed primarily by 
headquarters and field office staff in the following teams: Education, 
Workforce, and Income Security; Financial Markets and Community 
Investment; Health Care; Homeland Security and Justice; Natural
Resources and Environment; and Physical Infrastructure. In line with 
our performance goals and key efforts, goal 1 staff reviewed a variety 
of programs affecting the nation’s students and schools, employees and
workplaces, health providers and patients, and social service providers 
and recipients. In addition, goal 1 staff performed work for our 
congressional clients related to improving the nation’s law enforcement 
systems and federal agencies’ ability to prevent and respond to 
terrorism and other major crimes. 

Selected Work under Goal 1: 

In our May 2008 report, we found that state nursing home surveys often 
missed serious care problems that caused harm to vulnerable nursing 
home residents. In about 15 percent of the state surveys that federal 
surveyors reviewed, they identified serious care problems that were 
missed by state surveyors. CMS agreed to implement our recommendations 
to identify and track all understatement identified by federal surveys. 
The report also was used by congressional requesters to support 
legislation to strengthen enforcement for poorly performing nursing 
homes. (See app. 1, item 1.08.C.) 

To accomplish our work under these strategic objectives in fiscal year 
2008, we conducted engagements, audits, analyses, and evaluations of 
programs at major federal agencies, such as the Departments of 
Education, Health and Human Services, Homeland Security, 
Transportation, Housing and Urban Development, and the Interior and 
developed reports and testimonies on the efficacy and soundness of 
programs they administer. 

As shown in table 10, we exceeded the goal 1 performance targets we set 
in fiscal year 2008 for financial benefits and testimonies but did not 
meet our nonfinancial benefits target. 

Table 10: Strategic Goal 1’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2004 Actual: $26.6 billion; 
2005 Actual: $15.6 billion; 
2006 Actual: $22.0 billion; 
2007 Actual: $12.9 billion; 
2008 Target: $13.8 billion; 
2008 Actual: $19.3 billion; 
Met/Not Met: Met; 
2009 Target[A]: $13.4 billion. 

Performance measure: Nonfinancial benefits; 
2004 Actual: 252; 
2005 Actual: 277; 
2006 Actual: 268; 
2007 Actual; 238; 
2008 Target: 238; 
2008 Actual: 226; 
Met/Not met: Not met; 
2009 Target[A]: 231. 

Performance measure: Testimonies; 
2004 Actual: 85; 
2005 Actual: 88; 
2006 Actual: 97; 
2007 Actual: 125; 
2008 Target: 84; 
2008 Actual: 124; 
Met/Not Met: Met; 
2009 Target[A]: 77. 

Source: GAO. 

[A] Our fiscal year 2009 targets for financial and nonfinancial 
benefits differ from the targets we reported in our fiscal year 2009 
performance budget in January 2008. Specifically, we increased our 
target for financial benefits from $12.7 billion and lowered the number 
of nonfinancial benefits from 238 to 231. 

[End of table] 

To help us examine trends for these measures over time, we look at 
their 4-year averages, which minimize the effect of an unusual level of 
performance in any single year. These averages are shown in table 11. 
This table indicates that goal 1 nonfinancial benefits have generally 
risen over time with a moderate decline in fiscal year 2008, while the 
number of hearings at which we testify has exhibited a more wavelike 
trend during the 5-year period since fiscal year 2004. 

Table 11: Four-Year Rolling Averages for Strategic Goal 1: 

Performance measure: Financial benefits; 
2004: $20.8 billion; 
2005: $22.5 billion; 
2006: $22.0 billion; 
2007: $19.3 billion; 
2008: $17.5 billion. 

Performance measure: Nonfinancial benefits; 
2004: 226; 
2005: 243; 
2006: 254; 
2007: 259; 
2008: 252. 

Performance measure: Testimonies; 
2004: 87; 
2005: 91; 
2006: 88; 
2007: 99; 
2008: 109. 

Source: GAO. 

[End of Table] 

The following sections describe our performance under goal 1 for each 
of these three quantitative performance measures and describe the 
targets for fiscal year 2009. 

Financial Benefits: 

Example of Goal 1’s Financial Benefits: 

We recommended that the U.S. Department of Agriculture (USDA) develop 
and analyze options for simplifying requirements for determining Food 
Stamp Program eligibility and benefits in order to help ease program 
administration and reduce payment errors. The Congress adopted our 
suggestion in the Farm Security and Rural Investment Act of 2002 by 
providing the states with the option to use simplified reporting 
requirements for verifying the accuracy of food stamp recipients’ 
income information. In addition to financial benefits resulting from a 
substantial decline in USDA’s overpayments of food stamp benefits, USDA 
has found that its share of the states’ administrative costs for 
certifying benefits for food stamp households has dropped by about $200 
million annually, or about $1 billion, from fiscal years 2003 to 2006. 
(See app. 1, item 1.12.F.) 

The financial benefits reported for this goal in fiscal year 2008 
totaled $19.3 billion, which exceeded the target of $13.8 billion by 
about $5.5 billion. This was due in large part to the unanticipated 
financial benefits that accrued from our work pertaining to spectrum 
auctions. We describe this and other goal 1 accomplishments in the goal 
1 section of appendix 1. 

Because financial benefits often result from work completed in prior 
years, we set our fiscal year 2009 target on the basis of our 
assessment of the progress agencies are making in implementing our past 
recommendations. Our analysis indicates that financial benefits in the 
future for goal 1 are likely to decrease from fiscal year 2008. 
However, we have set the target for fiscal year 2009 at $13.4 billion, 
rather than at $12.7 billion as reported in our fiscal year 2009 
performance plan as a result of multiyear financial benefits that may 
accrue from certain work in this area. 

Nonfinancial Benefits: 

Nonfinancial benefits reported for goal 1 in fiscal year 2008 included 
209 actions taken by federal agencies to improve their services and 
operations in response to our work and another 17 in which information 
we provided to the Congress resulted in statutory or regulatory 
changes. This total of 226 nonfinancial benefits did not meet our 
target of 238. We report some of our major nonfinancial accomplishments 
in detail in the goal 1 section of appendix 1. 

Example of Goal 1’s Nonfinancial Benefits: 

We found that the Department of Education did not have an effective 
system for monitoring and preventing abusive student loan practices 
within the Federal Family Education Loan Program (FFELP). Specifically, 
we identified weaknesses in the Department of Education’s enforcement 
of prohibitions on gifts from student loan companies to schools in 
exchange for companies being placed on schools’ “preferred lender” 
lists. In 2008, the Congress amended the Higher Education Act which 
includes provisions that define a prohibited gift and require schools 
to annually report on their preferred lender arrangements and to post a 
statement on their Web sites noting that the school is required to 
process loan documents from any eligible lender in FFELP that the 
student selects. (See app. 1, 1.09.N.) 

For fiscal year 2009, we have set a target of 231 for nonfinancial 
benefits. This target is higher than what goal 1 achieved in fiscal 
year 2008, but it is consistent with our recognition that we are more 
likely to achieve more nonfinancial benefits under goals 2 and 3 over 
the next few years. We decreased this target by 7 compared with the 
nonfinancial benefits target we reported in our fiscal year 2009 
performance plan. 

Testimonies: 

Our witnesses testified at 124 congressional hearings related to this 
strategic goal, which exceeded the fiscal year 2008 target by 40 
testimonies, about 48 percent. Among the testimonies given were those 
related to weaknesses in the Food and Drug Administration’s inspections 
of foreign manufacturers of medical devices sold in the United States, 
pension plan fees and the limited information about them, and 
challenges the Environmental Protection Agency faces in regulating 
chemicals. (See p. 35 for a list of testimony topics by goal.) We set 
our fiscal year 2009 target at 77 hearings at which we testify on goal 
1 issues because we anticipate a gradual decline in requests for 
testimony during the year on several topics, such as the Capitol 
Visitor Center and the nation’s transition to digital television. 

Example of Goal 1’s Testimonies: 

Our testimony on youth residential facilities highlighted state and 
federal oversight gaps in residential facilities for more than 200,000 
youth seeking help with behavioral or emotional challenges. Based on 
ongoing work, we focused on systems for monitoring these facilities and 
the reporting of incidents of maltreatment, as well as facility 
licensing requirements and standards. State agencies reported an 
inability to conduct yearly on-site visits to facilities because of 
fluctuating levels of staff resources dedicated by states, and 
infrequently sharing negative findings from their oversight results. 
Federal agencies, including the Departments of Health and Human 
Services, Justice, and Education, hold states accountable for youth 
well-being, but we found that federal efforts are hindered by the scope 
of the agencies’ oversight authority and practices. 
[hyperlink, http://www.gao.gov/products/GAO-08-696T] 

[End of Goal 1] 

Goal 2 Overview: Provide timely, quality service to the Congress and 
the federal government to respond to changing security threats and the 
challenges of global interdependence. 

The federal government is working to promote foreign policy goals, 
sound trade policies, and other strategies to advance the interests of 
the United States and its allies while also seeking to anticipate and 
address changing threats to the nation’s security and economy. Given 
the importance of these efforts, our second strategic goal focuses
on helping the Congress and the federal government respond to various 
types of threats to our nation and the challenges of global 
interdependency. Our multiyear (fiscal years 2007-2012) strategic 
objectives under this goal are to support congressional and agency 
efforts to: 

* protect and secure the homeland from threats and disasters; 

* ensure military capabilities and readiness; 

* advance and protect U.S. international interests, and: 

* respond to the impact of global market forces on U.S. economic and 
security interests. 

These objectives, along with the performance goals and key efforts that 
support them, are discussed fully in our strategic plan, which is 
available on our Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed primarily by 
headquarters and field staff in the following teams: Acquisition and 
Sourcing Management, Defense Capabilities and Management, and 
International Affairs and Trade. In addition, the work supporting
some performance goals and key efforts is performed by headquarters and 
field staff from the Information Technology, Homeland Security and 
Justice, Financial Markets and Community Investment, and Natural 
Resources and Environment teams. 

Selected Work under Goal 2: 

Our June 2008 report found that overall violence, as measured by enemy-
initiated attacks, had fallen, but that key legislation had not been 
enacted and Iraqi spending for reconstruction was still low. We 
recommended that DOD and the Department of State (State) develop an 
updated strategy for Iraq that would build on recent gains and address 
unmet goals. The Congress used our work as part of its oversight on 
whether U.S. surge forces were achieving their intended outcome—that 
is, a reduction in violence throughout Iraq that would provide the time 
and space needed for reconciliation among Iraq’s Shi’a, Sunni, and 
Kurdish peoples. (See app. 1, item 2.24.C.) 

To accomplish our work in fiscal year 2008 under these strategic 
objectives, we conducted engagements and audits that involved fieldwork 
related to programs that took us across multiple continents, including 
Europe, Africa, Asia, South America, and North America. As in the past, 
we developed reports, testimonies, and briefings on our work. 

As shown in table 12, we significantly exceeded our fiscal year 2008 
performance targets for financial benefits, nonfinancial benefits, and 
testimonies for this goal. 

Table 12: Strategic Goal 2’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2004 Actual: $9.7 billion; 
2005 Actual: $12.9 billion; 
2006 Actual: $12.0 billion; 
2007 Actual: $10.3 billion; 
2008 Target: $11.3 billion; 
2008 Actual: $15.4 billion; 
Met/Not Met: Met; 
2009 Target[A]: $12.7 billion. 

Performance measure: Nonfinancial benefits; 
2004 Actual: 369; 
2005 Actual: 365; 
2006 Actual: 449; 
2007 Actual: 468; 
2008 Target: 322; 
2008 Actual: 468; 
Met/Not Met: Met; 
2009 Target[A]: 344. 

Performance measure: Testimonies; 
2004 Actual: 70; 
2005 Actual: 42; 
2006 Actual: 68; 
2007 Actual: 73; 
2008 Target: 69; 
2008 Actual: 96; 
Met/Not Met: Met; 
2008 Target[A]: 64. 

Source: GAO. 

[A] Our fiscal year 2009 targets for these three measures differ from 
the targets we reported in our fiscal year 2009 performance budget in 
January 2008. Specifically, we increased our target for financial 
benefits from $11.3 billion, nonfinancial benefits from 322, and the 
number of hearings at which we testify from 62. 

[End of table] 

To help us examine trends for these measures over time, we look at 
their 4-year averages, which minimize the effect of an unusual level of 
performance in any single year and are shown in table 13. This table 
indicates that goal 2 financial benefits, nonfinancial benefits, and 
testimonies have steadily increased over the last 5 years. 

Table 13: Four-Year Rolling Averages for Strategic Goal 2: 

Performance measure: Financial benefits; 
2004: $8.9 billion; 
2005: $9.5 billion; 
2006: $10.4 billion; 
2007: $11.2 billion; 
2008: $12.7 billion. 

Performance measure: Nonfinancial benefits; 
2004: 262; 
2005: 306; 
2006: 364; 
2007: 413; 
2008: 438. 

Performance measure: Testimonies; 
2004: 48; 
2005: 50; 
2006: 57; 
2007: 63; 
2008: 70. 

Source: GAO. 

[End of Table] 

The following sections describe our performance under goal 2 for each 
of our quantitative performance measures and describe the targets for 
fiscal year 2009. 

Financial Benefits: 

Example of Goal 2’s Financial Benefits: 

Analyzing both the fiscal year 2008 base budget as well as the Global 
War on Terrorism budget, we provided the Congress with information 
identifying activities where funding reductions were appropriate. For 
example, our analysis revealed that the Army’s request for tactical 
radios exceeded approved objectives. Our work supported reductions of 
about $1.4 billion in the base budget and nearly $4 billion in the 
Global War on Terrorism budget. (See app. 1, item 2.12.F.) 

The financial benefits reported for this goal in fiscal year 2008 
totaled $15.4 billion, exceeding the target by $4.1 billion. Among 
other things, these accomplishments stemmed from engagements related to 
agency actions to reduce overpricing in federal contracts for goods and 
services and our assessment of the reasonableness of the Department of 
Defense’s (DOD) fiscal year 2008 budget request. We describe these and 
other accomplishments in the goal 2 section of appendix 1. 

Given the large portion of the U.S. budget that defense spending 
consumes, we expect our work under this goal to continue to produce 
economies and efficiencies that yield billions of dollars in financial 
benefits for the American people each year. We set our fiscal year 2009 
target at $12.7 billion based on our assessment of the progress 
agencies are making in implementing our past recommendations that might 
yield financial benefits and our 4-year rolling average. 

Nonfinancial Benefits: 

The nonfinancial benefits reported for goal 2 in fiscal year 2008 
included 419 actions taken by federal agencies to improve their 
services and operations in response to our recommendations and another 
49 in which information we provided to the Congress resulted in 
statutory or regulatory changes. This total of 468 nonfinancial 
benefits greatly exceeded our target of 322. Our success in this area 
arose from our increased emphasis on follow-up efforts and increased 
monitoring of our progress toward the targets throughout the year. Some 
of our major accomplishments are reported in detail in the goal 2 
section of appendix 1. 

Example of Goal 2’s Nonfinancial Benefits: 

During fiscal year 2008, we reported that DOD has yet to establish (1) 
a strategic planning process that results in a comprehensive, 
integrated, enterprisewide plan or set of plans to guide transformation 
and (2) a senior official who can provide full-time attention and 
sustained leadership to transformation. The Congress recognized the 
need for executive-level attention to business transformation matters 
and, in the National Defense Authorization Act for Fiscal Year 2008, 
assigned Chief Management Officer (CMO) responsibilities to the Deputy 
Secretary of Defense, established a full-time Deputy CMO position, and 
assigned CMO responsibilities within the military departments. Also, 
DOD has taken steps to improve its planning process and to implement 
the CMO legislation. (See app. 1, item 2.17.N.) 

Looking ahead, our assessments of the executive branch’s current 
efforts to implement our recommendations made under this goal led us to 
set our fiscal year 2009 target at 344. While we increased this target 
by 22 over the target we reported for goal 2 in our fiscal year 2009 
performance plan, we also recognize that this target is lower than our 
fiscal year 2008 actual performance and 4-year average for this 
measure. We believe that this target will best enable staff to stretch 
to capture the full range of nonfinancial benefits resulting from our 
goal 2 work without encouraging staff to document benefits of a more 
narrow scope or significance. 

Testimonies: 

Our witnesses testified at 96 congressional hearings related to this 
strategic goal in fiscal year 2008, exceeding our target of presenting 
testimony at 69 hearings. Among other things, we testified on the lack 
of sufficient oversight over billions of U.S. coalition support fund 
dollars provided to Pakistan and DOD’s oversight and management of 
contractors supporting military forces in the future. (See p. 35 for a 
list of testimony topics by goal.) We have set our target at 64 for 
presenting testimony at hearings in fiscal year 2009, less than the 
fiscal year 2008 actual performance, because we anticipate fewer 
hearings during the first session of the next Congress. However, we 
anticipate 2 hearings more than the target we reported in our fiscal 
year 2009 performance plan because of continued congressional interest 
in our work on homeland security issues and U.S. efforts to stabilize 
and rebuild Afghanistan, Iraq, and Pakistan. 

Example of Goal 2’s Testimonies: 

Extended operations in Iraq and elsewhere have had significant 
consequences for military readiness, such as increased length of 
deployments and frequency of mobilizations, which may affect recruiting 
and retention as well as the availability of equipment to nondeployed 
troops to met other needs. A common theme in our work has been the need 
for DOD to take a strategic approach to decision making that promotes 
transparency and ensures that programs and investments are based on 
sound plans with measurable goals, validated requirements, prioritized 
needs, and performance measures to gauge progress against goals. As a 
result, we recommended that DOD develop near-term plans for improving 
readiness by among other things creating an investment strategy linking 
needs to funding requests. Congress has taken specific actions to give 
greater attention to readiness, including requiring DOD to develop a 
plan for rebuilding readiness. 
[hyperlink, http://www.gao.gov/products/GAO-08-497T] 

[End of Goal 2] 

Goal 3 Overview: Help transform the federal government’s role and how 
it does business to meet 21st century challenges. 

Our third strategic goal focuses on the collaborative and integrated 
elements needed for the federal government to achieve results. The work 
under this goal highlights the intergovernmental relationships that are
necessary to achieve national goals. Our multiyear (fiscal years 2007-
2012) strategic objectives under this goal are to 

* reexamine the federal government’s role in achieving evolving 
national objectives; 

* support the transformation to results-oriented, high-performing 
government; 

* support congressional oversight of key management challenges and 
program risks to improve federal operations and ensure accountability; 
and: 

* analyze the government’s fiscal position and strengthen approaches 
for addressing the current and projected fiscal gap. 

These objectives, along with the performance goals and key efforts that 
support them, are discussed fully in our strategic plan, which is 
available on our Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed primarily by 
headquarters and field staff from the Applied Research and Methods,
Financial Management and Assurance, Information Technology, and 
Strategic Issues teams. In addition, the work supporting some 
performance goals and key efforts is performed by headquarters and field
staff from the Acquisition and Sourcing Management and Natural 
Resources and Environment teams. This goal also includes our bid 
protest and appropriations law work, which is performed by staff in 
General Counsel, and our vulnerability assessments and fraud 
investigations, which are conducted by staff from our Forensic Audits 
and Special Investigations unit within the Financial Management and 
Assurance team. 

Selected Work under Goal 3: 

In our March 2008 testimony, we placed the 2010 Census on GAO’s list of 
high-risk federal programs because of the following problems—long-
standing weaknesses in the U.S Census Bureau (Bureau) information 
technology acquisition and contract management function, risks 
associated with the performance of the handheld computers to collect 
data, and uncertainty over the cost of the census. Our work has helped 
the Bureau identify risks and improve the performance of key census-
taking activities. We have recommended numerous actions, and the Bureau 
is addressing some of these issues. Among other examples, on April 3, 
2008, the Bureau announced a major redesign of the 2010 Census. (See 
app. 1, item 3.06.C.) 

To accomplish our work under these four objectives, we plan to conduct 
audits, evaluations, and analyses in response to congressional requests 
and to carry out work initiatives under the Comptroller General’s 
authority to self-initiate engagements. As in the past, we will develop 
reports, testimonies, and briefings on our work. 

As shown in table 14, we significantly exceeded our fiscal year 2008 
performance targets for financial benefits, nonfinancial benefits, and 
testimonies for this goal. 

Table 14: Strategic Goal 3’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2004 Actual: $7.6 billion; 
2005 Actual: $11.0 billion; 
2006 Actual: $17.0 billion; 
2007 Actual: $22.8 billion; 
2008 Target: $14.9 billion; 
2008 Actual: $23.4 billion; 
Met/Not Met: Met; 
2009 Target[A]: $15.9 billion. 

Performance measure: Nonfinancial benefits; 
2004 Actual: 576; 
2005 Actual: 767; 
2006 Actual: 625; 
2007 Actual: 648; 
2008 Target: 590; 
2008 Actual: 704; 
Met/Not Met: Met; 
2009 Target[A]: 625. 

Performance measure: Testimonies; 
2004 Actual: 60; 
2005 Actual: 47; 
2006 Actual: 73; 
2007 Actual: 74; 
2008 Target: 67; 
2008 Actual: 77; 
Met/Not Met: Met; 
2009 Target[A]: 56. 

Source: GAO. 

[A] Our fiscal year 2009 targets for these three measures differ from 
the targets we reported in our fiscal year 2009 performance budget in 
January 2008. Specifically, we slightly decreased our targets for 
financial benefits and hearings at which we testify from $16 billion 
and 61, respectively. We also increased our target for nonfinancial 
benefits from 590. 

[End of table] 

To help us examine trends for these measures over time, we look at 
their 4-year averages—shown in table 15—which minimize the effect of an 
unusual level of performance in any single year. This table indicates 
that documentation of financial and nonfinancial benefits derived from 
our work under this goal has generally risen during the 5-year period 
shown, with a large increase in nonfinancial benefits recorded in 2006 
compared with the previous year. The trend in the number of hearings 
during which our senior executives testified on goal 3 issues is also 
in an upward direction and indicates a significant increase in 
testimonies between fiscal year 2006 and 2008. 

Table 15: Four-Year Rolling Averages for Strategic Goal 3: 

Performance measure: Financial benefits; 
2004: $6.1 billion; 
2005: $7.1 billion; 
2006: $10.1 billion; 
2007: $14.6 billion; 
2008: $18.6 billion. 

Performance measure: Nonfinancial benefits; 
2004: 498; 
2005: 590; 
2006: 630; 
2007: 654; 
2008: 686. 

Performance measure: Testimonies; 
2004: 56; 
2005: 57; 
2006: 59; 
2007: 64; 
2008: 68. 

Source: GAO. 

[End of Table] 

The following sections describe our performance under goal 3 for each 
of our quantitative performance measures and describe the targets for 
fiscal year 2009. 

Financial Benefits: 

Example of Goal 3’s Financial Benefits: 

Since fiscal year 2000, our recommendations have been aimed at raising 
the level of attention given to improper payments—any federal payment 
that should not have been made or that was made in an incorrect amount 
(including overpayments and underpayments) under statutory, 
contractual, administrative, or other legally applicable requirements. 
For fiscal year 2007, 21 agencies reported improper payments totaling 
about $55 billion associated with 78 programs, including 19 programs or 
activities reporting for the first time. (See app. 1, item 3.12.F.) 

The financial benefits reported for this goal in fiscal 2008 totaled 
$23.4 billion, exceeding our target of $14.9 billion by over 55 
percent. These efforts resulted in increased tax collections based on 
our review of the Internal Revenue Service’s withholding compliance 
program, reduced appropriations for the construction of a nuclear fuel 
fabrication facility, and a reduction in improper federal payments 
governmentwide. We describe these and other accomplishments in the goal 
3 section of appendix 1. 

We significantly exceeded the financial benefit target we set for this 
goal in fiscal year 2008 because we documented several unanticipated, 
large-dollar accomplishments. The federal government realized these 
financial benefits as a result of our work that examined, among other 
issues, DOD’s working capital fund and excess property programs and the 
Capitol Police’s asset management project. Our assessments of the 
executive branch’s current efforts to implement the recommendations we 
made in our work under this goal indicate that financial benefits 
related to this goal are likely to be in line with our 4-year average. 
Consequently, we set the target for financial benefits at $15.9 billion 
for fiscal 2009, which is only slightly lower than the target we 
reported in our fiscal year 2009 performance plan. 

Nonfinancial Benefits: 

Example of Goal 3’s Nonfinancial Benefits: 

Beginning in 2005, we have performed investigative work and made 
recommendations on excess parts and equipment at DOD. For example, we 
identified instances in which DOD improperly sold F-14 parts to the 
general public through its excess property system. Iran is the only 
nation in the world with operable F-14 fighter aircraft and is known to 
be seeking F-14 parts. The Congress cited our work in introducing 
legislation prohibiting DOD from selling parts that could be used on 
the F-14 fighter aircraft. The language was included in the 2008 
Defense Authorization Act. These actions have served to improve 
accountability over sensitive military parts and equipment. (See app. 
1, item 3.15.N.) 

Nonfinancial benefits reported for goal 3 in fiscal year 2008 included 
693 instances in which agencies’ core business processes were improved 
or governmentwide management reforms were advanced because of our work. 
In addition, there were 11 instances in which information we provided 
to the Congress resulted in statutory or regulatory changes. This total 
of 704 nonfinancial benefits exceeded our target of 590. The larger 
number of nonfinancial benefits occurred mainly in our financial 
management and information technology areas where we tend to make 
multiple, specific recommendations for change to more than one entity. 
We describe some of our major accomplishments in the goal 3 section of 
appendix 1. 

Our forward-looking assessments of the executive branch’s current 
efforts to implement our recommendations made under this goal led us to 
set our fiscal year 2009 target at 625. While we recognize that this 
target is lower than our fiscal year 2008 actual performance and 4-year 
average for this measure, we believe that this target will best enable 
staff to stretch to capture the full range of nonfinancial benefits 
resulting from our goal 3 work without encouraging staff to document 
benefits of a more narrow scope or significance. 

Testimonies: 

Our witnesses testified at 77 congressional hearings related to this 
strategic goal in fiscal year 2008, exceeding the target of 67 by about 
15 percent. Among the testimonies presented were those related to 
mismanagement of property at the Indian Health Service, electronic 
voting systems, and information security at the Department of Veterans 
Affairs. (See p. 35 for a list of testimony topics by goal.) For fiscal 
year 2009, we have set a target of presenting testimony at 56 hearings 
because we expect the level of hearings to be lower than it was in 
fiscal year 2008. 

Example of Goal 3’s Testimonies: 

We testified on our work examining vulnerabilities in the 
Transportation Security Administration’s (TSA) passenger screening 
process. We conducted covert testing to uncover security gaps in the 
airline passenger screening process and succeeded in passing through 
TSA security screening checkpoints undetected with components for 
several improvised explosive devices and an improvised incendiary 
device concealed in carry-on luggage and on our persons. We briefed TSA 
to help it take corrective action to improve its passenger screening 
program, including aspects of human capital, processes, and technology. 
[hyperlink, http://www.gao.gov/products/GAO-08-48T] 

[End of Goal 3] 

Goal 4 Overview: Maximize the value of GAO by being a model federal 
agency and a world-class professional services organization. 

The focus of our fourth strategic goal is to make us a model 
organization. This means that our work is driven by our external
clients and internal customers, our managers exhibit the 
characteristics of leadership and management excellence, our employees 
are devoted to ensuring quality in our work process and products 
through continuous improvement, and our agency is regarded by current 
and potential employees as an excellent place to work. Our multiyear 
(fiscal years 2007-2012) strategic objectives under this goal are to: 

* improve client and customer satisfaction and stakeholder 
relationships; 

* lead strategically to achieve enhanced results; 

* leverage our institutional knowledge and experience; 

* enhance our business and management processes, and: 

* become a professional services employer of choice. 

These objectives, along with the performance goals and key efforts that 
support them, are discussed fully in our strategic plan, which is 
available on our Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed under the direction 
of the Chief Administrative Officer with assistance on specific key 
efforts provided by staff from the Applied Research and Methods team 
and from offices such as Strategic Planning and External Liaison,
Congressional Relations, Opportunity and Inclusiveness, Quality and 
Continuous Improvement, and Public Affairs. 

To accomplish our work under these five objectives, we performed 
internal studies and completed projects that further the strategic 
goal. 

Selected Work under Goal 4: 

We assisted in building the Iraqi Board of Supreme Audit’s capacity 
through a memorandum of understanding (MOU) with the State Department. 
Under the MOU we sponsored a modified version of our International 
Auditor Fellowship program, to enhance the relations between the United 
States and Iraq as we work to increase accountability for public funds 
spent in Iraq. (See app. 1, item 4.03.C.) 

We fully implemented our new accounting system, Delphi, enhancing our 
ability to produce auditable financial statements, supporting A-123 
compliance, and improving our financial management processes, 
reporting, and internal controls. (See app. 1, item 4.07.C.) 

We initiated an enterprise project to conceptualize, procure, and 
deploy a single, integrated, enterprise-wide automated system to 
capture, manage, store, preserve, protect, and deliver information 
consistent with our quality assurance framework throughout the life 
cycle of an engagement. (See app. 1, item 4.09.C.) 

We requested an independent review of our quality assurance system 
processes and began implementation of suggested improvements made by an 
international team of reviewers. (See app. 1, item 4.10.C.) 

Data Quality and Program Evaluation: 

Verifying and Validating Performance Data: 

Each year, we measure our performance by evaluating our annual 
performance on measures that cover the outcomes and outputs related to 
our work results, client service, management of our people, and 
internal operations. To assess our performance, we used performance 
data that were complete and actual (rather than projected) for almost 
all of our performance measures. We believe the data to be reliable 
because we followed the verification and validation procedures 
described here to ensure the data’s quality. 

The specific sources of the data for our annual performance measures, 
procedures for independently verifying and validating these data, and 
the limitations of these data are described in table 16. 

Table 16: How We Ensure Data Quality for Our Annual Performance 
Measures: 

Results measures: 

Financial benefits: Definition and background: 
Our work—including our findings and recommendations—may produce 
benefits to the federal government that can be estimated in dollar 
terms. These benefits can result in better services to the public, 
changes to statutes or regulations, or improved government business 
operations. A financial benefit is an estimate of the federal monetary 
effect of agency or congressional actions. These financial benefits 
generally result from work that we completed over the past several 
years. The funds made available as a result of the actions taken in 
response to our work may be used to reduce government expenditures, 
increase revenues, or reallocate funds to other areas. Financial 
benefits included in our performance measures are net benefits—that is, 
estimates of financial benefits that have been reduced by the costs 
associated with taking the action that we recommended. We convert all 
estimates involving past and future years to their net present value 
and use actual dollars to represent estimates involving only the 
current year. Financial benefit amounts vary depending on the nature of 
the benefit, and we can claim financial benefits over multiple years 
based on a single agency or congressional action. 

Financial benefits are linked to specific recommendations or other 
work. To claim that financial benefits have been achieved, our staff 
must file an accomplishment report documenting that (1) the actions 
taken as a result of our work have been completed or substantially 
completed, (2) the actions generally were taken within 2 fiscal years 
prior to the filing of the accomplishment report, (3) a cause-and-
effect relationship exists between the benefits reported and our 
recommendation or work performed, and (4) estimates of financial 
benefits were based on information obtained from non-GAO sources. Prior 
to fiscal year 2002, we limited the period over which the benefits from 
an accomplishment could be accrued to no more than 2 years. Beginning 
in fiscal year 2002, we extended the period to 5 years for certain 
types of accomplishments known to have multiyear effects, such as those 
associated with multiyear reductions in longer-term projects, changes 
embodied in law, program terminations, or sales of government assets 
yielding multiyear financial benefits. Financial benefits can be 
claimed for past or future years. For financial benefits involving 
events that occur on a regular but infrequent basis—such as the 
decennial census—we may extend the measurement period until the event 
occurs in order to compute the associated financial benefits using our 
present value calculator. 

Managing directors decide when their staff can claim financial 
benefits. A managing director may choose to claim a financial benefit 
all in 1 year or decide to claim it over several years, especially if 
the benefit spans future years and the managing director wants greater 
precision as to the amount of the benefit. 

Financial benefits: Data sources: 
Our Accomplishment Reporting System provides the data for this measure. 
Teams use this Web-based data system to prepare, review, and approve 
accomplishments and forward them to our Quality and Continuous 
Improvement office (QCI) for its review. Once accomplishment reports 
are approved, they are compiled by QCI, which annually tabulates total 
financial benefits agencywide and by goal. 

Financial benefits: Verification and validation: 
Our policies and procedures require us to use the Accomplishment 
Reporting System to record the financial benefits that result from our 
work. They also provide guidance on estimating those financial 
benefits. The team identifies when a financial benefit has occurred as 
a result of our work. The team develops estimates based on non-GAO 
sources, such as the agency that acted on our work, a congressional 
committee, or the Congressional Budget Office, and files accomplishment 
reports based on those estimates. When non-GAO estimates are not 
readily available, teams may use GAO estimates—developed in 
consultation with our experts, such as the Chief Economist, Chief 
Actuary, or Chief Statistician, and corroborated with a knowledgeable 
program official from the executive agency involved. The estimates are 
reduced by significant identifiable offsetting costs. The team develops 
workpapers to support accomplishments with evidence that meets our 
evidence standard, supervisors review the workpapers, and an 
independent person within GAO reviews the accomplishment report. The 
team’s managing director or director is authorized to approve financial 
accomplishment reports with benefits of less than $100 million. 

The team forwards the report to QCI, which reviews all accomplishment 
reports and approves accomplishment reports claiming benefits of $100 
million or more. QCI provides summary data on approved financial 
benefits to team managers, who check the data on a regular basis to 
make sure that approved accomplishments submitted by their staff have 
been accurately recorded. Our Engagement Reporting System also contains 
accomplishment data for the fiscal year. In fiscal year 2008, QCI 
approved accomplishment reports covering 96 percent of the dollar value 
of financial benefits we reported. 

Every year, our Inspector General (IG) reviews accomplishment reports 
that claim benefits of $500 million or more. For fiscal year 2008, the 
IG reviewed accomplishment reports covering 75 percent of the dollar 
value of financial benefits we reported. In addition, on a periodic 
basis, the IG independently tests compliance with our process for 
claiming financial benefits of less than $500 million. For example, the 
IG reviewed fiscal year 2006 financial benefits of $100 million or more 
and found our reporting process to be sound overall. However, the IG 
recommended improvements to the clarity of certain policies related to 
reporting financial accomplishments and the documentation supporting 
selected accomplishment reports. We clarified our guidance and updated 
our policy manual in fiscal year 2007. 

