United States Government Accountability Office

GAO Report to Congressional Committees

SMITHSONIAN 

INSTITUTION 

Implementation of 

Governance Reforms 

Is Progressing, but 

Work Remains 

December 2009 

GAO-10-190R 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

December 2009

SMITHSONIAN INSTITUTION 

Implementation of Governance Reforms Is

Progressing, but Work Remains

Highlights of GAO-10-190R, a report to 

congressional committees 

The Smithsonian Institution 

(Smithsonian) is the world’s largest 

museum complex. Its funding 

comes from its own private trust 

fund assets and federal 

appropriations. The Smithsonian 

Board of Regents, the 

Smithsonian’s governing body, is 

responsible for the long-term 

stewardship of the Smithsonian. In 

recent years, GAO and others have 

documented significant governance 

and accountability breakdowns at 

the Smithsonian, which could 

ultimately put funding and the 

organization’s credibility at risk. 

In 2007 the Board of Regents 

Governance Committee released a 

report recommending 42 

governance reforms. In May 2008 

GAO found that the Board of 

Regents had implemented 30 of 

these 42 reforms. GAO also made 4 

additional recommendations. 

In response to a congressional 

mandate, this report provides an 

update on the status of the 

Smithsonian’s implementation of 

governance reforms recommended 

by the Board of Regents 

Governance Committee and GAO. 

The work for this report is based 

on analysis of Smithsonian 

documents, interviews with 

Smithsonian officials, and a GAO 

report on Smithsonian governance 

(GAO-08-632). 

GAO is not making any new 

recommendations. The 

Smithsonian and the Board of 

Regents concurred with the 

findings of this report. 

Since May 2008, the Smithsonian has implemented 9 reforms recommended 

by its Governance Committee—in addition to the 30 it had implemented prior 

to May 2008—and 1 of 4 GAO recommendations, but work remains on 3 

reforms and 3 recommendations, as summarized in the following table. 

Status of the Smithsonian’s Implementation of Governance Reforms and Recommendations

Source Total 

Implemented as

of May 2008 

Implemented as

of December 1, 

2009 Work Remains

Governance 

Committee, June 

2007 42 30 9 3 

GAO, May 2008 4 N/A 1 3 

The nine Governance Committee reforms implemented since May 2008 

include efforts such as revising policies related to travel and expense 

reimbursement and event expenses, creating a regents’ annual public forum, 

and clarifying roles and responsibilities of and developing an assessment 

process for the Board of Regents. The Smithsonian has not completed 

implementation of three Governance Committee reforms related to the 

Smithsonian’s contracting policy, a comprehensive review of financial 

reporting and internal controls, and enhancing the role of advisory boards. 

Regarding GAO’s May 2008 recommendations, the Smithsonian implemented 

GAO’s recommendation to evaluate what actions it can take in the event of 

persistent neglect of duties by a regent, but has not completed implementation 

of the following three recommendations: 

• The Board of Regents took steps towards, but has not implemented, 

GAO’s recommendation to develop and make public its process for the 

selection, use, and evaluation of nonregents. The Board of Regents posted 

on its Web site the process for selecting nonregent committee members 

but did not make a final decision regarding a proposed bylaw to give 

nonregent committee members the same roles and responsibilities as 

regents. 

• The Board of Regents took steps to improve its relationship with 

stakeholders, including advisory boards. However, due to limitations of 

the efforts thus far—such as their informal nature and focus on 

dissemination of information from the regents rather than two-way 

communication—several advisory board chairs with whom we spoke 

expressed concern that the Board of Regents still lacked a sufficient 

understanding of Smithsonian museums and other entities to govern as 

effectively as possible. 

• The Board of Regents has not yet conducted a comprehensive evaluation 

of its reforms but plans to do so in fiscal year 2010. View GAO-10-190R or key components. 

For more information, contact Mark L. 

Goldstein, (202) 512-2834 or 

goldsteinm@gao.gov. 
GAO-10-190R 

United States Government Accountability Office

Washington, DC 20548 

December 10, 2009 

The Honorable Dianne Feinstein 

Chairman 

The Honorable Lamar Alexander 

Ranking Member 

Subcommittee on Interior, Environment, and Related Agencies 

Committee on Appropriations 

United States Senate 

The Honorable Norman D. Dicks 

Chairman 

The Honorable Michael K. Simpson 

Ranking Member 

Subcommittee on Interior, Environment, and Related Agencies 

Committee on Appropriations 

House of Representatives 

Subject: Smithsonian Institution: Implementation of Governance Reforms Is 

Progressing, but Work Remains 

The Smithsonian Institution (Smithsonian) has been referred to as America’s 

museum, as its museums hold and provide access to irreplaceable national 

collections in American and natural history, art, and other areas. The Smithsonian 

has evolved into the world’s largest museum complex and research organization; two 

of its museums on the National Mall in Washington, D.C., are among the most highly 

visited in the world. In fiscal year 2008, two-thirds of the Smithsonian’s annual 

operating revenues—which equaled about $1 billion—came from federal 

appropriations, with the rest coming from its own private trust fund assets. The act 

establishing the Smithsonian in 1846 provided that, among other things, the business 

of the Smithsonian be conducted by a board of regents. Currently, the Board of 

Regents is composed of 17 regents, including 2 ex-officio regents1

—the Chief Justice 

and the Vice President of the United States—6 congressional regents, and 9 citizen 

regents. As the Smithsonian’s chief decision-making body, the Board of Regents is 

responsible for the long-term stewardship of the Smithsonian’s mission. In recent 

years, we and others have documented significant governance and accountability 

 

1

An ex-officio regent is a regent not by appointment but by virtue of holding a certain office. 
breakdowns at the Smithsonian, which could result in a lack of trust from donors, 

grantors, and appropriators and ultimately put funding and the organization’s 

credibility at risk. 

In 2007, following a report from the Smithsonian’s Inspector General to the Board of 

Regents on the then-Secretary’s compensation package and expenses and related 

inquiries, the then-Secretary resigned. Two subsequent studies were published in 

June 2007, one by the Board of Regents Governance Committee and the other by an 

Independent Review Committee (IRC), created at the Board of Regents’ request, that 

identified such governance and accountability breakdowns as the following: 

• Policies and internal controls were inadequate in such areas as conflicts of 

interest, compensation, and travel. 

