This is the accessible text file for GAO report number GAO-11-2SP 
entitled 'U.S. Government Accountability Office: Performance & 
Accountability Report: Fiscal Year 2010' which was released on 
November 15, 2010. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. 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. 

Serving the Congress and the Nation: 

U.S. Government Accountability Office 

Performance and Accountability Report: Fiscal Year 2010: 

GAO-11-2SP: 

[Refer to PDF for image: U.S. flag and dome of U.S. Capitol Building] 

Mission: 

GAO exists to support the Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the federal government for the benefit of the 
American people. 

Accountability: 

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

Integrity: 

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

Reliability: 

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

Scope of work: 

GAO performs a range of oversight-, insight-, and foresight-related 
engagements, a vast majority of which are conducted in response to 
congressional mandates or requests. GAO’s engagements include 
evaluations of federal programs and performance, financial and 
management audits, policy analyses, legal opinions, bid protest 
adjudications, and investigations. 

Source: See Image Sources. 

[End of figure: Serving The Congress] 

Contents: 

Abbreviations: 

How to Use This Report: 

Introduction: 

From the Acting Comptroller General: 

Financial Reporting Assurance Statements: 

About GAO: 
Mission: 
Strategic Planning and Management Process: Organizational Structure: 
Strategies for Achieving Our Goals: How We Measure Our Performance: 

Part I: Management’s Discussion and Analysis: 

Assisting the Congress and the Nation During Changing and Challenging 
Times: Focusing on Results: 
Focusing on Our Client: 
Focusing on Our People: 
Focusing on Our Internal Operations: 
GAO’s High-Risk Program: 
Major Government Challenges: 
The Troubled Asset Relief Program: 
The American Recovery and 
Reinvestment Ac: General Counsel Decisions and Other Legal Work: 
Managing Our Resources: Strategic and Annual Work Planning: 
Internal Management Challenges and External Factors That Could Affect Our 
Performance: 

Part II: Performance Information: 

Performance Information by Strategic Goal: 

Goal 1 Overview: Address Current and Emerging Challenges to the Well- 
Being and Financial Security of the American People: 
Financial Benefits: 
Nonfinancial Benefits: 
Testimonies: 

Goal 2 Overview: Respond to Changing Security Threats and the 
Challenges of Global Interdependence: 
Financial Benefits: 
Nonfinancial Benefits: 
Testimonies: 

Goal 3 Overview: Help Transform the Federal Government to Address 
National Challenges: 
Financial Benefits: 
Nonfinancial Benefits: 
Testimonies: 

Goal 4 Overview: Maximize the Value of GAO by Enabling Quality, Timely 
Service to the Congress and by Being a Leading Practices Federal 
Agency: 

Data Quality and Program Evaluation: Verifying and Validating 
Performance Data: Program Evaluation: 

Part III: Financial Information: 
From the Acting Chief Financial Officer: 
Audit Advisory Committee’s Report: 
Independent Auditor’s Report: 
Purpose of Each Financial Statement: 
Financial Statements: 
Notes to Financial Statements: 

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

Part V: Appendixes: 
1. Accomplishments and Other Contributions: 
2. GAO’s Report on Personnel Flexibilities: 

Image Sources: 

Providing Comments on This Report: 

Obtaining Copies of GAO Documents: 

Abbreviations: 

ASC: ambulatory surgical center: 

ATO: Authorization to Operate: 

CAO: Chief Administrative Officer: 

CDL: commercial driver’s license: 

CGAB: Comptroller General’s Advisory Board: 

CMS: Centers for Medicare & Medicaid Services: 

CRA: Congressional Review Act: 

CSRS: Civil Service Retirement System: 

DCAA: Defense Contract Audit Agency: 

DEA: Drug Enforcement Administration: 

DHS: Department of Homeland Security: 

DOD: Department of Defense: 

DOJ: Department of Justice: 

DOL: Department of Labor: 

DOT: Department of Transportation: 

EPA: Environmental Protection Agency: 

FAA: Federal Aviation Administration: 

FCC: Federal Communications Commission: 

FECA: Federal Employees’ Compensation Act: 

FEGLI: Federal Employees Group Life Insurance: 

FEHBP: Federal Employees Health Benefits Program: 

FEMA: Federal Emergency Management Agency: 

FERS: Federal Employees Retirement System: 

FFETF: Financial Fraud Enforcement Task Force: 

FFMIA: Federal Financial Management Improvement Act of 1996: 

FHA: Federal Housing Administration: 

FICA: Federal Insurance Contributions Act: 

FISMA: Federal Information Security Management Act: 

FMAP: Federal Medical Assistance Percentage: 

FMFIA: Federal Managers’ Financial Integrity Act of 1982: 

FSI: Forensic Audits and Special Investigations: 

FTR: Federal Transportation Regulations: 

GPRA: Government Performance and Results Act of 1993: 

GSA: General Services Administration: 

HHA: home health agency: 

HHS: Department of Health and Human Services: 

HUD: Department of Housing and Urban Development: 

IAFP: International Auditor Fellowship Program: 

ICE: Immigration and Customs Enforcement: 

IFPTE: International Federation of Professional and Technical 
Engineers: 

IG: inspector general: 

INTOSAI: International Organization of Supreme Audit Institutions: 

IP: intellectual property: 

IRS: Internal Revenue Service: 

IT: information technology: 

LEP: Stockpile Life Extension Program: 

MA: Medicare Advantage: 

MAS: Multiple Award Schedules: 

MDA: Missile Defense Agency: 

NARA: National Archives and Records Administration: 

NASA: National Aeronautics and Space Administration: 

NextGen: Next Generation Air Transportation System: 

NFC: National Finance Center: 

NIST: National Institute of Standards and Technology: 

NMTC: New Markets Tax Credit: 

NNSA: National Nuclear Security Administration: 

NOAA: National Oceanic and Atmospheric Administration: 

NPOESS: National Polar-orbiting Operational Environmental Satellite 
System: 

OMB: Office of Management and Budget: 

OPM: Office of Personnel Management: 

PAR: performance and accountability report: 

QCI: Quality and Continuous Improvement office: 

RAC: recovery audit contractor: 

SAI: supreme audit institution: 

SBA: Small Business Administration: 

TAA: Trade Adjustment Assistance: 

TARP: Troubled Asset Relief Program: 

TSA: Transportation Security Administration: 

UI: Unemployment Insurance: 

UN: United Nations: 

USACE: U.S. Army Corps of Engineers: 

USCIS: U.S. Citizenship and Immigration Service: 

USPS: United States Postal Service: 

VA: Department of Veterans Affairs: 

[End of section] 

How to Use This Report 

This report describes the U.S. Government Accountability Office’s 
(GAO) performance measures, results, and accountability processes for 
fiscal year 2010. In assessing our performance, we compared actual 
results against targets and goals that were set in our annual 
performance plan and performance budget and were developed to help 
carry out our strategic plan. Our complete set of strategic planning 
and performance and accountability reports is available on our Web 
site at [hyperlink, http://www.gao.gov/sp.html]. 

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

Introduction: 

This section includes the letter from the Acting Comptroller General 
and a statement attesting to the reliability of our performance and 
financial data in this report and the effectiveness of our internal 
control over our financial reporting. This section also includes a 
summary discussion of our mission, strategic planning process, 
organizational structure, 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 2010. 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 2010 and the targets we are aiming for in fiscal 
year 2011. It also includes an explanation of how we ensure the 
completeness and reliability of the performance data used in this 
report. 

Financial Information: 

This section includes details on our finances in fiscal year 2010, 
including a letter from our Acting 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 kind of information each of our financial 
statements conveys. 

From the Inspector General: 

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

Appendixes: 

These sections include summaries of our most significant 
accomplishments and contributions recorded in fiscal year 2010 and 
information on certain human capital management flexibilities. 

[End of How to Use This Report] 

Introduction: 

From the Acting Comptroller General: 

November 15, 2010: 

I am pleased to present GAO’s performance and accountability report 
for fiscal year 2010. The year presented many opportunities for us to 
make meaningful contributions to improving the way government works in 
support of the Congress and the nation. Our products covered a wide 
spectrum of issues—from national and homeland security to the 
environment and transportation, from cybersecurity to health care, 
banking, and housing. We continue to highlight high-risk areas and 
government challenges for the Congress and the executive branch and 
call attention to opportunities for cost savings and improvements in 
federal agency and program management. Throughout the year, we also 
regularly provided the Congress with the results of our work in 
carrying out our responsibilities related to the Troubled Asset Relief 
Program and the American Recovery and Reinvestment Act of 2009. I am 
confident that the performance and financial information in this 
report is complete and reliable and meets our high standards for 
accuracy and transparency. 

We again received from independent auditors an unqualified or “clean” 
opinion on our financial statements for fiscal year 2010. We 
documented $49.9 billion in financial benefits—a return of $87 for 
every dollar invested in us. We also recorded 1,361 nonfinancial 
benefits that helped to change laws, such as the Improper Payments 
Elimination and Recovery Act of 2010; improve services to the public; 
and promote sound management throughout government. The 111th Congress 
continued to rely on us to inform its work on national and 
international issues, with our senior officials testifying at 192 
hearings. Getting our message out is crucial; to better serve our 
clients and the public we developed a mobile Web site for access to 
GAO’s work from smart phones and other small screen devices. We have also 
piloted an “e-report” format for faster and easier access to key 
aspects of our reports. The response from our readers has been very 
positive. 

We could not have achieved this level of performance without the 
outstanding efforts of our professional, diverse, and 
multidisciplinary staff. Through their hard work and dedication, we 
met our clients’ needs with 95 percent on-time delivery. Our people 
and internal operations measures for fiscal year 2010 indicate that 
our employees feel they have the developmental and training 
opportunities, work experiences and work environment, and operational 
support they need to continue producing high-quality products. We met 
or exceeded all of the targets we set for our seven people measures-— 
new hire rate, retention rate (with and without retirements), staff 
development, staff utilization, effective leadership by supervisors, 
and organizational climate. We ranked second among large agencies 
according to the 2010 Best Places to Work in the federal government 
rankings of the Partnership for Public Service and the Institute for 
the Study of Public Policy Implementation at American University. 

We have continued to focus on key internal management challenges-— 
physical security, information security, and human capital-—and the 
external factors that affect them. For example, in fiscal year 2010, 
we strengthened our recruitment initiatives to reach a more diverse 
applicant pool, laid the groundwork for revamping our performance 
management systems, and issued an annual Workforce Diversity Plan. In 
addition, we strengthened our policies and training on compliance with 
the Americans with Disabilities Act. We also improved physical 
security by installing upgraded electronic security systems in our 
field offices and information security by supplementing our data 
protection encryption. 

We maintained our productive working relationship with the employees’ 
union, GAO Employees Organization, International Federation of 
Professional and Technical Engineers, Local 1921, and as of November 
1, we finalized negotiations toward completion of our first master 
collective bargaining agreement. We are also working with the Employee 
Advisory Council and the Diversity Advisory Council on a range of 
issues. 

Fiscal year 2010 was one of our most busy and challenging years--yet 
we succeeded at performing our mission, responding to mandates, and 
accomplishing many of our goals. 2011 brings more challenges with 
additional responsibilities to assess duplicative government programs 
and opportunities to improve operations and carry out studies and 
activities related to the implementation of new health care and 
financial regulatory reform legislation. Our new strategic plan for 
serving the Congress through fiscal year 2015 provides the framework 
for reporting on progress toward our institutional goals. We look 
forward to continuing to serve the Congress and the public with these 
and other new efforts in the coming year. 

Signed by: 

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

[End of From the Acting Comptroller General] 

Financial Reporting Assurance Statements: 

November 15, 2010: 

We, the executive committee, along with the Controller, 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 of 1982 
(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, 
2010, was operating effectively and that no material weaknesses exist 
in the design or operation of the internal control over financial 
reporting. 

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

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

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

* Our performance reporting is reliable—transactions and other data 
that support reported performance measures are properly recorded, 
processed, and summarized to permit the preparation of performance 
information consistent with the criteria set forth in the Government 
Performance and Results Act of 1993 and related OMB guidance. We also 
believe that (1) these same systems of accounting and internal 
controls provide reasonable assurance that we are in compliance with 
the spirit of FMFIA and (2) we have implemented and maintained 
financial systems that comply substantially with federal financial 
management systems requirements, applicable federal accounting 
standards, and the U.S. Government Standard General Ledger at the 
transaction level consistent with the requirements in the Federal 
Financial Management Improvement Act and OMB guidance. These are 
objectives that we set for ourselves even though, as part of the 
legislative branch of the federal government, we are not legally 
required to do so. 

Signed by: 

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

Signed by: 

Cheryl Whitaker: 
Acting Chief Financial Officer: 

Signed by: 

Lynn H. Gibson: 
Acting General Counsel: 

Signed by: 

Pamela LaRue: 
Controller: 

[End of Financial Reporting Assurance Statements] 

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, the Government 
Performance and Results Act of 1993 (GPRA), and the Federal Financial 
Management Improvement Act of 1996 (FFMIA).[Footnote 1] Accordingly, 
this performance and accountability report for fiscal year 2010 
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 
accomplish our mission by providing objective and reliable information 
and informed analysis to the Congress, to federal agencies, and to the 
public, and we recommend improvements, when appropriate, on a wide 
variety of issues. Three core values-—accountability, integrity, and 
reliability—-form the basis for all of our work, regardless of its 
origin. These are described on the inside front cover of this report. 

[Text box: 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. End of text box] 

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 figure 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. 

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 this work, which is further 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. 

Figure 1: GAO’s Strategic Planning Hierarchy: 

[Refer to PDF for image: A four level stair-step pyramid that shows 
GAO's strategic planning hierarchy] 

Level 1: Strategic Goals (4); 
Level 2: Strategic Objectives (20); 
Level 3: Performance goals (96); 
Level 4: Key Efforts (300+). 

Source: GAO. 

[End of figure] 

[Text box: 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: Financing and Programs to Serve the Health Needs 
of an Aging and Diverse Population. 

Performance Goal: Assess trends and issues in public and private 
health insurance coverage and reforms. 

Key Efforts: 

* Analyze implementation of mandated and potential reforms, such as 
modifications to federal tax policies and new insurance-purchasing 
arrangements, for their estimated impact on the numbers of uninsured, 
costs of health care services, the health insurance industry, and 
implementation challenges for federal and state agencies. 

* Evaluate trends and the distribution of health insurance coverage, 
including long-term care insurance and employer sponsorship of private 
health insurance for employees and retirees. 

* Analyze the coverage and affordability of products available to 
consumers in the individual and small-group insurance markets. 

* Assess the impact of public and private agencies’ efforts to achieve 
compliance with federal and state health insurance standards. End of 
text box] 

Figure 2: How GAO Assisted the Nation: Fiscal Year 2010: 

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

* Identified ways for HHS to strengthen inspections of ambulatory 
surgical centers leading to a fourfold increase in the proportion of 
centers found to have deficient practices; 

* Appointed 49 experts and stakeholders to 3 organizations created in 
new health care legislation; 

* Recommended food safety improvements that the Congress included in 
legislation for USDA’s school lunch program; 

* Facilitated expedited claims process for Labor’s black lung benefits 
program; 

* Increased EPA focus on environmental threats to children’s health; 

* Identified factors to consider in restructuring Fannie Mae and 
Freddie Mac; 

* Proposed changes to improve control of toxic chemicals in consumer 
products; 

* Identified hidden fees for air travel that should be disclosed to 
consumers. 

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

* Led FEMA to begin developing a strategic plan to improve the 
national public alert and warning system; 

* Exposed weaknesses in TSA’s behavior-based identification of high- 
risk air passengers; 

* Recommended changes that FEMA implemented to better plan for 
national emergency response capabilities; 

* Informed DHS’s top-level review of weaknesses and risks in the 
multibillion dollar Secure Border Initiative; 

* Contributed to a more robust missile defense acquisition policy; 

* Encouraged reforms in the United Nations’ procurement, internal 
oversight, and employment processes; 

* Provided insight to the Congress that led to expanding U.S. 
sanctions against Iran; 

* Informed development of a framework to reform the U.S. export 
control system. 

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

* Informed IRS’s decision to extend regulation of paid tax preparers, 
including requiring them to obtain an identifying number and be tested 
for competency; 

* Exposed Energy Star as a self-certification program by obtaining 
certification for bogus products which led DOE and EPA to adopt 
improvements in their approval process; 

* Led GSA to strengthen requirements due to improper spending on 
premium class government travel; 

* Surfaced weaknesses in VA outpatient scheduling IT systems; 

* Developed a methodology adopted by the Congress to efficiently 
target billions of dollars in Medicaid assistance through the Recovery 
Act; 

* Assessed IT risks for the 2010 Census to ensure successful execution; 

* Profiled selected DHS investments in a 2-page format to provide the 
Congress with a new, easy reference on acquisition oversight, 
planning, and execution. 

Goal 4: Maximize the value of GAO by enabling quality, timely service 
to the Congress and Being a leading practices federal agency: 

* Implemented leading practices to attract a more diverse workforce 
and foster an inclusive work environment; 

* Leveraged technology to facilitate business process improvements in 
financial and administrative IT systems; 

* Improved access to our products with a new mobile Web site for users 
of small screen devices and a new electronic product format; 

* Collaborated with international accountability organizations to 
enhance their audit guidelines by incorporating private sector 
international auditing standards; 

* Led development of a strategic plan for the international 
accountability community. 

Source: GAO. 

Additional information on accomplishments by goal is highlighted in 
Parts II and V of this report. 

[End of figure] 

In July 2010, we updated and began the transition to our strategic 
plan for fiscal years 2010-2015. 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 
figure 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 update our 6-year strategic plan every 3 years, consulting 
extensively during the update with our clients on Capitol Hill and 
with other experts. A description of the steps in our strategic 
planning process is included in our strategic plan, (see our complete 
strategic plan on [hyperlink, http://www.gao.gov/products/GA0-10-595P]). 
This site also provides access to our annual performance plans since 
fiscal year 1999 and our performance and accountability reports since 
fiscal year 2001. 

Using the plan as a blueprint, we lay out the areas in which we expect 
to conduct research, audits, analyses, and evaluations to meet our 
clients' needs, and we allocate the resources we receive from the 
Congress accordingly. Given the increasingly fast pace with which 
crucial issues emerge and evolve, we 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 Web site [hyperlink, 
http://www.gao.gov/sp.html]. 

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

We have included some information about future plans in this report to 
provide as cohesive a view as possible of what we have done, what we 
are doing, and what we expect to do to support the Congress and to 
serve the nation. 

Last year, the Association of Government Accountants awarded us for 
the ninth consecutive year its Certificate of Excellence in 
Accountability Reporting for our fiscal year 2009 performance and 
accountability report. According to the association, this certificate 
means that we produced an interesting and informative report that 
achieved the goal of complete and fair reporting. We also received an 
award from Graphic Design USA for the full version of our fiscal year 
2009 performance and accountability report, as well as for its summary 
version known as the Citizens' Report (see figure 4). 

Figure 3: GAO's Strategic Plan Framework: 

[Refer to PDF for Image: illustration] 

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. 

Trends: 

* National Security Threats; 

* Fiscal Sustainability Challenges; 

* Economic Recover and Growth; 

* Global Interdependency; 

* Science & Technology; 

* Networks and Virtualization; 

* Shifting Roles of Government; 

* Demographic and Societal Change. 

Goals & Objectives: 

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

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

* Health care needs; 

* Lifelong learning; 

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

* Financial security; 

* Effective system of justice; 

* Viable communities; 

* Stable financial system and consumer protection; 

* Stewardship of natural resources and the environment; 

* Infrastructure; 

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

* Homeland security; 

* Military capabilities and readiness; 

* U.S. foreign policy interests; 

* Global market forces. 

Help Transform the Federal Government to Address National Challenges 
by assessing: 

* Government’s fiscal position and options for closing gap; 

* Fraud, waste, and abuse; 

* Major management challenges and program risks. 

Maximize the Value of GAO by Enabling Quality, Timely Service to the 
Congress and Being a Leading Practices Federal Agency in the areas of: 

* Efficiency, effectiveness, and quality; 

* Diverse and inclusive work environment; 

* Professional networks and collaboration; 

* Institutional stewardship and resource management. 

Core Values: 

* Accountability; 

* Integrity; 

* Reliability. 

Source: GAO. 

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

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

[Refer to PDF for Image: illustrations] 

Scanned copies of: 

1. Cover of the Government Accountability Office's Summary of GAO's 
Performance and Financial Results, Fiscal Year 2009. 

2. Cover of the Government Accountability Office's Performance and 
Accountability Report for Fiscal Year 2009. 

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

In recognition of your outstanding efforts preparing GAO's Performance 
and Accountability Report for the fiscal year ended September 30, 2009. 

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

Signed by: 

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

Signed by: 

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

4. 2010 Graphic Design USA presents an: American Inhouse Design Award 
to Government Accountability Office for Performance and Accountability 
Report FY 2009. 

5. 2010 Graphic Design USA presents an: American Inhouse Design Award 
to Government Accountability Office for Summary of GAO's Performance 
and Financial Info, FY 2009. 

Source: GAO. 

[End of Figure 4: GAO’s Performance and Accountability Report Awards] 

Organizational Structure: 

As the Acting Comptroller General of the United States, Gene L. Dodaro 
is the head of GAO. On March 13, 2008, he succeeded David L. Walker 
who resigned before the end of his 15-year term that began in 1998. 
Mr. Dodaro previously served as GAO's Chief Operating Officer for 9 
years, and he retained this position after assuming the top post. Two 
other executives join Acting Comptroller General Dodaro to form our 
Executive Committee: Acting Chief Administrative Officer/Chief 
Financial Officer Cheryl Whitaker and Acting General Counsel Lynn 
Gibson. Mr. Dodaro has been nominated by the President to serve as the 
Comptroller General. 

To achieve our strategic goals, our staff are 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 Special Investigations (FSI) 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. Also, FSI 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. FSI is an 
integrated unit composed of investigators, analysts, and auditors who 
have experience with forensic auditing and data mining and staff in 
the office of our General Counsel. 

Senior executives in charge of 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, Quality and 
Continuous Improvement, 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. 
 
Figure 5: Organizational Structure: 

[Refer to PDF for image] 

Level one: Comptroller General of the United States: 
* Public Affairs; 
* Strategic Planning and External Liaison; 
* Congressional Relations; 
* Opportunity and Inclusiveness. 

Level one (set apart from all GAO units to denote independence and 
statutory role): Inspector General. 

Level two: 
* General Counsel; 
* Chief Operating Officer; 
* Chief Administrative Officer/Chief Financial Officer. 

Level three: 

Under General Counsel: 
Goals 1, 2, 3, and 4: 
* Provide audit and other legal support services for all goals and 
staff offices; 
* Manage GAO’s bid protest and appropriations law work. 

Under Chief Operating Officer: 

Goal 1: 
Provide timely, quality service to the Congress and the federal 
government to address current and emerging challenges to the well-
being and financial security of the American people: 
* Education, Workforce, and Income Security; 
* Financial Markets and Community Investment; 
* Health Care; 
* Homeland Security and Justice; 
* Natural Resources and Environment; 
* Physical Infrastructure. 

Goal 2: 
Provide timely, quality service to the Congress and the federal 
government to respond to changing security threats and the challenges 
of global interdependence: 
* Acquisition and Sourcing Management; 
* Defense Capabilities and Management; 
* International Affairs and Trade. 

Goal 3: 
Help transform the federal government’s role and how it does business 
to meet 21st century challenges: 
* Applied Research and Methods; 
* Financial Management and Assurance; 
* Forensic Audits and Special Investigations; 
* Information Technology; 
* Strategic Issues. 

Under Chief Administrative Officer/Chief Financial Officer: 

Goal 4: 
Maximize the Value of GAO by Enabling Quality, Timely Service to the 
Congress and Being a Leading Practices Federal Agency: 
* Controller; 
* Human Capital Office; 
– Chief Human Capital Officer; 
* Information Systems and Technology Services; 
– Chief Information Officer; 
* Knowledge Services; 
– Chief Knowledge Services Officer; 
* Professional Development Program; 
* Field Operations. 

Source: GAO. 

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

[End of Figure 5: Organizational Structure] 

The General Counsel's office 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 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 in-house support to our management on a 
wide array of human capital matters and initiatives and on information 
management and acquisition matters and defends the agency in 
administrative and judicial forums. Finally, attorneys in the 
Procurement Law and the Budget and Appropriations Law groups prepare 
administrative decisions and opinions adjudicating protests to the 
award of government contracts or opining on the availability and use 
of appropriated funds. 

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

We maintain a multidisciplinary workforce with training in many 
disciplines, including accounting, law, engineering, public and 
business administration, economics, and the social and physical 
sciences. About three-quarters of our approximately 3,200 employees 
are based at our headquarters in Washington, D.C.; the rest are 
deployed in field offices across the country (see figure 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 an independent statutory office within the agency. Under the 
legislation, the IG is responsible for conducting audits and 
investigations relating to the administration of the programs and 
operations of GAO and for making recommendations to promote its 
economy, efficiency, and effectiveness. The IG also keeps the 
Comptroller General and the Congress fully informed through its 
semiannual reports that describe its findings. In addition, the IG 
investigates allegations from GAO 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. 

Figure 6: GAO’s Office Locations: 

[Refer to PDF for image] 

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

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

Source: See Image Sources. 

[End of Figure 6: GAO’s Office Locations] 

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 and strengthening our 
human capital and internal operations. Specifically, our strategies 
emphasize the importance of working with other organizations on 
crosscutting issues and effectively addressing the challenges to 
achieving our agency's goals and recognizing the internal and external 
factors that could impair our performance. Through these strategies, 
which have proven successful for us for a number of years, we plan to 
achieve the level of performance that is needed to meet our 
performance measures and goals. This level of performance will allow 
us 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 
professional, objective, fact-based, nonpartisan, nonideological, 
fair, and balanced information to support the Congress in carrying out 
its constitutional responsibilities. To implement the performance 
goals and key efforts related to these three goals, we develop and 
present information in a number of ways, including: 

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

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

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

* analyses of the financing for government activities; 

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

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

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

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

We conduct specific engagements as a result of requests from 
congressional committees and mandates written into legislation, 
resolutions, and committee reports. In fiscal year 2010, 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 we 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 cost and status of 
both security stabilization and reconstruction efforts in Iraq and the 
United States' efforts to secure Afghanistan and combat terrorism in 
Pakistan.[Footnote 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. We generally issue around 1,000 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. 
[Footnote 3] Our publication, Principles of Federal Appropriations 
Law, is viewed both within and outside of the government as the 
primary resource on federal case law related to the availability, use, 
and control of federal funds. In addition, we maintain the 
government's repository of reports on Antideficiency Act violations 
and make available on our Web site various information extracted from 
those reports. Collectively, our products always contain information 
and often conclusions and recommendations that allow us to achieve our 
external strategic goals. 

Another means of ensuring that we are achieving our goals is 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 of these evaluations are reported in 
terms of the financial benefits and nonfinancial benefits that reflect 
the value of our work. We actively monitor the status of our open 
recommendations—-those that remain valid but have not yet been 
implemented—-and report our findings annually to the Congress and the 
public [hyperlink, http://www.gao.gov/openrecs.html]. 

Similarly, we use our biennial high-risk report, most recently issued 
in January 2009, to provide a status report on major government 
operations that we consider high risk because they are vulnerable to 
fraud, waste, abuse, and mismanagement or are in need of broad-based 
transformation. In fiscal year 2010 we updated our high-risk and 
government management challenges Web site to draw attention to issues 
of national importance, including preparedness for large-scale public 
health emergencies; effective representation of U.S. diplomatic 
interests; and major cost saving opportunities; and the products we 
issued that address them. These products are valuable planning tools 
because they help us to identify those areas where our continued 
efforts are needed to maintain 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 issue-specific organizations. 

How We Measure Our Performance: 

To help us determine how well we are meeting the needs of the Congress 
and maximizing our value as a 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. 

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) so that the 
sum of the targets for the goals equals the agencywide targets. For 
past recommendations implemented and percentage of products with 
recommendations, we set targets and report performance for the agency 
as a whole because we want our performance on these measures to be 
consistent across goals. We track our performance by strategic goal in 
order to understand why we meet or do not meet the agencywide target. 
We also use this information to provide feedback to our teams on the 
extent to which they are contributing to the overall target and to 
help them identify areas for improvement. 

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

We set a target at the agencywide level for the number of hearings and 
then assign a portion of these hearings as a target for each of the 
external goals (1, 2, and 3) based on each 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 why we met or did not 
meet the agencywide target. We set an agencywide target for timeliness 
because we want our performance on this measure to be consistent 
across goals. 

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

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

Setting Performance Targets: 

To establish targets for all of our measures, we examine what we have 
been able to achieve in the past (for example, by looking at our 4- 
year rolling averages) for most of our results measures (see p. 24) 
and the external factors that influence our work (see p. 56). The 
teams and offices that are directly engaged in the work discuss their 
views of what must be accomplished in the upcoming fiscal year with 
our top executives, who then establish targets for the performance 
measures. 

Once approved by the Comptroller General, the targets become final and 
are presented in our annual performance plan and budget.[Footnote 4] 
We may adjust these targets after they are initially published when 
our expected future work or level of funding provided warrants doing 
so. If we make changes, we include the changed targets in later 
documents, such as this performance and accountability report, and 
indicate that we have changed them. In part II, we include detailed 
information on data sources that we use to assess each of these 
measures, as well as the steps we take to verify and validate the data. 

On the pages that follow, we assess our performance for fiscal year 
2010 against our previously established performance targets. We also 
present our financial statements, the independent auditor's report, 
and a statement from GAO's Inspector General. 

[End of About GAO] 

Part 1: Management's Discussion and Analysis: 

Assisting the Congress and the Nation During Changing and Challenging 
Times: 

In fiscal year 2010, the challenges that most urgently engaged the 
attention of the Congress and the public helped to define our 
priorities. Our work on nationwide funding provided through the 
American Recovery and Reinvestment Act of 2009 (Recovery Act) and the 
Troubled Asset Relief Program (TARP) in response to the economic 
crisis, national security and wartime commitments, expanded health 
care coverage for our citizens, and environmental crises helped inform 
congressional members, the administration, and their staffs in 
developing new federal policies and programs and overseeing ongoing 
ones to address these and other issues. 

We monitored how well we performed our work and supported our staff 
using 15 annual performance measures. The results of our efforts are 
reflected in our solid performance in fiscal year 2010—-we met or 
exceeded all but one of the performance targets we set for each of 
these measures (see table 1). We exceeded our financial benefits 
target of $42 billion for the fiscal year by $7.9 billion. This 
represents an $87 return on every dollar the Congress invested in us. 
In addition, we exceeded our target of 1,200 nonfinancial benefits by 
161 benefits. We also exceeded our targets for past recommendations 
implemented by 2 percentage points and for new products with 
recommendations by 1 percentage point. We did not meet our target of 
220 hearings at which we were asked to testify, due to fewer than 
anticipated hearings in a range of subject areas. We did meet the 
target for delivering our products and testimonies to our clients in a 
timely manner. We also met or exceeded our annual targets for all 
seven of our people measures. 

Concerning our two internal operations measures, we will assess our 
performance related to how well our internal administrative services 
(e.g., computer support, mail service, and Internet service) help 
employees get their jobs done or improve employees' quality of work 
life once data from our November 2010 annual customer satisfaction 
survey have been analyzed. These measures are directly related to our 
goal 4 strategic objectives of continuously enhancing our business and 
management processes and becoming a professional services employer of 
choice. There will always be a lag in reporting on this measure 
because our customer feedback survey is distributed after we issue the 
performance and accountability report. In fiscal year 2009, we 
exceeded our targets of 4.0 (a composite score based on employees' 
responses from an internal survey) for our measure to help get the job 
done and for our quality of work life measure. These scores indicate 
that our employees were satisfied with the internal administrative 
services they used during their workday. The survey asked staff to 
rank the importance of each service to them and indicate their 
satisfaction with it on a scale from 1 to 5, with 5 being the highest 
score. 

Table 1: Agencywide Summary of Annual Measures and Targets: 

Performance Measure: Results: Financial benefits (dollars in 
billions); 
2006 Actual: $51.0 billion; 
2007 Actual: $45.9 billion; 
2008 Actual: $58.1 billion; 
2009 Actual: $43.0 billion; 
2010 Target: $42.0 billion; 
2010 Actual: $49.9 billion; 
Met/Not Met: Met; 
2011 Target: $42.0 billion. 

Performance Measure: Results: Nonfinancial benefits; 
2006 Actual: 1,342; 
2007 Actual: 1,354; 
2008 Actual: 1,398; 
2009 Actual: 1,315; 
2010 Target: 1,200; 
2010 Actual: 1,361; 
Met/Not Met: Met; 
2011 Target: 1,200. 

Performance Measure: Results: Past recommendations implemented; 
2006 Actual: 82%; 
2007 Actual: 82%; 
2008 Actual: 83%; 
2009 Actual: 80%; 
2010 Target: 80%; 
2010 Actual: 82%; 
Met/Not Met: Met; 
2011 Target: 80%. 

Performance Measure: Results: New products with recommendations; 
2006 Actual: 65%; 
2007 Actual: 66%; 
2008 Actual: 66%; 
2009 Actual: 68%; 
2010 Target: 60%; 
2010 Actual: 61%; 
Met/Not Met: Met; 
2011 Target: 60%. 