Financial benefits: Data limitations: 
Not every financial benefit from our work can be readily estimated or 
documented as attributable to our work. As a result, the amount of 
financial benefits is a conservative estimate. Estimates are based on 
information from non-GAO sources and are based on both objective and 
subjective data, and as a result, professional judgment is required in 
reviewing accomplishment reports. We feel that the verification and 
validation steps that we take minimize any adverse impact from this 
limitation. 

Nonfinancial benefits: Definition and background: 
Our work—including our findings and recommendations—may produce 
benefits to the federal government that cannot be estimated in dollar 
terms. These nonfinancial benefits can result in better services to the 
public, changes to statutes or regulations, or improved government 
business operations. Nonfinancial benefits generally result from past 
work that we completed. 

Nonfinancial benefits are linked to specific recommendations or other 
work that we completed over several years. To claim that nonfinancial 
benefits have been achieved, staff must file an accomplishment report 
that documents that (1) the actions taken as a result of our work have 
been completed or substantially completed, (2) the actions generally 
were taken within the past 2 fiscal years of filing the accomplishment 
report, and (3) a cause-and-effect relationship exists between the 
benefits reported and our recommendation or work performed. 

Nonfinancial benefits: Data sources: 
Our Accomplishment Reporting System provides the data for this measure. 
Teams use this automated system to prepare, review, and approve 
accomplishments and forward them to QCI for its review. Once 
accomplishment reports are approved, they are compiled by QCI, which 
annually tabulates total other (nonfinancial) benefits agencywide and 
by goal. 

Nonfinancial benefits: Verification and validation: 
Our policies and procedures require us to use the Accomplishment 
Reporting System to record the nonfinancial benefits that result from 
our findings and recommendations. Staff in the teams file 
accomplishment reports to claim that benefits have resulted from our 
work. The team develops workpapers to support accomplishments with 
evidence that meets our evidence standard. Supervisors review the 
workpapers; an independent person within GAO reviews the accomplishment 
report; and the team’s managing director or director approves the 
accomplishment report to ensure the appropriateness of the claimed 
accomplishment, including attribution to our work. 

The team forwards the report to QCI, where it is reviewed for 
appropriateness. QCI provides summary data on nonfinancial benefits to 
team managers, who check the data on a regular basis to make sure that 
approved accomplishments from their staff have been accurately 
recorded. Additionally, on a periodic basis, the IG independently tests 
compliance with our process for claiming nonfinancial benefits. For 
example, the IG tested this process in fiscal year 2005 and found it to 
be reasonable. The IG also recommended actions to strengthen 
documentation of our nonfinancial benefits and to encourage the timely 
processing of the supporting accomplishment reports. 

Nonfinancial benefits: Data limitations: 
The data may be underreported because we cannot always document a 
direct cause-and-effect relationship between our work and benefits it 
produced. However, we feel that this is not a significant limitation on 
the data because the data represent a conservative measure of our 
overall contribution toward improving government. 

Percentage of products with recommendations: Definition and background: 
We measure the percentage of our written products (chapter and letter 
reports and numbered correspondence) issued in the fiscal year that 
included at least one recommendation. We make recommendations that 
specify actions that can be taken to improve federal operations or 
programs. We strive for recommendations that are directed at resolving 
the cause of identified problems; that are addressed to parties who 
have the authority to act; and that are specific, feasible, and cost-
effective. Some products we issue contain no recommendations and are 
strictly informational in nature. 

We track the percentage of our written products that are issued during 
the fiscal year and contain recommendations. This indicator recognizes 
that our products do not always include recommendations and that the 
Congress and agencies often find such informational reports just as 
useful as those that contain recommendations. For example, 
informational reports, which do not contain recommendations, can help 
to bring about significant financial and nonfinancial benefits. 

Percentage of products with recommendations: Data sources: 
Our Documents Database records recommendations as they are issued. The 
database is updated daily. As our staff monitor implementation of 
recommendations, they submit updated information to the database. 

Percentage of products with recommendations: Verification and 
validation: 
Through a formal process, each team identifies the number of 
recommendations included in each product and an external contractor 
enters them into a database. We provide our managers with reports on 
the recommendations being tracked to help ensure that all 
recommendations have been captured and that each recommendation has 
been completely and accurately stated. Additionally, on a periodic 
basis, the IG independently tests the teams’ compliance with our 
policies and procedures related to this performance measure. For 
example, during fiscal year 2006, the IG tested and determined that our 
process for determining the percentage of written products with 
recommendations was reasonable. The IG also recommended actions to 
improve the process for developing, compiling, and reporting these 
statistics. We have implemented the IG’s recommendations for fiscal 
year 2007. Since then, we have used the same procedures to compute and 
report this measure. 

Percentage of products with recommendations: Data limitations: 
This measure is a conservative estimate of the extent to which we 
assist the Congress and federal agencies because not all products and 
services we provide lead to recommendations. For example, the Congress 
may request information on federal programs that is purely descriptive 
or analytical and does not lend itself to recommendations. 

Past recommendations implemented: Definition and background: 
We make recommendations designed to improve the operations of the 
federal government. For our work to produce financial or nonfinancial 
benefits, the Congress or federal agencies must implement these 
recommendations. As part of our audit responsibilities under generally 
accepted government auditing standards, we follow up on recommendations 
we have made and report to the Congress on their status. Experience has 
shown that it takes time for some recommendations to be implemented. 
For this reason, this measure is the percentage rate of implementation 
of recommendations made 4 years prior to a given fiscal year (e.g., the 
fiscal year 2008 implementation rate is the percentage of 
recommendations made in fiscal year 2004 products that were implemented 
by the end of fiscal year 2008). Experience has shown that if a 
recommendation has not been implemented within 4 years, it is not 
likely to be implemented. 

This measure assesses action on recommendations made 4 years 
previously, rather than the results of our activities during the fiscal 
year in which the data are reported. For example, the cumulative 
percentage of recommendations made in fiscal year 2004 that were 
implemented in the ensuing years is as follows: 13 percent by the end 
of the first year (fiscal year 2005), 25 percent by the end of the 
second year (fiscal year 2006), 42 percent by the end of the third year 
(fiscal year 2007), and 83 percent by the end of the fourth year 
(fiscal year 2008). 

Past recommendations implemented: Data sources: 
Our Documents Database records recommendations as they are issued. The 
database is updated daily. As our staff monitor implementation of 
recommendations, they submit updated information to the database. 

Past recommendations implemented: Verification and validation: 
Through a formal process, each team identifies the number of 
recommendations included in each product, and an external contractor 
enters them into a database. 

Policies and procedures specify that our staff must verify, with 
sufficient supporting documentation, that an agency’s reported actions 
are adequately being implemented. Staff update the status of the 
recommendations on a periodic basis. To accomplish this, our staff may 
interview agency officials, obtain agency documents, access agency 
databases, or obtain information from an agency’s inspector general. 
Recommendations that are reported as implemented are reviewed by a 
senior executive in the unit and by QCI. 

Summary data are provided to the units that issued the recommendations. 
The units check the data regularly to make sure that the 
recommendations they have reported as implemented have been accurately 
recorded. We also provide to the Congress a database with the status of 
recommendations that have not been implemented, and we maintain a 
publicly available database of open recommendations that is updated 
daily. 

Additionally, on a periodic basis, the IG independently tests our 
process for calculating the percentage of recommendations implemented 
for a given fiscal year. For example, based on the IG’s last review of 
this measure, the IG determined that our process was reasonable for 
calculating the percentage of recommendations that had been made in our 
fiscal year 2002 products and implemented by the end of fiscal year 
2006. The IG also recommended actions to improve the process for 
developing, compiling, and reporting this statistic. In fiscal year 
2007, we implemented the IG’s recommendation for calculating the 
percentage of recommendations that had been made in fiscal year 2003 
products and implemented by the end of fiscal year 2007. We continue to 
use this approved process in fiscal year 2008. 

Past recommendations implemented: Data limitations: 
The data may be underreported because sometimes a recommendation may 
require more than 4 years to implement. We also may not count cases in 
which a recommendation is partially implemented. However, we feel that 
this is not a significant limitation to the data because the data 
represent a conservative measure of our overall contribution toward 
improving government. 

Client measures: 

Testimonies: Definition and background: 
The Congress may ask us to testify at hearings on various issues, and 
these hearings are the basis for this measure. Participation in 
hearings is one of our most important forms of communication with the 
Congress, and the number of hearings at which we testify reflects the 
importance and value of our institutional knowledge in assisting 
congressional decision making. When multiple GAO witnesses with 
separate testimonies appear at a single hearing, we count this as a 
single testimony. We do not count statements submitted for the record 
when a GAO witness does not appear. 

Testimonies: Data sources: 
The data on hearings at which we testified are compiled in our 
Congressional Hearing System managed by staff in Congressional 
Relations. 

Testimonies: Verification and validation: 
The units responding to requests for testimony are responsible for 
entering data in the Congressional Hearing System. After a GAO witness 
has testified at a hearing, Congressional Relations verifies that the 
data in the system are correct and records the hearing as one at which 
we testified. Congressional Relations provides weekly status reports to 
unit managers, who check to make sure that the data are complete and 
accurate. Additionally, on a periodic basis, the IG independently 
examines the process for recording the number of hearings at which we 
testified. For example, the IG determined that our process for 
recording hearings during fiscal year 2006 was reasonable. In fiscal 
year 2008, we followed the same process for recording hearings. 

Testimonies: Data limitations: 
This measure does not include statements for the record that we prepare 
for congressional hearings. Also, this measure may be influenced by 
factors other than the quality of our performance in any specific year. 
The number of hearings held each year depends on the Congress’s agenda, 
and the number of times we are asked to testify may reflect 
congressional interest in work in progress as well as work completed 
that year or the previous year. To mitigate this limitation, we try to 
adjust our target to reflect cyclical changes in the congressional 
schedule. We also outreach to our clients on a continuing basis to 
increase their awareness of our readiness to participate in hearings. 

Timeliness: Definition and background: 
The likelihood that our products will be used is enhanced if they are 
delivered when needed to support congressional and agency decision 
making. To determine whether our products are timely, we compute the 
proportion of favorable responses to questions related to timeliness 
from our electronic client feedback survey. Because our products often 
have multiple requesters, we often survey more than one congressional 
staff person per product. Thus, we base our timeliness result on the 
number of surveys sent out during the fiscal year. We send a survey to 
key staff working for the requesters of our testimony statements and a 
survey to requesters of our more significant written 
products—specifically, engagements assigned an interest level of “high” 
by our senior management and those requiring an investment of 500 GAO 
staff days or more. One question on each survey asks the respondent 
whether the product was delivered on time. When a product that meets 
our survey criteria is released to the public, we electronically send 
relevant congressional staff an e-mail message containing a link to a 
survey. When this link is accessed, the survey recipient is asked to 
respond to the questions using a five-point scale—strongly agree, 
generally agree, neither agree nor disagree, generally disagree, 
strongly disagree—or choose “not applicable/no answer.” For this 
measure, favorable responses are “strongly agree” and “generally 
agree.” 

Timeliness: Data sources: To identify the products that meet our survey 
criteria (all testimonies and other products that are high interest or 
involve 500 staff days or more), we run a query against GAO’s Documents 
Database maintained by a contractor. To identify appropriate recipients 
of the survey for products meeting our criteria, we ask the engagement 
teams to provide in GAO’s Product Numbering Database e-mail addresses 
for congressional staff serving as contacts on a product. Relevant 
information from both of these databases is fed into our Product by 
Product Survey Approval Database that is managed by QCI. This database 
then combines product, survey recipient, and data from our 
Congressional Relations staff and creates an e-mail message with a Web 
link to a survey. (Congressional Relations staff serve as the GAO 
contacts for survey recipients.) The e-mail message also contains an 
embedded client password and unique client identifier to ensure that a 
recipient is linked with the appropriate survey. Our Congressional 
Feedback Database creates a survey record with the product title and 
number and captures the responses to every survey sent back to us 
electronically. 

Timeliness: Verification and validation: 
QCI staff review a hard copy of a released GAO product or access its 
electronic version to check the accuracy of the addressee information 
in the Product by Product Survey Approval Database. QCI staff also 
check the congressional staff directory to ensure that survey 
recipients listed in the Product by Product Survey Approval Database 
appear there. In addition, our Congressional Relations staff review the 
list of survey recipients entered by the engagement teams and identify 
the most appropriate congressional staff person to receive a survey for 
each requester. Survey e-mail messages that are inadvertently sent with 
incorrect e-mail addresses automatically reappear in the survey 
approval system. When this happens, QCI staff correct any obvious 
typing errors and resend the e-mail message or contact the 
congressional staff person directly for the correct e-mail address and 
then resend the message. The IG also periodically reviews the 
timeliness performance measure and last reviewed it in fiscal year 
2005—the last year before we began to use the independent feedback from 
the survey as a basis for determining our timeliness. 

Timeliness: Data limitations: 
We do not measure the timeliness of all of our external products 
because we do not wish to place too much burden on busy congressional 
staff. Testimonies and written products that met our criteria for this 
measure represented about 65 percent of the congressionally requested 
written products we issued during fiscal year 2008. We exclude from our 
timeliness measure low and medium interest reports requiring fewer than 
500 staff days to complete, reports addressed to agency heads or 
commissions, some reports mandated by the Congress, classified reports, 
and reports completed under the Comptroller General’s authority. Also, 
if a requester indicates that he or she does not want to complete any 
surveys, we will not send a survey to this person again, even though a 
product subsequently requested meets our criteria. The response rate 
for our client feedback survey is about 25 percent. We received 
comments from one or more people for about 56 percent of the products 
for which we sent surveys in fiscal year 2008. In our timeliness 
calculations for fiscal years 2004 through 2007, we inadvertently 
included nonresponses to the timeliness question in our client feedback 
survey. We therefore recalculated the survey results for these fiscal 
years and for fiscal year 2008. 

People measures: 

New hire rate: Definition and background: 
This performance measure is the ratio of the number of people hired to 
the number we planned to hire. Annually, we develop a workforce plan 
that takes into account our strategic goals, projected workload 
changes, and other changes such as retirements, other attrition, 
promotions, and skill gaps. The workforce plan for the upcoming year 
specifies the number of planned hires. The Chief Operating Officer, the 
Chief Administrative Officer, the Deputy Chief Administrative Officer, 
the Chief Human Capital Officer, and the Controller meet monthly to 
monitor progress toward achieving the workforce plan. Adjustments to 
the workforce plan are made throughout the year, if necessary, to 
reflect changing needs and conditions. 

New hire rate: Data sources: 
The Executive Committee approves the workforce plan. The workforce plan 
is coordinated and maintained by the Chief Administrative Office. Data 
on accessions—that is, new hires coming on board—is taken from a 
database that contains employee data from the Department of 
Agriculture’s (USDA) National Finance Center (NFC) database, which 
handles payroll and personnel data for GAO and other agencies. 

New hire rate: Verification and validation: 
The Chief Administrative Office maintains a database that monitors and 
tracks all our hiring offers, declinations, and accessions. In 
coordination with our Human Capital Office, our Chief Administrative 
Office staff input workforce information supporting this measure into 
the Chief Administrative Office database. While the database is updated 
on a daily basis, CAO staff provide monthly reports to the Chief 
Operating Officer and the Chief Administrative Officer to monitor 
progress by GAO units in achieving workforce plan hiring targets. The 
Chief Administrative Office continually monitors and reviews accessions 
maintained in the NFC database against its database to ensure 
consistency and to resolve discrepancies. In addition, on a periodic 
basis, the IG examines our process for calculating the new hire rate. 
During fiscal year 2008, the IG independently reviewed this process and 
recommended actions to improve the documentation of the process used to 
calculate this measure. We have begun developing standard operating 
procedures to document how we calculate and ensure quality control over 
data relevant to this measure. 

New hire rate: Data limitations: 
There is a lag of one to two pay periods (up to 4 weeks) before the NFC 
database reflects actual data. We generally allow sufficient time 
before requesting data for this measure to ensure that we get accurate 
results. 

Acceptance rate: Definition and background: 
This measure is the ratio of the number of applicants accepting offers 
to the number of offers made. Acceptance rate is a proxy for GAO’s 
attractiveness as an employer and an indicator of our competitiveness 
in bringing in new talent. 

Acceptance rate: Data sources: 
The information required is the number of job offers made (excluding 
unpaid interns, experts/consultants, and reemployed annuitants), the 
number of offers declined, and the number of individuals who come on 
board. Our Chief Administrative Office staff maintains a database that 
contains the job offers made and those accepted or declined. Data on 
accessions—that is, new hires coming on board—are taken from a database 
that contains employee data from USDA’s NFC database, which handles 
payroll and personnel data for GAO and other agencies. 

Acceptance rate: Verification and validation: 
Human capital managers in the Human Capital Office work with the Chief 
Administrative Office staff to ensure that each job offer made and its 
outcome (declination or acceptance) is noted in the database that is 
maintained by Chief Administrative Office staff; periodic checking is 
performed to review the accuracy of the database. In addition, on a 
periodic basis, the IG examines our process for calculating the 
acceptance rate. During fiscal year 2008, the IG independently reviewed 
this process and recommended actions to improve the documentation of 
the process used to calculate this measure. We have begun developing 
standard operating procedures to document how we calculate and ensure 
quality control over data relevant to this measure. 

Acceptance rate: Data limitations: 
In addition to the data limitations shown under New hire rate, this 
measure does not include potential offers to paid interns who 
informally expressed their preference not to work for GAO and others 
prospective employees who informally declined job offers. Thus, this 
may overstate the acceptance rate for our offers of employment. 

Retention rate: Definition and background: 
We continuously strive to make GAO a place where people want to work. 
Once we have made an investment in hiring and training people, we would 
like to retain them. This measure is one indicator that we are 
attaining that objective and is the complement of attrition. We 
calculate this measure by taking 100 percent minus the attrition rate, 
where attrition rate is defined as the number of separations divided by 
the average onboard strength. We calculate this measure with and 
without retirements. 

Retention rate: Data sources: Data on retention—that is, people who are 
on board at the beginning of the fiscal year and people on board at the 
end of the fiscal year—are taken from a Chief Administrative Office 
database that contains some data from the NFC database, which handles 
payroll and personnel data for GAO and other agencies. 

Retention rate: Verification and validation: 
Chief Administrative Office staff continually monitor and review 
accessions and attritions against the contents of their database that 
has NFC data and they follow up on any discrepancies. In addition, on a 
periodic basis, the IG examines our process for calculating the 
retention rate. During fiscal year 2008, the IG reviewed this process 
and recommended actions to improve the documentation of the process 
used to calculate this measure. We have begun developing standard 
operating procedures to document how we calculate and ensure quality 
control over data relevant to this measure. 

Retention rate: Data limitations: 
See New hire rate, Data limitations. 

Staff development: Definition and background: 
One way that we measure how well we are doing and identify areas for 
improvement is through our annual employee feedback survey. This Web-
based survey, which is conducted by an outside contractor to ensure the 
confidentiality of every respondent, is administered to all of our 
employees once a year. Through the survey, we encourage our staff to 
indicate what they think about GAO’s overall operations, work 
environment, and organizational culture and how they rate our 
managers—from the immediate supervisor to the Executive Committee—on 
key aspects of their leadership styles. The survey consists of over 100 
questions. To further ensure confidentiality, in fiscal year 2008 the 
contractor also analyzed the data. 

This measure is based on staff’s favorable responses to three of the 
six questions related to staff development on our annual employee 
survey. This subset of questions was selected on the basis of senior 
management’s judgment about the questions’ relevance to the measure and 
specialists’ knowledge about the development of indexes. Staff were 
asked to respond to three questions on a five-point scale or choose “no 
basis to judge/not applicable” or “no answer.” 

Staff development: Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff how 
much positive or negative impact (1) external training and conferences 
and (2) on-the-job training had on their ability to do their jobs 
during the last 12 months. From the staff who expressed an opinion, we 
calculated the percentage of staff selecting the two categories that 
indicate satisfaction with or a favorable response to the question. For 
this measure, the favorable responses were either “very positive 
impact” or “generally positive impact.” In addition, the survey 
question asked how useful and relevant to your work did you find 
internal (Learning Center) training courses. From staff who expressed 
an opinion, we calculated the percentage of staff selecting the three 
categories that indicate satisfaction with or a favorable response to 
the question. For this measure, the favorable responses were “very 
greatly useful and relevant,” “greatly useful and relevant,” and 
“moderately useful and relevant.” 

Beginning in FY 2006 we changed the way that the staff development 
people measure was calculated. Specifically, we dropped one question 
regarding computer-based training because we felt such training was a 
significant part of (and therefore included in) the other questions the 
survey asked regarding training. We also modified a question on 
internal training and changed the scale of possible responses to that 
question. We show the FY 2004 and 2005 data on a separate line so as to 
indicate that those data are not comparable to the data beginning in FY 
2006. 

Staff development: Verification and validation: 
The employee feedback survey gathers staff opinions on a variety of 
topics. The survey is password protected, and only the outside 
contractor has access to passwords. In addition, when the survey 
instrument was developed, extensive focus groups and pretests were 
undertaken to refine the questions and provide definitions as needed. 
In fiscal year 2008, our response rate to this survey was about 76 
percent, which indicates that its results are largely representative of 
the GAO population. In addition, many teams and work units conduct 
follow-on work to gain a better understanding of the information from 
the survey. 

In addition, on a periodic basis, the IG independently examines our 
process for calculating the percentage of favorable responses for staff 
development. The IG examined this process during fiscal year 2004 and 
found it to be reasonable. The IG also recommended actions to improve 
the documentation of the process used to calculate this measure. We 
have implemented the IG’s recommendations. The IG examined this process 
during fiscal year 2008, but the results of this review are not final 
at this time. 

Staff development: Data limitations: 
The information contained in the survey is the self-reported opinions 
of staff expressed under conditions of confidentiality. Accordingly, 
there is no way to further validate those expressions of opinion. 

The practical difficulties of conducting any survey may introduce 
errors, commonly referred to as nonsampling errors. These errors could 
result from, for example, respondents misinterpreting a question or 
data entry staff incorrectly entering data into a database used to 
analyze the survey responses. Such errors can introduce unwanted 
variability into the survey results. We took steps in the development 
of the survey to minimize nonsampling errors. Specifically, when we 
developed the survey instrument we held extensive focus groups and 
pretests to refine the questions and define terms used to decrease the 
chances that respondents would misunderstand the questions. We also 
limited the chances of introducing nonsampling errors by creating a Web-
based survey for which respondents entered their answers directly into 
an electronic questionnaire. This approach eliminated the need to have 
the data keyed into a database by someone other than the respondent, 
thus removing an additional source of error. 

Staff utilization: Definition and background: 
This measure is based on staff’s favorable responses to three of the 
six questions related to staff utilization on our annual employee 
survey. This subset of questions was selected on the basis of senior 
management’s judgment about the questions’ relevance to the measure and 
specialists’ knowledge about the development of indexes. Staff were 
asked to respond to these three questions on a five-point scale or 
choose “no basis to judge/not applicable” or “no answer.” (For 
background information about our entire employee feedback survey, see 
Staff development.) 

Staff utilization: Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff how 
often the following occurred in the last 12 months: (1) my job made 
good use of my skills; (2) GAO provided me with opportunities to do 
challenging work; and (3) in general, I was utilized effectively. From 
the staff who expressed an opinion, we calculated the percentage of 
staff selecting the two categories that indicate satisfaction with or a 
favorable response to the question. For this measure, the favorable 
responses were either “very positive impact” or “generally positive 
impact.” 

Staff utilization: Verification and validation: 
See Staff development, Verification and validation. 

Staff utilization: Data limitations: 
See Staff development, Data limitations. 

Leadership: Definition and background: 
This measure is based on staff’s favorable responses to 10 of 20 
questions related to six areas of leadership on our annual employee 
survey. This subset of questions was selected on the basis of senior 
management’s judgment about the questions’ relevance to the measure and 
specialists’ knowledge about the development of indexes. Specifically, 
our calculation included responses to 1 of 4 questions related to 
empowerment, 2 of 4 questions related to trust, all 3 questions related 
to recognition, 1 of 3 questions related to decisiveness, 2 of 3 
questions related to leading by example, and 1 of 3 questions related 
to work life. Staff were asked to respond to these 10 questions on a 
five-point scale or choose “no basis to judge/not applicable” or “no 
answer.” (For background information about our entire employee feedback 
survey, see Staff development, Definition and background.) 

Leadership: Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff about 
empowerment, trust, recognition, decisiveness, leading by example, and 
work life as they pertain to the respondent’s immediate supervisor. 
Specifically, the survey asked staff the following questions about 
their immediate supervisor during the last 12 months: (1) gave me the 
opportunity to do what I do best; (2) treated me fairly; (3) acted with 
honesty and integrity toward me; (4) ensured that there was a clear 
link between my performance and recognition of it; (5) gave me the 
sense that my work is valued; (6) provided me meaningful incentives for 
high performance; (7) made decisions in a timely manner; (8) 
demonstrated GAO’s core values of accountability, integrity, and 
reliability; (9) implemented change effectively; and (10) dealt 
effectively with equal employment opportunity and discrimination 
issues. From the staff who expressed an opinion, we calculated the 
percentage of staff selecting the two categories that indicate 
satisfaction with or a favorable response to the question. For this 
measure, the favorable responses were either “always or almost always” 
or “most of the time.” 

Leadership: Verification and validation: 
See Staff development, Verification and validation. 

Leadership: Data limitations: 
See Staff development, Data limitations. 

Organizational climate: Definition and background: 
This measure is based on staff’s favorable responses to 5 of the 13 
questions related to organizational climate on our annual employee 
survey. This subset of questions was selected on the basis of senior 
management’s judgment about the questions’ relevance to the measure and 
specialists’ knowledge about the development of indexes. Staff were 
asked to respond to these 5 questions on a five-point scale or choose 
“no basis to judge” or “no answer.” (For background information about 
our entire employee feedback survey, see Staff development.) 

Organizational climate: Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff to 
think back over the last 12 months and indicate how strongly they agree 
or disagree with each of the following statements: (1) a spirit of 
cooperation and teamwork exists in my work unit; (2) I am treated 
fairly and with respect in my work unit; (3) my morale is good; (4) 
sufficient effort is made in my work unit to get the opinions and 
thinking of people who work here; and (5) overall, I am satisfied with 
my job at GAO. From the staff who expressed an opinion, we calculated 
the percentage of staff selecting the two categories that indicate 
satisfaction with or a favorable response to the question. For this 
measure, the favorable responses were either “strongly agree” or 
“generally agree.” 

Organizational climate: Verification and validation: 
See Staff development, Verification and validation. 

Organizational climate: Data limitations: 
See Staff development, Data limitations. 

Internal operations measures: 

Help get job done and quality of work life: Definition and background: 
To measure how well we are doing at delivering internal administrative 
services to our employees and identify areas for improvement, we 
conduct an annual Web-based survey in November. The customer 
satisfaction survey on administrative services, conducted by an outside 
contractor to ensure the confidentiality of every respondent, is 
administered to all of our employees once a year. Through the survey we 
encourage our staff to indicate how satisfied they are with 18 services 
that help them get their jobs done and another 11 services that affect 
their quality of work life. 

As part of the survey, employees are asked to rate, on a scale of 1 
(low) to 5 (high), those services that are important to them and that 
they have experience with or used recently. Then, for each selected 
service, employees are asked to indicate their level of satisfaction 
from 1 (low) to 5 (high), and provide a written reason for their rating 
and recommendations for improvement if desired. Based on employees’ 
responses to these questions, we calculate a composite score. 

Help get job done and quality of work life: Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. To determine how satisfied GAO employees are with internal 
administrative services, we calculate composite scores for two 
measures. One measure reflects the satisfaction with the 18 services 
that help employees get their jobs done. These services include 
Internet and intranet services, information technology (IT) customer 
support, mail services, and voice communication services. The second 
measure reflects satisfaction with another 11 services that affect 
quality of work life. These services include assistance related to pay 
and benefits, building maintenance and security, and workplace safety 
and health. The composite score represents how employees rated their 
satisfaction with services in each of these areas relative to how they 
rated the importance of those services to them. The importance scores 
and satisfaction levels are both rated on a scale of 1 (low) to 5 
(high). 

Help get job done and quality of work life: Verification and 
validation: 
The satisfaction survey on administrative services is housed on a Web 
site maintained by an outside contractor, and only the contractor has 
the ability to link the survey results with individual staff. Our 
survey response rate was 43 percent in 2007. To ensure that the results 
are largely representative of the GAO population, we analyze the 
results by demographic representation (unit, tenure, location, band 
level, and job type). Each GAO unit responsible for administrative 
services conducts follow-on work, including analyzing written comments 
to gain a better understanding of the information from the survey. In 
addition, on a periodic basis, the IG independently assesses the 
internal operations performance measures. The IG examined the measures 
during fiscal year 2007 and found the measures reasonable. The IG also 
recommended actions to improve the measures’ reliability and 
objectivity. We are in the process of implementing the IG’s 
recommendations. 

Help get job done and quality of work life: Data limitations: 
The information contained in the survey is the self-reported opinion of 
staff expressed under conditions of confidentiality. Accordingly, there 
is no way to further validate those expressions of opinion. We do not 
plan any actions to remedy this limitation because we feel it would 
violate the pledge of confidentiality that we make to our staff 
regarding the survey responses. 

The practical difficulties of conducting any survey may introduce 
errors, commonly referred to as nonsampling errors. These errors could 
result, for example, from respondents misinterpreting a question or 
entering their data incorrectly. Such errors can introduce unwanted 
variability into the survey results. We limit the chances of 
introducing nonsampling errors by using a Web-based survey for which 
respondents’ enter their answers directly into an electronic 
questionnaire. This eliminates the need to have the data keyed into a 
database by someone other than the respondent. 

Source: GAO. 

[End of table] 

Program Evaluation: 

To assess our progress toward our first three strategic goals and their 
objectives and to update them for our strategic plan, we evaluate 
actions taken by federal agencies and the Congress in response to our 
recommendations. The results of these evaluations are conveyed in this 
performance and accountability report as financial benefits and 
nonfinancial benefits that reflect the value of our work. 

In addition, we actively monitor the status of our open 
recommendations—those that remain valid but have not yet been 
implemented—and report our findings annually to the Congress and the 
public [hyperlink, http://www.gao.gov/openrecs.html]. We use the 
results of that analysis to determine the need for further work in 
particular areas. For example, if an agency has not implemented a 
recommended action that we consider to be worthwhile, we may decide to 
pursue further action with agency officials or congressional 
committees, or we may decide to undertake additional work on the 
matter. 

We also use our biennial high-risk update report to provide a status 
report on those major government operations considered high risk 
because of their vulnerabilities to fraud, waste, abuse, and 
mismanagement or the need for broad-based transformation. The report is 
a valuable evaluation and planning tool because it helps us to identify 
those areas where our continued efforts are needed to maintain the 
focus on important policy and management issues that the nation faces. 
See [hyperlink, http://www.gao.gov/docsearch/featured/highrisk.html]. 

The following evaluations helped us to continuously improve the quality 
of our work supporting strategic goals 1, 2, and 3 in fiscal year 2008. 

* Annual inspection: We completed our annual inspection of our quality 
control system for our performance audit practice during the year ended 
December 31, 2007. The inspection included reviews of audit 
documentation from a random sample of performance audit engagements 
completed in 2007; tests of selected functional areas, such as 
independence documentation and recruiting and hiring procedures; and 
interviews with key staff on each select engagement. The inspection 
team concluded that our quality control system was suitably designed 
and operating effectively during 2007 to provide us with reasonable 
assurance that we (1) conformed with Government Auditing Standards in 
conducting our performance audits and (2) provided the Congress and 
other users of our products with independent, objective, and reliable 
information. The inspection team did not identify instances where our 
work was not reliable or contained material errors. However, it did 
identify a number of areas where compliance with established quality 
controls could be enhanced, such as improved documentation of contacts 
with congressional requesters of our work. 

* Peer review of performance audit practices: An international team 
with representation from the supreme audit institutions of Canada, 
Australia, the Netherlands, and the United Kingdom reviewed the quality 
assurance system that we established for managing our performance audit 
practice. Our quality assurance system encompasses our organizational 
structure and the policies and procedures established to provide us 
with reasonable assurance that we comply with government auditing 
standards. The peer review team conducted the review in accordance with 
the peer review standards in Government Auditing Standards 2003 and 
early adopted portions of the 2007 revision. They examined our 
documented policies and procedures relative to applicable professional 
standards; reviewed documentation for a representative sample of 2007 
audits selected from the first 8 months of the year ended December 31, 
2007, and interviewed professional and administrative staff. The team 
also examined the performance of our own inspection process. The peer 
review team found that our quality assurance system was suitably 
designed and operating effectively during the year ended December 31, 
2007, to provide us with reasonable assurance that our performance 
auditing practices conform to the government auditing standards used as 
criteria. The team completed its review over a 7-month period. 

* Peer review of financial audit practices: An independent accounting 
firm reviewed our system of quality control for the accounting and 
auditing practices we use to perform our financial audit work and 
attestation engagements that was in effect for the year ended December 
31, 2007. The firm conducted its review in accordance with standards 
established by the Peer Review Board of the American Institute of 
Certified Public Accountants and government auditing standards. The 
firm reviewed relevant documentation, policies, and procedures 
pertaining to our financial audits and interviewed our staff who 
perform and manage our financial audits. The firm also selected a 
sample of financial audit engagement and administrative files to test 
for conformity with professional standards and compliance with our own 
systems of quality control. The engagements selected represented a 
reasonable cross section of our accounting and auditing practice with 
emphasis on high-risk engagements. The accounting firm found that our 
system of quality control for the financial accounting and auditing 
practice ended December 31, 2007, was designed to meet the requirements 
of the applicable quality control standards used as criteria for its 
review. The independent audit firm completed its review in 4 months. 

We also completed two key evaluations related to goal 4’s strategic 
objectives. These studies resulted in internal products or briefings in 
fiscal year 2008 that are not available publicly. 