• The Board of Regents did not routinely receive or request information necessary 

to support vigorous deliberation, well-reasoned decision making, and adequate 

oversight. 

• The Board of Regents’ roles and responsibilities were not clearly defined, leaving 

the role of the regents subject to interpretation. 

• The Board of Regents may have lacked sufficient expertise to conduct effective 

oversight in some areas, and the size and structure of the Board of Regents itself 

may be contributing to this problem. 

Both studies recommended changes to address these governance challenges. The 

Board of Regents adopted all 25 of the Governance Committee’s recommendations 

and stated that the IRC’s recommendations were, for the most part, encompassed by 

the Governance Committee’s recommendations. In 2008, in a previous report2

assessing the Smithsonian’s implementation of these recommendations, we 

determined that some of these recommendations had multiple parts. In order to 

assess the Smithsonian’s efforts to implement these recommendations, we analyzed 

each reform contained in the recommendations separately; therefore, we assessed 

the Smithsonian’s efforts related to 42 reforms relating to the following areas: 

• executive and ethics reforms, 

• executive travel policies, 

• policies on broader Smithsonian operations, 

• access of senior officials and level of information available to the Board of 

Regents, 

• transparency of the Board of Regents’ and the Smithsonian’s activities, 

• communication and stakeholder relationships, 

• regents’ roles and responsibilities, 

• the Board of Regents’ structure and composition, and 

 

2

GAO, Smithsonian Institution: Board of Regents Has Implemented Many Governance Reforms, but 

Ensuring Accountability and Oversight Will Require Ongoing Action, GAO-08-632 (Washington, 

D.C.: May 15, 2008). 

Page 2 GAO-10-190R 
• assessment of the Board of Regents. 

We found that the Board of Regents had implemented 30 of the 42 reforms to address 

these areas of concern, and that it had not completed its implementation of 12 of the 

recommended reforms. In that report, we also made four recommendations to 

strengthen the Board of Regents’ governance reform efforts: that the Board of 

Regents (1) develop and make public a clear policy regarding the selection, use, and 

evaluation of nonregents who serve on the Board of Regents’ committees; (2) develop 

mechanisms to ensure the Board of Regents is considering and responding to 

stakeholder concerns; (3) evaluate actions the Board of Regents can take in the event 

of persistent neglect of duties by any of its members; and (4) arrange for a 

comprehensive evaluation of reforms after a suitable time has passed. 

In this report, in response to a congressional mandate,3

 we are providing an update 

on the Smithsonian’s status in implementing governance reforms recommended by 

the Board of Regents Governance Committee and by GAO.4 We conducted our work 

for this report from October through December 2009 in accordance with genera

accepted government auditing standards. Those standards require that we plan and 

perform the audit to obtain sufficient, appropriate evidence to provide a reasonable 

basis for our findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and conclusions 

based on our audit objectives. Information regarding the Smithsonian’s governance 

changes is based on our May 2008 report on Smithsonian governance and updated 

documentary and testimonial information provided by Smithsonian officials, 

including the Board of Regents. We assessed the extent to which the Smithsonian 

has implemented governance reforms recommended by its Governance Committee 

and GAO, but we did not evaluate the effectiveness of these reforms in improving 

Smithsonian governance. The Board of Regents and the Smithsonian provided 

comments on this report. Their comments are contained in enclosures II and III, 

respectively. For more information on the scope and methodology of this report, see 

enclosure I. 

lly 

 

Background 

Congress established the Smithsonian in 1846 to administer a large bequest left to the 

United States by James Smithson, an English scientist, for the purpose of establishing 

in Washington, D.C. an institution “for the increase and diffusion of knowledge 

among men.”5

 In accepting Smithson’s bequest on behalf of the nation, Congress 

3

Explanatory Statement in the 2009 Committee Print of the House Committee on Appropriations on 

H.R. 1105, at 1156-1157 accompanying the Omnibus Appropriations Act for FY 2009, Pub. L. No. 111-8, 

Div. E, Title III, 123 Stat. 524, 740-741 (2009). 

4

GAO-08-632. 

5

The Act of August 10, 1846, as amended, is codified at 20 U.S.C. §§ 41-67. 

Page 3 GAO-10-190R 
pledged the “faith of the United States” to carry out the purpose of the trust.6

 To that 

end, the act establishing the Smithsonian provided for the administration of the trust, 

independent of the government itself, by a board of regents and a secretary, who 

were given broad discretion in the use of the trust funds. The Board of Regents 

currently consists of nine private citizens, as well as members of all three branches of 

the federal government, including the Chief Justice of the United States, the Vice 

President, and six congressional members, three from the Senate and three from the 

House of Representatives.7

Over the last 160 years, the Smithsonian’s facilities inventory has expanded to include 

19 museums and galleries, 9 research centers, a zoo, and other facilities—most 

located in or near Washington, D.C. The major buildings owned by the Smithsonian 

range in age from about 170 years old to about 5 years old, with most of the facilities’ 

growth occurring since the 1960s (see fig. 1). The Smithsonian’s growth will continue 

with the construction of an aircraft restoration area—phase II of the National Air and 

Space Museum Steven F. Udvar-Hazy Center8

—and the design and construction of a 

National Museum of African American History and Culture, authorized by Congress 

in 2003.9

 Beyond this, in May 2008, Congress established a commission to study the 

potential creation of a National Museum of the American Latino and whether the 

museum should be located within the Smithsonian.10

 

6

A trust is a fiduciary relationship involving a right of property held by the trustee for the benefit of 

another. 

7

The three senators are appointed by the President of the Senate, the three representatives are 

appointed by the Speaker of the House, and nine citizens are appointed by joint resolution of 

Congress—two from the District of Columbia and seven from the states. 

8

The National Air and Space Museum Steven F. Udvar-Hazy Center near Washington Dulles 

International Airport is the companion facility to the National Air and Space Museum on the National 

Mall and is being built in two phases. Phase I opened in December 2003 and provides enough space for 

the Smithsonian to display thousands of aviation and space artifacts. Phase II will include a restoration 

hangar, archives, collections processing unit, conservation laboratory, and a collections storage 

facility. 

9

20 U.S.C. §§ 80r through 80r-9. 

10Pub L. No 110-229, Title III, § 333, 122 Stat. 754, 784-787 (2008). 