Performance Measure: Client: Testimonies; 
2006 Actual: 240; 
2007 Actual: 276; 
2008 Actual: 298; 
2009 Actual: 203; 
2010 Target: 220; 
2010 Actual: 192; 
Met/Not Met: Not Met; 
2011 Target: 200. 

Performance Measure: Client: Timeliness[A]; 
2006 Actual: 93%; 
2007 Actual: 95%; 
2008 Actual: 95%; 
2009 Actual: 95%; 
2010 Target: 95%; 
2010 Actual: 95%; 
Met/Not Met: Met; 
2011 Target: 95%. 

Performance Measure: People: New hire rate; 
2006 Actual: 94%; 
2007 Actual: 96%; 
2008 Actual: 96%; 
2009 Actual: 99%; 
2010 Target: 95%; 
2010 Actual: 95%; 
Met/Not Met: Met; 
2011 Target: 95%. 

Performance Measure: People: Retention rate: With retirements; 
2006 Actual: 90%; 
2007 Actual: 90%; 
2008 Actual: 90%; 
2009 Actual: 94%; 
2010 Target: 90%; 
2010 Actual: 94%; 
Met/Not Met: Met; 
2011 Target: 90%. 

Performance Measure: People: Retention rate: Without retirements; 
2006 Actual: 94%; 
2007 Actual: 94%; 
2008 Actual: 93%; 
2009 Actual: 96%; 
2010 Target: 94%; 
2010 Actual: 96%; 
Met/Not Met: Met; 
2011 Target: 94%. 

Performance Measure: People: Staff development[B,C]; 
2006 Actual: 76%; 
2007 Actual: 76%; 
2008 Actual: 77%; 
2009 Actual: 79%
2010 Target: 76%; 
2010 Actual: 79%; 
Met/Not Met: Met; 
2011 Target: 76%. 

Performance Measure: People: Staff utilization[B,D]; 
2006 Actual: 75%; 
2007 Actual: 73%; 
2008 Actual: 75%; 
2009 Actual: 78%; 
2010 Target: 75%; 
2010 Actual: 77%; 
Met/Not Met: Met; 
2011 Target: 75%. 

Performance Measure: People: Effective leadership by supervisors 
[B,C]; 
2006 Actual: 79%; 
2007 Actual: 79%; 
2008 Actual: 81%; 
2009 Actual: 83%; 
2010 Target: 80%; 
2010 Actual: 83%; 
Met/Not Met: Met; 
2011 Target: 80%. 

Performance Measure: People: Organizational climate[B]; 
2006 Actual: 73%; 
2007 Actual: 74%; 
2008 Actual: 77%; 
2009 Actual: 79%; 
2010 Target: 75%; 
2010 Actual: 79%; 
Met/Not Met: Met; 
2011 Target: 75%. 

Performance Measure: Internal operations[F]: Help get job done; 
2006 Actual: 4.1; 
2007 Actual: 4.05; 
2008 Actual: 4.0; 
2009 Actual: 4.03; 
2010 Target: 4.0. 
2010 Actual: N/A; 
Met/Not Met: N/A; 
2011 Target: 4.0. 

Performance Measure: Internal operations[F]: Quality of work life; 
2006 Actual: 4.0; 
2007 Actual: 3.98; 
2008 Actual: 4.01; 
2009 Actual: 4.01; 
2010 Target: 4.0. 
2010 Actual: N/A. 
Met/Not Met: N/A; 
2011 Target: 4.0. 

Source: GAO. 

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

[A] 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 
2010 is 29 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] Beginning in fiscal year 2006 we changed the way that the staff 
development people measure was calculated. Specifically, we dropped 
one question regarding computer-based training because we felt such 
training was a significant part of (and therefore included in) the 
other questions the survey asked regarding training. We also modified 
a question on internal training and changed the scale of possible 
responses to that question. 

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

[E] 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 their immediate supervisors’ 
leadership. In fiscal year 2010, we changed one of the questions for 
this measure.

[F] For our internal operations measures, we ask staff to rank 33 
internal services available to them and to indicate on a scale from 1 
to 5, with 5 being the highest, their satisfaction with each service. 
These measures are described in more detail on page 38 of this report. 
We will report actual data for fiscal year 2010 once data from our 
November 2010 internal customer satisfaction survey have been 
analyzed. N/A indicates that the data are not yet available. 

[End of Table 1] 

Our fiscal year 2011 targets for 14 of 15 of our performance measures 
are the same as those targets we reported in our fiscal year 2010 
performance plan in January 2010. We believe that these targets are 
challenging yet realistic for our staff. For example, we did not 
increase our financial benefits target for 2011 above our fiscal year 
2010 actual because we cannot always predict whether agencies or the 
Congress will implement our recommendations or the benefits that may 
accrue from these actions in a given year. Thus, we believe our target 
of $42 billion for financial benefits for fiscal year 2011 (shown on 
p. 23) is an achievable, conservative estimate. 

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 from fiscal 
year 2006 through fiscal year 2010, our averages for financial 
benefits and new products with recommendations remained fairly stable 
during this period. However, the average number of nonfinancial 
benefits we recorded declined from fiscal years 2008 to 2009 and 
increased again in fiscal year 2010. 

When setting our target for the number of hearings at which our senior 
executives testify, we base our testimonies target largely on the 
cyclical nature of the congressional calendar, 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 because the members usually 
only meet for a short session at the end of the calendar year, and 
then they reorganize in the following months, providing fewer 
opportunities for us to testify. In 2010, our experience was different 
than expected due to 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 have therefore set a lower target for 
congressional testimonies in 2011 than in 2010. 

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

Performance measure: Results: Financial benefits (billions); 
2006: $43.0 billion; 
2007: $45.1 billion; 
2008: $48.7 billion; 
2009: $49.5 billion; 
20010: $49.2 billion. 

Performance measure: Results: Nonfinancial benefits; 
2006: 1,248; 
2007: 1,325; 
2008: 1,376; 
2009: 1,352; 
2010: 1,357. 

Performance measure: Results: New products with recommendations; 
2006: 61%; 
2007: 64%; 
2008: 65%; 
2009: 66%; 
2010: 65%. 

Performance measure: Client: Testimonies; 
2006: 206 
2007: 228; 
2008: 248; 
2009: 254; 
2010: 242. 

Source: GAO. 

[End of Table 2] 

Focusing on Results: 

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

Financial Benefits and Nonfinancial Benefits: 

We describe many of the results produced by our work as either 
financial or nonfinancial benefits. Both types of benefits result from 
our efforts to provide information to the Congress that helped to (1) 
change laws and regulations, (2) improve services to the public, and 
(3) promote sound agency and governmentwide management. In many cases, 
the benefits we claimed in fiscal year 2010 are based on work we did 
in past years because it often takes the Congress and agencies time to 
implement our recommendations or to act on our findings. 

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

Financial Benefits: 

Our findings and recommendations produce measurable financial benefits 
for the federal government after the Congress acts on or agencies 
implement them and the funds are made available to reduce government 
expenditures or are reallocated to other areas. 

The monetary effect realized can be the result of: 

* changes in business operations and activities; 

* the restructuring of federal programs; or; 

* modifications to entitlements, taxes, or user fees. 

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

In fiscal year 2010, our work generated about $49.9 billion in 
financial benefits (see figure 7). We exceeded our target by almost 19 
percent due to several large unanticipated accomplishments. Part II of 
this report provides more information on these accomplishments by 
goal. Of the total amount documented in fiscal year 2010, about $26.4 
billion (or approximately 53 percent) resulted from changes in laws or 
regulations (see figure 8). 

Figure 7: Financial Benefits GAO Recorded: 

[Refer to PDF for image: vertical bar graph] 

2006 Actual: $51.0 billion; 
2007 Actual: $45.9 billion; 
2008 Actual: $58.1 billion; 
2009 Actual: $43.0 billion; 
2010 Target: $42.0 billion; 
2010 Actual: $49.9 billion. 

Source: GAO. 

[End of Figure 7: Financial Benefits GAO Recorded] 

Figure 8: Types of Financial Benefits Recorded in Fiscal Year 2010 
from Our Work: 

[Refer to PDF for image: pie-chart] 

Financial Benefits, Total: $9.9 billion; 

* Agencies acted on GAO information to improve services to the public: 
$16.9 billion (34%); 

* Information GAO provided to the Congress resulted in statutory or 
regulatory changes: $26.4 billion (53%); 

* Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO’s work: $6.6 billion (13%). 

Source: GAO. 

[End of Figure 8: Types of Financial Benefits Recorded in Fiscal Year 
2010 from Our Work] 

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 non- 
GAO sources are typically the agency that acted on our work, a 
congressional committee, or the Congressional Budget Office. 

To document financial benefits, our staff complete reports documenting 
accomplishments that are linked to specific recommendations or 
actions. Each accomplishment report for financial benefits is 
documented and reviewed by (1) another GAO staff member not involved 
in the work and (2) a senior executive in charge of the work. Also, a 
separate unit, our Quality and Continuous Improvement (QCI) office, 
reviews all financial benefits and approves benefits of $100 million 
or more, which amounted to 95 percent of the total dollar value of 
benefits recorded in fiscal year 2010. In fiscal year 2010, financial 
accomplishments of $100 million or more were also reviewed by 
independent second and third reviewers with knowledge of our 
accomplishment reporting policies and procedures. (See the financial 
benefits section in table 15 in part II of this report for more 
details about our process for reviewing accomplishment reports 
claiming financial benefits.) Figure 9 describes several examples of 
our major financial benefits for fiscal year 2010. Additional examples 
of financial benefits can be found in Part II: Performance information 
by goal, and Part V, appendix 1 of this report. 

Figure 9: GAO’s Selected Major Financial Benefits Reported in Fiscal 
Year 2010: 

[Refer to PDF for image: table] 

Description: Canceling the Manned Ground Vehicle Portion of the Army’s 
Future Combat System. Our body of work on the Army’s Future Combat 
System (FCS) has continuously identified concerns regarding the 
program’s technology maturity, requirements definition, and affordability, 
and that alternatives to the FCS program may need to be considered. In 
2009, the Secretary of Defense effectively made a no-go decision 
regarding the program when he recommended canceling the manned ground 
vehicle portion of the program-8 of 14 systems-and directed the Army to 
pursue an alternative program. The President’s budget request for 
2010 reflected this recommendation and, in explaining the rationale 
for this decision, OMB cited our work. The estimated financial benefit, 
even after a replacement program is initiated, is $3.742 billion from 
2010 through 2012. [hyperlink, http://www.gao.gov/products/GAO-09-288] 
Amount: $3.7 billion. 

Description: Eliminating Seller-Funded Assistance for Federal Housing 
Administration Mortgages. We previously reported that Federal Housing 
Administration (FHA)-insured mortgages with seller-funded down payment 
assistance had relatively high delinquency and insurance claim rates 
and tended to inflate the sales prices of homes. We recommended that 
FHA take steps to mitigate the risks of this type of assistance. In 
2007, we testified that loans with this assistance were contributing 
to FHA’s deteriorating financial condition. Citing our work, in 2008 
Congress enacted legislation prohibiting seller-funded down payment 
assistance. The estimated financial benefit associated with reduced 
insurance claims from this provision is $3.53 billion in fiscal year 
2010. [hyperlink, http://www.gao.gov/products/GAO-06-24] 
Amount: $3.5 billion. 

Description: Enhancing Tax Compliance Involving Foreign Accounts. Our 
work on international tax compliance supported Congress’s 
deliberations. The work included reviews of: the Internal Revenue 
Service’s qualified intermediary program, the civil statute of 
limitations for offshore transaction cases, the use of accounts and 
company subsidiaries in countries considered to be tax havens, and 
information on company ownership. The Joint Committee on Taxation 
estimated the provisions will increase revenue by about $3 billion in 
net present value from 2010 to 2014. [hyperlink, 
http://www.gao.gov/products/GAO-08-99] [hyperlink, 
http://www.gao.gov/products/GAO-08-778] 
Amount: $3.0 billion. 

Description: Reducing Compensation to Federal Crop Insurance 
Providers. We found that administrative and operating allowances and 
underwriting gains paid to providers of federal crop insurance are 
excessive. As a result, Congress authorized the U.S. Department of 
Agriculture (USDA) to reexamine this compensation. At our urging, USDA 
used this authority to reduce compensation to the providers and better 
align it with profitability of comparable private property and 
casualty insurance. The reduced compensation is estimated to yield a 
financial benefit of $2.75 billion from 2011 through 2015. USDA stated 
that our contributions were instrumental in achieving these savings. 
[hyperlink, http://www.gao.gov/products/GAO-09-445] 
[hyperlink, http://www.gao.gov/products/GAO-07-944T] 
[hyperlink, http://www.gao.gov/products/GAO-07-819T] 
Amount: $2.8 billion. 

Description: Improving Accountability Over U.S. Assistance to 
Pakistan. We have reported and testified on the need for greater 
accountability over Coalition Support Funds (CSF) that are provided to 
Pakistan. In 2008, we found that the Department of Defense (DOD) did 
not consistently apply existing CSF guidance to document that claimed 
costs were valid, actually incurred, or correctly calculated. We 
recommended that DOD consistently implement existing oversight 
criteria and implement additional controls, and in response, DOD 
revised its guidance for processing CSF claims. Under this revised 
guidance, DOD has thus far denied over $690 million worth of Pakistani 
claims for CSF reimbursements. 
[hyperlink, http://www.gao.gov/products/GAO-08-806] 
Amount: $0.7 billion. 

Source: GAO. 

Note: Additional examples of fiscal year 2010 financial benefits can 
be found in Part II: Performance Information and Part V, appendix 1: 
Accomplishments and Other Contributions. 

[End of Figure 9: GAO’s Selected Major Financial Benefits Reported in 
Fiscal Year 2010] 

Nonfinancial Benefits: 

Many of the benefits that result from our work cannot be measured in 
dollar terms. During fiscal year 2010, we recorded a total of 1,361 
nonfinancial benefits (see figure 10). We exceeded our target by over 
13 percent due largely to a number of accomplishments we documented 
that related to the nation's defense and security, environmental, and 
national infrastructure programs. 

Figure 10: Nonfinancial Benefits GAO Recorded: 

[Refer to PDF for image: vertical bar graph] 

2006 Actual: 1,342; 
2007 Actual: 1,354; 
2008 Actual: 1,398; 
2009 Actual: 1,315; 
2010 Target: 1,200; 
2010 Actual: 1,361. 

Source: GAO. 

[End of Figure 10: Nonfinancial Benefits GAO Recorded] 

In fiscal year 2010 we documented 645 instances where federal agencies 
used our information to improve services to the public, 43 instances 
where the information we provided to the Congress resulted in 
statutory or regulatory changes enacted in fiscal year 2010, and 673 
instances where agencies improved core business processes or 
governmentwide reforms as a result of our work (see figure 11). These 
actions covered a variety of issues, such as improving oversight of 
nursing home care, identifying fraud at the SBA's business development 
program, and improving foreign service officers' language skills. In 
figure 12, we provide examples of nonfinancial benefits we claimed as 
accomplishments in fiscal year 2010. Additional examples of 
nonfinancial benefits can be found in Part II: Performance information 
by goal, and Part V, appendix 1 of this report. 

Figure 11: Types of Nonfinancial Benefits Documented in Fiscal Year 
2010 from Our Work: 

[Refer to PDF for image: pie-chart] 

Nonfinancial Benefits, Total: 1,361; 

* Agencies acted on GAO information to improve services to the public: 
645 (48%); 

* Information GAO provided to the Congress resulted in statutory or 
regulatory changes: 43 (3%); 

* Core business processes improved at agencies and governmentwide 
management reforms advanced by GAO’s work: 673 (49%). 

Source: GAO. 

[End of Figure 11: Types of Nonfinancial Benefits Documented in Fiscal 
Year 2010 from Our Work] 

Figure 12: GAO’s Selected Nonfinancial Benefits Reported in Fiscal 
Year 2010: 

[Refer to PDF for image: table] 

Nonfinancial benefits that helped to change laws: 

Worker, Homeownership, and Business Assistance Act of 2009 (Public Law 
111-92): Strengthening First-Time Homebuyer Credit Provisions. Since 
2008, Congress enacted three versions of the First-time Homebuyer 
Credit (FTHBC) to assist the real estate market. Taxpayers claiming 
the 2008 credit (up to $7,500) must repay the credit over 15 years, 
but subsequent claimants (up to $8,000) generally do not have to repay 
the credit. Based on our work, Congress granted IRS the statutory 
authority to apply math error checks that allow IRS to automatically 
deny ineligible FTHBC claims. This includes allowing IRS to use the 
prior year return information to verify compliance with the 2008 
payback provision and ensuring taxpayers do not claim the credit in 
multiple years. [hyperlink, http://www.gao.gov/products/GAO-09-1026] 

Patient Protection and Affordable Care Act (Public Law 111-148): 
Expediting Black Lung Benefits Claims. The Department of Labor’s Black 
Lung Benefits Program provides medical and income assistance to miners 
who suffer disability or death from lung disease caused by coal dust, 
and their survivors. We found that certain claims took a long time to 
process, and claimants had difficulty proving eligibility, finding 
legal representation and developing supporting evidence. Congress 
considered our recommendations and in 2010 enacted the Patient 
Protection and Affordable Care Act (P. L. 111-148) to expedite the 
claims process and make eligibility easier for survivors and widows to 
prove. [hyperlink, http://www.gao.gov/products/GAO-10-7] 

Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, 
P.L. 110-417: Standardizing governmentwide policy on contractor 
personal conflicts of interest. Congress enacted a provision directing 
the Office Federal Procurement Policy (OFPP) at OMB to establish a 
governmentwide policy to prevent personal conflicts of interest by 
contractor employees performing acquisition functions involving the 
development, award, and administration of federal agency contracts. In 
March 2008, we reported that contractor employees often perform 
critical acquisition functions, such as developing contract 
requirements, assisting on source selection, and making award-fee 
determinations. The OFPP policy, to apply governmentwide, expands upon 
our findings and will require all government contractors whose 
employees perform acquisition functions to screen their financial 
disclosures to prevent personal conflicts of interest, and will 
prohibit contractor employees from using non-public government 
information for personal gain. 
[hyperlink, http://www.gao.gov/products/GAO-08-169] 

Nonfinancial benefits that helped to improve services to the public: 

Improved Oversight of Federal Oil and Gas Resources: Our reviews of 
Interior’s oversight of oil and gas resources led Interior to take 
action. Our finding that the U.S. government received less value than 
many other countries for oil and gas extracted from federal lands led 
Interior to launch a major study of revenue collection. Our finding 
that Interior does less to encourage development of federal oil and 
gas leases than other landowners led Interior to raise costs for 
nonproducing leases. Our finding that Interior was forgoing revenues 
for gas royalties contributed to Interior’s decision to end the 
royalties-in-kind program—-potentially saving on receiving and 
reselling oil and gas. 
[hyperlink, http://www.gao.gov/products/GAO-09-744] 
[hyperlink, http://www.gao.gov/products/GAO-09-74] 

Improved Oversight of Care in Nursing Homes: Over more than a decade, 
we have made numerous recommendations to improve oversight of care in 
nursing homes and other facilities where states conduct on-site 
inspection surveys. As a result, the Centers for Medicare & Medicaid 
(CMS) has taken a number of actions to improve oversight. For example, 
in 2009, we found that states had not surveyed 13 percent of 
facilities at the frequency required by CMS, which can increase the 
risk of not detecting quality problems. Subsequently, CMS required 
states failing to meet survey requirements to develop a plan of 
correction. [hyperlink, http://www.gao.gov/products/GAO-09-64] 

Strengthened Security of Networks and Information Systems at Federal 
Agencies: We identified numerous weaknesses in federal systems that 
make them vulnerable to a broad range of cyber threats and pinpointed 
technical and procedural improvements to better safeguard sensitive 
information and assets. We made over 330 recommendations to better 
protect the confidentiality, integrity, and availability of federal 
systems, including some of the most sensitive information possessed by 
the federal government. Based on our recommendations, key agencies, 
including OMB, Treasury, and IRS, bolstered their security programs 
and strengthened controls to prevent, limit, and detect unauthorized 
access to information resources. 
[hyperlink, http://www.gao.gov/products/GAO-09-546] 
[hyperlink, http://www.gao.gov/products/GAO-10-355] 

Improved Foreign Service Officers’ Language Skills: We examined the 
foreign language proficiency of the Department of State’s (State) 
approximately 3,600 Foreign Service officers in positions requiring 
proficiency and found that 31 percent did not meet language 
requirements. We also found that State’s method for calculating the 
percentage of officers who meet foreign language requirements is 
potentially misleading. As a result of our work, State has begun 
enhancing its foreign language requirements process and expanding its 
language training efforts. 
[hyperlink, http://www.gao.gov/products/GAO-09-955] 

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

Improved Treasury’s Debt Management: Treasury’s borrowing needs have 
increased greatly in response to the financial crisis and the 
recession. We have recommended increasing transparency of auctions and 
expanding Treasury’s Inflation Protected Securities (TIPS) to 
diversify funding sources and reduce the cost of borrowing. As a 
result, Treasury increased from once to twice a month the publication 
of the types of investors who purchase securities at auction. Treasury 
also reaffirmed its commitment to the TIPS program by increasing 
issuance amounts and frequency of auctions, and replacing the 20-year 
TIPS with 30-year TIPS. 
[hyperlink, http://www.gao.gov/products/GAO-10-498] 
[hyperlink, http://www.gao.gov/products/GAO-09-932] 

Identified Vulnerabilities in the Energy Star Certification Process: 
By submitting fake products for certification, we showed that the 
Energy Star program is vulnerable to fraud and abuse. We obtained 
Energy Star certifications for 10 bogus products, including a gas- 
powered alarm clock. The Energy Star program is meant to identify and 
certify products that decrease greenhouse emissions and lower energy 
costs, and is promoted through tax credits, appliance rebates, and 
required federal purchasing. As a result of our investigation, DOE and 
EPA announced planned improvements to program controls that will 
revise the program that was vulnerable to fraud to a certification 
program. [hyperlink, http://www.gao.gov/products/GAO-10-470] 

Assessed the Cost and Progress of the 2010 Census: In March 2008, we 
designated the 2010 Census a high-risk area, in part, because of 
weaknesses in managing information technology (IT) and untested field 
operations. Our oversight of the 2010 Census helped the U.S. Census 
Bureau mitigate IT risks and improve the accuracy of census data. 
Consistent with our recommendations on the need to finalize test plans 
and schedules for key decennial systems and operations, the Bureau 
improved performance of a critical field-data collection system. Based 
on our field observations, the Bureau also issued additional guidance 
to ensure housing units were properly counted. 
[hyperlink, http://www.gao.gov/products/GAO-10-324] 

Source: GAO. 

Note: Additional examples of fiscal year 2010 nonfinancial benefits 
can be found in Part II: Performance Information and Part V, Appendix 
1: Accomplishments and Other Contributions. 

[End of Figure 12: GAO’s Selected Nonfinancial Benefits Reported in 
Fiscal Year 2010] 

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 2010, 82 percent of the 
recommendations we made in fiscal year 2006 had been implemented (see 
figure 13), primarily by executive branch agencies. Putting these 
recommendations into practice generates tangible benefits for the 
nation. 

Figure 13: Percentage of Past Recommendations Implemented: 

[Refer to PDF for image: vertical bar graph] 

Four-year implementation rate: 
2006 Actual: 82%; 
2007 Actual: 82%; 
2008 Actual: 83%; 
2009 Actual: 80%; 
2010 Target: 80%; 
2010 Actual: 82%. 

Source: GAO. 

[End of Figure 13: Percentage of Past Recommendations Implemented] 

The 82 percent implementation rate for fiscal year 2010 exceeded our 
target for the year. As figure 14 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 14: Cumulative Implementation Rate for Recommendations Made in 
Fiscal Year 2006: 

[Refer to PDF for image: vertical bar graph] 

After 1 year: 12%; 
After 2 years: 27%; 
After 3 years: 42%; 
After 4 years: 82%. 

Source: GAO. 

[End of Figure 14: Cumulative Implementation Rate for Recommendations 
Made in Fiscal Year 2006] 

New Products Containing Recommendations: 

In fiscal year 2010, about 61 percent of the 601 written products we 
issued (excluding testimonies) contained recommendations (see figure 
15). 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 slightly exceeded our target 
of 60 percent by 1 percentage point. However, we set our target again 
in fiscal year 2011 at 60 percent because we recognize that our 
products do not always include recommendations and that 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 15: Percentage of New Products with Recommendations: 

[Refer to PDF for image: vertical bar graph] 

2006 Actual: 65%; 
2007 Actual: 66%. 
2008 Actual: 66%; 
2009 Actual: 68%; 
2010 Target: 60%; 
2010 Actual: 61%. 

Source: GAO. 

[End of Figure 15: Percentage of New Products with Recommendations] 	 

Focusing on Our Client: 

To fulfill the Congress's information needs, we strive to deliver the 
results of our work orally as well as in writing at a time agreed upon 
with our client. Our performance this year indicates that we assisted 
the Congress extremely well, by testifying about the same number of 
times we did in 2009 and delivering most of our products on time based 
on the feedback from our client. 

Testimonies: 

Our clients often invite us to testify on our current and past work as 
it relates to issues that committees are examining through the 
congressional hearing process. During fiscal year 2010, experts from 
our staff testified at 192 congressional hearings covering a wide 
range of complex issues. We did not meet our target of 220 hearings at 
which we testify (see figure 16) by 28 hearings. This measure is 
client-driven based on their invitation to testify and we cannot 
always anticipate their specific subject area interests. The 192 
hearings at which the Congress asked our executives to testify in 
fiscal year 2010 covered a broad range of issue areas. (See figure 17 
for selected topics we testified on by strategic goal in fiscal year 
2010.) 67 of the hearings at which our senior executives testified 
were related to high-risk areas and programs, which are listed on page 
40. 

Figure 16: Testimonies: 

[Refer to PDF for image: vertical bar graph] 

Hearings at which GAO testified: 
2006 Actual: 240; 
2007 Actual: 276. 
2008 Actual: 298; 
2009 Actual: 203; 
2010 Target: 220; 
2010 Actual: 192. 

Source: GAO. 

[End of Figure 16: Testimonies] 

Figure 17: Selected Testimony Topics: Fiscal Year 2010: 

[Refer to PDF for image: table] 

Goal 1: Address Current and Emerging Challenges to the Well-Being and 
Financial Security of the American People: 
* Unemployment Insurance Trust Funds; 
* Social Security Disability; 
* Underfunded Pension Plans; 
* Proprietary Schools; 
* Medicare High-Cost Drugs; 
* Toxic Substance Abuses Disease Registry; 
* Concussions in High School Athletes; 
* Children’s Access to Medicaid Dental Services; 
* Corporate Crime; 
* DOJ’s Civil Rights Division Enforcement Efforts; 
* Community Emergency Preparedness; 
* Fannie Mae & Freddie Mac; 
* Interior’s Oversight of Oil & Gas; 
* Clean Water Act Enforcement Efforts; 
* U.S. Postal Service Financial Viability; 
* Federal Facilities Security; 
* High Speed Rail Projects; 
* Commercial Aviation Consumer Fees. 

Goal 2: Respond to Changing Security Threats and the Challenges of 
Global Interdependence: 
* Financial Markets Regulation; 
* National Flood Insurance Program; 
* Climate Change; 
* Alien Smuggling Along U.S. Southwest Border; 
* Aviation Security Advanced Imaging Technology; 
* Terrorist Watchlist Screening; 
* Combating Nuclear Smuggling; 
* Iran Sanctions; 
* Counternarcotics and Anticrime Efforts in Mexico; 
* Global Food Security; 
* Intellectual Property Enforcement Efforts; 
* Afghanistan Security Force Capacity; 
* DOD Military and Civilian Employee Compensation; 
* Warfighter Contract Support; 
* Joint Strike Fighter Challenges. 

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

* Defense Space Acquisitions; 
* Military Language Skills; 
* Interagency Collaboration for National Security; 
* Interagency Contracting Strategies; 
* NASA Management and Program Challenges; 
* Balancing the Government-to-Contractor Workforce; 
* Iraq and Afghanistan Contract and Grant Management; 
* Recovery Act Oversight; 
* First Time Homebuyer Tax Credit; 
* Equal Employment Opportunity at DHS; 
* 2010 Census Management Challenges; 
* U.S. Government Financial Statements; 
* DHS Financial Management Systems Consolidation; 
* Protecting Federal Information Systems; 
* Environmental Satellites; 
* Debt Settlement Risks to Consumers; 
* Service Disabled Veteran-Owned Small Business Program Fraud 
Prevention; 
* Head Start Program Fraud; 
* Defense Contract Audit Agency Vulnerabilities. 

Source: GAO. 

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

[End of Figure 17: Selected Testimony Topics: Fiscal Year 2010] 

We believe that our fiscal year 2011 target of testimonies at 200 
hearings is a reasonable estimate given the Congress's continuing 
interest in U.S. financial and housing markets, conflicts in Iraq and 
Afghanistan, and antiterrorism efforts in Pakistan. 

Timeliness: 

To be useful to the Congress, our products must be available when our 
clients need them. 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 management[Footnote 5] and those expected to reach 500 
staff days or more), which represented about 60 percent of the 
congressionally requested written products we issued in fiscal year 
2010. 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 2010, 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 29 percent, though we received feedback on 
58 percent of the products for which we sent forms. 

In fiscal year 2010, we met our timeliness target of 95 percent. We 
have set a high target for timeliness because it is important for us 
to meet congressional needs when they occur, and we set our fiscal 
year 2011 target at the same 95 percent level. 

Figure 18: Timeliness: 

[Refer to PDF for image: vertical bar graph] 

Percentage of products on time: 
2006 Actual: 93%; 
2007 Actual: 95%; 
2008 Actual: 95%; 
2009 Actual: 95%; 
2010 Target: 95%; 
2010 Actual: 95%. 

Source: GAO. 

[End of Figure 18: Timeliness] 

Focusing on Our People: 

Our highly professional, multidisciplinary, and diverse staff were 
critical to the level of performance we demonstrated in fiscal year 
2010. 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 2010, 
we met or exceeded all 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 Verifying and Validating Performance Data on page 
80 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. We develop an annual workforce plan that 
takes into account strategic goals; projected workload requirements; 
and other changes, such as retirements, other attrition, promotions, 
and skill gaps. The workforce plan specifies the number of planned 
hires for the upcoming year. The plan is conveyed to each of our units 
to guide hiring throughout the year. The Chief Operating Officer, the 
Chief Administrative Officer, the Deputy Chief Administrative Officer, 
the Chief Human Capital Officer, and the Controller meet monthly, or 
more frequently if needed, to monitor progress against the workforce 
plan. Adjustments to the plan are made throughout the year, if 
necessary, to reflect changing needs and conditions. In fiscal year 
2010, our adjusted plan was to hire 260 staff. We were able to bring 
on board 248 staff by year-end. Table 3 shows that we met our target 
of 95 percent of our goal for new hires. Consistent with fiscal year 
2009, our success in achieving a 95 percent new hire rate resulted 
from a continuation of the focused recruiting initiatives from last 
year to effectively address workload requirements and succession 
planning needs. 

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

Performance measures: People: New hire rate; 
2006 Actual: 94%; 
2007 Actual: 96%; 
2008 Actual: 96%; 
2009 Actual: 99%; 
2010 Target: 95%; 
2010 Actual: 95%. 

Source: GAO. 

[End of Table 3: Actual Performance and Targets Related to Our New 
Hire Rate Measure] 

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 survey shows that staff who retire do so for family, life, or 
health considerations; whereas nonretirees leave for new opportunities 
to work elsewhere, family reasons, or to make better use of their 
skills. Table 4 shows that prior to fiscal year 2009 and 2010, we 
consistently met the 90 percent target rate for overall retention 
(with retirements), and in fiscal year 2010 we exceeded that rate for 
a second consecutive year by 4 percentage points. As in fiscal year 
2009, the slowdown in the overall economy has caused some staff to 
delay retirement and reduced other attrition via resignations or 
transfers to other agencies. Similarly, for retention without 
retirements, in fiscal year 2010 we again exceeded the target by 2 
percentage points. As with the overall retention rate, we attribute 
this increase to a slowdown in the overall economy, which has also 
slowed attrition via resignations and transfers. 

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

Performance measures: People: Retention rate: With retirements; 
2006 Actual: 90%; 
2007 Actual: 90%; 
2008 Actual: 90%; 
2009 Actual: 94%; 
2010 Target: 90%; 
2010 Actual: 94%. 

Performance measures: People: Retention rate: Without retirements; 
2006 Actual: 94%; 
2007 Actual: 94%. 
2008 Actual: 93%; 
2009 Actual: 96%; 
2010 Target: 94%; 
2010 Actual: 96%. 

Source: GAO. 