* Financial management practices and processes: We have a comprehensive 
management control program to meet the objectives of the Federal 
Managers’ Financial Integrity Act, even though, as part of the 
legislative branch of the federal government, we are not legally 
required to do so. The program includes an integration of management 
controls into our financial processes[Footnote 18] and financial 
management systems; review of management controls and financial 
management systems controls on a regularly recurring basis; and 
development of corrective action plans for any control issues found and 
monitoring of those plans until the issues are resolved or corrected. 
Our Senior Assessment Team (SAT), consisting of senior managers and 
chaired by the Chief Financial Officer, ensures our commitment to an 
appropriate system of internal control; actively oversees the process 
of assessing internal controls, and provides input for the level and 
priority of resource needs to correct any control issue identified. In 
addition to the SAT, our Internal Control Working Group (ICWG) planned, 
conducted, and managed the assessment in accordance with OMB Circular A-
123 guidelines. The ICWG was composed of individuals designated as 
business unit managers, the project management team, technical 
consultants, and field office representatives. Also, our quality 
assurance framework provides us with reasonable assurance that we (1) 
conformed in all material respects with Government Auditing Standards 
and (2) provided the Congress and other users of our products with 
independent, objective, and reliable information. We monitor management 
controls through internal control reviews that included identification 
of key controls over financial reporting; performance of interviews, 
walkthroughs, and observations to determine whether those controls were 
in operation; documentation of key controls; testing and evaluation of 
the operating effectiveness of the key controls; and reporting the 
results to our ICWG and SAT. The review of our financial management 
systems was performed consistent with OMB Circular A-127, and included 
analyzing the SAS 70 audit reports of our shared service providers. Our 
review of financial management systems to determine that they were in 
substantial compliance with the Federal Financial Management 
Improvement Act included consideration of all information available, 
including the results of financial management systems reviews and the 
auditor’s opinions on GAO’s financial statements and on internal 
controls over financial reporting and the auditor’s report on 
compliance with laws and regulations. 

* African American performance assessment: We requested that a 
contractor conduct an independent study of the differences in average 
performance appraisals between our African American and Caucasian 
analysts. The framework for the study consisted of three tasks: 
determining whether differences exist and, if so, to what extent; 
determining when, how, and why these differences appear; and providing 
conclusions and recommendations for addressing the study findings. To 
perform these tasks, the contractor validated and expanded our own 
prior analysis to confirm that there is a difference between appraisal 
results for African American and Caucasian analysts, and conducted 
regression analysis to test the effect of specific variables (i.e., 
race, education, years of experience, location, team, competency, pay 
band, and participation in the GAO intern program) on performance 
ratings. The contractor evaluated key characteristics, such as 
education and years of experience outside of GAO, to assess 
comparability of African American and Caucasian analysts when hired; 
controlled statistically for differences in education, gender, years of 
experience, risk level of projects, and rater demographics; and 
interviewed 21 process owners and subject matter experts to understand 
how key human capital processes that influence performance ratings 
(i.e., workforce planning, recruiting, Professional Development 
Program, training and development, engagement assignment, feedback, and 
performance review) are supposed to work. The contractor also reviewed 
related GAO documentation pertaining to the work analysts perform and 
how their performance is assessed. In addition, the contractor 
conducted 17 focus groups and analyzed eight pairs of closely matched 
analysts to learn how the processes really work based on individual 
experiences at the agency. Based on the results and research on 
performance management best practices, the contractor synthesized the 
findings and developed conclusions and recommendations. We have already 
made solid progress on many of the over 25 recommendations. (For 
additional information about GAO’s human capital activities in fiscal 
year 2008, see appendix 2 in this report.) 

[End of Goal 3] 

[End of Part II, Performance Information] 

Part III: Financial Information: 

From the Chief Financial Officer: 

[Refer to PDF for picture of Sallyanne Harper, Chief Financial Officer] 

November 14, 2008: 

I am pleased to report that during fiscal year 2008 the U.S. Government 
Accountability Office continued to honor its commitment to lead by 
example in government financial management. For the 22nd consecutive 
year, independent auditors gave us an unqualified opinion on our 
financial statements with no material weaknesses and no major 
compliance problems. The financial statements that follow were 
prepared, audited, and made publicly available as an integral part of 
this performance and accountability report (PAR) 45 days after the end 
of the fiscal year. Our fiscal year 2007 PAR received a certificate of 
excellence in accountability reporting from the Association of 
Government Accountants (AGA). Our annual reports have received this AGA 
honor each year since we first applied with our fiscal year 2001 PAR. 

We are especially pleased with these results given that this was our 
first year operating under a new financial management system, Delphi. 
We implemented Delphi on time and on budget and our financial services 
continued seamlessly throughout this first year of operations. A key 
element in our success was the close working relationship forged 
between our executive leadership and the leadership of the Department 
of Transportation (DOT) and DOT’s Enterprise Service Center (ESC), our 
financial system and accounting service provider, throughout the year 
to refine operations of the new system for GAO. 

This fiscal year, we expanded our internal controls review program. The 
financial system implementation presented unique challenges, requiring 
all business cycles to be retested as financial system processes 
evolved. As a further check, we monitored the progress of the 
independent auditor’s assessment (commonly known as a SAS 70 audit) of 
the internal controls of services provided by ESC, focusing on those 
systems and services directly affecting GAO, to ensure that we would 
not have any surprises. All of these efforts contributed to GAO’s 
independent auditors providing a positive opinion on the effectiveness 
of our internal controls again this year. 

We also completed a number of efforts resulting in increased 
efficiencies, including reducing energy costs and water consumption 
through installation of a new cooling tower and a water heater, 
providing greatly expanded leadership training for our Band III 
employees at no greater cost than our former program, saving training 
costs through the use of our three learning hubs in the field for 
leadership training, achieving an estimated $163,000 annual savings 
through elimination of a duplicative remote access dial-up service, and 
reducing paper usage by 76 percent and achieving cost savings of over 
$350,000 through full implementation of an agencywide e-dissemination 
process for GAO products. 

Moving forward, our goal is to continue our progress toward more 
efficient and effective financial operations and overall agency 
operations. We also face challenges in our next implementation phases 
of the Delphi system, including completing the interface with Prism, 
the acquisition system; updating to a new E-Gov travel system; and 
working with DOT’s Financial Management Business Council on 
enhancements to the Delphi system as part of a governmentwide 
initiative to further standardize financial processes for all federal 
agencies. 

Always, we strive to support the Congress in meeting its constitutional 
responsibilities, to help improve government performance and ensure its 
accountability for the benefit of the American people, and to continue 
to focus on, and enhance, our internal operations and services to 
better achieve our strategic goal of being a model federal agency. 

Signed by: 

Sallyanne Harper: 
Chief Financial Officer: 

[End of From the Chief Financial Officer] 

Overview of Financial Management and Controls: 

Our financial statements and accompanying notes begin on page 101. 
[Footnote 19] Our financial statements for the fiscal years ended 
September 30, 2008 and 2007, were audited by an independent auditor, 
Clifton Gunderson, LLP. Clifton Gunderson, LLP, rendered an unqualified 
opinion on our financial statements and an unqualified opinion on the 
effectiveness of our internal controls over financial reporting and 
compliance with laws and regulations. The auditor also reported that we 
have substantially complied with the applicable requirements of the 
Federal Financial Management Improvement Act of 1996 (Improvement Act) 
and found no reportable instances of noncompliance with selected 
provisions of laws and regulations. In the opinion of the independent 
auditor, the financial statements are presented fairly in all material 
respects and are in conformity with generally accepted accounting 
principles. 

Financial Systems and Internal Controls: 

We recognize the importance of strong financial systems and internal 
controls to ensure our accountability, integrity, and reliability. To 
achieve a high level of quality, management maintains a quality control 
program and seeks advice and evaluation from both internal and external 
sources. 

We complied with the spirit and intent of Appendix A, OMB Circular No. 
A-123, Management’s Responsibility for Internal Control, which provides 
guidance for agencies’ assessments of internal control over financial 
reporting. We performed this assessment by identifying, analyzing, and 
testing internal controls for key business processes. Based on the 
results of the assessment, we have reasonable assurance that internal 
control over financial reporting, as of September 30, 2008, was 
operating effectively and that no material control weaknesses exist in 
the design or operation of the internal controls over financial 
reporting. Additionally, our independent auditor found that we 
maintained effective internal controls over financial reporting and 
compliance with laws and regulations. Consistent with our assessment, 
the auditor found no material internal control weaknesses. 

We are also committed to fulfilling the internal control objectives of 
31 U.S.C. 3512, commonly referred to as the Federal Managers’ Financial 
Integrity Act (Integrity Act). Although we are not subject to the act, 
we comply voluntarily with its requirements. Our internal controls are 
designed to provide reasonable assurance that obligations and costs are 
in compliance with applicable laws and regulations; funds, property, 
and other assets are safeguarded against loss from unauthorized 
acquisition, use, or disposition; and revenues and expenditures 
applicable to our operations are properly recorded and accounted for to 
enable our agency to prepare reliable financial reports and maintain 
accountability over our assets. 

In addition, we are committed to fulfilling the objectives of the 
Improvement Act, which is also covered within 31 U.S.C. 3512. Although 
not subject to the act, we voluntarily comply with its requirements. We 
believe that we have implemented and maintained financial systems that 
comply substantially with federal financial management systems 
requirements, applicable federal accounting standards, and the United 
States Government Standard General Ledger at the transaction level as 
of September 30, 2008. We made this assessment based on criteria 
established under the Improvement Act and guidance issued by OMB. Also, 
our auditor reported that we had substantially complied with the 
applicable requirements of the Improvement Act as of September 30, 
2008. 

GAO’s Inspector General (IG) also conducts audits and investigations 
that are internally focused, functions as an independent fact-gathering 
adviser to the Comptroller General, and reviews all accomplishment 
reports totaling $500 million or more. During fiscal year 2008, the IG 
examined compliance with our policy and procedures for conflict-of-
interest determinations and conducted reviews of our information 
security program, travel by Senior Executive Service members, transit 
benefit program, reemployed annuitants program, certain procedures for 
removal of accountable property, access to employee e--mail and 
computers, and diversity among GAO’s top leaders and managers. In 
addition, the IG managed an internal hotline for use by our employees 
and contractors to report potential fraud, waste, and abuse in our 
operations. Finally, the IG independently tests our compliance with 
procedures related to our performance data on a rotating basis over a 
3--year period; these actions are specifically identified in the table 
that begins on page 79. No material weaknesses were reported by the IG. 
During fiscal year 2008, we completed actions related to 48 IG 
recommendations, none of which affected the financial statements. IG’s 
September 10, 2008, report on diversity among GAO’s top leaders and 
managers has 4 open recommendations, which we are working to implement. 

Our Audit Advisory Committee assists the Comptroller General in 
overseeing the effectiveness of our financial reporting and audit 
processes, internal controls over financial operations, and processes 
that ensure compliance with laws and regulations relevant to our 
financial operations. The committee is composed of individuals who are 
independent of GAO and have outstanding reputations in public service 
or business with financial or legal expertise. The current members of 
the committee are as follows: 

* Sheldon S. Cohen (Chairman), a certified public accountant and 
practicing attorney in Washington, D.C.; a former Commissioner and 
Chief Counsel of the Internal Revenue Service; and a Senior Fellow of 
the National Academy of Public Administration. 

* Edward J. Mazur, CPA, Senior Advisor for Governmental Financial 
Management at Cherry, Bekaert & Holland, LLP; past member of the 
Governmental Accounting Standards Board; former State Comptroller of 
Virginia; and a former Controller of the Office of Federal Financial 
Management in the Office of Management and Budget. 

* Charles O. Rossotti, senior advisor at The Carlyle Group; former 
Commissioner of the Internal Revenue Service; and founder and former 
Chief Executive Officer and Chairman of American Management Systems, 
Inc., an international business and information technology consulting 
firm. 

The committee’s report and that of our independent auditors are 
included on the following pages. 

Audit Advisory Committee’s Report: 

The Audit Advisory Committee (the Committee) assists the Comptroller 
General in overseeing the U.S. Government Accountability Office’s (GAO) 
financial operations. As part of that responsibility, the Committee 
meets with agency management and its internal and external auditors to 
review and discuss GAO’s external financial audit coverage, the 
effectiveness of GAO’s internal controls over its financial operations, 
and its compliance with certain laws and regulations that could 
materially impact GAO’s financial statements. GAO’s external auditors 
are responsible for expressing an opinion on the conformity of GAO’s 
audited financial statements with the U.S. generally accepted 
accounting principles. The Committee reviews the findings of the 
internal and external auditors, and GAO’s responses to those findings, 
to ensure that GAO’s plan for corrective action includes appropriate 
and timely follow-up measures. In addition, the Committee reviews the 
draft Performance and Accountability Report, including its financial 
statements, and provides comments to management who have primary 
responsibility for the Performance and Accountability Report. The 
Committee met twice with respect to its responsibilities as described 
above. During these sessions, the Committee met with the internal and 
external auditors without GAO management being present and discussed 
with the external auditors the matters that are required to be 
discussed by generally accepted auditing standards. Based on procedures 
performed as outlined above, we recommend that GAO’s audited statements 
and footnotes be included in the 2008 Performance and Accountability 
Report. 

Signed by: 

Sheldon S. Cohen: 
Chairman: 
Audit Advisory Committee: 

[End of Audit Advisory Committee's Report] 

Independent Auditor’s Report: 

Clifton Gunderson, LLP: 
Certified Public Accountants & Consultants: 
Offices in 17 states and Washington, DC: 
11710 Beltsville Drive, Suite 300: 
Calverton, Maryland 20705-3106: 
tel: 301-931-2050: 
fax: 301-931-1710: 
[hyperlink, http://www.cliftoncpa.com] 

Independent Auditor’s Report: 

Acting Comptroller General of the United States: 

In our audits of the Government Accountability Office (GAO) for fiscal 
years 2008 and 2007, we found: 

* The financial statements are presented fairly, in all material 
respects, in conformity with accounting principles generally accepted 
in the United States of America. 

* GAO had effective internal control over financial reporting 
(including safeguarding assets) and compliance with laws and 
regulations. 

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

* No reportable noncompliance with laws and regulations we tested. 

The following sections discuss in more detail (1) these conclusions, 
(2) our conclusions on Management’s Discussion and Analysis (MD&A) and 
other supplementary information, and (3) our objectives, scope and 
methodology. 

Opinion on Financial Statements: 

In our opinion, the financial statements including the accompanying 
notes present fairly, in all material respects, in conformity with 
accounting principles generally accepted in the United States of 
America, GAO’s assets, liabilities and net position as of September 30, 
2008 and 2007, and net costs; changes in net position; and budgetary 
resources for the years then ended. 

Opinion on Internal Control: 

In our opinion, GAO maintained, in all material respects, effective 
internal control over financial reporting (including safeguarding 
assets) and compliance as of September 30, 2008 that provided 
reasonable assurance that misstatements, losses, or noncompliance 
material in relation to the financial statements would be prevented or 
detected on a timely basis. Our opinion is based on criteria 
established under 31 U.S.C. 3512 (c), (d), the Federal Managers’ 
Financial Integrity Act (FMFIA), and the Office of Management and 
Budget (OMB) Circular A-123, Management’s Responsibility for Internal 
Control. 

We noted other nonreportable matters involving internal control and its 
operation that we will communicate in a separate management letter. 

Opinion on FFMIA Compliance: 

In our opinion, GAO’s financial management systems, as of September 30, 
2008, substantially complied with the following requirements of FFMIA: 
(1) federal financial management systems requirements, (2) federal 
accounting standards, and (3) the United States Government Standard 
General Ledger (SGL) at the transaction level. Our opinion is based on 
criteria established under FFMIA, OMB Circular No. A-127, Financial 
Management Systems (which includes the Joint Financial Management 
Improvement Program/Office of Federal Financial Management series of 
system requirements documents), accounting principles generally 
accepted in the United States of America, and the SGL. 

Compliance with Laws and Regulations: 

Our tests for compliance with selected provisions of laws and 
regulations disclosed no instances of noncompliance that would be 
reportable under Government Auditing Standards or OMB audit guidance. 
However, the objective of our audit was not to provide an opinion on 
overall compliance with laws and regulations. Accordingly, we do not 
express such an opinion. 

This conclusion is intended solely for the use of the management of 
GAO, OMB, and Congress and is not intended to be, and should not be, 
used by anyone other that these specified parties. 

Consistency of Other Information: 

The MD&A included as Part I is not a required part of the financial 
statements but is supplementary information required by accounting 
principles generally accepted in the United States of America. We have 
applied certain limited procedures, which consisted principally of 
inquiries of management regarding the methods of measurement and 
presentation of the required supplementary information. However, we did 
not audit the information and express no opinion on it. 

The introductory information, performance information and appendixes 
listed in the table of contents are presented for additional analysis 
and are not a required part of the financial statements. Such 
information has not been subjected to the auditing procedures applied 
in the audit of the financial statements and, accordingly, we express 
no opinion on them. 

Objectives, Scope, and Methodology: 

Management is responsible for (1) preparing the financial statements in 
conformity with accounting principles generally accepted in the United 
States of America, (2) establishing, maintaining, and assessing 
internal control to provide reasonable assurance that the broad control 
objectives of FMFIA are met, (3) ensuring that GAO’s financial 
management systems substantially comply with FFMIA requirements, and 
(4) complying with applicable laws and regulations. 

We are responsible for planning and performing our audits to obtain 
reasonable assurance about whether the financial statements are free of 
material misstatement. An audit includes examining, on a test basis, 
evidence supporting the amounts and disclosures in the financial 
statements. An audit also includes assessing the accounting principles 
used and significant estimates made by management, as well as 
evaluating the overall financial statement presentation. 

We are responsible for planning and performing our examination to 
obtain reasonable assurance about whether management maintained 
effective internal control over financial reporting (including 
safeguarding of assets) and compliance with applicable laws and 
regulations based on criteria established under 31 U.S.C. 3512 (c), 
(d), the Federal Managers’ Financial Integrity Act, and OMB Circular A-
123, Management’s Responsibility for Internal Control. Our examination 
included obtaining an understanding of internal control related to 
financial reporting (including safeguarding assets) and compliance with 
laws and regulations (including execution of transactions in accordance 
with budget authority); testing relevant internal controls over 
financial reporting (including safeguarding assets) and compliance, 
evaluating the design and operating effectiveness of internal control; 
and performing such other procedures as we considered necessary in the 
circumstances. We did not test all internal controls relevant to 
operating objectives as broadly defined by the Federal Managers’ 
Financial Integrity Act. 

Because of inherent limitations in any internal control, misstatements 
due to error or fraud may occur and not be detected. Also, projections 
of any evaluation of the internal control to future periods are subject 
to the risk that the internal control may become inadequate because of 
changes in conditions, or that the degree of compliance with the 
policies or procedures may deteriorate. 

We are responsible for planning and performing our examination to 
obtain reasonable assurance about whether GAO’s financial management 
systems substantially complied with the three FFMIA requirements. We 
examined, on a test basis, evidence about GAO’s substantial compliance 
with those requirements, and performed such other procedures as we 
considered necessary in the circumstances. 

We are also 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, 2008. We caution that noncompliance may occur and not be 
detected by these tests and that such testing may not be sufficient for 
other purposes. 

We conducted our audits and examinations in accordance with auditing 
standards generally accepted in the United States of America; 
Government Auditing Standards, issued by the Comptroller General of the 
United States; attestation standards established by the American 
Institute of Certified Public Accountants; and OMB audit guidance. We 
believe that our audits and examinations provide a reasonable basis for 
our opinions. 

Signed by: 

Clifton Gunderson, LLP: 
Calverton, Maryland: 
November 10, 2008: 

Purpose of Each Financial Statement: 

The financial statements on the next four pages present the following 
information: 

* The balance sheet presents the combined amounts we had available to 
use (assets) versus the amounts we owed (liabilities) and the residual 
amounts after liabilities were subtracted from assets (net position). 

* The statement of net cost presents the annual cost of our operations. 
The gross cost less any offsetting revenue earned from our activities 
is used to arrive at the net cost of work performed under our four 
strategic goals. 

* The statement of changes in net position presents the accounting 
items that caused the net position section of the balance sheet to 
change from the beginning to the end of the fiscal year. 

* The statement of budgetary resources presents how budgetary resources 
were made available to us during the fiscal year and the status of 
those resources at the end of the fiscal year. 

Financial Statements: 
U.S. Government Accountability Office: 
Balance Sheets: 
As of September 30, 2008 and 2007: 
Dollars in thousands: 

Assets: 

Intragovernmental: Funds with the U.S. Treasury and cash (Note 3); 
2008: $70,472; 
2007: $63,626. 

Intragovernmental: Accounts receivable; 
2008: $602; 
2007: $977. 

Total Intragovernmental; 
2008: $71,074; 
2007: $64,601. 

Property and equipment, net (Note 4); 
2008: $39,964; 
2007: $41,566. 

Other; 
2008: $284; 
2007: $374. 

Total Assets; 
2008: $111,322; 
2007: $106,541. 

Liabilities: 

Intragovernmental: Accounts payable; 
2008: $11,252; 
2007: $6,232. 

Intragovernmental: Employee benefits (Note 6); 
2008: $2,965; 
2007: $2,968. 

Intragovernmental: Workers' compensation (Note 7); 
2008: $2,514; 
2007: $2,364. 

Total Intragovernmental; 
2008: $16,731; 
2007: $11,564. 

Accounts payable and other; 
2008: $15,711; 
2007: $11,280. 

Salaries and benefits (Note 6); 
2008: $21,304; 
2007: $16,827. 

Accrued annual leave and other (Note 5); 
2008: $30,953; 
2007: $29,572. 

Workers' compensation (Note 7); 
2008: $16,687; 
2007: $16,368. 

Capital leases (Note 9); 
2008: $7,018; 
2007: $4,542. 

Note Payable (Note 5); 
2008: [Empty]; 
2007: $3,779. 

Total Liabilities; 
2008: $108,404; 
2007: $93,932. 

Net Position: Unexpended appropriations; 
2008: $24,064; 
2007: $30,562. 

Net Position: Cumulative results of operations; 
2008: ($21,146); 
2007: ($17,953). 

Total Net Position (Note 13); 
2008: $2,918; 
2007: $12,609. 

Total Liabilities and Net Position; 
2008: $111,322; 
2007: $106,541. 

The accompanying notes are an integral part of these statements.  

[End of balance sheets] 

Financial Statements: 
U.S. Government Accountability Office: 
Statements of Net Cost: 
For Fiscal Years Ended September 30, 2008 and 2007: 
Dollars in thousands: 

Net Costs by Goal (Note 2): 

Goal 1: Well-Being/Financial Security of American People; 
2008: $201,159; 
2007: $177,376. 

Less: reimbursable services; 
2008: [Empty]; 
2007: [Empty]. 

Net goal costs; 
2008: $201,159; 
2007: $177,376. 

Goal 2: Changing Security Threats/Challenges of Global Interdependence; 
2008: $161,144; 
2007: $157,568. 

Less: reimbursable services; 
2008: [Empty]; 
2007: [Empty]. 

Net goal costs; 
2008: $161,144; 
2007: $157,568. 

Goal 3: Transforming the Federal Government's Role; 
2008: $153,719; 
2007: $148,959. 

Less: reimbursable services; 
2008: ($3,145); 
2007: ($2,391). 

Net goal costs; 
2008: $150,574; 
2007: $146,568. 

Goal 4: Maximize the Value of GAO; 
2008: $22,706; 
2007: $23,924. 

Less: reimbursable services; 
2008: ($91); 
2007: [Empty]. 

Net goal costs; 
2008: $22,615; 
2007: $23,924. 

Less: reimbursable services not attributable to goals; 
2008: ($5,890); 
2007: ($5,730). 

Net Cost of Operations (Note 10); 
2008: $529,602; 
2007: $499,706. 

The accompanying notes are an integral part of these statements. 

[End of Statements of Net Cost] 

Financial Statements: 
U.S. Government Accountability Office: 
Statements of Changes in Net Position: 
For Fiscal Years Ended September 30, 2008 and 2007: 
Dollars in thousands: 

Cumulative Results of Operations, Beginning of fiscal year; 
2008: ($17,953); 
2007: ($17,891). 

Budgetary Financing Sources - Appropriations used; 
2008: $503,368; 
2007: $474,925. 

Other Financing Sources: Intragovernmental transfer of property and 
equipment; 
2008: ($3); 
2007: ($27). 

Other Financing Sources: Federal employee retirement benefit costs paid 
by OPM and imputed to GAO (Note 6); 
2008: $23,044; 
2007: $24,746. 

Total Financing Sources; 
2008: $526,409; 
2007: $499,644. 

Net Cost of Operations; 
2008: ($529,602); 
2007: ($499,706). 

Net Change; 
2008: ($3,193); 
2007: ($62). 

Cumulative Results of Operations, End of fiscal year; 
2008: ($21,146); 
2007: ($17,953). 

Unexpended Appropriations, Beginning of fiscal year; 
2008: $30,562; 
2007: $25,951. 

Budgetary Financing Sources and Uses: Current year appropriations; 
2008: $501,000; 
2007: $485,894. 

Budgetary Financing Sources and Uses: Appropriations transferred in; 
2008: $250; 
2007: [Empty]. 

Budgetary Financing Sources and Uses: Permanently not available; 
2008: ($4,380); 
2007: ($6,358). 

Budgetary Financing Sources and Uses: Appropriations used; 
2008: ($503,368); 
2007: ($474,925). 

Total unexpended appropriations, End of fiscal year; 
2008: $24,064; 
2007: $30,562. 

Net Position; 
2008: $2,918; 
2007: $12,609. 

The accompanying notes are an integral part of these statements. 

[End of Statements of changes in net position] 

Financial Statements: 
U.S. Government Accountability Office: 
Statements of Budgetary Resources: 
For Fiscal Years Ended September 30, 2008 and 2007: 
Dollars in thousands: 

Budgetary Resources (Note 11): Unobligated balance, brought forward October 1; 
2008: $10,010; 
2007: $8,492. 

Budgetary Resources (Note 11): Recoveries of prior year unpaid 
obligations: 
2008: $2,014; 
2007: [Empty]. 

Budgetary Resources (Note 11): Budget authority: Appropriations; 
2008: $501,000; 
2007: $485,894. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Earned and collected; 
2008: $10,462; 
2007: $10,698. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in receivable from Federal 
sources: 
2008: ($385); 
2007: [Empty]. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in unfilled customer orders- 
advance received; 
2008: ($91); 
2007: $136. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in unfilled customer orders- 
without advance; 
2008: $125; 
2007: [Empty]. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Subtotal; 
2008: $511,111; 
2007: $496,728. 

Budgetary Resources (Note 11): Nonexpenditure transfers, net and 
actual; 
2008: $250; 
2007: [Empty]. 

Budgetary Resources (Note 11): Permanently not available; 
2008: ($4,380); 
2007: ($6,358). 

Total Budgetary Resources; 
2008: $519,005; 
2007: $498,862. 

Status of Budgetary Resources: Obligations incurred: Direct; 
2008: $500,362; 
2007: $480,731. 

Status of Budgetary Resources: Obligations incurred: Reimbursable; 
2008: $11,887; 
2007: $8,121. 

Status of Budgetary Resources: Obligations incurred: Subtotal; 
2008: $512,249; 
2007: $488,852. 

Status of Budgetary Resources: Unobligated balance-Apportioned; 
2008: $2,588; 
2007: $3,170. 

Status of Budgetary Resources: Unobligated balance not available; 
2008: $4,168; 
2007: $6,840. 

Total Status of Budgetary Resources; 
2008: $519,005; 
2007: $498,862. 

Change in Obligated Balance: Change in Obligated Balances: Obligated 
balance, net: Unpaid Obligated balance, brought forward October 1; 
2008: $54,606; 
2007: $55,238. 

Change in Obligated Balance: Uncollected customer payments from Federal 
sources, brought forward October 1; 
2008: ($990); 
2007: [Empty]. 

Change in Obligated Balance: Total, Unpaid Obligation, net, brought 
forward October 1; 
2008: $53,616; 
2007: $55,238. 

Change in Obligated Balance: Obligations incurred; 
2008: $512,249; 
2007: $488,852. 

Change in Obligated Balance: Less: Gross Outlays; 
2008: ($500,393); 
2007: ($490,474). 

Change in Obligated Balance: Recoveries of prior-year unpaid 
obligations, actual; 
2008: ($2,014); 
2007: [Empty]. 

Change in Obligated Balance: Change in uncollected customer payments 
from Federal sources; 
2008: $260; 
2007: [Empty]. 

Change in Obligated Balance: Obligated balance, net, end of period: 
Unpaid Obligations; 
2008: $64,448; 
2007: $54,606; 

Change in Obligated Balance: Obligated balance, net, end of period: Uncollected customer payments from Federal sources; 
2008: ($730); 
2007: ($990). 

Change in Obligated Balance: Total, Unpaid obligations, net, end of 
period; 
2008: $63,718; 
2007: $53,616. 

Net Outlays: Gross outlays; 
2008: $500,393; 
2007: $490,474. 

Net Outlays: Less: Offsetting collections; 
2008: ($10,372); 
2007: ($10,645). 

Net outlays; 
2008: $490,021; 
2007: $479,829. 

The accompanying notes are an integral part of these statements. 

[End of Statements of Budgetary Resources] 

[End of Financial Statements] 

Notes to Financial Statements: 

Note 1. Summary of Significant Accounting Policies: 

Reporting Entity: 

The accompanying financial statements present the financial position, 
net cost of operations, changes in net position, and budgetary 
resources of the United States Government Accountability Office (GAO). 
GAO, an agency in the legislative branch of the federal government, 
supports the Congress in carrying out its constitutional 
responsibilities. GAO carries out its mission primarily by conducting 
audits, evaluations, analyses, research, and investigations and 
providing the information from that work to the Congress and the public 
in a variety of forms. The financial activity presented relates 
primarily to the execution of GAO’s congressionally approved budget. 
GAO’s budget consists of an annual appropriation covering salaries and 
expenses and revenue from reimbursable audit work and rental income. 
The revenue from audit services and rental income is included on the 
Statement of Budgetary Resources as “reimbursable services.” The 
financial statements, except for federal employee benefit costs paid by 
OPM and imputed to GAO, do not include the effects of centrally 
administered assets and liabilities related to the federal government 
as a whole, such as interest on the federal debt, which may in part be 
attributable to GAO; they also do not include activity related to GAO’s 
trust function described in Note 14. 

Basis of Accounting: 

GAO’s financial statements have been prepared on the accrual basis and 
the budgetary basis of accounting in conformity with generally accepted 
accounting principles for the federal government. Accordingly, revenues 
are recognized when earned and expenses are recognized when incurred, 
without regard to the receipt or payment of cash. These principles 
differ from budgetary reporting principles. The differences relate 
primarily to the capitalization and depreciation of property and 
equipment, as well as the recognition of other long-term assets and 
liabilities. The statements were also prepared in conformity with OMB 
Circular A-136, Financial Reporting Requirements. 

Assets: 

Intragovernmental assets are those assets that arise from transactions 
with other federal entities. Funds with the U.S. Treasury comprise the 
majority of intragovernmental assets on GAO’s balance sheet. 

Funds with the U.S. Treasury: 

The U.S. Treasury processes GAO’s receipts and disbursements. Funds 
with the U.S. Treasury represent appropriated funds Treasury will 
provide to pay liabilities and to finance authorized purchase 
commitments. 

Accounts Receivable: 

GAO’s accounts receivable are due principally from federal agencies for 
reimbursable services; therefore, GAO has not established an allowance 
for doubtful accounts. 

Property and Equipment: 

The GAO headquarters building qualifies as a multiuse heritage asset, 
is GAO’s only heritage asset, and is reported with property and 
equipment on the balance sheet. The designation of multiuse heritage 
asset is a result of both being listed in the National Register of 
Historic Places and being used in general government operations. 
Statement of Federal Financial Accounting Standards No. 29 requires 
accounting for multiuse heritage assets as general property, plant, and 
equipment to be included in the balance sheet and depreciated. 
Maintenance of the building has been kept on a current basis. The 
building is depreciated on a straight-line basis over 25 years. 

Generally, property and equipment individually costing more than 
$15,000 are capitalized at cost. Building improvements and leasehold 
improvements are capitalized when the cost is $25,000 or greater. Bulk 
purchases of lesser-value items that aggregate more than $150,000 are 
also capitalized at cost. Assets are depreciated on a straight-line 
basis over the estimated useful life of the property as follows: 
building improvements, 10 years; computer equipment, software, and 
capital lease assets, ranging from 3 to 6 years; leasehold 
improvements, 5 years; and other equipment, ranging from 5 to 20 years. 
GAO’s property and equipment have no restrictions as to use or 
convertibility except for the restrictions related to the GAO 
building’s classification as a multiuse heritage asset. 

Liabilities: 

Liabilities represent amounts that are likely to be paid by GAO as a 
result of transactions that have already occurred. 

Accounts Payable: 

Accounts Payable consists of amounts owed to federal agencies and 
commercial vendors for goods and services received. 

Federal Employee Benefits: 

GAO recognizes its share of the cost of providing future pension 
benefits to eligible employees over the period of time that they render 
services to GAO. The pension expense recognized in the financial 
statements equals the current service cost for GAO’s employees for the 
accounting period less the amount contributed by the employees. OPM, 
the administrator of the plan, supplies GAO with factors to apply in 
the calculation of the service cost. These factors are derived through 
actuarial cost methods and assumptions. The excess of the recognized 
pension expense over the amount contributed by GAO and employees 
represents the amount being financed directly through the Civil Service 
Retirement and Disability Fund administered by OPM. This amount is 
considered imputed financing to GAO (see Note 6). 

The Federal Employees’ Compensation Act (FECA) provides income and 
medical cost protection to covered federal civilian employees injured 
on the job, employees who have incurred a work-related occupational 
disease, and beneficiaries of employees whose death is attributable to 
a job-related injury or occupational disease. Claims incurred for 
benefits for GAO employees under FECA are administered by the 
Department of Labor (Labor) and are paid, ultimately, by GAO (see Note 
7). 

GAO recognizes a current-period expense for the future cost of post 
retirement health benefits and life insurance for its employees while 
they are still working. GAO accounts for and reports this expense in 
its financial statements in a manner similar to that used for pensions, 
with the exception that employees and GAO do not make current 
contributions to fund these future benefits. 

