Serving the Congress and the Nation 

U.S. Government Accountability Office

Performance and 

Accountability Report 

Fiscal Year 2012

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE
S E R V I N G T H E C O N G R E S S

M i s s i o n

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.

A c c o u n t a b i l i t y

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.

I n t e g r i t y

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.

R e l i a b i l i t y

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.

S c o p e o f w o r k

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.
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GAO Performance and Accountability Report 2012

Contents

Abbreviations........................................................................................ iii

How to Use This Report............................................................................. v

Introduction................................................................................................. 1

Financial Reporting Assurance Statements ...................................................... 4

About GAO............................................................................................ 6

Mission........................................................................................... 6

Strategic Planning and Management Process ............................................. 7

Organizational Structure.....................................................................12

Strategies for Achieving Our Goals.........................................................15

How We Measure Our Performance........................................................17

Part I: Management’s Discussion and Analysis.......................................................21

Assisting the Congress and Benefiting the Nation during Challenging Times...............22

Focusing on Our Client.......................................................................32

Focusing on Our People......................................................................34

Focusing on Our Internal Operations.......................................................37

GAO’s High-Risk Program....................................................................38

Opportunities to Reduce Duplication, Overlap and Fragmentation,

Achieve Savings, and Enhance Revenue.................................................41

Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010...............42

The Patient Protection and Affordable Care Act.........................................43

The Troubled Asset Relief Program.........................................................45

The American Recovery and Reinvestment Act...........................................45

General Counsel Decisions and Other Legal Work.......................................46

Managing Our Resources.....................................................................49

Strategic Planning and Partnerships.......................................................54

Internal Management Challenges...........................................................57

Part II: Performance Information......................................................................63

Performance Information by Strategic Goal.....................................................64

Goal 1 Overview: Address Current and Emerging Challenges to the Well-being

and Financial Security of the American People..............................................65

Financial Benefits.............................................................................67

Nonfinancial Benefits.........................................................................67

Testimonies....................................................................................68

Contents

Source: GAO.
ii GAO-13-2SP

GAO Performance and Accountability Report 2012

Contents 

This is a work of the U.S. government and is not subject to copyright protection in the United States. The published 

product may be reproduced and distributed in its entirety without further permission from GAO. However, because this 

work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you 

wish to reproduce this material separately.

Goal 2 Overview: Respond to Changing Security Threats and

the Challenges of Global Interdependence....................................................73

Financial Benefits.............................................................................75

Nonfinancial Benefits.........................................................................75

Testimonies....................................................................................75

Goal 3 Overview: Help Transform the Federal Government to Address

National Challenges..............................................................................80

Financial Benefits.............................................................................82

Nonfinancial Benefits.........................................................................82

Testimonies....................................................................................82

Goal 4 Overview: Maximize the Value of GAO by Enabling Quality, Timely

Service to the Congress and by Being a Leading Practices Federal Agency..............87

Data Quality.........................................................................................92

Verifying and Validating Performance Data...............................................92

Part III: Financial Information..........................................................................93

Audit Advisory Committee’s Report..............................................................96

Independent Auditor’s Report.....................................................................97

Purpose of Each Financial Statement.......................................................... 101

Financial Statements............................................................................. 103

Notes to Financial Statements.................................................................. 106

Other Accompanying Information................................................................119

Part IV: Inspector General’s View of GAO’s Management Challenges..........................121

Inspector General’s View of GAO’s Management Challenges................................ 122

Part V: Appendix........................................................................................ 123

Data Quality....................................................................................... 124

Image Sources........................................................................................... 133

Providing Comments on This Report................................................................ 134

Obtaining Copies of GAO Documents................................................................ 134

Connect with GAO...................................................................................... 134
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GAO Performance and Accountability Report 2012

Abbreviations

AAC Audit Advisory Council

AIT advanced-imaging technology

ALGA Association of Local Government Auditors

APQA Audit Policy and Quality Assurance

APSS Administrative Professional and Support Staff

ARTF Afghanistan Reconstruction Trust Fund

BRAC DOD’s Base Realignment and Closure

CAO Chief Administrative Officer

CFPB Consumer Financial Protection Bureau

CGAB Comptroller General’s Advisory Board

CHIP State Children’s Health Insurance Program

CIGIE Council of Inspectors General for Integrity and Efficiency

CMS Centers for Medicare & Medicaid Services

COR Contracting Officer Representative

CPP Capital Purchase and Improvement Program

CRA Congressional Review Act

CS U.S. Commercial Service

CSRS Civil Service Retirement System

DHS Department of Homeland Security

DOD Department of Defense

DOE Department of Energy

DOJ Department of Justice

DOL Department of Labor

DOT Department of Transportation

DWG Domestic Working Group

DWSS Defense Weather Satellite System

EA enterprise architecture

EAP Educator’s Advisory Panel

ECI Employment Cost Index

ED Department of Education

EESA 2008 Emergency Economic Stabilization Act

EMS Engagement Management System

EPA Environmental Protection Agency

EPP Electronic Prescribing Program

ERS Engagement Reporting System

ESC Enterprise Services Center

FAIS Forensic Audits and Investigative Service

FCC Federal Communications Commission

FDA Food and Drug Administration

FECA Federal Employees’ Compensation Act

FEGLI Federal Employees Group Life Insurance Program

FEHBP Federal Employees Health Benefit Program

FEMA Federal Emergency Management Agency

FERS Federal Employees Retirement System

FFMIA Federal Financial Management Improvement Act of 1996

Abbreviations
iv GAO-13-2SP

GAO Performance and Accountability Report 2012

Abbreviations 

FICA Federal Insurance Contributions Act

FINRA Financial Industry Regulatory Authority

FISMA Federal Information Security Management Act

FMFIA Federal Managers’ Financial Integrity Act of 1982

FTE full-time equivalent

GPO Government Printing Office

GPRA Government Performance and Results Act as amended

GSA General Services Administration

HHS Department of Health and Human Services

HUD Department of Housing and Urban Development

IAF Intergovernmental Audit Forums

IC U.S. Intelligence Community

ICD Intelligence Community Directive

IFPTE International Federation of Professional and Technical Engineers

IG inspector general

INTOSAI International Organization of Supreme Audit Institutions

IRS Internal Revenue Service

ISSAI International Standards of Supreme Audit Institutions

IT information technology

MA Medicare Advantage

NASA National Aeronautics and Space Administration

NASACT National Association of State Auditors, Controllers, and Treasurers

NFC National Finance Center

NFIP National Flood Insurance Program

NIAF National Intergovernmental Audit Forum

NPOESS National Polar-orbiting Operational Environmental Satellite System

OIG Office of Inspector General

OMB Office of Management and Budget

PAB Personnel Appeals Board

PAR performance and accountability report

PBGC Pension Benefit Guarantee Corporation

PMR Product Metadata Repository

PPACA Patient Protection and Affordable Care Act

SAI supreme audit institution

SDVOSB service-disabled veteran-owned small business

SEC Securities and Exchange Commission

SRO self-regulatory organization

SSA Social Security Administration

STEM Science, Technology, Engineering, and Math

TARP Troubled Asset Relief Program

TIPS Treasury Inflation-Protected Securities

TSA Transportation Security Administration

USACE U.S. Army Corps of Engineers

USAID U.S. Agency for International Development

USDA Department of Agriculture

VA Department of Veterans Affairs

VOIP voice over Internet Protocol

WMATA Washington Metropolitan Area Transit Authority
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GAO Performance and Accountability Report 2012

How to Use This Report

How to Use This Report

This report describes the U.S. Government Accountability Office’s performance measures,

results, and accountability processes for fiscal year 2012. 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 website at http://www.gao.gov/sp.html.

This report has an introduction, four parts, and a supplementary appendix as follows:

Introduction

This section includes the letter from the Comptroller General and a statement attesting to

the completeness and reliability of the performance and financial data in this report and

the effectiveness of our internal controls over our financial reporting. This section also

includes a summary discussion of our mission, strategic planning process, organizational

structure, strategies we use to achieve our goals, 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 2012. It also includes information on our internal controls 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 2012

and the targets we are aiming for in fiscal year 2013. It also includes a summary of our

program evaluation for the fiscal year.

Financial Information

This section includes details on our finances in fiscal year 2012, 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 an explanation

of the information each of our financial statements conveys.

Inspector General’s View of GAO’s Management Challenges

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

challenges.

Appendix on Data Quality

This section describes how we ensure the completeness and reliability of the data for each

of our performance measures.
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Introduction UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
2 GAO-13-2SP

GAO Performance and Accountability Report 2012

From the Comptroller General 

November 15, 2012

I am pleased to present GAO’s performance and accountability report for fiscal year

2012. During the year, we reported on a broad range of issues including retirement security

and nutrition assistance, foreclosure mitigation, Medicare and Medicaid, transportation

safety, missile defense acquisitions, emergency management grants, counterterrorism,

cybersecurity, and the debt limit. We issued our second annual report identifying duplication,

overlap, cost-saving opportunities, and revenue enhancements in a total of 51 areas such as

unmanned aircraft systems, surface freight transportation, information technology investment

management, and housing assistance. We issued 11 products in response to the Dodd-Frank

Wall Street Reform and Consumer Protection Act on financial institutions and securities

markets and several reports on insurance markets and publicly financed health insurance

programs related to the Patient Protection and Affordable Care Act. We also continued

to regularly report the results of our work on the Troubled Asset Relief Program and the

American Recovery and Reinvestment Act. We again received from independent auditors an

unqualified or “clean” opinion on our financial statements for fiscal year 2012. The detailed

performance and financial information in this report is complete and reliable, and meets our

high standards for accuracy and transparency.

It was another strong year for our performance. We documented $55.8 billion in financial

benefits for the federal government—a return of $105 for every dollar invested in us.

Additionally, we recorded 1,440 other program and operational benefits across the

government. For example, we documented 504 benefits in public safety and security

programs including homeland security, critical infrastructure, food safety, transportation

safety, public health, and consumer protection. We referred over 70 cases of potential fraud

or other impropriety to executive branch agencies, leading to such actions as recoupment

of improperly received funds and conviction for theft of government property. In addition

to benefits to the government, our work also benefitted the consumer. For example, our

work resulted in savings to consumers from new energy standards for appliances, better

information on fees to participants in defined contribution retirement plans, and about $140

million in refunds to consumers of debt protection products.

The 112th Congress relied on us to inform its work on national and international issues.

Our senior officials testified at 159 hearings on key topics, such as Department of Defense

weapon systems, protecting federal information systems, improving disability programs, and

Medicare. We know that getting our message out is crucial. To better serve our clients and

the public we expanded our presence in digital and social media, released GAO’s iPhone

application, and launched streaming video web chats with the public. We also continued our

popular podcast audio series, recently releasing our 100th podcast.

Source: GAO.

From the

Comptroller General
GAO-13-2SP 3

GAO Performance and Accountability Report 2012

From the Comptroller General

We depend upon our professional, diverse, and multidisciplinary staff to meet our clients’

needs. Our people enable us to fulfill our mission 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. Through

the dedication and commitment of our staff, we achieved 95 percent on-time product

delivery. Our people and internal operations measures indicate that our employees feel

they have the developmental opportunities, work experiences and environment, and

operational support they need to produce high-quality work. We met or exceeded six of

the targets for our seven people measures—retention rate (with and without retirements),

staff development, staff utilization, effective leadership by supervisors, and organizational

climate. We did not meet our target for new hires as we curtailed hiring, filling only critical

needs because of budget constraints.

We continued to focus on our two internal management challenges, human capital and

engagement efficiency. In the area of human capital, we recruited for critical hires and

implemented an enhanced telework pilot program in selected field offices, in conjunction

with a workspace sharing initiative. Under our engagement efficiency initiative, we

completed an end-to-end analysis of our engagement process that identified several areas

of opportunity for improved efficiency. We have established an Office of Continuous Process

Improvement that has begun several efficiency improvement projects based on our analysis

results. These two management challenges will continue to be priorities in fiscal year 2013.

We maintained our productive working relationship with the employees’ union, GAO

Employee’s Organization, International Federation of Professional and Technical Engineers

(IFPTE), Local 1921, and reached agreement on several initiatives, including approval of our

new performance appraisal system. We welcomed the establishment of a new bargaining

unit with IFPTE, Local 1921, for our administrative professional and support staff. We are

also working with the Employee Advisory Council and the Diversity Advisory Council on

several issues, and we developed additional diversity and inclusion courses and improved our

reasonable accommodations process.

Fiscal year 2012 provided many opportunities for GAO to address complex issues facing

the Congress and the nation. We met these challenges, accomplishing our objectives

under constrained budget circumstances. Although fiscal year 2013 may present many

similar challenges, we plan to deliver our third annual report on overlap, duplication, and

fragmentation across government, the biennial update of our high-risk list, and continued

work on financial regulatory and health insurance issues, among other pressing matters.

We will continue our work to improve our efficiency and will begin the process of updating

our strategic plan for serving the Congress, which we expect to issue early in 2014. We look

forward to continuing to serve the Congress and the public in the coming year through our

work on issues and programs affecting the lives of all Americans.

Gene L. Dodaro

Comptroller General

of the United States
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GAO Performance and Accountability Report 2012

Financial Reporting Assurance Statements 

November 15, 2012

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, 2012, 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 and complete. Transactions are (1) 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; and (2) 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 and complete. 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, as amended, (GPRA) and

related OMB guidance.

Financial Reporting 

Assurance Statements 
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GAO Performance and Accountability Report 2012

Financial Reporting Assurance Statements

We also believe that (1) these same systems of accounting and internal controls provide

reasonable assurance that we are in compliance with 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.

Gene L. Dodaro

Comptroller General

of the United States

David M. Fisher

Chief Administrative Officer/Chief

Financial Officer

Patricia A. Dalton

Chief Operating Officer

William L. Anderson

Controller

Lynn H. Gibson

General Counsel
6 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO 

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 FMFIA, GPRA, and the Federal Financial Management Improvement Act of 1996

(FFMIA) and the Federal Information Security Management Act (FISMA).1 Accordingly, this

performance and accountability report for fiscal year 2012 provides what we consider to

be information comparable to that reported by executive branch agencies in their annual

performance and accountability reports. This report also fulfills our requirement to report

annually on the work of the Comptroller General under 31 U.S.C. 719.

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 provide

objective and reliable information and

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.

1 FMFIA requires ongoing evaluations and annual reports on the adequacy of internal accounting and administrative control systems of each

agency. GPRA seeks to improve public confidence in federal agency performance by requiring that federally funded agencies develop and

implement accountability systems based on performance measurement that include goals and objectives and measure progress toward them. The

GPRA Modernization Act of 2010 incorporates additional requirements for reporting and transparency. FFMIA emphasizes the need to improve

federal financial management by requiring federal agencies to implement and maintain 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. FISMA

requires federal agencies to implement policies and procedures to cost-effectively reduce information technology risks.

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.

Source: See Image Sources.

About GAO

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE
GAO-13-2SP 7

GAO Performance and Accountability Report 2012

About GAO

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 to Address National Challenges

■ Strategic Goal 4: Maximize the Value of GAO by Enabling Quality, Timely Service to the

Congress and Being a Leading Practices Federal Agency

Figure 1: GAO’s Strategic Planning Hierarchy

Source: GAO.

Each strategic goal is composed of strategic

objectives, for which there are specific

strategies taking the form of performance

goals, each of which has a set of key efforts.

Figure 1 illustrates this hierarchy and the text box on the right provides an example of

structure of one of our strategic goals. Our audit, evaluation, and investigative work is

primarily aligned under the first three strategic goals, which span domestic and international

issues affecting the lives of all Americans and influencing the extent to which the federal

government serves the nation’s current and future interests.

Figure 2 provides examples of the results of this work described in Part II of this report.

The fourth goal is focused internally on improving efficiency and effectiveness in performing

our work, maintaining and enhancing a diverse workforce, expanding collaboration to

promote professional standards, and being a responsible steward of our resources.

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: Viable National Infrastructure

Performance Goal: Assess federal regulation of 

transportation safety and efforts to fund improvements in 

safety

Key Efforts:

 Assess federal oversight of aviation safety.

 Assess federal oversight of safety in highway, rail, 

pipeline, and other surface modes.

 Review the use of federal grants and other strategies to 

improve safety outcomes.
8 About GAO GAO-13-2SP 

GAO Performance and Accountability Report 2012

Source: GAO.

Note: Additional information on accomplishments by goal is highlighted in Part II of this report.

 Led the Federal Emergency Management Agency to better target National Flood Insurance Program 

bonuses for companies to focus on under-served areas and small businesses 

 Identified challenges in processing increased volumes of terrorist watchlist information and impacts on 

agency resources and the traveling public 

 Recommended that the Coast Guard improve its maintenance cost estimating process and adjust 

operational targets for its aging fleet

 Encouraged improved information security controls over multiple agencies’ information systems and 

networks to protect confidentiality, integrity, and availability of agency information 

 Found cost and technical risks in the Navy’s $80 billion plan to purchase 40 destroyers

 Helped ensure the Department of Defense’s (DOD) $19 billion space launch vehicle acquisition is 

based on sound data

 Led DOD to establish guidelines for enhanced end-use monitoring of arms sales to the Persian Gulf

 Identified a lack of trend data on illegal exports and a need for effectiveness measures for the U.S. 

export control system

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

 Led the Treasury to increase the liquidity of Treasury Inflation Protected Securities, reducing borrowing 

costs by about $2.2 billion over 5 years

 Encouraged the Internal Revenue Service and Department of Education to improve information for tax 

filers about higher education tax benefits

 Contributed to reducing improper payments by about $1.4 billion for 22 federal programs 

 Referred over 70 individual cases of potential fraud or other impropriety to federal agencies for action 

 Identified counterfeit parts that could enter the DOD supply chain for military grade electronic parts

 Ensured the soundness of National Aeronautics and Space Administration’s (NASA) plans to sustain 

the international space station through replicating NASA’s system assessments 

 Published a guide to provide a consistent methodology for developing, managing, and evaluating 

schedules for capital investments

Goal 3: Help Transform the Federal Government to Address National Challenges

Goal 4: Maximize the Value of GAO by Enabling Quality, Timely Service to the Congress 

and Being a Leading Practices Federal Agency

 Provided extensive training on revised Government Auditing Standards 

 Analyzed our engagement process and identified 31 areas of opportunity for improved efficiency

 Reduced our physical infrastructure footprint and expanded telework for $1.1 million in potential 

savings 

 Established a three-tier certification program and certified 73 contracting officer representatives

 Launched an agencywide financial literacy initiative including a speakers’ series and training classes

 Identified $12 billion of additional savings by reducing unneeded payments to Medicare Advantage Plans

 Improved oversight of the Food and Drug Administration’s investigators of medical devices

 Encouraged the Social Security Administration to develop goals, measures, and risk assessments for 

its plan to eliminate the backlog of disability hearings 

 Led the Treasury to change requirements for its mortgage modification program to allow modifications 

for properties that are not owner-occupied, thereby reducing vacant and unmaintained properties

 Provided support for the Congress to eliminate the duplicative $5.7 billion ethanol tax credit

 Developed findings for the Congress to establish national goals and require development of 

performance measures and targets for highway safety, condition, and performance

Goal 1: Address Current and Emerging Challenges to the Well-Being and Financial Security 

of the American People

Figure 2: How GAO Assisted the Nation • Fiscal Year 2012
GAO-13-2SP 9

GAO Performance and Accountability Report 2012

About GAO

In July 2010, we issued and began the transition to our strategic plan for fiscal years 2010

through 2015. The plan describes our goals and strategies for supporting the Congress

and the nation and identifies eight trends that provide context for the plan. These are

highlighted in our strategic planning framework for serving the Congress (see fig. 3). We

identified these trends based on a review of external literature, discussions with outside

advisors and selected experts, and input from our mission teams based on their discussions

with congressional clients and their institutional knowledge.

The four strategic goals and the strategic objectives that support them reflect these broad

trends. Several multiyear performance goals define a specific level of achievement for each

strategic objective. At the base of our strategic planning hierarchy, key efforts describe

a body of work that operationalizes each performance goal. To ensure that we are well

positioned to meet the Congress’s current and future needs, we have updated our 6-year

strategic plan every 3 years, consulting extensively during the update with our clients on

Capitol Hill and with other experts. In keeping with the GPRA Modernization Act of 2010,

we plan to shift to a 4-year planning cycle. We issued an interim update to our plan in

February 2012 and plan to issue the next full update in 2014. A description of the steps in

our strategic planning process is included in our strategic plan (see our complete strategic

plan on http://www.gao.gov/products/GAO-10-559SP). This site also provides access to our

prior annual performance plans and performance and accountability reports.

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 increasing pace with which

crucial issues emerge and evolve, we incorporate 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 publicly available—like our strategic plan—

on our website (http://www.gao.gov/sp.html).

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 eleventh

consecutive year its Certificate of Excellence in Accountability Reporting for outstanding

accountability reporting for our fiscal year 2011 performance and accountability report. We

also received a “Best-in-Class” award for the most comprehensive and candid presentation

of forward looking information for fiscal year 2011 (see fig. 4).

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.
10 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO

CORE VALUES

TRENDS

National 

Security 

Threats

Fiscal 

Sustainability 

Challenges

Economic 

Recovery 

and Growth

Global 

Interdependence

Science and 

Technology

Networks and 

Virtualization

Shifting Roles 

of Government

Demographic 

and Societal 

Change

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.

 Goals Objectives

 Accountability Integrity Reliability

Source: GAO. GAO Strategic Plan 2010–2015

● Health care needs

● Lifelong learning

● Bene
 ts and 

protections for workers, 

families, and children

● Financial security

● E ective system of 

justice

● Viable communities

● Stable 
 nancial system and 

consumer protection

● Stewardship of natural 

resources and the 

environment

● Infrastructure

● Homeland security

● Military capabilities

and readiness

● U.S. foreign policy interests

● Global market forces

● Government’s 
 scal 

position and options for 

closing gap

● Fraud, waste, and abuse

● Major management 

challenges and program risks

● E ciency, e ectiveness, 

and quality

● Diverse and inclusive 

work environment

● Professional networks and 

collaboration

● Institutional stewardship and 

resource management

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 related to...

...Respond to Changing Security 

Threats and the Challenges of Global 

Interdependence involving...

Help Transform the Federal Government to 

Address National Challenges by assessing...

Maximize the Value of GAO by Enabling 

Quality, Timely Service to the Congress and 

Being a Leading Practices Federal Agency in 

the areas of...

Figure 3: GAO’s Strategic Plan Framework
GAO-13-2SP About GAO 11

GAO Performance and Accountability Report 2012

Source: GAO.

Figure 4: GAO’s Performance and Accountability Report Awards

P&AAwards

2011

Fiscal Year 2011

PERFORMANCE AND ACCOUNTABILITY REPORT

U.S. Government Accountability Office

ERVING THE CONGRESS AND THE NATION

CERTIFICATE OF

EXCELLENCE IN

ACCOUNTABILITY

REPORTING®

BEST-IN-CLASS AWARD

Presented to the

In recognition for Providing the

Most Comprehensive and Candid Presentation 

of Forward Looking Information

in your FY2011 Performance and Accountability report

U.S. Government 

Accountability Office

Executive Director, AGA

in Accountability Reporting Board

 CERTIFICATE OF 

 EXCELLENCE IN 

ACCOUNTABILITY

 REPORTING®

Presented to the

A Certificate of Excellence in Accountability Reporting is presented

by AGA to federal government agencies whose annual 

Performance and Accountability Reports achieve the 

highest standards demonstrating accountability 

and communicating results.

Executive Director, AGA

In recognition of your outstanding efforts in

preparing the agency’s Performance and

Accountability Report and Summary of 

Performance and Financial Information for 

the fiscal year ended September 30, 2011.

U.S. Government 

Accountability 

Office
12 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO 

Organizational Structure

As the Comptroller General of the United States, Gene L. Dodaro is the head of GAO.

On December 22, 2010, he was confirmed as Comptroller General after serving as the

Acting Comptroller General since March 2008. Prior to that, Mr. Dodaro served as GAO’s

Chief Operating Officer for 9 years. Three other executives join Comptroller General

Dodaro to form our Executive Committee: Chief Operating Officer Patricia A. Dalton, Chief

Administrative Officer/Chief Financial Officer David M. Fisher, and General Counsel Lynn

Gibson.

To achieve our strategic goals, our staff is organized as shown in figure 5. For the most

part, our 14 evaluation, audit, research, and investigative 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. In addition to this work,

Forensic Audits and Investigative Service (FAIS) follows up on engagements and referrals

from our other teams when its special services are required for specific fraud allegations

or for assistance in evaluating security matters. FAIS also manages Fraudnet, which is our

online system created for the public to report to GAO allegations of fraud, waste, abuse,

or mismanagement of federal funds. FAIS is an integrated unit composed of investigators,

analysts, and auditors who have experience with forensic auditing and data mining assisted

by staff in our Office of General Counsel.

Senior executives in the teams manage a portfolio 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, our General Counsel’s office 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, Audit Policy and Quality Assurance, Public Affairs,

and the Chief Administrative Office, support the efforts of the teams. This matrixed

structure increases our effectiveness, flexibility, and efficiency in using our expertise and

resources to meet congressional needs on complex issues.
GAO-13-2SP 13

GAO Performance and Accountability Report 2012

About GAO

Figure 5: Organizational Structure

Inspector General Opportunity and

Inclusiveness

Congressional

Relations

Public

Affairs

Source: GAO.

Teams

Comptroller General

of the United States

Chief Operating Officer

Audit Policy and 

Quality Assurance

Continuous Process 

Improvement

Strategic Planning

and External Liaison

General

Counsel

Chief Administrative Officer/

Chief Financial Officer

Goal

4

Goal

2

Goal

3

Goal

1

Goal

4

Goal

3

Goal

2

Goal

1

• Provide Audit and 

Other Legal Support 

Services for All Goals 

and Staff Offices

• Manage GAO’s Bid 

Protest and 

Appropriations Law 

Work

Provide Timely, Quality 

Service to the Congress 

and the Federal 

Government to 

Respond to Changing 

Security Threats and 

the Challenges of 

Global Interdependence

• Acquisition and 

Sourcing 

Management

• Defense Capabilities 

and Management

• International Affairs 

and Trade

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

Help Transform the 

Federal Government to 

Address National 

Challenges

• Applied Research

and Methods

• Financial 

Management and 

Assurance

• Forensic Audits and 

Investigative Service

• Information 

Technology

• Strategic Issues

Maximize the Value of 

GAO by Enabling 

Quality, Timely Service 

to the Congress and 

Being a Leading 

Practices Federal 

Agency

• Financial 

Management and 

Business 

Operations

– Controller

• Human Capital 

Office

– Chief Human

Capital Officer

• Information Systems 

and Technology 

Services

– Chief Information

Officer

• Infrastructure 

Operations

• Professional 

Development 

Program

• Field Operations

Note: The structure of the Office of the General Counsel 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.

The Office of the 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 are organized
14 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO 

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. The Legal Services group provides inhouse 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 only internal strategic goal—staff in our Chief Administrative

Office take the lead. In fiscal year 2012, we created a new Office of Continuous Process

Improvement to establish change in mission and mission support operations to improve

efficiency and effectiveness in how we conduct our work. Other teams and goal 4 offices

including the Applied Research and Methods team and the Office of Strategic Planning and

External Liaison, Congressional Relations, Opportunity and Inclusiveness, Audit Policy and

Quality Assurance, and Public Affairs assist in achieving specific key efforts. In addition,

attorneys in the General Counsel’s office, primarily in the Legal Services group, provide

legal support for goal 4.

We maintain a workforce with training in many disciplines, including accounting, law,

engineering, public and business administration, economics, and the social and physical

sciences. About 72 percent of our 2,960 employees are based at our headquarters in

Washington, D.C.; the rest are deployed in 11 field offices across the country (see fig. 6).

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.

In September 2008, the Government Accountability Office Act of 2008 was enacted

establishing the Office of the Inspector General (IG) of GAO as a statutory office within

the agency. The IG is appointed by and reports to the Comptroller General. The IG is

responsible for conducting audits and investigations relating to the administration of

our programs and operations and for making recommendations to promote its economy,

efficiency, and effectiveness. The IG also keeps the Comptroller General and the Congress

fully informed through semiannual reports that describe the IG’s findings. In addition, the

IG investigates allegations from our employees and other interested parties concerning

activities within GAO that may constitute the violation of any law, rule, or regulation;

mismanagement; or a gross waste of funds or other wrongdoing.
GAO-13-2SP 15

GAO Performance and Accountability Report 2012

About GAO

Figure 6: GAO’s Office Locations

Chicago

Dayton

Los Angeles

San Francisco

Huntsville

Seattle

Norfolk

Dallas

Denver

Boston

Atlanta

Washington, D.C.

Source: See Image Sources.

Strategies for Achieving Our Goals

GPRA 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 to strengthen 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 proved 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 and to achieve our four broad strategic goals.

Attaining our three external strategic goals (1, 2, and 3) and their related objectives rests,

for the most part, on providing accurate, 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;
16 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO 

■ 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

2012, we devoted 95 percent of our engagement resources to work requested or mandated

by the Congress. We devoted the remaining 5 percent of the engagement resources to

work initiated under the Comptroller General’s authority. Much of this work addressed

various challenges that are of broad-based interest to the Congress, such as the war in

Afghanistan, follow-up on our 2011 duplication, overlap and fragmentation report, and

the federal, state and local government fiscal outlook.2 Also covered by this work were

reviews of 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. This information is usually presented

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. In recent

years, we have issued around 900 products each year, primarily in an electronic format. In

addition, we publish about 300 to 400 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 congressional 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 many

Americans, such as our reports on the fiscal future of the United States and our decisions

on federal bid protests.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 website information extracted from those reports. Collectively, our products contain

information and often conclusions and recommendations that allow us to achieve our

external strategic goals.

2

 In fiscal year 2011 the work performed under the Comptroller General’s authority represented 6 percent of our engagement resources.. 3

 GAO, The Federal Government’s Long-Term Fiscal Outlook: Spring 2012 Update, GAO-12-521SP (Washington, D.C.: Apr. 2, 2012); GAO, Bid 

Protest Annual Report to the Congress for Fiscal Year 2011, GAO-12-199SP (Washington, D.C.: Nov. 15, 2011); and GAO, Principles of Federal 

Appropriations Law: Annual Update of the Third Edition, GAO-12-413SP (Washington, D.C.: Mar. 8, 2012).
GAO-13-2SP 17

GAO Performance and Accountability Report 2012

About GAO

Another means of ensuring that we are achieving our goals is by 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 are reported in terms of financial benefits and nonfinancial

benefits. 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 (http://www.gao.gov/openrecs.html).

Similarly, our biennial high-risk report, to be updated in February 2013, provides 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 (see p. 38). Such special publications are valuable planning tools because

they help us to identify areas of focus on important policy and management issues facing

the nation.

To attain our fourth strategic goal—an internal goal—and its four related objectives, we

implement projects to address the key efforts in our strategic plan. We conduct surveys

of our congressional clients and internal customers to obtain feedback on our products,

processes, and services and identify ways to improve them. We also perform internal

management studies and evaluations.