[End of Table 4: Actual Performance and Targets Related to Our 
Retention Rate Including and Excluding Retirements] 

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, which is conducted by 
an outside contractor to ensure the confidentiality of every 
respondent, is administered to all of our employees once a year. 
Through the survey, we encourage our staff to indicate what they think 
about our overall operations, work environment, and organizational 
culture and how they rate their immediate supervisors on key aspects 
of their leadership styles. 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. 
In fiscal year 2010, to better ensure confidentiality of individual 
responses, we used the same outside contractor that administered the 
survey to also analyze the data. (See Part II of this report on pp. 
82- 85 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 2010 
performance on all of these measures was very consistent with our 
fiscal year 2009 results. Our performance on the staff development, 
leadership, and organizational climate measures was the same as last 
year, and staff utilization was lower by 1 percentage point. Given our 
performance on these measures over the last 5 years, we decided to 
retain our fiscal year 2010 targets for fiscal year 2011 (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 Measures[A]: People: Staff development[B]; 
2006 Actual: 76%; 
2007 Actual: 76%. 
2008 Actual: 77%; 
2009 Actual: 79%; 
2010 Target: 76%; 
2010 Actual: 79%. 

Performance Measures[A]: People: Staff utilization; 
2006 Actual: 75%; 
2007 Actual: 73%. 
2008 Actual: 75%; 
2009 Actual: 78%; 
2010 Target: 75%; 
2010 Actual: 77%. 

Performance Measures[A]: People: Effective leadership by supervisors[C]; 
2006 Actual: 79%; 
2007 Actual: 79%. 
2008 Actual: 81%; 
2009 Actual: 83%; 
2010 Target: 80%; 
2010 Actual: 83%. 

Performance Measures[A]: People: Organizational Climate; 
2006 Actual: 73%; 
2007 Actual: 74%. 
2008 Actual: 77%; 
2009 Actual: 79%; 
2010 Target: 75%; 
2010 Actual: 79%. 

Source: GAO. 

[A] Certain portions of our Web-based survey are used to develop these 
four measures. 

[B] Beginning in fiscal year 2006 we changed the way that the staff 
development people measure was calculated. Specifically, we dropped 
one question regarding computer-based training because we felt such 
training was a significant part of (and therefore included in) the 
other questions the survey asked regarding training. We also modified 
a question on internal training and changed the scale of possible 
responses to that question. 

[C] 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. 

[End of 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] 

Focusing on Our Internal Operations: 

Our mission and people are supported by our internal administrative 
services, including information management, facility management, 
knowledge services, human capital, financial management, and other 
services. To assess our performance related to how well our internal 
administrative services help employees get their jobs done or improve 
employees' quality of work life, 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 rank 33 internal services available to them and to 
indicate on a scale from 1 to 5, with 5 being the highest, their 
satisfaction with each service. Our internal operations measures are 
directly related to our goal 4 strategic objectives of continuously 
enhancing our business and management processes and becoming a 
professional services employer of choice. The first measure 
encompasses 20 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 13 services that affect quality of work life, such 
as assistance related to pay and benefits, building security and 
maintenance, and workplace safety and health. Using survey responses, 
we calculate a composite score for each service category that reflects 
employee ratings for (1) satisfaction with the service and (2) 
importance of the service. 

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

Performance measures: Internal operations: Help get job done; 
2006 Actual: 4.10; 
2007 Actual: 4.05; 
2008 Actual: 4.00; 
2009 Actual: 4.03; 
2010 Target: 4.0; 
2010 Actual: N/A. 

Performance measures: Internal operations: Quality of work life; 
2006 Actual: 4.00; 
2007 Actual: 3.98; 
2008 Actual: 4.01; 
2009 Actual: 4.01; 
2010 Target: 4.0; 
2010 Actual: N/A. 

Source: GAO. 

Note: We will report actual data for fiscal year 2010 once the data 
from our November 2010 internal operations survey have been analyzed. 
N/A indicates that the data are not available yet. 

[End of Table 6: Actual Performance and Targets Related to Our 
Internal Operations Measures] 

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 
increasingly used the high-risk designation to draw attention to the 
need for broad-based 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. For example, our focus on high-risk 
issues contributed to the Congress enacting a series of governmentwide 
reforms to address critical human capital challenges, strengthen 
financial management, improve IT practices, and instill a more 
results- oriented focus. 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. As 
of the end of fiscal year 2010, our high-risk list highlighted 31 
troubled areas across government. Table 7 lists each current high-risk 
area and the year it was added to the list. 

[Text box: Our 2010 high-risk area work: 
* 151 reports; 
* 67 testimonies; 
* $27 billion in financial benefits; 
* 522 nonfinancial benefits. 
End of text box] 

In fiscal year 2010, we issued 151 reports, delivered 67 testimonies 
to the Congress, and prepared several other products, such as 
briefings and presentations, related to our high-risk work. In 
addition, we documented nearly $27 billion in financial benefits and 
522 nonfinancial benefits related to high-risk areas. These results 
are based on reviews spanning a wide range of issues such as 
implementing and transforming the Department of Homeland Security, 
revamping federal oversight of food safety, executing the 2010 Census, 
and managing federal real property. Our next biennial high-risk update 
is planned for January 2011. More information on the high-risk series 
is available on our Web site at [hyperlink, http://www.gao.gov/highrisk]. 

Major Government Challenges: 

In addition to high-risk issues, we also identify other major 
government challenges. 

Other challenges of great national and international concern are 
Strengthening Preparedness for Large-Scale Public Health Emergencies; 
Advancing U.S. Efforts in Iraq, Afghanistan, and Pakistan; and 
Ensuring Effective Representation of U.S. Diplomatic Interests and 
Image. 

Agency-by-Agency Issues focus on a range of distinctive major 
challenges affecting the mission, budget, and programs of 28 federal 
agencies. Increased demand for better government performance and 
responsiveness as well as greater accountability makes agency 
challenges all the more important. 

Major Cost-Saving Opportunities exist to limit costs, reduce waste 
across agencies and programs, and collect revenues already due the 
government. We identify key areas where the Congress and the 
administration could make major strides in conserving fiscal resources 
for high-priority programs and new initiatives addressing fundamental 
long-term fiscal imbalances. 

Table 7: GAO’s High-Risk List as of September 30, 2010: 

High-risk area: Strengthening the Foundation for Efficiency and 
Effectiveness: 

* Modernizing the Outdated U.S. Financial Regulatory System; 
Year designated: 2009. 

* Restructuring the U.S. Postal Service to Achieve Sustainable 
Financial Viability; 
Year designated: 2009. 

* Funding the Nation’s Surface Transportation System[A]; 
Year designated: 2007. 

* 2010 Census; 
Year designated: 2008. 

* Strategic Human Capital Management[A]; 
Year designated: 2001. 

* Managing Federal Real Property[A]; 
Year designated: 2003. 

High-risk area: Transforming DOD Program Management; 

* DOD Approach to Business Transformation[A]; 
Year designated: 2005. 

* Business Systems Modernization; 
Year designated: 1995. 

* Personnel Security Clearance Program; 
Year designated: 2005. 

* Support Infrastructure Management; 
Year designated: 1997. 

* Financial Management; 
Year designated: 1995. 

* Supply Chain Management; 
Year designated: 1990. 

* Weapon Systems Acquisition; 
Year designated: 1990. 

High-risk area: Ensuring Public Safety and Security; 

* Implementing and Transforming the Department of Homeland Security; 
Year designated: 2003. 

* Establishing Effective Mechanisms for Sharing Terrorism-Related 
Information to Protect the Homeland; 
Year designated: 2005. 

* Protecting the Federal Government’s Information Systems and the 
Nation’s Critical Infrastructures; 
Year designated: 1997. 

* Ensuring the Effective Protection of Technologies Critical to U.S. 
National Security Interests[A]; 
Year designated: 2007. 

* Revamping Federal Oversight of Food Safety[A]; 
Year designated: 2007. 

* Protecting Public Health through Enhanced Oversight of Medical 
Products; 
Year designated: 2009. 

* Transforming EPA’s Process for Assessing and Controlling Toxic 
Chemicals[A]; 
Year designated: 2009. 

High-risk area: Managing Federal Contracting More Effectively; 

* DOD Contract Management; 
Year designated: 1992. 

* DOE’s Contract Management for the National Nuclear Security 
Administration and Office of Environmental Management; 
Year designated: 1990. 

* NASA Acquisition Management; 
Year designated: 1990. 

* Management of Interagency Contracting; 
Year designated: 2005. 

High-risk area: Assessing the Efficiency and Effectiveness of Tax Law 
Administration; 

* Enforcement of Tax Laws[A]; 
Year designated: 1990. 

* IRS Business Systems Modernization; 
Year designated: 1995. 

High-risk area: Modernizing and Safeguarding Insurance and Benefit 
Programs; 

* Improving and Modernizing Federal Disability Programs[A]; 
Year designated: 2003. 

* Pension Benefit Guaranty Corporation Insurance Programs[A]; 
Year designated: 2003. 

* Medicare Program[A]; 
Year designated: 1990. 

* Medicaid Program[A]; 
Year designated: 2003. 

* National Flood Insurance Program[A]; Year designated: 2006. 

Source: GAO. 

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

[End of Table 7: GAO’s High-Risk List as of September 30, 2010] 

Management Challenges Across the Government include capacity building 
and management capabilities to improve operational efficiency and 
effectiveness and address current and emerging demands. Although 
agencies have made progress in improving their operations in recent 
years, they often lack the management capabilities needed to 
effectively and efficiently implement new programs and policies. We 
identify several key areas such as acquisition, human capital, and 
financial management. 

Our nation's Long-Term Fiscal Outlook will be shaped largely by rising 
health care costs and the aging population. These trends will result 
in an unsustainable imbalance between expected spending and tax 
revenues over the long term. We analyze and monitor the long-term 
fiscal outlook. 

Our Web site includes our analysis and recommendations for addressing 
these areas, key reports for further research, video messages from our 
experts, and contacts for specific areas. 

The Troubled Asset Relief Program: 

The Congress created the $700 billion Troubled Asset Relief Program 
(TARP) in October 2008, passing the Emergency Economic Stabilization 
Act to restore liquidity and stability in the financial system. The 
act gave us a statutory oversight role with broad monitoring and 
reporting responsibilities, including a requirement to report at least 
every 60 days. The Dodd-Frank Wall Street Reform and Consumer 
Protection Act of July, 2010, set a new spending ceiling for TARP--in 
effect, prohibiting Treasury from incurring any additional obligations 
for programs that were not initiated prior to June 25, 2010. 

In fiscal year 2010, we issued 17 products and made over 50 
recommendations on issues such as: (1) the nature and purpose of 
activities that have been initiated under TARP and ongoing challenges; 
(2) the process for making decisions related to unwinding TARP 
programs, and (3) indicators of credit conditions in markets targeted 
by TARP programs. Recommendations from these reviews have generally 
followed three themes: monitoring the use of funds to meet the Act’s 
objectives; articulating a better communication strategy; and ensuring 
effective Treasury management. Specifically, we reviewed strategies 
for monitoring and divesting financial interests in Chrysler Group and 
General Motors Company [hyperlink, 
http://www.gao.gov/products/GAO-10-51]; government assistance to AIG and 
the company’s financial condition [hyperlink, 
http://www.gao.gov/products/GAO-10-475]; implementation of foreclosure 
mitigation programs [hyperlink, http://www.gao.gov/products/GAO-10-634]; 
and guiding principles for government assistance to the private sector 
[hyperlink, http://www.gao.gov/products/GAO-10-719]. 

For the second consecutive year, we audited the annual financial 
statements of the entity established to implement TARP—the Department 
of the Treasury's Office of Financial Stability within the Office of 
Domestic Finance. 

To perform this work in 2010, we continued to make use of 
interdisciplinary teams to leverage the wide range of technical skills 
of our staff, including financial market and public policy analysts, 
accountants, lawyers, and economists who combined resources across the 
agency. 

The American Recovery and Reinvestment Act: 

The Congress passed The Recovery Act in February 2009 to address the 
nation’s most serious economic crisis since the Great Depression. The 
act included 12 mandates for GAO and required bimonthly reviews on the 
uses of and accountability for Recovery Act funds in selected states 
and localities. We have conducted in-depth reviews in 16 states, 
selected localities in those states, and the District of Columbia-— 
jurisdictions containing about 65 percent of the U.S. population and 
receiving an estimated two-thirds of the intergovernmental Recovery 
Act assistance. In addition, we have commented quarterly on the 
required reports from nonfederal recipients of Recovery Act funds, 
including grants, contracts, and loans. These reports are to include a 
list of each project or activity 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 2010, we issued reports fulfilling these ongoing 
mandates in November 2009 [hyperlink, http://www.gao.gov/products/GAO-
10-223], December 2009 [hyperlink, http://www.gao.gov/products/GAO-10-
231], March 2010 [hyperlink, http://www.gao.gov/products/GAO-10-437], 
May 2010 [hyperlink, http://www.gao.gov/products/GAO-10-604], and 
September 2010 [hyperlink, http://www.gao.gov/products/GAO-10-999]. 

Since our first bimonthly review in April 2009, we have made 63 
recommendations to improve management and strengthen accountability 
over Recovery Act funds at eight federal departments and agencies, 
including the Departments of Transportation, Housing and Urban 
Development, Labor, Education, Health and Human Services, and the 
Treasury; the Environmental Protection Agency; and the Office of 
Management and Budget (OMB). Our recommendations covered several 
programs receiving Recovery Act funds, such as highways, housing, job 
training, education, clean and safe drinking water, energy efficiency 
and weatherization, as well as several recommendations to improve 
audit and program management oversight processes. In response, the 
agencies have implemented nearly half of our recommendations to date, 
such as providing additional guidance to fulfilling reporting 
requirements, improving the monitoring of recipients and subrecipients 
of Recovery Act funds, and clarifying approaches states can take to 
recover administrative costs associated with the wide range of 
activities to comply with the Recovery Act. Further, all of the 13 
recommendations we made on carrying out the recipient reporting 
requirements have been implemented. For example, OMB clarified how to 
calculate jobs, issued frequently asked questions, and improved 
notification of available Recovery Act funds to recipients. 

In addition, we have made a number of suggestions to states and 
localities for improvement in their use of Recovery Act funds. Our 
presence in the selected states and localities has further heightened 
the level of vigilance, including influencing officials to make real- 
time improvements to head off problems before they could occur. For 
example, suggestions our audit team made in Texas were acted upon and 
resulted in the Department of Energy providing training to state and 
local officials responsible for weatherization work at multifamily 
units. Based on another suggestion, the state of Mississippi now 
requires engineers to visit and inspect federally funded projects, 
including those funded by the Recovery Act, at least twice a week 
during working hours if construction is in progress and at least once 
a week if construction is not ongoing. Our capacity to continue this 
work has been enhanced by the strong and productive working 
relationships established with both state and local government leaders. 

Our oversight of Recovery Act programs has resulted in the issuance of 
more than 60 related products by several of our teams for the 
Congress. This year, our reports covered a wide spectrum of program 
and policy areas, including opportunities to strengthen oversight of 
the broadband stimulus programs [hyperlink, 
http://www.gao.gov/products/GAO-10-823] and [hyperlink, 
http://www.gao.gov/products/GAO-10-80]; lessons and oversight for high-
speed rail investment [hyperlink, http://www.gao.gov/products/GAO-10-
625]; improving the public’s understanding of Recovery Act fund use 
and expected outcomes in education and other areas [hyperlink, 
http://www.gao.gov/products/GAO-10-807] and [hyperlink, 
http://www.gao.gov/products/GAO-10-581]; improving contracting 
approaches and oversight [hyperlink, http://www.gao.gov/products/GAO-
10-809]; use of highway and transit funds [hyperlink, 
http://www.gao.gov/products/GAO-10-312T]; the influence of certain 
federal regulations on Recovery Act project selection and starts 
[hyperlink, http://www.gao.gov/products/GAO-10-383]; officials’ views 
on impact of Davis-Bacon Act prevailing wage provisions in the 
Recovery Act [hyperlink, http://www.gao.gov/products/GAO-10-421]; 
implications of the Recovery Act in the Temporary Assistance for Needy 
Families program [hyperlink, http://www.gao.gov/products/GAO-10-525]; 
challenges in evaluation compliance with maintenance-of-effort and 
similar provisions [hyperlink, http://www.gao.gov/products/GAO-10-247]; 
and ensuring adequate oversight for clean water projects 
[hyperlink, http://www.gao.gov/products/GAO-10-761T]. 

For a second year, we have maintained a separate page on our external 
Web site devoted to our Recovery Act work. In one place [hyperlink, 
http://www.gao.gov/recovery], the public can find information and 
updates on Recovery Act outlays such as our bimonthly reviews and 
reports on each of the selected states and the District of Columbia, 
related podcasts, and can 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, the 
Congress and the public also benefited from our legal work in fiscal 
year 2010 in the following ways: 

* The Procurement Law Division within the Office of General Counsel 
received nearly 2,300 bid protests during the course of fiscal year 
2010.[Footnote 6] 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 2010, we issued 
more than 440 decisions on the merits, that addressed a wide range of 
issues involving compliance with, and the interpretation of, 
procurement statutes and regulations. As a result of the detailed 
insight we gain through our protest work, we were asked to testify 
about lessons learned and procurement trends in a hearing before the 
House Appropriations Committee's Subcommittee on Defense. In addition, 
bid protest attorneys are involved in a significant outreach effort to 
the contracting community, federal government agencies, and the 
private bar. In particular, we have provided briefings on developments 
in federal procurement law, and conducted training on federal contract 
issues throughout the federal government, including for such civilian 
agencies as the Departments of Education and the Treasury; various 
branches of the military; and the Judge Advocate General School in 
Charlottesville, Virginia, which trains military attorneys. 

* 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 on contracting officer 
decisions with respect to any contract entered into by a legislative 
branch agency. Board members are responsible for developing the 
record, holding hearings where requested, and preparing a decision 
where necessary to resolve the wide range of contract disputes 
presented. In addition to using alternative dispute resolution 
procedures to resolve appeals, the board published five decisions in 
fiscal year 2010, which appear on our Web site. As of the end of the 
fiscal year there were 19 appeals pending on the board's docket. 

* We issued appropriations law and other legal decisions on, among 
other things, the purposes for which appropriated funds may be used, 
potential and actual Antideficiency Act[Footnote 7] violations, and 
the obligational consequences of various interagency agreements. Some 
decisions and opinions stand out. Two opinions, issued in response to 
legislative mandates, concluded that agencies had violated the 
Antideficiency Act. One opinion found that the U.S. Secret Service 
violated the act when it used funds without properly notifying the 
House and Senate Appropriations Committees of a reprogramming. 
[Footnote 8] The other opinion found that the U.S. Army violated the 
act by failing to accurately record obligations for certain personnel 
actions in its Military Personnel appropriation.[Footnote 9] We issued 
two opinions to Members of the Congress concluding that NASA had not 
violated the Impoundment Control Act, or statutory prohibitions 
against creating or initiating a new program, project, or activity, 
and barring it from terminating or eliminating particular programs, 
projects, or activities.[Footnote 10] We issued another opinion to 
Members of the Congress concluding that the Department of Health and 
Human Services did not violate the antilobbying or publicity or 
propaganda prohibitions when it used its Web site [hyperlink, 
http://www.healthreform.gov] to gauge public support for the 
administration's health reform initiatives.[Footnote 11] 

* For fiscal year 2010, we received 10 Antideficiency Act reports for 
our repository and made selected information from these reports 
publicly available on our Web site. Since the Congress amended the 
Antideficiency Act in December 2004, requiring agencies to send us a 
copy of reports of Antideficiency Act violations, we have maintained 
the official repository of Antideficiency Act reports. 

* We continued to report under the Congressional Review Act (CRA) to 
the standing committees of jurisdiction of both Houses of the Congress 
on major rules proposed by federal agencies. For fiscal year 2010, we 
issued 103 reports. In addition, we continued to track executive 
branch regulations that were published in the Federal Register but not 
submitted to us, and subsequently notified OMB and the relevant 
agencies in order to assist them in meeting their CRA requirements. 

* The General Counsel's Legal Services group served on the negotiating 
team for the agency's first master Collective Bargaining Agreement 
with the GAO Employees Organization, International Federation of 
Professional and Technical Engineers (IFPTE), Local 1921. Legal 
Services also served on the negotiating team for the 2010 analyst pay 
increases. The group also participated in informal, weekly meetings 
with IFPTE, at which a range of labor management relations issues were 
discussed. 

To enhance education on appropriations law and promote a common 
understanding of and compliance with legal requirements, we published 
an electronic Index and Table of Authorities for the third edition of 
Principles of Federal Appropriations Law, commonly known as the Red 
Book. The Red Book is available to the public on our Web site and is 
considered the primary resource for appropriations law guidance in the 
federal financial community. The Red Book averages thousands of 
downloads per week as attorneys, budget analysts, financial managers, 
project managers, contracting officers, and accountable officers from 
all three branches of the government access it to research questions 
about budget and appropriations law. We also issued our annual update 
of the third edition of the Red Book. 

Attorneys from the Office of the General Counsel continued to teach a 
2 1/2-day course on appropriations law that explains the framework for 
analyzing appropriations law issues to ensure that funds are available 
for obligation with regard to purpose, amount, and time This year we 
increased the number of sessions to 25 and had participation from 
staff at 11 agencies as well as a number of congressional staff. In 
addition, appropriations lawyers taught several 1-day seminars on 
specialized appropriations law topics for 5 agencies, and spoke on our 
appropriations law work at conferences and training hosted by 4 
agencies. To further communication within the appropriations law 
community across all agencies and within the three branches of 
government, we hosted our sixth annual appropriations law forum in 
March 2010. This included an analysis of significant decisions and 
opinions from 2009 and interactive sessions on personal versus 
official expenses and the intersection of appropriations and contract 
law. 

In addition, we taught our new course, Appropriations Law for Analysts 
and Auditors, which is designed primarily for senior analysts and 
auditors to enable them to identify appropriations law issues that may 
arise in their audit work, and to ensure accurate use of budget and 
appropriations law terminology in our products. The course was offered 
15 times this fiscal year, including six classes at three field 
offices. 

Managing Our Resources: 

Resources Used to Achieve Our Fiscal Year 2010 Performance Goals: 

Our financial statements for the fiscal year ending September 30, 2010, 
were audited by an independent auditor, Clifton Gunderson, LLP, and 
received an unqualified opinion. They found our internal controls to 
be effective—which means that no material weaknesses were identified—
and reported that we substantially complied with the applicable 
requirements for financial systems in FFMIA. In addition, they 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 94 in this report.[Footnote 12] Table 8 
summarizes key data. 

Compared with the statements of large and complex agencies in the 
executive branch, our statements present a relatively simple picture 
of a small yet very important agency in the legislative branch. We 
focus most of our financial activity on the execution of our 
congressionally approved budget with most of our resources devoted to 
the people needed for our mission. 

In fiscal year 2010, our budgetary resources included new 
appropriations of $558 million as well as $20 8 million available 
through fiscal year 2010 to cover program reviews required by the 
Recovery Act. We also received $7.5 million in reimbursement from the 
Treasury to support activities related to monitoring the 
implementation of TARP including bimonthly reporting and conducting an 
annual audit of the Office of Financial Stability's financial 
statements for TARP. 

Our total assets were $122 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 balance in Funds with the U.S. Treasury decreased by $13.5 
million, a result of the combination of fully expending the remaining 
balance of the Recovery Act funds offset by an increase in 
reimbursable funds collected. Total liabilities of $111 million were 
composed largely of employees' accrued annual leave, employees' 
salaries and benefits, amounts owed to other government agencies, and 
nongovernmental accounts payable. The greatest change in our 
liabilities is an increase of $3.8 million in nongovernmental accounts 
payable due primarily to the timing of billings on service contracts 
resulting in a larger accrual this fiscal year as compared to last 
fiscal year. The decrease in capital lease liability of $2 2 million 
is a result of paying down the existing leases. 

Our net cost of operating during fiscal year 2010 and fiscal year 2009 
was approximately $603 million and $559 million, respectively. 
Expenses for salaries and related benefits accounted for 79 percent of 
our net cost of operations in both fiscal years 2010 and 2009. We 
report net cost of operations according to our four strategic goals, 
consistent with our strategic plan. Overall, our net costs of 
operations increased by $44 million, due primarily to increases in 
salaries and benefits. The increase in costs for goal 1 (Well-being 
and financial security of the American people) and goal 3 
(Transforming the federal government to address national challenges) 
can be substantially attributed to the increase in Recovery Act 
efforts this fiscal year. Figure 19 shows how our fiscal year 2010 
costs break down by category. 

Table 8: GAO’s Financial Highlights: Resource Information: 

Total budgetary resources[A]; 
Fiscal year 2010: $613.0 million; 
Fiscal year 2009: $580.6 million. 

Total outlays[A]; 
Fiscal year 2010: $593.8 million; 
Fiscal year 2009: $539.9 million. 

Net cost of operations: Goal 1: Well-being and Financial security of 
the American people; 
Fiscal year 2010: $210.1 million; 
Fiscal year 2009: $191.3 million. 

Net cost of operations: Goal 2: Changing security threats and 
challenges of globalization; 
Fiscal year 2010: $173.5 million; 
Fiscal year 2009: $168.4 million. 

Net cost of operations: Goal 3: Transforming the federal government's 
role; 
Fiscal year 2010: $196.5 million; 
Fiscal year 2009: $177.1 million. 

Net cost of operations: Goal 4: Maximizing the value of GAO; 
Fiscal year 2010: $29.4 million; 
Fiscal year 2009: $27.7 million. 

Net cost of operations: Less reimbursable services not attributable to 
goals; 
Fiscal year 2010: ($6.6 million); 
Fiscal year 2009: ($5.7 million). 

Total net cost of operations[A]; 
Fiscal year 2010: $602.9 million; 
Fiscal year 2009: $558.8 million. 

Actual FTEs: 
Fiscal year 2010: 3,347; 
Fiscal year 2009: 3,204. 

Source: GAO. 

[A] The net cost of operations figures include nonbudgetary items, 
such as imputed pension and depreciation costs, which are not included 
in the figures for total budgetary resources or total outlays. 

[End of Table 8: GAO’s Financial Highlights: Resource Information] 

Figure 19: Use of Fiscal Year 2010 Funds by Category: 

[Refer to PDF for image: pie chart] 

Percentage of Total Net Costs: 
Salaries and benefits: 78.9; 
Building and hardware maintenance services: 12.3%; 
Rent (space and hardware): 2.3%; 
Depreciation: 1.8%; 
Other: 4.9%. 

Source: GAO. 

[End of Figure 19: Use of Fiscal Year 2010 Funds by Category] 

Figures 20 and 21 show our net costs by goal for fiscal year 2007 
through fiscal year 2010. Figure 20 shows costs unadjusted for 
inflation, while figure 21 shows the same costs in 2010 dollars, that 
is, adjusted for inflation. 

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

[Refer to PDF for image: vertical bar chart] 

Goal 1; 
2007: $177.4 million; 
2008: $201.2 million; 
2009: $191.3 million; 
2010: $210.1 million. 

Goal 2; 
2007: $157.5 million; 
2008: $161.1 million; 
2009: $168.4 million; 
2010: $173.5 million. 

Goal 3; 
2007: $146.6 million; 
2008: $150.6 million; 
2009: $177.1 million; 
2010: $196.5 million. 

Goal 4; 
2007: $23.9 million; 
2008: $22.6 million; 
2009: $27.7 million; 
2010: $29.4 million. 

Source: GAO. 

[End of Figure 20: Net Cost by Goal, Unadjusted for Inflation] 

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

[Refer to PDF for image: vertical bar chart] 

Goal 1; 
2007: $185.0 million; 
2008: $205.0 million; 
2009: $192.6 million; 
2010: $210.1 million. 

Goal 2; 
2007: $164.2 million; 
2008: $164.2 million; 
2009: $169.6 million; 
2010: $173.5 million. 

Goal 3; 
2007: $152.9 million; 
2008: $153.5 million; 
2009: $178.3 million; 
2010: $196.5 million. 

Goal 4; 
2007: $24.9 million; 
2008: $23.0 million; 
2009: $27.9 million; 
2010: $29.4 million. 

Source: GAO. 

[End of Figure 21: Net Cost by Goal, Adjusted for Inflation] 

Summary of Financial Systems Strategies and Financial Management 
System Framework: 

We migrated our financial management system processing in October 2007 
to 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. 

Delphi is an off-the-shelf system that meets OMB's Office of Federal 
Financial Management's Federal Financial Management System 
Requirements. We use a number of other off the shelf systems for 
specialized support of Delphi. These include Compusearch's PRISM, a 
contract and procurement system, U.S. Bank's purchase card system for 
small purchases and 170 System'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 we can produce timely, useful and reliable financial 
information and strengthen internal controls. 

Going forward, we are planning to implement a new Budget 
Formulation/Workforce Planning system during the fiscal year 20112013 
time period. Oracle's Hyperion system and Pentaho data base will form 
the basis of this project. In fiscal year 2011 we plan on "standing 
up" the project's phase 1, which will be a limited access budget 
formulation module and a repository for workforce planning data. 

Financial Systems and Internal Controls: 

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

We complied with the spirit of OMB Circular A-123, Management's 
Responsibility for Internal Control, which provides guidance for 
agencies' assessments of internal control over financial reporting. We 
performed this assessment by identifying, analyzing, and testing 
internal controls for key business processes. Based on the results of 
the assessment, we have reasonable assurance that internal control 
over financial reporting, as of September 30, 2010, 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. Although we are not subject to the act, we comply voluntarily 
with its requirements. 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, they 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, 2010. We made this assessment based on criteria 
established under FFMIA and guidance issued by OMB. 

Our Inspector General (IG) also conducts audits and investigations 
that are internally focused. During fiscal year 2010, the IG examined 
compliance with our policy and procedures for conflicts-of-interest 
determinations and conducted reviews of our information security 
program. In addition, the IG managed an internal hotline for use by 
our employees and contractors to report potential fraud, waste, and 
abuse of GAO government property, assets, and resources and other 
potentially serious problems in our operations, including the possible 
violation of any law or regulation. Finally, the IG reported on its 
work independently testing our compliance with procedures related to 
the fiscal year 2009 results for two of our performance measures-- 
financial accomplishment reports of over $1 billion and testimonies. 
No material weaknesses were reported by the IG. 

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: 

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

* Judith H. O'Dell, CPA CVA, President of O'Dell Valuation Consulting 
LLC, Chair of the Financial Accounting Standards Board's Private 
Companies 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 93. 

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 Circular 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 2011 Performance Goals: 

As with the rest of the federal government, GAO is operating under a 
continuing resolution appropriation—-at fiscal year 2010 levels-— 
through December 3, 2010, pending enactment of the final fiscal year 
2011 appropriations bills. Although final congressional action on our 
request is still pending, indications are that we will be operating at 
or near our fiscal year 2010 appropriated level and additional funding 
to support our Recovery Act oversight responsibilities, previously 
funded by the Recovery Act legislation, will not be provided in fiscal 
year 2011. On July 1, 2010, the Subcommittee on Legislative Branch, 
House Committee on Appropriations approved direct appropriations of 
$560.7 million, an increase of $3.8 million (0.7 percent) over fiscal 
year 2010.[Footnote 13] On September 16, 2010 the Senate Committee on 
Appropriations approved $556.8 million-—the same level as our fiscal 
year 2010 appropriation. The Subcommittees on Legislative Branch of 
both the House and Senate Appropriations Committees have emphasized 
that the legislative branch should lead by example and serve as a 
model for the executive branch by tightening its belt wherever 
possible, employing best practices, finding efficiencies, and 
improving business practices. In keeping with this goal, we are 
continuing best practices already in place, such as guidelines to 
minimize administrative costs, maximizing the use of travel dollars, 
and using a hiring strategy that targets succession planning needs to 
fill critical positions. We are also assessing the impact of 
anticipated funding levels to ensure that we provide the appropriate 
balance of staff and support to continue to assist the Congress and 
meet our performance goals as outlined in our strategic plan through 
fiscal year 2015. 

Strategic and Annual Work Planning: 

Achieving our strategic goals and objectives requires us to coordinate 
with other organizations with similar or complementary missions. In 
particular, we: 

* 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 help us to identify key trends, 
opportunities and challenges, and lessons learned that we should 
factor into our work and our internal operations. During fiscal year 
2010, the agendas of the Comptroller General advisory entities (i.e., 
the Comptroller General's Advisory Board (CGAB), the Domestic Working 
Group, the Global Working Group, the Educators Advisory Panel, and the 
Accountability Advisory Council) revolved around the theme of economic 
recovery and accountability. The CGAB, with over 40 members from the 
public, private, and nonprofit sectors, has broad expertise in areas 
related to our strategic objectives. The CGAB 2010 meeting was 
particularly helpful to us in updating our strategic plan and planning 
work in response to significant new congressional mandates on health 
care, financial regulatory reform, and overlap and duplication among 
federal programs and activities. 

Through the 18th Biennial Forum of Government Auditors, jointly hosted 
by the National Intergovernmental Audit Forum and the Southwestern 
Intergovernmental Audit Forum, we brought together the accountability 
community in May 2010 to discuss transparency, the changing economic 
environment, and other topics, such as fiscal sustainability. We 
further extended the knowledge shared at the event by providing the 
biennial forum's programming via online video to our staff and the 
wider intergovernmental audit community. We organized eight meetings 
and seminars in the various Intergovernmental Audit Forum regions 
where our staff serve as executive directors to promote dialogue 
regarding common issues, opportunities, and challenges. We also 
convened a meeting with the leaders and members of the Council of 
Inspectors General for Integrity and Efficiency to discuss emerging 
issues. 