Page 4 GAO-10-190R 
Figure 1: Growth in Major Facilities Owned by the Smithsonian Institution 

Square feet in millions

Smithsonian Institution Building Patent Office Building

Arts and Industries

National Zoological Park

National Museum of Natural History (NMNH)

Freer Gallery of Art

Smithsonian Tropical Research Institute

Garber Facility MD

National Museum of American History

NMNH - East Wing

Smithsonian Environmental Research Center

Renwick Gallery and Cooper Hewitt

Hirshhorn Museum and Sculpture Garden 

National Air and Space Museum

Museum Support Center

Quadrangle

Anacostia Museum

Amazonia Exhibit

Victor

Building

NMNH - West Court in FIll

and Cultural Resource Center

Udvar-Hazy Center, Phase 1

National Museum of the American Indian

Year

Source: Smithsonian Institution. 

Smithsonian Astrophysical Observatory

NMNH - East Court in FIll

0

2

4

6

8

10

12

14

1850

1860

1870

1880

1890

1900

1910

1920

1930

1940

1950

1960

1970

1980

1990

2000

2010

Note: This figure tracks the square footage for all owned and leased buildings as they were added to the inventory over time. 

Only the major facilities are named in the figure, although the square footage of smaller buildings is included. Also, in 

November 2005 the Smithsonian Institution sold the Victor Building. 

The Board of Regents is vested with governing authorities over the Smithsonian11 and 

considers matters such as the Smithsonian’s budgets and planning documents, new 

programs and construction proposals, appointments to Smithsonian advisory boards, 

and a variety of other issues facing the Smithsonian. The Board of Regents also has 

stewardship responsibilities, including ensuring that the Smithsonian’s facilities and 

collections are maintained and that the Smithsonian has a funding strategy that 

provides sufficient funds to support these activities. 

Although the Smithsonian is a trust instrumentality of the United States with a private 

endowment,12 about two-thirds of its operating revenues in fiscal year 2008 came 

from federal appropriations. In fiscal year 2008, the Smithsonian’s operating reven

equaled about $1 billion, while its federal appropriations equaled about $678.4 

million—$107.1 million for facilities capital, which provides funds for construction 

and revitalization projects, and $571.3 million for salaries and expenses, which 

includes funding for the program activities of each museum and research center, 

ues 

 

11For example, 20 U.S.C. §42 establishes the Board of Regents’ responsibility to conduct the business of 

the Smithsonian, and 20 U.S.C. §50 provides for the Board of Regents to accept specimens and objects 

of art and for these items to be appropriately classed and arranged. 

12GAO recently issued a report on federally created entities such as the Smithsonian. See GAO, 

Federally Created Entities: An Overview of Key Attributes, GAO-10-97 (Washington, D.C.: Oct. 29, 

2009). 

Page 5 GAO-10-190R 
rents, utilities, and facilities’ operations, maintenance, and security costs.13 The 

Smithsonian’s fiscal year 2008 appropriation was subject to an across-the-board 

rescission of 1.56 percent, which according to the Smithsonian resulted in an 

appropriation of $105.4 million for facilities capital and $562.4 million for salaries and 

expenses. The remaining operating revenues came from the Smithsonian’s private 

trust funds. For fiscal year 2008, the Smithsonian was also appropriated an additional 

$15 million for facilities capital (reduced to $14.8 million by the rescission), referred 

to as the Legacy Fund, to be provided if the Smithsonian received matching private 

donations of at least $30 million; however, according to a Smithsonian official, the 

Smithsonian did not meet the matching donations requirement and therefore has not 

received these funds.14 In fiscal year 2009, the Smithsonian was appropriated $123 

million for facilities capital and $593.4 million for salaries and expenses. The 

Smithsonian was also appropriated an additional $15 million for the Legacy Fund, 

with the same requirements as for fiscal year 2008, except that funds were made 

available for individual projects in incremental amounts as matching funds were 

raised.15 The Smithsonian was also appropriated an additional $25 million for 

facilities capital under the American Recovery and Reinvestment Act of 2009.16

In fiscal year 2010, the Smithsonian was appropriated $125 million for facilities 

capital and $636.16 million for salaries and expenses.17 Of the $30 million 

appropriated for the Legacy Fund in fiscal years 2008 and 2009, the approximately 

$29.8 million unobligated balance was rescinded, and $29.8 million was appropriated 

under a new requirement—the Legacy Fund is now directed to the Arts and 

Industries Building for the purpose of facilitating the reopening of this building. The 

Appropriations Act makes funds available in incremental amounts as private funding 

becomes available. Private donations, including major in-kind donations, that 

contribute significantly to the building’s reopening will be matched dollar for dollar. 

The Smithsonian Implemented Most Governance Committee Reforms and 

One of Four GAO Governance Recommendations, but Work Remains on 

Others 

The Smithsonian Has Implemented 39 Governance Committee Reforms but Work 

Remains on 3 Reforms

 

13Pub. L. No. 110-161, Div. F, Title III, 121 Stat. 1844, 2140 (2007). 

14The fiscal year 2008 Appropriations Act establishing the Legacy Fund required that both private 

donations and federal matching funds be used for the restoration, renovation, and rehabilitation of 

existing facilities. Funds could not be used for day-to-day maintenance, salaries and expenses, or 

programmatic purposes, and in-kind donations did not count toward the match. See Pub. L. No. 110-

161, 121 Stat. 1844, 2140 (2007). 

15Pub. L. No. 111-8, Div. E, Title III, 123 Stat. 524, 740-741 (2009). Smithsonian’s fiscal year 2009 

appropriation is not subject to a rescission. 

16Pub. L. No. 111-5, Title VII, 123 Stat. 115, 171 (2009). 

17Pub. L. No 111-88, Title III, 123 Stat. 2904, 2951-2952 (2009). 

Page 6 GAO-10-190R 
Since May 2008, the Smithsonian has implemented 9 reforms recommended by the 

Board of Regents Governance Committee—in addition to the 30 reforms it had 

implemented as of May 2008—bringing the total number of reforms implemented to 

39 of 42 reforms.18 The 3 reforms that have not been completely implemented include 

2 related to improving policies on broader Smithsonian operations—developing a 

contracting policy and conducting a comprehensive review of financial reporting and 

internal controls—and 1 related to communication and stakeholder relationships—to 

enhance the role of the Smithsonian advisory boards. Figure 2 summarizes the status 

of the Smithsonian’s implementation of the Governance Committee’s recommended 

reforms as of May 2008 and December 1, 2009. 