Federal employee benefit costs paid by OPM and imputed to GAO are 
reported on the Statements of Changes in Net Position and are also 
included as a component of net cost by goal on the Statement of Net 
Cost. 

Annual, Sick, and Other Leave: 

Annual leave is recognized as an expense and a liability as it is 
earned; the liability is reduced as leave is taken. The accrued leave 
liability is principally long-term in nature. Sick leave and other 
types of leave are expensed as leave is taken. All leave is funded when 
expensed. 

Contingencies: 

GAO has certain claims and lawsuits pending against it. Provision is 
included in GAO’s financial statements for any losses considered 
probable and estimable. Management believes that losses from certain 
other claims and lawsuits are reasonably possible but are not material 
to the fair presentation of GAO’s financial statements and provision 
for these losses is not included in the financial statements. 

Estimates: 

Management has made certain estimates and assumptions when reporting 
assets, liabilities, revenue, expenses, and in the note disclosures. 
Actual results could differ from these estimates. 

Note 2. Intragovernmental Costs and Exchange Revenue: 

Intragovernmental costs arise from exchange transactions made between 
two reporting entities within the Federal government in contrast with 
public costs which arise from exchange transactions made with a non-
federal entity. Intragovernmental costs and exchange revenue for the 
periods ended September 30, 2008 and September 30, 2007, are as 
follows: 

[Dollars in thousands] 

Goal 1: 

Intragovernmental costs; 
2008: $52,132;
2007: $39,484. 

Public costs; 
2008: $149,027; 
2007: $137,892. 

Net goal 1 costs; 
2008: $201,159; 
2007: $177,376. 

Goal 2: 

Intragovernmental costs; 
2008: $41,409; 
2007: $35,075. 

Public costs; 
2008: $119,735; 
2007: $122,493. 

Net goal 2 costs; 
2008: $161,144; 
2007: $157,568. 

Goal 3: 

Intragovernmental costs; 
2008: $39,680; 
2007: $33,158. 

Public costs; 
2008: $114,039
2007: $115,801. 

Total goal 3 costs; 
2008: $153,719
2007: $148,959. 

Goal 3 intragovernmental earned revenue; 
2008: ($3,145); 
2007: ($2,391). 

Net goal 3 costs; 
2008: $150,574; 
2007: $146,568. 

Goal 4: 

Intragovernmental costs; 
2008: $12,160; 
2007: $5,326. 

Public costs; 
2008: $10,546; 
2007: $18,598. 

Total goal 4 costs; 
2008: $22,706; 
2007: 23,924. 

Goal 4 Intergovernmental earned revenue: 
2008: ($91); 
2007: [Empty]. 

Net Goal 4 Costs: 
2008: $22,615; 
2007: 23,924. 

Earned revenue not attributable to goals: 

Intragovernmental; 
2008: ($5,757); 
2007: ($5,640). 

Public; 
2008: ($133); 
2007: ($90). 

Total earned revenue not attributable to goals; 
2008: ($5,890); 
2007: ($5,730). 

[End of Table] 

Goals 1 and 2 have no associated intragovernmental revenue and all 
public earned revenue collected is not attributable to goals. GAO’s 
pricing policy for reimbursable services is to seek reimbursement for 
actual costs incurred, including overhead costs where allowed by law. 
Therefore, revenues, as listed above, and costs that generated those 
revenues are equivalent. 

Note 3. Funds with the U.S. Treasury: 

GAO’s funds with the U.S. Treasury consist of only appropriated funds. 
The status of these funds as of September 30, 2008 and September 30, 
2007 is as follows: 

Dollars in thousands: 

Unobligated balance: Available; 
2008: $2,586; 
2007: $3,168. 

Unobligated balance: Unavailable; 
2008: $4,168; 
2007: $6,840. 

Obligated balances not yet disbursed; 
2008: $63,718; 
2007: $53,616. 

Total funds with U.S. Treasury; 
2008: $70,472; 
2007: $63,624. 

[End of Table] 

Note 4. Property and Equipment, Net: 

The composition of property and equipment as of September 30, 2008, is 
as follows: 

Dollars in thousands: 

Classes of property and equipment: Building; 
Acquisition value: $15,664; 
Accumulated depreciation: $12,531; 
Book value: $3,133. 

Classes of property and equipment: Land; 
Acquisition value: $1,191; 
Accumulated depreciation: [Empty]; 
Book value: $1,191. 

Classes of property and equipment: Building improvements; 
Acquisition value: $108,652; 
Accumulated depreciation: $93,367; 
Book value: $15,285. 

Classes of property and equipment: Computer and other equipment and 
software; 
Acquisition value: $38,579; 
Accumulated depreciation: $27,689; 
Book value: $10,890. 

Classes of property and equipment: Leasehold improvements; 
Acquisition value: $6,242; 
Accumulated depreciation: $5,803; 
Book value: $439. 

Classes of property and equipment: Assets under capital lease; 
Acquisition value: $27,237; 
Accumulated depreciation: $18,211; 
Book value: $9,026. 

Classes of property and equipment: Total property and equipment; 
Acquisition value: $197,565; 
Accumulated depreciation: $157,601; 
Book value: $39,964. 

[End of Table] 

The composition of property and equipment as of September 30, 2007, is 
as follows: 

Dollars in thousands: 

Classes of property and equipment: Building; 
Acquisition value: $15,664; 
Accumulated depreciation: $11,905; 
Book value: $3,759. 

Classes of property and equipment: Land; 
Acquisition value: $1,191; 
Accumulated depreciation: [Empty]; 
Book value: $1,191. 

Classes of property and equipment: Building improvements; 
Acquisition value: $106,565; 
Accumulated depreciation: $90,152; 
Book value: $16,413. 

Classes of property and equipment: Computer and other equipment and 
software; 
Acquisition value: $40,575; 
Accumulated depreciation: $27,032; 
Book value: $13,543. 

Classes of property and equipment: Leasehold improvements; 
Acquisition value: $6,125; 
Accumulated depreciation: $5,540; 
Book value: $585. 

Classes of property and equipment: Assets under capital lease; 
Acquisition value: $23,762; 
Accumulated depreciation: $17,687; 
Book value: $6,075. 

Classes of property and equipment: Total property and equipment; 
Acquisition value: $193,882; 
Accumulated depreciation: $152,316; 
Book value: $41,566. 

[End of Table] 

Note 5. Liabilities Not Covered by Budgetary Resources: 

The liabilities on GAO’s Balance Sheets as of September 30, 2008 and 
September 30, 2007 include liabilities not covered by budgetary 
resources, which are liabilities for which congressional action is 
needed before budgetary resources can be provided. Although future 
appropriations to fund these liabilities are likely and anticipated, it 
is not certain that appropriations will be enacted to fund these 
liabilities. The composition of liabilities not covered by budgetary 
resources as of September 30, 2008 and September 30, 2007, is as 
follows: 

Dollars in thousands: 

Intragovernmental liabilities-Workers' compensation; 
2008: $2,514; 
2007: $2,364. 

Salaries and benefits-Comptrollers' General retirement plan[A]; 
2008: $1,975; 
2007: $3,113. 

Accrued annual leave and other; 
2008: $30,953; 
2007: $29,572. 

Workers' compensation[B]; 
2008: $16,687; 
2007: $16,368. 

Capital leases; 
2008: $7,018; 
2007: $4,542. 

Note payable[C]; 
2008: [Empty]; 
2007: $3,779. 

Total liabilities not covered by budgetary resources; 
2008: $59,147; 
2007: $59,738. 

[A] See Note 6 for further discussion of the Comptrollers’ General 
retirement plan. 

[B] See Note 7 for further discussion of workers’ compensation. 

[C] The majority of the note payable represents financing for 
telecommunications equipment purchased in fiscal year 2007 with an 
interest rate of 8.75%. In fiscal year 2008 the balance of the note was 
paid off. 

[End of Table] 

Note 6. Federal Employee Benefits: 

All permanent employees participate in the contributory Civil Service 
Retirement System (CSRS) or the Federal Employees Retirement System 
(FERS). Temporary employees and employees participating in FERS are 
covered under the Federal Insurance Contributions Act (FICA). To the 
extent that employees are covered by FICA, the taxes they pay to the 
program and the benefits they will eventually receive are not 
recognized in GAO’s financial statements. GAO makes contributions to 
CSRS, FERS, and FICA and matches certain employee contributions to the 
thrift savings component of FERS. All of these payments are recognized 
as operating expenses. 

In addition, all permanent employees are eligible to participate in the 
contributory Federal Employees Health Benefits Program (FEHBP) and 
Federal Employees Group Life Insurance Program (FEGLIP) and may 
continue to participate after retirement. GAO makes contributions 
through OPM to FEHBP and FEGLIP for active employees to pay for their 
current benefits. GAO’s contributions for active employees are 
recognized as operating expenses. Using the cost factors supplied by 
OPM, GAO has also recognized an expense in its financial statements for 
the estimated future cost of postretirement health benefits and life 
insurance for its employees. These costs are financed by OPM and 
imputed to GAO. 

Amounts owed to OPM and Treasury as of September 30, 2008 and September 
30, 2007 are $2,965,000 and $2,968,000, respectively for FEHBP, FEGLIP, 
FICA, FERS, and CSRS contributions and are shown on the Balance Sheet 
as an employee benefits liability. 

Details of the major components of GAO’s federal employee benefit costs 
for the periods ended September 30, 2008 and September 30, 2007, are as 
follows: 

Dollars in thousands: 

Federal Employee Benefits Costs: Federal employee retirement benefit 
costs paid by OPM and imputed to GAO: Estimated future pension 
costs(CSRS/FERS); 
2008: $8,584; 
2007: $9,115. 

Federal Employee Benefits Costs: Federal employee retirement benefit 
costs paid by OPM and imputed to GAO: Estimated future postretirement 
health and life insurance (FEHBP/FEGLIP); 
2008: $14,460; 
2007: $15,631. 

Federal Employee Benefits Costs: Federal employee retirement benefit 
costs paid by OPM and imputed to GAO: Total; 
2008: $23,044; 
2007: $24,746. 

Federal Employee Benefits Costs: Pension expenses(CSRS/FERS); 
2008: $31,070; 
2007: $29,895. 

Federal Employee Benefits Costs: Health and life insurance expenses 
(FEHBP/FEGLIP); 
2008: $16,098; 
2007: $16,100. 

Federal Employee Benefits Costs: FICA payment made by GAO; 
2008: $17,578; 
2007: $16,581. 

Federal Employee Benefits Costs: Thrift Savings Plan-matching 
contribution by GAO; 
2008: $10,391; 
2007: $9,596. 

[End of Table] 

Comptrollers General and their surviving beneficiaries who qualify and 
so elect to participate are paid retirement benefits by GAO under a 
separate retirement plan. These benefits are paid from current year 
appropriations. Due to the departure of Comptroller General Walker 
during fiscal year 2008 he is no longer eligible to participate in the 
retirement plan. Because GAO is responsible for future payments under 
this plan, the estimated present value of accumulated plan benefits of 
$1,975,000 as of September 30, 2008, and $3,113,000 as of September 30, 
2007, is included as a component of salary and benefit liabilities on 
GAO’s Balance Sheet. This decrease is due to the departure of 
Comptroller General Walker. 

Note 7. Workers’ Compensation: 

GAO utilizes the services of an independent actuarial firm to calculate 
its FECA liability. GAO recorded an estimated liability for claims 
incurred but not reported as of September 30, 2008 and 2007, which is 
expected to be paid in future periods. This estimated liability of 
$16,687,000 and $16,368,000 as of September 30, 2008 and 2007, 
respectively, is reported on GAO’s Balance Sheet. GAO also recorded a 
liability for amounts paid to claimants by Labor as of September 30, 
2008 and September 30, 2007, of $2,514,000 and $2,364,000, 
respectively, but not yet reimbursed to Labor by GAO. The amount owed 
to Labor is reported on GAO’s Balance Sheet as an intragovernmental 
liability. 

Note 8. Building Lease Revenue: 

In fiscal year 2000 the U.S. Army Corps of Engineers (USACE) entered 
into an agreement with GAO to lease the entire third floor of the GAO 
building. USACE provided all funding for the third floor renovation. 
Occupancy began August 3, 2000, for an initial period of 3 years, with 
options to renew on an annual basis for 7 additional years. Total 
rental revenue to GAO includes a base rent, which remains constant for 
the entire 10-year period, plus operating expense reimbursements at a 
fixed amount for the first 3 years, with escalation clauses from year 4 
through year 10 if the option years are exercised. Beginning in fiscal 
year 2002, USACE leased additional space on the sixth floor with 
occupancy lasting through the original lease term. 

Rent received by GAO for fiscal year 2008 and 2007 was $5,194,000 and 
$5,123,000, respectively. These amounts are included in reimbursable 
services shown on the Statement of Net Costs. Total rental revenue for 
the remaining period of the 10-year lease is as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2009; 
Total rental revenue[A]: $5,111. 

Fiscal year ending September 30: 2010; 
Total rental revenue[A]: $5,179. 

Fiscal year ending September 30: Total; 
Total rental revenue[A]: $10,290. 

[A] If option years are exercised. 

[End of Table] 

Note 9. Leases: 

Capital Leases: 

GAO has entered into capital leases for office equipment and computer 
equipment under which the ownership of the equipment covered under the 
leases transfers to GAO when the leases expire. When GAO enters into 
these leases, the present value of the future lease payments is 
capitalized, net of imputed interest, and recorded as a liability. The 
acquisition value and accumulated depreciation of GAO’s capital leases 
are shown in Note 4, Property and Equipment, Net. As of September 30, 
2008 and September 30, 2007, the capital lease liability was $7,018,000 
and $4,542,000, respectively. This increase is due in part to new 
computer laptop leases executed during fiscal year 2008. 

These lease agreements are written as contracts with a base year and 
option years. The option years are subject to the availability of 
funds. Early termination of the leases for reasons other than default 
is subject to a negotiation between the parties. These leases are lease-
to-ownership agreements. GAO’s leases are short term in nature and no 
liability exists beyond the years shown in the table below. GAO’s 
estimated future minimum lease payments under the terms of the leases 
are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2009; 
Total: $3,101. 

Fiscal year ending September 30: 2010; 
Total: $2,535. 

Fiscal year ending September 30: 2011; 
Total: $2,170. 

Fiscal year ending September 30: 2012; 
Total: $26. 

Fiscal year ending September 30: 2013; 
Total: $2. 

Total estimated future lease payments; 
Total: $7,834. 

Less: imputed interest; 
Total: ($816). 

Net capital lease liability; 
Total: $7,018. 

[End of Table] 

Operating Leases: 

GAO leases office space, predominately for field offices, from the 
General Services Administration and has entered into various other 
operating leases for office communication and computer equipment. Lease 
costs for office space and equipment for fiscal year 2008 and fiscal 
year 2007 amounted to approximately $12,040,000 and $13,629,000, 
respectively. Leases for equipment under operating leases are generally 
less than 1 year, therefore there are no associated future minimum 
lease payments. Estimated future minimum lease payments for field 
office space under the terms of the leases are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2009; 
Total: $7,486. 

Fiscal year ending September 30: 2010; 
Total: $6,593. 

Fiscal year ending September 30: 2011; 
Total: $6,598. 

Fiscal year ending September 30: 2012; 
Total: $6,543. 

Fiscal year ending September 30: 2013; 
Total: $5,232. 

Fiscal year ending September 30: 2014 and thereafter; 
Total: $18,412. 

Total estimated future lease payments; 
Total: $50,864. 

[End of Table] 

Leased property and equipment must be capitalized if certain criteria 
are met (see Capital Leases description). Because property and 
equipment covered under GAO’s operating leases do not satisfy these 
criteria, GAO’s operating leases are not reflected on the Balance 
Sheets. However, annual lease costs under the operating leases are 
included as components of net cost by goal in the Statements of Net 
Cost. 

Note 10. Net Cost of Operations: 

Expenses for salaries and related benefits for fiscal year 2008 and 
fiscal year 2007 amounted to $414,406,000 and $402,772,000, 
respectively, which were about 78 percent of GAO’s annual net cost of 
operations in fiscal year 2008 and 81 percent in fiscal year 2007. 
Included in the net cost of operations are federal employee benefit 
costs paid by OPM and imputed to GAO of $23,044,000 in fiscal year 2008 
and $24,746,000 in fiscal year 2007. 

Revenues from reimbursable services are shown as an offset against the 
full cost of the goal to arrive at its net cost. Earned revenues that 
are insignificant or cannot be associated with a major goal are shown 
in total, the largest component of which is rental revenue from the 
lease of space in the GAO building. Revenues from reimbursable services 
for fiscal year 2008 and fiscal year 2007 amounted to $9,126,000 and 
$8,121,000, respectively. Further details of the intragovernmental 
components are provided in Note 2. 

The net cost of operations represents GAO’s operating costs that must 
be funded by financing sources other than revenues earned from 
reimbursable services. These financing sources are presented in the 
Statement of Changes in Net Position. 

Note 11. Budgetary Resources: 

Budgetary resources made available to GAO include current 
appropriations, spending authority from budget transfers, prior years’ 
unobligated appropriations, and reimbursements arising from both 
revenues earned by GAO from providing goods and services to other 
federal entities for a price (reimbursable services) and cost-sharing 
and pass-through contract arrangements with other federal entities. 
Reimbursements from cost-sharing and pass-through contract arrangements 
consisted primarily of collections from other federal entities 1) for 
the support of Federal Accounting Standards Advisory Board and 2) to 
utilize GAO contracts to obtain services. The costs and reimbursements 
for these activities are not included in the Statements of Net Cost. 

There were no transfers of budgetary authority for fiscal year 2007. 
For fiscal year 2008, budget transfer consisted of budget authority 
transferred for the assessment of programs and activities funded under 
the heading “Millennium Challenge Corporation” to include a review of 
financial controls and procurement practices. 

Comparison of GAO’s fiscal year 2007 Statement of Budgetary Resources 
with the corresponding information presented in the 2009 President’s 
Budget is as follows: 

Dollars in thousands: 

Fiscal year 2007 Statement of Budgetary Resources; 
Budgetary Resources: $498,862; 
Obligations Incurred: $488,852. 

Unobligated balances, beginning of year - (prior year funds activity); 
Budgetary Resources: ($6,492); 
Obligations Incurred: [Empty]. 

Permanently not available – (prior year funds activity); 1,358–
Budgetary Resources: $1,358; 
Obligations Incurred: [Empty]. 

Other - rounding in President's Budget: 
Budgetary Resources: $272; 
Obligations Incurred: $1,148. 

2009 President's Budget - fiscal year 2007, actual; 
Budgetary Resources: $494,000; 
Obligations Incurred: $490,000. 

[End of Table] 

As the fiscal year 2010 President’s Budget will not be published until 
February 2009, a comparison between the fiscal year 2008 data reflected 
on the Statement of Budgetary Resources and fiscal year 2008 data in 
the President’s Budget cannot be performed, though we expect similar 
differences will exist. The fiscal year 2010 President’s Budget will be 
available on the OMB’s Web site and directly from the Government 
Printing Office. 

Budgetary resources obligated for undelivered orders at the end of 
fiscal year 2008 and the end of fiscal year 2007 totaled $15,237,000 
and $20,550,000, respectively. GAO’s apportionments fall under Category 
A, quarterly apportionment. Apportionment categories of obligations 
incurred for fiscal years 2008 and 2007 are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: Direct-Category A; 
2008: $500,362; 
2007: $480,731. 

Fiscal year ending September 30: Reimbursable-Category A; 
2008: $11,887; 
2007: $8,121. 

Fiscal year ending September 30: Total obligations incurred; 
2008: $512,249; 
2007: $488,852. 

[End of Table] 

Note 12. Reconciliation of Net Costs of Operations to Budget: 

Details of the relationship between budgetary resources obligated and 
the net costs of operations for the fiscal years ending September 30 
are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Obligation incurred; 
2008: $512,249;
2007: $488,852. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Less: spending authority from offsetting 
collections and recoveries; 
2008: ($12,126); 
2007: ($10,698). 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Obligations net of offsetting 
collections and recoveries; 
2008: $500,123; 
2007: $478,154. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Intragovernmental transfer of property and equipment; 
2008: ($3); 
2007: ($27). 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Federal employee retirement benefit costs paid by OPM 
imputed to GAO
2008: $23,044; 
2007: $24,746. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Net other resources used to finance activities; 
2008: $23,041; 
2007: $24,719. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Total resources used to finance activities; 
2008: $523,164; 
2007: $502,873. 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Change in unliquidated obligations; 
2008: $5,338; 
2007: ($3,091). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Reduction in lease liability and 
other; 
2008: ($1,303); 
2007: [Empty]. 
 
Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Assets capitalized; 
2008: ($9,514)
2007: ($14,631). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Net decrease in receivables not 
generating resources until collected and other adjustments; 
2008: $17; 
2007: [Empty]. 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Total resources used to fund items 
not part of the net cost of operations; 
2008: ($5,462); 
2007: ($17,722). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Total resources used to finance Net 
Cost of Operations; 
2008: $517,702; 
2007: $485,151. 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; 
(Decrease)/Increase in workers’ compensation and actuarial pension 
liability; 
2008: ($670); 
2007: $485. 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; 
(Decrease)/Increase in accrued annual leave; 
2008: $1,381; 
2007: ($340). 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; 
Increase/(Decrease) in other liabilities; 
2008: [Empty]; 
2007: $101. 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; Total Components 
of net cost that will not require or generate resources in the current 
period; 
2008: $711; 
2007: $246. 

Fiscal year ending September 30: Costs that do not require resources: 
Depreciation and other; 
2008: $11,189; 
2007: $14,309. 

Fiscal year ending September 30: Net Cost of Operations; 
2008: $529,602; 
2007: $499,706. 

[End of Table] 

Note 13. Net Position: 

Net position on the Balance Sheets comprises unexpended appropriations 
and cumulative results of operations. Unexpended appropriations is the 
sum of the total unobligated appropriations and undelivered goods and 
services. Cumulative results of operations represent the excess of 
financing sources over expenses since inception. Details of the 
components of GAO’s cumulative results of operations for the year ended 
September 30, 2008 and 2007, are as follows: 

Dollars in thousands: 

Investment in property and equipment, net; 
2008: $39,964; 
2007: $41,566. 

Rent related reimbursable funds expended in current year; 
2008: ($2,116); 
2007: [Empty]. 

Other-supplies inventory; 
2008: $153; 
2007: $219. 

Liabilities not covered by budgetary resources; 
2008: ($59,147); 
2007: ($59,738). 

Cumulative results of operations; 
2008: ($21,146); 
2006: ($17,953). 

[End of Table] 

Liabilities not covered by budgetary resources are liabilities for 
which congressional action is needed before budgetary resources can be 
provided. See Note 5 for components. 

Note 14. Davis-Bacon Act Trust Function: 

GAO is responsible for administering for the federal government the 
trust function of the Davis-Bacon Act receipts and payments and 
publishes separate, audited financial statements for this fund. GAO 
maintains this fund to pay claims relating to violations of the Davis-
Bacon Act and Contract Work Hours and Safety Standards Act. Under these 
acts, Labor investigates violation allegations to determine if federal 
contractors owe additional wages to covered employees. If Labor 
concludes that a violation has occurred, GAO collects the amount owed 
from the contracting federal agency, deposits the funds into an account 
with the U.S. Treasury, and remits payment to the employee. GAO is 
accountable to the Congress and to the public for the proper 
administration of the assets held in the trust. Trust assets under 
GAO’s administration as of September 30, 2008 and 2007 totaled 
approximately $4,807,000 and $4,151,000, respectively. These assets are 
not the assets of GAO nor the federal government and are held for 
distribution to appropriate claimants. During fiscal years 2008 and 
2007, receipts in the trust amounted to $1,573,000 and $373,000 and 
disbursements amounted to $916,000 and $708,000, respectively. Because 
the trust assets and related liabilities are not assets and liabilities 
of GAO, they are not included in the accompanying financial statements. 

[End of Notes to Financial Statements] 

[End of Part III] 

Part IV: From the Inspector General: 

From the Inspector General: 

GAO: 
Memorandum: 

Date: October 30, 2008: 

To: Acting Comptroller General – Gene L. Dodaro: 

From: [Signed by]: Inspector General – Frances Garcia: 

Subject: GAO Management Challenges and Performance Measures: 

We have examined management’s assessment of the management challenges. 
Based on our work and institutional knowledge, we agree that physical 
security, information security, and human capital continue to be 
management challenges that may affect GAO’s performance. We also agree 
with management’s assessment of progress made in addressing these 
challenges. 

During fiscal year 2008, we reviewed all accomplishment reports of $500 
million or more, which totaled approximately 75 percent of the total 
dollar value reported. Based on our reviews, we believe that GAO had a 
reasonable basis for claiming these benefits. In addition, we assessed 
GAO’s fiscal year 2007 people performance measures—new hire rate, 
acceptance rate, and retention rate. We made recommendations to help 
enhance these measures and also made a recommendation for consideration 
of alternative measures for assessing agency human capital management. 
We are also reviewing the four other people performance measures—staff 
development, staff utilization, leadership, and organizational climate. 

[End of letter from the Inspector General] 

[End of Part IV] 

Part V: Appendixes: 

1. Accomplishments and Contributions: 

In pursuing our strategic goals during fiscal year 2008, we recorded 
hundreds of accomplishments and made numerous other contributions. This 
appendix provides details on the most significant of these. In 
reporting accomplishments (i.e., financial benefits and nonfinancial 
benefits) and contributions (designated by an F, N, or C in each entry 
numbered below), we are holding ourselves accountable for the resources 
we received to implement our strategic plan. 

Typically, the accomplishments describe work we completed in prior 
fiscal years because it takes time to implement recommendations, 
realize benefits, and record them. Contributions, which refer to work 
completed in fiscal year 2008, describe instances in which we provided 
information or recommendations that aided congressional decision making 
or informed the public debate to a significant degree. At the end of 
each accomplishment and contribution summary, we list the reference 
number of products associated with the work discussed. In the online 
PDF version of this document, readers can find direct links to these 
products if they want additional information. 

Strategic Goal 1: Provide timely, quality service to the Congress and 
the federal government to address current and emerging challenges to 
the well-being and financial security of the American people. 

The health needs of an aging and diverse population: 

1.01.F. Enhancing Fiscal and Management Oversight of Medicaid: 

We testified on our past work that identified shortcomings in the 
federal government’s fiscal and management oversight of the joint 
federal and state Medicaid program and the lack of transparency in the 
Center for Medicare and Medicaid Services’ (CMS) oversight efforts. 
Specifically, we reported: 

* Problems with states’ inappropriately obtaining billions of dollars 
in federal funds through use of Medicaid supplemental payment 
arrangements. Under such arrangements, some states made large 
supplemental payments to providers in order to generate excessive
federal matching payments. 

* The Department of Health and Human Services (HHS) had approved states’
Medicaid demonstrations without assuring that they would be budget 
neutral to the federal government. HHS allowed spending limits that 
could increase federal costs by billions of dollars, and approved 
demonstrations with implications for beneficiaries without providing 
for a public input process at the federal level. 

Impact: Our work encouraged CMS to end some inappropriate state 
supplemental payments, which will save an estimated $973 million in 
fiscal years 2008 and 2009. Our work was cited in congressional debates 
about the administration’s planned reforms for the Medicaid program. In 
fiscal year 2008, the Congress also used our work to seek improvements 
in HHS’s process for reviewing and approving states’ Medicaid 
demonstration proposals. 
[hyperlink, http://www.gao.gov/products/GAO-08-614], 
[hyperlink, http://www.gao.gov/products/GAO-08-650T], 
[hyperlink, http://www.gao.gov/products/GAO-08-87], 
[hyperlink, http://www.gao.gov/products/GAO-08-255T], 
[hyperlink, http://www.gao.gov/products/GAO-04-228] 

1.02.N. Contributing to Passage of the Medicare Improvements for 
Patients and Providers Act: 

The Medicare Advantage (MA) program provides health care coverage to 
Medicare beneficiaries through private health plans. In 2008, Medicare 
is projected to pay about 13 percent more for beneficiaries in MA plans 
than it would if they were in the original Medicare fee-for-service 
(FFS) program. Our work examining MA plan data for 2007 showed that the 
increased spending would not benefit all MA beneficiaries, with some 
beneficiaries likely experiencing higher cost sharing in MA plans than 
they would in Medicare FFS, and that MA plans had higher-than-projected 
profits of about $1.14 billion. 

Impact: Our work contributed to the passage of the Medicare 
improvements for Patients and Providers Act of 2008, which, among other 
things, reduced payments to MA plans. 
[hyperlink, http://www.gao.gov/products/GAO-08-522T], 
[hyperlink, http://www.gao.gov/products/GAO-08-827R], 
[hyperlink, http://www.gao.gov/products/GAO-08-359] 

1.03.N. Improving the Payment Method for Medicare End-Stage Renal 
Disease Care: 

CMS in HHS divides Medicare payment for end-stage renal disease (ESRD) 
items and services into two groups. The first group—dialysis and 
associated routine services—is paid under single composite rate for a 
defined set of services. The second group is primarily injectable drugs 
and certain laboratory tests that were either not routine or not 
available in 1983 when Medicare implemented the composite rate and are 
paid for separately on a per-service basis. In 2007, we reported that 
dialysis facilities have been relying on Medicare’s generous payments 
for separately billable drugs to subsidize the composite rate and that 
the payments for one drug in particular had created an incentive for 
facilities to potentially use more of the drug than necessary. CMS had 
been exploring the creation of a bundled payment system for all ESRD 
services, including separately billable drugs, but its timeline for 
testing a bundled payment rate for ESRD services was uncertain. 
Therefore, we recommended that the Congress consider establishing a 
bundled payment system for all ESRD services as soon as possible. 

Impact: Our work helped to encourage the Congress to include a 
provision in the Medicare Improvements for Patients and Providers Act 
of 2008 that requires the Secretary of Health and Human Services to 
implement a fully bundled payment method for all ESRD items and 
services beginning January 1, 2011. 
[hyperlink, http://www.gao.gov/products/GAO-07-77] 

1.04.N. Improving Nursing Home Fire Safety by Requiring Automatic 
Sprinkler Systems: 

In a 2004 report, we reported on two nursing home fires in 2003 in 
which 31 residents died. Neither facility was equipped with an 
automatic sprinkler system. Our review revealed weaknesses in federal 
fire safety standards for nursing homes, in how they are applied in un-
sprinklered facilities, and in federal and state oversight. To better 
ensure the adequacy of fire safety standards, we recommended that the 
Administrator of CMS work with the National Fire Protection Association 
(NFPA) to strengthen fire safety standards for un-sprinklered nursing 
homes and to explore the feasibility of requiring sprinklers in all 
nursing homes. Subsequently, NFPA adopted an automatic sprinkler 
requirement for all nursing homes in the 2006 edition of its Life 
Safety Code. 

Impact: In August 2008, in response to our recommendation, CMS 
published a final rule adopting this NFPA requirement. All nursing 
homes participating in the Medicare and Medicaid programs must install 
and maintain automatic sprinkler systems by August 13, 2013. Such 
systems are the single most effective fire safety method currently 
available, and their presence will help save both lives and property. 
[hyperlink, http://www.gao.gov/products/GAO-04-660] 

1.05.C. Identifying Challenges in FDA’s Foreign Inspection Programs: 

We responded rapidly to mounting concern about the safety of drugs and 
medical devices from overseas in four testimonies. We identified 
weaknesses in the Food and Drug Administration’s (FDA) programs for 
inspecting foreign establishments that market their products in the 
United States. For example, FDA inspects about 8 percent of foreign 
establishments each year. FDA investigators and laboratory analysts 
volunteer to conduct these inspections because the agency does not have 
a dedicated staff devoted to conducting foreign inspections. 

Impact: The Congress is using information from our products to develop 
legislation that would, among other things, require FDA to conduct more 
frequent inspections of foreign establishments manufacturing drugs and 
medical devices for the U.S. market. FDA is exploring the creation of a 
cadre of investigators who would be dedicated to conducting foreign 
inspections and has proposed establishing foreign offices that would 
expand the agency’s capacity for regulating products such as drugs and 
medical devices. 
[hyperlink, http://www.gao.gov/products/GAO-08-970], 
[hyperlink, http://www.gao.gov/products/GAO-08-224T], 
[hyperlink, http://www.gao.gov/products/GAO-08-428T], 
[hyperlink, http://www.gao.gov/products/GAO-08-701T], 
[hyperlink, http://www.gao.gov/products/GAO-08-780T] 

1.06.C. Improving Health Care for Servicemembers and Veterans: 

In a series of products on health care for servicemembers and veterans 
returning from deployments in Operations Enduring Freedom and Iraqi 
Freedom, we: 

* testified that the Army continued to have staffing shortfalls in one-
third of its Warrior Transition Units, which are designed to manage 
servicemembers’ outpatient recovery process; 

* reported shortcomings with the Department of Defense’s (DOD) 
oversight of the military services’ completion of post-deployment 
health reassessments—a screening tool for identifying servicemembers’ 
mental health concerns; and: 

* noted concerns with the Department of Veterans Affairs (VA) screening 
tool for identifying returning servicemembers who may have a mild 
traumatic brain injury (TBI). 

Impact: We provided the Congress a real-time assessment and information 
to help it develop legislation to strengthen DOD’s oversight of post-
deployment health reassessments. In addition, as a result of our work, 
VA agreed to fast-track its validation study of the TBI screening tool. 
[hyperlink, http://www.gao.gov/products/GAO-08-514T], 
[hyperlink, http://www.gao.gov/products/GAO-08-276], 
[hyperlink, http://www.gao.gov/products/GAO-08-1025R] 

1.07.C. Highlighting the Need For HHS’ Leadership to Reduce Health-Care-
Associated Infections: 

Health-care-associated infections (HAI)—infections that patients 
acquire while receiving treatment for other conditions—are estimated to 
be one of the top 10 causes of death in the United States. In March 
2008, we reported that a lack of prioritization by HHS of the Centers 
for Disease Control and Prevention’s almost 1,200 recommended practices 
for infection control and prevention hindered efforts to promote their 
implementation; and that HHS has not effectively used the HAI-related 
data it has collected through multiple databases across the department 
to provide a complete picture of the extent of the problem. 