Typically, the Acting Comptroller General also meets annually with the 
18-member Domestic Working Group. In 2010, based on the fiscal 
condition across the country, we instead convened a teleconference in 
April with the Domestic Working Group members to discuss key topics of 
interest and leverage the knowledge of and network with the heads of 
select federal, state, and local audit institutions. 

During the fiscal year 2010 annual meeting of the Global Working 
Group, comprised of the Acting Comptroller General and 18 heads of 
national audit offices, we gained information and knowledge relating 
to the experiences and lessons learned of national audit offices and 
their respective countries in past financial crises and the current 
global financial crisis. We also gained insights into emerging issues 
related to fraud and corruption, changes in the role of national audit 
offices, and environmental audits. 

In fiscal year 2010, we updated our strategic plan for 2010 through 
2015. Our Strategic Planning and External Liaison office worked 
closely with all the teams and units across the agency to update our 
four strategic goals and identify eight key trends that affect the 
work we do for the Congress. We also developed and incorporated new 
approaches into our strategic planning process. For example, we: 

* implemented a Web-based survey to solicit and track internal 
comments on the plan, 

* leveraged our networks with key stakeholders and external advisory 
entities to validate and fine tune the plan, and, 

* improved the format and readability of the plan. 

Networks, Collaborations, and Partnerships: 

By collaborating with our domestic and global networks, we have 
acquired, expanded, and shared our knowledge and expertise, which 
continued to help to build capacity within our agency and among our 
collaborative partners. On the domestic front, collaboration has 
become increasingly important because monitoring Recovery Act spending 
through the federal, state and local levels required increased 
coordination with federal inspectors general and state and local audit 
offices. For example, we helped coordinate and participated in monthly 
and sometimes weekly teleconferences hosted by the National 
Association of State Auditors, Comptrollers, and Treasurers (NASACT) 
to bring together representatives of the federal Inspectors General, 
OMB, the Recovery Accountability and Transparency Board, and state and 
local auditors. The relationships built through these channels, as 
well as through the intergovernmental audit forums, have proven 
particularly valuable for our staff as they continue to conduct a wide 
range of audit work in the states. On the international front, 
coordination and collaboration has also been important since many of 
our domestic challenges require global interaction and our staff are 
engaged in work that requires them to obtain information from foreign 
governments and officials. 

Through the International Organization of Supreme Audit Institutions 
(INTOSAI), we are leaders and active members of international teams 
working on the strategic plan goals of enhancing professional 
standards, capacity building, knowledge sharing, and good governance. 
Through our participation in the Professional Standards Committee and 
subcommittees, we are able to stay abreast of changes in international 
accounting, auditing, and reporting standards. In participating in the 
knowledge sharing working groups (i.e., Public Debt, Information 
Technology, Environmental Auditing, Program Evaluation, Fight Against 
International Money Laundering and Corruption, and Key National 
Indicators) and task forces, we acquire knowledge and build a network 
of professionals and experts in other countries that we can access. In 
2010, we organized meetings of GAO representatives to the INTOSAI 
working groups to facilitate knowledge sharing among our 
representatives in order to better disseminate knowledge gained 
through our INTOSAI working groups throughout GAO. 

We continued to advance and support implementation of the INTOSAI 
Donors Funding Initiative and Capacity Building Goal to expand 
capacity building in the international accountability community. The 
October 2009 signing of an international memorandum of understanding 
with INTOSAI and 15 donor organizations marked the willingness of all 
parties to work in a coordinated way to support Supreme Audit 
Institutions capacity building in developing countries. In 2010, the 
Acting Comptroller General was named as Vice Chair of the INTOSAI 
steering committee continuing his leadership role on this issue. 

We also continued to chair the Task Force on the Global Financial 
Crisis: Challenges to Supreme Audit Institutions. The task force met 
via teleconference in April, and in person in September 2010, and 
plans to submit a status report at the 20th INTOSAI Congress scheduled 
for November 2010 to summarize its results. The task force has 
provided a forum to share information and knowledge about the effect 
of the financial crisis globally and helped expand our knowledge about 
the causes of the financial crisis, the stimulus initiatives that had 
been implemented, the impact on the real economy, and challenges to 
the national audit offices. 

We continued to publish INTOSAI's quarterly International Journal of 
Government Auditing in five languages to foster global understanding 
of professional standards, best practices, and technical issues. In 
fiscal year 2010, we enhanced the Journal Web site by developing an 
automated system to manage e-mail subscriptions, and we completed 
digitization of the Journal's archives. 

As a contribution to building capacity in national audit offices 
around the world, we conduct an annual International Auditor 
Fellowship Program (IAFP) for mid- to senior-level staff from other 
countries. The IAFP is our flagship multilateral capacity building 
assistance initiative and has completed its 31st year. This program is 
designed to strengthen the ability of the national audit offices to 
fulfill their missions and to enhance accountability and governance 
worldwide. Since the program's inception, over 463 mid- to senior- 
level officials from counterpart offices of more than 103 countries 
have graduated. Several of them have become auditors general, deputy 
auditors general, or government ministers. Through this program, our 
instructors, mentors, and sponsors become part of a global network 
that helps support our engagements. In addition, it has strengthened 
professional networks among SAIs donors, and other accountability 
partners providing an ongoing and growing community of good government 
professionals and experts across nations. The goodwill engendered by 
this program supports our country's image abroad. 

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

The Comptroller General, the Executive Committee, and other senior 
executives identify management challenges through the agency's 
strategic planning, management, internal controls, and budgeting 
processes. We monitor our progress in addressing the challenges 
through our annual performance and accountability process. Under 
strategic goal 4, several performance goals and underlying key efforts 
focus attention on each of our management challenges. We use a 
balanced scorecard approach for quarterly monitoring of these and 
other critical initiatives, and we report each year on our progress 
toward our performance goals. Each year, we ask our IG to examine 
management's assessment of the challenges and the agency's progress in 
addressing them. (See part IV of this report for the IG's assessment.) 

In fiscal year 2010, we continued to address three priority management 
challenges—-physical security, information security, and human 
capital. Each of these areas is affected by external factors that 
could impact our performance and we need to continuously identify ways 
to adapt and improve our internal operations. 

Physical Security Challenge: 

Domestic and international events, both ongoing and anticipated, 
present challenges in terms of physical security of our staff and 
facilities, emergency preparedness, and continuity of operations. To 
ensure our ability to protect our people and our assets, we must 
constantly assess our physical security profile to identify and 
implement improvements. To address this challenge in fiscal year 2010, 
we: 

* awarded several contracts to obtain upgraded technology for: 

- electronic security systems in our field offices to provide the 
capability for 24/7 monitoring and visual verification of incidents at 
any of our offices and; 

- encrypted mobile radios and radio antennas and repeaters for our 
contract security unit and emergency preparedness staff to support 
headquarters emergency operations; 

* replaced an antiquated electronic security system at one of our 
field offices to avoid a system failure; 

* strengthened our protective measures for our hearing impaired 
employees in headquarters by providing them with mobile devices to 
alert them of evacuations and adding procedures for ensuring their 
safe evacuation from the building; 

* enhanced protection for our headquarters building and employees 
through a revised guard force contract; 

* enhanced our adherence to Homeland Security Presidential Directive 
12 standards for federal building access by conducting about 630 
minimum background investigations of government and contractor staff; 

* strengthened our emergency preparedness through required annual 
continuity awareness training; and; 

* took steps to enhance visitor management by reviewing our processes 
and identifying ways to leverage technology to strengthen controls and 
eliminate manual processes. 

In fiscal year 2011, we plan to: 

* continue replacement of electronic security systems in field offices 
and begin to integrate them with our headquarters' system; 

* finalize and issue our Facility Security Plan; and; 

* conduct necessary background investigations to comply with minimum 
federal building access requirements. 

Information Security Challenge: 

Our audit mission has moved from a papercentric world to a global 
electronic environment. This electronic evolution has resulted in 
security challenges to information and information systems. Through 
our physical and electronic information security programs, we 
continuously assess threats; identify enhancements to policy, 
procedures, and technology; and ensure that the steps we take to 
address these threats limit risks to the agency. We have implemented 
information security programs consistent with current guidance from 
the National Institute of Standards and Technology (NIST), the Federal 
Information Security Management Act (FISMA), and other agencies' 
information security policies to protect data that they share with us. 
While we are not required by law to comply with FISMA or Executive 
Branch information policies, we have adopted them to help us ensure 
physical and information system security. 

Our overall goal is to ensure that information protection requirements 
extend across the life cycle of audit work from data collection, 
report production, and data transmission and storage, to the eventual 
archiving and disposal of data. In support of this goal, our 
Information Security and Information Systems Security programs address 
the full range of requirements associated with securely accessing, 
handling, storing, and disposing of classified and sensitive national 
security information stored electronically and on paper. They also 
work hand in hand to educate staff on handling sensitive information 
and raise awareness of the need to maintain appropriate security. 
[Footnote 14] 

To address this challenge in fiscal year 2010, we: 

* provided better access control to our network and information 
through additional data protection encryption and identity management 
options; 

* increased our vigilance in the auditing of network servers and 
devices through the use of automated tools; 

* enhanced adherence to OMB, NIST, and FISMA guidance by revising our 
policies and procedures; 

* improved our ability to respond to changing threats through refined 
security processes and procedures, enhanced incident response 
capability, and new technologies; 

* enhanced our configuration and change management capabilities by 
consolidating our automated monitoring process across all network 
systems; 

* enhanced initial security awareness training to better prepare new 
staff to properly handle and protect sensitive and classified 
government information; and; 

* began addressing best practices relating to the mandatory 
declassification of classified products by coordinating with the 
National Archives and Records Administration (NARA) on development of 
a declassification program. 

In fiscal year 2011, we plan to: 

* consolidate information systems monitoring to maintain the 
confidentiality of information, the availability of information 
systems, and the integrity of our data network; 

* refine our security controls, enhance our contingency operations, 
and identify and implement appropriate new technologies to improve our 
ability to respond to changing threats; 

* implement new and updated security guidance from NIST and OMB, and 
monitor systems in accordance with OMB, NIST, and FISMA guidance; 

* revise annual security awareness training required for all staff 
handling both classified and sensitive unclassified information; and; 

* formalize a memorandum of understanding with NARA to initiate 
systematic declassification of our reports under mandatory guidelines. 

Human Capital Challenge: 

We depend on a talented and diverse, high-performing, knowledge-based 
workforce to accomplish our work and carry out our mission in support 
of the Congress. However, like the rest of the federal government, we 
face new and complex 21st century challenges that affect our ability 
to attract and retain such a high quality workforce, including long- 
term fiscal constraints, changing demographics, emerging civil service 
reform initiatives, and evolving public attitudes about the federal 
workforce. To sustain the quality of our services and the demand for 
our work, we must continue to focus our efforts on recruiting, 
developing, and retaining our workforce. We must also continue to 
build on our efforts to promote a work environment that is fair, 
unbiased, and inclusive, as well as one that offers opportunities for 
all employees to realize their full potential. To strengthen our human 
capital programs and processes to address this challenge in 2010, we: 

* negotiated the majority of the articles for our master collective 
bargaining agreement with the GAO Employees Organization, IFPTE, Local 
1921 using interest based bargaining; 

* implemented actions in our Workforce Diversity Plan to improve 
recruitment, such as increasing the use of the student career 
experience program (SCEP), establishing partnerships with intern 
programs representing diverse populations, and expanding outreach 
activities to campuses and professional associations with diverse 
members and affiliates; 

* enhanced our recruiting, hiring, and retention programs by 
developing a strategic recruiting framework, and streamlining the 
student loan repayment program process; 

* completed a review of our performance management system in response 
to concerns from staff that it was not working well, briefed all 
employees on the findings, and awarded a contract for development of a 
new performance management system; and; 

* expanded supervisory and leadership training to improve how managers 
and staff elicit, receive, and give feedback, and introduced new 
courses to develop and refine skills on teamwork, improving 
communication, and coaching. 

In fiscal year 2011, we plan to: 

* complete a master collective bargaining agreement with IFPTE, Local 
1921; 

* leverage social media tools to further enhance our recruiting and 
outreach efforts to address changing technologies and communication 
norms; 

* continue to focus on attracting and retaining staff of certain 
population groups identified in our Workforce Diversity Plan with low 
representation in our workforce-Hispanics, veterans, and people with 
disabilities; 

* ensure consistency of our human capital practices and procedures 
with Office of Personnel Management's civil service reform 
initiatives, to the extent practicable; 

* ensure the integrity of personnel-related data in our human resource 
information systems; 

* optimize the utility of our human resource information systems by 
better aligning technology solutions with critical business processes; 

* continue to align our learning activities with organizational 
priorities and leverage technology to deliver, track, and report on 
them; 

* finalize a strategic plan for providing human capital services for 
the next 5 years that aligns with our strategic plan; and; 

* complete the redesign of our performance management system and 
implement short and long-term recommendations from the Performance 
Appraisal Study. 

Mitigating External Factors: 

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; resource constraints; and access to agency 
information. We mitigate these factors in several ways. 

While demand for our work is very high, with nearly 1,000 
congressional requests and new mandates in fiscal year 2010, as the 
Congress responds to current and unforeseen events, the mix of work we 
are asked to perform can and does change. To be prepared to address 
timely and relevant issues, in our 2010 strategic planning process, we 
identified 8 broad trends to guide our work plans. We determined these 
trends through literature review, discussions with advisors and 
experts, and input from mission teams. We communicate frequently with 
our congressional clients to stay abreast of their interests. In 
addition, each year we conduct a limited number of evaluations under 
the Comptroller General's authority to address priority issues we 
identify. We also 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 recent mandates for work 
related to the Recovery Act and TARP in fiscal year 2010, we employed 
multidisciplinary teams composed of staff from across the agency. We 
devoted almost 40 percent of our audit resources to mandates in fiscal 
year 2010. We expect the level of demand for our work to continue as 
we fulfill ongoing requirements under mandates and other 
responsibilities. For example, recent health care and financial 
regulatory reform legislation include many new mandates for us. 
Moreover, all Senate committees are required to review programs within 
their jurisdiction to root out fraud, waste, and abuse in program 
spending—-giving particular scrutiny to issues raised in our reports—- 
and develop recommendations for improved government performance, and 
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. 39 for more 
information about our high-risk list areas and programs.) 

Federal funding and resource constraints could also affect our ability 
to serve the Congress and meet our performance targets. To improve our 
ability to work efficiently and make the best use of resources, we are 
focused on leveraging technology and enhancing our quality assurance 
processes. For example, in fiscal year 2010, we upgraded the 
capability of several information systems used by our engagement teams 
to manage their work. 

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. Some of 
these are agency specific, stemming from long-standing processes and 
procedures that impede our access; others reflect misinterpretations 
of our authorities. 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 2010, there were some 
positive developments on the access front stemming from these 
discussions. In the past year, DHS took the significant step of 
finalizing its new DHS Management Directive and implementing 
instruction for responding to our requests for information and 
interviews. In particular, the new protocols are designed to provide 
us with direct access to designated program officials for the purpose 
of requesting and receiving documents, information, and interviews, 
rather than working through liaisons. When fully implemented, these 
processes should result in key improvements in our access to records 
and knowledgeable program officials at DHS. 

The Department of Justice (DOJ) in recent years has also employed a 
centralized process for screening our access requests, resulting in 
delays and occasional denials of access to information. Given this, in 
2010 we held discussions with senior officials at DOJ about options 
for streamlining our access to information. We have agreed to initiate 
a pilot with target time frames for DOJ production of documents and 
for the scheduling of interviews with agency officials. We are hopeful 
that the pilot will lead to a more efficient and effective working 
relationship with DOJ. 

We have sometimes experienced issues at certain agencies due to 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 of a provision in the 
Hart-Scott-Rodino Act, as amended. 

Legislation that passed the House earlier this year (the Government 
Accountability Office Improvement Act of 2010, H.R. 2646) and pending 
in the Senate (S. 2991) 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. 

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

Part II: Performance Information: 

Performance Information by Strategic Goal: 

In the following sections, we discuss how each of our four strategic 
goals contributed to our fiscal year 2010 performance results. 
Specifically, for goals 1, 2, and 3—-our external goals—-we present 
performance results for the three annual measures that we assess at 
the goal level. Most teams and units also contributed toward meeting 
the targets for the agencywide measures that were discussed in part I 
of this report. 

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

Our first strategic goal upholds our mission to support the Congress 
in carrying out its constitutional responsibilities by focusing on 
work that helps address the current and emerging challenges affecting 
the well-being and financial security of the American people and 
American communities. Our multiyear (fiscal years 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 Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives was performed primarily by 
headquarters and field office staff in the following teams: Education, 
Workforce, and Income Security; Financial Markets and Community 
Investment; Health Care; Homeland Security and Justice; Natural 
Resources and Environment; and Physical Infrastructure. In line with 
our performance goals and key efforts, goal 1 staff reviewed a variety 
of programs affecting the nation's health providers and patients, 
students and schools, 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. 

[Text box: Selected Work under Goal 1: Attacks on federal facilities 
in 2010 demonstrate the continued vulnerability of federal facilities. 
In a series of reports, we identified a number of challenges that 
hamper the Federal Protective Service’s ability to protect about 9,000 
federal facilities from a potential terrorist attack or other act of 
violence. On the basis of our work, legislation was introduced in 
Congress to improve the protection of federal facilities and 
employees. DHS also used our work to help support moving the Federal 
Protective Service to another component within the department. 
[hyperlink, http://www.gao.gov/products/GAO-10-901] [hyperlink, 
http://www.gao.gov/products/GAO-10-341] End of text box] 

To accomplish our work under these strategic objectives in fiscal year 
2010, 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 (DHS), 
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 exceeded all three of the goal 1 performance 
targets we set for fiscal year 2010 financial and nonfinancial 
benefits and testimonies. 

Table 9: Strategic Goal 1’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2006 Actual: $22.0 billion; 
2007 Actual: $12.9 billion; 
2008 Actual: $19.3 billion; 
2009 Actual: $12.1 billion; 
2010 Target[A]: $13.4 billion; 
2010 Actual: $17.8 billion; 
Met/Not Met: Met; 
2011 Target[A]: $13.4 billion. 

Performance measure: Nonfinancial benefits; 
2006 Actual: 268; 
2007 Actual; 238; 
2008 Actual: 226; 
2009 Actual: 224; 
2010 Target[A]: 225; 
2010 Actual: 233; 
Met/Not met: Met; 
2011 Target[A]: 225. 

Performance measure: Testimonies; 
2006 Actual: 97; 
2007 Actual: 125; 
2008 Actual: 123[B]; 
2009 Actual: 85; 
2010 Target[A]: 80; 
2010 Actual: 86; 
Met/Not Met: Met; 
2011 Target[A]: 78. 

Source: GAO. 

[A] Our fiscal year 2011 targets for all three performance measures 
are the same as those we reported in our fiscal year 2011 performance 
budget in January 2010. 

[End of Table 9: Strategic Goal 1’s Annual Performance Results and 
Targets] 

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 has declined steadily since fiscal year 2006. This decline is 
mostly due to some large financial benefits from earlier years that 
are reflected in the averages. Goal l's nonfinancial benefits peaked 
in fiscal year 2007 and have also declined since then. The average 
number of hearings at which we testify increased from 2006 through 
2008 and has remained fairly stable from 2008-2010. 

Table 10: Four-Year Rolling Averages for Strategic Goal 1: 

Performance measure: Financial benefits; 
2006: $22.0 billion; 
2007: $19.3 billion; 
2008: $17.5 billion; 
2009: $16.6 billion; 
2010: $15.5 billion. 

Performance measure: Nonfinancial benefits;
2006: 254; 
2007: 259; 
2008: 252; 
2009: 239; 
2010: 230. 

Performance measure: Testimonies; 
2006: 88; 
2007: 99; 
2008: 108; 
2009: 108; 
2010: 105. 

Source: GAO. 

[End of Table 10: Four-Year Rolling Averages for Strategic Goal 1] 

The following sections describe our performance under goal 1 for each 
of these three quantitative performance measures and describe the 
targets for fiscal year 2011. 

Financial Benefits: 

The financial benefits reported for this goal in fiscal year 2010 
totaled $17.8 billion, which exceeded the target we set by $4.4 
billion. Among these accomplishments are large financial savings from 
our work on the level of funding for the Medicare Advantage program 
and insurance claims for Federal Housing Administration-insured 
mortgages. We further describe financial accomplishments in the goal 1 
section of appendix 1. 

While we exceeded our target in 2010, we do not expect this level of 
performance to continue based on our recent experience and our 4-year 
average. We have set the target for fiscal year 2011 at $13.4 
billion-—the same level we set for fiscal year 2010. 

[Text box: Example of Goal 1’s Financial Benefits: Spending on the 
Medicare Advantage (MA) program-—a private health option under 
Medicare-—increased rapidly after 2003, rising 64 percent from 2004 to 
2006. We found that in 2007 some beneficiaries enrolled in MA plans 
likely experienced higher cost sharing than if they were enrolled in 
Medicare fee-for-service. Further, in 2006, MA plans spent less on 
medical expenses than they projected, leading to greater than 
estimated profits. The 2008 Medicare Improvements for Patients and 
Providers Act reduced payments to MA plans, resulting in estimated 
reductions of $3.4 billion for fiscal years 2010-2011. [hyperlink, 
http://www.gao.gov/products/GAO-08-359] [hyperlink, 
http://www.gao.gov/products/GAO-09-132R] End of text box] 

Nonfinancial Benefits: 

Nonfinancial benefits reported for goal 1 in fiscal year 2010 included 
222 actions taken by federal agencies to improve their services to the 
public in response to our work and another 11 in which information we 
provided to the Congress resulted in statutory or regulatory changes. 
This total of 233 nonfinancial benefits exceeded our target of 225. We 
further describe our nonfinancial accomplishments in the goal 1 
section of appendix 1. 

For fiscal year 2011, we have set a target of 225 for nonfinancial 
benefits. This target is the same as our fiscal year 2010 target, as 
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 prior experience. This target is the same as that we set 
in our fiscal year 2011 performance plan. 

[Text box: Example of Goal 1’s Nonfinancial Benefits: Our work has 
been the cornerstone for numerous legislative proposals in both the 
House and Senate to amend the Toxic Substances Control Act— the 
primary federal law to protect the American public from the threats of 
harmful chemicals in consumer products. Our body of work on the 
regulations controlling the manufacture and use of dangerous chemicals 
continues to be at the forefront in influencing the Congress to 
strengthen U.S. chemical control laws and to keep pace with the 
European Union and other countries in protecting the public. 
[hyperlink, http://www.gao.gov/products/GAO-09-428T] [hyperlink, 
http://www.gao.gov/products/GAO-07-825] End of text box] 

Testimonies: 

Our witnesses testified at 86 congressional hearings related to this 
strategic goal, which exceeded the fiscal year 2010 target by 6 
testimonies, or 8 percent. Among the topics on which we testified were 
unemployment insurance trust funds; concussions in high school 
athletes; corporate crime; Interior's oversight of oil and gas, and 
high-speed rail projects. (See p. 34 for selected testimony topics by 
goal.) We set our fiscal year 2011 target at 78 testimonies on goal 1 
issues because 2011 is the first year of a new Congress and we 
generally have fewer hearing requests in those years. 

[Text box: Example of Goal 1’s Testimonies: We testified on the state 
of Unemployment Insurance (UI) trust funds, which we found to have 
outstanding loans totaling $38.9 billion from the federal government 
to pay benefits. At the end of 2009, no state had enough reserves to 
cover 12 months of benefits, and net reserves are projected to remain 
negative for several years. We identified options to improve state UI 
trust fund financial conditions, such as raising and indexing the 
taxable wage base, adjusting state tax rates more frequently, and 
raising solvency targets before lowering rates. [hyperlink, 
http://www.gao.gov/products/GAO-10-692T] End of text box] 

[End of Goal 1 Overview] 

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

The federal government is working to promote foreign policy goals, 
sound trade policies, and other strategies to advance the interests of 
the United States and its allies. 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 Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed primarily by 
headquarters and field staff in the following teams: Acquisition and 
Sourcing Management, Defense Capabilities and Management, 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. 

[Text box: Selected Work under Goal 2: Since 2005 we have reviewed FEMA’
s preparedness grant-allocation methodologies and its efforts to 
implement a national system of emergency-response planning, exercises, 
and capability assessment. In 2010, in response to our recommendations, 
FEMA enhanced its project planning for implementation of the Comprehensive 
Assessment System, obtained information from past principal level exercises 
and conducted remedial action tracking and long-term trend analysis, and 
included the National Council on Disability on committees involved in the 
design and execution of national level exercises for issues related to 
populations with special needs. End of text box] 

To accomplish our work in fiscal year 2010 under these strategic 
objectives, we conducted engagements and audits that involved 
fieldwork related to programs that took us across multiple continents, 
including Europe, Africa, Asia, South America, and North America. As 
in the past, we developed reports, testimonies, and briefings on our 
work. 

As shown in table 11, we exceeded our fiscal year 2010 performance 
targets for financial and nonfinancial benefits, but we did not meet 
the target for testimonies. 

Table 11: Strategic Goal 2’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2006 Actual: $12.0 billion; 
2007 Actual: $10.3 billion; 
2008 Actual: $15.4 billion; 
2009 Actual: $12.4 billion; 
2010 Target: $13.8 billion; 
2010 Actual: $20.5 billion; 
Met/Not Met: Met; 
2011 Target[A]: $13.9 billion. 

Performance measure: Nonfinancial benefits; 
2006 Actual: 449; 
2007 Actual: 468; 
2008 Actual: 468; 
2009 Actual: 457; 
2010 Target: 345; 
2010 Actual: 444; 
Met/Not Met: Met; 
2011 Target[A]: 345. 

Performance measure: Testimonies; 
2006 Actual: 68; 
2007 Actual: 73; 
2008 Actual: 93[B]; 
2009 Actual: 67; 
2010 Target: 73; 
2010 Actual: 58; 
Met/Not Met: Not met; 
2011 Target[A]: 65. 

Source: GAO. 

[A] Our fiscal year 2011 target for testimonies differs from the 
targets we reported in our fiscal year 2011 performance budget in 
January 2010. Specifically, we decreased the number of testimonies by 
six. 

[End of table: Strategic Goal 2’s Annual Performance Results and 
Targets] 

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 12. This 
table indicates that over the past 5 years goal 2 financial benefits 
reached the highest level in 2010, and average nonfinancial benefits 
and testimonies increased steadily from 2006 to 2009 and declined 
slightly in 2010. 

Table 12: Four-Year Rolling Averages for Strategic Goal 2: 

Performance measure: Financial benefits; 
2006: $10.4 billion; 
2007: $11.2 billion; 
2008: $12.7 billion; 
2009: $12.5 billion; 
2010: $14.7 billion; 

Performance measure: Nonfinancial benefits; 
2006: 364; 
2007: 413; 
2008: 438; 
2009: 461; 
2010: 459. 

Performance measure: Testimonies; 
2006: 57; 
2007: 63; 
2008: 69; 
2009: 75; 
2010: 73. 

Source: GAO. 

[End of Table 12: Four-Year Rolling Averages for Strategic Goal 2] 

The following sections describe our performance under goal 2 for each 
of our quantitative performance measures and describe the targets for 
fiscal year 2011. 

Financial Benefits: 

The financial benefits reported for this goal in fiscal year 2010 
totaled $20.5 billion which exceeded our target by $6.7 billion. Among 
these accomplishments are large financial benefits from our work, 
including reductions DOD made to the Army's Future Combat System 
vehicle program and the Missile Defense Agency's cancellation of the 
Kinetic Energy Interceptor program and second airborne laser aircraft 
prototype. We further describe financial accomplishments in the goal 2 
section of appendix 1. 

Given the large portion of the U.S. budget that defense spending 
consumes, we expect our work under this goal to continue to produce 
economies and efficiencies; however we set our fiscal year 2011 target 
at $13.9 billion based on an assessment of our recent results and our 
4-year rolling average. 

[Text box: Example of Goal 2’s Financial Benefits: Our prior work 
identified issues such as excessive payments of enlistment and 
reenlistment bonuses to servicemembers in occupations that exceeded 
their authorized levels while other occupations were underfilled. We 
made recommendations that DOD assess reasons for occupations being 
over- or underfilled and justify use of financial incentives for 
overfilled occupations. On the basis of our work, DOD developed a more 
rigorous approach to managing and overseeing its recruiting and 
retention budget, resulting in a financial benefit of $947.3 million. 
[hyperlink, http://www.gao.gov/products/GAO-06-134] End of text box] 

Nonfinancial Benefits: 

The nonfinancial benefits reported for goal 2 in fiscal year 2010 
included 423 actions taken by federal agencies to improve their 
services to the public and business processes in response to our 
recommendations and another 21 in which information we provided to the 
Congress resulted in statutory or regulatory changes. This total of 
444 nonfinancial benefits exceeded our target by 99. Our success in 
this area arose from our increased emphasis on follow-up efforts and 
increased monitoring of our progress toward the targets throughout the 
year. We further describe nonfinancial accomplishments in the goal 2 
section of appendix 1. 

Looking ahead, our assessments of the executive branch's current 
efforts to implement our recommendations made under this goal led us 
to set our fiscal year 2011 target at 345, which is the same as we 
reported for goal 2 in our fiscal year 2011 performance plan. While 
this target is lower than our fiscal year 2010 actual performance and 
4-year average for this measure, we believe that this is a realistic 
estimate based on the level of our outstanding goal 2 recommendations. 

[Text box: Example of Goal 2’s Nonfinancial Benefits: In fiscal year 
2006, we analyzed how well multiple Department of Homeland Security 
(DHS) components were basing their security efforts on risk management-—
a systematic process for assessing threats and taking steps to address 
them. We recommended that DHS standardize its risk management 
approach, better link local and national risk assessment efforts, 
provide guidance on using risk management to develop performance 
measures, and integrate risk management activities with resource 
allocation. DHS has taken action to implement these recommendations, 
and as a result is better positioned to allocate its resources to 
those areas of highest risk. [hyperlink, 
http://www.gao.gov/products/GAO-06-91] [hyperlink, 
http://www.gao.gov/products/GAO-08-627SP] End of text box] 

Testimonies: 

Our witnesses testified at 58 congressional hearings related to this 
strategic goal in fiscal year 2010, missing our target of 73 hearings. 
Goal 2 testimony topics included financial markets regulation, TARP, 
aviation security, global food security, DOD military and civilian 
compensation, and defense space acquisitions. (See p. 34 for selected 
testimony topics by goal.) We have set our target at 65 for presenting 
testimony at hearings in fiscal year 2010-7 more hearings than our 
fiscal year 2010 actual performance. We anticipate an increase in 
hearings due to ongoing work of the Congress on these and other 
defense and global interdependence issues. 

[Text box: Example of Goal 2’s Testimonies: We testified on U.S. 
governmentwide efforts to address global food security. We found that 
while the U.S. government supports a wide variety of programs and 
activities in this area—totaling at least $5 billion in fiscal year 
2008—it lacks readily available comprehensive funding data and cannot 
determine precisely the total amount. The administration is making 
progress toward a governmentwide global food security strategy, but 
the lack of a commonly accepted governmentwide operational definition 
of global food security programs and activities and comprehensive data 
on programs and funding make it hard to establish a baseline for 
planning. [hyperlink, http://www.gao.gov/products/GAO-10-494T] End of 
text box] 

[End of Goal 2 Overview] 

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

Our third strategic goal focuses on the collaborative and integrated 
elements needed for the federal government to achieve results. The 
work under this goal highlights the intergovernmental relationships 
that are necessary to achieve national goals. Our multiyear (fiscal 
years 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 Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed primarily by 
headquarters and field staff from the Applied Research and Methods, 
Financial Management and Assurance, Forensic Audits and Special 
Investigations, 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 General Counsel's Office. 

[Text box: Selected Work under Goal 3: We advocated increased 
congressional scrutiny of problematic, major IT projects intended to 
modernize the Department of Veterans Affairs’ (VA) systems for 
outpatient appointment scheduling as well as asset and financial 
management. In multiple reports, we identified weaknesses in IT 
management capabilities that were undermining the department’s efforts 
to develop and implement new systems. Our work spurred improvements to 
the appointment-scheduling and asset management system projects and 
contributed to VA’s decision to terminate its financial management 
system project. [hyperlink, http://www.gao.gov/products/GAO-10-579] 
[hyperlink, http://www.gao.gov/products/GAO-10-40] End of text box] 

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 13, we did not meet our fiscal year 2010 performance 
targets for this goal's financial benefits, we exceeded our target for 
nonfinancial benefits, and we did not meet our target for testimonies 
for this goal. 

Table 13: Strategic Goal 3’s Annual Performance Results and Targets: 

Performance measure: Financial benefits; 
2006 Actual: $17.0 billion; 
2007 Actual: $22.8 billion; 
2008 Actual: $23.4 billion; 
2009 Actual: $18.5 billion; 
2010 Target: $14.8 billion; 
2010: Actual: $11.6 billion; 
Met/Not Met: Not met; 
2011 Target[A]: $14.7 billion. 

Performance measure: Nonfinancial benefits; 
2006 Actual: 625; 
2007 Actual: 648; 
2008 Actual: 704; 
2009 Actual: 634; 
2010 Target: 630
2010: Actual: 684
Met/Not Met: Met; 
2011 Target[A]: 630. 