Figure 2: Status of the Smithsonian’s Implementation of Governance Committee Reforms as of May 2008

and December 1, 2009 

 

18For more information on the reforms implemented as of May 2008, see GAO-08-632. 

Page 7 GAO-10-190R 
The following reforms have been implemented by the Smithsonian since May 2008: 

• Executive and ethics reforms—conflict of interest: The Smithsonian 

completed its implementation of executive and ethics reforms by developing a 

database to identify potential conflicts of interest. This reform was one of several 

related to strengthening the Smithsonian’s policies regarding conflicts of interest. 

The Smithsonian’s policies in this area had come under concern because the 

previous policy resulted in two senior executives, including a former Secretary, 

serving on for-profit boards, one of which had a contract with the Smithsonian. 

• Operational policies—Smithsonian Business Ventures: The Smithsonian 

implemented a reform to require the former Smithsonian Business Ventures 

(SBV)—now reorganized and renamed Smithsonian Enterprises to underscore 

that the Smithsonian’s revenue generating enterprises are in a distinct, but not 

separate, operational unit—to follow Smithsonian policies except in the case of a 

Page 8 GAO-10-190R 
few documented exceptions.19 This reform came out of concerns about the 

propriety of SBV policies and activities. 

• Operational policies—event expenses: The Smithsonian has implemented a 

reform to develop expense policies for regent events. New event guidelines for all 

special events using Smithsonian funding, including regent events, were given 

final approval by the Board of Regents in November 2009. The event expense 

guidelines require that each Smithsonian event funding organization establish and 

approve a special events annual plan. The guidelines also describe three 

categories of events, from the most formal to the least formal, and provide 

guidance on how event coordinators should determine the appropriate event 

category for any particular event, and how events in each category are to be 

approved. For example, a regent event in the most formal category is to be 

reviewed by the Chief Financial Officer (CFO’s) office and authorized by the Chair 

of the Board of Regents. The approval form requires event coordinators to 

provide to the approving official the event location, total budget, number of 

guests, and catering cost per guest—as well as the same information on a 

comparable event, such as the same event in a prior year. According to a 

Smithsonian official, this comparable information is to help ensure that the 

approving official is able to judge whether event expenses are justifiable and 

reasonable. According to the CFO, the Smithsonian will create a review process 

to monitor and ensure that approving officials are held accountable for following 

the new guidelines. This reform effort relates to concerns about a former 

Secretary’s entertainment expenses, as well as concerns raised in 2007 and 2008 

about the reasonableness of the event expenses surrounding the departure of the 

former Director of the National Museum of the American Indian.

• Operational policies—travel and expense reimbursement: The Smithsonian 

implemented the Governance Committee’s reform calling for a review of the 

Smithsonian’s internal controls for travel and expense reimbursement. As a result 

of this review, the Smithsonian has implemented a number of additional 

accountability measures for travel and expense reimbursement. For example, in 

addition to ongoing review of all senior officials’ travel (including the Secretary’s 

travel) by the Smithsonian’s Office of the Comptroller, a judgmental sample of 

nonsenior officials’ travel is reviewed quarterly. The CFO reviews the 

Smithsonian Secretary’s travel through travel authorizations prior to the travel 

and post-travel vouchers. The CFO presents a formal report of senior officials’ 

travel and credit card use semiannually to the Board of Regents Audit and Review 

Committee, which includes information on all travel and expense card policy 

 

19SBV was a centralized entity responsible for the Smithsonian’s various business activities. The 

documented exceptions were driven by the fact that SBV used different automated systems from the 

rest of the Smithsonian for financial accounting, payroll, and time and attendance. 

Page 9 GAO-10-190R 
violations. In addition, the Smithsonian implemented five recommendations made 

by the Smithsonian Inspector General in January 2009 to further improve travel 

accountability.20

• Communication and stakeholder relationships—public forum: The 

Smithsonian implemented a reform calling for the creation of a regent annual 

public forum. Two regent public forums have now been held—the first in 

November 2008 and the second in September 2009. This reform was adopted in 

response to criticisms about the lack of transparency regarding governance at the 

Smithsonian. 

• Roles and responsibilities—board orientation process: The Smithsonian 

completed implementation of a reform that called for clarifying the regents’ roles 

and responsibilities by developing a board orientation process. The orientation 

program includes a book with information on the Smithsonian, the Board of 

Regents, and the regents’ roles and responsibilities. It also includes the 

expectation that as close as possible to the regents’ first board meeting, new 

regents will meet with the Chair of the Board of Regents, the Secretary of the 

Smithsonian, and the Smithsonian’s General Counsel and Inspector General. 

According to a Smithsonian official, all current regents received the orientation 

materials, and of the two regents appointed after the development of the 

orientation program, one has had the orientation, and the other, who was 

appointed in September 2009, will receive it around the time of the next board 

meeting. These reforms were developed because previously the roles and 

responsibilities of regents were not clearly and explicitly defined, which, in part, 

led to a lack of oversight and awareness. 

• Structure and composition—review of committee charters: The 

Smithsonian implemented a reform calling for review and revision of the Board of 

Regents committees’ charters. All committees had completed their charter review 

by October 2008. Previously, committees were not consistently examining their 

roles, responsibilities, and jurisdiction. The June 2007 Governance Committee 

report raised concerns that some committees were not effectively carrying out 

their proper oversight functions as a result. 

• Structure and composition—appointment procedures to committees: The 

Smithsonian implemented a reform calling for a review of appointment 

procedures to Board of Regents’ committees. Since 2008, the Board of Regents 

has standardized and clarified the appointment process for nonregents to 

committees and has made this process publicly available on the Smithsonian’s 

Web site. This reform related to a concern that the Board’s lack of expertise in 

some areas—such as finance or accounting—may have contributed to the lack of 

oversight of executive compensation and expenses. In our 2008 report, we noted 

that the Board of Regents had addressed this need by increasing the use of 

nonregents on committees, but stated that some issues were still under 

consideration regarding the appropriate selection and use of nonregents. We 

 

20The Inspector General recommended that Smithsonian management (1) encourage use of per diem 

allowances rather than actual expenses; (2) expand post-travel compliance reviews; (3) revise 

procedures to define more precisely what circumstances constitute adequate justification for actual 

expenses rather than per diem allowances; (4) ensure compliance with sponsored travel procedures; 

and (5) verify that employees with approval authority are not subordinates of the travelers. The 

Smithsonian implemented all five of these recommendations by May 2009. 