Impact: HHS generally agreed with our recommendations. Our report was 
the centerpiece of an April 2008 hearing held by the Committee on 
Oversight and Government Reform. Subsequent congressional concerns are 
being addressed in follow-up work on HAI state reporting systems and 
HAIs in other settings, including ambulatory surgery centers. 
[hyperlink, http://www.gao.gov/products/GAO-08-283], 
[hyperlink, http://www.gao.gov/products/GAO-08-673T] 

1.08.C. Reducing Understatement of Serious Care Problems in Nursing 
Homes: 

In our May 2008 report, we found that state nursing home surveys often 
missed serious care problems that caused harm to vulnerable nursing 
home residents. In about 15 percent of the state surveys that federal 
surveyors reviewed, they identified serious care problems that were 
missed by state surveyors. 

Impact: CMS agreed to implement our recommendations to identify and 
track all understatement identified by federal surveys. The report also 
was used by congressional requesters to support legislation to 
strengthen enforcement for poorly performing nursing homes. 
[hyperlink, http://www.gao.gov/products/GAO-08-517] 

Lifelong learning to enhance U.S. competitiveness: 

1.09.N. Monitoring and Preventing Abusive Student Loan Practices: 

We found that the Department of Education (Education) did not have an 
effective system for monitoring and preventing abusive student loan 
practices within the Federal Family Education Loan Program (FFELP). 
Specifically, we found: 

* weaknesses in Education’s enforcement of prohibitions on gifts from 
student loan companies to schools in exchange for companies being 
placed on schools’ "preferred lender" lists and: 

* problems with the agency’s enforcement of a student’s right to choose 
a qualified lender and not have this choice limited by a school. 

Impact: In 2008, the Congress amended the Higher Education Act, which 
includes provisions that define a prohibited gift and require schools 
to annually report on their preferred lender arrangements and to post a 
statement on their Web sites noting that the school is required to 
process loan documents from any eligible lender in FFELP that the 
student selects. 
[hyperlink, http://www.gao.gov/products/GAO-07-750] 

1.10.N. Improving Information on School Choice Option under No Child 
Left Behind Act: 

Our report on school choice under the No Child Left Behind Act found 
that little was known about the academic performance of transferring 
students and required notification letters to parents about the school 
transfer option were not always clear or complete. We recommended that 
Education: 

* use a methodology with the potential to identify the effects of 
school choice on students’ academic achievement, comparing outcomes for 
students transferring and those not transferring over several years, 
taking into account differences in student demographics, and: 

* help states develop strategies to better inform parents about the 
option by collecting and disseminating promising practices, such as 
examples of well-written, informative letters to parents; and to ensure 
that the results of its survey of parents be made widely available. 

Impact: Education issued a report on the effect on achievement for 
students participating in school choice comparing students transferring 
and not transferring; funded a Web site dedicated to implementing 
school choice with a tool kit on communication with parents, sample 
practices used by districts to inform parents, and sample letters to 
share through national meetings and monitoring visits; published a 
handbook identifying effective strategies for informing parents about 
school choice; and released the results of the parental survey. 
[hyperlink, http://www.gao.gov/products/GAO-05-7] 

1.11.C. Strengthening Higher Education Access and Affordability: 

We issued several reports on issues related to higher education access 
and affordability and we found that Education’s exceptional performer 
program for lenders in the FFELP had not achieved its goals of 
improving student loan servicing and reducing student loan defaults at 
a substantial cost to the federal government and that college textbook 
prices increased at twice the rate of inflation over the past 2 
decades. 

Impact: The Congress passed the College Cost Reduction Act, which 
eliminated the exceptional performer program. Also, in amendments to 
the Higher Education Act, the Congress increased transparency in 
college textbook pricing by ensuring that faculty, students, and 
bookstores have sufficient and relevant information to make informed 
choices before purchasing textbooks. 
[hyperlink, http://www.gao.gov/products/GAO-08-245], 
[hyperlink, http://www.gao.gov/products/GAO-07-1087], 
[hyperlink, http://www.gao.gov/products/GAO-05-806] 

Benefits and Protections for Workers, Families, and Children: 

1.12.F. Reducing Food Stamp Payment Errors: 

In a January 2001 report and subsequent testimony, we recommended that 
the Department of Agriculture (USDA) develop and analyze options for 
simplifying requirements for determining Food Stamp Program eligibility 
and benefits in order to ease program administration and reduce payment 
errors. 

Impact: The Congress adopted our suggestion in the Farm Security and 
Rural Investment Act of 2002 by providing the states with the option to 
use simplified reporting requirements for verifying the accuracy of 
food stamp recipients’ income information. In addition to financial 
benefits resulting from a substantial decline in its overpayments of 
food stamp benefits, we found that USDA’s share of the states’ 
administrative costs for certifying benefits for food stamp households 
has dropped by more than $200 million annually, or about $1 billion, 
from fiscal years 2003 to 2006. 
[hyperlink, http://www.gao.gov/products/GAO-01-272], 
[hyperlink, http://www.gao.gov/products/GAO-01-881T], 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-10] 

1.13.N. Ensuring Program Integrity in the Food Stamp Program: 

Our work on the Food Stamp Program, administered by the Department of 
Agriculture’s Food and Nutrition Service (FNS), found that: 

* the Food Stamp Program remains vulnerable because retailers can enter 
the program intending to traffic; and: 

* current penalties may not be sufficient to deter traffickers because 
the most severe penalty most traffickers face is disqualification from 
the program and FNS must rely upon others for prosecution. 

We recommended that FNS develop a strategy to increase the penalties 
for trafficking. 

Impact: USDA requested tough penalties, and the Congress enacted the 
Food, Conservation and Energy Act of 2008 (Pub. L. No. 110-246), which 
includes a provision that raises civil penalties from $10,000 to 
$100,000 and a provision to allow USDA to immediately suspend 
trafficking retailers from the program pending administrative action. 
[hyperlink, http://www.gao.gov/products/GAO-07-53], 
[hyperlink, http://www.gao.gov/products/GAO-05-245] 

1.14.N. Improving Oversight of Underground Coal Mines: 

In reviewing the Mine Safety and Health Administration’s (MSHA) process 
for approving coal mines’ emergency response plans, we recommended that 
MSHA take steps to address the following findings: 

* the process was hampered by several factors, including the lack of 
specificity of MSHA’s guidance; 

* some plans did not specify the protections to be provided, and 
information about these protections varied; 

* failure to evaluate citation data to identify potential problems with 
implementation or enforcement; and: 

* insufficient oversight of district offices to ensure that the levels 
of safety protection required by the plans are adequate across all 
district offices. 

Impact: MSHA issued (1) Guidance on the Use of Checklists for Emergency 
Response Plan Reviews for district offices in order to clarify what is 
required for key components of the emergency response plans; (2) 
requirements for national and district-level accountability reviews to 
include reviews of relevant emergency response plans to ensure 
consistency in plan provisions, operator implementation, and 
enforcement efforts; and (3) clarification of how inspectors should 
cite mines for violations in order to ensure that repeat violations are 
accurately captured in a mine’s violation history. 
[hyperlink, http://www.gao.gov/products/GAO-08-424] 

1.15.C. Strengthening Oversight of Residential Programs for Youth: 

In our investigations of specific fatalities and abuses of youth in 
residential facilities—including boarding schools and academies, boot 
camps, and wilderness camps to serve youth with behavioral and 
emotional challenges—and our national study of these facilities, we 
determined that the existing patchwork of state and federal oversight 
is not adequate to protect youth from maltreatment. We found: 

* evidence of deceptive marketing, ineffective management, and reckless 
or negligent operating practices in case studies of abuse and 
fatalities in private facilities; 

* data showing more than 1,500 reported instances of maltreatment of 
residents by staff in government and private facilities in 2005; and: 

* gaps in state licensing of some government and private facilities, 
such as juvenile justice facilities and residential schools and 
academies, and in federal oversight of these facilities. 

Impact: Our work was frequently cited during congressional 
deliberations on the oversight of residential facilities for youth. In 
June 2008, the House of Representatives approved legislation to address 
many of the weaknesses we found. In July 2008, the Federal Trade 
Commission issued a guide for consumers considering a private 
residential program for troubled teens. 
[hyperlink, http://www.gao.gov/products/GAO-08-346], 
[hyperlink, http://www.gao.gov/products/GAO-08-696T], 
[hyperlink, http://www.gao.gov/products/GAO-08-713T] 

Financial security for an aging population: 

1.16.N. Enhancing the Pension Benefit Guaranty Corporation’s Governing 
Structure: 

We reviewed the governance structure of the Pension Benefit Guaranty 
Corporation (PBGC), which insures the pensions of more than 44 million 
private sector workers and retirees, and made recommendations to 
address the following findings: 

* PBGC had never established formal guidelines to articulate the 
administrative roles and responsibilities among the board of directors, 
the Secretary of Labor as the board chair, board member agencies, and 
the PBGC Director, which led, at times, to confusion and 
inefficiencies. 

* PBGC’s board lacked mechanisms to monitor and review PBGC operations 
and programs and generally relied on PBGC’s Inspector General (IG) to 
provide oversight of PBGC’s operations; there were no formal protocols 
describing the IG’s interaction with the board. 

Impact: PBGC reviewed and revised the bylaws to help delineate roles 
and responsibilities. A final rule was issued in which the PGBC board 
of directors revised the corporation’s bylaws to specifically delineate 
the role and responsibilities of the board, the Secretary of Labor as 
the board chair, the board agencies, and the PBGC Director and the 
reporting relationship of PBGC’s IG. 
[hyperlink, http://www.gao.gov/products/GAO-07-808] 

1.17.C. Ensuring Retirement Security: 

Our work on private pensions included reports and testimonies on 
limited 401(k) fee disclosure, which found that participants did not 
have the information they needed to make informed decisions about their 
investments. 401(k) plans are private pension plans that allow workers 
to save for retirement by diverting a portion of their pretax income 
into investment accounts. Many participants are not aware that they pay 
any fees, and those who are may not know how much they are paying. In 
prior work, we also recommended that sponsors of participant-directed 
plans disclose fee information to participants in a way that 
facilitates comparison among the options and report a summary of fees. 

Impact: This work sparked several bills in the Congress that address 
these recommendations. For example, one bill would require detailed fee 
disclosures by plans to participants and another would amend the 
Internal Revenue Code to impose taxes on any defined contribution plan 
failing to provide plan participants with prescribed information about 
plan fees and expenses. In addition, the Department of Labor has 
proposed regulations designed to better disclose fees associated with 
401(k) plans to participants. 
[hyperlink, http://www.gao.gov/products/GAO-08-222T], 
[hyperlink, http://www.gao.gov/products/GAO-08-95T], 
[hyperlink, http://www.gao.gov/products/GAO-07-21], 
[hyperlink, http://www.gao.gov/products/GAO-08-774, 
[hyperlink, http://www.gao.gov/products/GAO-07-530T] 

A responsive, fair, and effective system of justice: 

1.18.F. Reducing Funding for the Office of National Drug Control 
Policy’s Media Campaign: 

Pursuant to a mandate, we reviewed various aspects of the Office of 
National Drug Control Policy’s (ONDCP) National Youth Anti-Drug Media 
Campaign, including an evaluation by Westat, Inc. We determined that 
the Westat evaluation yielded no evidence of a positive outcome and 
suggested that the Congress consider limiting appropriations for the 
campaign. Subsequently, the Congress appropriated: 

* $100 million dollars for the campaign for fiscal year 2007, a 
reduction of $20 million dollars from the requested $120 million 
dollars, and: 

* $60 million dollars for the campaign for fiscal year 2008, a 
reduction of $70 million dollars from the requested $130 million 
dollars. 

Impact: These efforts resulted in about $91 million in federal funding 
being made available for other purposes. 
[hyperlink, http://www.gao.gov/products/GAO-06-818] 

1.19.N. Encouraging Agencies to Formally Agree to Participate in and 
Support the Watch List Redress Process: 

In September 2006, we reported on terrorist watch list screening. We 
noted the importance of having a process—often referred to as 
redress—for affected persons to express their concerns, seek correction 
of any inaccurate data, and request other actions to reduce or 
eliminate future inconveniences. Further, our report noted that an 
overarching factor regarding whether appropriate relief is being 
afforded to persons inadvertently and adversely affected by terrorist 
watch list-related screening was the absence of an interagency 
agreement to help ensure that, among other matters, redress procedures 
and responsibilities are clearly documented and implemented 
effectively. Our report characterized the absence of such an agreement 
as a fundamental deficiency. 

Impact: An interagency agreement—a memorandum of understanding (MOU)— 
was concluded and signed in September 2007. The signatories to the MOU 
are the Attorney General; the Secretaries of Homeland Security, State, 
Defense, and the Treasury; and the Directors of National Intelligence, 
the Federal Bureau of Investigation, the Central Intelligence Agency, 
the National Counterterrorism Center, and the Terrorist Screening 
Center. Among other key commitments, the MOU requires each agency to 
provide appropriate staff and other resources to ensure that the 
redress process functions in a timely and efficient manner and to 
designate a senior official responsible for the agency’s full 
participation in the redress process and overall compliance with the 
MOU. [hyperlink, http://www.gao.gov/products/GAO-06-1031] 

The promotion of viable communities: 

1.20.N. Transforming SBA to Improve Performance and Employee Morale: 

In a 2003 report, we reviewed the Small Business Administration’s (SBA) 
initial implementation of its transformation efforts, which included 
centralizing loan functions and shifting the focus of district offices 
to marketing and outreach. We found a lack of transparency and 
communication with employees and other stakeholders, and we recommended 
that SBA adopt key practices that have helped other organizations 
succeed in transforming their organizations. 

Impact: In a September 2008 report, we determined that SBA had made 
significant progress in addressing our 2003 recommendations. We also 
recommended actions SBA could take to sustain its progress by 
developing a strategic training plan and measuring the effectiveness of 
its centralized operations. SBA agreed with our recommendations. 
[hyperlink, http://www.gao.gov/products/GAO-04-76], 
[hyperlink, http://www.gao.gov/products/GAO-08-995] 

1.21.C. Improving SBA’s Oversight of the HUBZone Program: 

In a June 2008 report and subsequent testimony, we highlighted several 
deficiencies in SBA’s oversight and administration of its historically 
underutilized business zone (HUBZone) program—which provides federal 
contracting assistance to small businesses located in economically 
distressed communities, or HUBZone areas. Among other things, we: 

* found that the map that SBA uses to help firms interested in 
participating in the program determine if they are located in a HUBZone 
area is inaccurate; 

* reported that SBA verifies the information reported by firms on their 
applications or during recertification—its process for monitoring 
firms—in limited instances and does not follow its own policy of 
recertifying all firms every 3 years; and: 

* recommended that SBA correct and update its HUBZone map, develop and 
implement guidance to ensure more routine verification of application 
data, and eliminate its backlog of recertifications. 

Impact: SBA agreed to implement our recommendations, which should help 
ensure that only eligible firms receive federal contracting 
preferences. 
[hyperlink, http://www.gao.gov/products/GAO-08-643, 
[hyperlink, http://www.gao.gov/products/GAO-08-975T] 

Responsible stewardship of natural resources and the environment: 

1.22.N. Improving the Federal Government’s Response to Climate Change: 

Experts believe that federal land and water resources are vulnerable to 
a wide range of effects from climate change, some of which are already 
occurring. These effects include (1) physical effects, such as droughts 
or floods; (2) biological effects, such as increases in insect and 
disease infestations; and (3) economic and social effects, such as 
adverse impacts on tourism and infrastructure. We held a workshop with 
the National Academies and issued a report with a recommendation for 
improving the federal government’s response to climate change. 

Impact: The Forest Service is responding to our recommendation by 
initiating a number of actions. For example, it has drafted a companion 
document to its 2007 Strategic Plan that explains how climate change is 
embedded in various parts of the plan. It has also issued a letter to 
resource managers naming 16 high priority climate-related actions they 
are expected to take in 2008, including development of guidance for the 
preparation of forest plans and National Environmental Policy Act 
documents that take climate change into account. 
[hyperlink, http://www.gao.gov/products/GAO-07-863] 

1.23.C. Improving Management of Large-Scale Ecosystem Restoration 
Projects: 

Over the last 5 years, we have conducted several reviews of large scale 
ecosystem restoration projects such as in the Chesapeake Bay, Florida 
Everglades, and the Great Lakes. The Congress has also turned to us for 
assessments of the actions being taken in response to the 
recommendations made in our reports. For example, our 2008 assessment 
of the progress made by the Chesapeake Bay Program in implementing the 
recommendations made in our October 2005 report found that although 
recent actions taken by the program will enable the program to better 
manage the restoration effort, additional actions are still needed to 
ensure that the restoration effort is moving forward in the most cost-
effective manner. 

Impact: As a result of our work, managers of these restoration projects 
are planning to take actions to improve management of these billion-
dollar efforts. 
[hyperlink, http://www.gao.gov/products/GAO-08-1033T], 
[hyperlink, http://www.gao.gov/products/GAO-08-1131R], 
[hyperlink, http://www.gao.gov/products/GAO-08-130], 
[hyperlink, http://www.gao.gov/products/GAO-07-1250T], 
[hyperlink, http://www.gao.gov/products/GAO-06-96] 

1.24.C. Increasing Research Funding for Environmental and Health Risks 
of Nanotechnology: 

Nanotechnology encompasses a wide range of innovations based on the 
understanding and control of matter at the scale of nanometers—the 
equivalent of one-billionth of a meter. Nanotechnology has a range of 
commercial uses and holds the promise for innovations in virtually 
every industry from aerospace and energy to health care and 
agriculture. The small size and unique properties of nanomaterials have 
raised questions about their potential environmental, health, and 
safety (EHS) risks. The National Nanotechnology Initiative (NNI) was 
established in 2001 to help coordinate the nanotechnology-related 
activities of 25 participating federal agencies. Of the $1.3 billion 
that federal agencies allocated to nanotechnology research in fiscal 
year 2006, the NNI reported that about $37 million was devoted to 
research that primarily focused on studying the EHS risks of 
nanotechnology. However, we reported in March 2008 that about 20 
percent of this amount cannot actually be attributed to this purpose. 

Impact: In response to our findings and recommendations, the Congress 
has emphasized EHS research in its proposed reauthorization of the NNI 
and participating agencies have requested $76 million for EHS research 
for 2009, which is more than double the level of actual funding in 
2005. [hyperlink, http://www.gao.gov/products/GAO-08-594] 

A safe, secure, and effective national physical infrastructure: 

1.25.F. Improving Spectrum Management by Extending Auction Authority: 

Since 1993, the Federal Communications Commission (FCC) has conducted 
auctions to assign spectrum licenses to commercial users; these 
licenses permit companies to use a portion of the spectrum to provide 
various wireless communications services, such as mobile voice and data 
services. Some parties have raised concerns about the use of auctions, 
contending that the auctions raise consumer prices. In December 2005, 
we reported that auctions appeared to have little or no impact on end-
user prices, infrastructure deployment, and competition, and that they 
mitigated the problems associated with comparative hearings and 
lotteries, which the FCC previously used to assign licenses. We 
therefore recommended that the Congress extend the FCC’s auction 
authority beyond the scheduled expiration date of September 30, 2007. 

Impact: In the Deficit Reduction Act of 2005, the Congress extended the 
FCC’s auction authority and in March 2008, the commission completed the 
auction of the 700 megahertz (MHz) spectrum. The 700 MHz auction 
generated $19.1 billion, greatly exceeding previous estimates, and a 
portion of the proceeds will be used to support public safety and 
digital television transition initiatives. The net present value of the 
financial benefits associated with the legislation, and the associated 
700 MHz auction, is $8.6 billion. 
[hyperlink, http://www.gao.gov/products/GAO-04-926T], 
[hyperlink, http://www.gao.gov/products/GAO-05-258T], 
[hyperlink, http://www.gao.gov/products/GAO-05-623T], 
[hyperlink, http://www.gao.gov/products/GAO-06-236], 
[hyperlink, http://www.gao.gov/products/GAO-06-212R] 

1.26.N. Improving Postal Realignment Planning and Accountability: 

We issued two reports on the U.S. Postal Service’s (USPS) strategy for 
realigning its mail processing network, which discussed why realignment 
to improve efficiency and reduce costs is urgently needed due to 
declining mail volumes. Our reports identified several concerns we had 
related to USPS’s lack of clarity, criteria, evaluation process, and 
public communication about what it planned to do and why. On the basis 
of our reviews it was not clear whether USPS was identifying the best 
opportunities for realignment or what the expected and actual impacts 
have been. We recommended that USPS enhance the transparency and 
communication of its decisions related to realigning its 
infrastructure. 

Impact: USPS has addressed our recommendations by (1) providing a 
Network Plan to the Congress that clarified how USPS makes realignment 
decisions; (2) establishing a process for evaluating results; and (3) 
enhancing communication with stakeholders by improving public notice, 
engagement, and transparency. 
[hyperlink, http://www.gao.gov/products/GAO-07-717], 
[hyperlink, http://www.gao.gov/products/GAO-05-261], 
[hyperlink, http://www.gao.gov/products/GAO-08-1022T] 

1.27.N. Improving Postal Delivery Performance Information: 

In a July 2006 report, we found that USPS had delivery standards for 
the timely delivery of its major types of mail, but some had not been 
updated in a number of years to reflect changes in how mail is prepared 
and delivered. These outdated standards were unsuitable as benchmarks 
for setting realistic expectations for measuring delivery performance 
or improving service, oversight, and accountability. We recommended 
that USPS modernize delivery standards and commit to developing a 
complete set of delivery performance measures for all major types of 
mail. 

Impact: In December 2006, the Congress enacted the Postal 
Accountability and Enhancement Act (Pub. L. No. 109-435) that required 
USPS to modernize its delivery standards and develop delivery 
performance measures. In December 2007, USPS issued its modernized 
delivery standards. Then, in June 2008, USPS developed a service 
performance measurement plan, in which it committed to measure and 
report on delivery performance for major types of mail starting in 
fiscal year 2009. 
[hyperlink, http://www.gao.gov/products/GAO-06-733] 

1.28.C. Informing Efforts to Meet Growing Demands on the Transportation 
System: 

The economic implications of growing levels of transportation 
congestion are significant, ranging from wasted fuel as cars idle in 
gridlock to increased costs for businesses. In a series of reports and 
testimonies, we addressed these issues. For example: 

* We reported that many of the current surface transportation programs 
do not effectively address congestion and other transportation 
challenges because, in part, these programs lack a well-defined vision 
of the national interest and federal role. We called for the refocusing 
of the surface transportation programs. 

* We examined the Federal Aviation Administration’s efforts to redesign 
the airspace structure in the northeast—which is intended to reduce 
delay—and made recommendations to improve the implementation of these 
efforts. 

Impact: Our work provided timely information as the Congress considers 
the reauthorization of aviation and surface transportation programs. 
[hyperlink, http://www.gao.gov/products/GAO-08-786], 
[hyperlink, http://www.gao.gov/products/GAO-08-934T], 
[hyperlink, http://www.gao.gov/products/GAO-08-743T], 
[hyperlink, http://www.gao.gov/products/GAO-08-763T], 
[hyperlink, http://www.gao.gov/products/GAO-08-400] 

1.29.C. Improving Transportation Safety: 

As in past years, we highlighted the need to improve federal actions to 
reduce highway, aviation, and other transportation accidents that lead 
to the 45,000 people killed and 2.8 million injured annually. Most 
notably, we called for: 

* improved ways to detect commercial truck drivers who use drugs and 
keep them off the road, such as expediting rule making that would 
create a national database of positive test results; 

* more progress in reducing runway collision hazards by implementing 
runway-related safety technologies and addressing controller staffing 
issues; and: 

* better oversight and accountability for ¦results from the hundreds of 
millions of dollars provided to states to improve highway safety by 
identifying common state challenges to improving safety and by tying 
state performance to receipt of grants. 

Impact: The Congress is using information provided by our work as it 
conducts oversight of these transportation programs and considers 
legislation to reauthorize safety programs. 
[hyperlink, http://www.gao.gov/products/GAO-08-600], 
[hyperlink, http://www.gao.gov/products/GAO-08-29], 
[hyperlink, http://www.gao.gov/products/GAO-08-477], 
[hyperlink, http://www.gao.gov/products/GAO-08-788], 
[hyperlink, http://www.gao.gov/products/GAO-08-398] 

1.30.C. Advising Policy Makers and Consumers on the Digital Television 
(DTV) Transition: 

In a series of reports and testimonies issued in fiscal year 2008, we 
reviewed the progress of the nation’s transition from analog to DTV, 
and found that: 

* no comprehensive plan existed that detailed goals and milestones that 
could be used to measure transition progress; 

* some broadcasters still faced technical, coordination, or other 
issues that needed to be resolved before broadcasting only in digital; 

* 84 percent of people had heard of the transition, but 45 percent of 
those at risk of losing television service planned to take inadequate 
or no action to prepare for it; and: 

* the government was effectively implementing a $1.5 billion subsidy 
program for converter boxes, but plans to address a likely increase in 
subsidy demand remained unclear. 

Impact: We provided timely information to the Congress as it conducted 
oversight of the DTV transition to help ensure that Americans do not 
lose television service. 
[hyperlink, http://www.gao.gov/products/GAO-08-191T], 
[hyperlink, http://www.gao.gov/products/GAO-08-43], 
[hyperlink, http://www.gao.gov/products/GAO-08-510], 
[hyperlink, http://www.gao.gov/products/GAO-08-881T], 
[hyperlink, http://www.gao.gov/products/GAO-08-1040] 

1.31.C. Improving Federal Real Property Management and Security: 

The federal real property portfolio is vast and diverse, totaling over 
3 billion square feet of space with an estimated gross value in the 
hundreds of billions of dollars. Our work highlighted the government’s 
continued reliance on costly leasing, challenges facing the Department 
of Homeland Security’s (DHS) Federal Protective Service (FPS) in 
protecting facilities, and threats to the collections of the 
Smithsonian Institution related to problems in its real property 
management and security. 

Impact: Our reports and testimonies led to robust congressional 
oversight in these areas and several actions are planned to address the 
problems. Our work brought renewed focus on the leasing issue by the 
Office of Management and Budget (OMB). DHS has agreed to implement our 
recommendations to improve FPS’s ability to address its challenges and 
better protect federal facilities. The Smithsonian Institution agreed 
with our recommendations related to real property management and 
security and committed to making several improvements. 
[hyperlink, http://www.gao.gov/products/GAO-08-197], 
[hyperlink, http://www.gao.gov/products/GAO-08-683], 
[hyperlink, http://www.gao.gov/products/GAO-08-250T], 
[hyperlink, http://www.gao.gov/products/GAO-08-897T], 
[hyperlink, http://www.gao.gov/products/GAO-08-914T] 

1.32.C. Overseeing Telecommunications: 

FCC is responsible for enforcing various telecommunications laws that 
are designed to protect consumers, ensure public safety, and encourage 
competition. We found that the extent to which FCC is effectively 
enforcing its rules and orders is difficult to assess because it lacks 
a robust data management system. From 2003 through 2006, FCC received 
nearly a half million complaints and opened about 46,000 
investigations, but closed about 83 percent of its investigations with 
no enforcement action. We recommended that FCC develop a data system 
that, among other things, improves its data collection and analysis to 
help it better manage its enforcement efforts. 

Impact: In response to our recommendation, FCC stated that it had taken 
several actions to address these issues, though we did not agree that 
these actions were fully responsive. Developing a data system as 
recommended would remedy FCC’s lack of critical information in this 
area, so that it is able to invest resources where they are needed, 
reduce costs, and fully oversee its programs. 
[hyperlink, http://www.gao.gov/products/GAO-08-125] 

[End of Strategic Goal 1] 

Strategic Goal 2: Provide timely, quality service to the Congress and 
the federal government to respond to changing security threats and the 
challenges of global interdependence. 

Protect and secure the homeland from threats and disasters: 

2.01.N. Strengthening Management and Risk Mitigation of Visa Waiver
Program: 

The Departments of Homeland Security and State manage the Visa Waiver
Program, which allows citizens from 27 countries to travel to the 
United States visa free. Terrorism concerns involving citizens from 
program countries have led some to suggest eliminating or suspending
the program, while the executive branch is considering adding programs 
to it. We found that changes to the program could bring about 
substantial increases in the demand for visas at embassies and consular 
offices abroad, severely disrupting visa operations at those locations. 
We also found that DHS had not fully developed tools to assess and 
mitigate program risks— including the risk that the program could be 
exploited by criminals to gain illegal entry into the country—and had 
not followed a transparent process to expand the program to additional 
countries. 

Impact: Our reports, testimonies, and briefings have contributed to 
congressional oversight of the Visa Waiver Program, and our 
recommendations have served as the basis for preliminary agency 
actions. For example, DHS completed standard operating procedures to 
guide mandated security assessments of potential expansion and existing 
program countries. 
[hyperlink, http://www.gao.gov/products/GAO-08-458T], 
[hyperlink, http://www.gao.gov/products/GAO-08-623], 
[hyperlink, http://www.gao.gov/products/GAO-08-967], 
[hyperlink, http://www.gao.gov/products/GAO-06-854] 

2.02.N. Improving Stakeholder Involvement in National Response Policy 
Making: 

The Federal Emergency Management Agency (FEMA) has emphasized the 
importance of partnering with stakeholders—state, local, and tribal 
governments; nongovernmental organizations; and the private sector—to
effectively prepare for and respond to major and catastrophic 
disasters. Moreover, the Congress, through the Post-Katrina Emergency 
Management Reform Act, requires such partnership. Although DHS included 
nonfederal stakeholders in the initial and final stages of developing 
the National Response Framework in 2007, it did not collaborate with 
these stakeholders as fully as originally planned or as required by the 
Post-Katrina Act. We found that FEMA did not have policies or procedures
in place to guide this process or to ensure a collaborative partnership 
with stakeholders. We recommended that FEMA develop policies and 
procedures that guide how future revision processes will occur, 
particularly for collaborating with nonfederal stakeholders. 

Impact: The Senate report for the fiscal year 2009 DHS appropriations 
act directs FEMA to brief the Committee within 60 days of the date of 
enactment regarding its plan to implement our recommendations. 
[hyperlink, http://www.gao.gov/products/GAO-08-768] 

2.03.N. Strengthening Watch-List Matching for Commercial Aviation 
Passengers: 

In a series of reports and testimonies, we reported on the 
Transportation Security Administration’s (TSA) oversight of air carrier 
efforts to match passenger information against the terrorist watch list 
(watch list matching)—used to identify persons who should be denied 
boarding or who should undergo additional security scrutiny—and TSA’s 
progress in assuming the watch list matching function with development 
of the Secure Flight program. We found that due to TSA’s limited 
oversight, some air carriers did not perform critical aspects of watch-
list matching, which has led to some actual matches not being 
identified, and that Secure Flight was at risk of exceeding cost and 
schedule estimates and not delivering needed functionality. 

Impact: As a result of our work, TSA has strengthened current watch-
list matching requirements and also taken action to improve its 
development of the Secure Flight program. 
[hyperlink, http://www.gao.gov/products/GAO-08-456T], 
[hyperlink, http://www.gao.gov/products/GAO-08-992] 

2.04.C. Improving Cargo and Port Security: 

In a series of reports and testimonies on maritime security, we 
summarized overall progress, but also identified weaknesses, 
limitations, and challenges in federal programs to secure our ports and 
the oceangoing cargos that they receive. In our October 2007 
testimonies on the SAFE Port Act, we provided a detailed summary of 
federal efforts, and challenges ahead, to improve maritime security 
across a number of agencies and programs. In a reports and testimony on 
the U.S. Coast Guard, we raised concerns about the agency’s ability to 
adequately ensure maritime security—for energy tanker vessels, at 
domestic maritime facilities, and at foreign ports—as well as to 
conduct its traditional missions within current resource levels. In 
reports and testimony on U.S. Customs and Border Protection programs 
related to oceangoing cargo containers, we noted weaknesses in the 
agency’s ability to assess the security of private companies that are 
members of its security partnership, as well as its ability to assess 
the adequacy of foreign governments. 

Impact: Our work aided the Congress in the decision to pass legislation 
to close some of the resource gaps and security limitations we noted. 
Further, agencies agreed to take several steps to implement our 
recommendations and improve their maritime security efforts. 
[hyperlink, http://www.gao.gov/products/GAO-08-126T], 
[hyperlink, http://www.gao.gov/products/GAO-08-494T], 
[hyperlink, http://www.gao.gov/products/GAO-08-533T], 
[hyperlink, http://www.gao.gov/products/GAO-08-187], 
[hyperlink, http://www.gao.gov/products/GAO-08-12] 

2.05.C. Improving National Flood Insurance Program Data and Analysis: 

In an October 2007 testimony we concluded that FEMA faced a number of 
ongoing challenges with data collection and analysis in managing the 
National Flood Insurance Program (NFIP) that, if not addressed, would 
continue to threaten the program’s financial solvency. Subsequently, we 
identified specific data collection and analysis shortcoming, such as 
the inability of (1) NFIP’s data systems to consistently determine the 
extent to which winds and floods contribute to total property damages 
and the accuracy of flood claims and (2) FEMA’s grant management system 
to record acquisition data in real time, which would help to ensure the 
systematic review of performance by disaster mitigation contractors. We 
made several recommendations to help ensure systematic monitoring and 
review of contractor performance. 

Impact: FEMA agreed with our recommendations to improve contractor 
oversight and has taken steps to address them. 
[hyperlink, http://www.gao.gov/products/GAO-08-118T], 
[hyperlink, http://www.gao.gov/products/GAO-08-28], 
[hyperlink, http://www.gao.gov/products/GAO-08-437] 

2.06.C. Identifying Challenges Associated with Implementing the Secure 
Border Initiative: 

In October 2007 and February 2008 we testified on DHS’s progress in 
implementing its CBP” Secure Border Initiative (SBI) program–a 
multibillion-dollar program to secure U.S. borders and reduce illegal 
immigration using technology, infrastructure, and personnel. We raised 
concerns regarding schedule delays and unmet expectations for a $20.6 
million technology project and meeting a December 2008 deadline to 
construct 670 miles of fencing along the southwest border. In addition, 
in spring 2008, we reviewed SBI’s planned fiscal year 2008 
expenditures. We found that the plans submitted to the Congress did not 
include detailed justification for all planned SBI expenditures nor did 
they permit progress against program commitments to be adequately 
measured and disclosed. 

