This is the accessible text file for CG Presentations number GAO-07-
251CG entitled 'Modernizing Accountability Organizations in Times of 
Fiscal Constraint' which was released on December 7, 2006. 

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National Intergovernmental Audit Forum: 

Modernizing Accountability Organizations in Times of Fiscal Constraint: 

The Honorable David M. Walker: 
Comptroller General of the United States: 

December 1, 2006: 

The Case for Change: 

The federal government is on a "burning platform," and the status quo 
way of doing business is unacceptable for a variety of reasons, 
including: 

Past fiscal trends and significant long-range challenges: 

Rising public expectations for demonstrable results and enhanced 
responsiveness: 

Selected trends and challenges having no boundaries: 

Additional resource demands due to Iraq, Afghanistan, incremental 
homeland security needs, and recent natural disasters in the United 
States: 

Numerous government performance/accountability and high risk 
challenges: 

Outdated federal organizational structures, policies, and practices: 

Composition of Federal Spending: 

[See PDF for image] - graphic text 

3 pie charts with 5 items each. 

1966: 
Defense: 43.0%; 
Social Security: 15.0%; 
Medicare & Medicaid: 1.0%; 
Net interest: 7.0%; 
All other spending: 34.0%. 

1986: 
Defense: 28.0%; 
Social Security: 20.0%; 
Medicare & Medicaid: 10.0%; 
Net interest: 14.0%; 
All other spending: 29.0%. 

2006*: 
Defense: 20.0%; 
Social Security: 21.0%; 
Medicare & Medicaid: 19.0%; 
Net interest: 9.0%; 
All other spending: 32.0%. 

*Preliminary

Source: Office of Management and Budget and the Department of the 
Treasury. 

Note: Numbers may not add to 100 percent due to rounding. 

[End of figure]  

How Big is Our Growing Fiscal Burden? 

Our total fiscal burden can be translated and compared as follows: 
	
Total Fiscal exposures: $49.9 trillion; 
Total Household net worth[1]: $53.3 trillion; 
* Burden/Net worth ratio: 94 percent; 

Burden[2]: 
Per person: $165,000; 
Per full-time worker: $395,000; 
Per Household: $435,000; 

Income: 
Median Household income[3]: $46,326; 
Disposable personal income per capita[4]: $32,392; 

Notes: (1) Federal Reserve Board, Flow of Funds Accounts, Table B.100, 
2006:Q2 (Sept. 19, 2006); (2) Burdens are calculated using estimated 
total U.S. population as of 9/30/06, from the U.S. Census Bureau; full- 
time workers reported by the Bureau of Economic Analysis, in NIPA table 
6.5D (Aug. 2, 2006); and households reported by the U.S. Census Bureau, 
in Income. Poverty, and Health Insurance Coverage in the United States: 
2005 (Aug. 2006); (3) U.S. Census Bureau, Income, Poverty, and Health 
Insurance Coverage in the United States: 2005 (Aug. 2006); and (4) 
Bureau of Economic Analysis, Personal Income and Outlays: September 
2006, table 2, 2006:Q3, (Oct. 30, 2006). 

Sources: GAO analysis. 

[End of table] 

Current Fiscal Policy Is Unsustainable: 

The "Status Quo" is Not an Option: 

* We face large and growing structural deficits largely due to known 
demographic trends and rising health care costs: 

*  simulations show that balancing the budget in 2040 could require 
actions as large as: 

-Cutting total federal spending by 60 percent or: 

- Raising federal taxes to 2 times today's level: 

Faster Economic Growth Can Help, but It Cannot Solve the Problem: 

* Closing the current long-term fiscal gap based on reasonable 
assumptions would require real average annual economic growth in the 
double digit range every year for the next 75 years: 

* During the 1990s, the economy grew at an average 3.2 percent per 
year: 

* As a result, we cannot simply grow our way out of this problem. Tough 
choices will be required: 

The Way Forward: A Three-Pronged Approach: 

1. Strengthen Budget and Legislative Processes and Controls: 

2. Improve Financial Reporting and Performance Metrics: 

3. Fundamental Reexamination & Transformation for the 21St Century 
(i.e., entitlement programs, other spending, and tax policy): 

Solutions Require Active Involvement from both the Executive and 
Legislative Branches: 

Selected State and Local Fiscal Challenges: 

States have many of their own fiscal challenges, including: 

Unsustainable Medicaid cost increases: 

Unfunded liabilities of state retirement systems (e.g., pensions and 
health): 

Education funding squeezed by competing demands: 

Infrastructure maintenance and expansion needs given unparalleled 
sprawl and congestion: 

Emergency preparedness response and recovery needs (e.g., natural 
disaster, terrorist incident, pandemic flu): 

GAO has ongoing work examining our total national fiscal exposure 
(federal, state, and local): 

Accountability Organization Maturity Model: 

A Pyramid starting with facilitating foresight at the top and a 
different goal at each level: 

Facilitating Foresight: 

Increasing Insight: 

Enhancing Economy Efficiency, Ethics, Equity, and Effectiveness: 

Assuring Accountability: 

Combating Corruption: 

Key Oversight Concepts: 