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 issuespecific 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 leading practices 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. 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.
18 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO 

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 (1, 2, and 3) to reach 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 to encourage consistent

performance across goals. Internally, 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 measure how well we are serving our client, we capture the number of

congressional hearings where we are asked to present expert testimony and our

timeliness in delivering products to the Congress. We use an electronic client feedback

form to collect data on the services we are providing to our congressional clients.

We set a target at the agencywide level for the number of hearings and then assign a

portion of these hearings as a target for each of the external goals (1, 2, and 3) based

on that goal’s expected contribution to the agencywide total. We base this target on

our assessment of the congressional calendar and hearing trend data. As in measuring

the results of our work, we track our progress on this measure at the goal level in

order to understand where 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, infrastructure operations,

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 impact employees’ quality of work life. Examples of

surveyed services include Internet access, voice and video communication systems, pay

and benefits, and building security and maintenance. We set targets for these measures

at the agencywide level.

Setting Performance Targets

To establish targets for all of our measures, we consider our past performance, including

recent patterns and 4-year rolling averages, as well as known upcoming events for most

of our results measures (see p. 24) and the external factors that influence our work

(see p. 60). Based on this information, the teams and offices that are directly engaged
GAO-13-2SP 19

GAO Performance and Accountability Report 2012

About GAO

in the work discuss with our top executives their views of what we have planned to

accomplish in the strategic plan and what they believe they can accomplish in the

upcoming fiscal year. Members of our Executive Committee 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.4 We may adjust these targets after they are

initially published when our expected future work or level of funding 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 V,

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 2012 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.

4

 Our most recent performance plan is available on our website at http://www.gao.gov/products/GAO-11-343SP.
20 GAO-13-2SP

GAO Performance and Accountability Report 2012

About GAO

This page intentionally left blank
Part I

Management’s

Discussion and Analysis

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
22 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

Assisting the Congress and Benefiting the 

Nation during Challenging Times

In fiscal year 2012, demand for our work was high with 924 congressional requests and

new mandates. Our work in key areas helped inform the Congress and the administration

on issues relevant to all Americans. These included issues related to duplication, overlap

and opportunities for cost-saving in government programs, for which we identified 51 areas

where programs may be able to achieve greater efficiencies or become more effective

in providing government services, the Dodd-Frank Wall Street Reform and Consumer

Protection Act, the Patient Protection and Affordable Care Act, nationwide funding

provided through the American Recovery and Reinvestment Act and the Troubled Asset

Relief Program, and our continued oversight of high-risk and other critical areas.

This work also allowed us to achieve many of our performance goals, and we monitored

how well we performed and supported our staff using 15 annual performance measures.

The results of our efforts are reflected in our solid performance in fiscal year 2012—we

met or exceeded all but two of the performance targets we set for our client and people

measures—those for which data are available (see table 1). We exceeded our targets for

our two priority measures—financial and nonfinancial benefits. We achieved $55.8 billion

in financial benefits, exceeding our target of $40 billion by $15.8 billion.5 This represents

a $105 return on every dollar the Congress invested in us. We recorded 1,440 nonfinancial

benefits, exceeding our target of 1,200 by 240 benefits. We met our target of 80 percent

for past recommendations implemented, and we exceeded our target for new products

with recommendations by 7 percentage points. We did not meet our target of 180 hearings

at which we were asked to testify, due to fewer-than-anticipated hearings in a range of

subject areas. We exceeded our target for delivering our products and testimonies to our

clients in a timely manner. We also met or exceeded our annual targets for six of seven of

our people measures.

Concerning our two internal operations measures, we assess our performance related

to how well our internal administrative services (e.g., computer support, telework, and

building maintenance) help employees get their jobs done or impact employees’ quality

of work life based on responses to an annual internal survey. These measures are directly

related to our efforts under goal 4 of our strategic plan to enable quality, timely service to

the Congress and being a leading practices federal agency. The survey asks staff to indicate

their satisfaction with each service, or to indicate if they did not use it. There always is

a lag in reporting on this measure because our customer feedback survey is conducted

after we issue the performance and accountability report. Our scores from the 2011 survey

were 3.98 for services that “help get the job done” and 3.99 for services that impact the

“quality of work life.” On a 5-point scale, with 5 being the highest, these scores indicate

that our employees were satisfied with the internal administrative services we provide.

Our fiscal year 2013 targets for 13 of 15 of our performance measures are the same as

those targets we reported in our fiscal year 2013 performance plan in February 2012.

We believe that these targets are challenging yet realistic for our staff given constrained

resources to monitor agency actions to implement our recommendations.

5

 A financial benefit is an estimate of the federal cost reduction of agency or congressional actions.
GAO-13-2SP 23

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Table 1: Agencywide Summary of Annual Measures and Targets

Performance

measure

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target actual

Met/

not met

2013

target

Results

Financial benefits

(dollars in billions) $45.9 $58.1 $43.0 $49.9 $45.7 $40.0 $55.8 Met $44.0

Nonfinancial benefits 1,354 1,398 1,315 1,361 1,318 1,200 1,440 Met 1,200

Past recommendations implemented 82% 83% 80% 82% 80% 80% 80% Met 80%

New products with

recommendations 66% 66% 68% 61% 68% 60% 67% Met 60%

Client

Testimonies 276 298 203 192 174 180 159 Not met 170

Timelinessa 95% 95% 95% 95% 95% 90% 95% Met 90%

People

New hire rate 96% 96% 99% 95% 84% 95% 76% Not met 95%

Retention rate

With retirements 90% 90% 94% 94% 92% 90% 93% Met 90%

Without

retirements 94% 93% 96% 96% 96% 94% 96% Met 94%

Staff developmentb 76% 77% 79% 79% 79% 76% 80% Met 76%

Staff utilizationb,c 73% 75% 78% 77% 78% 75% 76% Met 75%

Effective leadership 

by supervisorsb,d 79% 81% 83% 83% 83% 80% 82% Met 80%

Organizational

climateb 74% 77% 79% 79% 80% 75% 78% Met 75%

Internal operationse

Help get job done 4.05 4.0 4.03 3.94 3.98 4.0 N/A N/A 4.0

Quality of work life 3.98 4.01 4.01 3.94 3.99 4.0 N/A N/A 4.0

Source: GAO.

Note: Information explaining all of the measures included in this table appears in the Appendix on Data Quality of this report. a

The timeliness measure is based on one question on a form sent out to selected clients. The response rate for the form in fiscal 

year 2012 was 22 percent, and 99 percent of the clients who responded answered this question. The percentage shown in the 

table represents the percentage of respondents who answered favorably to this question on the form.

b

This measure is derived from our annual agencywide employee feedback survey. From the staff who expressed an opinion, we 

calculated the percentage of those who selected favorable responses to the related survey questions. Responses of “no basis 

to judge/not applicable” or “no answer” were excluded from the calculation. While including these responses in the calculation 

would result in a different percentage, our method of calculation is an acceptable survey practice, and we believe it produces a 

better and more valid measure because it represents only those employees who have an opinion on the questions.

c

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.

d

In fiscal year 2009, we changed the name of this measure from “Leadership” to its current nomenclature to clarify that the 

measure reflects employees’ satisfaction with their immediate supervisors’ leadership. In fiscal year 2010, we changed one of 

the questions for this measure.

e

For our internal operations measures, we ask staff to rate 30 internal services available to them, indicating on a five-point 

scale, with 5 being the highest, their satisfaction with each service from “very dissatisfied” to “very satisfied” or to indicate if they 

did not use the service. These measures are described in more detail on page 37 of this report. We will report actual data for 

fiscal year 2012 once the survey results have been analyzed. N/A indicates that the data are not yet available.
24 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

To help us examine trends over time, we look at 4-year rolling averages for the following

performance measures: financial benefits, nonfinancial benefits, new products with

recommendations, and testimonies. We calculate 4-year rolling averages because historically

our performance on these measures has fluctuated from year to year, and this calculation

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 our

averages for financial benefits increased each year from 2007 to 2009 and then remained

fairly stable from 2010 to 2012. The average number of nonfinancial benefits we recorded

increased from 2007 to 2008 and has remained fairly stable for the period from 2010 to 2012.

New products with recommendations has been very stable from 2007 through 2012.

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

Performance measure 2007 2008 2009 2010 2011 2012

Results

Financial benefits (billions) $45.1 $48.7 $49.5 $49.2 $49.2 $48.6

Nonfinancial benefits 1,325 1,376 1,352 1,357 1,348 1,359

New products with recommendations 64% 65% 66% 65% 66% 66%

Client

Testimonies 228 248 254 242 217 182

Source: GAO.

When setting our target for the number of hearings at which our senior executives testify,

we base our testimonies target in part on the cyclical nature of the congressional calendar,

in addition to our 4-year rolling averages and our past performance. Our experience has

shown that during the fiscal year in which an election occurs, the Congress generally

holds fewer hearings. In the months after an election, the members usually only meet

for a short session, and then they reorganize in the following months, providing fewer

opportunities for us to testify. For the past three years, our testimonies have been lower

than anticipated because of a congressional focus on a few key policy areas that did not

encompass as many hearings on our broad scope of work as in recent years. We therefore

have set a lower target for congressional testimonies in 2013.

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. In many cases, the benefits we claimed in fiscal year 2012 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.
GAO-13-2SP 25

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

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. Our methodology

for determining financial benefits can be found in table 19 in the Appendix on Data Quality

of this report.

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

financial benefit can be the result of changes in business operations and activities; the

restructuring of federal programs; or modifications to entitlements, taxes, or user fees.

In fiscal year 2012, our work generated about $56 billion in financial benefits (see fig. 7).

We exceeded our target by almost 40 percent because of several unexpectedly large

accomplishments. Part II of this report provides more information on these accomplishments

by goal. (See fig. 8.) In light of ongoing resource constraints that may affect our ability to

follow up on actions taken, we have set our fiscal year 2013 target for financial benefits at

$44 billion. This is above the fiscal year 2012 target but below our actual performance.

Figure 7: Financial Benefits GAO Recorded

Dollars in billions

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

60

2007 2008 2009 2010 2011 2012 2012

$43.0 $40.0

$49.9 $45.7

$58.1

$45.9

$55.8

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. We limit the period over which benefits from an

accomplishment can accrue to no more than 5 years.

Estimates used to calculate our financial benefits come from non-GAO sources. These

sources are typically the agency that acted on our work, a congressional committee, or

the Congressional Budget Office. Additional examples of financial benefits can be found in

Part II of this report.
26 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

Figure 8: GAO’s Selected Major Financial Benefits Reported in Fiscal Year 2012

Financial Benefits

Source: See Image Sources.

Description

Amount

(Dollars in 

billions)

Reductions in Payments to Medicare Advantage (MA) Plans. As the MA program—a 

private plan option under Medicare—grew, some policymakers raised concerns about its 

design and cost. Specifically, they were concerned that payments to MA plans exceeded 

what Medicare would have paid had MA beneficiaries received services through Medicare 

fee-for-service, thereby increasing overall Medicare spending. Our work showed that for 2007, 

despite the higher MA plan payments, some beneficiaries enrolled in the MA program were 

likely to have higher out-of-pocket costs than if they were enrolled in Medicare fee-for-service. 

In addition, our work showed that in 2005 MA plans spent less on medical expenses than 

projected, thus gaining profits of about $1.14 billion more than estimated. Our work influenced 

2008 legislation that reduced payments to the MA program. For fiscal years 2013-2014, the 

present value of the reduced payments will exceed $12 billion. (GAO-08-359, GAO-08-522T, 

GAO-08-827R) $12.4

NASA Cancellation of Constellation/Ares I Project. From 2006 to 2009, we issued a 

number of products on various aspects of NASA’s Constellation program, including the Orion 

and Ares I projects, the two main development efforts under that program. We questioned the 

affordability and overall acquisition strategy for each project and stressed that NASA needed 

to develop a sound business case to support the Constellation program before making longterm commitments. Development and funding issues with the project led to an extended gap 

in human space flight capability, and as a result, NASA’s fiscal year 2011 budget request 

canceled the Constellation program, effectively halting the program’s planned entry into 

the implementation phase of development. The estimated financial benefit of canceling the 

program is about $8.0 billion. (GAO-09-844, GAO-08-51) $8.0

Elimination of Ethanol Excise Tax Credit for Corn. We found that a federal ethanol tax 

credit was duplicative with a federal renewable fuel standard that requires U.S. transportation 

fuels to contain certain volumes of biofuels, such as ethanol. In 2011, along with the fuel 

standard, the Congress supported domestic ethanol production through a $5.7 billion tax 

credit program, which provided a 45-cent-per-gallon federal tax credit to fuel blenders that 

purchase and blend ethanol with gasoline. We advised the Congress to consider allowing 

the tax credit to expire. The Congress took no action to extend the tax credit, which had been 

active in various forms since 1979, and it expired at the end of 2011. Over the nine months of 

fiscal year 2012 when the tax credit did not apply, tax expenditure savings totaled $4.5 billion. 

(GAO-11-318SP, GAO-09-446) $4.5
GAO-13-2SP 27

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Tour Normalization for Forces in South Korea. In May 2011, we recommended that DOD 

assess benefits, costs, and alternatives before implementing an initiative to increase the 

lengths of U.S. servicemembers’ tours in South Korea. In response to our report, the Congress 

directed that DOD conduct such an analysis, which in turn led the department to decide that 

the initiative was unaffordable. DOD avoided $3.1 billion in costs for additional personnel and 

infrastructure that would have been needed to support the initiative. (GAO-11-316) $3.1

Termination of Defense Weather Satellite System (DWSS) Program. DWSS was a follow-on 

program to the National Polar-orbiting Operational Environmental Satellite System (NPOESS) 

disbanded due to cost increases, schedule delays, and ineffective management structure. 

We reviewed NPOESS as well as its restructure and transition to DWSS. We reviewed the 

follow-on program and found delays in completing key acquisition activities while the program 

was accelerating planned development activities, thus increasing program concurrency and 

risk. In response to our work, the Congress did not fund DWSS for fiscal year 2012 other 

than for termination of the program. DOD had planned on spending about $3 billion in fiscal 

years 2012 through 2016 on NPOESS and DWSS activities. DOD currently has two weather 

satellites to be launched as needed and is working on the weather satellite follow-on effort. 

(GAO-11-233SP, GAO-10-388SP, GAO-10-558, GAO-09-564) $3.0

Source: GAO.

Note: Additional examples of fiscal year 2012 financial benefits can be found in Part II of this report.

Nonfinancial Benefits

Many of the benefits that result from our work cannot be measured in dollar terms. During

fiscal year 2012, we recorded a total of 1,440 nonfinancial benefits (see fig. 9). We exceeded

our target by 20 percent largely because of a number of accomplishments we documented

for information technology, physical infrastructure, and environmental issues. We have set

our 2013 target for nonfinancial benefits at 1,200 again given ongoing resource constraints.

Figure 9: Nonfinancial Benefits

0

300

600

900

1200

1500

2007 2008 2009 2009 2011 2012 2012

Number

Source: GAO.

Actual Target Actual

1,361

1,200

1,315 1,318 1,398 1,354 1,440

In fiscal year 2012 we documented actions taken across federal programs—about 36 percent

of the total nonfinancial benefits were in the area of public safety and security, including

programs such as homeland security and justice programs and critical technologies. About

35 percent resulted from improvements in business process and management, such as

federal information systems, business systems modernization, and financial management.
28 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

(See figure 10.) In figure 11, we provide examples of nonfinancial benefits we claimed as

accomplishments in fiscal year 2012. Additional examples of nonfinancial benefits can be

found in Part II of this report.

Figure 10: Types of Fiscal Year 2012 Nonfinancial Benefits

0

10

20

30

40

Percentage of total

Source: GAO.

 Public Insurance 

 and Benefits 

 Public Safety and 

 Security

 

Acquisition and 

Contract Management

 

Tax Law Administration

 Program Efficiency 

 and Effectiveness

Business Process 

 and Management

3%

36%

4%

8%

14%

35%

Note: These categories closely align with those in our high-risk list (see table 7).

Examples of programs included in categories:

 Public Insurance and Benefits: Medicare, Medicaid, Department of Veterans Affairs and DOD health care, disability 

programs, national flood insurance, federal deposit insurance, and other insurance programs.

 Public Safety and Security: Homeland security and justice programs, critical infrastructure, including information security, 

critical technologies, food safety, transportation safety, telecommunications safety, international food assistance, public 

health, consumer protection, environmental issues, national defense, foreign policy, and international trade.

 Acquisition and Contract Management: DOD weapon system acquisition, National Aeronautics and Space Administration 

acquisition management, and all federal agency and interagency contract management.

 Tax Law Administration: Internal Revenue Service (IRS) business systems modernization, tax policy, and enforcement of 

tax laws.

 Program Efficiency and Effectiveness: Fraud, waste, and abuse; U.S. financial regulatory system; federal oil and gas 

resources; U.S. Postal Service; transportation funding; and telecommunications funding.

 Business Process and Management: Federal agency financial audits, federal information systems, federal real property, 

human capital management, DOD business transformation, business systems modernization, financial management, support 

infrastructure management, and supply chain management.
GAO-13-2SP 29

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Figure 11: GAO’s Selected Nonfinancial Benefits Reported in Fiscal Year 2012

Nonfinancial Benefits

Source: See Image Sources.

Program Description

Public 

Insurance and 

Benefits

We found in 2009 that the Social Security Administration (SSA) neither provided 

performance goals and measures nor identified implementation risks for many 

initiatives in its plan to eliminate its backlog of disability hearings, where people can 

appeal SSA’s decisions about their claims. We recommended that SSA develop 

goals and measures, and identify risks and steps to address them so that SSA could 

improve its disability claims process. SSA subsequently established goals for each 

initiative and implemented a system that includes measures and risk assessments 

for each initiative, as well as proposed risk mitigation strategies. For example, SSA 

eliminated the oldest cases in their backlog and reduced average processing time. 

(GAO-09-398) 

Public Safety 

and Security

The December 2009 attempted airline bombing exposed weaknesses in how 

agencies create and use the terrorist watchlist. In May 2012, we reported that 

agencies faced challenges in processing increased volumes of watchlist-related 

information and that changes to screening processes based on the incident had 

impacted agency resources and the traveling public. We recommended that the 

Assistant to the President for Homeland Security and Counterterrorism routinely 

assess the results from using the watchlist to determine if outcomes and impacts are 

acceptable and manageable. This work has assisted the Congress in overseeing 

terrorist watchlist processes. (GAO-12-144T, GAO-12-476) 

Acquisition 

and Contract 

Management

In September 2011 we reported that DOD faced challenges in ensuring orderly 

contractor demobilization for the Iraq drawdown—specifically, in obtaining accurate 

and sufficient information from contractors, such as detailed demobilization plans 

and contractor employee headcount data. We recommended that DOD take steps, 

such as enforcing guidance to contractors to ensure proper planning associated 

with demobilization and engaging contractors to ensure that total personnel 

headcounts accurately reflect all personnel, including those working under 

subcontracts. In response, DOD took aggressive action to work with contractors to 

ensure robust contractor planning for demobilization and personnel accountability. 

(GAO-11-774)
30 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

Tax Law 

Administration

We reported that Internal Revenue Service’s (IRS) approach to the collection 

of unpaid taxes did not provide for the full effective use of the tools available. 

Specifically, IRS’s overall approach focused primarily on gaining voluntary 

compliance, a practice that has little likelihood of success for egregious payroll tax 

offenders. To strengthen IRS’s use of existing collection tools, we recommended 

that IRS review current case prioritization and assignment practices. In response, 

in October 2011, IRS changed its case routing processes, and in November 2011, 

IRS implemented a process to systematically accelerate entities with 30 or more 

delinquent tax-reporting periods as a priority for tax collection. These changes 

should increase the likelihood of successful IRS collection action against identified 

payroll tax debtors. (GAO-08-617) 

Program 

Efficiency and 

Effectiveness

In September 2010, we reported on results of undercover testing that found Head 

Start employees lied about applicants’ employment status or misrepresented 

their earnings in order to qualify applicants for enrollment under eligibility criteria 

designed for families with incomes below 130 percent of the poverty line. In 

response to our report, Head Start grantees across the nation took steps to improve 

fraud prevention controls related to eligibility for enrollment in Head Start centers. 

These actions will help reduce the risk that over-income children are enrolled while 

legitimate under-income children are put on waitlists. (GAO-10-1049) 

Business 

Process and 

Management

We identified more than $794 million remaining in expired grant accounts in the 

largest civilian payment system for grants at the end of fiscal year 2011. Closing 

out grants allows agencies to identify and redirect unused funds to other projects 

or to return unspent balances to the Treasury. In response to our recommendations, 

OMB issued the first ever “Controller Alert,” instructing agencies to close out grants 

in a timely manner and suggesting strategies such as establishing annual or semiannual performance targets for timely grant closeout, monitoring closeout activity, 

and tracking progress in reducing closeout backlog. (GAO-12-360, GAO-12-704T) 

Source: GAO.

Note: Additional examples of fiscal year 2012 nonfinancial benefits can be found in Part II of this report.

In addition to benefits to the government, our work also results in benefits to the

consumer. For example, we reviewed the Department of Energy’s (DOE) record of standard

setting for minimum energy efficiency for consumer and industrial appliances and found

that dozens of standards were backlogged (GAO-07-42). DOE took action to address our

recommendations to streamline the standard setting process and allocate additional

resources to expedite setting new standards and has largely caught up with its backlog of

unset standards. As a result, according to DOE’s data American consumers are currently

saving $15 billion per year because the appliances they purchase are using less energy. In

another review, we found that consumers only received 21 cents on the dollar in financial

benefits for every dollar they spent for debt protection products from 9 large credit card

issuers (GAO-11-311). We recommended that the Bureau of Consumer Financial Protection

(Bureau) consider the financial benefits and costs to consumers of these products. In July

2012, the Bureau announced an enforcement action—triggered by our work, according to

the Bureau’s director—that required one credit card issuer to provide about $140 million in

refunds to consumers of debt protection products, and subsequently at least three issuers

announced that they were phasing out these products altogether. In a third example, we

reported that participants in defined contribution plans, such as 401(k) and 403(b) plans,

had limited information to compare investment options and invest wisely (GAO-07-21). We

recommended that the Department of Labor (DOL) ensure that information, such as fees
GAO-13-2SP 31

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

and expenses, be made available, and DOL issued a rule requiring plan administrators

and their service providers to disclose certain information regarding investments to plan

sponsors. DOL estimated that this change could save workers $12.3 billion in fees and

administrative costs over a ten-year period. There are 72 million participants in 401(k)-type

plans who now have the information they need to manage their retirement savings.

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 2012, 80 percent of

the recommendations we made in fiscal year 2008 had been implemented (see fig. 12),

primarily by executive branch agencies. Putting these recommendations into practice

generates tangible benefits for the nation.

Figure 12: Percentage of Past Recommendations Implemented

Four-year implementation rate

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

60

70

80

90

2007 2008 2009 2009 2011 2012 2012

82% 83% 80% 82% 80% 80% 80%

The 80 percent implementation rate for fiscal year 2012 met our target for the

year. As figure 13 indicates, agencies need time to act on recommendations. We

assess recommendations implemented after 4 years based on our experience that

recommendations remaining open after that period of time are generally not implemented

in subsequent years.

Figure 13: Cumulative Implementation Rate for Recommendations Made in Fiscal Year 2008

Percentage

Source: GAO.

0

10

20

30

40

50

60

70

80

90

After

4 years

After

3 years

After

2 years

After

1 year

80%

37%

24%

15%
32 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

New Products Containing Recommendations

In fiscal year 2012, about 67 percent of the 651 written products we issued contained

recommendations (see fig. 14). We track the percentage of new products with

recommendations because we want to focus on developing 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 7 percentage points. However,

we have set our target again in fiscal year 2013 at 60 percent because we recognize that

our products do not always include recommendations, and the Congress and agencies

often find informational reports 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 substantial financial

and key nonfinancial benefits. Hence, this measure allows us some flexibility in responding

to requests that result in reports without recommendations.

Figure 14: Percentage of New Products with Recommendations

Percentage

Source: GAO.

Actual Target Actual

0

10

20

30

40

50

60

70

2007 2008 2009 2010 2011 2012 2012

68% 68%

61% 60%

66% 66% 67%

Focusing on Our Client

To fulfill the Congress’s information needs, we plan 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 well, by striving to respond to all congressional

requests for testimony and delivering almost all of our products on time based on the

feedback from our clients. We issued 964 products and completed work for 172 clients.

Testimonies

Our clients often invite us to testify on our current and past work as it relates to issues

that committees are examining through the congressional hearing process. During fiscal

year 2012, experts from our staff testified at 159 congressional hearings covering a wide

range of complex issues. We did not meet our target of 180 hearings at which we testify

(see fig. 15) by 21 hearings. This measure is client driven based on invitations to testify,

and we cannot always anticipate clients’ specific subject area interests. The 159 hearings

at which the Congress asked our executives to testify in fiscal year 2012 covered the scope

of our mission areas. (See fig. 17 for selected topics we testified on by strategic goal in
GAO-13-2SP 33

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

fiscal year 2012.) Fifty-five of the hearings at which our senior executives testified were

related to high-risk areas and programs, which are listed on page 39 of this report.

Figure 15: Testimonies

0

50

100

150

200

250

300

350

2007 2008 2009 2010 2011 2012 2012

Hearings at which GAO testified

Source: GAO.

Actual Target Actual

192 174 180

159

203

298

276

We have reduced our fiscal year 2013 target of testimonies to 170 hearings and believe this

should be a reasonable estimate given recent trends and the Congress’s continuing interest

in such matters as national and homeland security, health care, information security, public

safety, and natural resources.

Timeliness

To be useful to the Congress, our products must be available when our clients need them.

In fiscal year 2012, we met our timeliness target of 95 percent. (See fig. 16.) We outreach

directly to our clients through several means, including an electronic feedback form. We

use the results of our client feedback form as a primary source and barometer for whether

we are getting our products to our congressional clients when they need the information.

To calculate this result, we tally responses from the form 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

management6 and those expected to reach 500 staff days or more), which represented

about 47 percent of the congressionally requested written products we issued in fiscal year

2012. Because our products usually have multiple requesters, we often send forms to more

than one congressional staff person per testimony or product. One of the questions on

each form asks the client whether the product was provided or delivered on time. In fiscal

year 2012, of the forms returned to us, 99 percent of the congressional staff responding

answered the question on timeliness. Overall, the response rate to our entire form was

22 percent, though we received feedback on 48 percent of the products for which we sent

forms.

We have consistently set a high target for timeliness because it is important for us to meet

congressional needs when they occur. We have set our fiscal year 2013 target at 90 percent

because of resource constraints that may affect our on-time delivery.

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.
34 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

Figure 16: Timeliness

Percentage of products on time

Source: GAO.

Actual Target Actual

95% 95% 90% 95% 95% 95% 95%

0

20

40

60

80

100

2007 2008 2009 2010 2011 2012 2012

Focusing on Our People

Our highly professional, multidisciplinary, and diverse staff were critical to the level of

performance we demonstrated in fiscal year 2012. 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 2012, we met or exceeded six of seven of our

people measures. These measures are directly linked to our goal 4 strategic objective of

being a leading practices federal agency. For more information about our people measures,

see Table 19 on page 124 of this report.

New Hire Rate

Our new hire rate is the ratio of the number of people hired to the number we planned to

hire. Our annual workforce planning process helps to identify the human capital resource

requirements needed to accomplish our mission. It is the key tool to translate strategic

goals into human capital actions to respond to a changing work environment. The workforce

plan takes into account strategic goals, projected workload requirements, and other

changes, such as retirements, attrition, promotions, and skill gaps. It specifies the number

of planned hires for the upcoming year. Adjustments to the plan are made throughout the

year, if necessary, to respond to the most pressing issues for congressional oversight and

decision making. In fiscal year 2012, our plan was to hire about 55 critical new staff, but

we were only able to bring on board 42 staff by year-end. Because of budget concerns, we

delayed moving forward with critical hire approvals until early summer. Consequently, the

remaining 13 positions will be carried over to fiscal year 2013 since recruitment activities

were not completed prior to the end of fiscal year 2012. Table 3 shows that we did not

meet our target rate of 95 percent, achieving a 76 percent new hire rate.
GAO-13-2SP 35

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

 DOD and VA Health Care Integration

 Medicare Durable Medical Equipment

 FDA’s Ability to Respond to Drug Shortages

 Oversight of Medicaid Payments

 Urgent Local Workforce Needs

 Small Employers Challengesto Pension Plan Sponsorship

 Modernizing SSA’s Disability Programs

 Unemployed Older Workers

 School Bullying

 Improving Homelessness Programs

 Mortgage Finance Risk Management

 Fragmented Economic Development Programs

 Federal Housing Administration’s Mutual Mortgage

Insurance Fund

 Federal Reserve System’s Emergency Assistance

 Climate Change Adaptation

 Unconventional Oil and Gas Production

 Unmanned Aircraft Systems

 Commercial Space Transportation

 Transportation Issues and Management Challenges

 Los Angeles Federal Courthouse Construction

 Federal Real Property Management

Goal 1: Address Current and Emerging Challenges to the Well-being and Financial 

Security of the American People

 National Nuclear Security Administration Management

 Deepwater Horizon

 Securing the Modernized Electricity Grid

 Visa Waiver Program

 TSA’s Processfor Vetting Foreign Flight Students

 DHS’s Container Security Programs

 FEMA’s Management of Preparedness Grants

 DHS’s ProgressImproving and Integrating Management

 DOD Civilian Workforce

 Personnel Security Clearances

 Military Base Realignments and Closures

 Joint Strike Fighter Restructuring

 DOD Satellite Acquisitions

 DOD’s Acquisition Workforce Capacity

 Countering the Use of Improvised Explosive Devices

 Support and Security Capabilitiesin Iraq

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

Interdependence

 Arlington National Cemetery Contract Management

 Coast Guard’s Deepwater Program

 Suspension and Debarment Oversight

 Medicare Part D Fraud and Prescription Drug Abuse

 Fraud Prevention in Service-Disabled Veteran-Owned

Small Business Program

 Oversight of Psychotropic Prescription Drugsfor Foster

Children

 Internet Availability of Counterfeit Military-Grade

Electronic Parts

 Reducing Improper Payments

 Army Financial Audit Readiness

 Fiscal Year 2011 U.S. Government Financial Statements

 Information Technology Reform

 Social Security Administration Technology

Modernization

 Centersfor Medicare & Medicaid Fraud Detection

Systems

 Environmental Satellite Program Risks

 Federal Workforce Challenges

 Effective Long-term Disaster Recovery

 Evaluating Expiring Tax Provisions

 Strategiesto Reduce Taxpayer Noncompliance

 IRS’s Opportunitiesto Improve the Taxpayer

Experience

 Improving 2020 Census Cost Effectiveness

Goal 3: Help Transform the Federal Government to Address National Challenges

Source: GAO.

Note: Additional information on selected testimonies can be found in Part II of this report.