Impact: The Congress subsequently requested additional information from 
CBP before releasing $650 million of the agency’s 2008 appropriation. 
[hyperlink, http://www.gao.gov/products/GAO-08-131T], 
[hyperlink, http://www.gao.gov/products/GAO-08-508T], 
[hyperlink, http://www.gao.gov/products/GAO-08-739R] 

2.07.C. Defining and Articulating the Federal Government’s Role in 
Sustaining Fusion Centers: 

After 2001, state and local governments began to establish fusion 
centers—collaborative efforts to detect, prevent, investigate, and 
respond to criminal or terrorist activity—to help address gaps in 
homeland security and law enforcement information sharing with the 
federal government and among levels of government. In an October 2007 
report we found that despite DHS’s and the Federal bureau of 
Investigation’s efforts to deploy personnel to fusion centers and DHS’s 
grant funding, center officials were concerned about long-term 
sustainability—both the extent of federal support they could expect as 
well as the roles of their state or local jurisdictions. We reported 
that one specific funding challenge fusion center officials cited was 
time limits on the use of Urban Area Security Initiative and State 
Homeland Security Grant Program grant funds for personnel, including 
intelligence analysts. This limit made retaining personnel challenging 
because state and local entities may lack the resources to continue 
funding such positions, which could affect the centers’ ability to 
continue to operate. 

Impact: Legislation proposed in fiscal year 2008 would, among other 
things, permit states and localities that receive these grant funds to 
use them for analyst salaries regardless of whether the analysts are 
current employees, new full-time employees, or contract employees and 
without limitations on the time period that these analysts can serve 
under the awarded grants. 
[hyperlink, http://www.gao.gov/products/GAO-08-636T], 
[hyperlink, http://www.gao.gov/products/GAO-08-35], 
[hyperlink, http://www.gao.gov/products/GAO-08-637T] 

2.08.C. Enhancing Security of Critical Infrastructure Control Systems: 

GAO testified in October 2007 on the need to improve security over 
critical control systems—computer-based systems that monitor and 
control sensitive processes and physical functions—highlighting the 
increased threats to control systems that support the nation’s critical 
infrastructure, such as those for electric power generation, oil and 
gas refining, and water treatment. In May 2008, we reported that the 
Tennessee Valley Authority (TVA), a federal entity and the nation’s 
largest public power company, needed to implement an effective 
information security program to protect such systems. We made 
recommendations to TVA to improve the implementation of security 
programs activities for the control systems governing TVA’s critical 
infrastructures, such as assessing the risk of all control systems and 
developing and implementing remedial action plans. 

Impact: TVA agreed with our recommendations and is taking steps to 
implement them. 
[hyperlink, http://www.gao.gov/products/GAO-08-119T], 
[hyperlink, http://www.gao.gov/products/GAO-08-526], 
[hyperlink, http://www.gao.gov/products/GAO-08-775T] 

2.09.C. Improving Government Efforts to Protect Sensitive Information: 

Information security (IS) requirements are designed to effectively 
protect sensitive information including personal, law enforcement, and 
proprietary information. We testified in February and March 2008 that 
despite agencies’ reported progress in implementing IS requirements, 
incidents involving data loss or theft, computer intrusions, and 
privacy breaches reported by federal agencies underscore the need for 
further improvements. 

Impact: Our work called for governmentwide action and brought attention 
to the need for federal agencies to better protect sensitive 
information by improving information protection policies and 
effectively implementing encryption technologies. 
[hyperlink, http://www.gao.gov/products/GAO-08-343], 
[hyperlink, http://www.gao.gov/products/GAO-08-525], 
[hyperlink, http://www.gao.gov/products/GAO-08-496T], 
[hyperlink, http://www.gao.gov/products/GAO-07-751T] 

Ensure military capabilities and readiness: 

2.10.F. Contributing to Properly Funding the Military’s Needs: 

In a number of reviews, we analyzed DOD’s base budget request for 
fiscal year 2008 and DOD’s approach for requesting the funds and 
reporting obligations for the Global War on Terrorism (GWOT). 

* In DOD’s fiscal year 2008 budget request, we identified billions of 
dollars in potential costs that could be avoided and opportunities for 
DOD to improve its internal oversight of the use and tracking of funds. 
We analyzed unobligated balances (i.e., funding that has been approved 
or is available but not yet committed for a particular purpose); 
operations and maintenance execution trends; and active, reserve, and 
civilian personnel expenditures. 

* In other work, we reported that expanded guidance allowed DOD to 
request GWOT funding for items, such as major weapon systems, that were 
also included in DOD’s base budget request, and we recommended that DOD 
build more of the GWOT funding requirement into the base budget request 
to provide greater transparency between base and GWOT needs. We also 
made recommendations to improve the reliability of GWOT cost reporting. 

Impact: Our budget work contributed to multiple actions that resulted 
in total financial benefits of about $3.062 billion and reductions in 
the fiscal year 2008 budget. In response to our GWOT funding work, DOD 
has taken steps to improve transparency in its base budget including 
revising procedures for analyzing variances in obligations, performing 
quality assurance, and providing clarification to guidance. 
[hyperlink, http://www.gao.gov/products/GAO-08-68] 

2.11.F. Assessing Joint Seabasing Results in $2.05 Billion Reduction in 
Ship Procurement: 

In January 2007, we issued a report on DOD’s joint seabasing 
initiative—an evolving concept for projecting and sustaining forces 
ashore that could cost billions of dollars. We recommended that DOD 
conduct additional experimentation and evaluation of joint seabasing 
options and synchronize associated cost estimates so that decision 
makers would have sufficient information for making investment 
decisions. We also concluded that if individual systems that support 
seabasing were procured before total ownership cost of seabasing 
options were developed and made transparent to DOD and the Congress, 
there was a risk that DOD could make significant investments that might 
not be the most cost-effective means of projecting and sustaining U.S. 
forces. 

Impact: Since our report’s issuance, DOD has reduced the number of 
ships it plans to procure for joint seabasing from eight to two ships, 
reducing the Navy’s shipbuilding costs by $2.273 billion. The Navy 
stated in a report to the Congress on its fiscal year 2009 shipbuilding 
plans that it delayed ship procurement for joint seabasing to resolve 
the concept of operations. This approach is consistent with our 
recommendations, which were partially agreed to by DOD. We estimate 
that the financial benefit realized from the Navy’s action totals about 
$2.05 billion—the difference between the net present value of the 
President’s requests for fiscal years 2009, 2010, and 2011 and the 
Navy’s fiscal year 2007 and 2009 shipbuilding plans. 
[hyperlink, http://www.gao.gov/products/GAO-07-211] 

2.12.F. Analyzing DOD’s Investment Budget for Fiscal Year 2008: 

We reviewed the President’s request for procurement and research, 
development, test and evaluation funding for DOD and identified a 
number of activities for which funding reductions were appropriate. For 
example, our analysis revealed that the Army’s request for tactical 
radios exceeded approved objectives, and the Congress reduced the 
budget request by $1.7 billion. We also identified a miscalculation in 
the costs of expanding a communications network, resulting in a budget 
reduction of $812 million. We also questioned the appropriateness of 
buying a Joint Strike Fighter to replace a combat loss since the 
aircraft would not be a combat-ready aircraft. As a result, the 
Congress did not fund this $230 million request. 

Impact: Our work supported reductions of about $1.4 billion in the base 
budget and nearly $4 billion in the GWOT budget. 

2.13.N. Improving the Management of Defense Infrastructure: 

In a series of reports and testimonies, we have recommended ways for 
DOD to improve the implementation of the Base Realignment and Closure 
(BRAC) process and the operation and sustainment of defense 
installations and facilities that support military missions, personnel, 
and readiness. In our BRAC series, we made recommendations to improve 
DOD’s reporting of BRAC implementation costs and savings and provide 
the Congress with greater transparency in projected implementation 
costs to aid in oversight. Our 2008 report on sustainment, 
modernization, and restoration of DOD facilities and bases made several 
recommendations to help ensure that military forces have adequate 
facilities to fully support the missions and personnel at the levels 
desired. In another report, we recommended that DOD improve the process 
it uses to communicate with and provide assistance to local communities 
surrounding military bases that are growing due to the BRAC and various 
realignment and Army reorganization initiatives. 

Impact: DOD is in the process of implementing these recommendations 
which are critical to ensuring that military bases flagged for 
expansion can operate in a sustainable fashion. 
[hyperlink, http://www.gao.gov/products/GAO-08-315], 
[hyperlink, http://www.gao.gov/products/GAO-08-602R], 
[hyperlink, http://www.gao.gov/products/GAO-08-244R], 
[hyperlink, http://www.gao.gov/products/GAO-08-1010R], 
[hyperlink, http://www.gao.gov/products/GAO-08-159] 

2.14.N. Enhancing DOD’s Preparedness for Homeland Security Missions: 

DOD established U.S. Northern Command (NORTHCOM) to conduct homeland 
defense and civil support missions in and around the United States. 
NORTHCOM coordinates with the National Guard Bureau because the bureau 
has experience dealing with state and local authorities during 
incidents and functions as NORTHCOM’s formal link to the states. In a 
series of reports, we identified shortcomings in DOD’s approach to its 
homeland security missions, specifically the National Guard Bureau’s 
management of weapons of mass destruction civil support teams. We also 
found that NORTHCOM did not adequately track supporting plans and that 
key challenges hindered NORTHCOM’s planning—including a gap in 
identifying requirements, a lack of regularly assigned forces to 
NORTHCOM, and difficulty monitoring the readiness of military units to 
accomplish civil support missions. 

Impact: To correct shortcomings in the National Guard Bureau’s 
management of civil support teams, the Army developed a plan to 
institutionalize the civil support team program—including management 
standardization and training efforts. In response to our NORTHCOM work, 
DOD agreed to address our recommendations and is in the process of 
establishing a means of tracking supporting plans, assigning key 
specialized forces to NORTHCOM, and revising guidance on roles and 
responsibilities for interagency coordination and interaction with the 
National Guard Bureau. 
[hyperlink, http://www.gao.gov/products/GAO-08-252], 
[hyperlink, http://www.gao.gov/products/GAO-08-251], 
[hyperlink, http://www.gao.gov/products/GAO-06-498] 

2.15.N. Strengthening Defense Security: 

A series of reports identified shortcomings in defense security related 
to the use of biometrics and securing DOD’s critical infrastructure. 
Our May 2008 report on improving DOD biometrics collection and sharing 
recommended that (1) DOD establish a minimum baseline standard set of 
biometrics data for collection during military operations so that 
biometrics data could be compared across multiple databases in 
different commands and across federal agencies as appropriate and in 
accordance with applicable laws, regulations, and international 
agreements and (2) the Secretaries of Defense and Homeland Security, in 
consultation with other federal agencies, determine if biometrics 
information sharing needs are being met and address any biometrics data-
sharing gaps that may exist, in accordance with laws, regulations, and 
international agreements. 

Impact: DOD noted that it urgently implemented our recommendation and 
filled gaps we identified in routine sharing of certain biometrics data 
with DHS and others for border security purposes. In addition, the 
White House used our report to support its policy making on biometrics. 
(Classified product not publicly available) 

2.16.N. Improving DOD Knowledge and Management of Servicemembers’ 
Employment Rights: 

In numerous products, we identified actions to address servicemember 
employment rights and discussed the Department of Labor and DOD’s 
implementation of the Uniformed Services Employment and Reemployment 
Rights Act of 1994 (USERRA), which protects employment and reemployment 
rights of federal and nonfederal employees who leave their civilian 
employment for military or other uniformed service. For example, we 
reported that the Congress did not have comprehensive information on 
reservists’ complaints because the Department of Labor’s annual USERRA 
report did not include informal complaints reservists made to DOD. 

Impact: In response to our work, both DOD and the Congress have taken 
several steps to protect employment and reemployment rights of federal 
and nonfederal employees who leave their civilian employment for 
military or other uniformed service. Specifically, the Congress amended 
the reporting requirement of title 38 U.S.C. § 4332 to require the 
Department of Labor to include informal complaint data from DOD in its 
annual USERRA report to the Congress. Also, in response to a 
congressional mandate, DOD has also agreed to better define scholarship 
costs for students who receive a DOD-funded medical education and to 
better capture employment data of reservists who require certification 
or licenses in their civilian careers. 
[hyperlink, http://www.gao.gov/products/GAO-08-254T], 
[hyperlink, http://www.gao.gov/products/GAO-08-370R], 
[hyperlink, http://www.gao.gov/products/GAO-07-259] 

2.17.N. Creating a Chief Management Officer (CMO) at DOD to Guide 
Business Transformation: 

During fiscal year 2008, we reported that DOD has yet to establish (1) 
a strategic planning process that results in a comprehensive, 
integrated, enterprisewide plan or set of plans to guide transformation 
and (2) a senior official who can provide full-time attention and 
sustained leadership to transformation. At a time of increasing 
military operations and growing fiscal constraints, billions of dollars 
have been wasted annually because of a lack of adequate transparency 
and appropriate accountability across DOD’s business areas. DOD’s lack 
of a comprehensive enterprisewide business transformation plan linked 
with performance goals, objectives, and rewards for all key business 
areas has been a continuing weakness. 

Impact: The Congress recognized the need for executive-level attention 
to business transformation matters and, in the National Defense 
Authorization Act for Fiscal Year 2008, assigned CMO responsibilities 
to the Deputy Secretary of Defense, established a full-time Deputy CMO 
position, and assigned CMO responsibilities within the military 
departments. Also, DOD has taken steps to improve its planning process 
and to implement the CMO legislation. 
[hyperlink, http://www.gao.gov/products/GAO-08-462T], 
[hyperlink, http://www.gao.gov/products/GAO-08-132T], 
[hyperlink, http://www.gao.gov/products/GAO-08-322T] 

2.18.C. Assessing U.S. Military Readiness and Ongoing Operations in 
Iraq and Afghanistan: 

Our work on force readiness and military operations in Iraq and 
Afghanistan has included several reports and testimonies on such topics 
as DOD’s ability to provide trained and ready forces for ongoing 
operations and other contingencies, equipment reset, the training and 
use of Navy and Air Force personnel to fill ground force requirements, 
force protection solutions to support deployed troops, and oversight of 
support contractors. Our work identified key challenges facing DOD, 
prompting the Congress to take legislative action to require DOD to 
address several readiness and training issues. 

Impact: Our work has helped frame significant issues for congressional 
and public debate, and DOD and the Congress are taking actions to 
address some of these issues. For example, DOD is establishing policies 
to guide the training and use of selected forces, and the Congress and 
DOD are taking steps to improve management of the Commander’s Emergency 
Response Program in Iraq for meeting urgent needs. 
[hyperlink, http://www.gao.gov/products/GAO-08-264], 
[hyperlink, http://www.gao.gov/products/GAO-08-342], 
[hyperlink, http://www.gao.gov/products/GAO-08-966], 
[hyperlink, http://www.gao.gov/products/GAO-08-736R], 
[hyperlink, http://www.gao.gov/products/GAO-08-497T] 

2.19.C. Improving DOD’s Major Weapons Acquisition Management Process: 

For a number of years we have reported on DOD’s history of major 
acquisitions costing more than estimated, delivering products later 
than originally promised, and providing less capability than desired. 
This year we reported on DOD’s actions to develop a congressionally 
mandated comprehensive strategy for improving the empowerment and 
accountability of program managers responsible for major DOD 
acquisitions. We also reviewed and made recommendations on how to 
improve DOD’s quality management practices by using best practices 
found at leading commercial companies, DOD’s management and oversight 
of programs with multiyear contracts, and DOD’s funding process and its 
impact on major acquisitions. 

Impact: DOD agreed or partially agreed with the majority of our 
recommendations and intends to take actions accordingly. For example, 
in line with recommendations made as a result of our review of DOD’s 
management and oversight of programs using multiyear contracts, DOD 
intends to implement a database to track multiyear procurements and 
post-procurement assessments. The Congress also continued to make use 
of our work, citing the results of our review of multiyear procurements 
and a prior year’s examination of technology transition in suggesting 
DOD actions. 
[hyperlink, http://www.gao.gov/products/GAO-06-883], 
[hyperlink, http://www.gao.gov/products/GAO-08-62R], 
[hyperlink, http://www.gao.gov/products/GAO-08-294], 
[hyperlink, http://www.gao.gov/products/GAO-08-619], 
[hyperlink, http://www.gao.gov/products/GAO-08-298] 

Advance and protect U.S. international interests: 

2.20.F. Realigning Funds for the National Nuclear Security 
Administration’s (NNSA) Surplus Russian Fissile Materials Disposition 
Program: 

In our review of NNSA’s fiscal year 2008 budget request, we found that 
$151 million in funds appropriated in fiscal year 1999 by the Congress 
for the Russian Surplus Fissile Materials Disposition program—which 
helps Russia dispose of weapons-grade plutonium—had never been allotted 
to the program for obligation, and thus remained unobligated. We also 
reported that the program had an additional $57.4 million in 
unobligated balances that were also potentially available for other 
uses. 

Impact: The Congress agreed with our assessment. Based in part on our 
review, the Congress acted in the Fiscal Year 2008 Consolidated 
Appropriations Act to rescind the $151 million appropriated in fiscal 
year 1999 as well as $57 million in unobligated program balances, 
resulting in $208 million available for use in other government 
programs. 

2.21.F. Analyzing the Fiscal Year 2008 Appropriation for the Millennium 
Challenge Corporation (MCC): 

Our February 2007 work showed that MCC could operate with a smaller-
than-requested fiscal year 2008 appropriation because, based on 
historical experience, the corporation would not obligate the balance 
of its prior years’ appropriations until the fourth quarter of fiscal 
year 2008. Our May 2007 correspondence to congressional committees 
showed that MCC had disbursed only about $68 million of the $2.1 
billion obligated for compact assistance and could have significant 
undisbursed balances when compacts expired. Our July 2007 report showed 
that MCC’s portrayal of projected compact impact did not reflect 
underlying data and identified five key risks that could affect project 
impact. 

Impact: Our work supported and informed appropriations and authorizing 
committees’ decisions about MCC funding for fiscal year 2008, and 
contributed to a congressional appropriation of about $1.6 billion for 
MCC for fiscal year 2008, a reduction of about $1.4 billion from the 
President’s $3 billion request. MCC officials confirmed that our 
analysis was used by congressional appropriators to frame key 
discussions abut MCC funding and as a basis for reducing MCC’s request. 
[hyperlink, http://www.gao.gov/products/GAO-08-577R], 
[hyperlink, http://www.gao.gov/products/GAO-07-909], 
[hyperlink, http://www.gao.gov/products/GAO-05-455T] 

2.22.N. Improving International Food Assistance: 

We found that multiple challenges hinder the efficiency and 
effectiveness of U.S. food aid, and U.S. agencies lack data to 
adequately monitor food aid program costs. As a result, these programs 
may not get the right food to the right people at the right time. We 
also found that persistent food insecurity in sub-Saharan Africa 
demonstrated that the efforts of both host governments and donors have 
been insufficient in meeting the commitment of the United States and 
more than 180 world leaders to halve hunger by 2015. 

Impact: A number of our recommendations have been enacted into law as 
part of the recent Farm Bill. Among other things, the Congress (1) 
authorized up to $22 million annually for a system of monitoring and 
assessment of nonemergency programs, (2) required the U.S. Agency for 
International Development to report on its oversight of nonemergency 
programs, and (3) directed GAO to review the agency’s efforts. 
[hyperlink, http://www.gao.gov/products/GAO-08-680], 
[hyperlink, http://www.gao.gov/products/GAO-07-560] 

2.23.C. Improving Oversight of U.S. Efforts in Afghanistan and 
Pakistan: 

We examined U.S. efforts to combat terrorism in Pakistan’s border areas 
and to secure and reconstruct Afghanistan. The result was a series of 
reports, testimonies, and briefings in which we identified a number of 
ways in which oversight of these efforts could be improved, including 
better monitoring of Coalition Support Funds provided to Pakistan and 
of road reconstruction funds for Afghanistan. Spending for each of 
these has totaled in the billions of dollars. 

Impact: Our work contributed to various congressional oversight 
hearings and legislative actions, including a formal letter from a 
congressional committee chairman to the President on our findings 
related to Afghan National Security Forces. In addition, DOD has begun 
to take steps to enhance its oversight of Coalition Support Funds, and 
DOD and the U.S. Agency for International Development have begun taking 
steps to improve their ability to measure the impact of Afghan 
reconstruction projects. 
[hyperlink, http://www.gao.gov/products/GAO-08-806], 
[hyperlink, http://www.gao.gov/products/GAO-08-689], 
[hyperlink, http://www.gao.gov/products/GAO-08-622], 
[hyperlink, http://www.gao.gov/products/GAO-08-820T], 
[hyperlink, http://www.gao.gov/products/GAO-08-932T] 

2.24.C. Securing, Stabilizing, and Rebuilding Iraq: 

Our June 2008 report found that overall violence, as measured by enemy-
initiated attacks, had fallen, but that key legislation had not been 
enacted and Iraqi spending for reconstruction was still low. We 
recommended that DOD and the Department of State (State) develop an 
updated strategy for Iraq that would build on recent gains and address 
unmet goals. 

Impact: The Congress used our work as part of its oversight on whether 
U.S. surge forces were achieving their intended outcome—that is, a 
reduction in violence throughout Iraq that would provide the time and 
space needed for reconciliation among Iraq’s Shi’a, Sunni, and Kurdish 
peoples. 
[hyperlink, http://www.gao.gov/products/GAO-08-837], 
[hyperlink, http://www.gao.gov/products/GAO-08-1031] 

Respond to the impact of global market forces on U.S. economic and 
security interests: 

2.25.N. Reforming the Federal Housing Government-Sponsored Enterprises 
(GSE) Regulatory Structure: 

In fiscal year 2008, we reported that the fragmented federal regulatory 
oversight structure for the housing government sponsored enterprises 
(GSE)—Fannie Mae, Freddie Mac, and the Federal Home Loan (FHL) bank 
system—was inadequate to monitor these large and complex financial 
institutions and their mission activities. We noted that while the 
housing GSEs play a critical role in the U.S. housing finance system 
(in the case of Fannie Mae and Freddie Mac by buying mortgages from 
lenders or the FHL bank system by providing loans to lenders), their 
activities pose potentially significant risks to taxpayers. 

Impact: In response to our findings and recommendations, Congress 
passed the Housing and Economic Recovery Act of 2008 that established a 
single housing GSE regulatory agency to better ensure consistency of 
regulation among the GSEs. This agency is responsible for safe and 
sound operations, provides housing mission oversight, has sufficient 
legal authority to authorize regulatory actions as capital levels 
decline, and can place insolvent institutions into receivership. 
[hyperlink, http://www.gao.gov/products/GAO-08-563T] 

2.26.N. Ensuring Compliance with Bank Fee Disclosure Requirements: 

The Truth-in-Savings Act and its implementing regulations require that 
banks provide uniform disclosures about, among other things, fees 
associated with checking and savings accounts to enable consumers to 
comparison shop and allow them to make informed decisions before 
opening checking or savings accounts. 

* In January 2008, we reported that GAO staff posing as customers were 
unable to obtain detailed fee information and account terms and 
conditions at more than one-fifth of the 185 bank branches visited. 

* We recommended that the five federal banking regulators assess the 
extent to which consumers receive disclosures on fees and incorporate 
steps into their oversight to ensure that disclosures continue to be 
made available. 

Impact: Each of the banking regulators agreed with our recommendation 
and indicated that they planned to take various actions in response to 
our report, including working on an interagency basis to revise their 
Truth-in-Savings Act examination procedures. 
[hyperlink, http://www.gao.gov/products/GAO-08-281] 

2.27.N. Balancing Customs and Border Protection’s Trade and Security 
Responsibilities: 

Our work informed the Congress on Customs and Border Protection’s (CBP) 
performance of mandated trade functions since its move to DHS. We found 
that, although CBP was the second largest revenue CBP was the second 
largest revenue generator for the U.S. government, the staffing levels 
for its revenue functions had declined below congressionally mandated 
levels. Further, CBP had not publicly reported on its performance of 
revenue functions, and the DHS IG had not audited CBP’s efforts in this 
area. Also, despite a legal mandate to maintain staffing levels in 
revenue positions, the number of staff had declined. We also found that 
the enforcement of intellectual property rights among CBP ports was 
uneven and that several factors contributed to a $613 million shortfall 
in collecting antidumping and countervailing duties from fiscal year 
2001 through fiscal year 2007. 

Impact: CBP has taken several steps to improve its performance of trade 
functions including (1) increased oversight by the IG and (2) more 
strategic direction and analysis of intellectual property enforcement. 
Based on our work, the Congress has required additional CBP reporting 
on revenue collections, is considering ways to improve the antidumping 
and countervailing duty system, and has addressed our recommendations 
in a major piece of intellectual property enforcement legislation. 
[hyperlink, http://www.gao.gov/products/GAO-08-157], 
[hyperlink, http://www.gao.gov/products/GAO-08-391], 
[hyperlink, http://www.gao.gov/products/GAO-07-529], 
[hyperlink, http://www.gao.gov/products/GAO-07-735] 

2.28.C. Assessing the Implications of Potential Systemic Risk from 
Hedge Fund and Leveraged Buyout Activities: 

In two reports on hedge funds and private equity-sponsored leveraged 
buyouts, we: 

* noted that even with the combined expertise of the relevant 
regulators, they still lack the data necessary to judge the full risks 
associated with hedge funds and leveraged buyouts and called attention 
to the potential for systemic risk that may stem from these activities; 

* reported that academic research suggests that leveraged buyouts 
generally have a positive impact on the financial performance of the 
target companies, but impact on employment is uncertain, and that our 
econometric analysis generally found no statistical indication that 
club deals, in aggregate, were associated with prices paid for the 
target companies; and: 

* recommended that the regulators for financial institutions that 
provide leveraged financing give increased attention to ensuring that 
their oversight of financial institutions takes into consideration 
potential systemic risks raised by changes in the broader financial 
market. 

Impact: Our work on hedge funds and private equity provided important 
insights into the growth and impact of an increasingly significant part 
of the global financial system. 
[hyperlink, http://www.gao.gov/products/GAO-08-200], 
[hyperlink, http://www.gao.gov/products/GAO-08-885] 

2.29.C. Providing a Basis for Improving the Export Control System: 

The system is a key component of the government’s safety net of 
programs designed to protect technologies critical to national 
security, which we designated as a new high risk list area in 2007. We 
identified the underlying factors that contributed to inefficiencies in 
State’s processing of arms export licenses. Based on the results of our 
analyses and recommendations, State has begun analyzing its own 
licensing data and implementing actions that will allow it to better 
manage its workload and restructure its workforce. Separately, we 
reported that the multiple federal agencies responsible for enforcing 
export control laws faced several challenges. For example, they have 
had difficulty coordinating investigations and agreeing on how to 
proceed on cases. These findings prompted the Department of Justice 
along with other export enforcement agencies to form a task force to 
enhance coordination. Also based on our recommendation, enforcement 
agencies began providing State and the Department of Commerce, which 
regulate defense-related exports, information on criminal enforcement 
actions—information that is important for these departments to consider 
as they review export license applications. 

Impact: We have continued to identify opportunities for improving the 
efficiency and effectiveness of the U.S. export control system. Our 
work has helped to inform legislative, administration, and industry 
proposals for reforming the export control system. 
[hyperlink, http://www.gao.gov/products/GAO-08-89], 
[hyperlink, http://www.gao.gov/products/GAO-08-710T], 
[hyperlink, http://www.gao.gov/products/GAO-07-265] 

2.30.C. Improving Oversight of Commodity Futures Markets: 

We reported on how various changes in the energy futures markets have 
posed increased challenges for regulators. As prices for various oil 
and natural gas commodities have risen significantly, concerns arose 
that the increases were the result of increased trading outside of 
regulated futures markets and by new market participants, such as hedge 
funds. 

* We found that the Commodity Futures Trading Commission (CFTC) was not 
maintaining documentation of the abusive trading practice allegations 
it received and lacked adequate measures of the effectiveness of its 
enforcement program. 

* We recommended that CFTC improve its oversight program and asked the 
Congress to consider revising the scope of the agency’s authority over 
energy derivatives trading given the changes in the markets. 

Impact: In response, CFTC has begun collecting more information on the 
reporting and classification of energy traders, and developing summary 
records of futures contracts in the major energy markets. In addition, 
various congressional committees have begun to examine the issues on 
which we reported and are considering potential changes in CFTC’s 
oversight authority. 
[hyperlink, http://www.gao.gov/products/GAO-08-25], 
[hyperlink, http://www.gao.gov/products/GAO-08-174T], 
[hyperlink, http://www.gao.gov/products/GAO-07-1095T], 
[hyperlink, http://www.gao.gov/products/GAO-06-742T] 

[End of Strategic Goal 2] 

Strategic Goal 3: Help transform the federal government’s role and how 
it does business to meet 21st century challenges. 

Reexamine the federal government’s role in achieving evolving national 
objectives: 

3.01.N. Enhancing National Preparedness for an Influenza Pandemic: 

Our work in this area included a March 2007 report on financial market
preparedness for an influenza pandemic and an October 2007 report on 
private sector coordinating councils that could help address challenges 
that will require coordination between the federal and private sectors
involved with protecting the nation’s critical infrastructure in 
advance of, as well as during, an influenza pandemic. 

Impact: In response to our recommendations, the Federal Reserve and the 
Office of the Comptroller of the Currency, in conjunction with the 
Federal Financial Institutions Examination Council, provided guidance to
financial institutions on actions they should take to minimize the 
potential adverse effects of a pandemic. 
[hyperlink, http://www.gao.gov/products/GAO-08-36], 
[hyperlink, http://www.gao.gov/products/GAO-08-539],
[hyperlink, http://www.gao.gov/products/GAO-08-92] 

Support the transformation to results-oriented, high-performing 
government: 

3.02.N. Improving Federal Agencies’ Acquisition Functions: 

Federal agencies spent nearly $440 billion in fiscal year 2007 on goods 
and services. For decades, however, we have reported on a number of 
systemic challenges in agencies’ acquisition of goods and services, 
which are so significant and wide ranging that we designated four areas 
of contract management across the government to be high risk. Such 
concerns led us in September 2005 to publish a framework to enable high-
level, qualitative assessments of the strengths and weaknesses of the
acquisition function at federal agencies. 

Impact: On May 21, 2008, the Administrator, Office of Federal 
Procurement Policy, issued guidelines and an associated template, which 
was largely based on our framework, for conducting reviews of agencies’ 
acquisition functions. The Administrator anticipated that using the 
template would contribute to a more holistic assessment of acquisition 
activities, minimize duplication of effort, and help chief acquisition 
officers fulfill their oversight responsibilities. 
[hyperlink, http://www.gao.gov/products/GAO-05-218G] 

3.03.C. Strengthening the Link between Contract Incentives and Outcomes
across Government: 

In December 2005 and January 2007, we reported that DOD and the 
National Aeronautics and Space Administration (NASA) structured monetary
incentives in contracts in ways that led to significant disconnects 
between the fees paid to contractors and program outcomes. For 
instance, DOD paid an estimated $8 billion in award fees on contracts 
regardless of outcomes. In both reports, we made recommendations aimed 
at strengthening the link between incentives and outcomes. 

Impact: The result was changes to award and incentive fee policies 
across several agencies, including DOD, NASA, and DHS. The Congress 
also enacted legislation incorporating most of our recommendations 
directed at DOD, and the emergency supplemental appropriation law for 
2007 required all DHS award fees to be linked to successful acquisition 
outcomes. In December 2007, OMB, citing our work, made tying award fees 
more directly to desired outcomes governmentwide policy. Moving toward 
more outcome-based award fee criteria will give contractors an 
increased stake in helping agencies develop more realistic targets up 
front or risk receiving less fees when unrealistic cost, schedule, and 
performance targets are not met. 
[hyperlink, http://www.gao.gov/products/GAO-07-58], 
[hyperlink, http://www.gao.gov/products/GAO-06-66], 
[hyperlink, http://www.gao.gov/products/GAO-06-409T] 

3.04.C. Assessing Risks and Strengthening Integrity of Reliance on 
Contractors: 

Contractor employees are increasingly performing tasks affecting 
billions of dollars in federal spending and assisting some of the most 
sensitive and restricted operations. This reliance on contractors 
carries challenges in maintaining institutional capacity distinguishing 
the roles and responsibilities of contractors and government personnel, 
and ensuring appropriate oversight. At DHS, we highlighted the need to 
manage risk and ensure government control over and accountability for 
decisions resulting from contractor services closely supporting 
inherently governmental functions. At the Army’s Contracting Center of 
Excellence, we found that contractors worked side by side with 
government contract specialists and performed the same duties, blurring 
the line between contractor and government responsibilities. 
Contractors also are not subject to the same ethics rules as government 
employees. 

Impact: To address the concerns raised in our work, DHS implemented 
training and issued memos on the appropriate use of contractors. In 
response to our work on the risks of personal conflicts of interests 
created by different ethics rules, and a lack of controls to help shed 
light on potential problems, DOD established a high-level panel to 
develop new contracting integrity policy and procedures. The Federal 
Acquisition Regulation Council also initiated efforts to gain insight 
into contractor practices and establish ways to provide more safeguards 
against personal conflicts of interest. 
[hyperlink, http://www.gao.gov/products/GAO-07-990], 
[hyperlink, http://www.gao.gov/products/GAO-08-169], 
[hyperlink, http://www.gao.gov/products/GAO-08-360], 
[hyperlink, http://www.gao.gov/products/GAO-08-485], 
[hyperlink, http://www.gao.gov/products/GAO-08-572T] 

3.05.C. Highlighting Congressional Oversight Issues for the Coast 
Guard’s Deepwater Program: 

The Coast Guard’s Deepwater Program is the largest acquisition in Coast 
Guard history. It is intended to replace or modernize 15 major classes 
of Coast Guard assets, including vessels, aircraft, and computer 
systems. In reports and testimonies, we evaluated the Coast Guard’s 
actions to increase accountability as it moves away from reliance on a 
contractor as lead system integrator and assumes greater government 
control over the Deepwater Program. Despite the positive changes under 
way, we highlighted several issues that warrant continued oversight. 
For example, the Coast Guard lacks adequate numbers of government 
contract specialists, cost estimators, and system engineers, and is 
relying on support contractors to help fill these key positions. As a 
further example, the Coast Guard has paid for Deepwater assets, such as 
the National Security Cutter, without having determined whether the 
assets’ planned capabilities will meet mission needs. 