Oversight is a key constitutional responsibility of the Congress: 

Oversight is critical to providing the necessary checks and balances to 
maximize the government's performance, assure it's accountability, and 
prevent the abuse of government power: 

History shows that oversight decreases with one-party rule: 

Oversight should be focused on improving performance and assuring 
accountability: 

It is essential that oversight be balanced and constructive by 
highlighting what is working well including best practices as well as 
identifying shortcomings to prevent repetition of mistakes: 

The Oversight Role of the Accountability Community: 

The current federal audit oversight structure includes: 

62 statutory inspector general (IG) offices: 

About 6,000 CPA firms that annually perform more than 34,000 audits of 
entities receiving federal funding (single audits): 

While the Single Audit Act has provided oversight of more than $300 
billion in annual federal grants, questions have been raised about the 
usefulness and effectiveness of oversight for federal funds: 

Three Suggested Areas of Congressional Oversight: 

Targets for near-term oversight (e.g., reducing the tax gap): 

Policies and programs that are in need of fundamental reform and re- 
engineering (e.g., reviewing U.S. and coalition efforts to stabilize 
and rebuild Iraq and Afghanistan): 

Governance issues that should be addressed to help ensure an 
economical, efficient, effective, ethical, and equitable federal 
government capable of responding to the various challenges and 
capitalizing on related opportunities in the 21st century (e.g., 
reviewing the effectiveness of the federal audit and accountability 
community, including the oversight, structure, and division of 
responsibility): 

Congressional Oversight Areas Related to the Accountability Community: 

Review the Single Audit Act and propose reforms to ensure continuing 
effective oversight of the more than $300 billion in annual federal 
grants awarded to nonfederal entities: 

Schedule a series of oversight hearings to deliberate GAO's and the 
IGs' roles, responsibilities, results, and proposed reforms: 

Establish a government-wide accountability council to establish 
priorities and develop strategies to address federal accountability 
issues among GAO, the Office of Management and Budget, the President's 
Council on Integrity and Efficiency and the Executive Council on 
Integrity and Efficiency, and other oversight organizations: 

The Objective of Transformation: 

To create a more positive future by maximizing value and mitigating 
risk within current and expected resource levels: 

Key Transformation Elements: 

Planning: 

People: 

Process: 

Partnerships: 

Technology: 

Environment: 

The most important of the six is PEOPLE an agency's human capital: 

Three Key Elements for Success: 

Incentives: 
Transparency: 
Accountability: 

Transformation: A New Model for Government Organizations: 

Government organizations will need to: 

* Become less hierarchical, process-oriented, stove-piped, and inwardly 
focused: 

* Become more partnership-based, results-oriented, integrated, and 
externally focused: 

* Achieve a better balance between results, customer, and employee 
focus: 

* Work better with other governmental organizations, non-governmental 
organizations, and the private sector, both domestically and 
internationally, to achieve results: 

* Focus on maximizing value, managing risk, and enhancing 
responsiveness within current and expected resource levels: 

Keys to Making Change Happen: 

Commitment and sustained leadership: 

Demonstrated need for change: 

Start at the top and with the new people (transformation takes 7+ 
years): 

Process matters - don't fight a two-front war: 

15-percent rule: 

Identifiable and measurable progress over time: 

Communication, communication, communication: 

Figure out what's right versus what's popular: 

Patience, persistence, perseverance to pain before you prevail: 

Several other actions needed: 

* Strategic Plan: 

* Core values: 

* Organizational alignment: 

* Recruiting, development, and succession planning strategies: 

* Modernizing and integrating institutional, unit, and individualized 
performance measurement and reward systems: 

* Broad banding and pay-for-performance: 

* Employee empowerment/effective communication: 

GAO's Shared Business Model: 

GAO Serving Congress and the Nation: 

Strategic Business Architecture - Shared Business Model: 

[See PDF for Image] - graphic text: 

A compilation of circles and arrows. 

In the center of the circles in Strategic management which consists of 
strategic planning and policy, relationship management, and portfolio 
management. 

The GAO provides Three areas of services: 
1. Oversight, Insight, and Foresight: 

This area is where the Audit services, non-audit services, and legal 
decisions and opinions tasks are completed. 

2. Engagement Services: 

This is the area where expert services and Knowledge management and 
communications as located. 

3. Infrastructure services: 

This is where information and technology management, human capital 
management, financial services, and facilities management saftey and 
security sections are located. 

GAO's three main goals that guide these three areas are: 

1. Improve performance: 
2. Ensure Accountability: 
3. Meet Statutory Responsibilities.  

Source: GAO. 