Figure 17: Selected Testimony Topics • Fiscal Year 2012
36 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

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

Performance

measure

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

People

New hire rate 96% 96% 99% 95% 84% 95% 76%

Source: GAO.

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. Our exit surveys have shown that staff who retire do

so for family, life, or health considerations; whereas nonretirees leave for new opportunities

to work elsewhere, for family reasons, or to make better use of their skills. Table 4 shows

that in fiscal year 2012, we exceeded our target rate of 90 percent for overall retention

by 3 percentage points at 93 percent. We also exceeded our retention rate of 94 percent

without retirements by 2 percentage points at 96 percent. We attribute exceeding the target

retention rates for the past few years to a slow economy, which has caused some staff to

delay retirement and reduced other attrition, such as resignations or transfers to other

agencies.

Table 4: Actual Performance and Targets Related to Our Retention Rate Measures, Including and 

Excluding Retirements

Performance

measures

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

People

Retention rate

With retirements 90% 90% 94% 94% 92% 90% 93%

Without retirements 94% 93% 96% 96% 96% 94% 96%

Source: GAO.

Staff Development and Utilization, Effective Leadership by Supervisors, and 

Organizational Climate

One way that we measure how well we are supporting our staff and providing an

environment for professional growth is through our annual employee feedback survey.

This web-based survey is administered to all of our employees once a year. To ensure the

confidentiality of every respondent, we use an outside contractor to administer the survey

and to analyze the responses. 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 their immediate supervisors on key aspects of their leadership styles.
GAO-13-2SP 37

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

The survey consists of over 100 questions. From the staff who expressed an opinion, we

calculated the percentage of those who selected favorable responses to the related survey

questions. Responses of “no basis to judge/not applicable” or “no answer” were excluded

from the calculation. While including these responses in the calculation would result in

a different percentage, our method of calculation is an acceptable survey practice, and

we believe it produces a better and more valid measure because it represents only those

employees who have an opinion on the questions. (See Part V of this report on pp. 124-132

for additional information about these measures.) This fiscal year, about 70 percent of our

employees completed the survey, and we exceeded all four targets (see table 5). Our fiscal

year 2012 performance on all of these measures has been fairly consistent for the past

few years. Our performance on the staff development was 1 percentage point higher than

last year, staff utilization and organizational climate were 2 percentage points lower, and

leadership was 1 percentage point lower than last year. Given our performance on these

measures over the last 5 years, we have decided to retain our fiscal year 2012 targets for

fiscal year 2013 (see table 1).

Table 5: Actual Performance and Targets Related to Our Measures of Employee Satisfaction with 

Staff Development, Staff Utilization, Effective Leadership by Supervisors, and Organizational Climate

Performance

measuresa

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

People

Staff development 76% 77% 79% 79% 79% 76% 80%

Staff utilization 73% 75% 78% 77% 78% 75% 76%

Effective leadership 

by supervisorsb 79% 81% 83% 83% 83% 80% 82%

Organizational 

climate 74% 77% 79% 79% 80% 75% 78%

Source: GAO.

a

Certain portions of our web-based survey are used to develop these four measures.

b

In fiscal year 2009, we changed the name of this measure from “Leadership” to its current nomenclature to clarify that the 

measure reflects employees’ satisfaction with their immediate supervisors’ leadership. In fiscal year 2010, we changed one of 

the questions for this measure.

Focusing on Our Internal Operations

Our mission and people are supported by our internal administrative services, including

information management, infrastructure operations, 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, and to set targets, we use information from our annual customer satisfaction

survey, the results of which are shown in table 6. We asked staff to rate 30 internal

services available to them, indicating on a 5-point scale, with 5 being the highest, their

satisfaction with each service from “very dissatisfied” to “very satisfied,” or to indicate

that they did not use the service. Our internal operations measures are directly related

to our efforts under goal 4 of our strategic plan to enable quality, timely service to the
38 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

Congress and be a leading practices federal agency. The first measure encompasses

16 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 14 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. Our

scores of 3.98 for the services under “help get the job done” and 3.99 for the services

under “quality of work life” from the November 2011 survey show that staff were largely

satisfied with the services they receive.

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

Performance

measures

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

Internal operations

Help get job done 4.05 4.00 4.03 3.94 3.98 4.0 N/A

Quality of work life 3.98 4.01 4.01 3.94 3.99 4.0 N/A

Source: GAO.

Note: Staff rate their satisfaction with services on a 5-point scale with 5 being the highest.

We will report actual data for fiscal year 2012 once the survey results have been analyzed. N/A indicates that the data are not 

available yet.

GAO’s High-Risk Program

In 1990, we began our high-risk program to highlight long-standing challenges facing the

federal government. Historically, we designated high-risk areas based on their increased

susceptibility to fraud, waste, abuse, and mismanagement. As the program has evolved,

we have also used the high-risk designation to draw attention to the need for broadbased transformation to achieve greater efficiency, effectiveness, accountability, and

sustainability of key government programs and operations.

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. 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. Since 1990, we have designated over 50 areas as high risk

and subsequently removed over one-third of the areas based on progress made. As of the

end of fiscal year 2012, our high-risk list highlighted 30 troubled areas across government.

Table 7 lists each current high-risk area and the year it was added to the list.

Our 2012 high-risk area work:

 188 reports

 55 testimonies

 $28.4 billion in financial benefits

 515 nonfinancial benefits
GAO-13-2SP 39

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Table 7: GAO’s High-Risk List as of September 30, 2012

High-risk area Year 

designated

Strengthening the Foundation for Efficiency and Effectiveness

■ Management of Federal Oil and Gas Resources 2011

■ Modernizing the Outdated U.S. Financial Regulatory System 2009

■ Restructuring the U.S. Postal Service to Achieve Sustainable Financial Viability 2009

■ Funding the Nation’s Surface Transportation System 2007

■ Managing Federal Real Property 2003

■ Strategic Human Capital Management 2001

Transforming DOD Program Management

■ DOD Approach to Business Transformation 2005

■ DOD Support Infrastructure Management 1997

■ DOD Business Systems Modernization 1995

■ DOD Financial Management 1995

■ DOD Supply Chain Management 1990

■ DOD Weapon Systems Acquisition 1990

Ensuring Public Safety and Security

■ Protecting Public Health through Enhanced Oversight of Medical Products 2009

■ Transforming EPA’s Process for Assessing and Controlling Toxic Chemicals 2009

■ Revamping Federal Oversight of Food Safety 2007

■ Ensuring the Effective Protection of Technologies Critical to U.S. National Security Interests 2007

■ Establishing Effective Mechanisms for Sharing and Managing Terrorism-Related Information to 

Protect the Homeland 2005

■ Implementing and Transforming the Department of Homeland Security 2003

■ Protecting the Federal Government’s Information Systems and the Nation’s Cyber Critical 

Infrasutrctures 1997

Managing Federal Contracting More Effectively

■ Management of Interagency Contracting 2005

■ DOD Contract Management 1992

■ NASA Acquisition Management 1990

■ DOE’s Contract Management for the National Nuclear Security Administration and Office of 

Environmental Management 1990

Assessing the Efficiency and Effectiveness of Tax Law Administration

■ IRS Business Systems Modernization 1995

■ Enforcement of Tax Laws 1990

Modernizing and Safeguarding Insurance and Benefit Programs

■ National Flood Insurance Programs 2006

■ Pension Benefit Guaranty Corporation Insurance Programs 2003

■ Improving and Modernizing Federal Disability Programs 2003

■ Medicaid Program 2003

■ Medicare Program 1990

Source: GAO.
40 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

In our February 2011 high-risk update, we reported that sufficient progress had been

made to remove the high-risk designation from two areas: the DOD Personnel Security

Clearance Program and the 2010 Census (GAO-11-278). High-level attention by DOD, OMB,

and the Office of the Director of National Intelligence, along with consistent congressional

oversight, led to significant improvements in processing security clearances. For example,

DOD processed 90 percent of all initial clearances in an average of 49 days in fiscal year

2010 and thus met the 60-day statutory timeliness objective. The Census Bureau, with

active congressional oversight, took steps to address problems we pointed out since

designating the 2010 Census a high-risk area in March 2008. Those steps included efforts

to control costs, better manage operations, strengthen its risk management activities, and

enhance the testing of automated systems.

Also in our last 2011 high-risk update, we designated one new high-risk area—the

Department of the Interior’s Management of Federal Oil and Gas Resources. At that time

we found that Interior did not have reasonable assurance that it was collecting its share of

billions of dollars of revenue from oil and gas produced on federal lands and it continued

to experience problems in hiring, training, and retaining sufficient staff to provide

oversight and management of oil and gas operations on federal lands and waters. Further,

Interior had recently began restructuring its oil and gas program, which is inherently

challenging, and there were many open questions about whether Interior had the capacity

to undertake this reorganization while carrying out its range of responsibilities, especially

in a constrained resource environment. Since then we have reported that Interior’s

reorganization has been meeting expected milestones and that much progress has been

made in strengthening environmental and worker safety oversight in its Gulf of Mexico

jurisdiction (GAO-12-423). We will continue to monitor Interior’s efforts to better manage

federal oil and gas resources including its efforts to resolve its human capital challenges

and weaknesses in its revenue collection processes.

Our next biennial high-risk update is planned for January 2013. The update will report

on progress made and what remains to be done to address each of the high-risk areas.

Our experience over the past 22 years has shown that the key elements needed to make

progress in high-risk areas are congressional action, high-level administration initiatives,

and agency efforts targeted to address the risk. We have met with top OMB and agency

leaders in a series of regular meetings to discuss progress and actions needed for the high

risk areas. Our commitment to helping agencies address high-risk areas is also reflected in

the reports, testimonies, and other work we completed in 2012.

In fiscal year 2012, we issued 188 reports, delivered 55 testimonies to the Congress, and

prepared several other products, such as briefings and presentations, related to our highrisk work. These reviews span a wide range of issues such as the financial regulatory

system, human capital management, federal oversight of food safety, tax laws, and

Medicare and Medicaid programs. In addition, we documented over $28 billion in financial

benefits and 515 nonfinancial benefits related to high-risk areas. The high-risk areas with

the largest amount of financial benefits were the Medicare Program, NASA Acquisition

Management, and DOD Weapon Systems Acquisition. The areas with the most nonfinancal

benefits were Protecting the Federal Government’s Information Systems and the Nation’s

Cyber Critical Infrastructures, IRS Business Systems Modernization, and DOD Weapon

Systems Acquisition. More information on the high-risk series is available on our website at

http://www.gao.gov/highrisk.
GAO-13-2SP 41

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue

In February 2012, we issued our second annual report (GAO-12-342SP) to the Congress

in response to the Duplication Mandate, a statutory requirement that called for us to

identify federal programs, agencies, offices, and initiatives—either within departments

or governmentwide—that have duplicative goals or activities and report annually to the

Congress on our findings, as well as actions to reduce such duplication.7 In addition, a

companion publication (GAO-12-453SP) described the extent to which progress was made to

address the actions we identified in 2011. This body of work can help to inform government

policymakers as they address the fiscal pressures facing our national government. We also

launched a new content area on our website titled “Improving Efficiency and Effectiveness”

(http://www.gao.gov/duplication) to make this work more easily accessible to the public.

Our 2012 report identified 51 areas where programs may be able to achieve greater

efficiencies or become more effective in providing government services. Like our March

2011 publication, this year’s report identified 32 duplication, overlap, and fragmentation

issues as well as 19 other areas that provide opportunities for cost savings and revenue

enhancement. Its findings involve a wide range of government missions and touch virtually

all major federal departments and agencies. In some instances of duplication, overlap, or

fragmentation, it may be appropriate for multiple agencies or entities to be involved in the

same programmatic or policy area due to the nature or magnitude of the federal effort.

However, the areas discussed in this report identify instances where multiple government

programs or activities have led to inefficiencies. Further, we expanded the scope of our

work this year to look for areas where a mix of federal approaches is used, such as tax

expenditures, direct spending, and federal grant or loan programs.

Among the 32 areas where our report found evidence of duplication, overlap, or

fragmentation, we identified ineffective acquisition practices and collaboration efforts in

the Department of Defense’s $37.5 billion8 Unmanned Aircraft Systems acquisitions portfolio,

which create overlap and the potential for duplication; we found 20 different entities that

administer 160 programs, tax expenditures, and other tools to support homeownership

and rental housing, and we reported that four grant programs administered by the Federal

Emergency Management Agency need better project information and coordination to identify

and mitigate potential unnecessary duplication among the billions of dollars distributed.

Among the 19 additional opportunities we identified where agencies or the Congress

could take action to either reduce the cost of government operations or enhance revenue

collection for the Treasury, we found that the Centers for Medicare & Medicaid Services can

better detect and recover billions of dollars of improper payments of claims; the Air Force

can reduce its overall food service costs by millions of dollars annually by reviewing food

service contracts and adjusting them, when appropriate; and marketing the Department of

Energy’s excess uranium could provide billions in revenue for the government.

Collectively, our work shows that if actions are taken to address the issues raised in both

our 2012 and 2011 reports, the government could potentially save tens of billions of dollars

annually, depending on the extent of actions taken. However, as the “Actions Needed”

presented in our 2012 report show, addressing our varied findings will require careful

7

 Pub. L. No. 111-139, § 21, 124 Stat. 29 (2010), 31 U.S.C. § 712 Note.

8

 For fiscal years 2012 through 2016, according to a Defense department estimate.
42 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

deliberation and tailored, well-crafted solutions. The GPRA Modernization Act of 2010

establishes a framework aimed at taking a more crosscutting and integrated approach to

focusing on results and improving government performance. Aspects of several crosscutting

government goals identified in the President’s fiscal year 2013 budget—including Science,

Technology, Engineering, and Math (STEM) Education; Entrepreneurship and Small

Businesses; Job Training; Cybersecurity; Information Technology Management; Procurement

and Acquisition Management, and Real Property Management—are discussed in our 2012

report or in our March 2011 report. Effective implementation of the Act could play an

important role in clarifying desired outcomes, addressing program performance spanning

multiple organizations, and facilitating future actions to reduce unnecessary duplication,

overlap, and fragmentation.

Our second annual report in response to the Duplication Mandate was based upon work

conducted for our completed products and certain ongoing audits during 2012 in which we

addressed issues of duplication, overlap, and fragmentation. We also testified before the

Congress on topics related to areas identified in the report. For example, we testified on

opportunities to achieve more efficient and effective government (GAO-12-449T), and we

discussed issues related to reexamining the structure of the federal government and its

operations (GAO-12-454T).

Consistent with the commitment expressed in our March 2011 Duplication Mandate report,

we monitored developments in the 81 areas we identified in 2011, and we described the

extent to which progress was made (GAO-12-453SP). In summary, our specific assessment

of progress as of February 10, 2012 showed that the majority of 176 actions needed within

the 81 areas identified by us have been partially addressed. Specifically, 23 (or 13 percent)

were addressed; 99 (or 56 percent) were partially addressed; 54 (or 31 percent) were

not addressed. In addition, the Office of Management and Budget instructed agencies to

consider areas of duplication or overlap identified by us and others in their fiscal year 2013

budget submissions and management plans. We continue to monitor executive, legislative,

and agency developments in the areas identified in our 2011 and 2012 reports and will

provide periodic updates on those developments to the Congress.

Dodd-Frank Wall Street Reform and Consumer Protection Act 

of 2010

The Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act

(Dodd-Frank Act) on July 21, 2010, to address regulatory gaps and oversight failures in

the U.S. mortgage, securities, and financial markets. The act requires significant rule

making by regulatory agencies and requires us to conduct over 40 studies on a broad array

of issues. In fiscal year 2011, we reported our findings on a third of these studies. We

continued to conduct required studies in fiscal year 2012 and issued 11 products on a range

of issues, such as those relating to financial institutions and securities markets, making 11

recommendations to various financial regulators.

With regard to financial institutions, we studied the potential effects of the exclusion

of the use of hybrid instruments, such as trust preferred securities, as Tier 1 capital on

banking institutions and the economy. Further, we studied the options for smaller banking

institutions, which often had larger proportions of hybrid instruments as Tier 1 capital, to

access regulatory capital (GAO-12-237). We also studied the potential effects of changes
GAO-13-2SP 43

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

in U.S. capital requirements on foreign-owned intermediate holding companies and on U.S.

banks operating abroad. (GAO-12-235).

We studied several issues related to securities markets, including regulatory oversight of

analyst conflicts of interest and the Financial Industry Regulatory Authority (FINRA). We

recommended that the Securities and Exchange Commission (SEC) assess and document

whether any of the Global Settlement’s remaining terms should be codified (GAO-12-209). We

also recommended that SEC encourage FINRA to conduct retrospective reviews of its rules

and establish a process for examining FINRA’s reviews (GAO-12-625). In our work on alternative

compensations for nationally recognized statistical rating organizations, we recommended

that SEC consult with the authors of the proposed models to obtain all available information

as it considers the various alternative compensation models and document in its report to

the Congress any recommendations for statutory changes SEC determines should be made

to implement its findings of its Dodd-Frank Section 939F study (GAO-12-240). In addition, we

discussed options for improving municipal securities disclosure (GAO-12-698) and provided an

overview of the market structure, pricing, and regulation of municipal securities, whereby

we recommended that SEC collect and analyze information on self-regulatory organizations’

(SRO) fixed-income regulatory programs on an ongoing basis to better inform its risk-based

inspection approach (GAO-12-265).

We explored other issues as well, including the actions taken by the Appraisal Subcommittee

to implement the original Title XI and additional Dodd-Frank Act responsibilities. We

recommended that the Appraisal Subcommittee improve its monitoring procedures

(GAO-12-147). In our audit of governance at the Federal Reserve Banks, we made four

recommendations to broaden director recruitment efforts and increase transparency

(GAO-12-18). Further, we reviewed the status of the conflict minerals disclosure rule and

recommended that SEC identify the remaining steps it needs to take and the associated

time frames to finalize and issue such a conflict minerals disclosure rule (GAO-12-763). With

regard to implementation of the Dodd-Frank Act, we studied financial regulators’ analyses of

the potential impact of the act’s regulations and interagency coordination in promulgating

the regulations. We made recommendations to strengthen the regulators’ analyses and

coordination, including improvements to agency guidance and data collection (GAO-12-151).

Finally, we conducted an audit of SEC financial controls (GAO-12-219) and an audit of the

Bureau of Consumer Financial Protection (GAO-12-186).

The Patient Protection and Affordable Care Act

The Congress passed the Patient Protection and Affordable Care Act (PPACA) in 20109 to

increase the accessibility and affordability of health coverage for Americans. PPACA includes

a wide range of provisions that affect individual and employer-sponsored health insurance

markets as well as public health insurance programs. We studied several aspects of PPACA

relating to the individual and employer sponsored insurance markets and publicly-financed

health insurance programs, such as Medicaid, and issued several reports in fiscal year 2012.

Relating to insurance markets, we examined the implementation of provisions currently in

effect and the future implications of others. Among currently implemented provisions, we

examined the Small Employer Health Insurance Tax Credit, a program to encourage small

9

 Pub. L. No. 111-148, 124 Stat. 119 (2010), as amended by the Health Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152,

124 Stat. 1029 (2010).
44 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

businesses to offer insurance to employees, in order to determine its frequency of use, IRS

oversight of claims, and to understand data needed to evaluate the credit’s effects. We

recommended that IRS improve its instructions to examiners and identify and address errors

by credit claimants (GAO-12-549). We investigated the initial implementation of the federal

Pre-Existing Condition Insurance Plan, a temporary program to provide coverage to high risk

individuals who might otherwise go uninsured, and compared its initial roll out to that of

another federal health insurance program (GAO-12-62R). In support of new rules for insurers,

we analyzed insurer data on their medical loss ratios—the ratio of expenditures on health

claims to total premium income—and determined how the ratios varied based on insurer

characteristics and program requirements (GAO-12-90R). Relating to the future implications of

other provisions, we examined existing research on the extent to which workers stay in jobs

out of fear of losing health coverage and the effect of this phenomenon on labor markets,

and we compiled expert views on the ability of PPACA to mitigate this effect (GAO-12-166R).

We examined estimates of the effect of PPACA on the likelihood employers will continue to

offer or begin offering health insurance, the factors that may contribute to variation across

estimates, and identified other changes employers may make to the health benefits they

offer (GAO-12-768). To assess the effect of 2014 requirements that issuers offer coverage

to all who apply regardless of health status, we examined estimates of the prevalence of

individuals with pre-existing health conditions and summarized demographic information

about the individuals and their most prevalent conditions (GAO-12-90R, GAO-12-439).

Regarding issues related to certain publicly financed health insurance programs, we studied

new coverage options and program expansions available under PPACA and state challenges

related to their implementation. For example, we examined:

■ the potential eligibility of uninsured children for Medicaid, the State Children’s Health

Insurance Program (CHIP), and the new premium tax credit available under PPACA, and

recommended that the Secretary of the Treasury consider the costs of insuring eligible

family members when defining access to affordable health insurance in future rule

making (GAO-12-648);

■ states’ efforts to implement PPACA’s requirement to expand Medicaid eligibility to nonelderly individuals with incomes at or below 133 percent of the federal poverty level

(GAO-12-821) and to implement options available under PPACA to expand home-and

community-based services for Medicaid beneficiaries (GAO-12-649); and

■ states’ use of Medicaid managed care, including the type of managed care arrangements

they have in place and their enrollment of populations with complex health care needs

(GAO-12-872R).

We identified states’ challenges in implementing certain PPACA provisions, which generally

related to their need for additional guidance or technical assistance from the Centers for

Medicare & Medicaid Services, state budget constraints, and operational challenges. We are

continuing to examine changes under PPACA related to state Medicaid and CHIP programs

and exchanges and are examining states’ experiences related to processing Medicaid

applications and ensuring beneficiaries’ access to services. We are also responding to

PPACA mandates, including a mandate that we examine coordination between the Indian

Health Service and publicly financed health insurance programs.
GAO-13-2SP 45

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

The Troubled Asset Relief Program

The 2008 Emergency Economic Stabilization Act (EESA) that created the Troubled Asset

Relief Program (TARP) originally authorized the Department of the Treasury (Treasury) to

purchase or guarantee up to $700 billion in troubled assets and to mitigate foreclosures. The

$700 billion ceiling was never reached, and in July 2010 the Dodd-Frank Wall Street Reform

and Consumer Protection Act reduced the amount to $475 billion. EESA provided us with an

oversight role with broad monitoring and reporting responsibilities, including a requirement

to submit a report on our work at least every 60 days. While TARP programs that provide

assistance to homeowners seeking to avoid foreclosure remain active, other TARP programs

have either closed or continue to wind down as the Treasury manages and sells assets

purchased to address the financial crisis.

In fiscal year 2012, we issued 7 products with 5 recommendations related to TARP. We

reviewed the continuing implementation of Making Home Affordable foreclosure mitigation

programs (GAO-12-296 and GAO-12-783), examined the financial condition of banks receiving

investments from the Capital Purchase Program (CPP), which Treasury used to provide

capital to banks during the financial crisis (GAO-12-301), monitored the status of Treasury’s

investment in American International Group, Inc. (GAO-12-574), and analyzed the Office

of Financial Stability’s management of conflicts of interest that may arise when private

sector entities seek or perform work under TARP (GAO-12-984R). In addition, we completed

our annual financial statement audit for Treasury’s Office of Financial Stability—the entity

established to implement TARP (GAO-12-169 and GAO-12-415R). Our recommendations

generally followed two themes: helping to (1) enhance Treasury’s analysis and reporting of

information and (2) improve internal control over financial reporting for TARP. Specifically,

we recommended that Treasury assess the risks associated with the recent changes to

the Making Home Affordable program, develop activity-level performance measures for

each program, and consolidate the states’ Hardest Hit Fund performance and financial

data, including administrative expenses, into a single public report. We also recommended

that Treasury consider analyzing and reporting on remaining and former CPP participants

separately. In addition, our financial audit recommended improvements to internal controls

over financial and accounting reporting processes.

As of September 2012, our oversight of TARP has resulted in over 70 performance

audit recommendations and matters for congressional consideration to improve TARP’s

accountability and transparency. Most of the recommendations were to Treasury, which has

overall responsibility for TARP. Treasury has taken a number of steps to address many of our

recommendations. We are in the process of following up on outstanding recommendations

and plan to report on the status in 2013.

The American Recovery and Reinvestment Act

The American Recovery and Reinvestment Act of 2009 (Recovery Act) mandated several

studies for GAO, including conducting bimonthly reviews on the uses of Recovery Act funds in

selected states and localities and commenting on the estimates of jobs created or retained as

reported by recipients of Recovery Act funds. In fiscal year 2012, we continued to focus our

bimonthly reviews on the uses of funds across a wide range of programs by the states and the

District of Columbia, with each review highlighting a single Recovery Act program.
46 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

To respond to the mandate to comment on jobs created or retained, we have continued to

comment each quarter on the required Recovery Act reports of nonfederal recipients of

Recovery Act funds, including grants, contracts, and loans. Each of these recipient reports

are to include a list of projects or activities for which Recovery Act funds were expended

or obligated and information concerning the amount and use of funds and jobs created or

retained by these projects and activities. In fiscal year 2012, our comments focused on

recipient reporting related to the specific programs reviewed, and included reviewing steps

that federal agencies took after recipients reported to ensure that their recipients’ data

were of high quality and that those required to report did so.

In fiscal year 2012, we reviewed several programs and issued reports fulfilling these two

ongoing mandates—on Recovery Act funding for the Weatherization Assistance Program

(GAO-12-195), the Public Housing Capital Fund and Section 1602 and Tax Credit Assistance

Programs (GAO-12-634), and efforts to increase deployment and adoption of broadband

service (GAO-12-937). Agencies have implemented most of the recommendations we have

made in our bimonthly review reports since the first report was issued in April 2009. As

designed, the expenditures devoted to Recovery Act programs continue to decrease, and we

will work with the Congress to seek revisions in our reporting requirements under the act.

We continue to maintain a separate page on our external website devoted to our Recovery

Act work. In one place (http://www.gao.gov/recovery), the public can find information on

the Recovery Act, see updates on Recovery Act outlays, access our bimonthly reviews on

the use of funds, view related podcasts, use an interactive map to access reports on each

of the states initially selected for our detailed review and the District of Columbia, learn

about other mandates and related work, and find out how to report allegations of abuse of

Recovery Act funds.

General Counsel Decisions and Other Legal Work

In addition to benefiting from our audit and evaluation work, which reflects considerable

legal input, the Congress and the public also benefited from the legal products and activities

undertaken by our Office of General Counsel in fiscal year 2012. The following exemplify

some of our key contributions.

The Procurement Law Division within the Office of General Counsel handled approximately

2,400 bid protests during the course of fiscal year 2012.10 A protest challenges a federal agency’s

handling of an individual federal procurement. Many of these protests were resolved without

a written decision because the federal agency involved voluntarily took corrective action to

address the protest. The remaining protests were either dismissed for procedural deficiencies,

resolved using Alternative Dispute Resolution procedures, or decided on the merits. In fiscal

year 2012, we issued more than 500 decisions on the merits, which are accessible on our

Legal Decisions & Bid Protest web pages at http://www.gao.gov/legal/index.html. These

decisions addressed a wide range of issues involving compliance with and the interpretation of

procurement statutes and regulations. Certain of these protests involved significant government

programs and received extensive media coverage. For example, we

10 In comparison, there were more than 2,350 bid protests filed in fiscal year 2011 and nearly 2,300 in fiscal year 2010.
GAO-13-2SP 47

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

■ denied a protest filed by TriWest Healthcare Alliance Corporation challenging the award

of a contract by DOD’s TRICARE Management Activity for managed health care support

services for the Western Region of the United States. The award was valued by DOD at

$20.4 billion.

■ sustained a challenge to the award by the Department of State of a $450 million

contract for the construction of a new embassy in London, England. The decision

concluded that the source selection authority’s decision was not adequately explained

and appeared to be inconsistent with the contemporaneous evaluation record.

■ denied a protest challenging the award of a contract valued at $230 million by the

National Aeronautics and Space Administration (NASA) to provide engineering, research

and technology development, operations, and project management support for NASA’s

Glenn Research Center in Ohio.

■ sustained challenges from seven public housing agencies to the Department of Housing

and Urban Development’s use of cooperative agreements to obtain services for the

administration of Project-Based Section 8 Housing Assistance Payment contracts.

Because the agency was principally obtaining contract administration services for the

direct benefit and use of the agency, the decision concluded that the services should be

acquired under a procurement contract.

Within the Procurement Law Division, six attorneys appointed by the General Counsel

also serve on our Contract Appeals Board, established by the Congress in 2007 to hear

appeals from contracting officer decisions with respect to any contract entered into by a

legislative branch agency. In addition to using alternative dispute resolution procedures to

resolve contract disputes, the Board conducted 2 hearings (one of which took 3 weeks), and

published one formal decision in fiscal year 2012, which appears on our website at http://

www.gao.gov/legal/contract/decisions.html. As of the end of the fiscal year, the Board had

significantly reduced the number of pending appeals on its docket, from 21 appeals pending

at the end of fiscal year 2011 compared to 11 appeals pending at the end of fiscal year 2012.

In addition to our bid protest decisions, we issued a management letter to the Secretary

of Health and Human Services advising that the Centers for Medicare & Medicaid Services

(CMS) had not established that the agency’s Medicare Advantage (MA) Quality Bonus

Payment Demonstration was within its legal authority under section 402 of the Social

Security Amendments of 1967, as amended.11 In addition, we testified before the House

Committee on Oversight and Government Reform regarding our review of the bonus

payment demonstration and the legal concerns raised in our letter (GAO-12-964T).

In fiscal year 2012, we published 34 appropriations decisions, opinions, and letters on

such issues as the Antideficiency Act, the recording statute, and the purpose statute.

We issued an opinion concluding that the Office of Science and Technology Policy (OSTP)

violated the Antideficiency Act when it engaged in meetings prohibited by a restriction

in OSTP’s appropriation.12 We testified on our opinion before the Subcommittee on

Oversight and Investigations for the House Committee on Foreign Affairs and explained

how the Antideficiency Act enforces the Congress’ constitutional control of the public

purse (GAO-12-200T). We issued a decision and a letter explaining how the Securities and

Exchange Commission (SEC) violated the recording statute when it failed to recognize the

11 B-323170, July 11, 2012. 12 B-321982, October 11, 2011.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

full amount of its legal liability under a lease.13 We advised the SEC to adjust its accounting

records and noted that where the SEC did not have sufficient budget authority, it should

report an Antideficiency Act violation. The SEC subsequently reported that it had violated

the Antideficiency Act.

Attorneys from General Counsel also provided ongoing appropriations law assistance to

congressional committees on a number of matters, including interpretation of the Budget

Control Act. We appeared at a member briefing for the House Armed Services Committee

and testified at a hearing before the House Budget Committee on the application of

the Antideficiency Act, the Impoundment Control Act, and the Budget Control Act

(GAO-12-675T). We issued an opinion to the Senate and House Committees on Veterans’

Affairs that resolved an apparent conflict between statutory provisions of the Budget

Control Act addressing sequestration and programs administered by the Department of

Veterans Affairs (VA).14 We solicited the legal views of the Office of Management Budget

(OMB) and after receiving OMB’s written response, concluded that all programs administered

by the VA, including veterans’ medical care, are exempt from sequestration.

