GAO-12-252CG

1 

Anticipating and Meeting Accountability 

Challenges in a Dynamic Environment

Institute of Internal Auditors

Washington, DC

November 15, 2011

Gene L. Dodaro

Comptroller General

U.S. Government Accountability Office
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Overview

• GAO’s Strategic Plan

• Trends Affecting Government and the U.S.

• GAO’s Related Work
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Performance & 

Accountability 

Report 

Performance 

Plan 

Strategic 

Plan 

GAO’s Planning & Performance Documents

www.gao.gov/sp.html
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Strategic Planning Framework
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Trend 1: Threats Confronting U.S. National 

Security Interests

• Regional instability (Middle East, Central Asia, Africa)

• Longstanding threats (extremism, terrorism, proliferation of 

weapons, cybersecurity)

• Emerging threats (energy security, climate change, global 

recession) 

• Need for new capabilities alongside increasingly constrained 

resources 
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Trend 1: Threats Confronting U.S. National 

Security Interests

Related GAO work

• Reviewing U.S. security and reconstruction efforts related to 

Afghanistan, Iraq and other regions in conflict, including 

reviewing the effect of drawing down military resources in Iraq, 

and countering terrorism and nuclear supplier networks in 

Pakistan. 

• Assessing U.S. efforts to combat terrorism abroad. 

• Reviewing the government’s efforts to identify and act on 

credible threats to homeland and border security, as well as 

those involving biological, chemical, and nuclear dimensions. 

• Analyzing the funding and costs of military operations and 

programs given the fiscal pressures facing the nation.

• Evaluate efforts to ensure the reliability, security, and 

affordability of energy supply infrastructure and assess the 

implications of climate change for the federal government.
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-20

-15

-10

-5

0

5

2000 2010 2020 2030 2040 2050 2060

Fiscal year

Percentage of GDP

Baseline

Extended

Alternative

Source: GAO.

Note: Data are from GAO’s Fall 2011 simulations based on the Trustees’ assumptions for Social Security and the Trustees’ and CMS Actuary’s 

alternative assumptions for Medicare. 

Trend 2: Fiscal Sustainability and Debt 

Challenges

Federal Budget Surpluses and Deficits under Different Fiscal 

Policy Simulations 

Deficit 

Surplus 
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Source: GAO.

Note: Data are from GAO’s Fall 2011 simulations based on the Trustees’ assumptions for Social Security and the Trustees’ and CMS Actuary’s 

alternative assumptions for Medicare.

0

50

100

150

200

2000 2010 2020 2030 2040 2050 2060

Fiscal year

Percentage of GDP

Alternative

Historical high

= 109 percent in 1946

Baseline Extended

Trend 2: Fiscal Sustainability and Debt 

Challenges

Debt Held by the Public Under Two Fiscal Policy Simulations
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Rising Health Care Costs and an Aging Population Have 

Already Begun to Affect the Federal Budget 

2008 Oldest members of the baby-boom generation became eligible for early Social Security 

retirement benefits

2008 Medicare Hospital Insurance outlays exceeded cash income

2010 Social Security runs first cash deficit in more than a quarter century

2011 Oldest members of the baby-boom generation become eligible for Medicare 

2027 Debt held by the public under GAO’s Alternative simulation exceeds the historical high 

reached in the aftermath of World War II 

Source: GAO.

Trend 2: Fiscal Sustainability and Debt 

Challenges
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Spending on Social Security, Medicare, Medicaid, CHIP, and 

Exchange Subsidies under Baseline Extended Simulation

0

2

4

6

8

10

12

14

16

18

20

2010 2020 2030 2040 2050 2060 2070 2080

Fiscal year

Percentage of GDP

Social Security

Medicaid, CHIP, & 

Exchange Subsidies

Medicare

Source: GAO.

