This is the accessible text file for CG speech number GAO-07-165CG 
entitled 'Enhancing Performance, Accountability, and Foresight' which 
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Presentation by: 

the Honorable David M. Walker: 

Comptroller General of the United States: 

Enhancing Performance, Accountability, and Foresight: 

Speech before the Caribbean Organization of Supreme Audit Institutions 
(CAROSAI): 

GAO-07-165CG: 

United States Government Accountability Office: 

It's a pleasure to be here today. As CAROSAI approaches its 20th 
anniversary, it can look with pride on the work you've done to improve 
government performance and enhance accountability in the region. You've 
truly lived up to your motto: "Towards greater accountability." 

Clearly, the Caribbean is one of the most beautiful spots in the world. 
In fact, my wife, Mary, and I have taken several vacations here, 
including a cruise this past summer. We've always had a wonderful time, 
whether it was here in the Bahamas or elsewhere in the region. 

The ties between the Caribbean and the United States are strong. 
Obviously, we're part of the same hemisphere. But we also share 
important economic ties and active trading arrangements. Since becoming 
Comptroller General in 1998, I've visited most of CAROSAI's member 
countries, either officially or as a tourist. I've also participated in 
several highly productive gatherings with my Caribbean colleagues. 

Today, I'd like to speak to you about a role that more supreme audit 
institutions (SAI) need to add to their portfolio of capabilities. That 
role is providing government officials with foresight about key 
emerging issues. Such forward thinking should supplement and complement 
our traditional audit responsibilities. 

Before addressing the issue of foresight, I'd like to touch on how SAIs 
can maximize their effectiveness and credibility. Over the years, I've 
found three elements are essential to maximizing value and mitigating 
risk. These three elements are incentives, transparency, and 
accountability. They apply equally to the public and private sectors 
and can provide a benefit to many areas, from governance systems to tax 
systems to health care systems. They also apply to countries and SAIs 
(see appendix). 

For SAIs, the incentives element requires, among other things, an 
adequate degree of auditor independence and an adequate level of 
auditor resources. The transparency element involves a commitment to 
keeping elected officials and average citizens informed about what SAIs 
do and how they do business. For example, GAO has adopted public 
protocols for dealing with clients, agencies, and fellow accountability 
organizations. We also make all our nonclassified reports public, and 
I'd urge other SAIs to do the same. Finally, the accountability element 
means that government auditors must have adequate access authority. At 
the same time, SAIs themselves need to be subject to independent 
financial audits and external peer reviews. 

These three elements--incentives, transparency, and accountability-- 
are critically important, and I consider them, along with our agency's 
core values, in every major initiative, internal or external, that GAO 
undertakes. For example, the three elements have resulted in GAO 
adopting four key performance elements to better assess how we're doing 
today and how we're positioned for the future. These four dimensions 
are results, client feedback, employee feedback, and external partner 
or alliance organization feedback. I'd be happy to speak with any of 
you about these during the conference. 

Returning to the issue of foresight, nearly a century ago, one of my 
favorite U.S. Presidents, Theodore Roosevelt, said, "We have to, as a 
nation, exercise foresight  and if we do not exercise that foresight, 
dark will be the future." 

Unfortunately, many in today's world, including in the United States, 
are consumed with the here and now. Far too little thought is given to 
what's come before or what lies ahead. Specifically, today: 

Too many individuals tend to focus on their next paycheck. 

Too many company executives focus on the next quarterly earnings 
report. 

Too many politicians focus on the next election cycle rather than the 
next generation. 

And too many countries focus on their immediate and sovereign needs 
while forgetting that we're all inhabitants of planet Earth. 

It's vital for all organizations to understand the big picture, to 
learn from the past, and to prepare for the future. It's especially 
important for SAIs to do so. We need to actively manage the 
opportunities and risks that come with change. After all, change isn't 
necessarily a bad thing. In fact, change is essential for progress and 
innovation. 

I think it's important to understand how myopia, or shortsightedness, 
can undermine a nation's willingness and ability to act. In the case of 
the United States, strong economic growth, modest inflation levels, 
relatively low interest rates, and our current superpower status have 
given many policymakers and the American public a false sense of 
security about our nation's current position and future prospects. Even 
though we know that a demographic tsunami of spending is building 
silently offshore--I'm referring to the impending retirement of our 
baby boom generation--America continues to party on and pile up record 
levels of debt. 

The reality is that we face an aging population, rising health care 
costs, and relatively low revenues as a percentage of the economy. 
Unless we change course, the United States faces decades of deficits 
and growing debt burdens. 

As Comptroller General of the United States and my nation's chief 
accountability officer, I've been speaking out on this issue to ensure 
that we do change course. Things are far from hopeless, but we need to 
act, and act soon! 