Impact: Our work provided the Congress with timely analysis as it 
continues oversight of this large and complex acquisition program. 
[hyperlink, http://www.gao.gov/products/GAO-08-745], 
[hyperlink, http://www.gao.gov/products/GAO-08-270R], 
[hyperlink, http://www.gao.gov/products/GAO-08-531T], 
[hyperlink, http://www.gao.gov/products/GAO-08-494T] 

3.06.C. Monitoring the Development and Operation of the 2010 Census: 

Because the decennial census faces uncertainty and substantial risk, 
enhanced oversight remains important to the success of this critical 
national effort. In our March 2008 testimony, we placed the 2010 Census 
on GAO’s list of high-risk federal programs because of the following 
problems—long-standing weaknesses in the U.S. Census Bureau’s (Bureau) 
information technology (IT) acquisition and contract management 
function, risks associated with the performance of the handheld 
computers to collect data, and uncertainty over the cost of the census. 

Impact: Our work has helped the Bureau identify risks and improve the 
performance of key census-taking activities. We have recommended 
numerous actions, and the Bureau is addressing some of these issues. 
For example, on April 3, 2008, the Bureau announced a major redesign of 
the 2010 Census. Specifically, the Bureau would no longer use handheld 
computers for nonresponse follow-up in which field-workers interview 
households that did not return census forms, but would still use them 
to verify and update addresses. 
[hyperlink, http://www.gao.gov/products/GAO-08-936], 
[hyperlink, http://www.gao.gov/products/GAO-08-554], 
[hyperlink, http://www.gao.gov/products/GAO-08-886T], 
[hyperlink, http://www.gao.gov/products/GAO-08-659T], 
[hyperlink, http://www.gao.gov/products/GAO-08-550T] 

3.07.C. Protecting Personal Privacy in the Post-9/11 Environment: 

In June 2008, we testified that the Privacy Act may not provide 
adequate controls over federal collection and use of personal 
information, and stated that the Congress should amend this law. In 
addition, we reported that agency senior privacy officials across 
government do not uniformly have oversight of all key privacy 
functions. 

Impact: We continued to help the Congress address increasing concerns 
that individuals’ personal information could be inadequately protected 
by federal agencies, potentially compromising individuals’ privacy 
rights or exposing their information to misuse, such as through 
identity theft. 
[hyperlink, http://www.gao.gov/products/GAO-08-536], 
[hyperlink, http://www.gao.gov/products/GAO-08-603], 
[hyperlink, http://www.gao.gov/products/GAO-08-795T] 

3.08.C. Improving IT Management over the 2010 Decennial Census: 

In 2005, we recommended that the Bureau make improvements in managing 
IT investments and take steps to implement improved IT investment 
management, enterprise architecture, human capital, information 
security, and software/acquisition management practices. In both 2006 
and 2007, we made project-specific recommendations to improve 
acquisition management capabilities for acquiring key IT 2010 Census 
systems. 

Impact: Our work has highlighted the need to correct weaknesses 
associated with the Census Bureau’s management of IT systems. Also, 
because of the concerns we raised regarding weaknesses in the Bureau’s 
IT acquisition management capabilities, operational planning, and other 
areas, the 2010 Census has been designated as a GAO high-risk area. 
[hyperlink, http://www.gao.gov/products/GAO-08-79], 
[hyperlink, http://www.gao.gov/products/GAO-08-259T], 
[hyperlink, http://www.gao.gov/products/GAO-07-1106T], 
[hyperlink, http://www.gao.gov/products/GAO-06-444T], 
[hyperlink, http://www.gao.gov/products/GAO-05-661] 

3.09.C. Strengthening DOD Business Systems Modernization Management: 

For decades, DOD has been challenged in modernizing its timeworn 
business systems. We have designated DOD’s business systems 
modernization program as high risk since 1995. Since 2001, our work on 
DOD’s institutional approach to modernizing its business systems has 
produced recommendations that provide a comprehensive framework for 
establishing and implementing the institutional management controls 
associated with successful modernization efforts. The Congress embraced 
these recommendations in legislative mandates to DOD, which has made 
progress on some fronts establishing key corporate management controls. 
Nevertheless, key to the success of its modernization program is 
ensuring that these controls are extended to DOD component 
organizations and every business system investment. Accordingly, we 
focused on the extent to which certain major DOD business system 
acquisitions are implementing these controls and have made 
recommendations to strengthen management of each. 

Impact: DOD largely agreed with these recommendations and as a result 
will be better positioned to deliver promised benefits and capabilities 
on time and within budget. 
[hyperlink, http://www.gao.gov/products/GAO-08-462T], 
[hyperlink, http://www.gao.gov/products/GAO-07-538], 
[hyperlink, http://www.gao.gov/products/GAO-07-733], 
[hyperlink, http://www.gao.gov/products/GAO-06-215] 

3.10.C. Improving OPM’s Management of Retirement Systems Modernization: 

Beginning in January 2008, our work raised the congressional and public 
awareness of problems the Office of Personnel Management (OPM) faced in 
modernizing the paper-intensive processes and antiquated information 
systems used to support the growing volume of civilian federal employee 
retirements. We recommended that the agency improve management of this 
program, including that OPM address weaknesses in its approaches to 
testing system components and managing system defects, and that the 
agency develop a reliable program cost estimate and a measurement 
baseline against which program progress can be determined. 

Impact: Our work led to increased congressional oversight, including a 
mandate requiring OPM to report on its actions in response to the 
concerns we raised. 
[hyperlink, http://www.gao.gov/products/GAO-08-345], 
[hyperlink, http://www.gao.gov/products/GAO-08-576R] 

3.11.C. Improving Strategic Human Capital Management: 

In a series of reports and testimonies on OPM’s leadership of 
governmentwide human capital reforms, employee performance management, 
and workforce diversity, we reported the following: 

* While OPM has started to transform into a more effective leader of 
personnel reforms, we recommended that OPM build on that progress by 
addressing its own internal challenges, including improving its 
workforce planning efforts. 

* Performance management systems must have adequate safeguards in 
place, such as transparent processes to ensure fairness. We found that 
several federal agencies we reviewed could enhance the transparency of 
their performance management systems in part by improving how they 
communicate performance appraisal results to employees. 

* Agencies’ human capital planning efforts are critical to address 
demographic trends facing the government, including the diversity of 
the Senior Executive Service (SES) and the potential SES developmental 
pool (GS-15s and GS-14s). 

Impact: In response to our findings and recommendations, OPM took steps 
to ensure that it has the skills it needs for its current and future 
requirements, and several agencies improved how they communicate 
performance appraisal results to all employees while protecting 
individual confidentiality. We also presented testimony that informed 
congressional decisionmaking on governmentwide and selected agencies’ 
workforce diversity efforts. 
[hyperlink, http://www.gao.gov/products/GAO-08-630T], 
[hyperlink, http://www.gao.gov/products/GAO-08-11], 
[hyperlink, http://www.gao.gov/products/GAO-08-609T], 
[hyperlink, http://www.gao.gov/products/GAO-08-725T], 
[hyperlink, http://www.gao.gov/products/GAO-08-815T] 

Support congressional oversight of key management challenges and 
program risks to improving federal operations and ensuring 
accountability: 

3.12.F. Reducing Federal Improper Payments: 

Since fiscal year 2000, our recommendations have been aimed at raising 
the level of attention given to improper payments—any federal payment 
that should not have been made or that was made in an incorrect amount 
(including overpayments and underpayments) under statutory, 
contractual, administrative, or other legally applicable requirements. 

Impact: Our work contributed to the Congress passing the Improper 
Payments Information Act of 2002. Specifically, the provisions of the 
act coincide with our recommendations that federal agencies take 
actions to estimate, reduce, and publicly report improper payments. 
Fiscal year 2007 marked the fourth year that federal agencies were 
required to include estimated improper payment information in their 
annual financial and related performance reporting. For fiscal year 
2007, 21 agencies reported estimated improper payments totaling about 
$55 billion associated with 78 programs, including 19 programs or 
activities reporting for the first time. Federal agencies have made 
progress in reducing their improper payments. We estimate that they 
reduced improper payments by about $1 billion (present value) during 
fiscal year 2007. 
[hyperlink, http://www.gao.gov/products/GAO-08-438T], 
[hyperlink, http://www.gao.gov/products/GAO-07-92], 
[hyperlink, http://www.gao.gov/products/GAO-06-347], 
[hyperlink, http://www.gao.gov/products/GAO-04-99], 
[hyperlink, http://www.gao.gov/products/GAO-02-749] 

3.13.F. Reducing Administrative Costs in the Federal Crop Insurance 
Program: 

USDA pays companies participating in the federal crop insurance program 
a percentage of the premium on policies sold, in order to cover the 
administrative and operating (A&O) expenses of selling and servicing 
these policies. At May and June 2007 congressional hearings, we stated 
that more than 40 cents of every dollar USDA spends on crop insurance 
goes to companies administering the federal crop insurance program 
while less than 60 cents goes to help farmers. Furthermore, we: 

* pointed out that A&O payments since 2002 have significantly increased 
and are expected to continue to rise because of high crop prices which 
will increases the value of policies and, ultimately, A&O payments; 
and: 

* stated that a reduced A&O payment rate for A&O expenses would 
potentially save hundreds of millions of dollars annually yet still 
provide sufficient funds for the companies to continue delivering high-
quality service. 

Impact: The Food, Conservation, and Energy Act of 2008 directed USDA to 
reduce the A&O payment rate 2.3 percentage points starting in 2009 and 
continuing through 2013. Based on premiums of $9.5 billion in the crop 
insurance program, USDA will reduce A&O payments $220 million per year 
to insurance companies participating in the program. In present value 
terms, these savings total $974 million through 2013. 
[hyperlink, http://www.gao.gov/products/GAO-07-819T], 
[hyperlink, http://www.gao.gov/products/GAO-07-944T] 

3.14.F. Improving the Financial Accountability of a Major DOE 
Construction Project: 

The Department of Energy (DOE) is constructing the Mixed Oxide (MOX) 
Fuel Fabrication Facility at the Savannah River Site in South Carolina. 
This facility will convert surplus weapons-grade plutonium into MOX 
fuel that can be used in commercial nuclear power plants. The project 
faces significant delays and project management challenges, and as a 
result, the project has significant unobligated balances (appropriated 
funds that have not yet been obligated to a contract) and uncosted 
obligations (funds obligated to a contact but not yet spent). We 
reported that the MOX project had a $476 million carryover balance at 
the beginning of fiscal year 2008, nearly $230 million of which was 
unobligated, and that NNSA was requesting an additional $333.8 million 
in its fiscal year 2008 appropriations request. We reported that the 
project’s carryover balance could be significantly reduced and that the 
fiscal year 2008 budget request may not be needed. 

Impact: The Congress agreed with our assessment and in the Fiscal Year 
2008 Consolidated Appropriations Act rescinded $115 million of the 
project’s carryover balance. In addition, the Congress reduced DOE’s 
fiscal year 2008 appropriation for the MOX project by $52.5 million. 

3.15.N. Improving Accountability for Excess DOD Parts and Equipment: 

Beginning in 2005, we have performed investigative work and made 
recommendations on excess parts and equipment at DOD. For example, we 
identified instances in which DOD improperly sold F-14 parts to the 
general public through its excess property system. Iran is the only 
nation in the world with operable F-14 fighter aircraft and is known to 
be seeking F-14 parts. 

Impact: The Congress cited our work in introducing legislation 
prohibiting DOD from selling parts that could be used on the F-14 
fighter aircraft. The language was included in the 2008 Defense 
Authorization Act. These actions have served to improve accountability 
over sensitive military parts and equipment. 
[hyperlink, http://www.gao.gov/products/GAO-06-943], 
[hyperlink, http://www.gao.gov/products/GAO-07-929R] 

3.16.N. Referring Individuals for Fraudulently Accepting Federal 
Disaster Assistance Payments: 

In the aftermath of hurricanes Katrina and Rita in 2005, we conducted 
forensic audit and investigative work related to FEMA’s disaster relief 
assistance payments to individuals. Our work found indications of 
widespread fraud. We referred thousands of individuals suspected of 
fraud to the appropriate federal agencies, such as DHS’s Office of 
Inspector General and the Katrina Fraud Task Force, for further review 
and possible prosecution. 

Impact: As a result of these referrals, over 50 individuals have been 
sentenced to jail or placed on probation after being found (or 
pleading) guilty. These individuals were convicted of crimes such as 
conspiracy, false claims, theft of government funds, mail fraud, and 
wire fraud. 
[hyperlink, http://www.gao.gov/products/GAO-06-655] 

3.17.N. Enhancing U.S. Border Security: 

Beginning in 2003, our investigators identified border security 
vulnerabilities both at U.S. ports of entry and at unmanned and 
unmonitored land border locations between ports of entry. In 
particular, undercover GAO investigators successfully used fraudulent 
documents to enter the United States at several CBP checkpoints on both 
the northern and southern borders. 

Impact: CBP recently reported that it took action to address a number 
of the vulnerabilities highlighted by our work, including enhanced 
training for its agents and the installation of additional fraudulent 
document detection equipment at U.S. ports of entry. Further, to 
address vulnerabilities in areas between border ports of entry, CBP has 
installed new sensor equipment technologies. These actions should 
enable CBP to more effectively identify attempts to illegally penetrate 
our nation’s borders. 
[hyperlink, http://www.gao.gov/products/GAO-06-976T], 
[hyperlink, http://www.gao.gov/products/GAO-07-884T], 
[hyperlink, http://www.gao.gov/products/GAO-08-757] 

3.18.C. Improving Transparency and Accountability of NASA’s Budget: 

With more than two-thirds of its major programs significantly over 
budget or behind schedule, NASA continues to struggle to improve its 
contract and program management functions. Our review of selected NASA 
programs found that NASA lacked the disciplined cost-estimating 
processes and financial and performance management systems needed to 
establish priorities, quantify risks, and manage costs. In an effort to 
address some of these systemic problems, we worked closely with the 
Congress this year to restructure and realign NASA’s appropriation 
funding account structure from three broadly defined appropriation 
accounts to seven accounts directly aligned to agency functions. 

Impact: As a result of our work, the Congress directed NASA to prepare 
to convert to a seven account structure in order to improve 
transparency and accountability. In addition, NASA submitted its fiscal 
year 2009 budget request using the new account structure. It is 
expected that this new structure will provide more transparency and 
clarity to agency spending and enhance the overall accountability of 
its expenditures. 
[hyperlink, http://www.gao.gov/products/GAO-08-51], 
[hyperlink, http://www.gao.gov/products/GAO-06-817R] 

Analyze the government’s fiscal position and strengthen approaches for 
addressing the current and projected fiscal gap: 

3.19.F. Changing the Criteria for IRS’s Federal Payment Levy Program: 

IRS’s Federal Payment Levy Program allows IRS to levy up to 15 percent 
of certain federal payments made to delinquent taxpayers. Our 2003 
report on the program’s operations found that IRS’s usage of Total 
Positive Income (TPI), a measure derived from income information on 
income tax returns, as a criterion for determining taxpayers’ ability 
to pay their delinquent taxes had likely resulted in unequal treatment 
of similarly situated taxpayers, and thus was in conflict with IRS’s 
goal of treating all taxpayers fairly. We recommended that IRS 
discontinue using the TPI criterion, and IRS agreed. 

Impact: With the elimination of the criterion, taxpayers could be 
treated more equally. Also, based on our analysis, which was reviewed 
by IRS, IRS collected an estimated $25 million in additional tax 
revenue in fiscal 2006. We further estimate that it will collect an 
additional $82 million over the fiscal year 2008-2010 period, for a 
total of $107 million (net present value) from phasing out TPI usage. 
[hyperlink, http://www.gao.gov/products/GAO-03-356] 

3.20.F. Reducing Tax Avoidance by Individuals Who Expatriate: 

In 2000 we reported on IRS, State, and Immigration and Naturalization 
Service (now a part of DHS) procedures for enforcing laws limiting 
individuals’ ability to avoid U.S. tax by expatriating, that is, 
leaving the United States and giving up U.S. citizenship or long-term 
residency status. In several confidential briefings to the Joint 
Committee on Taxation (JCT), we provided information on individuals who 
had expatriated including net worth at expatriation, average tax paid 
before expatriation, tax paid after expatriation, citizenship obtained, 
resident country, expatriation date, and number of years tax returns 
filed since expatriation. 

Impact: Subsequently, the Heroes Earnings Assistance and Relief Tax Act 
of 2008 (Pub. L. No. 110-245, June 17, 2008) was enacted, which 
tightens current rules to ensure that certain high net-worth 
expatriates cannot avoid U.S. taxes. JCT estimated that the budget 
effect of the revised tax rules will be to increase revenues by $206 
million (discounted) in the first 5 years after enactment. 
[hyperlink, http://www.gao.gov/products/GAO/GGD-00-110R] 

3.21.F. Increasing Tax Collections by Revising IRS’s Withholding 
Compliance Program: 

IRS’s Questionable Form W-4 program looked at cases where taxpayers 
claim more than 10 withholding allowances and exemption from federal 
income tax withholding. In November 2003, we recommended that IRS 
assess the value of its program and determine whether the program 
should continue. Acting on our recommendation, an IRS task force 
concluded that the program was not operating effectively. 

Impact: IRS eliminated the Questionable Form W-4 program and said that 
it would enhance its withholding compliance program by making more 
effective use of information reported on the Form W-2 wage and tax 
statements to ensure that employees have enough federal income taxes 
withheld from their wages. Using IRS’s data and assumptions, last year 
we estimated that the new program had resulted in the collection of 
$423 million (net present value) in additional income taxes for fiscal 
years 2005 and 2006 and through part of fiscal year 2007. Using IRS’s 
data and assumptions, this year we estimated that the program generated 
additional tax revenues for the remainder of fiscal year 2007 and much 
of fiscal year 2008 equal to a net present value of $309 million 
[hyperlink, http://www.gao.gov/products/GAO-04-79R] 

3.22.F. Improving the Cost-effectiveness of Filling the Strategic 
Petroleum Reserve: 

In February and April 2008 we testified on shortcomings in DOE’s 
efforts to fill the Strategic Petroleum Reserve with royalty oil (oil 
produced from federal lands and waters) received from the Department of 
the Interior (Interior). Through the current royalty-in-kind program, 
Interior’s Minerals Management Service (MMS) receives oil instead of 
cash for payments of royalties from companies that lease federal 
property for oil development, then DOE takes possession of this royalty 
oil at market centers and may exchange this oil for Strategic Petroleum 
Reserve-quality oil. The royalty-in-kind program precludes the need for 
the Congress to make outlays to finance oil purchases, but the forgone 
revenues associated with using royalty oil imply an equivalent loss of 
revenue because MMS would otherwise sell the oil and deposit the 
revenues with the U.S. Treasury. We testified that suspending the fill 
of the Strategic Petroleum Reserve during the current period of high 
oil prices would have a dampening effect on gasoline prices because it 
would reduce oil prices. 

Impact: DOE subsequently decided to suspend the Strategic Petroleum 
Reserve fill through the remainder of calendar year 2008, and the 
Congress passed legislation halting the fill with royalty oil until 
crude oil fell to $75 per barrel, on average, for a 90-day period. In 
May 2008, MMS estimated the value of 16.1 million barrels of royalty-in-
kind oil at about $1.89 billion. According to the Program Director, 
this represents MMS’s best estimate of the Treasury revenue gain 
stemming from DOE’s decision to suspend the Strategic Petroleum Reserve 
fill through the rest of calendar year 2008. The Program Director 
recommended that the estimated revenue gain be divided evenly among the 
last 6 months of the calendar year. In net present value terms, the 
$1.89 billion revenue gain would be reduced to about $1.86 billion. 
[hyperlink, http://www.gao.gov/products/GAO-08-521T], 
[hyperlink, http://www.gao.gov/products/GAO-08-726T], 
[hyperlink, http://www.gao.gov/products/GAO-08-893R], 
[hyperlink, http://www.gao.gov/products/GAO-08-942R] 

3.23.F. Improving Collections of Federal Nontax and Criminal Debts: 

Over the past several years, we have rigorously promoted federal 
agencies’ use of key debt collection processes and procedures to 
improve collections of delinquent federal nontax civil debts, and 
criminal debts owed to the federal government and victims of crime. In 
fiscal year 2007, delinquent federal nontax civil debts totaled about 
$65 billion; most of these debts were over 6 months delinquent. In 
addition, criminal debts exceeded $50 billion in fiscal year 2007, 
about $11 billion (or about 20 percent) of these debts were owed to the 
federal government. 

Impact: Based largely on recommendations we made in a series of 
reports, the Department of Education, the Department of Justice, the 
Department of the Treasury, and other federal agencies have continued 
to improve collections of delinquent federal nontax civil debts and 
criminal debts owed to the federal government. Adding to a steady 
stream of recoveries, these improved collections resulted in an 
estimated $2.3 billion in additional federal collections identified 
during fiscal year 2008. 
[hyperlink, http://www.gao.gov/products/GAO-04-338], 
[hyperlink, http://www.gao.gov/products/GAO-02-313], 
[hyperlink, http://www.gao.gov/products/GAO-01-664] 

3.24.F. Improving IRS’s Methodology for Pursuing Delinquent Taxes: 

Our report on IRS’s fiscal year 1999 financial statements disclosed 
that IRS did not have systems or procedures in place to allow it to 
identify and actively pursue cases that may have some collection 
potential. We recommended that IRS improve its capacity to assess the 
collectibility of delinquent taxes to focus collection resources on 
debts with the greatest potential for collection. 

Impact: In 2004, IRS began implementing more sophisticated modeling 
technology to better differentiate between more and less productive 
cases in order to make better resource allocation decisions. IRS’s 
records showed that its collections of delinquent taxes increased by 
about $4.8 billion or over 20 percent in fiscal year 2007 from fiscal 
year 2003 levels (using approximately the same level of resources). 
[hyperlink, http://www.gao.gov/products/GAO-01-42] 

3.25.F. Funding USPS Postretirement Health Obligations: 

For many years we have reported on USPS’s significant liabilities and 
obligations, including tens of billions of dollars in postretirement 
health care benefits that were not yet funded. In December 2006, the 
Postal Accountability and Enhancement Act (Pub. L. No. 109-435) was 
enacted, which created the Postal Service Retiree Health Benefits Fund 
into which USPS is to make a series of 10 annual payments to help fund 
its retiree health care obligations. In fiscal year 2007, USPS made the 
first of its annual payments into the fund. That $5.4 billion payment, 
funded through USPS rate increases, helped to avoid requiring the 
federal government to finance this substantial obligation. 

Impact: Each of these payments, including the $516 billion payment for 
fiscal year 2008, represents a financial benefit to the federal 
government resulting from our work.
[hyperlink, http://www.gao.gov/products/GAO-02-170], 
[hyperlink, http://www.gao.gov/products/GAO-03-448R], 
[hyperlink, http://www.gao.gov/products/GAO-04-238] 

3.26.N. Improving Federal Financial Reporting: 

In fiscal year 2007, for the first time, we were able to render an 
unqualified opinion on the U.S. government’s Statement of Social 
Insurance. This statement displays the present value of projected 
revenues and expenditures for scheduled benefits of federal social 
insurance benefit programs (e.g., Social Security and Medicare). In 
addition, through our continuing efforts as the principal auditor of 
the U.S. government’s consolidated financial statements, we were able 
to affect a number of significant improvements to the understandability 
and utility of federal financial reporting during 2007. 

Impact: The Department of the Treasury (Treasury), in coordination with 
OMB, implemented 35 of our recommendations directed at improving the 
process used to prepare these statements. Further, for a number of 
years, we have urged the issuing of a high-level summary of the federal 
financial report aimed at assisting average citizens in better 
understanding the extent and nature of our nation’s long-term fiscal 
challenge. In 2007, we assisted OMB and Treasury in producing the first-
ever high-level summary of federal financial reporting, The Federal 
Government’s Financial Health: A Citizen’s Guide to the 2007 Financial 
Report of the United States Government. This eight-page document 
summarizes key financial data needed to better understand our nation’s 
current financial condition and fiscal challenges today and over the 
long-term. 
[hyperlink, http://www.gao.gov/products/GAO-07-362SP], 
[hyperlink, http://www.gao.gov/products/GAO-08-926T] 

3.27.C. Reducing the Tax Gap: 

In a forum on tax compliance that we sponsored jointly with the 
Congressional Budget Office and JCT, participants indicated that 
reducing the annual net tax gap—the difference between the tax amounts 
taxpayers pay voluntarily and on time and what they should pay under 
the law, most recently estimated as $290 billion for 2001—would require 
a variety of approaches and incremental progress. In 2008, we focused 
on identifying such incremental improvements. For example, for one area 
we examined, to better pursue egregious payroll tax delinquents, we 
made six recommendations to prioritize IRS’s payroll tax enforcement 
efforts and take faster action against offenders. As another example, 
in reviewing IRS’s broader delinquent tax collection efforts, we noted 
that the large amount of outstanding tax debt, almost $300 billion in 
2007, and IRS’s limited resources result in a very complex collection 
process with delays and significant write-offs. To improve resource 
allocation, we recommended that IRS increase its use of return on 
investment information. 

Impact: IRS agreed with most of our recommendations. As they are 
implemented, the tax gap should be reduced. 
[hyperlink, http://www.gao.gov/products/GAO-08-617], 
[hyperlink, http://www.gao.gov/products/GAO-08-728], 
[hyperlink, http://www.gao.gov/products/GAO-08-99], 
[hyperlink, http://www.gao.gov/products/GAO-08-266], 
[hyperlink, http://www.gao.gov/products/GAO-08-567] 

3.28.C. Addressing Our Nation’s Long-term Fiscal Challenge: 

We continued our efforts in fiscal year 2008 to help the Congress and 
the public better understand the future fiscal implications of the 
federal government’s policies and commitments. Specifically, our 
report, A Call for Stewardship: Enhancing the Federal Government’s 
Ability to Address Key Fiscal and Other 21st Century Challenges, laid 
out a number of tools and process improvements to help the Congress and 
the executive branch facilitate difficult discussions and decisions 
that will be necessary. With a fiscal model of the state and local 
sector, we demonstrated that healthcare is a fundamental fiscal 
challenge at all government levels and that solutions should be 
considered in a strategic and integrated manner. In addition, we 
contributed to the federal government’s first-ever summary annual 
report, The Federal Government’s Financial Health: A Citizens’ Guide to 
the 2007 Financial Report of the United States Government, which 
provides an overview of the federal government’s financial condition. 

Impact: Our work informed legislative proposals calling for commissions 
to address the country’s fiscal challenge and the Federal Accounting 
Standards Advisory Board’s drafting of a fiscal sustainability 
reporting requirement. 
[hyperlink, http://www.gao.gov/products/GAO-08-93SP], 
[hyperlink, http://www.gao.gov/products/GAO-08-206], 
[hyperlink, http://www.gao.gov/products/GAO-08-317], 
[hyperlink, http://www.gao.gov/products/GAO-08-372], 
[hyperlink, http://www.gao.gov/products/GAO-08-912T] 

[End of Strategic Goal 3] 

Strategic Goal 4: Maximize the value of GAO by being a model federal 
agency and a world-class professional services organization. 

Improve client and customer satisfaction and stakeholder relationships: 

4.01.C. Strengthening Communication and Relationships with Our 
Congressional Clients and Our Stakeholders: 

We strengthened our communication and relationships with our
congressional clients in several ways this fiscal year: 

* performed an extensive annual outreach to senior members of 
congressional committees to ensure a full and complete understanding of 
emerging issues; 

* worked closely and collaboratively with Congress in support of 
passage of the GAO Act, which contains important provisions that will 
help us with a variety of human capital and administrative matters (see 
app. 2 for a summary of our recent human capital legislation and 
activities); 

* proactively provided testimony at House and Senate hearings on new
administration transition issues and began developing tools for use by 
the next President and Congress to help make the transition from 
campaigning to governing quickly; 

* broadened our understanding of client feedback through follow-up 
meetings with nonrespondents to our client satisfaction survey and 
contacted clients to further clarify feedback submitted; and: 

* decreased the time required between report issuance date and delivery 
to our congressional clients and other recipients from 2 or more days 
to the same day. 

We enhanced our ability to communicate our results more effectively and 
timely to our stakeholders and the American people by: 

* continuing to bring attention to the nation’s growing fiscal imbalance
through a series of high-profile efforts including a CG speech at the 
National Press Club, participating in the I.O.U.S.A. documentary, 
preparing an op-ed for USA Today, and continuing the Fiscal Wake-Up
Tour; 

* fostering greater public understanding of our role in contract award 
protests in the face of intense press interest in the release of GAO’s 
decision on the Air Force’s aerial refueling tanker contract. The 
resulting national and regional news coverage consistently portrayed 
the decision as professional, objective, and nonpartisan; 

* preparing articles that increased awareness of our efforts to lead on 
a range of “best practices,” including a piece on human capital reform 
that made the cover of The Federal Manager; and: 

* refining and expanding our external Web site, including enhancing the 
process for determining the standards for establishing topic 
collections and for posting items on “In the Spotlight”. 

Impact: As a result of these efforts, we improved our timeliness in 
providing audit products; enhanced press coverage of our work and 
improved access to our products for external users, from congressional 
staff to reporters, on current and emerging policy issues; enhanced the 
public’s understanding of our role as a professional, objective, and 
nonpartisan entity; and highlighted our commitment to continuous 
improvement through timely and accurate regional and national news 
coverage. 

4.02.C. Assessing Internal Customer Satisfaction with Our Services and 
Processes and Implementing and Measuring Improvement Efforts: 

The fifth annual GAO Customer Satisfaction Survey was conducted in 
November 2007, and 1,350 (43 percent) of our staff provided input on 
their satisfaction with our administrative services. Through this 
internal customer satisfaction survey, we gather information on how 
well our internal operations help employees get their jobs done (18 
services, such as IT tools, report production, and travel) and improve 
employees quality of work life (11 services, such as benefits and 
transit subsidies), asking our staff to rank each service on a scale 
from 1 to 5 for satisfaction with the service and from 1 to 5 for 
importance of the service. We use information from this survey to set 
targets and assess our performance for both of these measures, which 
are shown in table 1 in part I. 

Fiscal year 2008 is the third year in which we reported how well we 
performed against the targets we set for our internal operations 
measures. While both these scores decreased slightly in 2008, we met 
our target of “4” for services that help employees get their jobs done, 
and just missed our target of “4” for services that affect quality of 
work life with a score of 3.98. 

The survey provides us rich information on our administrative services 
which we used to proactively identify areas to address customer issues 
and recommendations, and implement several improvements, including: 

* increasing the promotion of services and resources available through 
our library; 

* improving the user interface to enhance the user-friendliness of our 
automated time and attendance system; 

* improving our travel Website by adding a Quick Reference Checklist 
that consolidates frequently used information onto a single page; 

* instituting lunch and learn sessions and special briefings on the 
myriad federal benefits available to staff; 

* communicating more proactively and frequently with our field offices 
to expeditiously resolve concerns about mail services; 

* enhancing our staff’s capability to work remotely through system 
upgrades and development of a user guide; 

* providing training and support for our document management (DM) 
system through a “tips and tricks” tool, and: 

* improving knowledge and expertise for help desk and floor support 
staff on DM. 

Impact: Our efforts and commitment to continuous improvement have 
resulted in improvements to GAO’s operations, processes, and services 
including greater efficiency for our staff, increased accessibility to 
and user friendliness of systems, and improved communication with our 
customers to provide information and guidance about our available 
services. 

4.03.C. Strengthening Relationships with External National and 
International Audit Organizations: 

To strengthen our relationships with auditors general from over 29 
developing countries, we partnered with the World Bank and the 
International Organization of Supreme Audit Institutions (INTOSAI) 
Development Initiative to design, develop, and deliver the Supreme 
Audit Institution (SAI) Transformation Seminar in November 2007. 

Impact: This prototype seminar provided the opportunity to strengthen 
public sector financial management and accountability at the global 
level and demonstrated successful partnership that will be replicated 
regionally by the INTOSAI Development Initiative. 

We assisted in building the Iraqi Board of Supreme Audit’s (BSA) 
capacity through an MOU with State. Under this MOU, we sponsored a 
modified version of the course of study we offer to auditors around the 
world through the International Auditor Fellowship program. We also 
produced an Arabic translation of the Yellow Book and related GAO forms 
and templates to assist the BSA in carrying out performance audits and 
fighting corruption. These documents will also be used by the 19 member 
SAIs of the Arab Organization of Supreme Audit Institutions. 

Impact: The program resulted in increased understanding between the 
United States and Iraqi BSA, and opened doors to positive relations 
between the two as they work to increase accountability for public 
funds spent in Iraq. The strategic partnership with State provided a 
foundation for future partnerships. 

We collaborated on the Institute of Internal Auditors webcast relating 
to professional standards, with a special focus on the revised Yellow 
Book. We provided the panelists and the public sector network while the 
institute provided the organization, funding, and infrastructure for 
the webcast. 

Impact: This webcast increased outreach to a global audience on the 
revised Yellow Book. 

We continued to strengthen the ability of SAIs around the globe to 
fulfill their missions and enhance accountability and governance 
worldwide through our International Auditor Fellowship program. 

Impact: We enabled 18 fellows from 17 countries to enhance their 
individual skills and knowledge and strengthen their SAI’s 
institutional capacity and allowed our instructors, mentors, and 
sponsors to become a part of a global professional network of SAIs, 
donors, and other accountability partners, which we leverage in support 
of our engagements. 

Lead strategically to achieve enhanced results: 

4.04.C. Enhancing our Strategic Planning Process: 

We took proactive steps to build on our strategic planning process and 
ensure enhancements to our 2010 strategic plan by increasing our 
internal awareness of the process through process mapping the “as is” 
process, and identifying related pain points and opportunities for 
improvement. 

Impact: We are entering the 2010 strategic planning cycle with 
identified opportunities for improvement which will result in a better 
plan. 

We shared our knowledge and experience in strategic planning by 
providing significant leadership to INTOSAI and the National 
Intergovernmental Audit Forum (NIAF) in implementing their strategic 
plans. We: 

* helped establish the Workgroup on National Performance Measures and 
the Task Force on Donor Funding; 

* served as vice-chair of the INTOSAI Board’s Finance and 
Administration Committee in developing a system for implementing, 
tracking progress on, and updating the INTOSAI Strategic Plan; and: 

* provided widespread support to NIAF’s ¦committees in implementing 
their strategic objectives. 