The third edition of Principles of Federal Appropriations Law, commonly known as the Red 

Book, continued to be the primary resource for appropriations law guidance in the federal

community. In fiscal year 2012, the Red Book averaged thousands of downloads per week

as attorneys, budget analysts, financial managers, project managers, contracting officers,

and accountable officers from all three branches of government accessed it to research

questions about budget and appropriations law. We also issued our annual update of the

third edition of the Red Book (GAO-12-413SP).

Attorneys from General Counsel continued to teach a 2-1/2 day course on appropriations

law. Presenting a framework for understanding and properly applying provisions of

appropriations laws, the course helps ensure that agencies use public money as the

Congress directed. We held 18 classes across 10 agencies, as well as the House Committee

on Appropriations. In addition, appropriations lawyers taught 1-day seminars on specialized

appropriations law topics for two agencies and the Office of the Vice President, and spoke

on our appropriations law work at conferences and training hosted by four agencies and

professional organizations. To enhance communication within the appropriations law

community across all agencies and within the three branches of government, we hosted

our eighth annual Appropriations Law Forum in March 2012. Attorneys from 110 agency

counsel offices and offices of inspectors general participated.

For fiscal year 2012, we received 20 Antideficiency Act reports and made selected

information from these reports available on our website. Since the Congress amended the

Antideficiency Act in December 2004 requiring agencies to send us a copy of any report

of an Antideficiency Act violation, we have received 161 reports and maintain an official

repository of Antideficiency Act reports.

We continued to report under the Congressional Review Act (CRA) on major rules proposed

by federal agencies to the standing committees of jurisdiction of both Houses of the

Congress. For fiscal year 2012, we issued 77 reports. To improve compliance with the CRA,

we tracked executive branch rules that were published in the Federal Register during

2011 and cross checked to ensure that they were submitted to us. We also outreached to

13 B-322160, October 3, 2011.

14 B-323157, May 21, 2012.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

OMB and the relevant agencies to assist them in meeting the CRA requirement that rules

be submitted to us. After this outreach, the number of rules not received by us declined

significantly over the last 2 fiscal years.

Finally, the General Counsel’s Legal Services group worked closely with management, union

representatives and the Personnel Appeals Board in connection with an election in which

the GAO Employees Organization, International Federation of Professional and Technical

Engineers (IFPTE) was chosen to be the exclusive bargaining representative for particular

Administrative Professional and Support Staff (APSS) employees. The Legal Services group

was also involved in the analysis of a range of labor relations and federal employment

issues, as well as privacy and document disclosure matters, during the course of the

year. Legal Services collaborated with our Learning Center to begin providing courses for

managers on equal employment and other human capital responsibilities. Finally, Legal

Services was instrumental in our agency’s adoption of particular rules regarding the

debarment, suspension, and ineligibility of government contractors in order to improve our

acquisition practices and procedures.

Managing Our Resources

Resources Used to Achieve Our Fiscal Year 2012 Performance Goals

Our financial statements for the fiscal year ending September 30, 2012, were audited by

an independent auditor, CliftonLarsonAllen, LLP, and received an unqualified opinion. The

auditor found our internal controls to be effective—which means that no material weaknesses

or significant deficiencies were identified—and reported that we substantially complied with

the applicable requirements for financial systems in FFMIA. In addition, the auditor found no

instances of noncompliance with the laws or regulations in the areas tested. In the opinion of

the independent auditor, our financial statements are presented fairly in all material respects

and are in conformity with generally accepted accounting principles. The auditor’s report,

along with the statements and their accompanying notes, begin on page 97 in this report.15

Table 8 summarizes key data.

15Note 14 to the financial statements describes our Davis-Bacon Act trust function. For more detailed Davis-Bacon Act financial information,

contact our General Counsel’s Office.
50 GAO-13-2SP

GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

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

Fiscal year 2012 Fiscal year 2011

Total budgetary resources $574.8 $591.5

Total outlays $538.7 $569.7

Net cost of operations

Goal 1: Well-being/financial security of the 

American people $215.6 $237.2

Goal 2: Changing security threats/challenges 

of global interdependence 132.6 141.3

Goal 3: Transform the federal government to 

address national challenges 140.2 156.9

Goal 4: Maximizing the value of GAO 18.6 19.9

Other costs in support of the Congress 24.4 21.4

Less reimbursable services not attributable to 

goals (7.3) (7.2)

Total net cost of operations $524.1 $569.5

Actual full-time equivalents (FTE) 2,997 3,212

Source: GAO.

Compared with the statements of large and complex departments 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 people needed

for our mission.

In fiscal year 2012, our budgetary resources included new direct appropriations of $511.3

million—a reduction of $35 million from the fiscal year 2011 level—and $22.3 million in current

reimbursable authority from the lease of space in our headquarters building and certain

audits of agency financial statements.

Our total assets were $122.4 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. The net property and equipment balance decreased $5.3

million in fiscal year 2012 to $31.4 million. As a result of reduced appropriations, spending for

capital assets has been minimized. Total liabilities of $97.2 million were composed largely of

employees’ accrued annual leave, employees’ salaries and benefits, amounts owed to other

government agencies, and nongovernmental accounts payable.

Overall, our net cost of operations in fiscal year 2012 is approximately $45.4 million below

the fiscal year 2011 level largely as a result of a reduced current year appropriation. Budget

constraints severely limited our ability to replace all of our staff departures from retirements

and attrition. Goal 1 (Well-being/financial security of the American people) had the largest

reduction in net costs from the prior year of $21.6 million mostly from the Education

Workforce and Income Security (EWIS), Natural Resources and Environment (NRE) and Health

Care (HC) teams.
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Management’s Discussion and Analysis

Figure 18 shows how our fiscal year 2012 costs break down by category.

Figure 18: Use of Fiscal Year 2012 Funds by Category

Percentage of total net costs

Building and

hardware maintenance

services

Salaries

and benefits

10.9%

81.4%

Rent (space

and hardware) 2.4%

Depreciation

Other 3.7%

1.6%

Source: GAO.

Figure 19 shows our net costs by goal for fiscal years 2011 and 2012.

Figure 19: Net Cost by Goal

2011

2012

Dollars in millions

Source: GAO.

0

50

100

150

200

250

Goal 1 Goal 2 Goal 3 Goal 4 Other

215.6

237.2

132.6

141.3

140.2

156.9

18.6

19.9

24.4

21.4

Note: Totals are not adjusted for inflation

Summary of Financial Systems Strategies and Financial Management System 

Framework

Our financial management system is an off-the-shelf system that meets OMB’s Office of

Federal Financial Management’s Federal Financial Management System Requirements and is

hosted by an OMB-designated shared service provider, the Department of Transportation,

Enterprise Services Center (ESC). The major financial system in use at ESC is Delphi/Oracle

Federal Financials (Delphi), supplemented by a number of supporting systems including:

Compusearch’s PRISM, a contract and procurement system; U.S. Bank’s purchase card

system for small purchases; Northrop Grumman’s GovTrip system for travel; and Kofax’s

Markview, a document work flow system to process vendor invoices.

These off-the-shelf systems are continuously updated by the respective system developers

and by periodically upgrading to new versions; therefore, our systems remain current.

Additionally, these systems ensure that we can produce timely, useful, and reliable

financial information and maintain strong internal controls. In fiscal year 2013 ESC will
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Management’s Discussion and Analysis 

begin testing for a technical upgrade to Oracle Release 12. Production implementation for

this upgrade will occur in fiscal year 2014.

In fiscal year 2011, Phase I implementation of a new workforce planning system, Pentaho

database, which is the repository for workforce planning data, was completed. Phase I

included “Staffing Summary” reporting. In fiscal year 2012 Phase II of the implementation

was completed. Phase II provides for a robust analytical business tool that links multiple

datasets to one authoritative database. This consolidation of information will enable

accurate and timely reporting for FTE management as well as salary and benefits analysis.

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.

Although not required by law to do so, we complied with 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 a risk-based

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, 2012, 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 FMFIA. Consistent

with the act our internal controls are designed to provide reasonable assurance that

transactions are properly recorded, processed, and summarized to permit the preparation

of financial statements, and that assets are safeguarded against loss from unauthorized

acquisition, use, or disposition. Further, our controls are designed to ensure that

transactions are executed in accordance with the laws governing the use of budget

authority and other laws and regulations that could have a direct and material effect on

the financial statements.

In addition, we are committed to fulfilling the objectives of FFMIA. 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 U.S. Government Standard General Ledger at the transaction level as of

September 30, 2012. We made this assessment based on criteria established under FFMIA

and guidance issued by OMB.

The Improper Payments Elimination and Recovery Act of 2010 requires that agencies

(1) periodically review activities susceptible to significant improper payments; (2) estimate

the amount of improper payments; (3) implement a plan to reduce improper payments;

and (4) report the estimated amount of improper payments and the progress to reduce

them. We have implemented and maintained internal control procedures that help monitor

disbursement of federal funds for valid obligations. These controls are tested annually.

Based on the results of our tests, we found no improper payments in fiscal year 2012.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Our Inspector General (IG) conducts audits and investigations that are internally focused on

our functions and programs. During fiscal year 2012, the IG evaluated the effectiveness of

our internal controls and oversight mechanisms for ensuring that recruitment, relocation,

and retention incentives were consistent with our policies and aligned with our strategic

human capital strategic plan (OIG-12-5). The IG also evaluated the effectiveness of our

information security program and practices for fiscal year 2011 as prescribed by the

Federal Information Security Management Act of 2002 (FISMA) (OIG-12-2) and assessed the

extent to which we had developed the policies and programs necessary to ensure that staff

appointed as Contracting Officer Representatives are trained and certified (OIG-12-3).

In addition, the IG operated an internal hotline for use by our employees and contractors

to report potentially serious problems in our operations. IG investigations typically originate

from hotline complaints and are intended to strengthen our programs and operations by

identifying and investigating allegations of fraud, waste, and abuse and misconduct of our

government property, assets, and resources, including the possible violation of any law or

regulation that may lead to criminal, civil, and administrative penalties and recoveries.

The results of the IG’s work and actions taken by us to address IG recommendations are

highlighted in the IG’s semiannual reports to the Congress (see for example OIG-12-4). In

November 2011, our IG was also designated the IG of the United States Commission on Civil

Rights by the Consolidated and Further Continuing Appropriations Act, 2012.

In addition, 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:

■ Judith H. O’Dell (Chair), CPA CVA, President of O’Dell Valuation Consulting, LLC, Chair

of the Financial Accounting Standards Board’s Private Company Financial Reporting

Committee; former trustee of the Financial Accounting Foundation, which is responsible

for overseeing, funding, and appointing members of the Financial Accounting Standards

Board and the Governmental Accounting Standards Board; and former member of the

board of directors of the American Institute of Certified Public Accountants.

■ Lawrence B. Gibbs, a practicing attorney and member of Miller & Chevalier, Chartered,

and a former Commissioner of IRS.

■ Michael A. Nemeroff, a partner in Sidley Austin LLP, and head of its Government

Contracting Practice, and a former member of the GAO Legal Advisory Committee.

The committee’s report appears in Part III of this report on page 96.

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 OMB
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Management’s Discussion and Analysis 

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 2013 Performance Goals 

As with the rest of the federal government, we are operating under a continuing

resolution appropriation slightly above fiscal year 2012 funding levels, pending enactment

of the final fiscal year 2013 appropriation bills. Final congressional action on our fiscal

year 2013 request of $526.2 million—an increase of 2.9 percent over our fiscal year 2012

appropriation amount—is still pending, although indications are that we will receive less

than our requested amount. On June 8, 2012, the House of Representatives approved

direct appropriations of $519.8 million, an increase of 1.7 percent over our fiscal year

2012 appropriation level of $511.3 million. On August 2, 2012, the Senate Committee on

Appropriations approved $513.8 million, an increase of 0.5 percent over our fiscal year

2012 appropriation level. The full Senate has not yet approved this funding level. Both the

House and Senate Committees on Appropriations approved authority for us to spend $24.3

million in collections derived from reimbursements for conducting financial audits and

rental of office space in our headquarters building. In addition, both the House and Senate

Committees on Appropriations continue to emphasize that the legislative branch will lead

by example by tightening its belt wherever possible, employing best practices, finding

efficiencies, and continuing to improve business practices.

We have initiated actions to begin rebuilding our staffing capacity to help enable us

to optimize the benefits we yield for the Congress and the nation. However, given the

possibility of a governmentwide sequester that would further reduce our funding level,

we are carefully monitoring the budget environment. We have been actively working to

reduce costs for more than 2 years, and we are continuing to explore opportunities to

enhance workforce and budget flexibilities, increase our effectiveness and efficiency, and

further reduce our operating costs. For example, our ongoing enhanced office sharing and

hoteling pilot is projected to reduce infrastructure costs in fiscal year 2013. These actions

will help ensure that we have the capacity to provide accurate, objective, nonpartisan, and

constructive information to the Congress to help it conduct effective oversight, produce

results for the American people, and help enable us to meet the performance goals

outlined in our strategic plan through fiscal year 2015.

Strategic Planning and Partnerships

As noted in our current strategic plan, we are operating in a dynamic, fiscally constrained

environment where the challenges we face span national borders; the public, private,

and non-profit sectors; and multiple levels of government. Achieving our strategic

goals and objectives requires us to coordinate and collaborate with international and

intergovernmental organizations with similar or complementary missions. In particular, we
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Management’s Discussion and Analysis

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

and

■ maintain strategic working relationships with other domestic and international

government accountability and professional organizations, including the federal

inspectors general, state and local audit organizations, and other countries’ national

audit offices.

Advisory boards and panels helped us to identify key trends, opportunities and challenges,

and lessons learned that we should factor into our work and operations. During fiscal year

2012, we continued a comprehensive reexamination of the membership and charters of

the Comptroller General’s Advisory Board (CGAB), the Domestic Working Group (DWG), the

Educator’s Advisory Panel (EAP), and the Audit Advisory Council (AAC). We deferred the

meeting of the CGAB and EAP until 2013 but organized meetings of the DWG and the AAC.

The November 2011 meeting of the DWG, comprising 19 inspectors general, state auditors,

and local auditors, provided us a better understanding of their continued fiscal challenges,

concerns relating to intergovernmental data issues, and interest in intergovernmental

collaboration and partnerships. The AAC met twice—once via teleconference in November

2011 and again in February 2012. The AAC members provided us insights relating to

conducting the Consolidated Financial Statement audits, auditing the Department of

Defense, intergovernmental balances and transactions, and agencies needing focused

oversight. To improve planning and performance, in April 2012 we participated in an

information and knowledge exchange at an annual meeting with senior representatives

from our sister legislative branch agencies—the Congressional Research Service and the

Congressional Budget Office. The meeting agenda included discussions on opportunities

to increase efficiency and reduce costs, policies and procedures relating to external

communications, and the use of social media.

Networks, Collaborations, and Partnerships

Unlike the national audit offices of some countries, we have no direct audit authority over

states and localities. However, we do have authority to “follow the federal dollar,” but we

face unique challenges in assuring accountability for grants and other federal funds flowing

to subfederal recipients. We also play an important role in coordinating professional audit

standards, setting audit standards for federally funded programs, and representing U.S.

views and interests in the international community. The State Department and the U.S.

Agency for International Development look to us to represent the broader interests of the

U.S. government in promoting good governance internationally and often seek our support

of educational visits by current and future leaders from foreign countries. Domestic audit

and accountability offices look to us for guidance, expertise, and technical assistance in

implementing professional standards.

We have leveraged our resources by collaborating with our domestic and global networks.

Through these networks, such as the federal inspectors general and state and local

auditors—notably the National Association of State Auditors, Controllers, and Treasurers

(NASACT) and Association of Local Government Auditors (ALGA)—we have continued to

build capacity within our agency and among our partners to do quality work auditing

programs involving U.S. funds.
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Management’s Discussion and Analysis 

Federal, State, and Local Collaboration

On the domestic front, we organized the National Intergovernmental Audit Forum (NIAF)

meeting of federal, state, and local auditors in November 2011 and the NIAF-sponsored

Biennial Forum of Government Auditors meeting in June 2012. The biennial meeting

program—a first ever collaboration among GAO, the Council of Inspectors General for

Integrity and Efficiency (CIGIE), NASACT, and ALG—was very well received by participants.

We leveraged the resources invested in the program by videotaping most of the sessions

and making them available to our staff, and to the broader public sector audit and

accountability community.

Our discussions with CIGIE to explore potential partnership opportunities in delivering

training to auditors and analysts benefitted us during this past fiscal year. We were able

to substantially reduce external training costs for our Senior Executive Service candidates

by following up on a CIGIE recommendation to explore using the American University

Executive Development Training Program. We also participated in the May annual meeting

of CIGIE where we shared with them our strategic plan’s trends and discussed opportunities

for further collaborations and partnerships.

We organized 11 meetings of the various regional Intergovernmental Audit Forums (IAF) to

discuss such topics as the 2011 update of the Yellow Book, which sets standards for auditing

federally funded programs, as well as to promote dialogue regarding common issues,

opportunities, and challenges.

INTOSAI

For over 3 decades, we have been a member of the International Organization of Supreme

Audit Institutions (INTOSAI), an association of 190 national audit offices—our counterparts

around the world. This network has positioned us well to address a more interdependent

world where domestic challenges (e.g., regulation of financial markets, prescription drugs,

and consumer products; homeland security; and rebuilding our infrastructure) often have

global dimensions. Through our active participation in INTOSAI’s Professional Standards

Committee and subcommittees, we stayed abreast of changes in international accounting,

auditing, and reporting standards and shared the U.S. perspective in shaping the standards.

This is especially important given the increased focus recently on the development and

adoption of international accounting and auditing standards.

By participating in INTOSAI knowledge sharing working groups and task forces (e.g., Public

Debt, Information Technology, Environmental Auditing, Program Evaluation, Fight Against

International Money Laundering and Corruption, Value of Supreme Audit Institutions (SAI),

and Key National Indicators), we acquire knowledge and network with experts in other

countries. For example, our participation in the Working Group on Public Debt and our

leadership of the Task Force on the Global Financial Crisis: Challenges to SAIs involves

some 25 countries and has provided us with insight into the causes and the continuing

international response to the global financial crisis. We also organized a joint meeting of

the INTOSAI Global Financial Crisis Task Force and the Working Group on Public Debt in

April 2012 to enhance knowledge sharing across national boundaries in light of the evolving

links between sovereign debt and the financial crisis. We continued to help strengthen

INTOSAI’s strategic planning capacity by participating in a task force focused on continuous

improvement, strategic foresight, emerging issues, and resource allocation.
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Management’s Discussion and Analysis

Capacity Building

In support of the federal government’s interest in promoting good governance and ensuring

that federal funds for programs abroad are spent effectively and efficiently, we continued

to advance capacity-building efforts and the INTOSAI-Donor Cooperation initiative.

We participated in a fourth meeting of the INTOSAI-Donor Steering Committee that was

held in February 2012, at which eight new global and regional initiatives were launched,

including a global program to implement International Standards of Supreme Audit

Institutions (ISSAI) which received significant funding and pledges of support. In addition,

donors16 expressed strong interest in response to a global call for proposals for SAIs in need

of support. Donors agreed on the operating arrangements for a global pooled fund for

SAI capacity development, which is expected to help draw major funding from donors to

support SAI capacity building around the world. A database on SAI capacity development,

which will serve to enhance coordination of support to SAIs, was launched and has begun

to be populated.

In fiscal year 2012, 21 participants from 17 countries completed our 4-month International

Auditor Fellowship Program for mid- to senior-level staff from other countries. They

brought the total number of participants during the program’s 33-year history to more

than 500. Through this program, our instructors, mentors, and sponsors become part of

a growing international community of good government professionals and experts. The

goodwill engendered supports our country’s image abroad and facilitates our staff’s access

to foreign officials, which is often essential to our international audit work.

Internal Management Challenges

The Comptroller General, the Executive Committee, and other senior executives identify

management challenges through the agency’s strategic planning, management, internal

controls and budgetary processes. Under strategic goal 4, several performance goals

and underlying key efforts focus attention on each of our management challenges. We

monitor our progress in addressing these challenges through our annual performance and

accountability process. Each year we also ask our IG to examine management’s assessment

of the challenges and the agency’s progress in addressing them.

For fiscal year 2013, we will continue focusing high-level management attention on

human capital issues and on the new challenge identified last year related to improving

the efficiency of our engagements and delivery of timely and quality information to the

Congress.

Human Capital Challenge

Having a talented, diverse, high-performing, knowledge-based workforce is essential to

carrying out our mission. Like other federal agencies, we are challenged to address several

critical human capital management issues, while doing more with less. These issues

included preparing for the retirement of executives and other senior managers, creating

and maintaining a performance-based culture that helps to motivate and retain talented

16 Donors are international government agencies and multilateral institutions that provide funds with the objective of promoting economic

development and improving the welfare of developing countries.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

people, and implementing workplace practices that meet the needs of an ever-changing

workforce in a fair and equitable manner. As a result in fiscal year 2012, we focused our

efforts on a few top priorities to sustain an agile, well-trained, balanced, and diverse

workforce. Specifically, we

■ recruited and hired staff to fill several senior executive positions and a few critical hires

to address succession planning needs;

■ identified candidates for our executive development program, and provided them a

more cost-effective, enhanced leadership training program;

■ launched an enhanced telework pilot program in conjunction with a workspace sharing

initiative; and

■ developed a new performance appraisal system.

Although we have made progress, the overarching human capital issue that we expect to

continue to face for the foreseeable future is ensuring that we support the mission of the

agency with the right resources, where and when they are needed, in the face of declining

budgets while providing meaningful rewards and recognition needed to retain our highly

skilled workforce. For the first time in a long time, we have had minimal hiring over 2

consecutive years, and as a result, the proportion of entry-level staff is not where it needs

to be to ensure a pipeline for the future. We will continue to address the same human

capital issues in fiscal year 2013 as we did last year.

■ Succession planning. Succession planning remains critical. While the percentage of our

senior executives eligible to retire has decreased from about 40 percent to 34 percent,

almost 25 percent of all our senior non-executive staff are also eligible to retire. Thus,

we will continue to emphasize the need for senior executives to work closely with less

senior staff to ensure that critical knowledge and expertise are not lost. We will also

continue to develop current employees to take on more responsibility and ensure that

employees who are eligible to advance to key positions have the requisite skills and

experience to succeed.

■ Hiring. While we have shifted our focus this year to address critical skills gaps, we

plan to develop recruitment plans that are inclusive of all of our workforce needs. To

ensure a pipeline for the future, a high priority will be to attract and hire entry-level

staff to the extent that our budget will support it. We will also continue to maintain

relationships and partnerships with colleges, universities, and professional associations

so we do not lose access to well-qualified, diverse, entry-level candidates.

■ Training and staff development. We will continue to realign training for our employees

based on our learning needs analysis, work demands from the Congress, and the

emerging areas of emphasis identified in our strategic plan and by experts. We will also

continue to enhance our learning delivery methods by using all available technologies,

including distance learning and online courses.

■ Performance management and rewards. We will to implement a new performance

appraisal system and finalize a revised system to reward and recognize our highperforming staff. Also, we plan to continue to support other programs and workplace

practices that will help us motivate and retain our employees. Such steps are needed

particularly in light of budget limitations.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

In addition, a recent audit by the IG of our use of recruitment and retention incentive

payments identified opportunities to strengthen controls to help ensure that incentive

payments support agency recruitment and retention goals, and improve effective

monitoring and oversight. We will address these issues in the coming year by ensuring

consistency and adherence to our recruitment, relocation, and retention policies; aligning

the use of these incentives with strategic human capital and workforce planning goals

and objectives; monitoring and evaluating the effectiveness of internal controls to include

maintaining appropriate supporting documentation; providing additional guidance to

human capital staff to ensure proper, timely, and accurate execution and recording of

administrative actions; and providing effective monitoring and oversight of these programs.

We will continue to work with our union partners to implement human capital programs in

a manner that helps us meet the needs of an ever-changing workforce in a fair, equitable,

and inclusive manner. We will also continue to explore ways to leverage technology to help

us improve the accuracy and efficiency of our human capital processes and management,

and work closely with outside organizations to help us stay informed of prevailing and

leading human capital practices.

Engagement Efficiency Management Challenge 

In our Fiscal Year 2011 Performance and Accountability Report, we identified a new

management challenge stemming from a continuing high workload in a time of declining

budgets and staff size. The agency made improving the efficiency with which it conducts

its mission work a priority and identified three areas of focus—managing and conducting

engagements, utilizing resources, and communicating its message. We made significant

progress in initiating work in these areas in fiscal year 2012. Specifically, in 2012, we

■ completed a contractor-assisted end-to-end analysis of our engagement process that

identified 31 areas of opportunity for improved efficiency,

■ established a new Office of Continuous Process Improvement that reports to the

Chief Operating Officer to focus exclusively on continuous process improvement and

implement projects to improve efficiency, and

■ created an executive-level governance structure for prioritizing and directing process

improvement initiatives.

These three steps represent the underlying core organizational commitment to improving

engagement processes and efficiency. In addition, we completed six projects to help

address process inefficiencies and enhance organizational focus on ensuring efficient

outcomes along with quality outcomes. Specifically, we

■ streamlined a final report review process by reducing documentation requirements and

moving to electronic routing,

■ revised report production standards and processes to clarify roles and expectations and

improve publication production efficiency,

■ streamlined the agenda for regular senior-level engagement review meetings by

eliminating discussion of non-material topics,
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis 

■ expanded access to a key engagement system to support improved decision making and

management of engagements,

■ consolidated results of key management meetings in one place on the agency’s internal

website to facilitate easy access, and

■ incorporated efficiency-oriented behaviors into our new performance appraisal system.

We also have a number of projects under way that will continue into fiscal year 2013—some

that will deliver results in the near-term while others are longer-term efforts. Specifically,

we are

■ identifying changes to key steps and decision points in our engagement process to

ensure resource investments on individual engagements are in line with client needs and

needed scope of work;

■ conducting market research to identify possible alternatives for more efficiently creating

content, meeting our review and fact checking procedures, and distributing and

publishing our reports and content in multiple formats;

■ developing guidance and tools to ensure staff and managers are more keenly focused on

managing resources committed and expended on engagements;

■ identifying project management principles and best practices that will be adopted for

all engagements;

■ pursuing major enhancements to key engagement support and management systems to

reduce rework and improve systems support and management information;

■ assessing client needs and the media marketplace to identify new ways of

communicating our message;

■ assessing ways to more efficiently manage staff on and across engagements; and

■ clarifying roles and responsibilities for engagement team members and stakeholders

including their responsibilities for reviewing draft products to reduce redundancies and

unneeded work.

Also in fiscal year 2013, we will continue to identify other areas of opportunity for

improved efficiency and will continually prioritize how to utilize resources to ensure the

most significant efficiency gains. In addition, we will develop performance metrics for the

process improvement program to show the effect improvement initiatives are having on our

operations.

Mitigating External Factors

In addition to the resource constraints and uncertainty of the budget for fiscal year 2013,

which directly affect our internal management challenges, other external factors that

could affect our performance and progress toward our goals include shifts in congressional

interests, the ability of other agencies to make improvements needed to implement our

recommendations in a constrained budget environment, and access to agency information.

We mitigate these factors in several ways.
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Demand for our work is very high, with 924 congressional requests and new mandates in

fiscal year 2012. To be prepared to address timely and relevant issues, we use the eight

broad trends identified in our strategic plan to guide our work plans. We also communicate

frequently with our congressional clients to stay abreast of their interests as unanticipated

shifts in congressional priorities can change the mix of work we are asked to perform.

In addition, each year we conduct about 80 evaluations annually under the Comptroller

General’s authority to address priority issues we identify. We strive to maintain flexibility

in deploying our resources in response to shifting priorities and have successfully redirected

our resources when appropriate and maintained broad-based staff expertise. For example,

to address crosscutting mandates we have used multidisciplinary teams composed of staff

from across the agency. We devoted 32 percent of our audit resources to mandates in fiscal

year 2012. We completed a second year of multiyear mandates to report on duplication

in government programs, and health insurance and financial regulatory reform issues. We

are also working with the Congress to revise or eliminate mandates that have outlived

their usefulness. Moreover, all Senate committees are required to review programs within

their jurisdiction to identify potential fraud, waste, and abuse in program spending—giving

particular scrutiny to issues raised in our reports—and to develop recommendations for

improved government performance. Similarly, House rules require each standing committee

or subcommittee to hold at least one hearing on issues raised by us indicating that federal

programs or operations authorized by the committee are at high risk for fraud, waste,

abuse, or mismanagement (see p. 38 for more information about our high-risk list areas and

programs).

Another external factor that affects our ability to serve the Congress is the extent to which

we can obtain access to agency information. This access to information plays an essential

role in our ability to report on issues of importance to the Congress and the American

people. Executive departments and agencies are generally very cooperative in providing

us access to the information we need. It is fairly rare for an agency to deny us access to

information, and rarer still for an agency to refuse to work toward an accommodation that

will allow us to do our work.

While we generally receive very good cooperation, over time we have experienced

access issues at certain departments and agencies. We actively pursue access issues as

they arise, and we are engaged in discussions and efforts across the executive branch to

enhance our access to information. In 2012, there were several developments on the access

front relating to these discussions and efforts. As we reported in the Fiscal Year 2011 

Performance and Accountability Report, the Department of Justice (DOJ) had initiated a

trial program designed to improve their timeliness to our requests for information, and the

trial program had resulted in key improvements in DOJ’s responsiveness and communication

with us. The program included target time frames for DOJ production of documents and

for the scheduling of interviews with agency officials, as well as the designation by DOJ of

senior component officials for our reviews. In March 2012, these procedures were made a

permanent part of DOJ’s protocols for interacting with us. As these procedures continue

to be implemented, we hope to see continued improvements in certain components’ and

offices’ timeliness in responding to our requests for information.

Another development relating to our access to information was in the context of

intelligence. As we reported last year, the Director of National Intelligence, in consultation

with the Comptroller General, issued a written directive in 2011 governing our access to

information in the possession of an element of the intelligence community, Intelligence
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GAO Performance and Accountability Report 2012

Management’s Discussion and Analysis

Community Directive (ICD) 114. The directive was designed to address the historic

challenges that we have experienced in gaining access to information in the Intelligence

Community, and it contains a number of provisions promoting constructive interaction

between us and elements of the IC, such as establishing a presumption of cooperation

with us. However, we have had concerns with how several terms in the directive could

be interpreted, since they are framed as areas where information would generally not be

available to us for certain audits or reviews. It is crucial that these terms and the overall

directive be carefully implemented and monitored to ensure that we are able to obtain

the information we need to assist the Congress in our oversight responsibilities, including

responding to requests from the committees on armed services, justice, homeland

security, foreign affairs, and appropriations, as well as the congressional intelligence

committees. In fiscal year 2012, we worked through a number of issues with the various

elements of the intelligence community related to challenges in obtaining information we

requested, and we will continue to monitor the implementation of ICD 114 moving forward.