[End of Figure] 

Focus on Maximizing Value and Mitigating Risk: 

Identify core services and those that can be outsourced: 

Determine which functions can be automated and which require people 
power: 

Eliminate unnecessary layers, levels, and locations: 

Streamline job processes: 

Leverage technology: 

Modernize human capital policies and practices to make them more market-
based and performance oriented: 

Matrix internally and partner externally to leverage resources and 
minimize duplication: 

Recognize that professional service organizations must continually 
develop, attract, and retain high-quality staff: 

Set realistic expectations with your client (e.g., protocols and 
portfolio management): 

Educate your client about long-term, adverse implications of budget 
cuts: 

GAO: Leading by Example in Connection with Government Transformation: 

Mission and vision clarification: 

Core values: accountability, integrity, reliability: 

Strategic planning: 

Organizational realignment: 

Definitions of success: 

Multi-tasking and matrix management: 

Procurement, contracting, and acquisition: 

Human capital: 

Information technology: 

Knowledge management: 

Financial management: 

Client service external agency relations and protocols: 

Enhanced products and services: 

Constructive engagement with agencies: 

Partnering with other accountability and "good government" 
organizations: 

Selected Steps GAO Took to Better Manage its Resources: 

Reprioritized work to focus on the highest priority work to our client: 

Redeployed staff from one team to another: 

Looked for opportunities to do joint work with the Inspectors General, 
state auditors, and local auditors (e.g., Katrina): 

Coordinated with others to avoid duplication of work (e.g., Katrina and 
Iraq): 

Performance Measurement: 

Key Dimensions: 

Results: 

Clients/Customers: 

People: 

Partnerships: 

Context: 

Absolute: 

Trend: 

Compared to Peers: 

GAO's Annual Performance Measures: 

Performance measure: Financial benefits (billions); 
FY 98: $19.7; 
FY 06: $51. 

Performance measure: Non-financial benefits (number); 
FY 98: 537; 
FY 06: 1342. 

Performance measure: Past recommendations implemented; 
FY 98: 69%; 
FY 06: 82%. 

Performance measure: New products with recommendations; 
FY 98: 33%; 
FY 06: 65%. 

Performance measure: Timeliness (percent on time)*; 
FY 98: 93%; 
FY 06: 97%. 

Performance measure: Return on investment (ROI); 
FY 98: $56; 
FY 06: $105. 

* Calculated differently in FY '06: 

[End of table] 

GAO's Budget Authority and FTE Usage FY 1992 - 2006 in FY 2006 Dollars: 

[See PDF for Image] 

Bar graph with a line for the FTEs. 

Millions. 

Year: 1992; 
Budget: $602; 
FTEs: 5,325. 

Year: 1993; 
Budget: $579; 
FTEs: 5,055. 

Year: 1994; 
Budget: $555; 
FTEs: 4,578. 

Year: 1995; 
Budget: $563; 
FTEs: 4,342. 

Year: 1996; 
Budget: $472; 
FTEs: 3,677. 

Year: 1997; 
Budget: $411; 
FTEs: 3,341. 

Year: 1998; 
Budget: $425; 
FTEs: 3,245. 

Year: 1999; 
Budget: $423; 
FTEs: 3,275. 

Year: 2000; 
Budget: $440; 
FTEs: 3,192. 

Year: 2001; 
Budget: $440; 
FTEs: 3,110. 

Year: 2002; 
Budget: $481; 
FTEs: 3,210. 

Year: 2003; 
Budget: $495; 
FTEs: 3,269. 

Year: 2004; 
Budget: $493; 
FTEs: 3,224. 

Year: 2005; 
Budget: $490; 
FTEs: 3,189. 

Year: 2006; 
Budget: $484; 
FTEs: 3,192. 

[End of Figure] 

GAO's Return on Investment FY 1998 - 2006 in FY 2006 Dollars: 

[See PDF for Image] - graphic text: 

Bar Graph. 

Year: 1998; 
GAO's Return on Investment: $56. 

Year: 1999; 
GAO's Return on Investment: $56. 

Year: 2000; 
GAO's Return on Investment: $61. 

Year: 2001; 
GAO's Return on Investment: $68. 

Year: 2002; 
GAO's Return on Investment: $87. 

Year: 2003; 
GAO's Return on Investment: $78. 

Year: 2004; 
GAO's Return on Investment: $95. 

Year: 2005; 
GAO's Return on Investment: $83. 

Year: 2006; 
GAO's Return on Investment: $105. 

[End of Figure] 

Cost Savings Actions all Professional Service Organizations Should 
Consider: 

Given tight budgets, reduce non-essential agency activities and 
initiatives first, then consider: 

Limiting additional pay increases for staff in excess of market-based 
pay caps: 

Limiting non-performance based compensation awards for all staff: 

Reducing hiring beyond half of the planned level: 

Reducing travel funds lower than the prior year's level: 

Limiting annual pay increases for all staff: 

Limiting promotions of qualified people: 

Conducting unpaid furloughs: 

Reducing force size: 

Key Leadership Attributes Needed for Challenging and Changing Times: 

Courage: 

Integrity: 

Creativity: 

Stewardship: 

On the Web: 

Web site: [Hyperlink, http://www.gao.gov/cghome.htm] 

Contact: 

Paul Anderson, Managing Director, Public Affairs AndersonP1@gao.gov 
(202) 512-4800: 

U.S. Government Accountability Office 441 G Street NW, Room 7149 
Washington, D.C. 20548: 

Copyright: 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. The published product may be 
reproduced and distributed in its entirety without further permission 
from GAO. However, because this work may contain copyrighted images or 
other material, permission from the copyright holder may be necessary 
if you wish to reproduce this material separately.