Note: Social Security and Medicare projections are based on CBO’s August 2011 baseline through 2021 and the Trustees' 2011 intermediate assumptions 

thereafter. Projections for Medicaid, the Children’s Health Insurance Program (CHIP), and state health insurance exchange subsidies are based on CBO’s shortterm estimates (from August 2011) and long-term projections (from June 2011) of outlays for those programs, adjusted to reflect excess cost growth consistent 

with the 2011 Trustees’ intermediate assumptions. This figure does not take into account any changes to these programs that may result from the provisions in the 

Budget Control Act related to the Joint Select Committee on Deficit Reduction. 

Trend 2: Fiscal Sustainability and Debt 

Challenges
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Spending on Social Security, Medicare, Medicaid, CHIP, and 

Exchange Subsidies under Alternative Simulation

0

2

4

6

8

10

12

14

16

18

20

2010 2020 2030 2040 2050 2060 2070 2080

Fiscal year

Percentage of GDP

Social Security

Medicaid, CHIP, & 

Exchange Subsidies

Medicare

Source: GAO.

Note: Projections for Social Security are based on CBO’s August 2011 baseline through 2021 and the Trustees' 2011 intermediate assumptions thereafter. 

Projections for Medicare are based on the CMS Actuary’s alternative assumptions. Projections for Medicaid, the Children’s Health Insurance Program (CHIP), & 

state health insurance exchange subsidies are based on CBO’s short-term estimates (from August 2011) and long-term projections (from June 2011) of outlays for 

those programs, adjusted to reflect excess cost growth consistent with the 2011 Trustees’ intermediate assumptions. This figure does not take into account any 

changes to these programs that may result from the provisions in the Budget Control Act related to the Joint Select Committee on Deficit Reduction. 

Trend 2: Fiscal Sustainability and Debt 

Challenges
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-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 2055 2060

Year

Percentage of GDP

Source: GAO simulations, updated April 2011. 

Note: Historical data are from the Bureau of Economic Analysis’s National Income and Product Accounts from 1980 to 2009. Data in 2010 are GAO estimates 

aligned with published data where available. GAO simulations are from 2011 to 2060, using many Congressional Budget Office projections and assumptions, 

particularly for the next 10 years. Simulations are based on current policy.

Surplus 

(Positive Balance)

Deficit 

(Negative Balance)

State and Local Operating Balance Measure, as a Percentage of 

Gross Domestic Product

Trend 2: Fiscal Sustainability and Debt 

Challenges
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Trend 2: Fiscal Sustainability and Debt 

Challenges

Related GAO work

• Conducting work to assess duplication and overlap among 

federal programs and agencies.

• Identifying elements to help address the nation’s financial 

challenges including Social Security, tax reform, retirement, and 

disability programs; opportunities to reduce spending; and 

reducing the gap between taxes owed and taxes collected. 

• Performing financial statement audits (IRS, Schedule of Federal 

Debt, FDIC, FHA, Consolidated Financial Statements, SEC).

• Performing long-term fiscal simulations and analyses of federal 

deficits, federal debt levels, and the state and local sector. 

• Identifying and recommending solutions to reduce the risk of 

waste, fraud, and abuse and improper payments. 
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Summary of 2011 report (GAO-11-318SP)

• 34 areas where agencies, offices, or initiatives 

have similar or overlapping objectives or provide 

similar services to the same populations; or 

where government missions are fragmented 

across multiple agencies or programs.

• 47 additional areas describing other opportunities 

for agencies or Congress to consider taking 

action that could either reduce the cost of 

government operations or enhance revenue 

collections for the Treasury.

• Depending on the extent of actions taken, these 

savings and revenues could collectively result in 

tens of billions of dollars in annual savings.
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Examples of GAO duplication and cost 

saving or revenue enhancement issues

Duplication, Overlap, or 

Fragmentation

Cost Saving or Revenue 

Enhancement

• DOD’s military medical command 

structures. 

• Fragmented food safety system.

• Multiple employment and training 

programs.

• Fragmented economic 

development programs.

• Fragmented federal approach to 

surface transportation.

• Federal data centers.

• Ethanol.

• Promoting competition in federal 

contracts.

• Better targeting of Medicaid and 

Medicare improper payments.