Page 10 GAO-10-190R
discuss the Smithsonian’s actions related to other issues regarding the use of 

nonregents on committees later in this report. 

• Assessment—Board of Regents’ self-assessment process: The Smithsonian 

implemented a reform calling for a regular assessment of the Board of Regents, its 

committees, and its members. In early fall 2008 the Board of Regents conducted a 

self assessment. The Board of Regents is currently in the process of conducting its 

second assessment, which includes a self-assessment of individual regents’ 

performance, and its first assessment of all committees—and individual 

committee members’ performance—to be completed by December 2009. 

Previously, the Board of Regents lacked a formal and regular assessment of its 

performance to determine its effectiveness in governance and oversight of 

Smithsonian management. In May 2008 we reported that a self-assessment of the 

Board of Regents, its committees, and individual members would enable the 

Board of Regents to identify areas for improvement in its operating procedures, 

governance practices, and committee structure. 

The Smithsonian Has Not Completed Implementation of Other Reforms 

Recommended by the Governance Committee 

Since we last reported on these issues in May 2008, the Smithsonian has continued to 

work on, but has not completed, implementation of three reforms recommended by 

the Governance Committee: two related to policies on broader Smithsonian 

operations and one related to communication and stakeholder relationships. 

According to Smithsonian officials, generally, the Board of Regents is responsible for 

setting the policies and the Smithsonian administration is responsible for 

implementing those policies. While the Board of Regents has approved policies or 

plans related to the two policy-related reforms, the Smithsonian has not completed its 

implementation of these reforms. In our May 2008 report, we raised concerns about 

challenges associated with these efforts, stating that effectively implementing the 

new policies and procedures developed during these reviews was likely to depend on 

effectively training staff and establishing accountability, both of which could be 

challenging because of a level of standardization and requirements that did not 

previously exist. The following provides a brief summary of the Smithsonian’s efforts 

regarding these reforms:

• Operational policies—contracting: The Smithsonian has taken steps toward, 

but has not fully implemented, the governance reform related to improving 

contracting policies and procedures. The Smithsonian issued a new contracting 

policy and is currently writing formal procurement and contracting procedure 

manuals that implement this policy and provide the rules and procedures for dayto-day procurement and contracting activities. According to the Smithsonian 

CFO, two of the seven parts of the manual are completed and in use with the rest 

scheduled to be completed by the end of fiscal year 2010. While the Smithsonian 

is not required to follow the Federal Acquisition Regulation (FAR), the 

Smithsonian’s contracting policy and procedures are guided by the principles in 

the FAR. In this environment, where the FAR is not required, having strong 

procedure manuals may be even more important to ensuring that the contracting 

policy is effectively implemented and staff know what sections of the FAR the 

Page 11 GAO-10-190R
Smithsonian has chosen to follow. Moreover, in previous work, we have found 

that a lack of agency-specific policies and procedures can result in an increased 

risk of improper or wasteful contract payments. Smithsonian officials indicated 

that the various parts of the Smithsonian’s contracting procedures manual will 

incorporate the principles of the FAR applicable to its contracting activities. 

Additionally, the officials indicated that they believe the new contracting policy 

and procedures, when complete, will be comprehensive and will serve to obviate 

incidences of improper contracting activity. This reform effort stemmed from 

concerns that the Smithsonian had entered into confidential business contracts 

that appeared to have been awarded in a manner not consistent with contracting 

standards generally applicable in the public sector. 

• Operational policies—financial reporting and internal controls: The 

Smithsonian has taken steps to implement its reform to conduct a comprehensive 

review of the Smithsonian’s financial reporting and internal controls. This reform 

effort is related to concerns about whether the Smithsonian has appropriate 

policies and an effective process for enforcing and monitoring compliance with its 

policies.21 Internal control—the plans, methods, and procedures used to meet 

missions, goals, and objectives—is the first line of defense in safeguarding assets 

and preventing and detecting fraud and errors and helps government program 

managers achieve desired results through effective stewardship of public 

resources. In May 2008 we reported that the Smithsonian had taken some steps to 

address this reform, including developing a framework with which to analyze 23 

critical processes where there is financial risk. We also reported that its 

framework for this analysis was closely aligned with the framework established 

by our Standards for Internal Control in the Federal Government.

22 However, 

we pointed out that effectively implementing the new policies and procedures 

developed during such review efforts would likely depend on effectively training 

Smithsonian staff and establishing accountability, both of which could be 

challenging for the Smithsonian.23 The Smithsonian’s review of financial reporting 

and internal controls led to a plan—approved by the Audit and Review Committee 

in March 2009—to reduce the risk level of five processes identified by the 

Smithsonian as high risk by the end of fiscal year 2012. The work laid out in the 

plan for accomplishing this goal includes such items as writing new policies and 

procedures, training staff on responsibilities and procedures for which they are 

accountable, and testing and validating controls through policy compliance 

reviews or personal property inventories. The CFO reported to the Audit and 

Review Committee that effective execution of the plan will require a commitment 

to increasing staffing and other resources over time. During the discussion with 

the CFO, members of the Audit and Review committee expressed concern that 

 

21The Smithsonian has defined internal control as a process designed to provide reasonable assurance 

of the Smithsonian’s ability to achieve and sustain effective and efficient operations, reliable financial 

reporting, and compliance with applicable laws, regulations, and policies. This definition is very 

similar to the definition we have established for internal controls. 

22GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.2.1 (Washington, 

D.C.: November 1999). 

23Accountability represents the processes, mechanisms, and other means by which an entity’s 

management carries out its stewardship and responsibility for resources and performance. 

Page 12 GAO-10-190R
providing these resources may be challenging for the Smithsonian, given limited 

available resources and other priorities, such as collections care and research. 

According to Smithsonian officials, the Smithsonian received funding in fiscal 

years 2009 and 2010 to improve internal controls, and Smithsonian officials 

recognize that vigilance with respect to internal controls is an ongoing process. 