Performance measure: Testimonies; 
2006 Actual: 73; 
2007 Actual: 74; 
2008 Actual: 76[B]; 
2009 Actual: 49; 
2010 Target: 59; 
2010: Actual: 45; 
Met/Not Met: Not met; 
2011 Target[A]: 54. 

Source: GAO. 

[A] Our fiscal year 2011 target for testimonies differs from the 
target we reported in our fiscal year 2011 performance budget in 
January 2010. Specifically, we decreased the number of testimonies by 
5. 

To help us examine trends for these measures over time, we look at 
their 4-year averages—shown in table 14—which minimize the effect of 
an unusual level of performance in any single year. Table 14 indicates 
that over the 5-year period from 2006-2010, financial benefits 
increased steadily from 2006-2009 and decreased somewhat in 2010. 
Nonfinancial benefits rose from 2006-2008, decreased in 2009, and 
increased again in 2010. The trend in the average number of hearings 
during which our senior executives testified on goal 3 issues also 
rose from 2006-2008, remained stable in 2009, and declined 
substantially in 2010. 

Table 14: Four-Year Rolling Averages for Strategic Goal 3: 

Performance measure: Financial benefits; 
2006: $10.1 billion; 
2007: $14.6 billion; 
2008: $18.6 billion; 
2009: $20.4 billion; 
2010: $19.1 billion. 

Performance measure: Nonfinancial benefits; 
2006: 630; 
2007: 654; 
2008: 686; 
2009: 653; 
2010: 668. 

Performance measure: Testimonies; 
2006: 59; 
2007: 64; 
2008: 68; 
2009: 68; 
2010: 49. 

Source: GAO. 

[End of Table 14: Four-Year Rolling Averages for Strategic Goal 3] 

The following sections describe our performance under goal 3 for each 
of our quantitative performance measures and describe the targets for 
fiscal year 2011. 

Financial Benefits: 

The financial benefits reported for this goal in fiscal 2010 totaled 
$11.6 billion, missing our target of $14.8 billion by about $3.2 
billion. We further describe financial accomplishments in the goal 3 
section of appendix 1. 

While we did not meet our fiscal year 2010 target, we have kept our 
fiscal year 2011 target for financial benefits at $14.7 billion, which 
is the same as the target we reported in our fiscal year 2011 
performance plan, as we expect more financial benefits from our work 
on information technology, financial management, and government 
operations. 

[Text box: Example of Goal 3’s Financial Benefits: We have reported on 
the continuing cost, schedule, and management challenges facing the 
acquisition and development of the National Polar-orbiting Operational 
Environmental Satellite System (NPOESS)—a tri-agency program managed 
by NOAA, DOD, and NASA. In a series of reports, we found that 
ineffective and inefficient executive management over the program led 
to the continuing unresolved cost increases and schedule delays. After 
forming a task force to assess options and identify a governance 
structure to address these problems, in February 2010, the Director of 
the Office of Science and Technology Policy disbanded the NPOESS 
program, announcing that it could not be successfully executed with 
the current management and budget structure. After the decision to 
disband the program, the President’s fiscal year 2011 budget excluded 
any further NOAA funding for NPOESS for a total benefit of about $1.6 
billion. [hyperlink, http://www.gao.gov/products/GAO-10-558] 
[hyperlink, http://www.gao.gov/products/GAO-09-564] End of text box] 

Nonfinancial Benefits: 

Nonfinancial benefits reported for goal 3 in fiscal year 2010 included 
673 instances in which agencies' core business processes were improved 
or governmentwide management reforms were advanced because of our 
work. In addition, there were 11 instances in which information we 
provided to the Congress resulted in statutory or regulatory changes. 
This total of 684 nonfinancial benefits exceeded our target by 54. We 
further describe nonfinancial accomplishments in the goal 3 section of 
appendix 1. 

Our forward-looking assessments of the executive branch's current 
efforts to implement our recommendations made under this goal led us 
to keep our fiscal year 2011 target at 630, the same level that we set 
in our 2011 performance plan. While we recognize that this target is 
lower than our fiscal year 2010 actual performance and 4-year average 
for this measure, we believe it is a realistic estimate based on our 
outstanding recommendations from our goal 3 work. 

[Text box: Example of Goal 3’s Nonfinancial Benefits: We developed a 
methodology adopted by the Congress to efficiently target billions of 
dollars in Medicaid assistance through the Recovery Act. Initial 
estimates showed that the act would provide about $87 billion in 
increased federal support through the Federal Medical Assistance 
Percentage (FMAP)—the rate states are reimbursed for Medicaid costs. 
About 38 percent of the $87 billion total is provided by a percentage 
increase targeted to states based on changes in each state’s 
unemployment rate, a measure closely correlated with recession- 
induced increased state Medicaid expenditures. Most of the remaining 
62 percent is provided through an across-the-board percentage increase 
in the FMAP. For the targeted portion of the increased Medicaid 
assistance, the legislation is based on our strategy for allocating 
supplemental federal Medicaid assistance during economic downturns— 
according to when and to what extent states’ unemployment rates 
increase. The Congress sought our input in designing the targeted 
allocation of supplemental Medicaid assistance for the Recovery Act. 
As a result, about $33 billion in grants to states are allocated 
according to where, when, and how severely they are impacted by 
recession-induced increases in Medicaid costs. [hyperlink, 
http://www.gao.gov/products/GAO-09-320R] [hyperlink, 
http://www.gao.gov/products/GAO-07-97] End of text box] 

Testimonies: 

Our witnesses testified at 45 congressional hearings related to this 
strategic goal in fiscal year 2010, missing the target of 59 by 14 
hearings. Among the testimonies presented were those related to the 
Recovery Act, DOD financial management, strategies for balancing the 
government-to-contractor workforce at federal agencies, and fraud in 
the Service Disabled Veteran-Owned Small Business Program. (See p. 34 
for selected testimony topics by goal.) For fiscal year 2011, we have 
set a target of testifying at 54 hearings, which is somewhat less than 
the target we set in our fiscal year 2011 performance plan. While this 
target is higher than our actual 2010 results, it is more consistent 
with our experience over the past several years. 

[Text box: Example of Goal 3’s Testimonies: Our 2010 review on use of 
recovery audit contractors (RAC) in Medicare found that the Centers 
for Medicare & Medicaid Services lacked an adequate process for using 
RAC findings to address vulnerabilities that led to over $230 million 
dollars in improper payments to Medicare providers. This influenced 
the Congress to add a provision to the Improper Payments Elimination 
and Recovery Act of 2010. All agencies that use RACs are now required 
to report yearly to the Office of Management and Budget and the 
Congress on actions taken to address RAC recommendations on how to 
reduce vulnerabilities leading to improper payments. [hyperlink, 
http://www.gao.gov/products/GAO-10-864T] End of text box] 

[End of Goal 3 Overview] 

Goal 4 Overview: Maximize the Value of GAO by Enabling Quality, Timely 
Service to the Congress and by Being a Leading Practices Federal 
Agency: 

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 three internal management challenges and our management 
improvement initiatives. 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. 

[Text box: Selected Work under Goal 4: To attract more applicants from 
demographic groups with low representation in our workforce, we 
implemented a number of leading practices in our recruitment program. 
We issued a diversity recruitment strategy to guide recruiting 
activities. We also trained diverse teams of staff representing all of 
our mission teams, locations, and affinity groups to recruit at 
college campuses and recruiting events. 

To deliver training more cost effectively to staff in our headquarters 
and field offices, we implemented virtual classroom courses or 
Webinars, and converted four key leadership courses from standard 
classroom to virtual courses. We certified 29 staff to teach these 
courses and trained 10 technicians to assist with course delivery. 

To support our analysts in conducting their work efficiently, we 
improved capabilities of several engagement support systems used by 
our analysts for required audit documentation, and we upgraded our 
document management system to streamline the user interface. 

To make our work more accessible to users of small-screen electronic 
devices, we created a simplified version of our Web site to provide 
easy access to our most frequently viewed products—reports, 
testimonies, and legal decisions. We also piloted a new electronic 
format for presenting our reports online. 

To reduce energy consumption in our headquarters building, we replaced 
ceiling light fixtures with energy efficient fixtures and installed 
energy efficient gas boilers for heating that should reduce annual 
costs by more than $.75 million. End of text box] 

These objectives, along with the performance goals and key efforts 
that support them, are discussed fully in our strategic plan, which is 
available on our Web site at [hyperlink, http://www.gao.gov/sp.html]. 
The work supporting these objectives is performed under the direction 
of the Chief Administrative Officer through the following offices: the 
Controller and Administrative Services, Field Operations, Human 
Capital, Information Systems and Technology Services, Knowledge 
Services, and the Professional Development Program. Assistance on 
specific key efforts is provided by the Special Assistant for 
Diversity Issues, the Applied Research and Methods team and other 
offices including Strategic Planning and External Liaison, 
Congressional Relations, Opportunity and Inclusiveness, Quality and 
Continuous Improvement, 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 exceeded out 
targets for services and functions that help employees get their jobs 
done and improve the quality of their work life. Goal 4 contributions 
are highlighted throughout this report and in appendix 1. 

Data Quality and Program Evaluation: 

Verifying and Validating Performance Data: 

Each year, we measure our performance with 14 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 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 15. 

Table 15: How We Ensure Data Quality for Our Annual Performance 
Measures: 

Results measures: 

Financial benefits: 

Definition and background: 
Our work—including our findings and recommendations—may produce 
benefits to the federal government that can be estimated in dollar 
terms. These benefits can result in better services to the public, 
changes to statutes or regulations, or improved government business 
operations. A financial benefit is an estimate of the federal monetary 
effect of agency or congressional actions. These financial benefits 
generally result from work that we completed over the past several 
years. The 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. Financial benefit amounts vary depending on the 
nature of the benefit, and we can claim financial benefits over 
multiple years based on a single agency or congressional action. 

Financial benefits are linked to specific recommendations or other 
work. To claim that financial benefits have been achieved, our staff 
must file an accomplishment report documenting that (1) the actions 
taken as a result of our work have been completed or substantially 
completed, (2) the actions generally were taken within 2 fiscal years 
prior to the filing of the accomplishment report, (3) a cause-and-effect 
relationship exists between the benefits reported and our recommendation 
or work performed, and (4) estimates of financial benefits were based on 
information obtained from non-GAO sources. To help ensure conservative 
estimates of net financial benefits, reductions in operating cost are 
typically limited to 2 years of accrued reductions, but up to 5 fiscal 
years of financial benefits can be claimed if the reductions are 
sustained over a period longer than 2 years. Multiyear reductions in 
long-term projects, changes in tax laws, program terminations, or sales 
of government assets are limited to 5 years. Financial benefits can be 
claimed for past or future years. For financial benefits involving events 
that occur on a regular but infrequent basis-—such as the decennial 
census-—we may extend the measurement period until the event occurs in 
order to compute the associated financial benefits using our present 
value calculator. 

Managing directors decide when their staff can claim financial 
benefits. A managing director may choose to claim a financial benefit 
all in 1 year or decide to claim it over several years, 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 Quality and Continuous 
Improvement office (QCI) for its review. Once accomplishment reports 
are approved, they are compiled by QCI, which annually tabulates total 
financial benefits agencywide and by goal. 

Verification and validation: 
Our policies and procedures require us to use the Accomplishment 
Reporting System to record the financial benefits that result from our 
work. They also provide guidance on estimating those financial 
benefits. The team identifies when a financial benefit has occurred as 
a result of our work. The team develops estimates based on non-GAO 
sources, such as the agency that acted on our work, a congressional 
committee, or the Congressional Budget Office, and files 
accomplishment reports based on those estimates. When non-GAO 
estimates are not readily available, teams may use GAO estimates—- 
developed in consultation with our experts, such as the Chief 
Economist, Chief Actuary, or Chief Statistician, and corroborated with 
a knowledgeable program official from the executive agency involved. 
The estimates are reduced by significant identifiable offsetting 
costs. The team develops workpapers to support accomplishments with 
evidence that meets our evidence standard, supervisors review the 
workpapers, and an independent person within GAO reviews the 
accomplishment report. For all financial accomplishment reports the 
managing director prepares a memorandum addressed to the Chief Quality 
Officer attesting that the accomplishment report meets GAO 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 GAO procedures. In 
fiscal year 2010, the teams were 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 QCI, which reviews all accomplishment 
reports and approves accomplishment reports claiming benefits of $100 
million or more. In fiscal year 2010, QCI approved accomplishment 
reports covering 95 percent of the dollar value of financial benefits 
we reported. 

In fiscal year 2010, accomplishments of $100 million or more were also 
reviewed by independent second and third reviewers (reemployed GAO 
annuitants), who have substantial experience and knowledge of GAO 
accomplishment reporting policies and procedures. GAO’s total fiscal 
year 2010 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 QCI for its review. Once 
accomplishment reports are approved, they are compiled by QCI, which 
annually tabulates total other (nonfinancial) benefits agencywide and 
by goal. 

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

The team forwards the report to QCI, where it is reviewed for 
appropriateness. QCI provides summary data on nonfinancial benefits to 
team managers, who check the data on a regular basis to make sure that 
approved accomplishments from their staff have been accurately 
recorded. Additionally, on a periodic basis, the IG independently 
tests compliance with our process for claiming nonfinancial benefits. 
For example, the IG tested this process in fiscal year 2005 and found 
it to be reasonable. In response to the IG’s recommendations, we 
strengthened the documentation of our nonfinancial benefits. 

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

Percentage of products with recommendations: 

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

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

Data sources: 
Our Documents Database records recommendations as they are issued. The 
database is updated daily. 

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

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 2010 
implementation rate is the percentage of recommendations made in 
fiscal year 2006 products that were implemented by the end of fiscal 
year 2010). Experience has shown that if a recommendation has not been 
implemented within 4 years, it is not likely to be implemented. 

This measure assesses action on recommendations made 4 years 
previously, rather than the results of our activities during the 
fiscal year in which the data are reported. For example, the 
cumulative percentage of recommendations made in fiscal year 2006 that 
were implemented in the ensuing years is as follows: 12 percent by the 
end of the first year (fiscal year 2007), 27 percent by the end of the 
second year (fiscal year 2008), 42 percent by the end of the third 
year (fiscal year 2009), and 82 percent by the end of the fourth year 
(fiscal year 2010). 

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

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

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

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

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

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

Client measures: 

Testimonies: 

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

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

Verification and validation: 
The units responding to requests for testimony are responsible for 
entering data in the Congressional Hearing System. After a GAO witness 
has testified at a hearing, Congressional Relations verifies that the 
data in the system are correct and records the hearing as one at which 
we testified. Congressional Relations provides weekly status reports 
to unit managers, who check to make sure that the data are complete 
and accurate. Additionally, on a periodic basis, the IG independently 
verifies the total number of hearings at which we testified. As a 
result of the IG’s most recent review, we adjusted the figure for the 
number of hearings we testified at in fiscal year 2008 from 304 to 
298. We also are improving the guidance and documentation for 
recording hearings at which we testify. 

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

Timeliness: 

Definition and background: 
The likelihood that our products will be used is enhanced if they are 
delivered when needed to support congressional and agency decision 
making. To determine whether our products are timely, we compute the 
proportion of favorable responses to a question related to timeliness 
that appears on our electronic client outreach form. 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 GAO 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", "strongly 
disagree"—-or to choose "not applicable/no answer." For this measure, 
favorable responses are "strongly agree" and "generally agree." 

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 GAO’s Documents Database maintained by a 
contractor. To identify appropriate recipients of the form for 
products meeting our criteria, we ask the engagement teams to provide 
in GAO’s Product Numbering Database e-mail addresses for congressional 
staff serving as contacts on a product. Relevant information from both 
of these databases is fed into another database that is managed by 
QCI. 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 GAO 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 
Congressional 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: 
QCI staff review a hard copy of a released GAO product or access its 
electronic version to check the accuracy of the addressee information 
in the QCI database. QCI staff also check the congressional staff 
directory to ensure that form recipients listed in the QCI 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, QCI staff correct any obvious typing errors 
and resend the e-mail message or contact the congressional staff 
person directly for the correct e-mail address and then resend the 
message. The IG reviewed the timeliness performance measure in fiscal 
year 2009, and as a result of this work, we have clarified the 
description of this measure and are documenting our procedures. 

Data limitations: 
We do not measure the timeliness of all of our external products 
because we do not wish to place too much burden on busy congressional 
staff. Testimonies and written products that met our criteria for this 
measure represented about 60 percent of the congressionally requested 
written products we issued during fiscal year 2010. 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 29 percent, and 99 percent of those who 
responded answered the timeliness question. We received responses from 
one or more people for about 58 percent of the products for which we 
sent a form in fiscal year 2010. In our timeliness calculations for 
fiscal years 2004 through 2007, we inadvertently included nonresponses 
to the timeliness question and therefore recalculated the results for 
these fiscal years. While the percentage of favorable responses did 
not change significantly, the recalculation did result in us meeting 
our target (from 94 to 95 percent). 

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 Acting Comptroller General, 
Chief Administrative Officer, the Deputy Chief Administrative Officer, 
the Chief Human Capital Officer, and the Controller meet monthly to 
monitor progress toward achieving the workforce plan. Adjustments to 
the workforce plan are made throughout the year, if necessary, to 
reflect changing needs and conditions. 

Data sources: 
The Executive Committee approves the workforce plan. The workforce 
plan is coordinated and maintained by the Chief Administrative Office 
(CAO). 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 GAO and other agencies. 

Verification and validation: 
The 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 input 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 Acting 
Comptroller General and the CAO to monitor progress by GAO units 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. In 
addition, on a periodic basis, the IG examines our process for 
calculating the new hire rate. During fiscal year 2008, the IG 
independently reviewed this process and recommended actions to improve 
the documentation of the process used to calculate this measure. In 
fiscal year 2009, we developed standard operating procedures to 
document how we calculate and ensure quality control over data 
relevant to this measure. 

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 Chief Administrative Office database that contains 
some data from the NFC database, which handles payroll and personnel 
data for GAO and other agencies. 

Verification and validation: 
CAO staff continually monitor and review accessions and attritions 
against their database that contains NFC data and they follow up on 
any discrepancies. In addition, on a periodic basis, the IG examines 
our process for calculating the retention rate. During fiscal year 
2008, the IG reviewed this process and recommended actions to improve 
the documentation of the process used to calculate this measure. In 
fiscal year 2009, we developed standard operating procedures 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 2010 
the contractor also analyzed the data. This measure is based on staff’
s favorable responses to three of the six questions related to staff 
development on our annual employee survey. This subset of questions 
was selected on the basis of senior management’s judgment about the 
questions’ relevance to the measure and specialists’ knowledge about 
the development of indexes. Staff were asked to respond to three 
questions on a five-point scale or choose “no basis to judge/not 
applicable” or “no answer.” 

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

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

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 2010, our response rate to this survey was about 70 
percent, which indicates that its results are largely representative 
of the GAO population. 

In addition, many teams and work units conduct follow-on work to gain 
a better understanding of the information from the survey. In 
addition, on a periodic basis, the IG independently reviews the 
reliability and validity of the staff development measure. The IG’s 
most recent evaluation showed that for fiscal year 2007 we accurately 
calculated the measure. 

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

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

Staff utilization: 

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

Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff how 
often the following occurred in the last 12 months: (1) my job made 
good use of my skills; (2) GAO provided me with opportunities to do 
challenging work; and (3) in general, I was utilized effectively. From 
the staff who expressed an opinion, we calculated the percentage of 
staff selecting the two categories that indicate satisfaction with or 
a favorable response to the question. For this measure, the favorable 
responses were either “always or almost always” or “most of the time.” 
Responses of “no basis to judge” or “no answer” were excluded from the 
calculation. Including “no basis to judge/not applicable” or “no answer”
 in the calculation (in those few instances where it occurred) would 
not 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. 

Verification and validation: 
See Staff development, Verification and validation. The IG’s most 
recent evaluation showed that for fiscal year 2007 we accurately 
calculated the measure. 

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

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. (Beginning with the 2010 survey, question 10 
will be not be used for this measure and we will substitute a question 
on respecting and valuing differences among individuals. We are making 
this change because there is a large number of respondents who answer “
no basis/not applicable” to the Equal Employment Opportunity/ 
discrimination question. We believe this is due to GAO having so few 
discrimination cases and the safeguarding of private information, thus 
many employees do not have direct knowledge about how supervisors deal 
with such issues.) From the staff who expressed an opinion, we 
calculated the percentage of staff selecting the two categories that 
indicate satisfaction with or a favorable response to the question. 
For this measure, the favorable responses were either “always or 
almost always” or “most of the time.” 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. 

Verification and validation: 
See Staff development, Verification and validation. The IG’s most 
recent evaluation showed that for fiscal year 2007 we accurately 
calculated the measure. 

Data limitations: 
See Staff development, Data limitations. 

Organizational climate: 

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

Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. The survey questions we used for this measure ask staff to 
think back over the last 12 months and indicate how strongly they 
agree or disagree with each of the following statements: (1) a spirit 
of cooperation and teamwork exists in my work unit; (2) I am treated 
fairly and with respect in my work unit; (3) my morale is good; (4) 
sufficient effort is made in my work unit to get the opinions and 
thinking of people who work here; and (5) overall, I am satisfied with 
my job at GAO. From the staff who expressed an opinion, we calculated 
the percentage of staff selecting the two categories that indicate 
satisfaction with or a favorable response to the question. For this 
measure, the favorable responses were either “strongly agree” or 
“generally agree.” Responses of “no basis to judge” or “no answer” were 
excluded from the calculation. Including the “no basis to judge/not 
applicable” or “no answer” in the calculation (in those few instances 
where it occurred) would not 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. 

Verification and validation: 
See Staff development, Verification and validation. The IG’s most 
recent evaluation showed that for fiscal year 2007 we accurately 
calculated the measure. 

Data limitations: 
See Staff development, Data limitations. 

Internal operations measures: 

Help get job done and quality of work life: 

Definition and background: 
To measure how well we are doing at delivering internal administrative 
services to our employees and identify areas for improvement, we 
conduct an annual Web-based survey in November. The customer 
satisfaction survey on administrative services, conducted by an 
outside contractor to ensure the confidentiality of every respondent, 
is administered to all of our employees once a year. Through the 
survey we encourage our staff to indicate how satisfied they are with 
20 services that help them get their jobs done and another 13 services 
that affect their quality of work life. 

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

Data sources: 
These data come from our staff’s responses to an annual Web-based 
survey. To determine how satisfied GAO employees are with internal 
administrative services, we calculate composite scores for two 
measures. One measure reflects the satisfaction with the 20 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 13 services that affect 
quality of work life. These services include assistance related to pay 
and benefits, building maintenance and security, and workplace safety 
and health. The composite score represents how employees rated their 
satisfaction with services in each of these areas relative to how they 
rated the importance of those services to them. The importance scores 
and satisfaction levels are both rated on a scale of 1 (low) to 5 
(high). 

Verification and validation: 
The satisfaction survey on administrative services is housed on a Web 
site maintained by an outside contractor, and only the contractor has 
the ability to link the survey results with individual staff. Our 
survey response rate was 54 percent in 2009. To ensure that the 
results are largely representative of the GAO population, we analyze 
the results by demographic representation (unit, tenure, location, 
band level, and job type). Each GAO unit responsible for 
administrative services conducts follow-on work, including analyzing 
written comments to gain a better understanding of the information 
from the survey. In addition, on a periodic basis, the IG 
independently assesses the internal operations performance measures. 
The IG examined the measures during fiscal year 2007 and found the 
measures reasonable. The IG also recommended actions to improve the 
measures’ reliability and objectivity. To address these 
recommendations, we worked with a contractor to implement an automated 
process for following-up with survey nonrespondents, while maintaining 
their anonymity. This significantly increased our response rate and 
reliability. To enhance objectivity, we have more explicitly disclosed 
our survey response rate and other data limitations consistent with 
our reporting on the response rate and data limitations for our people 
measures. 

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

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

Source: GAO. 

[End of Table 15: How We Ensure Data Quality for Our Annual 
Performance Measures] 

Program Evaluation: 

To assess our progress toward our mission-based strategic goals (1-3) 
and related objectives and to update them for our strategic plan, we 
evaluate actions taken by federal agencies and the Congress in 
response to our recommendations. The results of these evaluations are 
conveyed in this performance and accountability report as financial 
benefits and nonfinancial benefits from our work. In addition, we 
actively monitor the status of our open recommendations-—those that 
remain valid but have not yet been implemented-—and report our 
findings annually to the Congress and the public (see [hyperlink, 
http://www.gao.gov/openrecs.html]). We use this analysis to determine 
the need for further work in specific issue areas. For example, if an 
agency has not implemented a recommended action that we consider to be 
worthwhile, we may decide to pursue further action with agency 
officials or congressional committees, or we may decide to undertake 
additional work in that area. We also use our biennial high-risk 
report to update the status of the areas we consider vulnerable to 
fraud, waste, abuse, and mismanagement, or in need of broad-based 
transformation. The report serves as an evaluation and planning tool 
to help us to identify areas where our continued efforts are needed to 
maintain focus on important policy and management issues facing the 
nation. See [hyperlink, 
http://www.gao.gov/docsearch/featured/highrisk.html]. 	 

In fiscal year 2010, under strategic goal 4, we conducted management 
studies to examine internal issues, operations, and processes 
affecting all four of our strategic goals. We also continued our 
management improvement initiatives and reported on several projects 
completed within five priority areas identified in fiscal year 2008: 
Recognizing and Valuing Diversity; Reassessing the Performance 
Appraisal System; Managing Workload, Quality, and Streamlining 
Processes; Enhancing Staffing Practices and Developing the Workforce; 
and Strengthening Recruitment and Retention Initiatives. The results 
of some of these projects led to longer-term initiatives such as our 
engagement streamlining initiative and development of a new product 
line. 

* Engagement streamlining initiative. This initiative focuses on 
streamlining our engagement processes—especially those activities 
performed by mission team analysts—and increasing efficiency through 
the use of information technology, while still adhering to our high 
standards for product quality and timeliness. The engagement 
streamlining team is comprised of mission team analysts, technical 
staff, and representatives from our Offices of Quality and Continuous 
Improvement, Information Systems and Technology Services, and 
Knowledge Services and our employee organizations. The team is 
identifying short-term and longer-term improvements that can be 
addressed through changes in technology, refinements in policy and 
processes, or a combination of the two. 

* Product line modernization. This initiative focuses on modernizing 
our product line's format and dissemination methods to more 
effectively meet the information needs of our clients and the public 
and reach a wider audience in an increasingly wireless, multimedia, 
and Web-based communications environment. The Steering Committee is 
comprised of mission team representatives and staff from the Offices 
of Quality and Continuous Improvement, Information Systems and 
Technology Services, Knowledge Services, Applied Research and Methods, 
Congressional Relations, General Counsel, Human Capital, and Public 
Affairs and our employee organizations. The team is identifying short- 
term improvements for better communicating our existing product line 
to our various audiences as well as long-term improvements to adapt 
our product line to modern Web-based communications. During fiscal 
year 2010, we began a series of audio podcasts on significant issues 
we reviewed and our new reports; launched a mobile version of our Web 
site geared for easy access with smart phones and other small-screen 
electronic devices; and piloted a Web-based reporting format to make 
our products more accessible, useful, and recognizable for users. We 
also added a "Share/Save" feature on our home page to make it easier 
for users to alert their colleagues and others about our products. 

* Quality assurance improvements. In response to the findings of 
internal inspections and suggestions resulting from our most recent 
external peer review, we enhanced our quality assurance framework in 
several areas to simplify and clarify some of our key processes and to 
help ensure compliance with our professional standards. These changes 
included development of a new framework for categorizing our work, 
enhancements to our policy for obtaining comments on our draft 
products from external entities, revisions to how we document data 
reliability assessments, a new approach to organizing engagement 
documentation, enhancements to documenting the assessment of the 
collective evidence, and clarifications on how to document referencing 
of draft products. In preparation for our next external peer review in 
2011, we have also conducted mandatory quality assurance training for 
our audit staff. 

We also completed our annual evaluation of financial management 
practices and processes. Each year, we monitor internal financial 
management controls through the use of reviews that include 
identification of key controls over financial reporting and assessment 
of the operating effectiveness of those controls. We review control 
objectives across all cycles[Footnote 15] and, where applicable, 
implement consolidated end-to-end testing of some processes (e.g. 
budget, procurement, property and disbursement cycles). We also 
develop corrective action plans for any identified control issues and 
monitor the plans until the issue is resolved. Our program meets the 
objectives of the Federal Managers' Financial Integrity Act of 1982, 
even though, as a legislative branch agency, we are not legally 
required to do so. We report the results of our analyses to the 
appropriate internal control working groups and the Senior Assessment 
Team, composed of senior agency managers and chaired by our Chief 
Financial Officer, that actively oversee the process. Additionally, 
our review of financial management systems is consistent with OMB 
Circular A-127 and includes analyses of Statement on Auditing 
Standards (SAS) number 70, Service Organizations audit reports for our 
shared service providers. The review also includes the results of our 
auditor's opinions on our financial statements and on internal 
controls over financial reporting and the auditor's report on 
compliance with laws and regulations. 

[End of Goal 4 Overview] 

[End of Part II, Performance Information] 

Part III: Financial Information: 

From the Acting Chief Financial Officer: 

November 15, 2010: 

I am pleased to report that during fiscal year 2010, the U.S. 
Government Accountability Office continued to honor its commitment to 
lead by example in government financial management. For the 24th 
consecutive year, independent auditors gave us an unqualified opinion 
on our financial statements, citing no material weaknesses or major 
compliance problems. The financial statements that follow were 
prepared, audited, and made publicly available as an integral part of 
this performance and accountability report (PAR) 45 days after the end 
of the fiscal year. Our fiscal year 2009 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. 

In fiscal year 2010, we continued to implement our oversight 
activities under the American Recovery and Reinvestment Act of 2009 
(Recovery Act), reviewing the use of Recovery Act funds by states and 
localities. In fiscal year 2009, in order to quickly begin work under 
the act, we used current, permanent staff who were well versed in GAO 
practices, were knowledgeable about state and local practices, and had 
contacts in the states and localities, and also hired more than 80 
temporary staff and federal retirees to assist with this work. We 
sustained this investment through most of fiscal year 2010, although 
all temporary and annuitant staff were released before the end of the 
fiscal year. For fiscal year 2011, we are conducting a revised scope 
of work under the Recovery Act using permanent GAO staff funded by our 
annual appropriations. 

In fiscal year 2010, we completed phase 2 of our financial system 
implementation. Under this phase, we fully integrated our travel 
management processes with the agencywide implementation of an eGov 
travel system, GovTrip. We successfully tested and implemented the 
GovTrip travel system, through a phased-in approach, adding the final 
group of users to the system in August. In addition to providing a 
more intuitive user interface, automatic routing of approved 
authorizations to the travel agent, online travel guidance, and 
electronic submission of receipts, GovTrip provides travelers with the 
option to book flights, hotels, and rental cars online without travel 
agent assistance. Travel is critical to enabling GAO to carry out its 
work in support of the Congress, and the improved transaction 
efficiency achieved through the integration of travel activity 
directly with the financial system benefits both the traveler and the 
agency. 

The third and final phase of our financial system implementation 
focuses on automating budget formulation and workforce planning 
functions. This year we researched and evaluated budget formulation 
and workforce planning software tools available to improve data 
integration, provide analytical tools, and increase the efficiency of 
decision making and reporting. We selected Oracle Hyperion as the 
analytic tool, which will be supplemented by a consolidated, 
integrated data repository. These tools will allow GAO to automate 
manual processes, eliminate redundant systems, and provide enhanced 
analytical capabilities through a modern, integrated business 
intelligence solution. 

This year we continued to expand our internal control testing and 
monitoring for end-to-end transaction testing to include budget and 
property, along with the procurement and disbursement cycles started 
last year. Through testing of the integrity of data through the life 
cycle flow of transactions, we were able to ensure that proper 
procurement requests; procurement processes; receipts of goods and 
services; and appropriate approval authority for these transactions 
were operating as designed. Also, in fiscal year 2010, we further 
enhanced self-monitoring of programs, particularly in vulnerable areas 
such as purchase cards, disbursements, and property. Program managers 
now review or monitor performance metrics and determine how best to 
use them in their specific control environments. These enhancements to 
the self-monitoring of programs improved efficiencies in the 
operations of internal controls. We also continue to review the 
independent auditors' reports on our service providers to ensure that 
we are able to proactively address any issues with appropriate 
compensating controls. All of these efforts contributed to our 
independent auditors providing a positive opinion on the effectiveness 
of our internal controls again this year. 

Looking ahead to fiscal year 2011, we will continue implementing new 
systems and initiatives to ensure efficient and effective financial 
operations. We plan to implement the budget formulation and workforce 
planning tool to facilitate data integration and better enable 
analysis, planning, and management of GAO resources. Also, we will 
continue to expand our internal control testing and monitoring of 
critical human capital systems to enhance the quality of human capital 
data. In addition, we will continue our commitment to the Engagement 
Streamlining Initiative (ESI), which is identifying ways to streamline 
GAO's engagement processes and increase efficiency through the use of 
information technology, while adhering to our high standards for 
product quality and timeliness. ESI's major emphasis is to make data 
and information more accessible, findable, and actionable for our 
analyst staff performing GAO's core mission. 