• Multiple opportunities to address 

tax expenditures and tax gap
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Results of the FY 2010 Financial Audits

• 20 of 24 CFO Act Agencies received unqualified audit 

opinions on their accrual-based financial statements. 

(Only 6 did in 1996.)

• Three major impediments continue to prevent GAO from 

rendering an opinion on the U.S. government’s accrual- based consolidated financial statements:

• Financial management problems at the Department 

of Defense (DOD)

• Inability to adequately account for and reconcile 

intragovernmental activity and balances between 

federal entities

• Ineffective process for preparing the consolidated 

financial statements
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U.S. Government’s Consolidated Financial 

Statements - Getting to a Clean Opinion 

Department of Defense (DOD) 

• Several entities have received a clean opinion: 

• U.S. Army Corp of Engineers, Defense Finance and 

Accounting Service, Defense Commissary Agency, 

Defense Contract Audit Agency, Military Retirement Fund 

• U.S. Marine Corps working toward an auditable Statement of 

Budgetary Resources as a first step. Lessons learned may 

pave the way for other military services. 

• DOD focus on improving business systems, ensuring 

reliability of budget information, and existence and 

completeness of all mission-critical assets

• Financial Improvement and Audit Readiness plan defines 

path for DOD’s plans to achieve auditability by 2017
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U.S. Government’s Consolidated Financial 

Statements - Getting to a Clean Opinion 

Intragovernmental activity & balances between federal entities

 Key actions taken/planned by Treasury

• Developed and issued Intragovernmental Business Rules.

• Established various focus groups, consisting of Treasury and 

federal entity personnel.

• Developed and implemented intragovernmental confirmation 

and reporting and analysis systems. 

• Developing financial statements for the General Fund of the 

U.S. Government to help address unreconciled differences 

existing between the General Fund and federal entity trading 

partners related to appropriation and other intragovernmental 

transactions. 
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U.S. Government’s Consolidated Financial 

Statements - Getting to a Clean Opinion 

Consolidated financial statements (CFS) preparation process

Key actions taken/planned by Treasury

• Developed, documented, and implemented numerous 

standard operating procedures.

• Hired contractors to assist in addressing certain control 

deficiencies. 

• Continuing to execute and implement corrective action 

plans to address previously identified control deficiencies. 

• Considering obtaining personnel from certain other entities, 

with additional financial reporting expertise, to assist 

Treasury during the year-end CFS preparation process.
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Trend 3: Economic Recovery and Restored 

Growth 

• Different scenarios for economic recovery 

• Replacement of lost jobs 

• Role of consumers

• Housing and commercial real estate

• The timing of fiscal & monetary support 

• Managing concerns about inflation
21
22
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Trend 3: Economic Recovery and Restored 

Growth 

Related GAO work

• Assessing the effectiveness of financial and regulatory reform

efforts and plans to ensure the stability of the overall banking, 

housing, and financial markets. 

• Monitoring and evaluating various federal assistance programs

designed stabilize U.S. financial markets and boost the 

economy, including investments in infrastructure and job 

expansion.

• Continuing to perform our responsibilities under the Recovery Act. 

• Providing analysis on the functioning of the mortgage market and 

the ultimate disposition of Fannie Mae and Freddie Mac. 

• Monitoring services to assist job seekers and supports for lowincome families. 
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Trend 4: The Changing Dynamics of Global 

Interdependence

International Reserves in Developing & Emerging 

Economies Have Increased More Than Twelvefold 
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Trend 4: The Changing Dynamics of Global 

Interdependence

Related GAO work

• Understanding the effects of a global supplier base on U.S. 

national security interests and evaluating the effectiveness of 

programs to protect critical technologies. 

• Evaluating efforts to ensure a safe food supply. 

• Evaluating the effectiveness of federal programs to prevent, 

prepare for, and respond to public health emergencies. 

• Evaluating the effectiveness of international food security and food 

aid delivery. 

• Assessing U.S. export promotion programs and other traderelated jobs creation efforts. 