• Communication and stakeholder relationships—role of advisory boards: 

The Smithsonian has taken steps to implement its reform to enhance the role of 

its 30 advisory boards—which include a national advisory board, as well as 

advisory boards that focus on individual museums, research centers, or 

programs—but has not resolved all issues.24 The primary purpose of an advisory 

board is to provide advice, support, and expertise to the directors of museums, 

research centers, and programs, as well as to the Board of Regents and the 

Secretary. This reform came out of concern that there was a lack of transparency 

and connection to stakeholders within the Smithsonian, including advisory 

boards. According to the Governance Committee’s report, the advisory boards 

provide a key link between the Board of Regents and the public and a direct 

connection to the museums. We discuss the Smithsonian’s efforts regarding this 

reform later in this report, when we discuss the Smithsonian’s actions towards 

implementing our related May 2008 recommendation. 

The Smithsonian Has Implemented One of GAO’s Four Governance 

Recommendations, While Work Remains on the Other Three

In May 2008, we found that there were some areas where the Board of Regents 

Governance Committee had not yet developed reforms or where the Governance 

Committee’s reforms could be taken further. We therefore made four 

recommendations to strengthen the Smithsonian’s governance reform efforts. As 

shown in figure 3, the Smithsonian has implemented one of our four 

recommendations and has taken steps to implement the other three 

recommendations. 

 

24Most advisory boards (except for those with mandated statutory authority) have no independent 

governance function, and all are subject to the authority of the Board of Regents. The Smithsonian is 

not subject to the Federal Advisory Committee Act, which requires federal agencies that sponsor 

federal advisory committees and have at least one member that is not a federal employee to comply 

with requirements for establishing and managing advisory committees. See 5 U.S.C. App. 2. 

Page 13 GAO-10-190R
Figure 3: Smithsonian’s Progress in Implementing Our Governance Recommendations 

As Figure 3 shows, the Board of Regents implemented one of our recommendations 

related to assessment—to evaluate what actions it can take in the event of persistent 

neglect of duties by any regents or their liaisons. In July 2009 the Board of Regents 

Governance and Nominating Committee25 implemented this recommendation by 

considering a staff paper that described actions that could be taken in the event of 

persistent neglect of duties and approving an approach that included initial 

counseling and potential referral to the full Board of Regents for appropriate action. 

This recommendation came from a concern that because the Board of Regents has no 

authority to remove regents for cause, such as persistent neglect of duties during a 

regent’s term—only Congress can take action to remove a regent—a key challenge 

for the Board of Regents would be how to hold all regents accountable for individual 

performance. We therefore recommended that the Board of Regents evaluate actions 

it could take in the case of neglect of regent duties. 

The following briefly summarizes the status of the Smithsonian’s implementation of 

our other three recommendations: 

• Structure and composition: The Board of Regents has taken steps toward, but 

not implemented, our recommendation to develop and make public its process for 

the selection, use, and evaluation of nonregents. The Board of Regents has 

developed and posted on its Web site the process used to recruit and select the 

eight additional nonregents that have been added to its committees since our May 

2008 report, thus fulfilling the part of our recommendation related to making 

 

25The Board of Regents established the Governance Committee as a standing committee in March 2007 

and then combined committee function with its Nominating Committee in June 2007, after the 

issuance of the Governance Committee’s report and recommendations on Smithsonian governance 

reforms. The committee is now called the Governance and Nominating Committee. 

Page 14 GAO-10-190R
public its process for selecting nonregents.26 In addition, in May 2008, the Board 

of Regents adopted a recommendation stating that nonregent committee members 

must be considered full and equal members of committees. However, the Board 

of Regents has not fully determined the implications of this recommendation for 

the roles and responsibilities of nonregent committee members in some areas. In 

July 2009, the Board of Regents Governance and Nominating Committee 

considered but tabled a motion on a proposed bylaw concerning the duties and 

responsibilities of nonregent committee members. Committee members 

discussed several issues related to establishing such a bylaw, including the fact 

that nonregent committee members do not go through the same nomination and 

appointment process as regents and do not exercise the statutory authority of 

regents. Committee members also discussed whether certain ethical and 

disclosure obligations for regents under the Board of Regents ethics guidelines 

and annual disclosure statement should apply to nonregent committee members, 

and requested that Smithsonian staff provide the regents with further information 

on potential implications of this bylaw. According to the chief of staff to the 

Board of Regents, subsequently, the Smithsonian concluded that existing 

governance requirements in committee charters require that all committee 

members, including nonregent members, file annual financial disclosures, and the 

Smithsonian plans to apply this requirement to these individuals. The Board of 

Regents official also stated that the Governance and Nominating Committee plans 

to further discuss this issue at its March 2010 meeting. This recommendation 

came from a concern that, while the Board of Regents had addressed issues 

regarding the need for additional expertise by increasing the use of nonregents on 

committees, there was little transparency as to how nonregent experts on 

committees were to be selected, used, or evaluated. 

• Communication and stakeholder relationships: The Board of Regents has 

taken steps toward but not implemented our recommendation related to 

improving communication and stakeholder relationships by developing 

mechanisms to ensure consideration of and follow-up on the key concerns of 

advisory boards and other stakeholders. This recommendation came from a 

concern that, without mechanisms by which the Board of Regents could receive 

and consider unfiltered information from stakeholders on a regular basis, its 

reform efforts in this area may not have the desired impact of creating an 

environment for governance that is inclusive of the broad diversity of activities 

and viewpoints of stakeholders within and outside of the Smithsonian. The Board 

of Regents has taken steps toward implementing this recommendation. For 

example, the Board of Regents has now held two public forums and developed a 

process for each by which comments received were responded to. The Board of 

Regents has also taken several steps to improve its relationship with the 

Smithsonian advisory boards. For example, the Chair of the Board of Regents 

now sends a quarterly e-mail to all advisory board chairs providing information on 

the most recent meeting and asking advisory board chairs to contact her directly 

 

26The eight nonregents were recruited specifically from the various Smithsonian advisory boards and 

were vetted by the Secretary, the unit directors and advisory board chairs, and the Board of Regents 

committee chairs, as well as the Chair of the Board of Regents and the Governance and Nominating 

Committee. The criteria for selecting these nonregents were based on their expertise in areas subject 

to a committee’s oversight responsibilities. 