We have experienced other access issues at certain agencies because of long-standing

and erroneous interpretations of our access authority, even where the agencies involved

are otherwise generally cooperative. In some cases, agencies have interpreted language

in program statutes limiting their disclosure or use of data as restricting our access,

notwithstanding our statutory access rights. Examples include an interpretation by the

Food and Drug Administration with respect to a provision of the Federal Food, Drug, and

Cosmetic Act, as well as an interpretation by the Federal Trade Commission and DOJ of a

provision in the Hart-Scott-Rodino Act, as amended. Legislation that passed in the House

this session (H.R. 2146) and that is pending in the Senate (S. 237) would confirm our

access rights, refuting agency interpretations that restrict our access in these and other

circumstances.

We devote a high level of attention to monitoring and aggressively pursuing access issues as

they arise. 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.
Part II

Performance

Information

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
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GAO Performance and Accountability Report 2012

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 2012 performance results. 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

as well as accomplishments under the strategic objectives for these goals. Most teams

and units also contributed toward meeting the targets for the agencywide measures that

were discussed in part I of this report. For goal 4—our internal goal—we present selected

work and accomplishments for that goal’s strategic objectives. There was no change in our

strategic goals or measures during fiscal year 2012.
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GAO Performance and Accountability Report 2012

Performance Information

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 2010-2015) strategic objectives

under this goal are to provide information that will help address

■ financing and programs to serve 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;

■ viable communities;

■ a stable financial system and consumer protection;

■ responsible stewardship of natural resources and the environment; and

■ a viable, efficient, safe, and accessible 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

website at 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

health providers and patients, students and educators, employees and workplaces, 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.

Example of Work under Goal 1

Our reports over many years identified

the need for greater accountability for

results from recipients of federal highway

funds. As we reported, highway funding has

historically not been linked to performance

or outcomes. In July 2012, legislation was

enacted establishing national goals and

directing the Secretary of Transportation and

the states to develop performance measures

and targets for highway safety, condition, and

performance. Our work helped establish the

foundation for these congressional reforms.

(GAO-12-581T, GAO-12-474, GAO-11-918,

GAO-11-77, GAO-08-400)

Address Current and Emerging Challenges to 

the Well-being and Financial Security of the 

American People

Strategic Goal 1

Source: See Image Sources.
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GAO Performance and Accountability Report 2012

Performance Information 

To accomplish our work under these strategic objectives in fiscal year 2012, we conducted

engagements, audits, analyses, and evaluations of programs at major federal agencies, such

as the Departments of Health and Human Services, Education, Energy, Homeland Security,

Justice, 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 9, we met the target set for financial and nonfinancial benefits for goal

1, but we did not meet the target for testimonies.

Table 9: Strategic Goal 1’s Annual Performance Results and Targets

Performance 

measure

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

Met/

not met

2013

targeta

Financial benefits

(dollars in billions) $12.9 $19.3 $12.1 $17.8 $12.6 $11.0 $25.7 Met $11.5

Nonfinancial benefits 238 226 224 233 243 225 275 Met 231

Testimonies 125 123 85 86 84 85 61 Not met 70

Source: GAO.

Note: Financial benefits for goals 1 through 3 do not sum to the total agencywide target as we have left a portion of the financial 

benefits target unassigned in 2013. Experience leads us to believe that we can meet the agencywide target but we cannot predict 

under which goals because of governmentwide resource constraints.

a

Our fiscal year 2013 targets for all three performance measures differ from those we reported in our fiscal year 2013 performance plan 

in February 2012. Specifically, we have increased the financial benefits target from $11.0 to $11.5 billion and the nonfinancial benefits 

from 225 to 231, and decreased the testimony target from 85 to 70. 

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 10. This table indicates that the 4-year average for goal 1

financial benefits gradually declined from fiscal year 2007 through fiscal year 2010. This

decline was mostly because of some large financial benefits from earlier years that are

reflected in the averages. Financial benefits were stable from fiscal year 2010 to 2011

and increased in fiscal year 2012. Goal 1’s nonfinancial benefits peaked in fiscal year 2007

and declined until 2010 and then increased slightly in 2011 and again in 2012. The average

number of hearings at which we testified increased from 2007 to 2008 and remained fairly

stable from 2008 through 2010, declining in 2011 and again in 2012.

Table 10: Four-Year Rolling Averages for Strategic Goal 1

Performance measure 2007 2008 2009 2010 2011 2012

Financial benefits (dollars in billions) $19.3 $17.5 $16.6 $15.5 $15.5 $17.1

Nonfinancial benefits 259 252 239 230 232 244

Testimonies 99 108 108 105 95 79

Source: GAO.

The following sections describe our performance under goal 1 for each of these three

quantitative performance measures and describe the targets for fiscal year 2013.
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GAO Performance and Accountability Report 2012

Performance Information

Financial Benefits

The financial benefits reported for this goal

in fiscal year 2012 totaled $25.7 billion,

exceeding the target we set by nearly $15

billion. Among these accomplishments are

large financial savings from our work on the

level of funding for the Medicare Advantage

program and for eliminating the ethanol tax

credit for corn.

Because we expect to have constrained

resources, we have set the target for

fiscal year 2013 at $11.5 billion based on

discussions with the goal 1 teams about the

level of benefits they believe they can achieve.

Example of Goal 1’s

Financial Benefits

In our review of United States Department of Agriculture’s 

(USDA) fiscal year 2012 budget request, we identified more 

than $3 billion that USDA had not used in an account for 

loans to farmers to assist farm ownership and operations. 

USDA had been carrying ever-increasing unobligated 

balances forward year after year to help ensure it had 

sufficient funds to meet farmers’ needs. However, under 

Credit Reform, USDA can obtain funds directly from the 

Treasury to cover any shortfalls and does not need to 

carry over funds from year to year in this type of account. 

As a result of our work, USDA returned $3.2 billion to 

the Treasury and agreed to be vigilant in returning future 

balances to the Treasury in a timely manner.

Nonfinancial Benefits

Nonfinancial benefits reported for goal 1 in

fiscal year 2012 totaled 275, exceeding our

target of 225 by 50 benefits, or 22 percent.

The majority of goal 1’s nonfinancial benefits

were in the areas of public safety and security,

including programs in the areas of public

health, food safety, transportation safety,

consumer protection, environmental safety,

and telecommunications safety, and in the

area of program efficiency and effectiveness,

including the U.S. financial regulatory system,

federal oil and gas resources, the U.S. Postal

Service, and transportation and telecommunications funding. For fiscal year 2013, we have set

our target at 231 for nonfinancial benefits. We believe that we are more likely to achieve a

greater number of nonfinancial benefits under goals 2 and 3 over the next few years based on

our experience.

Example of Goal 1’s

Nonfinancial Benefits

As part of our 2011 review of recent nationwide shortages 

of prescription drugs, we reported that the Food and Drug 

Administration (FDA) was constrained in its ability to 

protect the public’s health because of its lack of authority 

to require manufacturers to report drug shortages to 

the agency. We suggested that the Congress consider 

requiring manufacturers to notify FDA when they experience 

circumstances that could lead to a supply disruption. Our 

work was cited in congressional debate on this topic, 

and less than a year later, the Congress included this 

requirement in the Food and Drug Administration Safety and 

Innovation Act. (GAO-12-116)
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GAO Performance and Accountability Report 2012

Performance Information 

Testimonies

Our witnesses testified at 61 congressional

hearings related to this strategic goal, which

fell short of the fiscal year 2012 target of

85 by 24 testimonies, or 28 percent. Among

the topics on which we testified were DOD

and VA health care integration, the Federal

Housing Administration’s mutual mortgage

insurance fund, unconventional oil and gas

production, school bullying, and the Los

Angeles federal courthouse construction.

(See fig. 17 for selected testimony topics by

goal.) We set our fiscal year 2013 target at 70

testimonies on goal 1 issues based on our experience over the past few years.

Table 11 provides examples of goal 1 accomplishments and contributions.

Table 11: Goal 1 Accomplishments and Contributions

Health Care Needs and Financing

Improving Department 

of Veterans Affairs 

(VA) Long-term Care 

Strategic Planning and 

Budgeting

In our 2009 review of VA’s processes for long-term care strategic planning

and budgeting, we recommended that VA strengthen the credibility of

workload estimates for noninstitutional long-term care services in future

budget justifications by reporting which workload measures are used for

each noninstitutional service and how these measures reflect the volume

of services veterans receive. VA implemented our recommendation,

making workload projections for different noninstitutional long-term care

services more transparent and comparable. This increased the clarity and

usefulness of VA’s projections for oversight and budgeting. (GAO-09-145)

Improving 

Oversight of Clinical 

Investigators

In a 2009 review of Food and Drug Administration (FDA) oversight of

clinical investigators—individuals who conduct research involving new

drugs and medical devices—we identified steps that FDA could take to

help ensure that investigator misconduct does not compromise the safety

of clinical trial participants or the integrity of clinical trial data. These

steps included ensuring that clinical investigators who have engaged in

misconduct for one type of product not serve as investigators for others.

FDA took these steps, thus helping it protect participants in clinical trials,

as well as the quality and integrity of clinical trial data. (GAO-09-807)

Improving the Safety 

of Medical Devices

In 2011, we reported on shortcomings in the FDA’s oversight of medical

device recalls. We recommended that FDA improve its oversight by

analyzing recall trends; clarifying procedures for conducting recalls; and

developing criteria for determining whether recalls are implemented

effectively, completed in a timely manner, and appropriately

documented. Our recommendations were included in the Food and Drug

Administration Safety and Innovation Act. Senators specifically attributed

these new requirements for FDA to the recommendations contained in

our report. (GAO-11-468)

Example of Goal 1’s Testimonies

In recent years, improvements in technology have allowed 

oil and gas operators to extract oil and natural gas 

from unconventional resources—resources that cannot 

be produced, transported, or refined using traditional 

techniques—including oil shale. We testified on the 

opportunities and challenges of oil shale development as 

identified in our October 2010 report (GAO-11-35). We 

noted that oil shale development presents opportunities 

for increasing domestic oil production and certain 

socioeconomic benefits. We noted challenges of impacts 

on water, air, and wildlife and socioeconomic impacts. Our 

testimony also discussed key actions that federal agencies 

can take to proactively prepare for the potential development 

of a future oil shale industry. (GAO-12-740T)
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GAO Performance and Accountability Report 2012

Performance Information

Encouraging Provider 

Use of Electronic 

Prescribing and 

Health Records

In our 2011 review of the Centers for Medicare & Medicaid Services’

(CMS) Electronic Prescribing Program (EPP) and Electronic Health

Records Program, both of which provide incentive payments to eligible

Medicare providers who adopt and use health information technology,

we recommended that CMS encourage physicians and other providers

to adopt certified electronic-prescribing technology, and that CMS

expedite efforts to remove overlap in reporting requirements for the two

programs. Our work prompted CMS to modify the EPP’s technological

requirements so that they include certified technology and remove

overlapping reporting requirements. (GAO-11-159)

Lifelong Learning

Expediting School 

Improvement Grant 

Awards

We reported in 2011 that the school improvement grant process

did not allow some districts and schools enough time to plan and

implement reforms for the school year, such as replacing a principal. We

recommended that the Department of Education (ED) consider ways to

grant awards earlier in the school year. The Congress cited our findings

and urged ED to make more timely awards. ED subsequently allowed

states to submit shorter applications in some cases to expedite awards so

that schools could have more time to make improvements. (GAO-11-741)

Benefits and Protection for Workers, Families, and Children

Better Reporting of 

Child Fatality Data

Child fatalities because of maltreatment are underreported, we found,

partly because many states do not collect all relevant data from

state agencies. We recommended in 2011 that the Department of

Health and Human Services identify ways to help states improve data

collection. The Chairman, House Committee on Ways and Means, cited

our recommendations and proposed legislation to implement them.

In September 2011, the Child and Family Services Improvement and

Innovation Act was enacted, requiring states to improve their data

collection on child fatalities from maltreatment. Collecting complete

information should help target efforts for preventing maltreatment

deaths. (GAO-11-599)

Addressing the Needs 

of Black Lung Workers

Consistent with our 2009 recommendations, the Department of Labor

(DOL) improved its Black Lung Benefits Program, which provides

assistance to miners suffering from coal dust exposure. DOL improved its

timeliness measures and identified ways to reduce delays. The agency

now also makes hearings available more frequently for claimants living

in remote locations by videoconferencing. DOL redesigned its diagnosis

reporting forms to provide better evidence required to award benefits

and also expanded its ability to analyze complaints about medical

evaluations. These steps should improve the claims process for miners.

(GAO-10-7)

Ensuring Voting 

Access and Integrity 

in Long-Term Care 

Facilities

Our 2009 work found that states and localities varied in how they

addressed challenges helping long-term care facility residents vote,

and also in the extent to which they ensured residents’ ballots are not

fraudulently completed by someone else and that these voters are not

subjected to undue influence. As we recommended, the U.S. Election

Assistance Commission, in developing guidance on voting in such facilities,

collected and disseminated information on cost-effective practices to

provide voting access. As a result, citizens in long-term care facilities may

have improved ability to cast ballots. (GAO-10-6)
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GAO Performance and Accountability Report 2012

Performance Information 

Financial Security for an Aging Population

Strengthening Pension 

Benefit Guaranty 

Corporation’s (PBGC) 

Management and 

Governance

We have recommended, in 2011 and earlier, that the PBGC improve its

governance structure and contract management. The Moving Ahead

for Progress in the 21st Century Act, enacted in 2012, addresses some

of our recommendations. The act has several requirements, including

those to strengthen PBGC’s board of directors and study alternative

governance structures. Also, PBGC implemented practices to strengthen

accountability of its contract management. These actions should allow

PBGC to improve its management and protect retirement incomes of

workers in private-sector defined benefit pension plans. (GAO-11-588,

GAO-11-271, GAO-11-182T, GAO-08-871, GAO-09-702T)

Responsive, Fair, and Effective System of Justice

Increasing Awareness 

of Funding for 

Indigent Defense

In May 2012, we assessed federal support to states, localities, and tribes

for indigent defense services—counsel for those accused of a crime

but unable to afford representation. Our work provided comprehensive

information on federal grants available to support such services. We

recommended that the Department of Justice better inform grantees and

public defender offices about these grants, which will better enable them

to access funding. We also provided previously unavailable information

about how grantees were using funds to support indigent defense and

challenges to evaluating the effectiveness of their efforts. (GAO-12-569)

Viable Communities

Reducing Reserves in 

the Housing Choice 

Voucher Program

Our review of the Department of Housing and Urban Development’s (HUD)

2012 budget request showed that in HUD’s Tenant-Based Rental Assistance

(voucher) account, as of September 2010, almost 2,000 housing agencies

held $1.3 billion in subsidy reserves that potentially could be used to

provide housing assistance to eligible households or could be used by HUD

to reduce future budget requests. We found that up to approximately

$663 million of these reserves could be considered excess funds and,

therefore, rescinded. Subsequently, the Congress rescinded $650 million

from housing agencies’ reserve accounts.

Reducing Improper 

Payments Resulting 

from Underreported 

Tenant Income

In reports issued in the last decade, we recommended that HUD reduce

the level of rental assistance payments it made improperly to tenants and

regularly monitor compliance with policies for rental assistance payments.

In response to our work, HUD deployed a new income verification system

to identify tenants who underreport income that helped reduce improper

payments by $186 million in fiscal year 2010, the last year for which data

are available. (GAO-05-224, GAO-02-749, GAO-01-248)

Improving Federal 

Response to 

Foreclosure Impacts

To reduce the frequency of banks and other institutions not finishing

property foreclosures—resulting in abandoned properties—banking

regulators issued guidance directing institutions to obtain updated

property valuations before starting foreclosure, and directed institutions

to notify borrowers and communities of foreclosure halts to better

ensure properties will be maintained. Responding to our 2011 report on

vacant properties, the Treasury changed requirements for its mortgage

modification program to allow modifications for properties that are not

owner-occupied, which could also help prevent vacant and unmaintained

properties. (GAO-11-93, GAO-12-34)
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GAO Performance and Accountability Report 2012

Performance Information

Stewardship of Natural Resources and the Environment

Recovering Unspent 

Funds at the 

Environmental 

Protection Agency 

(EPA)

Over several years, we identified opportunities for EPA to recover unspent

funds from expired grants, contracts, and interagency agreements,

and use those funds to offset the need for new appropriations. We

also encouraged EPA to better track these recoveries in its accounting

systems. In response to our work, EPA developed a database that enables

the agency to track recovered funds and has enhanced its efforts to

recover unspent funds. In 2010 and 2011, EPA recovered a total of over

$380 million in unspent funds. EPA’s enhanced efforts to recover these

funds reflect stronger fiscal management and improved compliance with

the agency’s policies and procedures.

Identifying Native 

American Human 

Remains and Objects 

for Repatriation

We found that almost 20 years after the Native American Graves

Protection and Repatriation Act was enacted, eight key federal

agencies had not fully complied with the requirements of the act. We

recommended that the agencies develop and provide to the Congress

a needs assessment and timetable for complying with the act for their

historical collections of Native American human remains and objects. In

response, most of the agencies have provided their needs assessments

and timetables. Furthermore, most of the agencies have begun reporting

their repatriation data to the National Park Service, as we recommended,

so repatriations can now be tracked governmentwide. (GAO-10-768,

GAO-11-755T)

Protecting Animal and 

Public Health through 

Improved Planning

Our work over several years identified challenges the federal government

faces in planning for animal disease outbreaks that can cause serious

harm to the economy and human health. We found that USDA and

the Department of Homeland Security (DHS) had not clarified agency

roles and responsibilities for such an event, that state plans lacked

critical components, and that there was a growing national shortage of

veterinarians. In response, in 2011, USDA and DHS took steps to better

define their response roles. In 2010, USDA provided states with key

information to develop more complete response plans, and the federal

government took steps to improve agencies’ veterinary workforce

planning. (GAO-07-652, GAO-09-178)

Viable National Infrastructure

Reducing the Risk 

of Disruptions in 

Aviation Funding

In 2009, we reported that actual revenues into the Airport and Airway

Trust Fund (Trust Fund) have been less than the forecast revenues, which

serve as the basis for appropriations from the Trust Fund, and have

resulted in a $6 billion decline in the fund’s balance over 7 years. Given

this decline and the inherent uncertainty of forecasts, we suggested that

the Congress consider not making the full amount of forecast revenues

available for appropriation from the Trust Fund. In 2012, the Congress

enacted such a provision, limiting the amount made available from the

fund, thereby reducing the risk of disruptions in funding for aviation

programs. (GAO-09-393, GAO-12-222)
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GAO Performance and Accountability Report 2012

Performance Information 

Addressing Excess and 

Underutilized Real 

Property

For years, we have identified problems with excess and underused federal

real property. The properties can be burdensome for agencies to maintain

and can be difficult to demolish, better use, or sell. We found problems

in June 2012 with the accuracy of real property data that the General

Services Administration (GSA), the Office of Management and Budget

(OMB), and other agencies use. Despite reform efforts, we also reported

that the government lacks a comprehensive national strategy to address

the underlying reasons the problems persist, including stakeholder

resistance and the cost of disposal. Our work has refocused efforts on

improving federal real property data and strategically managing federal

property. (GAO-12-645)

Determining 

Responsibility for the 

Cost of Postal Service 

Pension Benefits

Facing insolvency, the Postal Service asked the Congress to refund $75

billion in what it referred to as “overpayments” that it made to the Civil

Service Retirement System (CSRS). We were asked by House and Senate

oversight committees to review current law, actuarial analyses used in

pending legislation, and potential impacts of a refund on USPS’s financial

outlook. We determined that the methodology for determining the USPS’s

responsibility for the cost of CSRS benefits was consistent with current

law, that the transfer of assets would increase the federal government’s

current and future liability for federal retirement payments by an

estimated $56 billion to $85 billion, and that the question of a refund

was a congressional policy decision. Based on our work, the relevant

committees of the Congress decided not to pursue legislation to grant a

refund. (GAO-12-146, GAO-10-455)

Improving Transit 

Governance

Washington Metropolitan Area Transit Authority’s (WMATA) rail system

has experienced challenges that include costs, service reliability, and

safety. We reported in 2011 that WMATA’s board has, at times, focused on

management’s responsibilities, rather than its responsibilities to provide

oversight and strategic planning. This lack of strategic focus raised

concerns about WMATA’s ability to confront its challenges. In response to

our recommendations, the board issued bylaws to clearly delineate its

responsibilities and is engaged in developing a strategic plan for WMATA

to better equip the agency to provide safe and reliable transit service.

(GAO-11-660)

Source: GAO.
GAO-13-2SP 73

GAO Performance and Accountability Report 2012

Performance Information

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. The federal government is also working to balance national security demands overseas and at home

with demands related to an evolving national security environment. Given the importance

of these efforts, our second strategic goal focuses on helping the Congress and the federal

government in their responses to changing security threats and the challenges of global

interdependence. Our multiyear (fiscal years 2010-2015) 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. foreign policy 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

website at 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, Homeland

Security and Justice, 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 Financial Markets and

Community Investment, Information Technology, and Natural Resources and Environment

teams.

To accomplish our work in fiscal year 2012 under these strategic objectives, we conducted

engagements and audits that involved fieldwork related to international and domestic

programs that took us across multiple continents. As in the past, we developed reports,

testimonies, and briefings on our work.

Example of Work under Goal 2

Since the release of our report in 2008 on the encryption 

of information on federal information systems, the Office 

of Management and Budget and selected agencies have 

acted in response to our recommendations. These actions 

include issuing governmentwide policy and monitoring 

federal agencies’ encryption efforts. In addition, agencies 

developed training programs on encryption concepts, 

implemented mechanisms to monitor the successful 

installation and functioning of encryption products, and 

ensured that encryption technologies are installed in 

accordance with the validated federal cryptographic 

modules program. These actions helped to reduce the risk 

of unauthorized disclosure, modification, or loss of sensitive 

federal information. (GAO-08-525)

Respond to Changing Security Threats and the 

Challenges of Global Interdependence

Strategic Goal 2 

Source: See Image Sources.
74 GAO-13-2SP

GAO Performance and Accountability Report 2012

Performance Information 

As shown in table 12, we exceeded our fiscal year 2012 performance targets for financial

and nonfinancial benefits and testimonies.

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

Performance

measure

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

Met/

not met

2013

targeta

Financial benefits

(dollars in billions)

$10.3 $15.4 $12.4 $20.5 $25.9 $11.4 $13.4 Met $12.7

Nonfinancial benefits 468 468 457 444 447 450 513 Met 338

Testimonies 73 93 67 58 48 50 54 Met 45

Source: GAO.

Note: Financial benefits for goals 1 through 3 do not sum to the total agencywide target as we have left a portion of the financial 

benefits target unassigned. Experience leads us to believe that we can meet the agencywide target, but we cannot predict under which 

goals because of governmentwide resource constraints.

a

Our fiscal year 2013 targets for all three performance measures differ from those we reported in our fiscal year 2013 performance 

budget in February 2012. Specifically, we increased financial benefits from $11.4 billion to 12.7 billion, decreased nonfinancial benefits 

from 450 to 338, and decreased testimonies from 50 to 45. 

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 over the past 6 years goal 2 financial benefits

reached the highest level in 2011 and remained fairly stable in 2012. Average nonfinancial

benefits increased from 2007 to 2009, declined in 2010 and 2011, and increased again in

2012. Testimonies also increased from 2007 to 2009 and have declined steadily from 2010

through 2012.

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

Performance measure 2007 2008 2009 2010 2011 2012

Financial benefits (dollars in billions) $11.2 $12.7 $12.5 $14.7 $18.6 $18.1

Nonfinancial benefits 413 438 461 459 454 465

Testimonies 63 67 75 73 67 57

Source: GAO.

The following sections describe our performance under goal 2 for each of our quantitative

performance measures and describe the targets for fiscal year 2013.
GAO-13-2SP 75

GAO Performance and Accountability Report 2012

Performance Information

Nonfinancial Benefits

The nonfinancial benefits reported for goal

2 in fiscal year 2012 totaling 513 nonfinancial

benefits, exceeded our target by 63

benefits, or 14 percent. The majority of

goal 2’s nonfinancial accomplishments were

in the areas of public safety and security

for programs including homeland security

and justice, international trade, national

defense and foreign policy, and in acquisition

and contract management, including DOD

weapon system acquisition, and NASA and

DHS acquisition management. We set our fiscal year 2013 target at 338. This target is

lower than our recent experience as we do not expect the level of nonfinancial benefits to

continue at such a high volume.

Example of Goal 2’s

Nonfinancial Benefits

We have identified significant weaknesses in the U.S. export 

control system, which is designed to protect against the 

transfer of U.S. defense and other items to foreign parties 

that might use them against U.S. interests. In 2012, we 

identified challenges facing the many agencies responsible 

for enforcing export controls, including the lack of trend 

data on illegal exports and measures of effectiveness to 

gauge mission success. To improve enforcement, agencies 

are addressing the challenges by developing a more 

robust system to measure performance, and facilitating the 

exchange of data on illegal export activity. (GAO-12-246)

Financial Benefits

The financial benefits reported for this goal

in fiscal year 2012 totaled $13.4 billion, which

exceeded our target by $2 billion, or 18

percent. Among these accomplishments are

large financial benefits, including $8 billion

for NASA’s cancellation of the Constellation/

Ares I project and $3.1 billion for

modifications concerning tour normalization

for forces in South Korea.

We expect our work on defense and

acquisition issues to continue to produce

economies and efficiencies close to the fiscal

year 2012 level. Therefore, we set our fiscal

year 2013 target at $12.7 billion.

Example of Goal 2’s

Financial Benefits

In 2011, we reported that the Federal Emergency 

Management Agency (FEMA) needed to improve its 

oversight of preparedness grants and assess capabilities 

to identify gaps and prioritize investments. We suggested 

the Congress could limit funding until FEMA completed an 

assessment of capability gaps. In April 2011, the Congress 

reduced funding for FEMA preparedness grants by $875 

million from the President’s fiscal year 2011 budget request. 

In addition, citing our concerns regarding FEMA’s lack of 

assessment capabilities, the Congress concurred with 

our suggestion and recommended substantially reduced 

future funding for preparedness grants until metrics can 

be used to assess results. (GAO-12-526T, GAO-12-453SP, 

GAO-11-318SP)

Testimonies

Our witnesses testified at 54 congressional

hearings related to this strategic goal in fiscal

year 2012, exceeding our target of 50 by 4

hearings, or 8 percent. Goal 2 testimony

topics included the Deepwater Horizon oil

spill, DHS container security programs, DOD

personnel security clearances, and improvised

explosive devices. (See fig. 17 for selected

testimony topics by goal.) We have set our

target at 45 for presenting testimony based

on our recent experience.

Example of Goal 2’s Testimonies

DOD has faced long-term challenges in managing and 

halting degradation of its facilities and reducing unneeded 

infrastructure to free up funds to better maintain the facilities 

it still uses to meet other needs. DOD plans to reduce 

force structure and DOD will request that the Congress 

authorize the base realignment and closure (BRAC) process 

for 2013 and 2015. To inform the process, we discussed 

key factors and challenges that contributed to BRAC 

2005 implementation and results, and the most recent 

estimated costs and savings attributable to BRAC 2005. 

(GAO-12-513T)
76 GAO-13-2SP

GAO Performance and Accountability Report 2012

Performance Information 

Table 14 provides examples of goal 2 accomplishments and contributions.

Table 14: Goal 2 Accomplishments and Contributions

Protect and Secure the Homeland

Targeting National 

Flood Insurance Bonus 

Formula to Match 

Agency Marketing 

Goals

In 2009, we recommended that the Federal Emergency Management

Agency’s (FEMA) National Flood Insurance Program (NFIP) establish

more targeted marketing goals for the private companies that sell flood

insurance. We also stated that the bonuses that FEMA provided to those

companies would be more effective if FEMA established more targeted

goals in line with its NFIP goals. In response to our report, FEMA changed

the bonus formula for 2013 to include incentives for increasing sales in

under-served areas, for small business, and in areas of moderate or low

flood risk, which are all among NFIP goals. These changes should increase

program participation in these targeted areas. (GAO-09-455)

Identifying 

Deficiencies in the 

Transportation 

Security 

Administration’s (TSA) 

Advanced Imaging 

Technology Program

TSA deployed advanced imaging technology (AIT) across the country,

a high-priority technology to identify threat items concealed under

passengers’ clothing. In January 2012, we issued a report on TSA’s

adherence to DHS acquisition policy and TSA’s efforts to test the

effectiveness of AIT. TSA changed key performance parameters during

the acquisition process without formally informing DHS acquisition

officials—a violation of DHS policy. We recommended that TSA develop

a road map describing when vendors will meet milestones for further

developing AIT. Our work informed the Congress about the state of the

technology and a reduction in planned buys. (GAO-12-541T, GAO-12-644T)

Strengthening DHS’s 

Oversight of the 

Student and Exchange 

Visitor Program

Our June 2012 report noted weaknesses in DHS’s management of

the Student and Exchange Visitor Program, assisting the Congress in

overseeing the program and identifying vulnerabilities. We identified

significant challenges in DHS’s processes for certifying and monitoring

the more than 10,000 U.S. schools eligible to accept foreign students.

We reported that DHS had not analyzed program risks or implemented

existing controls to verify schools’ legitimacy and program eligibility, such

as their accreditation status. We recommended that DHS assess program

risks and strengthen its oversight of schools. (GAO-12-572, GAO-12-895T)

Improving Cost 

Estimates and Targets 

for Coast Guard’s 

Aging Fleet

Given delays in acquiring new vessels, we were asked to examine the

condition and performance of the Coast Guard’s fleet of older vessels.

In July 2012, we reported that the condition of the vessels was poor,

the Coast Guard’s process for estimating maintenance costs did not

fully reflect best practices, and the vessels’ capacity to perform

missions would continue to decline until new vessels are deployed.