• Analyzing energy market regulation, competition, and information.
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Trend 5: Advances in Science and Technology

• Nanotechnology 

• Biomedical technology

• Information technology

• Quantum computing 

• Cloud computing

• Virtualization technologies 

• Health IT 
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Trend 5: Advances in Science and Technology

China Has Caught Up to the United States in Terms of the 

Number of Scientific Researchers

Source: National Science Board

Note: 2007 data for United States are estimated based on annual growth rate between 1995 and 2006. 
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Trend 5: Advances in Science and Technology

Related GAO work

• Performing specialized studies and technology assessments of a 

wide range of science and technology issues, such as climate 

change, biotechnology, border security, the challenges of 

developing sophisticated space and defense systems, and 

renewable and sustainable energy. 

• Reviewing the effectiveness of computer and network security at 

federal agencies to better ensure the protection of government and 

personal information. 

• Assessing the government’s planning, implementation, and use of IT. 

• Assessing the management and results of the federal investment in 

science and technology and the effectiveness of efforts to protect 

intellectual property. 

• Reviewing federal efforts to turn around low-performing schools

and serve special populations.
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Trend 6: Increasing Impact of Networks and 

Virtualization

• Less-expensive technology that is increasingly more powerful

• Greater prevalence of wireless networks 

• More powerful portable devices

• Increased collaboration and sharing at home, in school, and 

at work

• Consumers are becoming content creators

• Location and time independence (telework, virtual meetings)
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Trend 6: Increasing Impact of Networks and 

Virtualization

Related GAO work

• Assessing federal efforts to promote affordable access to

telephone and broadband Internet services, including 

cloud computing. 

• Reviewing the management of government 

telecommunications and interconnected systems and federal 

agencies’ effectiveness in providing secure, reliable, and fast 

Internet and Web connections.

• Assessing DOD and DHS’s efforts to enhance the resiliency of 

critical national assets, networks, and systems. 

• Analyzing and supporting efforts to improve the federal 

workforce infrastructure. 
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Trend 7: Shifting Roles in Government and 

Governance

• Evolving roles for the public, private, and NGO sectors

• Contracting 

• State and local government

• Non-profit and non-governmental organizations
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Trend 7: Shifting Roles in Government and 

Governance

Related GAO work

• Focusing on major areas that are at high-risk, including the U.S. 

Postal Service’s financial condition, and on implementation of 

Government Performance and Results Act (GPRA) 

Modernization Act of 2010. 

• Assessing the government’s strategy for managing its reliance 

on contractors to ensure that agencies determine the right mix 

of as well as proper roles and responsibilities for government and 

contractor employees. 

• Identifying ways to improve the acquisition of goods and 

services by federal agencies. 

• Identifying opportunities to improve the coordination, 

collaboration, and governance of networks of governmental 

and nongovernmental organizations to address complex 

national issues.
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GPRA Modernization Act Goals

• Adopting a more coordinated and crosscutting 

approach to achieving common goals

• Addressing weaknesses in major management 

functions

• Ensuring performance information is both 

useful and used in decision making

• Instilling sustained leadership commitment and 

accountability for achieving results

• Engaging Congress in identifying management 

and performance issues to address
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Trend 8: Demographic and Societal Changes 

Confronting Young and Old 

Fewer Workers Will Be Supporting Each Retiree 

Source: Social Security and Medicare Boards of Trustees.
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Trend 8: Demographic and Societal Changes 

Confronting Young and Old

Related GAO work

• Supporting health care financing and reform efforts through 

analyses of Medicare, Medicaid, and other health programs. 

• Assessing policy and administrative challenges to the federal 

government in providing for Americans’ financial security in 

retirement, as well as options and strategies to help individuals 

ensure retirement security for themselves and their families.

• Assessing financial and administrative challenges to providing 

employer-sponsored pensions and retaining older Americans 

in the workforce, and their implications for retirement security. 

• Evaluating the federal government’s efforts to assist communities 

with combating crime and to safely and effectively manage a 

growing federal prison population. 
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