Page 15 GAO-10-190R
with any concerns.27 According to a Smithsonian official, when a concern is 

brought to the Chair of the Board of Regents’ attention, it is either responded to 

immediately or tracked by the Office of the Board of Regents until responded to. 

In addition, as part of its strategic planning process, the Smithsonian conducted a 

workshop of advisory board chairs in April 2009, which was organized through the 

regents and led by the Chair of the Board of Regents and the Secretary of the 

Smithsonian. According to Board of Regents officials, this workshop provided a 

critical opportunity for the Board of Regents to engage with advisory board chairs 

on the development of the plan and the role of the advisory boards in its 

implementation. According to a Smithsonian official, the input provided by these 

advisory board chairs was considered as the strategic plan was developed. 

Furthermore, seven regents sit on at least one advisory board,28 and eight 

nonregent committee members have a current or past affiliation with an advisory 

board. According to five advisory board chairs with whom we spoke, the 

relationship between the Board of Regents and the advisory boards has 

improved.29 However, limitations of the efforts thus far do not ensure that the 

Board of Regents is getting sufficient input from advisory boards to increase the 

effectiveness of its governance of the Smithsonian. 

First, much of the increased communication from the Board of Regents to 

advisory boards is due to efforts of the current Chair of the Board of Regents and 

has not been formalized to ensure that these improvements continue if the 

chairmanship of the Board of Regents changes hands. Moreover, while the 

advisory board chairs with whom we spoke stated that they would contact the 

Chair of the Board of Regents if they had a particular concern, several commented 

that regular e-mail updates from the Chair of the Board of Regents are one-way 

communications that do not encourage a full flow of information in both 

directions. In another example, except for the Chief Justice, who is on two 

advisory boards in an ex-officio position, the six regents who are on advisory 

boards are on a total of four advisory boards, leaving the majority of advisory 

boards without regent representation. Moreover, most of the nonregent members 

of committees who are current or past advisory board members come from the 

Smithsonian-wide National Board. Therefore, while this intermingling may be 

valuable, it is not significantly increasing the breadth of the regents’ knowledge 

about the different museums and other entities that make up the Smithsonian. 

Board of Regents officials clarified that the overarching purpose of adding 

nonregent committee members to Board of Regents’ committees is to supplement 

the Board of Regents’ subject-matter expertise. While the Board of Regents’ 

policy calls for giving primary consideration to nonregent members who possess 

significant ties to the Smithsonian, such as leaders of the advisory boards, if 

 

27The position description for the Chair of the Board of Regents states that the Chair serves as the 

primary liaison between the Board of Regents and the Smithsonian National Board and other advisory 

boards. 

28One of these seven regents is the Chancellor—the Chief Justice of the United States—who is an exofficio member of two advisory boards. 

29Four of the five people we interviewed were current advisory board chairs as of December 2009. One 

person had rotated off of the advisory board in October 2009, but was the advisory board chair prior to 

the governance reforms and during the time that the changes described above took place. 

Page 16 GAO-10-190R
needed expertise is absent in that pool, the Board of Regents will then look 

outside the advisory boards. 

Several advisory board chairs with whom we spoke expressed concern that the 

Board of Regents still lacked a sufficient understanding of the many museums and 

other Smithsonian entities to govern as effectively as possible—an understanding 

that could be gained through developing additional mechanisms to ensure 

substantive interactions between the Board of Regents and the advisory boards. 

For example, several advisory board chairs with whom we spoke suggested that 

each regent take ownership over understanding a certain number of museums or 

programs, which could include practices such as periodic telephone 

conversations with the advisory board chair, regular visits to the museum’s 

exhibits, and reading important museum, program, or advisory board documents. 

Board of Regents officials stated that because the regents are collectively 

responsible for the governance of the entire Smithsonian, better governance 

counsels against fragmentation of interests or promotion of the idea that an 

individual regent represents a particular museum constituency. GAO did not 

evaluate the suggestions of the advisory board chairs for improving interaction 

between the advisory board and the Board of Regents or the Board of Regents’ 

concerns. Board of Regents officials also stated that additional opportunities for 

interaction between regents and advisory boards have been and are being 

developed. These officials stated that, for example, regent dinners and meetings 

routinely contain mission-related components that include tours or presentations 

by museum directors and staff; and a 2010 goal of the Office of the Regents is to 

collect, analyze, and routinely inform the Board of Regents of issues gleaned from 

the minutes and other papers of the advisory boards. According to Board of 

Regents officials, in addition, both advisory board chairs and their respective 

museum or program directors will be requested annually to identify the most 

promising opportunities and most pressing challenges or issues that face the 

museum or program and the advisory board for dissemination to the Board of 

Regents. 

• Assessment—evaluation of reforms: The Board of Regents has taken steps 

toward, but has not implemented, our recommendation to conduct an evaluation 

of its reform efforts after a suitable time has passed. In May 2008 the Board of 

Regents took steps towards implementing this recommendation by approving a 

plan to conduct an evaluation of its governance reform effort every 3 years, 

beginning in 2010. This recommendation stemmed from a concern that the Board 

of Regents had no mechanism planned to evaluate the implementation and 

effectiveness of the governance reforms after enough time had passed for the 

Smithsonian to operate in a fully reformed environment. Board of Regents 

officials stated that the Board of Regents has been consistent in its commitment 

to conduct a review of the efficacy of the governance reforms in 2010. 

Agency Comments 

We provided a draft of this report to the Board of Regents and the Smithsonian for 

review and comment. Both the Board of Regents and the Smithsonian concurred 

with the findings of this report. The Board of Regents stated that it has made 

significant progress over the past 2 years in making the Smithsonian a leader in 

nonprofit governance, and that the Board of Regents is continuing to identify ways to 

Page 17 GAO-10-190R
strengthen relationships with Smithsonian advisory boards, including ways to 

formalize improvements in communication that have been made. The Board of 

Regents also reiterated its commitment to assess the efficacy of its governance 

reform efforts in 2010. The Smithsonian Institution stated that it is proud of the 

progress that has been made with regard to governance reform, and that the 

Smithsonian expects to complete the remaining reforms over the course of the 

coming year. In addition, both the Board of Regents and the Smithsonian provided 

technical clarifications and comments to the draft, which we incorporated into the 

final report as appropriate. The Board of Regents’ comments on our report can be 

found in enclosure II, and the Smithsonian’s comments to our report can be found in 

enclosure III. 