We recommended that the Coast Guard improve its maintenance costestimating process and adjust operational targets to be more realistic

given the aging vessels’ declining capacity. (GAO-12-741)

Improving Information 

Security at Multiple 

Federal Agencies

Over the past 2 years, multiple agencies including the Internal Revenue

Service, National Aeronautical and Space Administration, Federal Deposit

Insurance Corporation, Los Alamos National Laboratory, and Federal

Housing Finance Agency have acted, in response to our recommendations,

to improve the security controls over their computerized information

systems and networks. These actions include conducting risk assessments,

improving password controls, configuring devices more securely, and

securing sensitive assets. These actions helped to better protect the

confidentiality, integrity, and availability of agency information and

reduce the risk that information would be inappropriately used or

modified. (GAO-09-136, GAO-11-708, GAO-10-28, GAO-10-528)
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GAO Performance and Accountability Report 2012

Performance Information

Military Capabilities and Readiness

Contributing to Cost 

Savings in Military 

Compensation

We reported in 2010 that using the Employment Cost Index (ECI) to

determine the amount of the annual basic pay raise for servicemembers

is generally reasonable. In recent years, the Congress added one-half

percentage point to the ECI for military pay raises to reduce a perceived

gap between military and private-sector pay. However, we reported that

comparing changes in the ECI with changes in the rates of basic pay did

not necessarily show pay gaps between the two, or that such comparisons

were relevant. Therefore, the Congress decided not to increase military

pay beyond the ECI for fiscal years 2012-2015, resulting in about $2 billion

in savings. (GAO-10-561R, GAO-10-666T, GAO-10-803R)

Contributing to 

the Department 

of Defense’s (DOD) 

Avoidance of $797 

Million in the Costs of 

Excess Inventory

We reported over the last five years that DOD held significantly more

spare parts inventory than it needed. As directed by the Congress,

and as we recommended, DOD developed an inventory management

improvement plan to reduce its excess inventory. As a result, DOD

avoided approximately $797 million of costs for spare parts in fiscal year

2012. (GAO-07-232, GAO-09-103, GAO-09-199, GAO-10-469, GAO-12-493)

Ensuring DOD’s $19 

Billion Space Launch 

Vehicle Acquisition Is 

Based on Sound Data

DOD developed a space launch vehicle acquisition strategy for the

government to buy several launch vehicles from a single contractor and

associated subcontractors over many years. In 2011-2012, we identified

gaps in the data upon which DOD based its strategy and recommended

DOD reassess various parts prices and reconsider the length of the

purchasing commitment. The Congress responded to our work by

legislating that DOD explain how it would address the deficiencies we

found. DOD is taking actions to ensure it can negotiate fair prices.

DOD’s launch acquisitions should thus provide greater assurance that the

government and taxpayers will benefit. (GAO-11-641, GAO-12-822)

Identifying Risks in 

the Navy’s Future 

Destroyer Program

In 2012, we identified significant risks in the Navy’s plan to buy over 40

upgraded Arleigh Burke destroyers at a cost of up to $80 billion over

the next several decades. We found that the Navy lacked a sufficient

analytical basis to ensure that it selected the most cost-effective solution

that is also capable of meeting future threats. We also highlighted

significant cost and technical risks and identified the need for additional

oversight of this program. DOD took action on our recommendation,

resulting in the Under Secretary of Defense’s approval prior to the Navy’s

making major acquisition decisions. (GAO-12-113)

Assisting 

Congressional 

Oversight of the 2005 

Base Realignment 

and Closure (BRAC) 

Process

DOD’s BRAC 2005 was meant to transform the military, foster jointness

among the services, and reduce excess infrastructure. Our work has

shown that DOD faced several challenges in aligning those goals. We

testified in 2012 that DOD’s fiscal year 2011 budget submission to the

Congress included a one-time implementation cost growth of 67 percent

(from $21 billion estimated in 2005 to about $35.1 billion in fiscal year

2011), largely because of increased construction costs for new and

renovated facilities needed to enhance military capabilities. We plan to

report in fiscal year 2013 on lessons learned that could be applied to any

future BRAC round. (GAO-12-709R, GAO-12-513T)
78 GAO-13-2SP

GAO Performance and Accountability Report 2012

Performance Information 

Contributing to 

Successful Reform 

of DOD’s Personnel 

Security Clearance 

Program

Our body of work—including a 2009 report—on problems with DOD’s

Personnel Security Clearance Program, and placing the program on our

list of high-risk activities and programs, contributed to its successful

reform. The Deputy Director of OMB, Director of the Office of Personnel

Management, and other reform leaders issued (1) a strategic framework

which included strategic goals, communications plan, information

technology initiatives, and funding, and (2) a letter to the Congress

outlining outcome performance measures. As a result, DOD significantly

improved the timeliness for processing initial clearances for 90 percent

of industry personnel from 129 days in 2008 to 63 days in 2010. We

subsequently removed this issue from our high-risk list. (GAO-09-488)

Improving DOD’s 

Reporting on 

Headquarters 

Activities

In our 2012 review of DOD’s headquarters organizations and their

functions, we recommended that DOD improve its tracking and reporting

of headquarters personnel data. As a result, DOD took steps to increase

its visibility over headquarters personnel by requiring more accurate

identification and reporting of headquarters data. With this improved

visibility, DOD may be able to identify opportunities to save additional

costs by consolidating organizations and centralizing administrative and

support functions. (GAO-12-342SP, GAO-12-345)

U.S. Foreign Policy Interests

Monitoring Use of U.S. 

Arms Sent to Persian 

Gulf Countries

The United States has authorized billions of dollars in arms sales and

exports to Persian Gulf countries. However, concerns have been raised

about gaps in programs intended to assure that the arms are not acquired

by groups posing a threat to the United States. In 2011, we recommended

that DOD require its officials to document efforts to verify host country

security and accountability procedures for sensitive equipment. In

response, DOD established guidelines for enhanced end-use monitoring,

such as requiring that physical security and accountability checklists be

attached to inventory records. (GAO-12-89)

Improving 

Accountability of U.S. 

Direct Assistance to 

Afghanistan

In fiscal year 2010, the U.S. Agency for International Development (USAID)

awarded direct assistance to the Afghan government of over $1.4 billion

and to the multilateral Afghanistan Reconstruction Trust Fund (ARTF) of

$1.3 billion. The vulnerability of this assistance to waste, fraud, and abuse

makes it essential that U.S. agencies assess risks and safeguard the funds.

In response to recommendations we made in 2011, USAID has taken steps

to ensure risk assessments are completed in advance of direct assistance

awards to the Afghan government and to ensure adherence with policies

for assessing risks associated with multilateral trust funds in awarding

funds to the ARTF. (GAO-11-710)

Making Administrative 

Services Overseas 

More Cost Effective

U.S. agencies overseas spent over $2 billion on administrative services

in 2011 through an interagency system called International Cooperative

Administrative Support Services. The State Department primarily provides

these services. In 2012, we found that in some cases, agencies such as

USAID may provide services more cost effectively. In response, State and

USAID released guidance stating that USAID may provide administrative

services in place of State where it will achieve savings and superior levels

of customer satisfaction. As a result, agencies may be able to obtain

administrative services at a lower cost in future years. (GAO-12-317)
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GAO Performance and Accountability Report 2012

Performance Information

Global Market Forces

Supporting 

Export Promotion 

by Improving 

Management of the 

U.S. Commercial 

Service

Policymakers have emphasized the role of exports in strengthening

the U.S. economy. However, in a 2010 report, we identified several

weaknesses in the management controls of the U.S. Commercial

Service (CS), a key export promotion agency. Responding to our

recommendations, CS made several improvements that will shift its

resources to higher-priority countries. These include establishing a new

human capital plan, using updated resource allocation models and a

strategic analysis tool to decide where to place staff, and reorganizing

the personnel office. It also abolished over 103 vacant positions that

incurred needless administrative charges. (GAO-10-874)

Source: GAO.
80 GAO-13-2SP

GAO Performance and Accountability Report 2012

Performance Information 

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 2010-2015) strategic objectives under this goal are to

■ analyze the government’s fiscal position and opportunities to strengthen approaches to

address the current and projected fiscal gap;

■ identify fraud, waste, and abuse; and

■ support congressional oversight of major management challenges and program risks.

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

website at 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, Forensic Audits and Investigative

Service, 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 the Office of the General Counsel.

To accomplish our work under these objectives, we performed our foresight work, for

example, examining the nation’s long-term fiscal and management challenges, and our

insight work focusing on federal programs at high risk for fraud, waste, abuse, and

mismanagement.

As shown in table 15, we exceeded our fiscal year 2012 performance targets for this goal’s

financial and nonfinancial benefits and testimonies.

Example of Work under Goal 3

We analyzed the actions taken by the Treasury to manage 

federal debt to avoid exceeding the debt limit when delays 

in raising the limit occurred in 2011 and found that such 

delays led to an increase in the Treasury’s borrowing costs 

of about $1.3 billion in fiscal year 2011. We also found that 

the increased focus on debt limit-related operations as 

the delays occurred diverted the Treasury staff from other 

important cash and debt management responsibilities. 

These findings were widely reported and, along with related 

findings in our previous reports, will help inform the debate 

for the next debt limit increase. (GAO-12-701)

Source: See Image Sources.

Help Transform the Federal Government to 

Address National Challenges

Strategic Goal 3 
GAO-13-2SP 81

GAO Performance and Accountability Report 2012

Performance Information

Table 15: Strategic Goal 3’s Annual Performance Results and Targets

Performance

measure

2007

actual

2008

actual

2009

actual

2010

actual

2011

actual

2012

target

2012

actual

Met/

not met

2013

targeta

Financial benefits

(dollars in billions)

$22.8 $23.4 $18.5 $11.6 $7.2 $7.3 $16.7 Met $5.75

Nonfinancial benefits 648 704 634 684 628 525 652 Met 520

Testimonies 74 76 49 45 39 40 41 Met 29

Source: GAO.

Note: Financial benefits for goals 1 through 3 do not sum to the total agencywide target as we have left a portion of the financial 

benefits target unassigned. Experience leads us to believe that we can meet the agencywide target, but we cannot predict under which 

goals because of governmentwide resource constraints.

a

Our fiscal year 2013 targets for all three performance measures differ from those we reported in our fiscal year 2013 performance 

budget in February 2012. Specifically, we decreased financial benefits from $7.3 to $5.75 billion, nonfinancial benefits from 525 to 520, 

and testimonies from 40 to 29.

To help us examine trends for these measures over time, we look at their 4-year averages—

shown in table 16—which minimize the effect of an unusual level of performance in

any single year. Table 16 indicates that over the 6-year period from 2007 through 2012,

financial benefits increased from 2007 through 2009 and have decreased each year from

2009 through 2012. Nonfinancial benefits rose from 2007 to 2008 and fluctuated from

2009 through 2012. The trend in the average number of hearings during which our senior

executives testified on goal 3 issues also rose from 2007 to 2008, remained stable in 2009,

and declined in 2010 and again in 2012.

Table 16: Four-Year Rolling Averages for Strategic Goal 3

Performance measure 2007 2008 2009 2010 2011 2012

Financial benefits (dollars in billions) $14.6 $18.6 $20.4 $19.1 $15.2 $13.5

Nonfinancial benefits 654 686 653 668 663 650

Testimonies 64 68 68 52 52 44

Source: GAO.

The following sections describe our performance under goal 3 for each of our quantitative

performance measures and describe the targets for fiscal year 2013.
82 GAO-13-2SP

GAO Performance and Accountability Report 2012

Performance Information 

Financial Benefits

The financial benefits reported for this goal

in fiscal 2012 totaled $16.7 billion, exceeding

our target of $7.3 billion by $9.4 billion. Among

these accomplishments are benefits from

cancellation of the national polar-orbiting

environmental satellite follow-on program, and

increasing the liquidity of the Treasury Inflation

Protected Securities (TIPS).

We have set our 2013 target at $5.75 billion

because we do not expect the high level

of fiscal year 2012 benefits to continue. We

have also left a portion of our agencywide target unallocated rather than increasing the

target for each goal. Our experience leads us to believe that we can meet the target, but

we are uncertain under which goals.

Example of Goal 3’s

Financial Benefits

In our 2009 review of the Treasury’s debt management 

challenges following the financial market crisis, we found 

that improving Treasury Inflation Protected Securities 

(TIPS) liquidity could lower the Treasury’s cost of borrowing. 

Liquid securities can be auctioned at lower rates and 

cost the Treasury less money. Based on our work, the 

Treasury increased TIPS issuance and the frequency of 

TIPS auctions, issued TIPS with longer-dated maturities, 

and made public statements to reassure investors about its 

commitment to the TIPS program. These actions reduced 

the Treasury’s cost of borrowing by about $2.2 billion over 5 

fiscal years by improving the liquidity of TIPS. (GAO-09-932)

Nonfinancial Benefits

Nonfinancial benefits reported for goal 3 in

fiscal year 2012 totaled 652, exceeding our

target by 127 benefits, or about 24 percent.

The majority of goal 3’s benefits were in the

area of business process and improvement,

including federal agency financial audits,

federal information systems, business

systems modernization, and human capital.

We have set our 2013 target at 520 benefits.

While we recognize that this target is lower

than our fiscal year 2012 actual performance

and 4-year average for this measure, we

believe it is a realistic estimate based on our projected goal 3 work.

Example of Goal 3’s

Nonfinancial Benefits

Based on concerns that counterfeit, military-grade electronic 

parts may have entered the DOD supply chain, we created 

a fictitious company and purchased a total of 16 militarygrade electronic parts. We then contracted with a qualified, 

independent testing lab for full component authentication 

analysis, which revealed that parts had been re-marked 

to display manufacturer logos and numbers of authentic 

parts. Other part features were deficient from military 

standards. Finally, after submitting requests for bogus 

parts, we purchased 4 parts from four vendors, showing 

their willingness to supply parts that do not technically exist. 

(GAO-12-213T, GAO-12-375)

Testimonies

Our witnesses testified at 41 congressional

hearings related to this strategic goal in fiscal

year 2012, exceeding the target of 40 by 2.5

percent. Among the goal 3 testimony topics

covered were Arlington National Cemetery

contract management, fraud prevention

in the service-disabled veteran-owned

small business program, reducing improper

payments, cybersecurity vulnerabilities in

the electricity grid, and effective long-term

disaster recovery. (See fig. 17 for selected testimony topics by goal.) For fiscal year 2013, we

have set a target of testifying at 29 hearings as we do not expect goal 3 hearings to continue

at the same level.

Example of Goal 3’s Testimonies

Fiscal year 2011 marked the eighth year of implementation 

of the Improper Payments Act of 2002 and agencies 

reported an estimated $115.3 billion in improper 

payments—a decrease of $5.3 billion from the prior year. 

Ten programs accounted for about $107 billion or 93 percent 

of the total estimated improper payments reported. We 

testified on federal agencies’ reported progress in estimating 

and reducing improper payments; challenges in meeting 

current requirements to estimate and evaluate improper 

payments; and possible strategies for moving forward in 

reducing improper payments. (GAO-12-405T, GAO-12-573T)
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GAO Performance and Accountability Report 2012

Performance Information

Table 17 provides examples of goal 3 accomplishments and contributions.

Table 17: Goal 3 Accomplishments and Contributions

Analyze Government’s Fiscal Position

Internal Revenue 

Service (IRS) Saves At 

Least $487 Million in 

First-Time Homebuyer 

Credit Claims

At a hearing in 2009, we and others discussed the need to broaden

IRS’s statutory math error authority to ensure compliance with FirstTime Homebuyer Credit requirements. With math error authority, IRS

can automatically correct calculation errors and obvious noncompliance

without costly audits. After the hearing, the Congress granted IRS the

broader authority. As a result, IRS prevented at least $487 million in fiscal

years 2010 and 2011 in erroneous First-Time Homebuyer Credit claims that

would not otherwise have been caught. (GAO-09-1026)

Improving Consumer 

Protection Bureau’s 

Financial Reporting

We worked collaboratively with the Bureau of Consumer Financial

Protection (CFPB) to successfully audit its first set of financial statements

for fiscal year 2011. Because CFPB did not officially begin operations until

July 2011, it was developing its policies as we were conducting our audit.

While working within the short time available, we provided suggestions

which CFPB incorporated to improve its financial reporting, including

more clearly delineating its employee retirement funding commitments

and preparing a management discussion and analysis of CFPB’s operations

for year. (GAO-12-186)

Improving Federal 

Financial Reporting

Our financial audit of the U.S. Government’s Consolidated Financial

Statements helped promote more complete and accurate financial

reporting at the governmentwide level in such key areas as social

insurance and federal employee and veterans benefits. In addition, our

agency-level financial audit work furthered significant financial reporting

control improvements at IRS, the Federal Deposit Insurance Corporation,

and the Securities and Exchange Commission. (GAO-12-444T)

Improving the 

Effectiveness of 

Higher Education 

Assistance

In 2012, we found that tax filers do not always optimize available higher

education tax benefits. For example, about 1.5 million 2009 filers failed to

claim a benefit for which they appeared to be eligible, foregoing a total

of $726 million. Accordingly, we recommended that IRS work with the

Department of Education to develop a strategy to improve information

provided to tax filers who appear eligible to claim a tax benefit. In

August 2012, IRS stated that it is coordinating with Education to improve

outreach efforts and revising Form 8863, Education Credits, to simplify

the decision-making process for taxpayers. (GAO-12-560)

Prevent Fraud, Waste, and Abuse

Reducing Federal 

Improper Payments

Since fiscal year 2000, we have issued reports and testimonies to increase

attention to federal improper payments—i.e. payments that should not

have been made, were made in the wrong amount, or did not have

sufficient supporting documentation—and encourage corrective actions.

For fiscal year 2011, 79 programs reported $115 billion in estimated

improper payments, a decrease of $5 billion from the prior year. Thirtyfive of the 79 programs reported reductions in estimated improper

payments from fiscal year 2010. Our work contributed to reducing

improper payments by about $1.4 billion for 22 federal programs during

fiscal year 2011. (GAO-12-405T, GAO-12-573T, GAO-12-312)
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GAO Performance and Accountability Report 2012

Performance Information 

Improving Fraud 

Prevention Controls in 

the Service-Disabled 

Veteran-Owned Small 

Business (SDVOSB) 

Verification Program

In response to our ongoing work assessing fraud prevention controls within

the SDVOSB verification program, the Department of Veterans Affairs’

(VA) has taken several actions to reduce the program’s vulnerability

to fraud, waste, and abuse. These actions include verifying that firms

meet program eligibility requirements and providing guidance to VA staff

on identifying firms that misrepresent their status in the application

process. These actions will help VA provide reasonable assurance that the

contracting opportunities meant for our nation’s service-disabled veteran

entrepreneurs make it to the intended beneficiaries. (GAO-12-152R)

Preventing Doctor 

Shopping in Medicare 

Part D

In September 2011, we reported on indications of doctor shopping in

the Medicare Part D program for 14 categories of frequently abused

prescription drugs. In response to our report, Centers for Medicare &

Medicaid Services (CMS) directed Part D prescription drug plan sponsors

to withhold payment on suspicious claims, such as when enrollees use

doctor shopping to obtain painkillers and narcotics. This guidance will

help prescription drug plan sponsors to address doctor shopping in

Medicare Part D and to curb overutilization of prescription drugs funded

by taxpayers. (GAO-11-699)

Major Management Challenges and Program Risks

Leveraging Enterprise 

Architectures to 

Achieve Measurable 

Benefits

In 2006, we made recommendations aimed at improving federal agencies’

enterprise architecture (EA) programs and achieving related benefits. In

response, EA programs at the Departments of Health and Human Services

(HHS) and Agriculture have supported important agency modernizations

that have begun to yield results. Specifically, HHS will achieve financial

benefits of over $150 million between fiscal year 2011 to 2015 by

leveraging its EA to improve its telecommunications infrastructure. In

addition, Agriculture will realize benefits of almost $24 million over

the same period by leveraging its EA to move its e-mail to the cloud.

(GAO-06-831, GAO-11-318SP)

Enhancing 

Understanding of 

the Department 

of Defense’s (DOD) 

Financial Challenges

We assisted the Congress in overseeing DOD’s financial accountability

in the context of federal budget constraints, focusing on DOD’s efforts

toward audit readiness of its Statement of Budgetary Resources by

2014. We identified internal control and other process deficiencies that

threaten DOD’s efforts to achieve this goal, including processes in a key

step toward auditability that used unreliable and unsupported data and

significant problems in a component’s reported $46 billion payroll. Our

recommendations from these and related audits are directed at helping

DOD achieve its financial management and auditability goals. (GAO-12-134,

GAO-12-662R, GAO-12-565R, GAO-12-642T, GAO-12-501T)

Identifying Needed 

Improvements 

in Acquisition 

Planning for Iraq and 

Afghanistan

The State Department (State) has relied heavily on DOD for the acquisition

of critical goods and services to support the missions in Iraq and

Afghanistan. In 2012, we identified planning and management weaknesses

in contracts valued at almost $1 billion that DOD awarded and managed

for State. We recommended that State and DOD comprehensively

review existing and proposed interagency acquisitions supporting State’s

missions in Iraq and Afghanistan and implement corrective measures. The

departments agreed to do so, and this should improve the effectiveness

and accountability of DOD acquisitions on State’s behalf. (GAO-12-750)
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GAO Performance and Accountability Report 2012

Performance Information

Improving Contract 

Management at 

Arlington National 

Cemetery

The Army’s management of Arlington National Cemetery came under

scrutiny after burial errors and serious management deficiencies were

discovered. In 2011, we reported on multiple contracting issues, including

a lack of complete data on contracts supporting cemetery operations,

and unclear roles for organizations providing contracting support.

Without this information, cemetery officials will be unable to ensure the

effective oversight of contracts used to support the cemetery’s need to

serve the nation’s veterans and their families. Our work, highlighted in

multiple hearings, has aided Congressional oversight of the cemetery’s

management. (GAO-12-99, GAO-12-374T, GAO-12-436T)

Ensuring the 

Soundness of the 

National Aeronautics 

and Space 

Administration’s 

(NASA) Plans 

to Sustain the 

International Space 

Station

In 2010, the Congress authorized the extension of the International Space

Station program through 2020. NASA must use sophisticated analytical

techniques and judgments to assess the reliability of key components, the

health of systems that affect safety, and the ability to deliver spare parts.

In 2011, we replicated aspects of NASA’s assessments, comparing them to

those used for other complex structures. We found that the process NASA

used is commonly accepted within the risk assessment community and

provides reasonable assurance that NASA is taking the steps necessary to

ensure space station use through 2020. (GAO-11-519R, GAO-12-162)

Improving the 

Department of 

Housing and Urban 

Development’s (HUD) 

IT Management

In March and May 2012, we noted that HUD had made progress in

implementing our prior recommendations on modernizing its IT

environment (e.g., developing new systems, replacing paper processes)

and that its plan for spending funds on modernization efforts satisfied

statutory conditions. A report from a congressional committee responsible

for HUD’s appropriations highlighted our continual audits as having

contributed to improvements in HUD’s IT management. Specifically,

HUD had taken steps to establish key management controls, such as

enterprise architecture, investment management, and strategic planning.

(GAO-12-654, GAO-12-580T)

Adopting a 

Crosscutting 

Approach to Improve 

Federal Government 

Performance

Many federal efforts, such as ensuring food safety and providing

homeland and economic security, require effective collaboration by

more than one agency, level of government, or sector. Our past work

has highlighted challenges agencies face when attempting to work

collaboratively, and how effective implementation of the Government

Performance and Results Act of 1993 could improve collaboration to

achieve meaningful results. The Congress used our work in crafting the

GPRA Modernization Act of 2010, which established a new crosscutting

framework aimed at taking a more integrated approach to improving

government performance. (GAO-04-38, GAO-05-927, GAO-06-15,

GAO-08-1026T, GAO-09-1011T)

Analyzing the Varying 

Results of Key 

Federal/Non-Federal 

Pay Comparisons

Congressional policy has long held that pay for federal workers under

the General Schedule aligns with pay for comparable nonfederal

workers. Recent studies comparing compensation of federal workers to

those in other sectors came to different conclusions about which group

of employees is paid more, as well as the size of the disparities. We

reported in 2012 that the conclusions varied because the studies used

different approaches, methods, and data, so the conclusions should

not be used in isolation to answer how federal pay and compensation

compares with other sectors. Our work has helped inform the Congress

and others interested in federal pay reform. (GAO-12-564)
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GAO Performance and Accountability Report 2012

Performance Information 

Assessing Integrated 

Master Schedules

We published an exposure draft of the Schedule Assessment Guide in

2012 to provide federal and other government program officers with

a consistent methodology for developing, managing, and evaluating

schedules for capital programs. A well-planned schedule is a fundamental

management tool that can help government programs use public funds

effectively by specifying when work will be performed in the future and

measuring program performance against an approved plan. The guide

presents scheduling best practices that should be able to better heighten

the accountability of capital programs. (GAO-12-120G)

Designing Useful 

Program Evaluations

We updated our methodology guide, “Designing Evaluations,” in 2012

to help us and other agencies’ evaluators identify and use appropriate

methods to study the performance of government programs. The

guide identifies different types of evaluation approaches, key steps in

designing studies, and issues evaluators should consider to help ensure

study quality. Our evaluators have used the guidance to assess how other

agencies have evaluated their own programs’ effectiveness. Several

agencies and organizations, such as the Office of Personnel Management,

have cited our guide as useful advice for planning high quality program

evaluations. (GAO-12-208G)

Source: GAO.
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GAO Performance and Accountability Report 2012

Performance Information

Our fourth strategic goal embraces the spirit

of continuous and focused improvement in

order to sustain high-quality, timely service to

the Congress, while also implementing leading

practices in our internal operations. Activities

carried out under this goal also address our

two internal management challenges. The

multiyear (fiscal years 2010-2015) strategic

objectives under this goal are to

■ improve efficiency and effectiveness in

performing our mission and delivering

quality products and services to the

Congress and the American people;

■ maintain and enhance a diverse workforce

and inclusive work environment through

strengthened recruiting, retention,

development, and reward programs;

■ expand networks, collaborations, and

partnerships that promote professional

standards and enhance our knowledge, agility, and response time; and

■ be a responsible steward of our human, information, fiscal, technological, and physical

resources.

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 website at

http://www.gao.gov/sp.html. The work supporting these objectives is performed under the

direction of the Chief Administrative Officer through the following offices: the Controller

and Financial Management and Business Operations, Human Capital, Information Systems

and Technology Services, Infrastructure Operations, the Professional Development Program,

and Field Operations. Assistance on specific key efforts is provided by the Applied Research

and Methods team, and other offices, including Strategic Planning and External Liaison,

Congressional Relations, Opportunity and Inclusiveness, Audit Policy and Quality Assurance,

Public Affairs, and General Counsel. To accomplish our work under these four objectives,

we performed internal studies and completed projects that further the strategic goal. As

shown in table 6 on page 38, our internal operations for services and functions that help

employees get their jobs done and improve the quality of their work life were rated by

Examples of Work under Goal 4

We implemented cost-savings measures by reducing our 

physical infrastructure footprint. Specifically, we piloted 

expanded telework and added office sharing and hoteling 

in two field offices that reduced our physical footprint 

and furthered our efforts to provide work-life balance 

opportunities for employees. Our recent agreements to 

add two additional field offices to the pilot and schedule 

the additional field offices for implementation will result 

in significant economic benefits associated with spacerelated costs and improved flexibility for our staff. We 

also identified a new tenant and successfully negotiated 

a 10-year memorandum of agreement to occupy space in 

our headquarters building; and we moved the Personnel 

Appeals Board (PAB) back into our building, eliminating rent 

and security costs associated with the off-site location. 

We developed a robust analytical business tool that links 

multiple datasets to one authoritative database to enable 

timely and accurate tracking, reporting, and projecting of 

staff resources and costs by coordinating information related 

to salary and benefits with full-time equivalents and payroll 

cost projections. 

Source: See Image Sources.

Maximize the Value of GAO by Enabling Quality, Timely 

Service to the Congress and by Being a Leading Practices 

Federal Agency

Strategic Goal 4
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GAO Performance and Accountability Report 2012

Performance Information 

our staff with scores of 3.98 and 3.99 respectively on a five-point scale. Table 18 provides

examples of goal 4 accomplishments and contributions and additional examples are

included throughout this report.

Table 18: Goal 4 Accomplishments and Contributions

Improve Efficiency and Effectiveness

Enhancing 

Support for 

Conducting, 

Managing, and 

Reporting on 

Our Work

Consistent, repeatable processes. To consolidate and streamline essential

engagement management functions that rely on three outdated, stand-alone

systems, we deployed phase 1 of a new Engagement Management System (EMS),

which is expected to save staff time when locating key engagement-related

information and eliminate the need to store information multiple times in other

databases. Over the next year, EMS will begin to subsume the remaining two

legacy systems. This transformational effort will help us establish standardization

and consistency across the organization to gain significant efficiency advantages

while improving our management reporting and operational execution. We also

launched the Product Metadata Repository (PMR), whose capabilities include

publishing to multiple output formats and enhanced searching across all product

types and content, positioning us to realize efficiencies via consistent, repeatable

processes for creating and formatting electronic reports and other publication

formats.

Workflow. To reduce the administrative and environmental burden associated

with paper-based reviews prior to issuance, our Office of Congressional Relations

transitioned to a new electronic report review process for our unclassified

products. We also consolidated information that was spread across many locations

on our internal website and in our document repository into a single web page

on our intranet to further facilitate analysts’ ability to quickly find critical

engagement-related information.

Communication and outreach. To continue expansion of our digital and social

media presence, we released the GAO iPhone application, providing quick access

to a range of our reports and legal decisions; launched streaming-video web

chats with the public; posted our 100th audio podcast, cumulatively exceeding

250,000 podcast downloads in fiscal year 2012; implemented web analytics to

better understand how visitors to GAO.gov use the site; and conducted web

usability testing to further enhance that understanding with feedback from actual

users. Our Office of Public Affairs is sharing our successful social media outreach

efforts and is briefing other federal agencies on using social media to inform key

audiences and the public.
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GAO Performance and Accountability Report 2012

Performance Information

Monitoring 

Factors 

Affecting 

the Federal 

Government 

and Demands 

for Our Work 

Workload. To address the challenge of significant resource constraints, the

Comptroller General met with 42 Chairs and Ranking Members of standing

committees to glean their opinion of our work, which is extremely positive across

the board, and to emphasize the need to prioritize committee requests for us to

respond to the highest priority needs. As a result, while we continue to be highly

engaged on significant issues facing the Congress and the nation, our outreach

efforts yielded a reduction in our total requests and mandates for fiscal year

2012 by more than 8 percent from fiscal year 2010 levels. In addition, the Senate

recently passed a bill to revise or repeal eight GAO mandates. We are working

with the House to do the same. Five other mandates were also modified in this

Congress in bills that have already passed, and an additional eight revisions or

repeals are in other bills that are currently under consideration.

Internal efficiencies. We instituted biweekly review meetings, led by our

Chief Operating Officer and attended by audit team representatives and other

stakeholders, to discuss a consolidated list of all potential mandates requiring

congressional consultation. We created a database for our Office of Congressional

Relations that allows us to track and compare information on outcomes from one

Congress to the next, and to provide teams expanded information on the status

of the legislation and examples where the potential mandate is repeated in other

legislative vehicles.

Enhance Recruitment, Development, Retention, and Rewards

Strengthening 

Recruiting 

Initiatives 

to Attract 

a Diverse 

Workforce

Recruitment. Limited by constrained resources, we took steps to fill, as needed,

critical positions. We also worked to identify highly qualified candidates to

address our succession plan needs, and attracted and hired a highly diverse group

of candidates. We maintained relationships within our higher-education network

from which we seek assistance and advice on acquiring the best students. We

established the Human Capital Strategic Leadership Board to update our process

for maintaining recruiting relationships. We also implemented a formal Student

Volunteer Program that encourages interest in public service careers, introduces

students to GAO, and provides valuable work experiences that support students’

learning goals. The program is integrated with our workforce planning process

and includes consistent and transparent processes for requesting, approving,

and monitoring student volunteers. Twenty-three students from 11 colleges and

universities participated in the program both in headquarters and four field office

locations in fiscal year 2012.