Importantly, some nations have begun to face up to their long-term 
fiscal challenges. Specifically, two nations have made difficult 
decisions that involved short-term pain in the interest of long-term 
gain. I'm speaking about Australia and New Zealand. Like the United 
States, these two countries have aging populations. However, unlike the 
United States, these two countries have already stepped up to the plate 
and dealt with their long-range fiscal imbalances, including their 
overburdened and underfunded public pension and health care programs. 
In my view, SAIs can play an important professional and nonpolitical 
role in encouraging such prudent and sustainable policy choices. In 
this regard, I'm pleased that one of the themes for next year's INTOSAI 
Congress in Mexico City relates to the fiscal sustainability issue. 

As we all know, SAIs have traditionally been in the oversight business. 
Clearly, our financial audits are an important check on waste, fraud, 
and abuse. Many SAIs also undertake program evaluations and best- 
practice studies, which are designed to improve government economy, 
efficiency, ethics, equity, and effectiveness. At the same time, SAIs 
may perform a range of insight activities designed to help identify 
which programs and policies work, which ones don't, and possible ways 
forward. 

One key to an effective accountability system is strong government 
auditing standards. As most of you know, in the United States these 
standards are found in the so-called Yellow Book, which is promulgated 
by GAO. This publication specifies the essential characteristics of 
sound audit work. The Yellow Book also describes the professional 
qualifications that government auditors should possess. I'm proud to 
say that several SAIs around the world are using the Yellow Book in 
their work. 

For the fifth time since 1972, GAO is updating the U.S. government's 
auditing standards. With the advice of experts from government, private 
accounting firms, and colleges and universities, GAO is, among other 
things, proposing changes to strengthen and modernize audit ethical 
standards and quality control systems while providing clarification on 
the differences between audit and non-audit services. We expect the 
final standards to be issued next year. 

But audit work is only one of a hierarchy of functions SAIs can and 
should be undertaking. Envision a pyramid with five layers (see 
appendix). The bottom layer is fighting corruption, and directly above 
it is ensuring accountability. These are the foundations of our 
profession. All SAIs, whatever their budgets or experience, should be 
pursuing these objectives. 

The performance and insight roles I mentioned earlier make up the 
middle layers of the pyramid. These roles require a more diverse set of 
skills and capabilities. 

At the top of the pyramid is a function that more mature and 
experienced SAIs should be undertaking. I'm talking about providing 
policymakers with foresight about the future. SAIs are uniquely 
positioned to educate public officials about key emerging trends and 
challenges in a professional, objective, fact-based, nonpartisan, fair, 
and balanced manner. By encouraging early action on issues while 
they're still manageable, SAIs can help their governments take more 
timely and informed actions and avoid crises down the line. 

Today, GAO is working hard to help members of Congress better 
understand the trends and challenges facing the United States and its 
position in the world. We're also trying to help lawmakers grasp the 
long-term and collateral implications of current policy paths. 

Our goal is for the Congress to expand its horizon, improve its 
peripheral vision, and enhance its ability to act in a timely and 
evidence-based manner. We want policymakers to better understand where 
we are, how we may look 30 or even 40 years out, and how various 
policies and programs can have ripple effects collaterally, across 
borders, and over time. 

In this spirit and in an effort to "lead by example," GAO has published 
an unprecedented report called "21st Century Challenges" that asks a 
series of probing, sometimes provocative, questions about current 
government policies, programs, and operational practices. The report 
brings home how much of the U.S. government reflects organizational 
models, labor markets, life expectancies, transportation systems, 
security strategies, and other conditions that are rooted in the past. 
Clearly, the U.S. government isn't alone in this respect. In this 
report, we've also sought to communicate important foresight concepts 
in language used and understood by policymakers. By the way, you can 
find this report free on GAO's Web site at www.gao.gov. I recommend it 
to you. 

Today, our Congress and President need to decide which federal programs 
and policies remain priorities, which should be overhauled, and which 
have simply outlived their usefulness. I'm sure many other countries 
could also benefit from this kind of review. 

To give you one example in the tax area: Just this summer, the U.S. 
government announced it will stop collecting a 3 percent tax on long- 
distance telephone calls. This doesn't seem particularly startling 
until you realize that the tax had been introduced in 1898 to help pay 
for the Spanish-American War--a war that lasted only a few months! 

So, what's been the reaction of policymakers to our 21st Century 
Challenges report? I'm pleased to say we're seeing some hopeful signs 
in several areas that GAO has highlighted. For example, our government 
is taking seriously the need to plan ahead for the possibility of a 
global influenza pandemic. 

We're also finally starting to see greater concern about America's long-
range fiscal problems. Recently proposed legislation would convene a 
commission of leaders to study entitlement and tax reform issues and 
recommend changes. 

Most nations face similar long-term challenges. But the truth is in 
today's world, no nation, including the United States, should try to go 
it alone. In fact, most nations face a range of common challenges that 
know no geopolitical or sectoral boundaries. I'd include here economic 
globalization, new security threats, diseases such as AIDS and avian 
flu, environmental concerns like climate change, natural disasters, 
immigration challenges, and money laundering. In fact, I spoke last 
year in Jakarta on tsunami relief just months before two major 
hurricanes devastated my own country. My point here is that SAIs can 
and should help evaluate these challenges and develop solutions. 