- - - - - - - - - - - 

We are sending copies of this report to the appropriate congressional committees. 

We are also sending this report to the Chair of the Board of Regents and the Secretary 

of the Smithsonian. In addition, this report will be available at no cost on the GAO 

Web site at http://www.gao.gov. Contact points for our Offices of Congressional 

Relations and Public Affairs may be found on the last page of this report. 

If you or your staff have any questions regarding this report, please contact me at 

(202) 512-2834 or at goldsteinm@gao.gov. Key contributors to this report include 

David Sausville (Assistant Director), Brian Hartman, Jennifer Kim, Susan MichalSmith, Sara Ann Moessbauer, Ruth Walk, Alwynne Wilbur, and Carrie Wilks. 

Mark L. Goldstein 

Director, Physical Infrastructure Issues 

Enclosures

Page 18 GAO-10-190R
Enclosure I: Scope and Methodology 

To analyze the extent to which the Smithsonian Institution (Smithsonian) had 

implemented its Governance Committee and our May 2008 governance 

recommendations, we took the following steps. As described in 2008, in assessing 

the Smithsonian’s implementation of its Governance Committee’s 25 

recommendations, we determined that some of these recommendations had multiple 

parts. In order to assess the Smithsonian’s efforts to implement these 

recommendations, we analyzed each reform contained in the recommendations 

separately; therefore, we assessed the Smithsonian’s efforts related to 42 reforms that 

related to the following areas: 

• executive and ethics reforms, 

• executive travel policies, 

• policies on broader Smithsonian operations, 

• access of senior officials to the Board of Regents and level of information 

available to the Board of Regents, 

• transparency of the Board of Regents’ and the Smithsonian’s activities, 

• communication and stakeholder relationships, 

• regents’ roles and responsibilities, 

• the Board of Regents’ structure and composition, and 

• assessment of the Board of Regents. 

We found that the Board of Regents had implemented 30 of the 42 reforms to address 

these areas of concern, and that it had not completed its implementation of 12 of the 

recommended reforms. In that report, we also made four recommendations to 

strengthen the Board of Regents’ governance reform efforts. For this report, we 

assessed the status of the Smithsonian’s implementation of the 12 governance 

reforms that had not been implemented as of May 2008 and our four 

recommendations from prior work. We assessed the extent to which the Smithsonian 

has implemented governance reforms recommended by its Governance Committee 

and GAO, but we did not evaluate the effectiveness of these reforms in improving 

Smithsonian governance. 

In order to perform this assessment, we reviewed our May 2008 report on the 

Smithsonian’s governance reforms, and we reviewed Smithsonian documentary and 

testimonial evidence. To assess the status of the Smithsonian’s implementation of all 

the reforms and recommendations, we interviewed Smithsonian officials, including 

the Board of Regents Chief of Staff, and the Smithsonian Chief Financial Officer, 

among others, and five current or recently past advisory board chairs. In addition, we 

reviewed the following evidence related to the reform areas: 

• To review the Smithsonian’s steps to implement the Board of Regents Governance 

Committee’s reform on ethics, we reviewed a document describing the process 

Page 19 GAO-10-190R
for implementing the conflicts of interest database from the Smithsonian’s Office 

of General Counsel. 

• To assess the steps taken by the Board of Regents to implement its Governance 

Committee’s reforms on broader Smithsonian operations, we reviewed (1) 

documents relating to the former Smithsonian Business Ventures, (2) approved 

actions from the Board of Regents’ January 26, 2009, meeting, (3) a Chief 

Financial Officer report to the Audit and Review Committee on the results of the 

Smithsonian’s ongoing senior executive travel review, (4) Smithsonian-wide email announcements containing travel policy reminders, (5) portions of the 

Smithsonian’s travel handbook guidance, (6) the Smithsonian’s contracting policy 

(Smithsonian Directive 314), (7) and two plans (January 2009 and March 30, 2009) 

developed by the Chief Financial Officer for strengthening internal controls at the 

Smithsonian. We also reviewed two recent relevant Smithsonian Inspector 

General reports—a January 2009 report on travel oversight at the Smithsonian and 

an October 2008 report on the travel and event expenses of the former Director of 

the National Museum of the American Indian. To assess the steps taken by the 

Smithsonian to implement its Governance Committee reforms and our May 2008 

recommendation related to communication and stakeholder relationships, we 

watched the Webcast of the Smithsonian’s November 2008 public forum posted on 

the Smithsonian’s Web site and analyzed comments and responses posted on the 

Smithsonian’s Web site. We also reviewed a summary of comments received 

during and after the public forum created by the Smithsonian and provided to 

several Smithsonian parties, and we reviewed documentary evidence on the 

September 2009 annual public forum. In addition, we reviewed a document 

created by the Board of Regents and provided to the chairs of advisory boards 

detailing new efforts to improve communication and information sharing between 

the Board of Regents and the advisory boards. We analyzed three e-mails sent to 

Advisory Board chairs from April through October 2009, information on regents 

membership on advisory boards and advisory board membership on Board of 

Regents’ committees, and we spoke with five current or just prior advisory board 

chairs about the effectiveness of efforts to increase the role of the advisory 

boards. 

• To assess the steps taken by the Board of Regents to implement its Governance 

Committee reforms related to the Board of Regents’ roles and responsibilities, 

structure and composition, and assessment, and our May 2008 recommendations 

related to the Board of Regents’ structure and composition and assessment, we 

reviewed and analyzed the September and November 2008 and January, June, and 

September 2009 board meeting minutes; the Board of Regents’ orientation 

package; committee charters; self-assessment instruments used to conduct the 

Board and committee self-assessments; results of the Board of Regents’ first selfassessment; and the procedures for recruiting and selecting nonregents for 

committees, which are posted on the Smithsonian Web site. 

Page 20 GAO-10-190R
We conducted our work in Washington, D.C., between October and December 2009 in 

accordance with generally accepted government auditing standards. Those standards 

require that we plan and perform the audit to obtain sufficient, appropriate evidence 

to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our 

findings and conclusions based on our audit objectives. 

Page 21 GAO-10-190R
Enclosure II: Comments from the Smithsonian Institution’s Board of 

Regents 

Page 22 GAO-10-190R
Enclosure III: Comments from the Smithsonian Institution 

(543252) 

Page 23 GAO-10-190R
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