Development and retention. To ensure succession planning at our highest ranks

and bolster our senior executive pool, we selected 12 candidates to participate

in this year’s Executive Candidate Assessment and Development Program. To

enhance their readiness, we revised their training options and augmented their

on-the-job special assignments. We recently announced the beginning of another

candidate selection program to further enhance our executive corps. To retain

highly qualified staff agencywide, we provided an annual promotion cycle and

promoted staff at all levels.

Improving Our 

Performance 

Management 

Systems

To continue our commitment to ensuring fairness and equity in our performance

management process, we developed new performance competencies, standards,

and related management processes based on employee feedback, working group

analyses, and survey data. These new streamlined competencies and validated

standards will be the basis for our performance framework for fiscal year 2013.

This multi-year effort has resulted in a system designed by our people for our

people, and is expected to address many of the concerns raised about our

performance appraisal system over the years.
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GAO Performance and Accountability Report 2012

Performance Information 

Enhancing 

Efforts to 

Develop the 

Workforce

Financial literacy. To raise awareness, empower staff, and improve access to

information on personal financial matters, we launched an agencywide financial

literacy initiative that included a speakers’ series featuring five experts who

presented to more than 550 staff on topics such as retirement planning and saving

for college; an internal website with links to information on personal finance and

external education resources; and three pilot training courses with about 200

staff, which addressed federal benefits and financial planning for employees in

different stages of their careers. We also have met with other federal agencies

to learn about their programs and to identify best practices and opportunities for

collaboration.

Professional development. To continue to develop and support staff outside

of their primary assignments, we launched a new mentoring framework that

offers 6- and 9-month options and uses a streamlined, web-based application

and matching process. We completed a range of virtual-learning activities to

headquarters, field offices, and telework locations in support of our mobile

workforce.

Work-life balance. We delivered 17 seminars on topics such as stress management

and parenting, and facilitated five employee support groups reaching more than

300 employees.

Supporting 

an Unbiased 

Environment 

That Values 

Opportunity 

and 

Inclusiveness

Governance. To continue our commitment to ensuring an inclusive and inviting

workplace, we created a Human Capital Governance Board responsible for

establishing agencywide human capital objectives; monitoring strategies to

ensure our business needs are met; and leading initiatives related to diversity and

inclusion, learning, recruitment and hiring, pay, and other human capital-related

endeavors.

Learning. We completed agencywide delivery of Part II of our diversity training,

which required units to implement self-established plans for improving inclusion,

communication, and collaboration, and added three new elective workshops on

this topic to our curriculum. To broaden supervisors’ understanding of their legal

responsibilities, we offered two new courses—The Americans with Disabilities Act

and The Prevention of Sexual Harassment Workshop for GAO Managers.

Accessibility. Under the direction of the newly appointed full-time Disability

Program Manager, we improved our processing, tracking, and reporting on

reasonable accommodations in support of our employees. We began issuing

quarterly reports that enabled us to benchmark our progress in providing

reasonable accommodations and meeting the needs of disabled employees. We

responded to over 200 cases with a much improved processing time. In addition,

we ensured that our intranet content meets 508 compliance standards through

a formalized process for creating and posting accessible PDF files and added a

dedicated web page on accessibility compliance to our website.
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GAO Performance and Accountability Report 2012

Performance Information

Expand Networks, Collaborations, and Partnerships

Enhancing 

Professional 

Accounting 

and Auditing 

Standards

Training. After we revised the Government Auditing Standards in 2011, we

provided extensive training through numerous professional audit conferences

to enhance understanding and implementation of the extent and nature of the

revisions. We also collaborated with other standards-setting organizations (e.g.,

the American Institute of CPAs and the Institute of Internal Auditors) to help

assure the consistent convergence of emerging standards on quality audits and

audit reporting.

Outreach. We participated as a member of the international peer review team

reviewing the performance audit function of the Supreme Audit Institution of

India. We presented sessions on professional accounting and auditing standards as

part of the 2012 Biennial Forum of Government Auditors meeting. The domestic

public sector audit community will be able to view videos of these sessions via

the Intergovernmental Audit Forum website.

Enhancing 

Information 

Sharing and 

Collaboration 

with Others to 

Expand Audit 

Knowledge

Information sharing. We organized and hosted a joint meeting of the INTOSAI

Working Group on Public Debt and Global Financial Crisis Task Force that

resulted in identifying areas of collaboration. We hosted major study visits for

counterparts from Jordan, Russia, the United Kingdom, China, and South Africa on

such topics as performance auditing and procurement reform.

Collaboration. Our Chief Operating Officer and the Oregon State Auditor are

co-chairing the task force responsible for updating the National Intergovernmental

Audit Forum’s strategic plan.

Human, Information, Fiscal, Technological, and Physical Resources

Proactively 

Protecting 

Physical and 

Information 

Security

To replace an antiquated, stand-alone security system, we finalized the design for

a system that will facilitate the monitoring and assessment of field office security

from a centralized, headquarters-based location. At the request of the Internal

Revenue Service (IRS), we established Secure Data Transfer, a capability that

enables secure and reliable electronic transmission of IRS documents and data

requested by our analysts.

Leveraging 

Technology 

to Achieve 

Business 

Process 

Improvement 

and Efficiency 

Gains

Workplace tools. We implemented HR Connect as the authoritative source of

personnel records to electronically capture nearly all human capital functions and

processes in the employee life cycle from hiring to separation from the agency,

eliminating the manually intensive, paper-based system. We upgraded to and

trained employees in new versions of word-processing and e-mail software. We

provided enhanced tools such as desktop video-conferencing equipment, voice

over Internet Protocol (VOIP), and a web-based work space reservation system

to support employees participating in expanded telework. We replaced our

outdated and costly-to-maintain mechanical mail metering systems with an online

software system, reducing costs and providing real-time tracking of postagerelated expenditures. We used an electronic software program in headquarters to

identify vacant workspace, report headcount by team or floor, and facilitate move

management, replacing a time-consuming manual process.

Internet access. To facilitate employees’ use of online accessibility software and

to allow visitors to more readily connect to the Internet when leading meetings,

we created wireless hotspots in both headquarters and field offices. To expedite

employees’ ability to perform full-text searches of our products, we added this

capability to our intranet’s search engine, allowing one-stop searching for all

publicly available reports, legal decisions, testimonies, and special publications.
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Performance Information

Improving 

Management 

of Key 

Administrative 

Processes

Time-work reporting. To optimize resource management and better enhance

the linkage between the cost of our work and employees’ reporting of time,

we streamlined our job code structure and supporting electronic systems, and

published revised agencywide job code guidance.

Automated efficiencies. To reduce the human capital burden associated with

several manual processes, we instituted automated systems to purge electronic

records according to our records management retention schedule and improved

the use of our automated hiring solutions system to eliminate redundant data

entry, increase data accuracy, and streamline workflow processes. We upgraded

our budget tracking software to provide greater reporting capabilities, enhanced

site administrator security privileges, and completed integration with the Federal

Procurement Registration System to report all awards over $3,000.

Training. To enhance our contracting program and ensure consistent and accurate

contract oversight agencywide, we established a three-tier certification program

that better reflects the important role of the Contracting Officer Representative

(COR) and recognizes that CORs manage contracts that involve varying degrees of

risk. The requirements include competency-based core training and assignmentspecific training to achieve Level I certification, and additional training and

experience requirements for Level II and III certification. To date, we have

certified a total of 73 staff as COR-eligible and ensured that all active contracts

are managed by a certified COR.

Enhancing 

Informationsharing and 

Collaboration 

with Internal 

Employee 

Organizations

We successfully reached agreement with IFPTE, Local 1921, on many important

initiatives. We reached agreement on an enhanced telework policy in conjunction

with a work space sharing initiative in two field offices to decrease infrastructure

costs and enhance flexibility for employees. As a result, office space in both

locations has officially been turned back to the General Services Administration

(GSA), decreasing our lease costs. We successfully negotiated the next two field

office pilots and the schedule and plan for rolling out the pilot throughout our

field offices. We collaborated with both IFPTE and the Employee Advisory and

Diversity Advisory Committees to create a new internal website, accessible to all

employees, dedicated to further promoting diversity and inclusion. Further, we

reached a successful agreement to proceed with our newly designed performance

appraisal system. We also welcomed the establishment of a new bargaining unit

with the GAO Employee’s Organization, IFPTE, Local 1921, for our administrative

professional and support staff.

Source: GAO.

Data Quality

Verifying and Validating Performance Data

Each year, we measure our performance with indicators of the results of our work, client

service, people management, and internal operations. To assess our performance, we use

actual, rather than projected, data for almost all of our performance measures. We believe

the data are complete and reliable based on our verification and validation procedures

to ensure 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 19 of the Appendix on Data Quality.
Part III

Financial

Information

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
94 GAO-13-2SP

GAO Performance and Accountability Report 2012

From the Chief Financial Officer 

November 15, 2012

The Performance and Accountability Report (PAR) is the main mechanism for us to report on

our financial operations and provide transparency and accountability to the American people.

The financial statements included in the PAR demonstrate our sound stewardship for the

taxpayers’ dollars entrusted to us.

I am pleased to report that we received an unqualified “clean” opinion on our fiscal year

2012 consolidated financial statements for the 26th consecutive year. More importantly, our

independent auditors noted no significant deficiencies in internal control and no compliance

issues. The financial statements that follow were prepared, audited, and made publicly

available as an integral part of this PAR 45 days after the end of the fiscal year. Our fiscal

year 2011 PAR received a certificate of excellence in accountability reporting from the

Association of Government Accountants, an honor we have received each year since we first

applied in fiscal year 2001, and a Best in Class Award for providing the “Most Comprehensive

and Candid Presentation of Forward Looking Information” in our PAR.

Like most federal agencies, our operations were strained by the fiscal challenges facing the

nation, with significant reductions enacted in our funding levels during fiscal years 2010

and 2011. Operating within these challenges we continued actions to reduce administrative

expenses, streamline our operations, and leverage technology to improve the efficiency and

effectiveness of our operations. For example, during fiscal year 2012 we began optimizing

our physical footprint, both in headquarters and the field. In the field we implemented an

extended telework pilot and began using hoteling arrangements similar to the private sector.

In headquarters, we strategically optimized office space that enabled us to attract a new

tenant and that will begin to generate revenue to help offset our costs in fiscal year 2013. In

addition, we began expanding the use of technology, such as desktop videoconferencing, to

help reduce travel costs and enhance communication across distances, both internally and

with other agencies. These initiatives are expected to generate significant long-term financial

benefits for us.

To improve the efficiency of our mission work, we took several significant steps to more

effectively use staff time and leverage technology. For example, we established Secure Data

Transfer, an IRS-requested capability that enables secure and reliable electronic transmission

of IRS documents and data requested by our analysts. We eliminated unnecessary system

constraints in a key management system by launching a new Engagement Management System

(EMS) that provides all staff access to key engagement-related information such as scanned

copies of request and acceptance letters used to develop the agendas for our meetings

Source: GAO.

From the

Chief Financial Officer
GAO-13-2SP 95

GAO Performance and Accountability Report 2012

From the Chief Financial Officer

where we review and accept incoming engagement requests and mandates. Open access to

this information is expected to save staff time when locating key information at the start of

an engagement, and eliminate the need to store these documents multiple times in other

databases. Over the next 12 months, EMS will begin to subsume the functions currently

performed by two other legacy systems and will result in substantial time-saving benefits to

analysts and managers.

Our financial management system continues to be centered on Oracle Federal Financials,

hosted and supported by the Enterprise Services Center (ESC) at the Department of

Transportation. ESC maintains the accounting system and performs the bulk of our daily

transaction processing. Our Financial Management Office will begin working with ESC in fiscal

year 2013 to upgrade Oracle Federal Financials to the version 12 platform. During fiscal year

2013 in collaboration with ESC, we will begin to implement the latest eGov Travel System

recently awarded by the General Services Administration. These upgrades are expected to

provide us with improved reporting capabilities and tracking of travel expenditures.

In the area of internal controls, although not required by law to do so, we continue to

perform testing consistent with the Office of Management and Budget Circular A-123,

Management’s Responsibility for Internal Control. This year we tested all key business cycles

such as financial reporting and payroll. To ensure the integrity of financial transactions

data and that appropriate levels of authorizations occurred, we tested the life-cycle of

transactions from initial request and procurement, through receipt of the goods and services

to payment. We also reviewed the independent auditors’ reports of the “Design and

Operating Effectiveness of Controls” for our service providers to ensure that we were able to

proactively address any issues with appropriate compensating controls.

In addition, we revamped our Contracting Officer’s Representative (COR) program,

establishing a risk-based certification program consistent with Office of Federal Procurement

Policy guidance. The program better reflects the important role of the COR in the

procurement process and recognizes that CORs manage contracts that involve varying degrees

of risk. The certification program is designed to promote continued development of essential

business and technical competencies for CORs. The requirements include competency-based

core training and assignment-specific training to achieve Level I certification, and additional

training and experience requirements for Level II and III certifications. As of September 30,

2012, all of our active contracts had a certified COR assigned to manage the contract.

All of these efforts contributed to our independent auditors providing a favorable opinion

on the effectiveness of our internal controls again this year. Going forward, we will continue

to implement important initiatives throughout the agency to improve the performance of

our operations and the accountability of our employees. By focusing on measured results we

can further our ability to meet the highest priority needs of the Congress and maintain the

quality, timeliness and usefulness of our reports, testimonies, briefings and other products

and services.

David M. Fisher

Chief Financial Officer
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Audit Advisory Committee’s Report 

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, its Inspector

General, and its 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 Inspector General 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 Inspector General 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 2012

Performance and Accountability Report.

Judith H. O’Dell CPA CVA

Chair

Audit Advisory Committee
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Independent Auditor’s Report

CliftonLarsonAllen LLP

www.cliftonlarsonallen.com

Independent Auditor’s Report

Comptroller General of the United States

We have audited the accompanying balance sheets of the Government Accountability Office 

(GAO) as of September 30, 2012 and 2011, and the related statements of net cost and changes 

in net position, and the statements of budgetary resources (“financial statements”) for the years 

then ended. The objective of our audit was to express an opinion on the fairness of these 

financial statements. We have also examined GAO’s internal control over financial reporting, 

and GAO’s compliance with applicable requirements of the Federal Financial Management 

Improvement Act of 1996 (FFMIA). In connection with our audit, we also considered GAO’s

compliance with selected provisions of laws and regulations. In our audit, 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 (U.S.);

• GAO maintained, in all material respects, effective internal control over financial 

reporting;

• GAO’s financial management systems substantially complied with the applicable 

requirements of the Federal Financial Management Improvement Act of 1996 (FFMIA); 

and

• No reportable noncompliance with selected provisions of laws and regulations tested.

The following sections discuss in more detail (1) these conclusions, (2) Management’s 

Discussion and Analysis (MD&A) and other accompanying information, (3) management’s 

responsibility for the financial statements, and (4) our responsibility for the audit.

Opinion on Financial Statements

In our opinion, the financial statements referred to above present fairly, in all material respects, 

the financial position of GAO as of September 30, 2012 and 2011, and its net costs; changes in 

net position; and budgetary resources for the years then ended in conformity with accounting 

principles generally accepted in the U.S.

Opinion on Internal Control

In our opinion, GAO maintained, in all material respects, effective internal control over financial 

reporting as of September 30, 2012, that provided reasonable assurance that misstatements, 

losses, or noncompliance material in relation to the financial statements would be prevented or 

detected and corrected 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). 

We noted certain nonreportable matters that we communicated to GAO management in a 

separate letter dated November 9, 2012. 
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Opinion on FFMIA Compliance

In our opinion, GAO’s financial management systems, as of September 30, 2012, 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 for federal financial management systems, accounting principles generally 

accepted in the U.S., and the SGL.

Compliance with Laws and Regulations 

In connection with our audit, we performed tests of GAO’s compliance with selected provisions 

of laws and regulations. The results of our tests for fiscal year 2012 disclosed no instances of 

noncompliance that are required to be reported in accordance with Government Auditing 

Standards, issued by the Comptroller General of the United States. However, the objective of 

our audit was not to provide an opinion on compliance with laws and regulations except for 

FFMIA referred to above. Accordingly, we do not express such an opinion.

This conclusion on laws and regulations is intended solely for the information and use of GAO’s 

management, Audit Advisory Committee and Office of Inspector General, OMB, and the U.S. 

Congress, and is not intended to be, and should not be, used by anyone other than these 

specified parties.

Other Information

Accounting principles generally accepted in the U.S. require that GAO’s MD&A included as Part 

I of the Performance and Accountability Report (PAR) be presented to supplement the financial 

statements. Such information, although not a part of the financial statements, is required by the 

Federal Accounting Standards Advisory Board, which considers it to be an essential part of 

financial reporting for placing the financial statements in an appropriate operational, economic, 

or historical context. We have applied certain limited procedures to the MD&A in accordance 

with auditing standards generally accepted in the U.S., which consisted of inquiries of 

management about the methods of preparing the information and comparing the information for 

consistency with management's responses to our inquiries, the financial statements, and other 

knowledge we obtained during our audit of the financial statements. We do not express an 

opinion or provide any assurance on the information because the limited procedures do not 

provide us with sufficient evidence to express an opinion or provide any assurance.

Other information included in the PAR, other than the basic financial statements, MD&A, and 

the auditor’s report, is presented for additional analysis and is not a required part of the basic 

financial statements. Such information has not been subjected to the auditing procedures 

applied in the audit of the basic financial statements, and accordingly, we do not express an 

opinion or provide any assurance on it.

Management’s Responsibility for the Financial Statements

An entity’s internal control over financial reporting is a process effected by those charged with 

governance, management, and other personnel, the objectives of which are to provide 

reasonable assurance that (1) transactions are properly recorded, processed, and summarized 

to permit the preparation of financial statements in accordance with accounting principles 

generally accepted in the U.S., (2) assets are safeguarded against loss from unauthorized 
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acquisition, use, or disposition, and (3) transactions are executed in accordance with laws and 

regulations that could have a direct and material effect on the financial statements.

Management is responsible for (1) preparing the financial statements in conformity with 

accounting principles generally accepted in the U.S., (2) preparing and presenting other 

information in documents containing the audited financial statements and auditor’s report, and 

ensuring the consistency of that information with the audited financial statements, (3) designing, 

implementing, and maintaining effective internal control over financial reporting, and evaluating 

its effectiveness, (4) ensuring that GAO’s financial management systems substantially comply 

with FFMIA requirements, and (5) complying with applicable laws and regulations. GAO 

management evaluated the effectiveness of GAO’s internal control over financial reporting as of 

September 30, 2012, based on criteria established under FMFIA. GAO management’s assertion 

is included in the Introduction section of the PAR. 

Auditor’s Responsibility

We are responsible for conducting our audits in accordance with auditing standards generally 

accepted in the U.S.; the standards applicable to the financial audits contained in Government 

Auditing Standards, issued by the Comptroller General of the United States. We are responsible 

for planning and performing the audit to obtain reasonable assurance and provide our opinion 

about whether (1) the financial statements are presented fairly, in all material respects, in 

conformity with accounting principles generally accepted in the U.S., (2) GAO management 

maintained, in all material respects, effective internal control over financial reporting as of 

September 30, 2012, and (3) GAO’s financial management systems substantially comply with 

the three FFMIA requirements. We are also responsible for (1) testing compliance with selected 

provisions of laws and regulations that have a direct and material effect on the financial 

statements and applicable laws for which OMB Bulletin 07-04, Audit Requirements for Federal 

Financial Statements, as amended (OMB Bulletin 07-04), requires testing, and (2) performing 

limited procedures with respect to other information appearing in the published PAR.

In order to fulfill these responsibilities, we (1) examined, on a test basis, evidence supporting the 

amounts and disclosures in the financial statements; (2) assessed the appropriateness of the 

accounting policies used and the reasonableness of significant estimates made by 

management; (3) evaluated the overall presentation of the financial statements; (4) obtained an 

understanding of GAO and its operations, including its internal control over financial reporting; 

(5) assessed the risk that a material misstatement exists in the financial statements and that a 

material weakness exists in internal control over financial reporting; (6) evaluated the design 

and operating effectiveness of internal control over financial reporting based on the assessed 

risk; (7) tested the operating effectiveness of relevant internal control over financial reporting; (8) 

considered GAO’s process for evaluating and reporting on internal control over financial 

reporting under FMFIA and financial management systems under FFMIA; (9) tested whether 

GAO’s financial management systems substantially complied with the three FFMIA 

requirements referred to above; (10) tested compliance with selected provisions of the laws and 

regulations; (11) read the other information included with the financial statements in order to 

identify material inconsistencies, if any, with the audited financial statements; and (12) 

performed such other procedures as we considered necessary in the circumstances. The 

procedures selected depend on the auditors’ judgment, including our assessment of risks of 

material misstatement of the financial statements, whether due to fraud or error. 

We did not evaluate all internal controls relevant to operating objectives as broadly defined by

FMFIA, such as those controls relevant to preparing statistical reports and ensuring efficient 
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operations. We limited our internal control testing to controls over financial reporting and 

compliance. Because of inherent limitations in internal control, misstatements due to error or 

fraud, losses, or noncompliance may nevertheless occur and not be detected. We also caution 

that projecting our audit results to future periods is subject to risk that controls may become 

inadequate because of changes in conditions or that the degree of compliance with controls 

may deteriorate. 

We did not test compliance with all laws and regulations applicable to GAO. We limited our tests 

of compliance to selected provisions of laws and regulations that have a direct and material 

effect on the financial statements and those required by OMB Bulletin 07-04 that we deemed 

applicable to GAO’s financial statements for the fiscal year ended September 30, 2012. We 

caution that noncompliance with laws and regulations may occur and not be detected by these 

tests and that such testing may not be sufficient for other purposes. Also, our work on FFMIA 

would not necessarily disclose all instances of noncompliance with FFMIA requirements.

We performed our audit in accordance with government auditing standards generally accepted 

in the U.S. We believe that our audit provides a reasonable basis for our opinions and 

a 

conclusions.

Calverton, Maryland

November 9, 2012
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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.
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Financial Information 

Financial Statements

U.S. Government Accountability Office

Balance Sheets

As of September 30, 2012 and 2011

(Dollars in thousands)

2012 2011 

Assets

Intragovernmental

Funds with the U.S. Treasury (Note 3) $85,341 $84,253 

Accounts receivable 5,138 3,820 

Total Intragovernmental 90,479 $88,073 

Property and equipment, net (Note 4) 31,388 36,745 

Other 578 504 

Total Assets $122,445 $125,322 

Liabilities

Intragovernmental

Accounts payable and other $5,619 $7,700 

Advances from others (Note 8) 2,233 588 

Employee benefits (Note 6) 4,380 4,632 

Workers' compensation (Note 7) 2,637 2,554 

Total Intragovernmental 14,869 15,474 

Accounts payable and other 10,834 17,249 

Salaries and benefits (Note 6) 22,288 24,375 

Accrued annual leave (Note 5) 31,067 32,241 

Workers' compensation (Note 7) 15,959 16,181 

Capital leases (Note 9) 2 23 

Note payable (Note 5) 2,198 2,931 

Total Liabilities 97,217 108,474 

Net Position

Unexpended appropriations 31,496 29,701 

Cumulative results of operations (6,268) (12,853)

Total Net Position (Note 13) 25,228 16,848 

Total Liabilities and Net Position $122,445 $125,322 

The accompanying notes are an integral part of these statements.
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Financial Statements

U.S. Government Accountability Office

Statements of Net Cost

For Fiscal Years Ended September 30, 2012 and 2011

(Dollars in thousands)

2012 2011 

Net Costs by Goal (Note 2)

Goal 1: Well-being/Financial Security of American People $216,771 $239,330 

Less: reimbursable services (1,169) (2,089)

Net goal costs 215,602 237,241 

Goal 2: Changing Security Threats/Challenges of Global 

 Interdependence

132,581 141,270 

Less: reimbursable services - - 

Net goal costs 132,581 141,270 

Goal 3: Transforming the Federal Government’s Role 161,839 168,884 

Less: reimbursable services (21,659) (12,006)

Net goal costs 140,180 156,878 

Goal 4: Maximize the Value of GAO 18,555 19,865 

Less: reimbursable services - - 

Net goal costs 18,555 19,865 

Other Costs in Support of the Congress 25,672 22,600 

Less: reimbursable services (1,205) (1,205)

Net goal costs 24,467 21,395 

Less: reimbursable services not attributable to above 

cost categories (7,253) (7,152)

Net Cost of Operations (Note 10) $524,132 $569,497 

The accompanying notes are an integral part of these statements.
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Financial Information 

Financial Statements

U.S. Government Accountability Office

Statements of Changes in Net Position

For Fiscal Years Ended September 30, 2012 and 2011

(Dollars in thousands)

2012 2011 

Cumulative Results of Operations, Beginning of fiscal year ($12,853) ($17,544)

Budgetary Financing Sources - Appropriations used 505,633 543,327 

Other Financing Sources

Federal employee retirement benefit costs paid by OPM 

and imputed to GAO (Note 6) 25,084 30,861 

Total Financing Sources 530,717 574,188 

Net Cost of Operations (524,132) (569,497)

Net Change 6,585 4,691 

Cumulative Results of Operations, End of fiscal year (6,268) (12,853)

Unexpended Appropriations, Beginning of fiscal year 29,701 28,531 

Budgetary Financing Sources and Uses

Current year appropriations received 511,296 547,349 

Appropriations transferred in (Note 11) 250 - 

Appropriations permanently not available (4,118) (2,852)

Appropriations used (505,633) (543,327)

Total Unexpended Appropriations, End of fiscal year 31,496 29,701 

Net Position $25,228 $16,848 

The accompanying notes are an integral part of these statements.
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Financial Statements

U.S. Government Accountability Office

Statements of Budgetary Resources

For Fiscal Years Ended September 30, 2012 and 2011

(Dollars in thousands)

2012 2011 

Budgetary Resources (Note 11)

Unobligated balance, brought forward October 1 $18,894 $10,838 

Recoveries of prior year unpaid obligations 10,509 7,361 

Other changes in unobligated balance (4,118) (1,757)

Unobligated balance from prior year budget authority, net 25,285 16,442 

Appropriations 511,296 546,254 

Transfers in 250 - 

Spending authority from offsetting collections 37,967 28,821 

Total Budgetary Resources $574,798 $591,517 

Status of Budgetary Resources

Obligations incurred $542,804 $572,623 

Unobligated balance, end of year:

Apportioned 9,737 8,479 

Unapportioned 22,257 10,415 

Unobligated balance, end of year 31,994 18,894 

Total Status of Budgetary Resources $574,798 $591,517 

Change in Obligated Balances

Obligated balance, net:

Unpaid obligated balance, brought forward October 1 $73,783 $78,264 

Uncollected customer payments from federal sources, 

 brought forward October 1 (8,413) (846)

Total, unpaid obligation, net, brought forward October 1 65,370 77,418 

Obligations incurred 542,804 572,623 

Gross outlays (538,665) (569,743)

Change in uncollected customer payments from federal sources (5,650) (7,567)

Recoveries of prior-year unpaid obligations, actual (10,509) (7,361)

Obligated balance, net, end of year

Unpaid obligations, end of year 67,413 73,783 

Uncollected customer payments from federal sources (14,063) (8,413)

Obligated balance, net, end of year $53,350 $65,370 

Budget Authority and Outlays, Net

Budget authority, gross $549,513 $576,170 

Actual offsetting collections (32,317) (21,254)

Change in uncollected customer payments from federal sources (5,650) (7,567)

Budget authority, net $511,546 $547,349 

Outlays, gross $538,665 $569,743 

Actual offsetting collections (32,317) (21,254)

Outlays, net $506,348 $548,489 

The accompanying notes are an integral part of these statements.
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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 as well as revenue

from reimbursable audit services and rental income. The revenue from audit services and

rental income is presented on the statements of net cost as “reimbursable services” and

included as part of “spending authority from offsetting collections earned and collected”

on the statements of budgetary resources. The financial statements, except for federal

employee benefit costs paid by the Office of Personnel Management (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. The Davis-Bacon Act trust’s assets, related liabilities,

revenues, and costs related to beneficiary payments are not those of GAO and therefore

are not included in the accompanying financial statements. See Note 14, Davis-Bacon Act

Trust Function.

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, as amended.

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 sheets.

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.
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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 sheets. The

building’s designation as a 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 deaths
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are attributable to job-related injury or occupational disease. Claims incurred for benefits

for GAO employees under FECA are administered by the Department of Labor (DOL) and

are paid, ultimately, by GAO (see Note 7).

GAO recognizes a current-period expense for the future cost of postretirement 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 as a

financing source on the statements of changes in net position and are also included as a

component of net cost by goal on the statements 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

taken.

Contingencies

GAO has certain claims and lawsuits pending against it. GAO’s policy is to include provision

in the 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.

Reclassifications

Certain prior year amounts in the Statements of Net Cost have been reclassified to conform

to the current year presentation. See Note 10 for further discussion.
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Note 2. Intragovernmental and Public 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 nonfederal entity. Intragovernmental and public costs and exchange

revenue for the periods ended September 30, 2012, and September 30, 2011, are as follows:

Dollars in thousands

 2012 2011

Goal 1: Well-being/Financial Security of American People

Intragovernmental costs $52,140 $56,252

Public costs 164,631 183,078

Total goal 1 costs 216,771 239,330

Goal 1 intragovernmental earned revenue (1,169) (2,089)

Net goal 1 costs 215,602 237,241

Goal 2: Changing Security Threats/Challenges of Global Interdependence

Intragovernmental costs 31,896 33,733

Public costs 100,685 107,537

Total goal 2 costs 132,581 141,270

Goal 3: Transform the Federal Government to Address National Challenges

Intragovernmental costs 43,266 36,100

Public costs 118,573 132,784

Total goal 3 costs 161,839 168,884

Goal 3 intragovernmental earned revenue (21,659) (12,006)

Net goal 3 costs 140,180 156,878

Goal 4: Maximize the Value of GAO

Intragovernmental costs 3,516 5,368

Public costs 15,039 14,497

Total goal 4 costs 18,555 19,865

Other costs in support of the Congress

Intragovernmental costs 24,779 22,402

Public costs 893 198

Total other costs 25,672 22,600

Related intragovernmental earned revenue (1,205) (1,205)

Net other costs 24,467 21,395

Earned revenue not attributable to above cost categories

Intragovernmental (7,023) (6,983)

Public (230) (169)

Total earned revenue not attributable to above cost categories $(7,253) $(7,152)

Goals 2 and 4 have no associated intragovernmental revenues and all public earned

revenue collected is not attributable to goals or other costs.
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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, 2012, and September 30, 2011, is as follows:

Dollars in thousands

2012 2011

Unobligated balance

Available $9,737 $8,479

Unavailable 22,254 10,404

Obligated balances not yet disbursed 53,350 65,370 

Total funds with U.S. Treasury $85,341 $84,253

Note 4. Property and Equipment, Net

The composition of property and equipment as of September 30, 2012, is as follows:

Dollars in thousands

Classes of property and equipment Acquisition value Accumulated depreciation Book value

Building $15,664 $15,038 $626

Land 1,191 – 1,191

Building improvements 125,336 104,716 20,620

Computer and other

equipment and software 62,686 53,799 8,887

Leasehold improvements 4,345 4,281 64

Total property and equipment $209,222 $177,834 $31,388

Depreciation expense for property and equipment for fiscal year 2012 amounted to $8,419,000.