Impact: Our assistance and leadership in these efforts has resulted in 
enhanced governance structure, a broader membership base, increased 
resources, better financial management systems, and accountability for 
INTOSAI and NIAF. 

4.05.C. Achieving External Recognition: 

We received the following external recognition during fiscal year 2008: 

* Certificate of Excellence in Accountability Reporting from the 
Association of Government Accountants for the seventh year in a row; 

* American Inhouse Design Award for three of our products – the 2007 
Performance and Accountability Highlights [hyperlink, 
http://www.gao.gov/products/GAO-08-2SP, January 2008], the Office 
of General Counsel’s recruitment brochure, and A Call for Stewardship: 
Enhancing the Federal Government’s Ability to Address Key Fiscal and 
Other 21st Century Challenges (December 2007) – selected from more than 
5,000 entries from the public and private sectors; 

* Tele-Vision Award for Excellence in Leadership in the Federal 
Government’s Telework Program; 

* 2008 Patriotic Employer from DOD’s National Committee for Employee 
Support of the Guard and Reserve “for contributing to national security 
and protecting liberty and freedom by supporting employee participation 
in America’s National Guard and Reserve Force”; and: 

* Government Energy Leader by the Association of Energy Engineers and 
EPA Energy Star for participation in the World Energy Engineering 
Congress. 

Impact: These accolades demonstrate that we continue to be recognized 
for our contributions and leadership in a wide variety of endeavors. 

4.06.C. Strengthening Our Strategic Human Capital Management to Achieve 
Enhanced Results: 

We substantially improved our leadership development program by 
changing our contracting vehicle. For the same investment ($250,000) 
that previously provided for slots in only 2 courses for a maximum of 
42 participants, we can now deliver an integrated, 12-course leadership 
development program for up to 499 Band III and equivalent level 
managers. 

Impact: These efforts improved the content and availability of our 
leadership training for over 10 times the number of managers at the 
same cost as the previous contract. 

We identified a cost-saving way to deliver our leadership training 
using our 3 regional learning hubs in Seattle, Dallas, and Atlanta. 
After analyzing our travel, per diem, and audience distribution 
associated with the training, we determined that this approach would 
save significant travel funds. 

Impact: We can provide timely access to leadership training for our 
field-based managers, while avoiding $396,000 in travel costs. 

We acquired "360 By Design," a tool that gives us the ability to 
integrate 360-degree feedback at all levels of management and link it 
to specific, developmental programs designed to improve performance in 
six critical dimensions of leadership. This tool, which we plan to 
implement in fiscal year 2009, will specifically address one of the Ivy 
Planning Group’s recommendations. 

Impact: Implementation of this tool will move us forward in improving 
our ability to assess managerial effectiveness in supervision and 
development. 

We initiated a full, systematic, and inclusive review of the 
performance appraisal system to address concerns raised by the Ivy 
Planning Group. We identified some short-term improvements, including 
developing standard guidelines for team/unit performance appraisal 
reviews and requiring training for all our designated performance 
managers. 

Impact: This evaluation will identify changes that we need to implement 
to update our appraisal system in response to employee feedback and 
management concerns. 

To enhance our Strategic Human Capital Plan, our human capital 
management team participated in a 2-day facilitated session on 
strategic planning and systems thinking, which laid the groundwork for 
a cohesive approach to internal strategic and change management issues 
and better alignment with our mission and goals. 

Impact: These efforts will enhance our human capital plan and assist us 
in developing corollary operational plans to support implementation of 
initiatives and ensure accountability. 

4.07.C. Ensuring Sound Financial Practices and Robust Systems in Our 
Fiscal Operations: 

In October 2007, we went “live” with the Delphi financial management 
system, which is hosted and operated by the Department of 
Transportation’s Enterprise Service Center (ESC). Such use of a cross-
service organization is a best practice, and allows the majority of our 
accounting transactions to be performed at ESC. Building on the new 
system we reengineered and improved our financial management processes, 
including: 

* implementing a reengineered IT asset management process; 

* replacing our purchase card, and: 

* developing a travel post audit system to support auditing of travel 
vouchers. 

Impact: Implementation of the Delphi system enhances our ability to 
produce auditable financial statements, supports A-123 compliance, and 
improves our financial management processes and reporting and internal 
controls. 

By applying emerging best practices in IT processes and management, we 
enhanced IT governance by: 

* creating a new IT strategic plan and operating report; 

* developing a GAO enterprise architecture; 

* implementing a work management system for guidance in managing 
requirements and resources; 

* adopting the IT Infrastructure Library, a collection of best 
practices in IT governance, as our guiding methodology; 

* instituting a management framework linking strategic goals to 
individual performance; and: 

* incorporating architecture and security reviews into all our 
projects. 

Impact: These enhancements provide a firm business case for technology 
initiatives, ensure support of our strategic and business goals, 
enhance our ability to manage work, and provide a foundation for the 
future. 

Leverage our institutional knowledge and experience: 

4.08.C. Maximizing the Collection, Use, and Retention of Essential 
Organizational Knowledge and Experience: 

We focused on training requirements for our newly implemented 
Electronic Records Management System (ERMS) in fiscal year 2008: 

* completing training of our mission teams in early 2008; 

* disseminating a Web-based training module to demonstrate document 
sharing, and the importance of limiting sharing of sensitive documents 
to those with a need to know, and: 

* monitoring use of ERMS to assess the effectiveness of training. 

Impact: The use and support of this system, which enhances our 
collection, use, and retention of organization knowledge, is growing 
and becoming the norm for document sharing. 

We added new search capabilities to our external Web page, enabling 
users to search for our products by keyword in the title, summary, and 
subject fields, and providing more relevant search results. 

Impact: Our online user survey demonstrates that these search 
enhancements have increased user satisfaction as we matched our highest 
score ever (74) on the American Customer Satisfaction Index. 

4.09.C. Increasing Our Knowledge-Sharing Capability: 

We increased our knowledge-sharing capability both internally and 
externally by: 

* upgrading our videoconferencing rooms; 

* developing GAOTV to deliver live and prerecorded programs to staff at 
their desktops; 

* piloting technology tools on the Web that support virtual 
collaboration; 

* continuing to improve our Internet site, and: 

* participating in the design of a redundant architecture for CAPNET, 
the legislative branch agencies’ private telecommunications network. 

Impact: These efforts resulted in increased usefulness and availability 
of videoconferencing, which encourages collaboration; greater staff 
productivity with the integration of video content delivery; customer 
satisfaction with our Internet site matching our highest score ever 
(74); the ability to securely send electronic reports to congressional 
committees; and the ability to share procurement information among 
legislative branch agencies. 

We also initiated the Enterprise Project to conceptualize, procure, and 
deploy a single, integrated, enterprisewide automated system that will 
capture, manage, store, preserve, protect, and deliver information 
consistent with our quality assurance framework throughout the life 
cycle of an engagement. 

Impact: Initial steps have been taken to move us in the direction of a 
seamless, single point of access to information, enhancing usability 
and customer satisfaction. 

Enhance our business and management processes: 

4.10.C. Streamlining the Engagement Process and Improving Engagement 
Services: 

An international team of independent reviewers examined our audit 
policies and process controls and a representative sample of 2007 audit 
engagement files and reports, and interviewed senior management and 
employees responsible for selected engagements. The team gave us a 
clean opinion and identified several good practices in our engagement 
process that other national audit offices may wish to emulate, such as 
our structured approach for collecting qualitative interview data and 
our use of accumulated knowledge to gain insights about the entities 
audited beyond what is needed for reaching sound audit conclusions. The 
team also had several suggestions for enhancing our process and we 
developed a plan to address all of the team’s suggestions and began 
implementing them in fiscal year 2008. 

Impact: Adopting the suggestions of the peer review team will enhance 
our quality assurance system processes and assure the Congress and the 
American people that our quality assurance system is working as 
intended and that our work is independent, objective, and reliable. 

We strengthened our audit policies and guidance by incorporating the 
July 2007 revision of Generally Accepted Government Auditing Standards 
into our Policy Manual and our online Electronic Assistance Guide for 
Leading Engagements. We also implemented the recommendation of our 
streamlining task force to revamp our engagement management process 
from seven gates to five phases. 

Impact: As a result of these enhancements, we provide auditors with 
current audit standards, a simplified engagement process that is more 
intuitive and easier to understand, and a basis for implementing a 
future integrated technology solution that will enable additional 
process simplification for conducting, documenting, and reporting on 
engagements. 

4.11.C. Improving our Administrative and Management Processes and Using 
Enabling Technology to Improve Crosscutting Processes: 

We streamlined our human capital business processes and leveraged 
technology to improve customer service and operations, including: 

* consolidating data entry of our payroll and time and attendance 
processing to enhance personnel processing function; 

* implementing an additional recruiting analytics module for our 
recruitment system, Hiring Management, to improve recruitment data 
analysis and reporting; 

* implementing the fax imaging feature in Hiring Management to obtain a 
complete electronic file and record of all applications and actions on 
those applications; and: 

* improving how we register and track Learning Center courses and 
course completion, produce reports, and coordinate the annual 
scheduling process through our automated learning systems. 

Impact: These streamlining actions resulted in more efficient and 
customer-focused processes and provided improved information, analysis, 
and reporting. 

We improved efficiency and effectiveness of several services or tools 
through the following efforts: 

* completing one year of e-dissemination of our audit products; 

* consolidating four separate service desks into one, creating a "one-
call" help capability for our IT services; 

* upgrading and replacing several hardware and software components of 
the IT infrastructure; 

* eliminating a duplicative remote access dial-up service; 

* enhancing the usability of automated performance and learning tools, 
such as the Web-based time and attendance system and the electronic 
individual development plan; and: 

* implementing a new bid protest module to provide work flow automation 
and tracking for our procurement law group in General Counsel. 

Impact: These initiatives led to a 76 percent reduction in paper usage 
and a printing cost savings of over $350,000 for our audit products, 
maintenance/improvement of network stability and performance and cell 
phone and Blackberry performance, improved network security, 
approximately $163,000 annual savings for dial-up service, and a 
reduction in administrative burden and increase in productivity for our 
staff. 

Become a professional services employer of choice: 

4.12.C. Promoting an Environment That Is Fair and Unbiased and That 
Values Opportunity and Inclusiveness: 

We implemented several initiatives aimed at promoting a fair and 
unbiased environment where opportunity and inclusiveness are valued. 
The most important initiatives were: 

* committing to addressing over 25 recommendations of the Ivy Planning 
Group following their examination of performance appraisal differences 
between Caucasian and African American analysts (see p. 90 for a full 
discussion of the Ivy study); 

* conducting an analysis of the agency’s diversity profile and programs 
and issuing a Workforce Diversity Plan with strategies grouped around 3 
goals: recruiting more Hispanics, African Americans, and staff with 
disabilities; enhancing staff development opportunities that prepare 
staff for upper level positions; and creating a more inclusive 
environment; 

* outreaching to our employees through 2 panels and several working 
sessions to identify ways to improve the work environment; and: 

* establishing the GAO Diversity Committee, in conjunction with our GAO 
Employee Organization, IFPTE, and the Employee Advisory Committee, to 
provide a forum for raising and addressing diversity issues and 
concerns of staff. 

Impact: Our efforts resulted in a staff better informed on the problems 
and recommended solutions associated with ratings disparities between 
our African American and Caucasian analysts; a clear framework to 
address underrepresentation of minorities and people with disabilities 
in our workforce; and clear and timely information and strategies to 
our staff and managers for resolving differences, improving 
communication, enhancing performance, and supporting a productive and 
inclusive work environment. 

4.13.C. Providing Tools, Technology, and a World-class Working 
Environment: 

We improved our work environment and energy efficiency by: 

* replacing the outdated cooling tower with a new, more energy 
efficient one; 

* installing a more energy efficient gas-fired domestic water heater, 
and: 

* completing a comprehensive energy audit ¦and identifying additional 
energy use improvements to be implemented over the next 3 to 5 years. 

Impact: These projects reduced energy costs and steam and water 
consumption, provided better temperature control, identified areas for 
additional energy use improvements, and helped to integrate energy 
management goals with asset management and customer-driven initiatives. 

4.14.C. Providing a Safe and Secure Workplace: 

We strengthened our information technology security by: 

* successfully completing our Federal Information Security Management 
Act compliance review, scoring an A+ using the OMB template; 

* providing agencywide security awareness training; 

* improving our network monitoring capability to detect unauthorized 
intrusions and potential threats; 

* operating an alternative computing facility, as a backup in case of 
disaster at the GAO building; 

* conducting disaster recovery and continuity of operations planning; 

* enhancing inventory controls over IT assets; 

* encrypting notebook computers; and: 

* conducting comprehensive reviews of all IT projects. 

Impact: These efforts enhanced our IT security and emergency 
preparedness and ensured that we were consistent with FISMA 
requirements. 

We made several improvements to our physical security program, 
including: 

* completing a multiyear Integrated Electronic Security Systems 
improvement program; 

* relocating our security operations center; 

* upgrading and modernizing the electronic security system; 

* installing new cameras and compliant card readers; 

* implementing smart card access to headquarters via turnstiles; and: 

* co-locating all receiving and mail functions in headquarters to a new 
mail center with blast mitigation and separate air exhaust, to minimize 
our risk of exposure to explosives and biocontaminants delivered via 
the mail, parcel post, or messenger. 

Impact: These efforts improved physical security and emergency response 
services for our headquarters staff. 

We also instituted several improvements to our information security 
program, including: 

* providing information security briefings and training that emphasized 
the importance of protection of classified, sensitive, and personally 
identifiable information; 

* established a dedicated Information Security Branch in the Office of 
Security; and: 

* appointed a Privacy Officer to begin inventorying and assessing 
electronic personally identifiable information holdings. 

Impact: These improvements help ensure that sensitive/classified 
information is adequately protected through enhanced knowledge sharing, 
policies, and procedures. 

4.15.C. Enhancing Employee Views about GAO: 

In our first year in a labor relations environment, we committed to 
bargain in good faith and establish and maintain a positive working 
relationship with our new union, the GAO Employees Organization, IFPTE. 
Specifically, we: 

* established a Workforce Relations Center to work with and negotiate 
with the union; 

* successfully negotiated the first pay agreement affecting 2008 
salaries and the interim collective bargaining agreement; 

* drafted our first workplace violence order; 

* established a Diversity Committee (see 4.12.C.); 

* established the notification procedure for formal discussions and 
changes in conditions of employment, and: 

* revised/updated the GAO adverse actions/discipline order. 

Impact: Our demonstrated commitment to a mutually cooperative working 
relationship has positioned us well as we begin negotiations on the 
first formal collective bargaining agreement. 

[End of Strategic Goal 4] 

[End of Appendix 1] 

2. GAO’s Report on Personnel Flexibilities: 

As required by section 11 of the GAO Human Capital Reform Act of 2004 
(Pub. L. No. 108-271), GAO is reporting actions that have taken place 
in fiscal year 2008 under sections 2, 3, 4, 6, 7, 9, and 10.[Footnote 
20] 

Section 2 of the Human Capital Reform Act made permanent GAO’s 
authority to offer voluntary early retirements and separation incentive 
payments. During fiscal year 2008, GAO offered its employees an 
agencywide voluntary early retirement opportunity to assist in dealing 
with fiscal year 2008 budget constraints, as well as to better align 
its workforce to meet mission needs, correct selected skill imbalances, 
and reduce high-grade supervisory and managerial positions. Eleven GAO 
employees applied for this opportunity; 6 applicants were approved, 1 
applicant was ineligible, 1 applicant was denied, and 3 applicants 
withdrew their applications. GAO also permitted employees to apply for 
voluntary early retirement outside of an open season. The use of this 
authority supported efforts to ensure that we had the appropriate 
numbers and skill mix of employees to respond to the requests of our 
congressional clients. An additional 4 employees applied for voluntary 
early retirement under this authority; 2 applicants were approved, 1 
applicant was denied, and 1 application is pending a decision. Because 
of high costs, GAO did not authorize any voluntary incentive payments, 
for the reasons indicated in prior performance and accountability 
reports. 

Section 3 of the act authorizes the Comptroller General to determine 
the amount of the annual pay adjustments provided to GAO employees and 
prescribes the factors to be considered in making this determination. 
In determining the amount of the adjustments and consistent with 
section 31 U.S.C. 732 (c)(3), the Comptroller General considered 
various data, including salary planning data reported by professional 
services, public administration and general industry organizations; the 
General Schedule (GS) adjustment; various purchasing power indexes; 
overall budgetary resources; and the appropriate distribution of 
available funds between the annual adjustment and individual 
performance-based compensation (PBC). 

After the Comptroller General made preliminary determinations regarding 
pay adjustments, GAO management negotiated with representatives of the 
GAO Employees Association, International Federation of Professional and 
Technical Engineers (IFPTE) to reach final agreement regarding salary 
adjustments. This first-time agreement was ratified by 97.8 percent of 
union voters and was then authorized by the Comptroller General for 
GAO’s nonbargaining unit staff as well. 

Pay adjustments for GAO staff were effective on January 6, 2008, and 
included an annual adjustment of 3.5 percent and PBC using a budget 
factor of 2.75 percent. Salary ranges were increased by 4.5 percent not 
to exceed the GS-15, step 10, statutory limit. 

The annual adjustment was provided to all banded employees who were 
performing at a satisfactory level and whose salaries were at or below 
the maximum salary rate for their pay ranges. One hundred seventy-one 
employees received no annual adjustment or a partial annual adjustment 
because their salaries were near or over the maximum rates for their 
bands or because their performance was not at a satisfactory level. 

In addition to the annual adjustment, GAO employees were eligible for 
PBC based on their performance appraisal ratings. All (100 percent) of 
an employee’s PBC amount was provided as a base pay adjustment not to 
exceed the maximum rate of the employee’s pay range. Any PBC amount 
that could not be paid because of the salary cap was provided to staff 
as a lump sum bonus. 

GAO’s banded employees (other than developmental staff) were also 
eligible for a “floor guarantee” if the total increase from the annual 
adjustment and PBC did not equal at least 4.49 percent of salary. The 
floor guarantee ensured that all staff received a base pay increase of 
at least 4.49 percent and was provided without regard to pay range 
maximums limited only by the GS-15, step 10, statutory maximum rate. In 
providing the floor guarantee to staff, the additional amount required 
to bring the base pay adjustment to 4.49 percent of salary was deducted 
from any PBC bonus. Overall, the average total dollar amount resulting 
from employees’ annual adjustments, PBC base pay increases and bonuses, 
and floor guarantees was approximately 6.12 percent of salary. 

GAO employees participating in one of GAO’s development programs 
(Professional Development Program, Attorney Development Program, 
Communication Analysts Pay Process, Program and Technical Development 
Program, and Administrative Pay Process) received the 3.5 percent 
annual adjustment, not to exceed the maximum rate of their bands. These 
employees were not eligible for the floor guarantee because they 
receive additional performance-based salary increases every 6 months 
for the 2-year duration of the development program. 

GAO’s SES and senior level (SL) employees were provided the same 2.5 
percent increase authorized for the executive branch, effective January 
6, 2008. SES and SL members were also eligible for PBC using a budget 
factor of 2.25 percent. The PBC was provided to the SES and SL staff as 
a base pay increase not to exceed $169,300. At the Comptroller 
General’s discretion, remaining amounts were provided as bonuses to 
staff rated “Outstanding” or “Exceeds.” 

Employees of GAO’s Personnel Appeals Board and student employees are 
paid according to GS rates, and GAO’s wage grade employees are paid 
according to the Federal Wage System (FWS) salary rates. These 
employees received the same percentage across-the-board adjustment on 
the same effective date as the increases authorized for GS and FWS 
employees in the executive branch. The pay ranges for these employees 
incorporated the changes made to the comparable executive branch pay 
ranges. 

Section 4 of the act authorizes the Comptroller General to place 
employees on pay retention. In fiscal year 2008, GAO had one 
Administrative Professional and Support Staff employee on pay 
retention. This employee has been subject to pay retention provisions 
continuously since prior to the act. 

Section 6 of the act authorizes the Comptroller General to increase the 
annual leave accrual rate for officers and employees in high-grade, 
managerial or supervisory positions who have less than 3 years of 
federal service. In fiscal year 2008, GAO increased the annual leave 
accrual rate of eight employees as an incentive to retain them. 

Section 7 of the act authorized GAO to establish an Executive Exchange 
Program, to bring executives from private industry to work on special 
projects at GAO and to permit GAO officers and employees to be assigned 
to private sector organizations. This authority was not used in fiscal 
year 2008. GAO anticipates that this authority will be used in the 
future on a sporadic basis. 

Section 9 of the act establishes requirements for GAO’s performance 
appraisal system. GAO’s performance appraisal system meets these 
requirements; however, GAO has undertaken various initiatives in the 
past year to ensure that the system meets its objectives and provides 
an even playing field for all employees. In response to continuing 
differences between African American and Caucasian analyst performance 
appraisal averages, the Ivy Planning Group was selected to conduct an 
independent assessment of the factors that may influence these 
differences. The Ivy Planning Group was also tasked with identifying 
what additional steps GAO can take to ensure fair, consistent and 
nondiscriminatory application of the appraisal system. A final report 
was issued on April 25, 2008, which contained over 25 major 
recommendations. GAO is committed to implementing the Ivy Planning 
Group’s recommendations and is developing a framework for moving 
forward. 

GAO has also initiated a systematic and comprehensive review of its 
competency-based appraisal systems to identify what works well, what 
does not, and what could be done better. The system is over 5 years old 
and employee feedback indicates a growing consensus that changes may be 
needed. Employee and management concerns have been documented from a 
variety of feedback sources, including the annual Customer Satisfaction 
and Employee Feedback surveys. The evaluation, which is ongoing, is 
utilizing a transparent and inclusive process to synthesize input 
received to date, obtain additional employee input, and develop 
proposals that lay out options for changes. To date, the study team has 
conducted focus groups and interviews and is developing an all-employee 
survey to collect input from GAO staff. Findings are expected in fiscal 
year 2009. 

In response to another Ivy Planning Group recommendation, GAO assigned 
a team to develop an approach to the review of appraisal ratings to 
maximize consistent application of performance appraisal standards 
within the team. The process builds on the existing mechanisms that GAO 
uses to review ratings and will be used on an interim basis for the 
fiscal year 2008 rating cycle. A key element of the new process is the 
requirement for all designated performance managers to present their 
preliminary ratings to team review panels. The requirements for these 
presentations have been standardized across the agency and all staff 
have been trained on these elements. This practice is designed to 
support consistent application of performance standards by different 
supervisors and supplements existing reviews of preliminary ratings by 
a higher-level reviewer and by the Office of Opportunity and 
Inclusiveness and the Human Capital Office. 

GAO provides continuing training on the performance appraisal system 
and the roles and responsibilities of staff, supervisors, and managers. 
To ensure that all designated performance managers are knowledgeable 
about appraisal policies, procedures, and practices, GAO is requiring 
raters to take online training prior to preparing fiscal year 2008 
appraisals. 

Section 10 requires the Comptroller General to consult with any interested groups or associations representing officers and employees of GAO before implementing any changes under the act. During this reporting period, changes to GAO’s compensation regulations were issued for notice and comment. However, even prior to the passage of the act, the Comptroller General and other relevant agency officials were meeting periodically with the Employee Advisory Council (EAC) to discuss current and emerging issues of mutual interest and concern, 
especially those in the human capital area. GAO also uses employee 
forums, focus groups, and other mechanisms to obtain employee input on 
major proposals. GAO provides all employees with advance copies of 
draft orders concerning proposed policies and regulations for their 
comments prior to publication in final form. These steps were taken in 
regard to the promulgation of all policies and regulations implementing 
the provisions of the Human Capital Reform Act of 2004. The Executive 
Committee considered all input from EAC members and other GAO employees 
before implementing any changes. With the election of the IFPTE as the 
exclusive representative for GAO bargaining unit employees, GAO 
consults, and negotiates where appropriate, with the IFATE with respect 
to those employees; the EAC now represents those GAO employees who are 
not included in the bargaining unit. 

In summary, GAO human capital management continues to use the value-
added flexibilities provided under sections 2, 3, 4, 6, 7, 9, and 10 to 
acquire and maintain the talent necessary to carry out and meet its 
strategic mission and goals. These and other human capital tools and 
flexibilities support the achievement of GAO’s strategic objective to 
be a world-class professional services organization and model federal 
agency. Without these provisions, GAO would have difficulty attracting 
and retaining top-flight talent in adequate numbers to properly support 
the Congress and serve the American people within current and expected 
resource levels. 

[End of Appendix 2] 

3. GAO's FISMA Efforts: 

GAO has implemented a strong Information Security Program that relies 
on protection, detection, and compliance. The Federal Information 
Security Management Act (FISMA) and related guidance are the 
cornerstone of our program, establishing the standards and practices 
that strengthen our protections. Even though we are not obligated by 
law to comply with FISMA under the EGovernment Act of 2002, we have 
adopted FISMA requirements to strengthen our information security 
program and demonstrate our ongoing commitment to lead by example. Our 
security standards are based on the federal guidance found in the 
National Institute of Standards and Technology (NIST) 800 series and 
Federal Information Processing Standards publications. As existing NIST 
guidance has been updated and new guidance disseminated, we have 
adjusted our internal IT security policies and procedures as well as 
expanded our efforts to effectively integrate these governmentwide 
policies and practices into our IT security processes. 

GAO’s Information Security Program seeks to continually improve the 
protection of data, strengthen access controls, and streamline security 
processes. Generally, GAO’s systemwide security controls meet or exceed 
key requirements set forth in NIST Special Publication 800-53, Revision 
2, Recommended Security Controls for Federal Information Systems. We 
monitor these requirements and work to ensure that our protections 
evolve as the environment changes. We also support recurring external 
assessments of our information security program, including internal 
reviews by GAO program offices, the IG, and security staff, to 
strengthen and streamline our security practices. For example, our IG 
independently evaluates our information security program annually, 
consistent with FISMA requirements, and identifies any weaknesses in 
our implementation of FISMA while offering additional recommendations 
to further strengthen our IT security program. In addition, we follow 
the standard practice of using a public accounting firm, as well as 
other external sources, to provide independent external evaluations and 
testing of IT controls on our major applications. We have leveraged 
third-party audits to successfully validate our security controls 
through a rigorous certification and accreditation process. During this 
past year, we conducted a full certification and accreditation of our 
General Support System using a third party to conduct the system test 
and evaluation. The audit team noted that we implemented a greater 
percentage of controls than other agencies that the team inspected. A 
major improvement in our security program has been the recent 
implementation of recurring security assessments of our financial and 
human capital systems operated by third parties. These reviews provide 
assurance of the effectiveness of the security policies and practices 
of these service providers. 

Compliance consistent with FISMA has enabled us to maintain excellent 
information systems security practices at GAO through our efforts to: 

* implement and refine an enterprisewide, risk-based security program; 

* develop and update essential policies, procedures, and reporting 
mechanisms to ensure that our security program is integrated into every 
aspect of IT system life cycle planning and maintenance; 

* provide recurring security training and awareness to all of our staff 
through annual awareness training, security fairs, and focused security 
briefings; 

* integrate security into our Capital Planning and Investment Control 
and project management processes; and: 

* implement and refine an enterprise disaster recovery solution. 

The dynamic nature of security threats requires that our Information 
Systems Security Group constantly monitor activities and adjust our 
strategy to thwart these challenges and meet the needs of GAO. As we 
continue to evolve and improve our Information Security Program, our 
strategies will also evolve to reduce the risk to GAO, streamline 
processes through the use of technologies, and reduce costs through 
standardization. 

Activities undertaken to improve our Information Security Program 
during fiscal year 2008 are listed below. 

* Certification and accreditation of information systems. We have 
implemented security practices to cover the entire life cycle of our 
information systems. Our process starts with an initial security 
assessment, establishes requirements for a system security plan, 
provides an independent system test and evaluation, provides 
remediation of security risks, and implements a continuous monitoring 
process, until finally the system is retired. In addition, we have 
updated our existing risk assessments to include the evaluation of 
security controls for systems operated by third parties. We have 
established and implemented processes for visiting vendors operating 
systems on our behalf to validate security processes, practices, and 
system controls, for the purpose of providing assurance to GAO 
management that the risk to GAO information is minimized and vendor 
operations are within acceptable federal security guidance. 

* Enterprise workstation security. We continue to upgrade our 
workstation images as our laptops are replaced to include full-disk 
encryption; mobile media encryption; an integrated antivirus, 
antispyware, and personal firewall application; and two-factor 
authentication. To enhance our enterprise workstation security 
solution, we have implemented a “least privilege” access for staff, 
limiting the ability to change the workstation configuration by 
installing software and preventing the unintentional downloading of 
malware and viruses. The enterprise end point security application 
continues to provide centralized policy management and control and 
automatic monitoring and remediation of security threats to the 
workstation, and events identified by the application flow to the event 
correlation engine. 

* Enterprise Internet screening. Following a successful pilot last 
year, we have now fully implemented an Internet screening tool that 
provides antivirus protection to our Web-based services and has 
successfully identified and removed numerous threats to our 
workstations. Screening non-business-approved sites implements GAO’s 
Internet access policy. This tool has already provided added security 
for our Internet access to Web sites and applications by improving the 
overall security posture for GAO’s network. 

* Business partner connections. We have secured our connections to our 
applications operated by third parties using virtual private networks. 
These secure tunnels control direct access from GAO to these remote 
sites in a secure and encrypted manner. 

* Classified processing upgrade. We enhanced our Secret Internet 
Protocol Router Network service with upgrades to the laptops, including 
a refreshed secured image. This network allows our staff to obtain 
specific classified data directly from agency officials via secure e-
mail, improves efficiency of our research through direct access to 
classified information, posts our classified reports for review and 
dissemination to appropriately cleared officials, electronically 
transmits our classified reports to agencies for comments, and reduces 
the necessity of using certified mail for classified data. 

[End of Appendix 3] 

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[End of United States Government Accounability Office's Performance and 
Accountability Report Fiscal Year 2008] 

Footnotes: 

[1] The Federal Managers’ Financial Integrity Act requires ongoing 
evaluations and annual reports on the adequacy of the systems of 
internal accounting and administrative control of each agency. The 
Government Performance and Results Act seeks to improve public 
confidence in federal agency performance by requiring that federally 
funded agencies develop and implement accountability systems based on 
performance measurement, including setting goals and objectives and 
measuring progress toward achieving them. The Federal Financial 
Management Improvement Act emphasizes the need to improve federal 
financial management by requiring that federal agencies implement and 
maintain financial management systems that comply with federal 
financial management systems requirements, applicable federal 
accounting standards, and the U.S. Government Standard General Ledger 
at the transaction level. 

[2] In fiscal years 2006 and 2007, the work performed under the 
Comptroller General’s authority represented 15 percent and 10 percent, 
respectively, of our engagement efforts. 

[3] GAO, A Call for Stewardship: Enhancing the Federal Government’s 
Ability to Address Key Fiscal and Other 21st Century Challenges, 
[hyperlink, http://www.gao.gov/products/GAO-08-93SP], 
(Washington, D.C.: December 2007), and Measuring Our Nation’s Natural 
Resources and Environmental Sustainability: Highlights of a Forum 
Jointly Convened by the Comptroller General of the United States and 
the National Academy of Sciences, 
[hyperlink, http://www.gao.gov/products/GAO-08-127SP], 
(Washington, D.C.: October 2007). 

[4] In addition, we are continuing to explore measures that could help 
us assess how well we develop mutually beneficial relationships with 
other accountability organizations. Such partnerships are important 
because they (1) create opportunities for collaboration and cooperation 
that help all organizations involved address common challenges and 
enhance their ability to improve government operations and serve the 
public better, (2) allow us and other organizations to make meaningful 
changes in our internal accountability processes and policies, and (3) 
allow us to better leverage available resources. In part I of this 
report, the section on Strategies for Achieving Our Goals provides 
additional information about the partnerships we established or 
continued in fiscal year 2008. 

[5] Our most recent performance plan is available on our Web site at 
[hyperlink, http://www.gao.gov/products/rptno=GAO-08-507SP]. 

[6] As part of our risk-based engagement management process, we 
identify a new engagement as high interest if the work we need to 
perform will likely require a large investment of our resources, 
involve a complex methodology, or examine controversial or sensitive 
issues. 

[7] B-3111344 et. al., June 18, 2008. 

[8] B-309752 et. al., Oct. 5, 2007; B-309752.8, Dec. 20, 2007. 

[9] B-309996, B-309996.4, Nov. 5, 2007; B-311245.2, B-311245.4, May 16, 
2008; B-311245.5, Aug. 4, 2008. 

[10] B-308968, Nov. 27, 2007. 

[11] B-310108, Feb. 6, 2008. 

[12] B-316796, Sept. 30, 2008. 

[13] B-308715, Nov. 13, 2007. 

[14] B-316048, April 17, 2008. 

[15] B-309928, Dec. 20, 2007. 

[16] See, GAO, Department of Homeland Security: Observations on GAO 
Access to Information on Programs and Activities, [hyperlink, 
http://www.gao.gov/products/GAO-07-700T] (Washington, D.C.: Apr 
25. 2007). 

[17] The Department of Homeland Security Appropriations Act, 2008 (Pub. 
L. No. 110-161, 121 Stat. 1884, 2042-43 (2007)) made $15,000,000 
unavailable for obligation until the Secretary certifies and reports 
that DHS has revised departmental guidance concerning relations with 
GAO. The object of the statutory provision is to provide expedited time 
frames for providing GAO timely and complete access to records and 
interviews and a “significant streamlining” of the review process for 
document and interview requests. 

[18] In fiscal year 2008, GAO operations were segmented into 10 
business cycles: Entity-Wide Controls, IT Controls, Facilities and 
Property Management, Travel, Procurement, Disbursements, Budget, Fund 
Balance with Treasury, Financial Reporting, and Payroll. 

[19] Note 14 to the financial statements describes our Davis-Bacon Act 
trust function. For more detailed Davis-Bacon Act financial 
information, contact our General Counsel. 

[20] The Government Accountability Office Act of 2008, Pub. L. 110-323, 
111 Stat. 3539, enacted in September 2008 amended certain sections of 
the GAO Human Capital Reform Act of 2004, and will be addressed as 
appropriate in the next performance and accountability report. 

[End of Performance and Accountability Report 2008]