Increasingly, the process of developing solutions will require 
collaboration and partnering for progress. Progress will depend on a 
willingness to collaborate with others, inside and outside of 
government, domestically and internationally. Frankly, all of us need 
to increase our efforts to join forces and apply our collective 
knowledge, experience, and expertise to solve shared problems. There's 
no question in my mind we can and should learn from each other. 

This is why GAO has been working so closely with its counterparts in 
other countries and with international accountability organizations, 
such as INTOSAI, IFAC, and IAASB. We all need to be working toward 
global convergence on major accounting and auditing standards as well 
as reporting models. This isn't just desirable, it's essential. In a 
world that grows smaller every day, accounting and reporting practices 
should be equally understandable to an auditor in Belgium, Bhutan, the 
Bahamas, Belize, Botswana, Bahrain, or Brazil. 

I'm happy to say that INTOSAI is making significant strides when it 
comes to international partnering. As I noted earlier, I'm a big 
believer in partnering for progress in order to share success stories 
and avoid common mistakes. We've also seen progress in developing 
ethical codes for government auditors and establishing best practices 
on vital issues like public debt management, environmental auditing, 
and privatization. 

As many of you know, I was honored to chair INTOSAI's strategic 
planning task force, and I know first-hand the contributions that 
regional members, such as Antigua and Barbuda, have made to this 
historic effort. I'm confident INTOSAI's new strategic plan will help 
raise the organization and its members to new heights in the coming 
years. 

A strategic plan is just one of many tools that SAIs have at their 
disposal to promote a forward focus. Other tools include key national 
indicators and scenario planning. Unfortunately, not all governments, 
including my own, have taken full advantage of these tools. 

The value of a strategic plan is probably obvious to everyone in this 
room. By thinking more comprehensively, governments can better set 
priorities and target their efforts, not just over months or years but 
over decades. In our case, GAO's strategic plan defines our agency's 
mission, goals, and objectives. Our plan also includes a range of key 
public policy trends and challenges that warrant attention from 
lawmakers and our agency. The plan also incorporates our agency's core 
values as the foundation for everything we do. In my view, an entity 
that doesn't have a strategic plan has little hope of maximizing value 
and mitigating risk. 

Key national indicators are another tool that can help governments 
focus on performance and the future. Key national indicators allow 
policymakers to better assess a nation's status, its progress over 
time, and its position relative to other nations on issues like public 
safety, health care, housing, immigration, energy, education, and the 
environment. Such indicators can help guide strategic planning, enhance 
performance and accountability reporting, and encourage more informed 
legislation, appropriations, and oversight. 

Key indicator systems are now used by various supranational and 
international entities, including the European Union (EU), the 
Organization for Economic Co-operation and Development (OECD), and the 
United Nations (UN). For years now, several countries, including 
Australia, Canada, and the United Kingdom, and even some U.S. states 
and municipalities have been using indicators to prioritize and target 
public resources. It's time the U.S. federal government and other 
countries developed their own systems. 

We at GAO are working with our National Academies of Sciences, the 
OECD, and others to help make key national indicators a reality in the 
United States and elsewhere. Furthermore, INTOSAI has adopted key 
national indicators as the main theme for its 2007 Congress in Mexico 
City. 

U.S. civilian agencies, including GAO, have started using another 
foresight tool long familiar to our defense agencies: scenario 
planning. For years, GAO has used this technique to analyze America's 
long-range fiscal imbalance. More recently, we've used scenario 
planning concepts to assess our nation's preparedness for natural 
disasters like hurricanes and earthquakes. 

In closing, enhancing government effectiveness, ensuring 
accountability, and focusing on foresight are important but often 
thankless jobs. Frankly, these vital tasks have too few real and 
devoted advocates. But when you return home, I hope you'll consider the 
things I've said in connection with your own SAI's work. It's time that 
policymakers put more emphasis on getting results and preparing for the 
future. In my view, it's the best way to ensure a brighter tomorrow for 
our citizens, our countries, and our planet. 

Thank you for your time and attention. 

[End of section] 

Appendix I: 

Table 1: Illustrative Key Elements for Successful Supreme Audit 
Institutions: 

Key Elements: Incentives; 
Examples: 
* Independence; 
* Resources. 

Key Elements: Transparency; 
Examples: 
* Protocols; 
* Public Reporting. 

Key Elements: Accountability; 
Examples: 
* Enforcement of Access Rights; 
* Peer Review. 

Source: GAO. 

[End of table] 

Figure 1: Supreme Audit Institution Maturity Model: 

[See PDF for Image] 

Pyramid shape diagram. 

Starting at the top with Facilitating Foresight, then Increasing 
Insight, then Enhancing Economy, Ethics, Equity, and Effectiveness, 
then Ensuring Accountability,m and last Combating Corruption.

Source: GAO. 

[End of Figure] 

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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.