It has been my privilege to serve as the Acting Chief Financial 
Officer, following the retirement of Sallyanne Harper this past 
September, to ensure that GAO continues to be a leading practices 
agency and effectively and efficiently supports the Congress in 
improving the performance and accountability of the federal government. 

Signed by: 

Cheryl Whitaker: 
Acting Chief Financial Officer: 

[End of From the Chief Financial Officer] 

Audit Advisory Committee's Report: 

The Audit Advisory Committee (the Committee) assists the Comptroller 
General in overseeing the U.S. Government Accountability Office's 
(GAO) financial operations. As part of that responsibility, the 
Committee meets with agency management and its internal and external 
auditors to review and discuss GAO's external financial audit 
coverage, the effectiveness of GAO's internal controls over its 
financial operations, and its compliance with certain laws and 
regulations that could materially impact GAO's financial statements. 
GAO's external auditors are responsible for expressing an opinion on 
the conformity of GAO's audited financial statements with the U.S. 
generally accepted accounting principles. The Committee reviews the 
findings of the internal and external auditors, and GAO's responses to 
those findings, to ensure that GAO's plan for corrective action 
includes appropriate and timely follow-up measures. In addition, the 
Committee reviews the draft Performance and Accountability Report, 
including its financial statements, and provides comments to 
management who have primary responsibility for the Performance and 
Accountability Report. The Committee met three times with respect to 
its responsibilities as described above. During two of these sessions, 
the Committee met with the internal and external auditors without GAO 
management being present and discussed with the external auditors the 
matters that are required to be discussed by generally accepted 
auditing standards. Based on procedures performed as outlined above, 
we recommend that GAO's audited statements and footnotes be included 
in the 2010 Performance and Accountability Report. 

Signed by: 

Sheldon S. Cohen: 
Chairman: 
Audit Advisory Committee: 

[End of Audit Advisory Committee’s Report] 

Independent Auditor’s Report: 

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

Independent Auditor's Report: 

Acting Comptroller General of the United States: 

In our audits of the Government Accountability Office (GAO) for fiscal 
years 2010 and 2009, we found: 

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

* GAO 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). 

* No reportable noncompliance with laws and regulations we tested. 

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

Opinion on Financial Statements: 

In our opinion, the financial statements including the accompanying 
notes present fairly, in all material respects, in conformity with 
accounting principles generally accepted in the United States of 
America, GAO's assets, liabilities and net position as of September 
30, 2010 and 2009, and net costs; changes in net position; and 
budgetary resources for the years then ended. 

Opinion on Internal Control: 

In our opinion, GAO maintained, in all material respects, effective 
internal control over financial reporting as of September 30, 2010 
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 other nonreportable matters involving internal control and 
its operation that we will communicate in a separate management letter. 

Opinion on FFMIA Compliance: 

In our opinion, GAO's financial management systems, as of September 
30, 2010, 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 
United States of America, and the SGL. 

Compliance with Laws and Regulations: 

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

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

Consistency of Other Information: 

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

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

Objectives, Scope, and Methodology: 

Management is responsible for (1) preparing the financial statements 
in conformity with accounting principles generally accepted in the 
United States of America, (2) establishing and maintaining effective 
internal control over financial reporting, and evaluating its 
effectiveness, (3) ensuring that GAO's financial management systems 
substantially comply with FFMIA requirements, and (4) complying with 
applicable laws and regulations. GAO management evaluated the 
effectiveness of GAO's internal control over financial reporting as of 
September 30, 2010, based on criteria established under FMFIA. GAO 
management's assertion is included in the Financial Reporting 
Assurance Statements section of the Performance and Accountability 
Report. 

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

We are responsible for planning and performing our examination to 
obtain reasonable assurance about whether management maintained, in 
all material respects, effective internal control over financial 
reporting as of September 30, 2010. Our examination included obtaining 
an understanding of the entity and its operations, including its 
internal control over financial reporting; considering GAO's process 
for evaluating and reporting on internal control over financial 
reporting the GAO is required to perform by FMFIA; assessing the risk 
that a material misstatement exists in the financial statements and 
the risk that a material weakness exists in internal control over 
financial reporting; evaluating the design and operating effectiveness 
of internal control and assessing risk; testing relevant internal 
controls over financial reporting; and performing such other 
procedures as we considered necessary in the circumstances. We did not 
test all internal controls relevant to operating objectives as broadly 
defined by the FMFIA. 

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 United States, and 
assets are safeguarded against loss from unauthorized acquisition, 
use, or disposition; and (2) 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. 

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

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

We are also responsible for testing compliance with selected 
provisions of laws and regulations that have a direct and material 
effect on the financial statements. We did not test compliance with 
all laws and regulations applicable to GAO. We limited our tests of 
compliance to selected provisions of those laws and regulations that 
have a direct and material effect on the financial statements and 
those required by OMB audit guidance that we deemed applicable to the 
financial statements for the fiscal year ended September 30, 2010. We 
caution that noncompliance may occur and not be detected by these 
tests and that such testing may not be sufficient for other purposes. 

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

Signed by: 

Clifton Gunderson LLP: 
Calverton, Maryland: 
November 9, 2010: 

[End of Independent Auditor's Report] 

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. 

[End of Purpose of Each Financial Statement] 

Financial Statements: 
U.S. Government Accountability Office: Balance Sheets: 
As of September 30, 2010 and 2009 (Dollars in thousands): 

Assets: 

Intragovernmental: Funds with the U.S. Treasury and cash (Note 3); 
2010: $88,244; 
2009: $101,710. 

Intragovernmental: Accounts receivable; 
2010: $871; 
2009: $983. 

Total Intragovernmental; 
2010: $89,115; 
2009: $102,693. 

Property and equipment, net (Note 4); 
2010: $32,824; 
2009: $32,684. 

Other; 
2010: $328; 
2009: $307. 

Total Assets; 
2010: $122,267; 
2009: $135,684. 

Liabilities: 

Intragovernmental: Accounts payable; 
2010: $11,573; 
2009: $14,857. 

Intragovernmental: Employee benefits (Note 6); 
2010: $4,404; 
2009: $3,662. 

Intragovernmental: Workers' compensation (Note 7); 
2010: $2,620; 
2009: $2,764. 

Total Intragovernmental; 
2010: $18,597; 
2009: $21,283. 

Accounts payable and other; 
2010: $16,286; 
2009: $12,500. 

Salaries and benefits (Note 6); 
2010: $23,365; 
2009: $23,069. 

Accrued annual leave and other (Note 5); 
2010: $35,178; 
2009: $33,351. 

Workers' compensation (Note 7); 
2010: $15,217; 
2009: $16,332. 

Capital leases (Note 9); 
2010: $2,637; 
2009: $4,814. 

Total Liabilities; 
2010: $111,280; 
2009: $111,349. 

Net Position: Unexpended appropriations; 
2010: $28,531; 
2009: $48,330. 

Net Position: Cumulative results of operations; 
2010: ($17,544); 
2009: ($23,995). 

Total Net Position (Note 13); 
2010: $10,987; 
2009: $24,335. 

Total Liabilities and Net Position; 
2010: $122,267; 
2009: $135,684. 

The accompanying notes are an integral part of these statements. 

[End of Balance Sheets] 

Financial Statements: 
U.S. Government Accountability Office: Statements of Net Cost: 
For Fiscal Years Ended September 30, 2010 and 2009 (Dollars in 
thousands): 

Net Costs by Goal (Note 2): 

Goal 1: Well-Being/Financial Security of American People; 
2010: $210,295; 
2009: $191,316. 

Less: reimbursable services; 
2010: ($145); 
2009: [Empty]. 

Net goal costs; 
2010: $210,150; 
2009: $191,316. 

Goal 2: Changing Security Threats/Challenges of Global Interdependence; 
2010: $178,479; 
2009: $173,645. 

Less: reimbursable services; 
2010: ($5,008); 
2009: ($5,283. 

Net goal costs; 
2010: $173,471; 
2009: $168,362. 

Goal 3: Transform the Federal Government to Address National 
Challenges; 
2010: $208,315; 
2009: $182,384. 

Less: reimbursable services; 
2010: ($11,802); 
2009: ($5,255)). 

Net goal costs; 
2010: $196,513; 
2009: $$177,129. 

Goal 4: Maximize the Value of GAO; 
2010: $29,441; 
2009: $27,658. 

Less: reimbursable services; 
2010: [Empty]; 
2009: [Empty]. 

Net goal costs; 
2010: $29,441; 
2009: $27,658. 

Less: reimbursable services not attributable to goals; 
2010: ($6,619); 
2009: ($5,672). 

Net Cost of Operations (Note 10); 
2010: $602,956; 
2009: $558,793. 

The accompanying notes are an integral part of these statements. 

[End of Statements of Net Cost] 

Financial Statements: 
U.S. Government Accountability Office: Statements of Changes in Net 
Position: For Fiscal Years Ended September 30, 2010 and 2009: (Dollars 
in thousands): 

Cumulative Results of Operations, Beginning of fiscal year; 
2010: ($23,995); 
2009: ($21,146). 

Budgetary Financing Sources - Appropriations used; 
2010: $576,126; 
2009: $530,184. 

Other Financing Sources: Intragovernmental transfer of property and 
equipment; 
2010: ($14); 
2009: ($1). 

Other Financing Sources: Federal employee retirement benefit costs 
paid by OPM and imputed to GAO (Note 6); 
2010: $33,295; 
2009: $25,761. 

Total Financing Sources; 
2010: $609,407; 
2009: $555,944. 

Net Cost of Operations; 
2010: ($602,956); 
2009: ($558,793). 

Net Change; 
2010: $6,451; 
2009: ($2,849). 

Cumulative Results of Operations, End of fiscal year; 
2010: ($17,544); 
2009: ($23,995). 

Unexpended Appropriations, Beginning of fiscal year; 
2010: $48,330; 
2009: $24,064. 

Budgetary Financing Sources and Uses: Current year appropriations; 
2010: $557,849; 
2009: $556,000. 

Budgetary Financing Sources and Uses: Permanently not available; 
2010: ($1,522); 
2009: ($1,550). 

Budgetary Financing Sources and Uses: Appropriations used; 
2010: ($576,126); 
2009: ($530,184). 

Total unexpended appropriations, End of fiscal year; 
2010: $28,531; 
2009: $48,330. 

Net Position; 
2010: $10,987; 
2009: $24,335. 

The accompanying notes are an integral part of these statements. 

[End of Statements of Changes in Net Position] 

Financial Statements: 
U.S. Government Accountability Office: Statements of Budgetary 
Resources: For Fiscal Years Ended September 30, 2010 and 2009: 
(Dollars in thousands): 

Budgetary Resources (Note 11): Unobligated balance, brought forward 
October 1; 
2010: $30,373; 
2009: $6,756. 

Budgetary Resources (Note 11): Recoveries of prior year unpaid 
obligations; 
2010: $2,344; 
2009: $2,370. 

Budgetary Resources (Note 11): Budget authority: Appropriations; 
2010: $557,849; 
2009: $556,000. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Earned and collected; 
2010: $24,139; 
2009: $16,299. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in receivable from Federal 
sources: 
2010: ($133); 
2009: $373. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in unfilled customer orders- 
advance received; 
2010: ($86); 
2009: $433. 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Change in unfilled customer orders- 
without advance; 
2010: $1; 
2009: ($125). 

Budgetary Resources (Note 11): Budget authority: Spending authority 
from offsetting collections: Subtotal; 
2010: $581,770; 
2009: $572,980. 

Budgetary Resources (Note 11): Permanently not available; 
2010: ($1,522); 
2009: ($1,550). 

Total Budgetary Resources; 
2010: $612,965; 
2009: $580,556. 

Status of Budgetary Resources: Obligations incurred: Direct; 
2010: $581,262; 
2009: $536,692. 

Status of Budgetary Resources: Obligations incurred: Reimbursable; 
2010: $20,865; 
2009: $13,491. 

Status of Budgetary Resources: Obligations incurred: Subtotal; 
2010: $602,127; 
2009: $550,183. 

Status of Budgetary Resources: Unobligated balance-Apportioned; 
2010: $6,515; 
2009: $26,463. 

Status of Budgetary Resources: Unobligated balance not available; 
2010: $4,323; 
2009: $3,910. 

Total Status of Budgetary Resources; 
2010: $612,965; 
2009: $580,556. 

Change in Obligated Balance: Obligated balance, net: Unpaid Obligated 
balance, brought forward October 1; 
2010: $72,317; 
2009: $64,448. 

Change in Obligated Balance: Uncollected customer payments from 
Federal sources, brought forward October 1; 
2010: ($978); 
2009: ($730). 

Change in Obligated Balance: Total, Unpaid Obligation, net, brought 
forward October 1; 
2010: $71,339; 
2009: $63,718. 

Change in Obligated Balance: Obligations incurred; 
2010: $602,127; 
2009: $550,183. 

Change in Obligated Balance: Less: Gross Outlays; 
2010: ($593,836); 
2009: ($539,944). 

Change in Obligated Balance: Recoveries of prior-year unpaid 
obligations, actual; 
2010: ($2,344); 
2009: ($2,370). 

Change in Obligated Balance: Change in uncollected customer payments 
from Federal sources; 
2010: $132; 
2009: ($248). 

Change in Obligated Balance: Obligated balance, net, end of period: 
Unpaid Obligations; 
2010: $78,264; 
2009: $72,317. 

Change in Obligated Balance: Obligated balance, net, end of period: 
Uncollected customer payments from Federal sources; 
2010: ($846); 
2009: ($978). 

Change in Obligated Balance: Total, Unpaid obligations, net, end of 
period; 
2010: $77,418; 
2009: $71,339. 

Net Outlays: Gross outlays; 
2010: $593,836; 
2009: $539,944. 

Net Outlays: Less: Offsetting collections; 
2010: ($24,053); 
2009: ($16,733). 

Net outlays; 
2010: $569,783; 
2009: $523,211. 

The accompanying notes are an integral part of these statements. 

[End of Statements of Budgetary Resources] 

[End of Financial Statements] 

Notes to Financial Statements: 

Note 1. Summary of Significant Accounting Policies: 

Reporting Entity: 

The accompanying financial statements present the financial position, 
net cost of operations, changes in net position, and budgetary 
resources of the U.S. Government Accountability Office (GAO). GAO, an 
agency in the legislative branch of the federal government, supports 
the Congress in carrying out its constitutional responsibilities. GAO 
carries out its mission primarily by conducting audits, evaluations, 
analyses, research, and investigations and providing the information 
from that work to the Congress and the public in a variety of forms. 
The financial activity presented relates primarily to the execution of 
GAO’s congressionally approved budget. GAO’s budget consists of an 
annual appropriation covering salaries and expenses and revenue from 
reimbursable audit work and rental income. The revenue from audit 
services and rental income is presented on the statements of net cost 
as “reimbursable services” and included as part of “spending authority 
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. 

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 death is attributable to 
a job-related injury or occupational disease. Claims incurred for 
benefits for GAO employees under FECA are administered by the 
Department of Labor (Labor) and are paid, ultimately, by GAO (see Note 
7). 

GAO recognizes a current-period expense for the future cost of 
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 expensed. 

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, and expenses and in the note 
disclosures. Actual results could differ from these estimates. 

Note 2. Intragovernmental Costs and Exchange Revenue: 

Intragovernmental costs arise from exchange transactions made between 
two reporting entities within the federal government in contrast with 
public costs, which arise from exchange transactions made with a 
nonfederal entity. Intragovernmental costs and exchange revenue for 
the periods ended September 30, 2010, and September 30, 2009, are as 
follows: 

Goal 1: Well-being/Financial Security of American People: 

Intragovernmental costs: 
2010: $56,875; 
2009: $49,421. 

Public costs: 
2010: $153,420; 
2009: $141,895. 

Total goal 1 costs: 
2010: $210,295; 
2009: $191,316. 

Goal 1 intragovernmental earned revenue: 
2010: ($145); 
2009: [Empty]. 

Net goal 1 costs: 
2010: $210,150; 
2009: $191,316. 

Goal 2: Changing Security Threats/Challenges of Global Interdependence: 

Intragovernmental costs: 
2010: $47,997; 
2009: $44,368. 

Public costs: 
2010: $130,482; 
2009: $129,277. 

Total goal 2 costs: 
2010: $178,479; 
2009: $173,645. 

Goal 2 intragovernmental earned revenue: 
2010: ($5,008); 
2009: ($5,283). 

Net goal 2 costs: 
2010: $173,471; 
2009: $168,362. 

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

Intragovernmental costs: 
2010: $53,042; 
2009: $45,260. 

Public costs: 
2010: $155,273; 
2009: $137,124. 

Total goal 3 costs: 
2010: $208,315; 
2009: $182,384. 

Goal 3 intragovernmental earned revenue: 
2010: ($11,802); 
2009: ($5,255). 

Net goal 3 costs: 
2010: $196,513; 
2009: $177,129. 

Goal 4: Maximize the Value of GAO: 

Intragovernmental costs: 
2010: $9,510; 
2009: $10,084. 

Public costs: 
2010: $19,931; 
2009: $17,574. 

Total goal 4 costs: 
2010: $29,441; 
2009: $27,658. 

Earned revenue not attributable to goals: 

Intragovernmental: 
2010: ($6,315); 
2009: ($5,534). 

Public: 
2010: ($304); 
2009: ($138). 

Total earned revenue not attributable to goals: 
2010: ($6,619); 
2009: ($5,672). 

[End of Table: Intragovernmental Costs and Exchange Revenue] 

Goal 4 has no associated year-to-date intragovernmental revenues and 
all public earned revenue collected is not attributable to goals. The 
Government Accountability Office Act of 2008 provided GAO the 
authority to bill for costs related to certain audit work provided to 
other government entities, this resulted in additional revenue in 
fiscal year 2010 under Goal 3. 

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, 2010, and September 30, 
2009, is as follows: 

Dollars in thousands: 

Unobligated balance: Available; 
2010: $6,515; 
2009: $26,461. 

Unobligated balance: Unavailable; 
2010: $4,311; 
2009: $3,910. 

Obligated balances not yet disbursed; 
2010: $77,418; 
2009: $71,339. 

Total funds with U.S. Treasury; 
2010: $88,244; 
2009: $101,710. 

[End of Table: Funds with the U.S. Treasury] 

A significant portion of the unobligated balance available in fiscal 
year 2009 (approximately $20,800,000) is due to the remaining 
unobligated balance of GAO’s supplemental multiyear appropriation for 
efforts that include reviewing states’ uses of the American Recovery 
and Reinvestment Act (Recovery Act) funds. 

Note 4. Property and Equipment, Net: 

The composition of property and equipment as of September 30, 2010, is 
as follows: 

Dollars in thousands: 

Classes of property and equipment: Building; 
Acquisition value: $15,664; 
Accumulated depreciation: $13,784; 
Book value: $1,880. 

Classes of property and equipment: Land; 
Acquisition value: $1,191; 
Accumulated depreciation: [Empty]; 
Book value: $1,191. 

Classes of property and equipment: Building improvements; 
Acquisition value: $115,736; 
Accumulated depreciation: $99,530; 
Book value: $16,206. 

Classes of property and equipment: Computer and other equipment and 
software; Acquisition value: $41,059; 
Accumulated depreciation: $30,513; 
Book value: $10,546. 

Classes of property and equipment: Leasehold improvements; 
Acquisition value: $6,203; 
Accumulated depreciation: $5,982; 
Book value: $221. 

Classes of property and equipment: Assets under capital lease; 
Acquisition value: $19,432; 
Accumulated depreciation: $16,652; 
Book value: $2,780. 

Classes of property and equipment: Total property and equipment; 
Acquisition value: $199,285; 
Accumulated depreciation: $166,461; 
Book value: $32,824. 

The composition of property and equipment as of September 30, 2009, is 
as follows: 

Dollars in thousands: 

Classes of property and equipment: Building; 
Acquisition value: $15,664; 
Accumulated depreciation: $13,158; 
Book value: $2,506. 

Classes of property and equipment: Land; 
Acquisition value: $1,191; 
Accumulated depreciation: [Empty]; 
Book value: $1,191. 

Classes of property and equipment: Building improvements; 
Acquisition value: $109,841; 
Accumulated depreciation: $96,780; 
Book value: $13,061. 

Classes of property and equipment: Computer and other equipment and 
software; 
Acquisition value: $40,258; 
Accumulated depreciation: $30,360; 
Book value: $9,898. 

Classes of property and equipment: Leasehold improvements; 
Acquisition value: $6,238; 
Accumulated depreciation: $6,037; 
Book value: $201. 

Classes of property and equipment: Assets under capital lease; 
Acquisition value: $20,954; 
Accumulated depreciation: $15,127; 
Book value: $5,827. 

Classes of property and equipment: Total property and equipment; 
Acquisition value: $194,146; 
Accumulated depreciation: $161,462; 
Book value: $32,684. 

[End of Table: Property and Equipment, Net] 

Note 5. Liabilities Not Covered by Budgetary Resources: 

The liabilities on GAO’s balance sheets as of September 30, 2010, and 
September 30, 2009, 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, 2010, and September 30, 2009, is as 
follows: 

Dollars in thousands: 

Intragovernmental liabilities-Workers' compensation; 
2010: $2,620; 
2009: $2,764. 

Salaries and benefits-Comptrollers' General retirement plan[A]; 
2010: $1,878; 
2009: $1,961. 

Accrued annual leave and other; 
2010: $35,178; 
2009: $33,351. 

Workers' compensation[B]; 
2010: $15,217; 
2009: $16,332. 

Capital leases; 
2010: $2,637; 
2009: $4,814. 

Total liabilities not covered by budgetary resources; 
2010: $57,530; 
2009: $59,222. 

[A] See Note 6 for further discussion of the Comptrollers’ General 
retirement plan. 

[B] See Note 7 for further discussion of workers’ compensation. 

[End of Table: Liabilities Not Covered by Budgetary Resources] 

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 Benefits Program (FEHBP) and 
Federal Employees Group Life Insurance (FEGLI) Program and may 
continue to participate after retirement. GAO makes contributions 
through OPM to FEHBP and FEGLI Program 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. As a result of OPM adopting Statement of Federal 
Financial Accounting Standards No. 33, Pensions, Other Retirement 
Benefits, and Other Post Employment Benefits: Reporting the Gains and 
Losses from Changes in Assumptions and Selecting Discount Rates and 
Valuation Dates, our estimated future pension costs increased from a 
change in the cost factors (see federal employee benefits costs table 
below). 

Amounts owed to OPM and Treasury as of September 30, 2010, and 
September 30, 2009 are $4,404,000 and $3,662,000, 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, 2010, and September 30, 
2009, are as follows: 

Dollars in thousands: 

Federal Employee Benefits Costs: 

Federal employee retirement benefit costs paid by OPM and imputed to 
GAO: Estimated future pension costs(CSRS/FERS); 
2010: $15,816; 
2009: $9,372. 

Federal Employee Benefits Costs: Federal employee retirement benefit 
costs paid by OPM and imputed to GAO: Estimated future postretirement 
health and life insurance (FEHBP/FEGLIP); 
2010: $17,479; 
2009: $16,389. 

Federal Employee Benefits Costs: Federal employee retirement benefit 
costs paid by OPM and imputed to GAO: Total; 
2010: $33,295; 
2009: $25,761. 

Federal Employee Benefits Costs: Pension expenses(CSRS/FERS); 
2010: $36,386; 
2009: $33,895. 

Federal Employee Benefits Costs: Health and life insurance expenses 
(FEHBP/FEGLIP); 
2010: $19,283; 
2009: $17,377. 

Federal Employee Benefits Costs: FICA payment made by GAO; 
2010: $21,796; 
2009: $19,436. 

Federal Employee Benefits Costs: Thrift Savings Plan-matching 
contribution by GAO; 
2010: $12,898; 
2009: $11,436. 

[End of Table: Federal Employee Benefits] 

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 
$1,878,000 as of September 30, 2010, and $1,961,000 as of September 
30, 2009, 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, 2009: $1,961. 

Expense: Interest on the liability balance: $127. 

Expense: Actuarial loss: From experience: $95. 

Expense: Actuarial loss: From assumption changes: $20. 

Total expense: $242. 

Less benefits paid: ($325). 

Actuarial liability as of September 30, 2010: $1,878. 

[End of table] 

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, 2010, and 
September 30, 2009, which is expected to be paid in future periods. 
This estimated liability of $15,217,000 and $16,332,000 as of 
September 30, 2010, and September 30, 2009, respectively, is reported 
on GAO’s balance sheets. GAO also recorded a liability for amounts 
paid to claimants by Labor as of September 30, 2010, and September 30, 
2009, of $2,620,000 and $2,764,000, respectively, but not yet 
reimbursed to Labor by GAO. The amount owed to Labor is reported on GAO’
s balance sheets as an intragovernmental liability. 

Note 8. Building Lease Revenue: 

In fiscal year 2010 the current lease with the U.S. Army Corps of 
Engineers (USACE) expired and GAO entered into a new 10-year lease 
agreement to continue to lease the entire third floor and part of the 
sixth floor of the GAO building. The period of this agreement begins 
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. 

Rent received by GAO for fiscal years 2010 and 2009 was $5,338,000 and 
$5,264,000, respectively. These amounts are included in reimbursable 
services shown on the statements of net costs. Total rental revenue 
for the period of the new 10-year lease is as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2011; 
Total Projected Receipts[A]: $6,845. 

Fiscal year ending September 30: 2012; 
Total Projected Receipts[A]: $6,928. 

Fiscal year ending September 30: 2013; 
Total Projected Receipts[A]: $7,014. 

Fiscal year ending September 30: 2014; 
Total Projected Receipts[A]: $7,102. 

Fiscal year ending September 30: 2015; 
Total Projected Receipts[A]: $7,194. 

Fiscal year ending September 30: 2016-2020; 
Total Projected Receipts[A]: $37,452. 

Total: $72,535. 

[A] If option years are exercised. 

[End of Table: Building Leases] 

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, 
2010, and September 30, 2009, the capital lease liability was 
$2,637,000 and $4,814,000, respectively. 

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 the years shown in the table below. GAO’s 
estimated future minimum lease payments under the terms of the leases 
are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2011; 
Total: $2,437. 

Fiscal year ending September 30: 2012; 
Total: $272. 

Fiscal year ending September 30: 2013; 
Total: $38. 

Total estimated future lease payments: $2,747. 

Less: imputed interest: ($110). 

Net capital lease liability: $2,637. 

[End of Table: Capital Leases] 

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 2010 and 
fiscal year 2009 amounted to approximately $13,963,000 and 
$11,780,000, respectively. Leases for equipment under operating leases 
are generally less than 1 year therefore there are no associated 
future minimum lease payments. Estimated future minimum lease payments 
for field office space under the terms of the leases are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: 2011; 
Total: $8,653. 

Fiscal year ending September 30: 2012; 
Total: $6,995. 

Fiscal year ending September 30: 2013; 
Total: $5,709. 

Fiscal year ending September 30: 2014; 
Total: $4,909. 

Fiscal year ending September 30: 2015; 
Total: $3,620. 

Fiscal year ending September 30: 2016 and thereafter; 
Total: $7,855. 

Total estimated future lease payments: $37,741. 

[End of Table: Operating Leases] 

Leased property and equipment must be capitalized if certain criteria 
are met (see Capital Leases description). Because property and 
equipment covered under GAO’s operating leases do not satisfy these 
criteria, GAO’s operating leases are not reflected on the balance 
sheets. However, annual lease costs under the operating leases are 
included as components of net cost by goal in the statements of net 
cost. 

Note 10. Net Cost of Operations: 

Expenses for salaries and related benefits for fiscal year 2010 and 
fiscal year 2009 amounted to $475,530,000 and $441,438,000, 
respectively, about 79 percent of GAO’s annual net cost of operations 
in fiscal year 2010 and fiscal year 2009. Included in the net cost of 
operations are federal employee benefit costs paid by OPM and imputed 
to GAO of $33,295,000 in fiscal year 2010 and $25,761,000 in fiscal 
year 2009. 

Revenues from reimbursable services are shown as an offset against the 
full cost of the goal to arrive at its net cost. Earned revenues that 
are insignificant or cannot be associated with a major goal are shown 
in total, the largest component of which is rental revenue from the 
lease of space in the GAO building. Revenues from reimbursable 
services for fiscal year 2010 and fiscal year 2009 amounted to 
$23,574,000 and $16,210,000, 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. 

Note 11. Budgetary Resources: 

Budgetary resources available to GAO during fiscal year 2010 include 
current year appropriations; prior years’ unobligated balances, 
including almost $21,000,000 available through fiscal year 2010 to 
cover program reviews required by the Recovery Act; and 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 building and 
program and financial audits of federal entities, including the 
Department of the Treasury, Securities and Exchange Commission, 
Federal Deposit Insurance Corporation, 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. The costs and reimbursements for cost-sharing 
arrangements from other federal entities for the support of the 
Federal Accounting Standards Advisory Board are not included in the 
statements of net cost. 

Fiscal years 2009 and 2010 budgetary resources do not include any 
transfers of budget authority. 

Comparison of GAO’s fiscal year 2009 statement of budgetary resources 
with the corresponding information presented in the 2011 President’s 
Budget is as follows: 

Dollars in thousands: 

Fiscal year 2009 Statement of Budgetary Resources; 
Budgetary Resources: $580,556; 
Obligations Incurred: $550,183. 

Unobligated balances, beginning of year - (funds activity, expired 
accounts); 
Budgetary Resources: ($5,756); 
Obligations Incurred: [Empty]. 

Recovery of prior-year unpaid obligations; 
Budgetary Resources: ($2,370); 
Obligations Incurred: [Empty]. 

Obligations incurred – expired years; 
Budgetary Resources: [Empty]; 
Obligations Incurred: ($2,836). 

Permanently not available – (funds activity, expired accounts); 
Budgetary Resources: ($1,550); 
Obligations Incurred: [Empty]. 

Spending Authority from offsetting collections – (funds activity, 
expired accounts); 
Budgetary Resources: ($461); 
Obligations Incurred: [Empty]. 

Other - rounding in President's Budget: 
Budgetary Resources: ($519); 
Obligations Incurred: ($347). 

2011 President's Budget - fiscal year 2009, actual; 
Budgetary Resources: $573,000; 
Obligations Incurred: $547,000. 

[End of Table: Budgetary Resources] 

As the fiscal year 2012 President’s Budget will not be published until 
February 2011, a comparison between the fiscal year 2010 data 
reflected on the statement of budgetary resources and fiscal year 2010 
data in the President’s Budget cannot be performed, though we expect 
similar differences will exist. The fiscal year 2012 President’s 
Budget will be available on the OMB’s Web site and directly from the 
Government Printing Office. 

Budgetary resources obligated for undelivered orders at the end of 
fiscal year 2010 and the end of fiscal year 2009 totaled $24,906,000 
and $20,670,000, respectively. GAO’s apportionments fall under 
Category A, quarterly apportionment. Apportionment categories of 
obligations incurred for fiscal years 2010 and 2009 are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: Direct-Category A; 
2010: $581,262
2009: $536,692. 

Fiscal year ending September 30: Reimbursable-Category A; 
2010: $20,865; 
2009: $13,491. 

Fiscal year ending September 30: Total obligations incurred; 
2010: $602,127; 
2009: $550,183. 

[End of Table: Apportionment categories of obligations] 

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, 2010, 
and 2009, are as follows: 

Dollars in thousands: 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Obligation incurred; 
2010: $602,127; 
2009: $550,183. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Less: spending authority from 
offsetting collections and recoveries; 
2010: ($26,265); 
2009: ($19,351). 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Budgetary Resources Obligated: Obligations net of offsetting 
collections and recoveries; 
2010: $575,862; 
2009: $530,832. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Intragovernmental transfer of property and equipment; 
2010: ($14); 
2009: ($1). 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Federal employee retirement benefit costs paid by OPM 
imputed to GAO; 
2010: $33,295; 
2009: $25,761. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Net other resources used to finance activities; 
2010: $33,281; 
2009: $25,760. 

Fiscal year ending September 30: Resources Used to Finance Activities: 
Other resources: Total resources used to finance activities; 
2010: $609,143; 
2009: $556,592. 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Change in unliquidated obligations; 
2010: ($4,320); 
2009: ($5,127). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Reduction in lease liability and 
other; 
2010: ($2,177); 
2009: ($2,203). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Assets capitalized; 
2010: ($9,975); 
2009: ($3,784). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Net decrease in receivables not 
generating resources until collected and other adjustments; 
2010: $17; 
2009: ($17). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Total resources used to fund items 
not part of the net cost of operations; 
2010: ($16,455); 
2009: ($11,131). 

Fiscal year ending September 30: Resources used to finance items not 
part of the net cost of operations; Total resources used to finance 
Net Cost of Operations; 
2010: $592,688; 
2009: $545,461. 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; Decrease) in 
workers’ compensation; 
2010: ($1,259); 
2009: ($118). 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; Increase in 
accrued annual leave; 
2010: $1,827; 
2009: $2,398. 

Fiscal year ending September 30: Components of net costs that will not 
require or generate resources in the current period; Total Components 
of net cost that will not require or generate resources in the current 
period; 
2010: $485; 
2009: $2,280. 

Fiscal year ending September 30: Costs that do not require resources: 
Depreciation and other; 
2010: $9,783; 
2009: $11,052. 

Fiscal year ending September 30: Net Cost of Operations; 
2010: $602,956; 
2009: $558,793. 