The composition of property and equipment as of September 30, 2011, is as follows:

Dollars in thousands

Classes of property and equipment Acquisition value Accumulated depreciation Book value

Building $15,664 $14,411 $1,253

Land 1,191 – 1,191

Building improvements 122,900 100,825 22,075

Computer and other

equipment and software 62,922 50,814 12,108

Leasehold improvements 4,340 4,222 118

Total property and equipment $207,017 $170,272 $36,745

Depreciation expense for property and equipment for fiscal year 2011 amounted to

$10,125,000.
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Note 5. Liabilities Not Covered by Budgetary Resources

The liabilities on GAO’s balance sheets as of September 30, 2012, and September 30,

2011, 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, 2012, and September 30, 2011, is

as follows:

Dollars in thousands

 2012 2011

Intragovernmental liabilities—Workers’ compensation $2,637 $2,554

Salaries and benefits—Comptrollers’ General retirement plan* 1,386 1,431

Accrued annual leave 31,067 32,241

Workers’ compensation** 15,959 16,181

Note payable 2,198 2,931 

Total liabilities not covered by budgetary resources $53,247 $55,338

* See Note 6 for further discussion of the Comptrollers’ General retirement plan.

** See Note 7 for further discussion of workers’ compensation.

In fiscal year 2011 GAO entered into an agreement to finance the replacement of the

building’s hot water boilers under the Federal Energy Management Program following

Section 201(a)(3) of the Federal Property Act. Financing guidance under this program allows

participating agencies to obligate only the annual payments. The balance of the note

payable is scheduled to be paid in fiscal years 2013 through 2015 with annual payments,

including interest, of approximately $733,000.

Note 6. Federal Employee Benefits

All permanent employees participate in either 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 Benefit Program (FEHBP) and the Federal Employees Group Life

Insurance (FEGLI) Program and may continue to participate after retirement. GAO makes

contributions through OPM to FEHBP and FEGLI 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.
112 GAO-13-2SP

GAO Performance and Accountability Report 2012

Financial Information 

Amounts owed to OPM and Treasury as of September 30, 2012, and September 30, 2011,

are $4,380,000 and $4,632,000, respectively, for FEHBP, FEGLI, FICA, FERS, and CSRS

contributions and are shown on the balance sheets as an employee benefits liability.

Details of the major components of GAO’s federal employee benefit costs for the periods

ended September 30, 2012, and September 30, 2011, are as follows:

Dollars in thousands

Federal employee benefits costs 2012 2011

Federal employee retirement benefit costs paid by OPM and imputed to GAO:

Estimated future pension costs (CSRS/FERS) $9,519 $13,444 

Estimated future postretirement health and life insurance (FEHBP/FEGLI) 15,565 17,417 

Total $25,084 $30,861

Pension expenses (CSRS/FERS) $36,538 $37,971

Health and life insurance expenses (FEHBP/FEGLI) $20,434 $20,640

FICA and Medicare payments made by GAO $19,788 $20,762 

Thrift Savings Plan – matching contribution by GAO $12,937 $13,188

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. Because GAO is responsible for future

payments under this plan, the estimated present value of accumulated plan benefits of

$1,386,000 as of September 30, 2012, and $1,431,000 as of September 30, 2011, is included

as a component of salary and benefit liabilities on GAO’s balance sheets. The following

summarizes the changes in the actuarial liability for current plan year:

Dollars in thousands

Actuarial liability as of September 30, 2011 $1,431

Expense:

Interest on the liability balance 57

Actuarial loss:

From experience 34

From assumption changes 34

Total gain 125

Less benefits paid (170)

Actuarial liability as of September 30, 2012 $1,386
GAO-13-2SP 113

GAO Performance and Accountability Report 2012

Financial Information

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, 2012, and September 30, 2011, which is expected to be paid in future periods. This

estimated liability of $15,959,000 and $16,181,000 as of September 30, 2012, and September

30, 2011, respectively, is reported on GAO’s balance sheets. GAO also recorded a liability

for amounts paid to claimants by DOL as of September 30, 2012, and September 30, 2011,

of $2,637,000 and $2,554,000, respectively, but not yet reimbursed to DOL by GAO. The

amount owed to DOL is reported on GAO’s balance sheets as an intragovernmental liability.

Note 8. Building Lease Revenue

In fiscal year 2011 GAO entered into a 10-year lease agreement with U.S. Army Corps of

Engineers (USACE) to continue to lease the entire third floor, and part of the sixth floor, of

the GAO building. The period of this new agreement began with fiscal year 2011 with an

option to renew each year through fiscal year 2020. Total rental revenue to GAO includes a

fixed base rent plus operating expense reimbursements, with escalation clauses each year,

if the option years are exercised.

In fiscal year 2012 GAO entered into a new 10-year lease with the Department of Justice

(DOJ) to lease part of the first and sixth floors of the GAO headquarters building. The period

of this new lease begins in fiscal year 2012 with an option to renew each year through fiscal

2022. The space will be ready for occupancy in fiscal year 2013. In fiscal year 2012, GAO

received $2,175,000 from DOJ as advance payment for construction which as of September

30, 2012, had not been completed. The balance sheet reflects this payment as the majority

of the intragovernmental liability line “Advances from others” in fiscal year 2012.

Rent received from USACE by GAO for fiscal years 2012 and 2011 was $6,852,000 and

$6,845,000, respectively. These amounts are included in reimbursable services shown

on the statements of net cost as “reimbursable services not attributable to above cost

categories.” Total rental revenue for the future periods from both USACE and DOJ is as

follows:

Dollars in thousands

Fiscal year ending September 30 Total projected receipts*

2013 $8,559

2014 9,178

2015 9,283

2016 9,395

2017 9,507

2018 - 2022 33,644

Total $79,566

*If option years are exercised.
114 GAO-13-2SP

GAO Performance and Accountability Report 2012

Financial Information 

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, 2012, and September 30, 2011, the capital lease

liability was $2,000 and $23,000, respectively. In fiscal year 2012, GAO paid off balances of

the majority of these capital leases.

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 negotiation between the parties. These leases

are lease-to-ownership agreements. GAO’s leases are short term in nature and no liability

exists beyond fiscal year 2013. GAO has estimated future minimum lease payments under

the terms of the leases in fiscal year 2013 of $2,000.

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 2012 and fiscal year 2011 amounted to approximately $12,670,000 and

$12,619,000, respectively. Leases for equipment under operating leases are generally

for less than 1 year; therefore there are no associated future minimum lease payments.

Estimated future minimum lease payments for field office space under the current terms of

the leases are presented in the table below. We anticipate that renegotiations underway

will result in reductions of future lease payments.

Dollars in thousands

Fiscal year ending September 30 Total

2013 $8,081

2014 6,059

2015 4,419

2016 2,936

2017 2,982

2018 and thereafter 2,565 

Total estimated future lease payments $27,042

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 in the statements of net cost.
GAO-13-2SP 115

GAO Performance and Accountability Report 2012

Financial Information

Note 10. Net Cost of Operations

Expenses for salaries and related benefits for fiscal year 2012 and fiscal year 2011

amounted to $426,429,000 and $467,064,000, respectively, about 81 and 82 percent of

GAO’s net cost of operations for fiscal years 2012 and 2011, respectively. Included in the

net cost of operations are federal employee benefit costs paid by OPM and imputed to GAO

of $25,084,000 in fiscal year 2012 and $30,861,000 in fiscal year 2011.

Revenues from reimbursable services are shown as an offset against the full cost to

arrive at net cost. Earned revenues that are insignificant or cannot be associated with a

major goal or other cost category 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 2012 and fiscal year 2011 amounted to $31,286,000 and $22,452,000,

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 statements of changes in net position.

In fiscal year 2012, “Other costs in support of the Congress” were separately disclosed

on the Statement of Net Costs. This new cost category presentation represents costs

of work which directly supports Congress and which represents GAO’s fulfillment of its

statutory responsibilities but which is not engagement specific. Examples of this work

include support of the Federal Accounting Standards Advisory Board, General Counsel

statutory procurement activities, recommendation follow up work and other direct

support to Congress. Prior year amounts were reclassified to conform to the current year

presentation. Previously, this work was not separately disclosed but rather was allocated to

the other cost categories.

Note 11. Budgetary Resources

Budgetary resources available to GAO during fiscal year 2012 include current year

appropriations, prior years’ unobligated balances, reimbursements earned by GAO from

providing goods and services to other federal entities for a price (reimbursable services),

and cost-sharing arrangements with other federal entities.

Earned reimbursements consist primarily of rent collected from USACE for lease of space

and related services in the GAO headquarters building and program and financial audits

of federal entities, including components of the Department of the Treasury, Securities

and Exchange Commission, Federal Deposit Insurance Corporation, Consumer Financial

Protection Bureau, and Federal Housing Finance Agency. Earned revenue from rent is

available indefinitely, subject to annual obligation ceilings, and must be used to offset the

cost of operating and maintaining the GAO headquarters building. Reimbursements from

program and financial audits are available without limitations on their use and may be

subject to annual obligation ceilings. GAO’s pricing policy for reimbursable services is to

seek reimbursement for actual costs incurred, including overhead costs where allowed by

law.
116 GAO-13-2SP

GAO Performance and Accountability Report 2012

Financial Information 

Fiscal years 2012 budgetary resources include $250,000 of budget authority transfer to

GAO’s Inspector General Office to carry out the duties of the Inspector General of the

Commission on Civil Rights. During fiscal year 2011 there were no transfers of budget

authority.

Comparison of GAO’s fiscal year 2011 statement of budgetary resources with the

corresponding information presented in the 2013 President’s Budget is as follows:

Dollars in thousands

Budgetary resources Obligations incurred

Fiscal year 2011 statement of budgetary resources $591,517 $572,623

Unobligated balances, beginning of year – (funds activity, 

expired accounts) (4,037) -

Recovery of prior year unpaid obligations (7,361) -

Obligations incurred – expired years - (4,819)

Permanently not available –(funds activity, expired accounts) 1,757 -

Spending authority from offsetting collections (funds activity, 

expired accounts) (2,154) -

Other – rounding in President’s Budget 278 196 

2013 President’s Budget – fiscal year 2011, actual $580,000 $568,000

As the fiscal year 2014 President’s Budget will not be published until February 2013, a

comparison between the fiscal year 2012 data reflected on the statement of budgetary

resources and fiscal year 2012 data in the President’s Budget cannot be performed, though

we expect similar differences will exist. The fiscal year 2014 President’s Budget will be

available on the OMB’s website and directly from the Government Printing Office.

Budgetary resources obligated for undelivered orders at the end of fiscal year 2012 and

the end of fiscal year 2011 totaled $25,682,000 and $21,269,000, respectively. GAO’s

apportionments fall under Category A, quarterly apportionment. Apportionment categories

of obligations incurred for fiscal years 2012 and 2011 are as follows:

Dollars in thousands

Fiscal year ending September 30 2012 2011

Direct – Category A $521,026 $550,308

Reimbursable – Category A 21,778 22,315 

Total obligations incurred $542,804 $572,623
GAO-13-2SP 117

GAO Performance and Accountability Report 2012

Financial Information

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, 2012 and 2011, are as follows:

Dollars in thousands

Fiscal year ending September 30 2012 2011

Resources used to finance activities

Budgetary resources obligated

Obligations incurred $542,804 $572,623

Less: spending authority from offsetting collections and recoveries (48,476) (36,182)

Obligations net of offsetting collections and recoveries 494,328 536,441 

Other resources

Federal employee retirement benefit costs paid by OPM imputed to GAO 25,084 30,861 

Net other resources used to finance activities 25,084 30,861 

Total resources used to finance activities 519,412 567,302 

Resources used to finance items not part of the net cost of operations

Change in undelivered orders and unfilled customer orders 1,560 8,432

Net (decrease)/increase in lease liability and other (754) 317

Assets capitalized (3,268) (14,057)

Net decrease/(increase) in receivables not generating resources until 

collected and other adjustments 119 (154) 

Total resources used to fund items not part of the net cost of operations (2,343) (5,462)

Total resources used to finance net cost of operations 517,069 561,840 

Components of net costs that will not require or generate resources in 

the current period

(Decrease)/increase in workers’ compensation (139) 898

Decrease in accrued annual leave (1,173) (2,937)

Decrease in other liabilities (45) (447)

Total components of net costs that will not (generate) or require 

resources in the current period (1,357) (2,486)

Costs that do not require resources

Depreciation and other 8,420 10,143 

Net cost of operations $ 524,132 $569,497
118 GAO-13-2SP

GAO Performance and Accountability Report 2012

Financial Information 

Note 13. Net Position

Net position on the balance sheets comprises unexpended appropriations and cumulative

results of operations. Unexpended appropriations are 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 fiscal years ended September

30, 2012, and 2011, are as follows:

Dollars in thousands

2012 2011

Investment in property and equipment, net $31,388 $36,745

Net reimbursable funds activity 15,093 5,355

Other – supplies inventory and accounts receivable from public 498 385

Liabilities not covered by budgetary resources (53,247) (55,338)

Cumulative results of operations ($6,268) ($12,853)

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 revenue and costs related to beneficiary payments and prepares separate,

audited financial schedules 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, DOL investigates violation allegations to determine if federal contractors owe

additional wages to covered employees. If DOL 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 claimant. GAO is

accountable to the Congress and to the public for the proper administration of the assets

held in the trust. Trust assets and liabilities under GAO’s administration as of September

30, 2012 and 2011, totaled approximately $4,726,000 and $5,037,000, respectively. These

assets are not the assets of GAO or the federal government and are held for distribution

to appropriate claimants. Revenues and costs related to beneficiary payments in the trust

amounted to $806,000 in fiscal year 2012 and $1,264,000 in fiscal year 2011.
GAO-13-2SP 119

GAO Performance and Accountability Report 2012

Financial Information

Other Accompanying Information

Consistent with OMB Circular No. A-136 requirements, we are including a new unaudited

Schedule of Spending (Schedule) in Other Accompanying Information for the year ended

September 30, 2012 following our audited financial statements and notes. The Schedule

presents an overview of how we are spending money on a budgetary basis, and is not

meant to agree to the cost information on the Statement of Net Cost, which presents

accrual based proprietary information. The data used to populate the Schedule is the same

underlying data used to populate the Statement of Budgetary Resources. The amounts in

the Schedule agree with the budgetary resources, obligations incurred, and gross outlays

reported in the Statement of Budgetary Resources.
120 GAO-13-2SP

GAO Performance and Accountability Report 2012

Financial Information

U.S. Government Accountability Office

Schedule of Spending for the Fiscal Year Ended September 30, 2012

(Dollars in thousands)

UNAUDITED

2012 

What Money is Available to Spend?

Direct appropriations $511,296 

Offsetting collections 37,967 

Recoveries and other changes in prior year unobligated balances 25,285 

Transfers in from other agencies 250 

Total Resources 574,798 

Less: amount available but not agreed to be spent (9,737)

Less: amount not available to be spent (22,257)

Total Amounts Agreed to be Spent $542,804 

How was the Money Spent?

Direct Funds

Personnel

Salaries and benefits $416,127 

Training 3,478 

Operations

IT services and equipment 52,054 

Buildings and equipment 18,875 

Travel 7,071 

Contractual services (non-IT) 20,620 

Total Direct Funds Spending $518,225 

Reimbursable Funds

Personnel

Salaries and benefits $12,278 

Training - 

Operations

IT services and equipment - 

Buildings and equipment 7,578 

Travel 517 

Contractual services (non-IT) 67 

Total Reimbursable Funds Spending $20,440 

Total Spending $538,665 

Amounts remaining to be spent 4,139 

Total Amounts Agreed to Be Spent $542,804 
Part IV

Inspector General’s View of 

GAO’s Management Challenges

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
122 GAO-13-2SP

GAO Performance and Accountability Report 2012

Inspector General’s View of GAO’s Management Challenges

Inspector General’s View of GAO’s Management 

Challenges

Date: October 11, 2012 

To: Comptroller General Gene L. Dodaro 

From: Inspector General Frances Garcia

Subject: GAO Management Challenges 

Based on our work and institutional knowledge, we agree that GAO faces challenges 

in (1) ensuring that it has the high-performing and agile workforce (human capital) 

needed to carry out its mission and (2) improving its capacity to effectively and 

efficiently produce quality work in support of the Congress (engagement efficiency).

Our recent audit1

 of the Human Capital Office’s controls over recruitment, relocation, 

and retention incentives identified needed improvements in its maintenance of 

appropriate supporting documentation; provision of additional guidance to human 

capital staff to ensure proper, timely, and accurate execution and recording of 

administrative actions; and provision of effective monitoring and oversight. In 

addition, we identified an opportunity for GAO to help ensure that incentive 

payments support agency recruitment and retention goals by establishing a clear 

agency-wide strategy and results-oriented performance measures for these 

payments. We made seven recommendations to help ensure consistency and 

adherence to GAO policy related to recruitment, relocation, and retention and to 

better align the use of these incentives with strategic human capital and workforce 

planning goals and objectives; and one recommendation to help GAO monitor and 

evaluate the effectiveness of controls. 

While we have not assessed GAO’s engagement efficiency efforts, our recent

discussions with GAO management have confirmed the significance of this 

challenge and the importance of successful efforts in improving GAO’s engagement 

efficiency. The April 2012 establishment of the Continuous Process Improvement 

Office, which organizationally reports to the Chief Operating Officer, is an important 

step toward providing the executive leadership and support needed to help this 

initiative succeed. 

1

OIG, Human Capital: Opportunities Exist to Strengthen Controls over Recruitment, Relocation, and 

Retention Incentives, OIG-12-5 (Washington, D.C.: Aug. 28, 2012). 
Part V

Appendix on Data

Quality

UNITED STATES

GOVE

RNMENT ACCOUNTABILITY

OFFICE

Serving the Congress and the Nation
124 GAO-13-2SP

GAO Performance and Accountability Report 2012

Appendix on Data Quality 

Table 19: 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 cost reduction of agency or congressional 

actions. These financial benefits generally result from work that we completed over the past 

several years. The estimated benefit is based on actions taken in response to our work, such 

as reducing government expenditures, increasing revenues, or reallocating 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. 

In some cases, 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. 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 longterm projects, changes in tax laws, program terminations, or sales of government assets are 

limited to 5 years. 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 over several years, if the benefit spans 

future years and the managing director wants greater precision as to the amount of the benefit.

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 Office of Audit Policy and Quality Assurance (APQA) for review. Once accomplishment 

reports are approved, they are entered into our Engagement Reporting System (ERS), which is 

the official reporting database.

Data Quality
GAO-13-2SP 125

GAO Performance and Accountability Report 2012

Appendix on Data Quality

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 documentation to 

support accomplishments with evidence that meets our evidence standard, supervisors review 

the documentation, and an independent person within GAO reviews the accomplishment 

report. For all financial accomplishment reports, the managing director prepares a 

memorandum addressed to the Chief Quality Officer attesting that the accomplishment 

report meets our standards for accomplishment reporting. The memorandum specifically 

(1) addresses how linkage to GAO is established and (2) attests that the financial benefits 

are claimed in accordance with our procedures. Beginning in fiscal year 2010, teams are also 

required to consult with our Center for Economics on the calculation for financial benefits of 

$500 million or more. For each of the financial accomplishment reports, an economist reviewed 

and approved the methodology for calculating the proposed financial benefit. The assessment 

results were documented in the accomplishment’s supporting documentation and provided to 

the second reviewers.

The team’s managing director is authorized to approve financial accomplishment reports 

with benefits of less than $100 million. The team forwards the report to APQA, which reviews 

all accomplishment reports and approves accomplishment reports claiming benefits of 

$100 million or more. In fiscal year 2012, APQA approved accomplishment reports covering 96 

percent of the dollar value of financial benefits we reported.

In fiscal year 2012, accomplishments of $500 million or more were also reviewed by 

independent second and third reviewers (reemployed GAO annuitants), who have substantial 

experience and knowledge of our accomplishment reporting policies and procedures. Our total 

fiscal year 2012 reported financial benefits reflect the views of the independent reviewers.

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 

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.

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 

APQA for its review. Once accomplishment reports are approved, they are entered into ERS, 

which is the official reporting system.
126 GAO-13-2SP

GAO Performance and Accountability Report 2012

Appendix on Data Quality 

Verification 

and 

validation

We use the Accomplishment Reporting System to record the nonfinancial benefits that 

result from our findings and recommendations. Staff in the team file accomplishment 

reports to claim benefits resulting from our work. The team develops documentation to 

support accomplishments with evidence that meets our standards. Supervisors review the 

documentation; an independent staff person checks the facts of the accomplishment report; 

and the team’s managing director, director, or both approve the accomplishment report to 

ensure its appropriateness, including attribution to our work.

The team forwards the report to APQA, where it is reviewed for appropriateness. APQA 

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.

Data 

limitations

The data may be underreported because we cannot always document a direct cause-andeffect relationship between our work and the resulting benefits. Therefore, 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 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 to 

ensure that recommendations are directed at resolving the cause of identified problems; that 

are addressed to parties who have the authority to act; and are specific, feasible, and costeffective. Some of our products are informational and do not contain recommendations.

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.

Data sources Our Publications Database incorporates recommendations from products as they are issued. 

The database is updated daily.

Verification 

and 

validation

Our Information Management team enters data on recommendations into a “staging” system 

where they are reviewed for accuracy and completeness. Once reviewed, the data are posted 

to the Publications 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.

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 2012 implementation rate is the percentage of recommendations made in fiscal year 

2008 products that were implemented by the end of fiscal year 2012). Our experience has 

shown that if a recommendation has not been implemented within 4 years, it is not likely to be 

implemented.

Data sources Our Publications Database incorporates recommendations as products are issued. The 

database is updated daily. As our staff monitor implementation of recommendations, they 

submit updated information to the database.
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Appendix on Data Quality

Verification 

and 

validation

Our policies and procedures specify that our staff must verify and document 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 IG. Recommendations that are reported as implemented are reviewed by a senior 

executive in the team and by APQA.

Summary data are provided to the teams that issued the recommendations. The teams 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.

Data 

limitations

The data may be underreported because, in some cases, a recommendation may require 

more than 4 years to implement. We also may not count cases in which a recommendation 

is partially implemented. Therefore, the data represent a conservative measure of our overall 

contribution toward improving government.

Client measures

Testimonies

Definition 

and 

background

The Congress asks 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 hearings at which we testify reflect the importance 

and value of our institutional knowledge in assisting congressional decision making. When we 

have multiple witnesses with separate testimonies at a single hearing, we count this as a single 

testimony. We do not count statements submitted for the record when our witness does not 

appear.

Data sources The data on hearings at which we testified are compiled in our Congressional Hearing System 

managed by staff in our Office of Congressional Relations (Congressional Relations).

Verification 

and 

validation

The teams responding to requests for testimony are responsible for entering data into the 

Congressional Hearing System. After we have 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.

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 solicit feedback from the client using an electronic form. We compute the 

proportion of favorable responses to a question related to timeliness. Because our products 

often have multiple congressional clients, we often outreach to more than one congressional 

staff person per product. We send a form to key staff working for requesters of our testimony 

statements and to clients of our more significant written products—specifically, engagements 

assigned an interest level of “high” by our senior management and those requiring an expected 

investment of 500 staff days or more. One question asks the respondent whether the product 

was delivered on time. When a product that meets our criteria is released to the public, we 

electronically send relevant congressional staff an e-mail message containing a link to the 

form. When this link is accessed, the form recipient is asked to respond to the timeliness 

question using a five-point scale—”strongly agree,” “generally agree,” “neither agree nor 

disagree,” “generally disagree,” or “strongly disagree”—or to choose “not applicable/no 

answer.” For this measure, favorable responses are “strongly agree” and “generally agree.”
128 GAO-13-2SP

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Appendix on Data Quality 

Data sources To identify the products that meet our criteria (testimonies and other products that are high 

interest or expected to reach 500 staff days or more), we run a query against our Publications 

Database, which is maintained by a contractor. To identify appropriate recipients of the form 

for products meeting our criteria, we ask the engagement teams to provide in our 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 another database that 

is managed by APQA. This database then combines product, form recipient, and data from 

our Congressional Relations staff and creates an e-mail message with a web link to the form. 

(Congressional Relations staff serve as the contacts for form 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 form. Our Client Feedback Database creates a record 

with the product title and number and captures the responses to every form sent back to us 

electronically.

Verification 

and 

validation

APQA staff review released GAO products to check the accuracy of the addressee information 

in the APQA database. APQA staff also check the congressional staff directory to ensure 

that form recipients listed in the APQA database appear there. In addition, our Congressional 

Relations staff review the list of form recipients entered by the engagement teams and identify 

the most appropriate congressional staff person to receive a form for each client. E-mail 

messages that are inadvertently sent with incorrect e-mail addresses automatically reappear 

in the form approval system. When this happens, APQA staff correct the errors and resend the 

e-mail message.

Data 

limitations

Testimonies and written products that met our criteria for this measure represented about 

56 percent of the congressionally requested written products we issued during fiscal year 

2011. We exclude from our timeliness measure low and medium-interest reports expected 

to take fewer than 500 staff days when completed, 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 a form, we will not send one to this person again, even 

though a product subsequently requested meets our criteria. The response rate for the form 

is 22 percent, and 99 percent of those who responded answered the timeliness question. We 

received responses from one or more people for about 48 percent of the products for which we 

sent a form in fiscal year 2012.

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, Chief Administrative Officer, Deputy Chief 

Administrative Officer, Chief Human Capital Officer, and 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.

Data sources The Executive Committee approves the workforce plan. The workforce plan is coordinated 

and maintained by the Chief Administrative Officer. 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 National Finance Center (NFC) database, which handles payroll and personnel 

data for us and other agencies.

Verification 

and 

validation

The Chief Administrative Officer (CAO) maintains a database that monitors and tracks all our 

hiring offers, declinations, and accessions. In coordination with our Human Capital Office, 

our CAO staff enter workforce information supporting this measure into the CAO database. 

While the database is updated on a daily basis, CAO staff provide monthly reports to the 

Chief Operating Officer and the CAO that allow them to monitor progress by unit in achieving 

workforce plan hiring targets. The CAO continually monitors and reviews accessions 

maintained in the NFC database against its database to ensure consistency and to resolve 

discrepancies.
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Appendix on Data Quality

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.

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.

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 CAO database that contains 

some data from the NFC database, which handles payroll and personnel data for us and other 

agencies.

Verification 

and 

validation

CAO staff continually monitor and review accessions and attritions against their database that 

contains NFC data and follow up on any discrepancies. In fiscal year 2009, we developed 

standard operating procedures, which are still in effect, to document how we calculate and 

ensure quality control over data relevant to this measure.

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 2012 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. We correlated each of the questions with 

job satisfaction and selected those questions with the highest correlation. Staff were asked to 

respond to three questions on a five-point scale or choose “no basis to judge/not applicable” or 

“no answer.”

Data sources 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.” Responses of “no basis to judge/not applicable” or 

“no answer” were excluded from the calculation. While including “no basis to judge/not 

applicable” or “no answer” in the calculation would result in a different percentage, our method 

of calculation is an acceptable survey practice, and we believe it produces a better and more 

valid measure because it represents only those employees who have an opinion on the 

questions.
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Appendix on Data Quality 

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 2012, our 

response rate to this survey was about 71 percent, which indicates that its results are largely 

representative of the GAO population. In addition, many teams and work units conduct followon work to gain a better understanding of the information from the survey.

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 rather than entering the data into a database, 

thus eliminating a potential 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. We correlated each question with job 

satisfaction and selected those questions with the highest correlation. 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.)

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. See also Staff development, 

Data sources.

Verification 

and 

validation

See Staff development, Verification and validation.

Data 

limitations

See Staff development, Data limitations.

Effective leadership by supervisors

Definition 

and 

background

This measure is based on staff’s favorable responses to 10 of 20 questions related to six 

areas of supervisory leadership on our annual employee survey. We correlated each of the 

questions with job satisfaction and selected those questions with the highest correlation. 

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.” In fiscal year 2009, we changed the name of 

this measure from “Leadership” to its current nomenclature to clarify that the measure reflects 

employee satisfaction with the immediate supervisor’s leadership.
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Appendix on Data Quality

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. See also Staff development, Data sources.

Verification 

and 

validation

See Staff development, Verification and validation.

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. We correlated each of the questions 

with job satisfaction and selected those questions with the highest correlation. Staff were 

asked to respond to these 5 questions on a five-point scale or choose “no basis to judge” or 

“no answer.”

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. See also Staff 

development, Data sources.

Verification 

and 

validation

See Staff development, Verification and validation.

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 a web-based survey annually. 

The customer satisfaction survey on administrative services, historically conducted by an 

outside contractor, was administered in-house for the first time in 2011. All employees were 

administered this survey and were encouraged to indicate how satisfied they are with 16 

services that help them get their jobs done and another 14 services that affect their quality of 

work life.

We asked staff to rate the 30 internal services available to them, indicating on a 5-point scale 

from “very dissatisfied” to “very satisfied”—or to indicate if they did not use a service—and 

to 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.
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Appendix on Data Quality

Data sources These data come from our staff’s responses to an annual web-based survey. To determine 

how satisfied our employees are with internal administrative services, we calculate composite 

scores for two measures. One measure reflects the satisfaction with the 16 services that 

help employees get their jobs done. These services include Internet and intranet services, 

information technology customer support, mail services, and voice communication services. 

The second measure reflects satisfaction with another 14 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. Unlike the surveys in prior years, in which both the 

importance of, and satisfaction with, administrative services were rated, employees were asked 

to rate only their satisfaction with services, or to indicate if they did not use a service. 

Verification 

and 

validation

The survey this year was brought in-house for the first time and administered by GAO’s 

Web Survey Services Group, in the Applied Research and Methods (ARM) team. While 

the two managers of this unit could access individual responses, they complied with the 

privacy statement that was posted on the website to only provide aggregated data to GAO 

management that could not be used to identify responses of any individual. Our survey 

response rate was 63 percent in 2011. We analyzed responses by demographic representation 

(unit, tenure, location). Each unit responsible for administrative services conducts follow-on 

work, including analyzing written comments to gain a better understanding of the information 

from the survey.

Data 

limitations

The information contained in the survey is the self-reported opinions of staff expressed under 

conditions of confidentiality. 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 entered into a database by 

someone other than the respondent, thus minimizing a potential source of error.

Source: GAO.
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GAO Performance and Accountability Report 2012

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GAO Performance and Accountability Report 2012

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A c c o u n t a b i l i t y I n t e g r i t y R e l i a b i l i t y

Fiscal Year 2011

PERFORMANCE AND ACCOUNTABILITY REPORT

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