[End of Table: Reconciliation of Net Costs of Operations to Budget] 

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, 2010, and 2009, are as follows: 

Dollars in thousands: 

Investment in property and equipment, net; 
2010: $32,824; 
2009: $32,684. 

Rent related reimbursable funds expended in current year; 
2010: $6,892; 
2009: $2,378). 

Other--supplies inventory; 
2010: $270; 
2009: $165. 

Liabilities not covered by budgetary resources; 
2010: ($57,530); 
2009: ($59,222). 

Cumulative results of operations; 
2010: ($17,544); 
2009: ($23,995). 

[End of Table: Net Position] 

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, Labor investigates 
violation allegations to determine if federal contractors owe 
additional wages to covered employees. If Labor concludes that a 
violation has occurred, GAO collects the amount owed from the 
contracting federal agency, deposits the funds into an account with 
the U.S. Treasury, and remits payment to the 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, 2010 and 
2009, totaled approximately $4,937,000 and $4,781,000, 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 $801,000 in 
fiscal year 2010 and $528,000 in fiscal year 2009. 

[End of Notes to Financial Statements] 

[End of Part III] 

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

Office of the Inspector General: United States Government 
Accountability Office: 

Memorandum: 

Date: October 28, 2010: 

To: Acting Comptroller General - Gene L. Dodaro: 

From: [Signed by] Inspector General - Frances Garcia: 

Subject: GAO Management Challenges and Performance Measures: 

We have considered management's assessment of GAO's management 
challenges. Based on our work and institutional knowledge, we agree 
that physical security, information security, and human capital 
continue to be management challenges that may affect GAO's 
performance. We also agree with management's assessment of progress 
made in addressing these challenges. At the same time, given that 
current management challenges have remained unchanged since 2002, we 
believe an examination by GAO management in the coming year is 
warranted to determine whether (1) significant actions have been taken 
in the areas of physical security, information security, or human 
capital to justify removal of any of these management challenges and 
(2) other risks have emerged that may also warrant designation as GAO 
management challenges. 

During fiscal year 2010, we completed work on two performance 
measures. First, we reviewed accomplishment reports that claimed $1 
billion or more in fiscal year 2009 financial benefits and recommended 
GAO consider steps that could assist its staff in complying with 
agency policies.[Footnote 1] In response, GAO initiated two actions 
that address the issues raised in the report, including a requirement 
that teams consult with GAO's Center for Economics on the calculation 
for financial benefits of $500 million or more. Second, we reviewed 
the agency's testimony performance measure and found that the number 
of hearings was slightly less than the 304 reported by the agency for 
fiscal year 2008.[Footnote 2] We recommended that specific steps for 
addressing the type of issues identified in our review be included in 
its revised procedures. GAO agreed with our recommendation and has 
issued revised procedures to address the issues discussed in this 
report. In addition, the agency has revised the number of hearings 
that it reports for fiscal year 2008. 

Footnotes: 

[1] GAO/OIG, Performance Measure: GAO Had a Reasonable Basis for 
Reporting Its Largest Financial Benefits for Fiscal Year 2009, 
[hyperlink, http://www.gao.gov/products/GAO/OIG-10-4], May 21, 2010. 

[2] GAO/OIG, Testimony Measure: Verification of Performance Data Could 
Be Improved, [hyperlink, http://www.gao.gov/products/GAO/OIG-10-1], 
November 18, 2009. 

[End of letter from the Inspector General] 

[End of Part IV] 

Part V: Appendixes: 

1. Accomplishments and Other Contributions: 

This appendix provides details on selected accomplishments and 
contributions we documented in pursuing our strategic goals during 
fiscal year 2010. In reporting financial benefits, nonfinancial 
benefits, and other contributions, we are holding ourselves 
accountable for the resources we received to implement our strategic 
plan. 

Typically, the accomplishments describe work we completed in prior 
fiscal years because it takes time to implement recommendations, 
realize benefits, and document them. 

Contributions, which generally refer to work completed in fiscal year 
2010, describe cases in which we provided information or 
recommendations that substantially aided congressional decision making 
or informed the public debate. At the end of each accomplishment and 
contribution summary, we list the product numbers associated with the 
work discussed. In the electronic version of this document, readers 
can link directly to these products for more information on the issue. 

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

Health Care Needs and Financing: 

1.01. Reducing Vulnerability to Improper Payments Identified by 
Recovery Auditors: Our 2010 review on use of recovery audit 
contractors (RAC) in Medicare found that the Centers for Medicare & 
Medicaid Services (CMS) lacked an adequate process to use RAC findings 
to address vulnerabilities that led to over $230 million in improper 
payments to Medicare providers. This influenced the Congress to add a 
provision to the Improper Payments Elimination and Recovery Act of 
2010. All agencies that use RACs are now required to report yearly to 
the Office of Management and Budget and the Congress on actions taken 
to address RAC recommendations on how to reduce vulnerabilities 
leading to improper payments. 
[hyperlink, http://www.gao.gov/products/GAO-10-143] 
[hyperlink, http://www.gao.gov/products/GAO-10-864T] 


1.02. Strengthening Oversight of Infection Control Practices in 
Surgical Centers: Because there was no nationwide information on 
infections transmitted in ambulatory surgical centers (ASC), we 
recommended that the Department of Health and Human Services (HHS) 
strengthen its routine inspections of ASC facilities by collecting 
detailed information on practices that reduce the risk of transmitting 
infections, and conduct inspections on a random sample of ASCs to 
determine how well these practices were followed. As a result, HHS 
enhanced its inspection process in 2009, leading to a fourfold 
increase in the proportion of facilities found to have deficient 
infection control practices—up to 61 percent in fiscal year 2010. 
[hyperlink, http://www.gao.gov/products/GAO-09-213] 

1.03. Strengthening Oversight of Medicare Home Health Agencies: Our 
February 2009 report on improper payments made by Medicare home health 
agencies (HHA) noted that gaps in screening allow problem providers to 
enter the program, leading to fraud and abuse. In response, the 
Centers for Medicare & Medicaid Services issued regulations 
strengthening enrollment requirements. For example, HHAs whose 
Medicare billing privileges are deactivated are now required to obtain 
an initial state survey or accreditation before their billing 
privileges can be reactivated. 
[hyperlink, http://www.gao.gov/products/GAO-09-185] 

1.04. Improving the Medicare Program: Our recommendations have led to 
many improvements to Medicare. For example, in 2009 we found that some 
Medicare Advantage (MA) plans charged beneficiaries more for certain 
covered services if the plans were not notified before service 
delivery. Due to our report, this practice was prohibited, which will 
protect over 11 million beneficiaries enrolled in MA plans. In 2000, 
we recommended that private insurers provide information on their 
enrollees to improve identification of beneficiaries with other 
insurance. This became a requirement in 2007, with an estimated 
financial benefit to Medicare of $447 million in fiscal years 2010 
through 2014. 
[hyperlink, http://www.gao.gov/products/GAO-09-25] 
[hyperlink, http://www.gao.gov/products/GAO-10-304] 

1.05. Improving Administration of Health Care for Veterans: Our work 
at the Department of Veterans Affairs (VA) has led the agency to 
implement changes to more efficiently plan and conduct its mission to 
provide care to veterans. In response to our recommendations on 
improving strategic planning for veterans' long term care, VA 
strengthened its September 2009 long-term care strategic plan by 
including information on estimated demand for and growth in 
institutional and noninstitutional services. As a result of our 
recommendation to examine its process for checking physician 
credentials, VA determined that the process could be simplified and 
has adjusted its policies for obtaining the information. 
[hyperlink, http://www.gao.gov/products/GAO-09-145] 
[hyperlink, http://www.gao.gov/products/GAO-10-26] 

Lifelong Learning to Enhance U.S. Competitiveness: 

1.06. Enhancing Classroom Instruction: We reported on the use of 
Recovery Act funds for classroom instruction, and the Department of 
Education's role in supporting programs that prepare and develop 
teachers to instruct all students, including those with disabilities 
and English language learners; student access to arts education; and 
instructional practices that help students achieve academic standards. 
The Congress is deliberating the reauthorization of the Elementary and 
Secondary Education Act. 
[hyperlink, http://www.gao.gov/products/GAO-09-593] 
[hyperlink, http://www.gao.gov/products/GAO-09-573] 
[hyperlink, http://www.gao.gov/products/GAO-09-286] 
[hyperlink, http://www.gao.gov/products/GAO-10-18] 

Benefits and Protection for Workers, Families, Children: 

1.07. Improving Child Nutrition: In light of recent concerns about the 
safety of foods provided through domestic nutrition assistance 
programs, particularly among programs targeting children, we made 
several recommendations to improve food safety in the National School 
Lunch Program. The Senate-passed Healthy, Hunger-Free Kids Act, which 
reauthorizes federal child nutrition programs, includes provisions to 
implement our recommendations. We also identified areas of potential 
program overlap that could lead to more efficient delivery of 
nutrition assistance programs, and USDA has agreed to consider 
studying potential inefficiencies among its smaller programs. 
[hyperlink, http://www.gao.gov/products/GAO-10-346] 
[hyperlink, http://www.gao.gov/products/GAO-09-649] 
[hyperlink, http://www.gao.gov/products/GAO-09-814] 

1.08. Improving Disability Evaluation System: In 2008, we reported on 
the Departments of Defense (DOD) and Veterans Affairs (VA) early 
efforts to improve their disability evaluation systems through a joint 
pilot of a merged system. We recommended that DOD and VA sustain 
executive focus on the pilot and develop more complete plans for 
evaluating the merits of large-scale implementation. Subsequently, the 
Congress extended DOD and VA's Senior Oversight Committee, and DOD and 
VA created offices to coordinate related policy. As follow-up, we 
advised DOD, VA, and the Congress of key implementation issues to 
inform decisions and plans for worldwide expansion. 
[hyperlink, http://www.gao.gov/products/GAO-08-1137] 

1.09. Addressing Insolvency in Unemployment Insurance Trust Funds: We 
gave the Congress information on the state of Unemployment Insurance 
(UI) trust funds, which we found to have outstanding loans totaling 
$38.9 billion from the federal government to pay benefits. At the end 
of 2009, no state had enough reserves to cover 12 months of benefits, 
and net reserves are projected to remain negative for several years. 
We identified options to improve state UI trust-fund financial 
conditions, such as raising and indexing the taxable wage base, 
adjusting state tax rates more frequently, and raising solvency 
targets before lowering rates. As a result of this work, the Congress 
asked us to testify in late 2010. 
[hyperlink, http://www.gao.gov/products/GAO-10-440] 
[hyperlink, http://www.gao.gov/products/GAO-10-692T] 

Financial Security for an Aging Population: 

1.10. Disclosing More Information on 401(k) Fees: Our recent work 
found that 401(k) plan participants bear the majority of a plan's fees 
and possess limited information to invest wisely, and that the 
Department of Labor (DOL) lacks the information to ensure effective 
oversight. We recommended better fee disclosure by plan sponsors to 
participants and by plan service providers to plan sponsors. 
Subsequently, the Congress added provisions calling for better fee 
disclosure and DOL issued regulations on fees and information that 
service providers must disclose. 
[hyperlink, http://www.gao.gov/products/GAO-10-153T] 
[hyperlink, http://www.gao.gov/products/GAO-09-641] 
[hyperlink, http://www.gao.gov/products/GAO-08-222T] 
[hyperlink, http://www.gao.gov/products/GAO-08-95T] 

Responsive, Fair, Effective System of Justice: 

1.11. Improving Accountability for Civil Rights Division's Workload: 
Our review of the Justice Department's Civil Rights Division, which 
enforces federal laws prohibiting discrimination, informed the 
Congress about matters and cases the division pursued, but exposed 
that the division did not record data about the protected class (e.g., 
race and sex) and subject (alleged discrimination) involved. We 
maintained that the division needed to record these data in its case 
management system to be able to monitor its activities and be 
accountable to the Congress, and as a result, in January 2010, the 
division required that such data be recorded. 
[hyperlink, http://www.gao.gov/products/GAO-09-938R] 
[hyperlink, http://www.gao.gov/products/GAO-10-75] 
[hyperlink, http://www.gao.gov/products/GAO-10-256T] 

Viable Communities: 

1.12. Improving Federal Efforts to Combat Foreclosure Rescue Schemes: 
In 2009, the administration created the Financial Fraud Enforcement 
Task Force (FFETF), led by the Department of Justice (DOJ), to combat 
financial crimes, including schemes that promise but do not provide 
relief to vulnerable homeowners facing pending foreclosure. In 2010, 
we reported that the FFETF's Mortgage Fraud Working Group had 
developed an action plan that articulated the group's purpose and 
activities but did not contain long-term strategies and performance 
measures. DOJ agreed with our recommendations to incorporate long-term 
strategies and metrics and consider developing strategies specific to 
foreclosure rescue schemes. 
[hyperlink, http://www.gao.gov/products/GAO-10-787] 

1.13. Improving Collaboration of Federal Agencies on Matters Related 
to Homelessness Programs: We reported that limited collaboration among 
federal agencies on matters related to differences in definitions and 
terminology regarding homelessness and the linking of housing and 
supportive services may impede the effective delivery of services to 
those experiencing homelessness. We recommended that the Departments 
of Education, Housing and Urban Development (HUD), and Health and 
Human Services (HHS) develop a common vocabulary for homelessness and 
that HUD and HHS explore further opportunities to link housing and 
supportive services. Our work provides constructive steps to improve 
collaboration to effectively deliver homelessness services. 
[hyperlink, http://www.gao.gov/products/GAO-10-702] 
[hyperlink, http://www.gao.gov/products/GAO-10-724] 

Stable Financial System and Consumer Protection: 

1.14. Identifying Options to Reform the Long-Term Structures of Fannie 
Mae and Freddie Mac: Fannie Mae and Freddie Mac, two government 
sponsored housing enterprises, were placed in conservatorships in 
September 2008 by the Federal Housing Finance Agency out of concern 
that their deteriorating financial condition would destabilize the 
financial system. Based on the amount of government financial support, 
the Congressional Budget Office estimates that the conservatorships 
could cost taxpayers nearly $400 billion. Our report identified 
several potential options to strengthen the enterprises' long-term 
structures as well as some of the associated trade-offs. Congress has 
used the report in considering a structural reform strategy. 
[hyperlink, http://www.gao.gov/products/GAO-09-782] 

Natural Resources and Environment: 

1.15. Increasing Focus on Children's Environmental Health: Our report 
and testimony on children's environmental health issues resulted in 
the Environmental Protection Agency (EPA) reorganizing and elevating 
its Office of Children's Health to report directly to the EPA 
Administrator and more proactively use its Children's Health Advisory 
Committee to increase the federal government's focus on children's 
health issues. In addition, the Congress cited our work in introducing 
legislation to protect children from dangerous chemicals. 
[hyperlink, http://www.gao.gov/products/GAO-10-205] 
[hyperlink, http://www.gao.gov/products/GAO-10-545T] 

1.16. Assessing the Interdependence between Energy and Water: Energy 
and water are inexorably linked—large quantities of water are needed 
to develop energy, and energy is needed to pump, treat, and transport 
water. Energy and water may face serious constraints as demand for 
both continues to rise. In 2010, we assessed the amount of water 
required to generate electricity in thermoelectric power plants and to 
cultivate and convert feedstocks, such as corn, into biofuels. We 
identified key research and data needed to better understand these 
vital links and testified on these issues before the House Committee 
on Science and Technology. 
[hyperlink, http://www.gao.gov/products/GAO-10-116] 
[hyperlink, http://www.gao.gov/products/GAO-10-23] 
[hyperlink, http://www.gao.gov/products/GAO-09-862T] 

Viable National Infrastructure: 

1.17. Identifying Options to Restructure the U.S. Postal Service 
(USPS): USPS faces a deteriorating financial situation due to 
continuing mail volume decline and changing use of the mail. We added 
USPS's financial condition to our high-risk list in 2009, stating that 
USPS urgently needs to restructure to address its current and long- 
term financial viability. We asked USPS to develop and implement a 
restructuring plan. In response, USPS published its plan in 2010, 
which included some options to improve its financial viability that we 
identified. Congressional hearings on USPS's financial viability 
focused on our work and the plan as the Congress and other 
stakeholders continue to concentrate on key aspects of the plan. 
[hyperlink, http://www.gao.gov/products/GAO-09-937SP] 
[hyperlink, http://www.gao.gov/products/GAO-10-191T] 
[hyperlink, http://www.gao.gov/products/GAO-10-455] 
[hyperlink, http://www.gao.gov/products/GAO-10-538T] 
[hyperlink, http://www.gao.gov/products/GAO-10-601T] 

1.18. Monitoring the Implementation of the Next Generation Air 
Transportation System: We testified before the Congress in fiscal year 
2010 on the Federal Aviation Administration's (FAA) efforts to 
implement the satellite-based Next Generation Air Transportation 
System (NextGen). Our work assisted the Congress in overseeing FAA's 
progress and keeping members aware of critical issues that threaten 
timely implementation of NextGen, which is expected to reduce flight 
delays and save time and fuel. For example, we found a lack of 
integration and coordination within FAA, and across federal partners 
and other stakeholders, and a lack of clear goals and metrics to guide 
NextGen. 
[hyperlink, http://www.gao.gov/products/GAO-10-188T] 
[hyperlink, http://www.gao.gov/products/GAO-10-649T] 
[hyperlink, http://www.gao.gov/products/GAO-10-629] 

1.19. Increasing the Likelihood That High-Speed Rail Projects Will 
Achieve Public Benefits: With $3.6 billion in federal funds set aside 
for projects in California and Florida, the U.S. is anticipated to 
have high-speed rail, similar to that in other countries. Following 
our recent work on potential economic viability, funding, and 
leadership and accountability challenges to building and sustaining 
these systems, our 2010 report assessed how states may be able to 
overcome these challenges, and plans for federal oversight. These 
reports can help policymakers and those planning rail investments 
assess whether high-speed rail proposals will likely benefit the 
public and justify their large costs. 
[hyperlink, http://www.gao.gov/products/GAO-10-625] 
[hyperlink, http://www.gao.gov/products/GAO-09-317] 

1.20. Improving Emergency Communications: Emergency communications are 
critical during war, terrorist attacks, and natural disasters, yet the 
nation depends on an antiquated, unreliable alert system. In 2009, we 
reported that the Federal Emergency Management Agency (FEMA) has made 
little progress in modernizing the alert system, with project 
milestones being left undefined since 2006. We recommended that FEMA 
ensure the dependability of systems used to disseminate alerts and 
update its strategic goals, implementation plans, and performance 
measures. As a result, FEMA is developing a strategic plan to achieve 
a solution for a national public alert and warning system. 
[hyperlink, http://www.gao.gov/products/GAO-09-834] 
[hyperlink, http://www.gao.gov/products/GAO-09-1044T] 

1.21. Improving Amtrak's Management and Performance: In response to 
continued heavy reliance on federal subsidies, we reported in 2005 on 
the National Railroad Passenger Corporation's (Amtrak) management and 
performance. We found systemic problems in a range of areas, including 
strategic planning and financial management, that hindered efficiency, 
effectiveness, and accountability. In 2009 and 2010, Amtrak addressed 
some of our recommendations by issuing strategic guidance and 
developing new financial management tools. These actions have helped 
to mitigate the systemic problems we found and contribute to improved 
management and performance at Amtrak. 
[hyperlink, http://www.gao.gov/products/GAO-06-145] 

1.22. Improving Air Travel for Consumers: Our 2010 work on consumer 
air travel resulted in recommendations to the Department of 
Transportation (DOT) and the FAA. We reported that airlines do not 
fully reveal the full cost of travel to consumers because of hidden 
fees, and DOT is considering our recommendation to help consumers by 
requiring airlines to standardize disclosure of fees. We reported on 
FAA efforts to reduce airport delays and found that seven airports 
accounted for 80 percent of departure delays. We recommended that FAA 
set airport-specific on-time performance targets, and FAA is 
developing these airport targets. 
[hyperlink, http://www.gao.gov/products/GAO-10-785] 
[hyperlink, http://www.gao.gov/products/GAO-10-885T] 
[hyperlink, http://www.gao.gov/products/GAO-10-542] 
[hyperlink, http://www.gao.gov/products/GAO-10-543SP] 

[End of Strategic Goal 1] 

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

Protect and Secure the Homeland: 

2.01. Using the Terrorist Watch List Process to Strengthen Aviation 
Security: The December 25, 2009, attempted bombing of flight 253 
raised questions about the U.S. government's ability to protect the 
homeland, including the commercial aviation system. We conducted 
numerous briefings with House and Senate committees and testified on 
how the U.S. government uses the terrorist watch list to screen 
individuals and how failure to do so contributed to the attempted 
attack. Our work helped the Congress better understand the 
complexities of the watch listing process and the challenges 
associated with deploying enhanced explosive-detection technology, 
such as advanced-imaging technology, in airports. 
[hyperlink, http://www.gao.gov/products/GAO-10-401T] 

2.02. Improving the Department of Homeland Security's (DHS) Secure 
Border Initiative: Since 2006, we have reviewed DHS's Secure Border 
Initiative—a multibillion dollar program aimed at securing U.S. 
borders through technology and fencing. We reported on continued 
delays and program management weaknesses and risks. DHS's actions to 
address our recommendations could reduce these program weaknesses and 
risks and improve accountability. DHS is analyzing alternatives and 
costs to ensure it employs the most efficient and effective border 
security solutions. As of October 2010, the first stage of the 
assessment is complete and DHS senior management was reviewing the 
results. 

2.03. Exposing Weaknesses in Behavior Based Identification of High- 
Risk Aviation Passengers: In response to a Congressional request, in 
May 2010 we reported weaknesses in the Transportation Security 
Administration's (TSA) program to identify high-risk air passengers 
based on their behaviors. We reported that the underlying science is 
unproven, potential threats need to be better identified, and TSA 
missed opportunities to study terrorist behaviors. We recommended that 
TSA conduct an independent review of the program's scientific basis, 
better use information it collects, and study terrorist behaviors 
using airport video recordings. TSA is taking action to address these 
issues. 
[hyperlink, http://www.gao.gov/products/GAO-10-763] 

2.04. Strengthening DHS's Efforts to Implement Its Management 
Functions: Our work identified ongoing challenges in DHS's 
acquisition, information technology, financial, and human capital 
management functions. We found that most acquisition programs we 
reviewed experienced significant cost growth and schedule delays. We 
also reported that DHS's major information technology programs had not 
met capability, benefit, cost, and schedule expectations. DHS had also 
not yet implemented a consolidated departmentwide financial management 
system to provide reliable financial data and faced difficulties in 
human capital management, including improving its foreign language 
capabilities. Our work drew congressional and agency attention to DHS 
management challenges, and the department is taking steps to improve 
implementation of its management areas. 
[hyperlink, http://www.gao.gov/products/GAO-10-911T] 
[hyperlink, http://www.gao.gov/products/GAO-10-588SP] 
[hyperlink, http://www.gao.gov/products/GAO-10-76] 
[hyperlink, http://www.gao.gov/products/GAO-10-714] 

Ensure Military Capabilities and Readiness: 

2.05. Improving Shipbuilding Programs through the Adoption of Best 
Practices: Our May 2009 report on best practices in shipbuilding 
highlighted changes needed to overcome billions of dollars in cost 
overruns. Our report called for relying on fixed price contracts, 
constraining requirements, stabilizing ship design, and expanding 
workforce capability. As a result, the Navy is building the Joint High 
Speed Vessel under a fixed-price contract and new ship designs 
recognize affordability in setting requirements. The Senate passed a 
provision in 2010 incorporating metrics we suggested for design 
stability. Further, the Navy added 400 positions to the command 
responsible for managing shipbuilding programs. 
[hyperlink, http://www.gao.gov/products/GAO-09-322] 

2.06. Not Building European Missile Defense Sites Will Save $1.4 
Billion: In 2009, we identified likely cost growth in military 
construction, base operations, and support for planned missile defense 
sites in Poland and the Czech Republic, and the administration later 
terminated plans for the sites based, in part, on that work. Our prior 
work had influenced the Congress to require DOD to review its 
ballistic defense policy and strategy to determine the most effective 
approach to ballistic missile defense in the region. Terminating these 
plans resulted in a financial benefit of over $1.4 billion through 
fiscal year 2013 by avoiding planned military construction and the 
costs to operate and support the sites. 
[hyperlink, http://www.gao.gov/products/GAO-09-771] 

2.07. Contributing to Properly Funding the Military's Needs: In 
several reviews, we analyzed DOD's base budget request for fiscal year 
2010 and DOD's approach to requesting funds and reporting obligations 
for overseas contingency operations. Our analysis of unobligated 
balances—funding that has been approved or is available, but not yet 
committed for a particular purpose—and execution trends for operation 
and maintenance, and military personnel expenditures resulted in 
financial benefits of about $2.3 billion. DOD subsequently took steps 
to improve the transparency of its funding requests and the 
reliability of its cost reporting, resulting in financial benefits of 
about $670 million. 
[hyperlink, http://www.gao.gov/products/GAO-10-288R] 
[hyperlink, http://www.gao.gov/products/GAO-10-562R] 

2.08. Assessing DOD's Ability to Provide Trained and Ready Forces for 
Military Operations: In numerous reports and testimonies on military 
operations and readiness, we identified issues with DOD's ability to 
provide trained and ready forces, supply and reset equipment, improve 
processes to address urgent needs identified by ground commanders in 
Iraq and Afghanistan, strengthen force protection for deployed forces, 
and plan for troop drawdown. Our work in framing these issues for 
congressional and public debate triggered action by DOD and the 
Congress. For example, the Navy is now required to report the impact 
of changes in crew size and training on ship readiness and life spans 
and any plans to address it. 
[hyperlink, http://www.gao.gov/products/GAO-10-376] 
[hyperlink, http://www.gao.gov/products/GAO-10-460] 
[hyperlink, http://www.gao.gov/products/GAO-10-465] 
[hyperlink, http://www.gao.gov/products/GAO-10-592] 
[hyperlink, http://www.gao.gov/products/GAO-10-842T] 

2.09. Assessing DOD's Management and Oversight of the Recruiting and 
Retention Budget: Our prior work identified issues such as excessive 
payments of enlistment and reenlistment bonuses to servicemembers in 
occupations that exceeded their authorized levels while other 
occupations were underfilled. We made recommendations that DOD assess 
reasons for occupations being over- or underfilled and justify use of 
financial incentives for overfilled occupations. On the basis of our 
work, DOD developed a more rigorous approach to managing and 
overseeing its recruiting and retention budget, resulting in a 
financial benefit of $947.3 million. 
[hyperlink, http://www.gao.gov/products/GAO-09-256] 
[hyperlink, http://www.gao.gov/products/GAO-06-134] 

2.10. Assessing DOD's Management of Operational Contractor Support: In 
2006, we identified long-standing problems with DOD's management of 
contractor support on the battlefield, including insufficient 
predeployment training of military personnel on the use of and 
oversight for such support and failure to develop a repository for 
lessons learned on working with contractors. In response to our 
recommendations on these issues, DOD provided training on the use of 
operational contract support, integrated contractors in rehearsal 
exercises in 2008, developed a DOD-wide lessons learned program in 
2007, and an Operational Contract Support Community of Interest in 
2009. 
[hyperlink, http://www.gao.gov/products/GAO-10-829T] 

2.11. Revamping Missile Defense Acquisition Policy: The Missile 
Defense Agency (MDA) was established with unprecedented funding and 
decision-making flexibility. For years, we have reported that missile 
defense testing was less productive than anticipated due to a lack of 
robust planning, and that cost progress could not be assessed because 
MDA had no full cost baselines. Over the past year, MDA has 
incorporated more knowledge-based approaches to testing missile 
defense systems through development of a new test plan and revamped 
acquisition policies including reporting some baselines. As a result 
of our work, MDA is in a better position to more effectively manage 
and oversee its acquisitions. 
[hyperlink, http://www.gao.gov/products/GAO-10-311] 
[hyperlink, http://www.gao.gov/products/GAO-08-448] 
[hyperlink, http://www.gao.gov/products/GAO-06-327] 
[hyperlink, http://www.gao.gov/products/GAO-09-338] 
[hyperlink, http://www.gao.gov/products/GAO-08-113] 

2.12. Improving the Nuclear Weapons Stockpile Life Extension Process: 
The National Nuclear Security Administration (NNSA) manages the 
Stockpile Life Extension Program (LEP), the purpose of which is to 
extend the operational lives of the weapons in the nuclear stockpile. 
Each of NNSA's life extensions has experienced significant problems, 
and we have recommended changes to the LEP process to better assess 
cost, schedule and technical risk. As a result, in 2009 NNSA improved 
its accounting for LEP costs, thereby providing greater transparency 
for program management. In 2010, NNSA has taken formal steps to better 
assess and manage technical risk early in its next planned LEP. 
[hyperlink, http://www.gao.gov/products/GAO-09-385] 
[hyperlink, http://www.gao.gov/products/GAO-03-583] 

Advance U.S. Foreign Policy Interests: 

2.13. Improving the Security of U.S. Travel Documents: Travel document 
security depends on well-designed security features and inspection 
procedures that utilize these features. We found deficiencies in the 
design process and recommended that the Department of State (State) 
conduct testing and evaluation of the passport and border-crossing 
cards and address any problems found. Further, DHS is not fully 
realizing the security benefits from the use of e-passports, and we 
recommended that DHS implement the systems needed to read and fully 
validate the data stored on e-passports at U.S. ports of entry. State 
and DHS agreed with the recommendations, which will help prevent U.S. 
travel document fraud. 
[hyperlink, http://www.gao.gov/products/GAO-10-96] 
[hyperlink, http://www.gao.gov/products/GAO-10-589] 

2.14. Encouraging Management Reform and U.S. Participation in the 
United Nations: Consistent with our recommendations, State and the 
United Nations (UN) have strengthened UN management by improving UN 
procurement processes, strengthening internal oversight, and boosting 
U.S. employment. The UN, with an annual procurement budget of about 
$3.5 billion, made its procurement processes more accountable and 
transparent. The UN Office of Internal Oversight Services adopted a 
risk assessment framework and operations work plans, and State 
continues to advocate more budgetary independence for this office. 
State also has developed a roster of qualified American candidates and 
better targeted its recruiting efforts. 
[hyperlink, http://www.gao.gov/products/GAO-10-168] 
[hyperlink, http://www.gao.gov/products/GAO-08-1094] 
[hyperlink, http://www.gao.gov/products/GAO-07-597] 
[hyperlink, http://www.gao.gov/products/GAO-07-14] 
[hyperlink, http://www.gao.gov/products/GAO-06-988] 

2.15. Improving International Food Assistance: Since 2007, our work on 
international food assistance, including six testimonies before the 
Congress, has contributed to multiple operational improvements. 
Consistent with our recommendations to improve the efficiency and 
effectiveness of U.S. food aid, agencies have enhanced monitoring and 
evaluation, quality control, and transportation and logistics, saving 
several million dollars annually through improved contracting 
practices. Our 2008 and 2010 reports on global food security have 
contributed to efforts to develop a governmentwide global food 
security strategy, including an interagency coordination mechanism and 
implementation guide. 
[hyperlink, http://www.gao.gov/products/GAO-10-352] 
[hyperlink, http://www.gao.gov/products/GAO-09-977SP] 
[hyperlink, http://www.gao.gov/products/GAO-09-570] 
[hyperlink, http://www.gao.gov/products/GAO-08-680] 
[hyperlink, http://www.gao.gov/products/GAO-07-560] 

2.16. Making U.S. Sanctions against Iran More Effective: Ongoing 
concerns about nuclear weapons proliferation and terrorism have led 
the Congress to expand both sanctions against Iran and related 
reporting requirements. Its actions underscore the importance of a 
comprehensive assessment of the effectiveness of U.S. sanctions. We 
have reported and testified on the challenges to preventing illegal 
transshipment of U.S. goods to Iran, restricting foreign investment in 
Iran's energy sector, and maintaining accurate data on U.S. exports to 
Iran. As a result, the U.S. Census Bureau has taken steps to improve 
the accuracy of its exports data, and the Congress cited our work in 
passing new legislation on Iran sanctions. 
[hyperlink, http://www.gao.gov/products/GAO-10-375] 
[hyperlink, http://www.gao.gov/products/GAO-10-515R] 
[hyperlink, http://www.gao.gov/products/GAO-10-639R] 
[hyperlink, http://www.gao.gov/products/GAO-10-967R] 
[hyperlink, http://www.gao.gov/products/GAO-10-928T] 

2.17. Improving Long-Term Management of New Embassy Compounds: In 
2006, we found that the size and complexity of new embassy compounds 
significantly increased operations and maintenance costs compared to 
the prior facilities, but State did not clearly identify or project 
these costs. In 2010, in response to our recommendation, State issued 
its first Long-Range Overseas Maintenance Plan, outlining the required 
financial resources to meet the maintenance requirements for the new 
embassy compounds. The plan provides greater transparency to 
congressional policymakers for the resources needed to protect the 
U.S. government's multibillion dollar investment in overseas 
facilities. 
[hyperlink, http://www.gao.gov/products/GAO-06-641] 

Respond to Global Market Forces: 

2.18. Reforming the U.S. Export Control System: Over the past decade, 
we have identified significant weaknesses in the U.S. export control 
system and in our 2007 high-risk series, we called for a fundamental 
reexamination of programs designed to protect critical technologies, 
including export controls. While agencies have implemented 
recommendations in several areas, other significant changes still need 
to be made. In April 2010, the President proposed a framework to 
reform the export control system. State and Commerce officials noted 
the value of our reports in guiding this effort, including our May 
2010 observations on selected foreign countries' export control 
systems. 
[hyperlink, http://www.gao.gov/products/GAO-10-557] 
[hyperlink, http://www.gao.gov/products/GAO-09-767T] 
[hyperlink, http://www.gao.gov/products/GAO-07-1103] 
[hyperlink, http://www.gao.gov/products/GAO-07-265] 
[hyperlink, http://www.gao.gov/products/GAO-02-120] 

2.19. Strengthening the Framework for Providing Financial Assistance 
to Private Companies: In 2010, we identified underlying principles to 
protect the government's interests when considering large-scale 
federal assistance efforts. These principles—including coordinating 
actions on a global and comprehensive basis, mitigating perceived or 
potential conflicts, ensuring transparency by establishing an 
effective communication strategy, establishing strong systems of 
accountability, and mitigating moral hazard—build on those we 
developed following financial crises of the 1970s and 1980s. Together, 
the principles provide a guide for government action should 
intervention in the private market be necessary in the future. 
[hyperlink, http://www.gao.gov/products/GAO-10-719] 

2.20. Increasing Regulatory Attention to Identifying and Monitoring 
Systemwide Leverage: Leverage played a considerable role in the 
financial crisis, but no regulator was clearly responsible for 
monitoring either the potential effects of a buildup in leverage in 
the system or the collective activities of institutions to deleverage. 
We suggested that the Congress task the new systemic risk regulator 
with this responsibility. The Congress's Dodd-Frank Act of 2010 
created the Financial Stability Oversight Council with authority to 
identify and respond to emerging systemic threats. By collecting and 
sharing information among the regulators, the council can better 
monitor systemwide leverage and its implications. 
[hyperlink, http://www.gao.gov/products/GAO-09-739] 
[hyperlink, http://www.gao.gov/products/GAO-10-555T] 

2.21. Strengthening Protection of Intellectual Property Rights: In a 
series of products, we have found weaknesses in federal agencies' 
efforts to protect intellectual property (IP) and limitations in 
studies of the economic effects of counterfeiting and piracy. Informed 
by this work, the Congress revised the federal IP enforcement 
structure, enhanced agency resources, and required a new interagency 
strategic plan for IP enforcement. Key agencies have taken steps to 
improve their collection and analysis of IP enforcement data and renew 
their commitment to an interagency mechanism for coordinating the IP- 
related activities of multiple law enforcement agencies. 
[hyperlink, http://www.gao.gov/products/GAO-10-219T] 
[hyperlink, http://www.gao.gov/products/GAO-10-423] 
[hyperlink, http://www.gao.gov/products/GAO-08-157] 
[hyperlink, http://www.gao.gov/products/GAO-07-735] 
[hyperlink, http://www.gao.gov/products/GAO-07-74] 

[End of Strategic Goal 2] 

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

Analyze the Government's Fiscal Position: 

3.01. Improving Federal Financial Reporting and Related Internal 
Controls: We furthered a number of significant improvements in federal 
financial reporting and related internal control. Based on our work, 
Treasury significantly improved information presented in the U.S. 
government's consolidated financial statements. These statements now 
include more complete and accurate information concerning actions 
taken to stabilize the financial system and disclosures on federal 
liabilities, contingencies, and social insurance. Further, our IRS 
financial audit work resulted in actions to address long-standing 
weaknesses in internal controls over financial reporting as well as 
tax revenue and refunds. 

3.02. Improving the Effectiveness of Tax Expenditures: We recommended 
changes to the design of two major tax expenditures-—the Research 
Credit and New Markets Tax Credit (NMTC)-—to improve their 
effectiveness. We suggested to the Congress that the Research Credit 
be changed to limit windfalls now received by those who would have 
spent on additional research without the credit. For the NMTC, we 
suggested to the Congress that a grant program be tested to replace 
the credit because we found that with grants more investment would 
reach the targeted low-income communities. Both reports received wide 
attention among tax professionals and have helped shape the debate 
about the future of these credits. 
[hyperlink, http://www.gao.gov/products/GAO-10-334] 
[hyperlink, http://www.gao.gov/products/GAO-10-136] 

3.03. Enhancing the Internal Revenue Service's Ability to Improve Tax 
Compliance: Consistent with our suggestions to the Congress, the 
Worker, Homeownership, and Business Assistance Act of 2009 (1) 
required certain paid tax return preparers to file tax returns 
electronically and (2) granted IRS authority to automatically verify 
compliance with the first-time homebuyer credit's provisions. 
Additionally, our work on paid preparers supported IRS's decision to 
extend regulation of paid tax return preparers, including requiring 
them to obtain an identifying number and be tested for competency. 
These changes should substantially improve tax compliance by improving 
the quality of tax return preparation. 
[hyperlink, http://www.gao.gov/products/GAO-09-1026] 
[hyperlink, http://www.gao.gov/products/GAO-08-567] 
[hyperlink, http://www.gao.gov/products/GAO-08-781] 
[hyperlink, http://www.gao.gov/products/GAO-07-27] 

3.04. Analyzing the Fiscal Year 2010 Appropriation for the USCIS: Our 
work showed that the U.S. Citizenship and Immigration Service's 
(USCIS) budget request would provide two sources of funding for 
processing and adjudicating refugee, asylum, and military 
naturalizations: tax-funded appropriations and application-fee 
surcharges. Based on this work, the Congress appropriated $151 million 
less than the $206 million requested and restricted $50 million until 
a final rule eliminating the application-fee surcharge was issued. The 
Congress provided the remaining $5 million to USCIS for processing 
military naturalizations. These actions resulted in a better use of 
taxpayer resources. 

3.05. Informing the Nation's Response to Long-Term Fiscal Challenges: 
Our 2010 reports on state and local fiscal conditions helped frame the 
policy debate regarding long-term fiscal challenges by informing 
congressional planning for a response to the long-term fiscal 
challenges facing all levels of government. Our state and local fiscal 
model attracted the attention of numerous outside experts and 
publications. Our report on state and local fiscal pressures and the 
interconnectedness that defines intergovernmental programs generated 
intense interest among state budget officers and local officials as 
they implement health care reform and continue efforts to balance 
their budgets. 
[hyperlink, http://www.gao.gov/products/GAO-10-358] 
[hyperlink, http://www.gao.gov/products/GAO-10-899] 
[hyperlink, http://www.gao.gov/products/GAO-10-604] 
[hyperlink, http://www.gao.gov/products/GAO-10-231] 
[hyperlink, http://www.gao.gov/products/GAO-10-437] 

Identify Fraud, Waste, and Abuse: 

3.06. Strengthening Efforts to Reduce Governmentwide Improper 
Payments: Over the past decade, our work has helped to better identify 
and minimize federal improper payments, including payments to 
individuals who used invalid information to improperly receive federal 
disaster assistance. For fiscal year 2009, 22 federal agencies 
reported estimated improper payments totaling $98.7 billion, and we 
estimate a reduction of over $1 billion for agencies that reported 
prior amounts and took steps to reduce them. Our work and 
recommendations contributed to the enactment of the Improper Payment 
Elimination and Recovery Act in fiscal year 2010, which calls for 
enhanced reporting and recouping of improper payments. 
[hyperlink, http://www.gao.gov/products/GAO-02-749] 
[hyperlink, http://www.gao.gov/products/GAO-04-99] 
[hyperlink, http://www.gao.gov/products/GAO-06-347] 
[hyperlink, http://www.gao.gov/products/GAO-07-92] 
[hyperlink, http://www.gao.gov/products/GAO-09-442] 

3.07. Identifying Fraud in the Small Business Administration (SBA) 
8(a) Program: SBA helps socially and economically disadvantaged small 
businesses gain access to federal contracting opportunities through 
its 8(a) program. By investigating complaints to our fraud hotline and 
reviewing SBA data, we identified $325 million in set-aside and sole- 
source contracts awarded to firms that were not eligible to 
participate in the program. Most of the improper awards we identified 
were obtained through fraudulent schemes, such as underreporting 
income and assets or misrepresenting ethnicity. Our investigators were 
also able to obtain 8(a) certification for a bogus firm using 
fabricated business information. 
[hyperlink, http://www.gao.gov/products/GAO-10-425 

3.08. Improving Defense Contract Audits' Ability to Protect Public 
Interest: A September 2009 GAO report uncovered pervasive quality 
problems with Defense Contract Audit Agency (DCAA) audits rooted in a 
flawed management environment and culture. In response, DOD revised 
DCAA's mission statement to clearly focus on protecting hundreds of 
billions in taxpayer dollars, assigned new agency leadership, 
rescinded over 80 DCAA audit reports, removed over 200 contractors' 
ability to submit invoices for payment without government review, and 
moved to better meet audit standards with a risk-based audit approach. 
DOD actions are important steps toward performing quality audits that 
better protect the public's interests. 
[hyperlink, http://www.gao.gov/products/GAO-08-857] 
[hyperlink, http://www.gao.gov/products/GAO-09-468] 

Address Major Management Challenges and Program Risks: 

3.09. Contributing to the Debate Over U.S. Human Spaceflight: We 
reported in 2009 that U.S. human spaceflight is at risk as NASA 
continues to experience setbacks in its Constellation Program, which 
is expected to cost about $100 billion through 2020. We found that 
over $10 billion had been obligated since 2005, and due to aggressive 
schedules, technical challenges, funding issues, cost increases, and 
changing requirements, NASA did not establish a sound business case 
for the program Our work led NASA to delay milestones and restructure 
contracts to limit risk and helped spur an independent review of U.S. 
human spaceflight that was the basis for the President's proposal to 
cancel the program. 
[hyperlink, http://www.gao.gov/products/GAO-10-387T] 
[hyperlink, http://www.gao.gov/products/GAO-10-227SP] 
[hyperlink, http://www.gao.gov/products/GAO-09-844] 
[hyperlink, http://www.gao.gov/products/GAO-09-436T] 
[hyperlink, http://www.gao.gov/products/GAO-09-306SP] 

3.10. Advancing DHS Efforts to Improve Acquisition Management: We have 
reported on DHS's continuing struggle to implement acquisition 
oversight for its expanding portfolio of complex investments worth 
hundreds of billions of dollars. This year, in our first-time-ever 
assessment of selected major acquisitions, we found that most programs 
reviewed experienced significant cost growth and schedule delays and 
that contracts were awarded before approval of key documents, such as 
the mission need statement. Our work drew congressional and agency 
attention to the issues facing DHS, and the department is taking steps 
to improve implementation of its acquisition review processes. 
[hyperlink, http://www.gao.gov/products/GAO-10-588SP] 

3.11. Providing the Impetus for Cost Savings and Improved Interagency 
Contract Management: In 2010, the administration cited our work in 
calling for reduced use of high-risk contract vehicles to achieve 
substantial governmentwide savings. We have identified opportunities 
for cost savings and improved management in a series of reports on 
high-risk and interagency contract vehicles covering a range of 
defense and civilian agencies. We highlighted opportunities to 
increase competition, realize savings, ensure that risky contracts 
types are used only when necessary, and improve visibility and 
management of interagency contracts. We also highlighted GSA's need to 
improve management of its multiple award schedules program. 
[hyperlink, http://www.gao.gov/products/GAO-10-833] 
[hyperlink, http://www.gao.gov/products/GAO-10-367] 
[hyperlink, http://www.gao.gov/products/GAO-09-792] 
[hyperlink, http://www.gao.gov/products/GAO-09-921] 
[hyperlink, http://www.gao.gov/products/GAO-09-579] 

3.12. Increasing Choice in Rigorous Evaluation Methods: To help the 
Congress assess efforts to identify programs with rigorous evidence of 
effectiveness, we examined how well randomized studies can assess the 
effectiveness of different types of programs. We found that requiring 
evidence from randomized studies will likely exclude many potentially 
effective and worthwhile programs, while other rigorous methods are 
appropriate when random assignment is not possible. A broad set of 
methods can inform OMB's planned interagency effort to develop 
governmentwide evaluation guidance that gives agencies flexibility to 
choose methods suited to the specific needs of their programs. 
[hyperlink, http://www.gao.gov/products/GAO-10-30] 

3.13. Implementing Improved Government Auditing Standards: Since our 
2007 major revision to the Government Auditing Standards, we have 
conducted extensive outreach and training to hundreds of federal, 
state, and local auditors, as well as public accounting firms 
conducting government audits, to guide their application of these 
standards, including providing extensive training. We have also 
continued to work closely with other audit standard-setting 
organizations and advisory councils focused on ensuring that 
accountability professionals rise to the increasingly critical 
challenge of producing high-quality and efficient audits. In August 
2010, we issued an exposure draft proposing additional refinements to 
the standards. 

3.14. Improving the Medical Certification Process for Commercial 
Drivers' Licenses (CDLs): Based on a comparison of federal disability 
recipients and state CDL holders, we identified nearly 600,000 
individuals holding CDLs despite having a medical condition giving 
them full federal disability benefits. We referred these individuals 
to state licensing agencies, several of which revoked CDLs from 
drivers with physical impairments preventing safe vehicle operation. 
As a result of our work, the Department of Transportation finalized a 
new rule requiring commercial drivers to furnish a medical examiner's 
certificate to their state licensing agency to prevent uncertified 
drivers from operating commercial vehicles. 

3.15. Improving Management and Oversight of Governmentwide Premium 
Class Travel: In 2007, we found that breakdowns in internal controls 
and a weak control environment resulted in at least $146 million in 
improper first- and business-class travel governmentwide. Based on 
statistical sampling, we estimated that two-thirds of premium class 
travel was not properly authorized or justified. In response to our 
recommendations, GSA amended the Federal Transportation Regulations 
(FTR) to strengthen authorization and justification requirements and 
to help agencies comply with existing FTR requirements. These 
amendments will help reduce waste in premium-class travel costs across 
the federal government. 
[hyperlink, http://www.gao.gov/products/GAO-07-1268] 

3.16. Improving Oversight of a Critical Satellite Acquisition: Since 
2002, we have assisted the Congress with oversight of the National 
Polar-orbiting Operational Environmental Satellite System, a $15 
billion satellite acquisition expected to assist weather forecasting 
and climate monitoring for the next two decades. Our reports and 
testimonies have identified the status and risks of satellite 
development, including those related to recent plans to disband the 
program, and made recommendations to address these risks. This work 
helped focus congressional, administration, and agency attention onto 
this important program, and resulted in more active oversight of the 
planned programmatic changes. 
[hyperlink, http://www.gao.gov/products/GAO-10-558] 
[hyperlink, http://www.gao.gov/products/GAO-10-858T] 
[hyperlink, http://www.gao.gov/products/GAO-09-772T] 
[hyperlink, http://www.gao.gov/products/GAO-09-564] 
[hyperlink, http://www.gao.gov/products/GAO-08-899T] 

3.17. Improvements to IT Oversight and Transparency: Enhancements to 
OMB's IT Dashboard: Federal IT spending is projected to reach $79 
billion in fiscal year 2011. We have issued a series of reports and 
testimonies with recommendations to OMB for improving its oversight 
and transparency of growing federal IT investments. In June 2009, OMB 
deployed a "dashboard," which is a Web site clearinghouse of 
information that provides details on all major federal IT investments 
and provides OMB and others with the ability to track the progress of 
these investments. More recently, in July 2010, we identified areas of 
the dashboard that needed improvements, and OMB has efforts under way 
to make these improvements. 
[hyperlink, http://www.gao.gov/products/GAO-10-701] 
[hyperlink, http://www.gao.gov/products/GAO-09-624T] 
[hyperlink, http://www.gao.gov/products/GAO-08-1174T] 
[hyperlink, http://www.gao.gov/products/GAO-08-1051T] 
[hyperlink, http://www.gao.gov/products/GAO-08-925] 

3.18. Increasing Visibility of Veterans Affairs Information Management 
Weaknesses: We advocated increased congressional scrutiny of 
problematic, major IT projects intended to modernize the Department of 
Veterans Affairs' (VA) systems for outpatient appointment scheduling 
as well as asset and financial management. In multiple reports, we 
identified weaknesses in IT management capabilities that were 
undermining the department's efforts to develop and implement new 
systems. Our work spurred improvements to the appointment-scheduling 
and asset management system projects and contributed to VA's decision 
to terminate its financial management system project. 
[hyperlink, http://www.gao.gov/products/GAO-10-40] 
[hyperlink, http://www.gao.gov/products/GAO-10-579] 

[End of Strategic Goal 3] 

Strategic Goal 4: Maximize the Value of GAO by Enabling Quality, 
Timely Service to the Congress and by Being a Leading Practices 
Federal Agency: 

Improve Efficiency and Effectiveness: 

4.01. Enhancing Support for Managing our Engagements: To improve 
usability and expand IT system functionality for our analysts, we: 

* upgraded our document management system to streamline the user 
interface and integrate it with our new e-mail program; 

* improved capabilities of several engagement support systems widely 
used by our analysts to record congressional contacts, record 
information on hearings, and research weapon systems; and; 

* modified the capabilities of our survey software for easier use by 
survey design specialists. 

Enhance Recruitment, Development, Retention, and Rewards: 

4.02. Strengthening Recruiting Initiatives to Attract a Diverse 
Workforce: To ensure that our recruitment efforts are aligned with 
workforce and diversity needs, we implemented a number of leading 
practices that supported our goal for a diverse workforce and 
inclusive work environment. For example, we: 

* issued a recruitment strategy that guided all recruiting activities 
in fiscal year 2010 and improved outreach to diverse candidates; 

* conducted mandatory training to communicate our recruitment strategy 
and reinforce our expectation that recruiters will develop networks 
with student and professional organizations; 

* ensured that diverse, well-trained teams of staff representing all 
of our mission teams, locations, staff levels, and affinity groups 
recruited on college campuses and at recruiting events; 

* increased use of the student career experience program (SCEP) and 
established relationships with two programs—the Public Policy and 
International Affairs Fellowship Program and the Hispanic Association 
of Colleges and Universities National Internship Program; 

* participated in targeted job fairs and conferences, such as the 
Career Expo for People with Disabilities and the Annual Federal 
Hispanic Career Advancement Summit, to help recruit people from 
population groups with low representation in GAO's workforce; and; 

* centralized program direction for the analyst intern program, which 
serves as the primary pipeline for GAO hiring, to ensure that interns 
received consistent experiences throughout the agency. 

4.03. Improving Our Performance Management Systems: To ensure fairness 
and equity in our performance management processes, we implemented 
most of the short-term recommendations from our November, 2009 
performance appraisal study. We also developed a detailed statement of 
requirements, with broad stakeholder input, and selected a vendor to 
design a new performance system. 

4.04. Enhancing Efforts to Develop the Workforce: To facilitate cost- 
effective, interactive delivery of training to headquarters and field 
locations, we implemented virtual classroom courses-—or Webinars—- 
converted four key leadership courses from standard classroom to 
virtual courses; certified 29 staff members to teach these courses; 
and trained 10 technicians to assist with course delivery. To 
strengthen management and leadership skills, we redesigned two courses 
for analysts and analyst-related staff on audit documentation and 
appropriations law, and developed a new course for managerial 
analysts. We also expanded access to language training to all staff to 
assist those who review programs in other countries. 

4.05. Promoting a Fair and Unbiased Environment that Values 
Opportunity and Inclusiveness: To continue to strengthen our 
commitment to diversity and inclusion and to enhance understanding of 
diversity across the agency, we: 

* implemented diversity training for all staff; 

* developed a course to assist new employees with the transition to 
our workplace and culture; 

* signed a memorandum of understanding with the Library of Congress to 
obtain access to its Assistive Technology Demonstration Center to help 
address reasonable accommodation requests; 

* prepared transcripts of our podcasts and accessible versions of 
legal decisions and opinions, and began captioning live broadcasts, 
such as selected congressional hearings, to make information on our 
Web site accessible to people with disabilities; 

* posted information on our intranet home page to recognize special 
observances such as Native American Heritage Month, Veterans Day, and 
African American History Month; and; 

* updated our training on compliance with the Americans with 
Disabilities Act and our reasonable accommodation process to promote 
better understanding of the requirements of the law and to assist 
eligible employees. 

Expand Networks, Collaborations, and Partnerships: 

4.06. Enhancing Professional Accounting and Auditing Standards: To 
strengthen worldwide financial auditing of public sector entities, we 
worked with INTOSAI to incorporate key components from private-sector 
International Standards on Auditing into INTOSAI financial audit 
guidelines and helped draft the guidelines. INTOSAI has adopted 38 of 
these financial audit guidelines. To enhance international accounting 
and auditing standards more broadly, we provided comments on 
International Standards for Supreme Audit Institutions (SAIs) and 
INTOSAI Guidance for Good Governance. Many of these comments were 
incorporated into (1) high level transparency, accountability, and 
quality control principles for SAIs; (2) guidance on the role and use 
of internal auditors in SAIs; and (3) comprehensive international 
guidelines for conducting financial, performance, and compliance 
audits. 

4.07. Building the Capacity of Domestic and International 
Accountability Communities: We helped build a permanent capacity for 
strategic planning at INTOSAI by providing important leadership on the 
development of INTOSAI's 2011-2016 plan. Our input helped to ensure 
that the plan was crafted in accordance with leading practices and 
circulated to appropriate stakeholders for comment. We also provided 
substantial leadership in drafting and developing consensus for an 
international memorandum of understanding for INTOSAI's task force on 
donor funding to move this initiative forward. 

To expand information sharing in the international accountability 
community, we launched several electronic enhancements to the 
quarterly International Journal of Government Auditing, which, as the 
primary conduit for information sharing across audit staff and 
managers around the world, plays a critical role in fostering global 
understanding of professional standards, best practices, and technical 
issues. These changes included publishing the Journal in other formats 
for easier downloading in other countries, completing digitization of 
issues of the Journal back to the 1970s for all of INTOSAI's five 
official languages, and working with INTOSAI partners to expedite 
translating the Journal into Arabic. 

4.08. Sharing Information and Expertise through Government Networks: 
To share our experiences with using social media outlets such as 
Twitter and YouTube, we met with representatives from our sister 
agencies-—the Congressional Research Service and the Congressional 
Budget Office-—and discussed legal, logistical, and policy issues to 
consider when using such tools. We also participated in two sessions 
sponsored by the Partnership for Public Service to share information 
on hiring and onboarding employees and discuss best practices. 

Human, Information, Fiscal, Technological, and Physical Resources: 

4.09. Proactively Protecting Physical and Information Security: 
Consistent with addressing our management challenges in protecting our 
people and assets, we continued implementation of two major 
initiatives to align our physical security procedures with Homeland 
Security Presidential Directive-12 guidelines. We awarded a contract 
for upgrading the electronic security systems in our field offices and 
integrating them with our headquarters system, and continued 
conducting minimum background investigations on our employees and 
contractor staff to comply with federal requirements. 

To ensure our information systems and assets are protected and 
continue our work addressing FISMA requirements, we: 

* updated "Authorization to Operate" (ATO) for 32 systems so that all 
of our FISMA systems now have a current ATO, which is necessary to 
meet certification and accreditation requirements under FISMA, and; 

* completed Certification and Accreditation (C&A's) and Security Tests 
and Evaluations (ST&E's) for 13 systems and completed the validation 
of security controls for all of our FISMA systems. 

We also implemented other actions to strengthen information security 
controls, including: 

* completing replacement of our managed Internet security contract, 
which includes failover capabilities; 

* replacing intrusion detection systems to improve capabilities and 
access to vendor support; and; 

* upgrading controls to provide more effective warnings for site 
access and anti-virus/anti-malware support for Web surfing. 

To ensure appropriate responses to any type of emergency and the 
ability to maintain our operational capability in the likelihood of 
significant and sustained absenteeism or the need for off-site 
operations, we established an agencywide pandemic plan, as well as 
individual unit pandemic plans, and completed all employee and manager 
training in continuity operations. 

4.10. Supporting Federal Environmental Sustainability Goals and 
Reducing Costs and Waste: To reduce energy consumption and waste, we: 

* completed a headquarters-wide retrofit of energy-efficient ceiling 
light fixtures to reducing power consumed by about 21 percent, 
resulting in an estimated $200,000 in savings per year; 

* installed energy-efficient gas boilers in headquarters for building 
heating, replacing an inefficient steam system, and reducing heating 
costs by an estimated 50 percent, leading to about $600,000 in annual 
savings; 

* developed environmental baseline metrics for use of information 
technology (IT), which will enable us to monitor and manage energy use 
of IT equipment over time; and; 

* began a "Greening Your Printing" pilot project to reduce paper use 
and printing costs. 

4.11. Leveraging Technology to Achieve Business Process Improvement 
and Efficiency Gains: We replaced our manual travel booking system 
with a new, fully integrated online reservation booking and document 
processing travel system to: 

* reduce transaction fees; 

* help ensure compliance with Federal Travel Regulations; 

* improve financial management processes and reporting through 
integration with our financial management system; 

* address external audit recommendations on replacing the outdated 
database with its associated security concerns; and; 

* provide enhanced travel information for our employees. 

We also implemented a number of technical projects that provide 
improved service to users or enhance underlying systems that support 
our engagement or management functions. For example, we: 

* implemented a new e-mail system to increase hardware/software 
interoperability, expand calendaring functionality, improve junk e- 
mail filters and features that disable links and warn about 
threatening content within an e-mail message, and provide access to a 
greater pool of expert technical support; 

* migrated all intranet content to a new intranet infrastructure to 
provide a consistent navigation structure for users, improve search 
functionality, and facilitate real-time changes across the site, and 
enable management to communicate directly to employees and reinforce 
our core values; 

* procured taxonomy software to improve search results for products on 
our external Web site and reduce processing time to apply search 
terms, created rules for indexing, and indexed our entire report 
collection; 

* developed a database to improve collecting, monitoring, and 
reporting on implementation of mission support activities in our 
strategic plan; and; 

* completed independent verification and validation of our Enterprise 
Architecture Program, which is a key requirement for achieving "stage 
4 maturity" of our Enterprise Architecture Management. 

4.12. Improving Management of Key Administrative Processes: To enhance 
customer service and management in our contracting and human resource 
functions, we: 

* began conducting quarterly customer satisfaction surveys of staff 
receiving services from our contracting unit to obtain timely customer 
feedback and facilitate timely responses and improvements in 
operations, if necessary, and; 

* implemented a new help desk customer service model to improve 
responsiveness to employees' human resources questions. 

To optimize use of our work space, we renovated 16,000 square feet in 
our headquarters building for a technical library that improves work 
space, realigns utilization from stacks of reference materials to 
computer-based research, and provides four additional video conference 
rooms—a 25 percent capacity increase—to handle increased demand from 
across the agency. We also completed office renovations in the 
Chicago, Los Angeles, and San Francisco field offices to optimize 
productivity of work space and align space utilization with current 
staffing plans. 

[End of Strategic Goal 4] 

[End of Appendix 1] 

2. GAO's Report on Personnel Flexibilities: 

As required by section 11(a) of the GAO Human Capital Reform Act of 
2004 (Pub. L. No. 108-271, July 7, 2004), we reported on actions the 
agency took under sections 2, 3, 4, 6, 7, 9, and 10 of the act in our 
performance and accountability reports for fiscal years 2005 through 
2009. In July 2010, we issued the final required report on agency 
actions under section 11. This report was required to provide (1) a 
summary of the information included in GAO annual performance and 
accountability reports for the fiscal year 2005 through 2009 reporting 
cycle for sections 2, 3, 4, 6, 7, 9, and 10; (2) recommendations for 
any legislative changes to sections 2, 3, 4, 6, 7, 9, or 10; and (3) 
any assessment furnished by the GAO Personnel Appeals Board or any 
interested groups or associations representing officers and employees 
of GAO. The final report, GAO Human Capital Reform Act of 2004: Final 
Report on GAO's Use of Provisions in the GAO Human Capital Reform Act 
of 2004, [hyperlink, http://www.GAO-10-811SP], was submitted to the 
Congress on July 6, 2010, and is available on our Web site. 

[End of Appendix 2] 

Image Sources: 

This section contains credit and copyright information for images and 
graphics in this product, as appropriate, when that information was 
not listed adjacent to the image or graphic. 

Front cover: GAO (Capitol, Flag). 

Inside front cover: Corbis (Capitol dome interior). 

Page i: PhotoDisc (flag and Thomas Jefferson Statue). 

Pages 1, 21, 63, 93, 119, and 121: GAO (Capitol, flag). 

Page 2: Corbis (Columns), PhotoDisc (Flag). 

Page 7: PhotoDisc (flag), GAO (Seal). 

Page 15: Map Resources (map). 

Page 27: GAO (flag), PhotoDisc (bills). 

Page 29: PhotoDisc (flag and Thomas Jefferson Statue). 

Page 33: GAO (seal). 

Page 61: PhotoDisc (flag, school children, doctor), BrandX (oil 
refinery). 

Page 65: Map art (map), DOD (Airforce plane, Ship). 

Page 69: GAO (relief art), PhotoDisc (flag). 

Page 73: PhotoDisc (GAO entrance), PhotoDisc (flag). 

Page 94: GAO (Capitol building reliefs and columns), PhotoDisc (flag). 

Inside back cover: Comstock Images (Capitol at night). 

[End of Image Sources] 

Providing Comments on This Report: 

To provide comments for improving this report, please contact our 
Chief Quality Officer, who can be reached at (202) 512-6100, at 
qci@gao.gov, or at the following address: 

U.S. Government Accountability Office: 441 G Street NW, Room 6K17Q: 
Washington, D.C. 20548: 

Obtaining Copies of GAO Documents: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO’s Web site [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its Web site newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select “E- 
mail Updates.” 

However, you can also order GAO documents by phone. The price of each 
GAO publication reflects GAO’s actual cost of production and 
distribution and depends on the number of pages in the publication and 
whether the publication is printed in color or black and white. 
Pricing and ordering information is posted on GAO’s Web site, 
[hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Back Page Figures: 

[Refer to PDF for images] 

Images: 
* Performance & Accountability Report cover; 
* Screen shot of the GAO public website, [hyperlink, 
http://www.gao.gov/index.html]. 

This report and a summary version of it will be available through our 
Web site at [hyperlink, http://www.gao.gov/sp.html]. Also linked to 
that page are our strategic plan and our past performance and 
accountability publications. 

Other Web pages of possible interest: 

Legal products: 

Download legal decisions and opinions about appropriations, bid 
protests, and major federal agency rules: [hyperlink, 
http://www.gao.gov/legal.htm] 

E-mail alerts: 

Get automatic updates on new GAO products: [hyperlink, 
http://www.gao.gov/subtest/subscribe.html] 

Careers at GAO: 

Review current job openings, apply online, and learn about GAO’s teams 
and offices: [hyperlink, http://www.gao.gov/jobopp.htm] 

Report allegations of fraud, waste, abuse, or mismanagement of federal 
funds: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 

[End of section: Back Page Figures] 

Footnotes: 

[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. FFMIA 
emphasizes the need to improve federal financial management by 
requiring that federal agencies 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. 

[2] In fiscal years 2008 and 2009, the work performed under the 
Comptroller General's authority represented 6 percent and 5 percent, 
respectively, of our engagement efforts. 

[3] GAO, The Federal Government's Long-Term Fiscal Outlook: Fall 2009 
Update, [hyperlink, http://www.gao.gov/products/GAO-10-137SP] 
(Washington, D.C.: October 2009); GAO, Bid Protest Overview, 
[hyperlink, http://www.gao.gov/products/GAO-10-534SP] (Washington, 
D.C.: December 2009); Principles of Federal Appropriations Law: Third 
Edition [hyperlink, http://www.gao.gov/products/GAO-09-576SP] 
(Washington, D.C.: August 2009). 

[4] Our most recent performance plan is available on our Web site at 
[hyperlink, http://www.gao.gov/products/GA0-10-598SP]. 

[5] 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. 

[6] In comparison, there were 1,900 bid protests filed in fiscal year 
2009, and 1,600 in fiscal year 2008. 

[7] The Antideficiency Act is a funds control statute that prohibits 
the obligation and expenditure of funds in advance or excess of 
appropriations or apportionment. It contains both administrative and 
criminal penalties. Agencies must report all violations to the 
Congress with a copy to GAO. 

[8] B-319009, Apr. 27, 2010. 

[9] B-318724, June 22, 2010. 

[10] B-320091, July 23, 2010; B-319488, May, 21, 2010. 

[11] B-319075, Apr. 23, 2010. 

[12] Note 14 to the financial statements describes our Davis-Bacon Act 
trust function. For more detailed Davis-Bacon Act financial 
information, contact our General Counsel's Office. 

[13] Our fiscal year 2011 budget request totaled $601.1 million. 

[14] We have implemented FISMA requirements and made them a routine 
part of our business operations. We believe it is no longer necessary 
to provide a separate appendix on our FISMA related efforts. 

[15] In fiscal year 2010, GAO operations were segmented into 10 
business cycles: Entity-wide Controls, IT Controls, Property, Travel, 
Procurement, Disbursements, Budget, Fund Balance with Treasury, 
Financial Reporting, and Payroll. 

[End of Footnotes] 

[End of United States Government Accountability Office's Performance 
and Accountability Report Fiscal Year 2010]