This is the accessible text file for CG Presentation number GAO-09- 382CG entitled 'GAO’s Work On Today’s High Risk Issues And Long–Term Challenges' which was released on February 20, 2009. 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. GAO’S Work On Today’s High Risk Issues And Long–Term Challenges: Before the Arizona Society of CPAs: Phoenix, Arizona: February 6, 2009: By Gene L. Dodaro: Acting Comptroller General: GAO-09-382CG: Outline: Financial Institutions and Markets: GAO’s 2009 High Risk Update: Long-Term Challenges: [End of section] Financial Institutions and Markets: * Financial Regulatory System. * GAO Role in Financial Rescue. * Auditors of Bank Insurance Fund, FHFA, TARP and U.S. Government Financial Statements. Modernizing The U.S. Financial Regulatory System: Financial Regulation: A Framework for Crafting and Assessing Proposals to Modernize the Outdated U.S. Financial Regulatory System (GAO-09-216, Jan. 8, 2009): * Explains the origins of the current financial regulatory system. * Describes market developments and changes that pose challenges to the current system. * Presents an evaluation framework that Congress and others can use to craft or evaluate potential regulatory reform efforts. Regulatory System Outdated: Risks Posed By: * Emergence of large, complex, and interconnected financial conglomerates; * Less-regulated entities are playing increasingly critical roles in the financial system; * New and complex products pose challenges to system stability and consumer protection. Crafting or Assessing Regulatory Reform Proposals: GAO Framework: 9 Essential Characteristics: * Clearly defined regulatory goals in statute. * Appropriately comprehensive. * Systemwide focus. * Flexible and adaptable. * Efficient and effective. * Consistent consumer and investor protections. * Regulators provided with independence, prominence, authority, and accountability. * Consistent financial oversight. * Minimal taxpayer exposure. Financial Institutions and Markets: * Emergency Economic Stability Act of 2008 created TARP. * GAO given statutory oversight role. * GAO’s TARP reports recommendations follow 3 themes: - Monitoring the use of funds to meet the Act’s objectives. - Articulating a better communication strategy. - Ensuring effective Treasury management structure. Improving Financial Literacy: * Given the complex nature of financial products, financial literacy is more important than ever; * Federal efforts to educate consumers are disjointed and not well coordinated; * AICPA initiatives important. [End of section] GAO’s High-Risk Program: * Since 1990—updated biennially for each new Congress. * Initial focus on fraud, waste, abuse, and mismanagement. * Evolved to also identify needed broad-based transformations. 2009 High-Risk List: 30 items grouped into four categories: * Broad-Based Transformation Challenges (e.g., DOD, DHS, surface transportation, food safety oversight); * Federal Contracting; * Tax Law Administration; * Insurance and Benefit Programs (e.g., Medicare, Medicaid, PBGC, flood insurance). Latest High-Risk List Additions: * Modernizing the Outdated U.S. Financial Regulatory System. * Protecting Public Health through Enhanced Oversight of Medical Products. * Transforming EPA’s Processes for Assessing and Controlling Toxic Chemicals. GAO’s High-Risk Program: Making an Impact: * Promoted sustained congressional attention to key problems—oversight and legislative action. * Provided an impetus for the legislative framework for governmentwide management reforms. * Encouraged recent administrations to give greater priority to addressing related challenges. Transition: Assisting The New Administration and The New Congress: Figure: Photographs of the White House and the U.S. Capitol buildings. [Refer to PDF for image] [End of figure] Figure: Screen shot of the home page of the GAO Website [hyperlink, http://www.gao.gov]. [Refer to PDF for image] Highlighted in the screen shot is the link to the 2009 Congressional and Presidential Transition page. [End of figure] Figure: Screen shot of the 2009 Congressional and Presidential Transition page of the GAO Website [hyperlink, http://www.gao.gov/transition_2009/]. [Refer to PDF for image] Links on the page include: * Urgent Issues. * Agency-by-Agency Issues. * Management Challenges Across the Government. * Major Cost-Saving Opportunities. * Upcoming Reports on Major Issues. * Long-Term Fiscal Outlook. * Working with GAO. [End of figure] Urgent Issues: Timely Action Critical: Examples: * U.S. Efforts in Iraq, Afghanistan, and Pakistan. * Defense Readiness, Spending, and Care for Service Members. * Protecting the Homeland and Preparing for Public Health Emergencies. * Improving U.S. Image Abroad. * Food Safety. * Transition to Digital TV. [End of section] Long-Term Challenges: * Today’s focus, understandably, is on: - Dealing with financial system stress; - Addressing the economic downturn. * But... Underlying issues still need to be addressed: - Long-term fiscal challenge. - Sustaining progress on federal financial management. Figure: Fiscal Downturn: Outlook for State and Local Sector: [Refer to PDF for image] This figure is a line graph depicting the following data in percent of GDP: Year: 1980; Operating Surplus/Deficit Measure: 0.36%. Year: 1985; Operating Surplus/Deficit Measure: 0.81%. Year: 1990; Operating Surplus/Deficit Measure: 0.12%. Year: 1995; Operating Surplus/Deficit Measure: 0.23%. Year: 2000; Operating Surplus/Deficit Measure: 0.52%. Year: 2005; Operating Surplus/Deficit Measure): 0.51%. Year: 2010; Operating Surplus/Deficit Measure: -1.24%. Year: 2015; Operating Surplus/Deficit Measure: -1.07%. Year: 2020; Operating Surplus/Deficit Measure: -1.44%. Year: 2025; Operating Surplus/Deficit Measure: -1.85%. Year: 2030; Operating Surplus/Deficit Measure: -2.36%. Year: 2035; Operating Surplus/Deficit Measure: -2.92%. Year: 2040; Operating Surplus/Deficit Measure: -3.50%. Year: 2045; Operating Surplus/Deficit Measure: -4.08%. Year: 2050; Operating Surplus/Deficit Measure: -4.70%. Source: Historical data from National Income and Product Accounts. Historical data from 1980 –2007, January, 2009 GAO projections from 2008 –2050 using many CBO projections and assumptions, particularly for next 10 years. [End of figure] Figure: Long-Term Fiscal Challenge: [Refer to PDF for image] This figure is a multiple line graph depicting the following data in percent of GDP: Year: 2005; Federal Surplus/Deficit[A]: -2.6%; Combined Surplus/Deficit: -3.1%. Year: 2010; Federal Surplus/Deficit[A]: -5.04%; Combined Surplus/Deficit: -7%. Year: 2015; Federal Surplus/Deficit[A]: -5.19%; Combined Surplus/Deficit: -6.9%. Year: 2020; Federal Surplus/Deficit[A]: -6.77%; Combined Surplus/Deficit: -8.7%. Year: 2025; Federal Surplus/Deficit[A]: -9.23%; Combined Surplus/Deficit: -11.5%. Year: 2030; Federal Surplus/Deficit[A]: -12.02%; Combined Surplus/Deficit: -14.8%. Year: 2035; Federal Surplus/Deficit[A]: -15.07%; Combined Surplus/Deficit: -18.4%. Year: 2040; Federal Surplus/Deficit[A]: -18.25%; Combined Surplus/Deficit: -22.1%. Year: 2045; Federal Surplus/Deficit[A]: -21.55%; Combined Surplus/Deficit: -25.9%. Year: 2050; Federal Surplus/Deficit[A]: -25.02%; Combined Surplus/Deficit: -30%. Source: GAO January 2009 analysis. [A] Federal surplus/deficit is from GAO’s Alternative Simulation using the Trustees’ assumptions. [End of figure] Figure: Long-Term Fiscal Challenge Driven by Health Care Spending: [Refer to PDF for image] This figure is a stacked line graph depicting the following data in percent of GDP: Year: 2008; Social Security: 4.32%; Medicaid: 1.44%; Medicare: 3.24%; Total: 9.00%. Year: 2009; Social Security: 4.35%; Medicaid: 1.59%; Medicare: 3.28%; Total: 9.22%. Year: 2010; Social Security: 4.39%; Medicaid: 1.68%; Medicare: 3.32%; Total: 9.39%. Year: 2015; Social Security: 4.8%; Medicaid: 1.79%; Medicare: 3.71%; Total: 10.3%. Year: 2020; Social Security: 5.3%; Medicaid: 2.03%; Medicare: 4.45%; Total: 12.68%. Year: 2025; Social Security: 5.71%; Medicaid: 2.27%; Medicare: 5.35%; Total: 13.33%. Year: 2030; Social Security: 6%; Medicaid: 2.55%; Medicare: 6.26%; Total: 15.1%. Year: 2035; Social Security: 6.09%; Medicaid: 2.84%; Medicare: 7.00%; Total: 15.93%. Year: 2040; Social Security: 6.02%; Medicaid: 3.13%; Medicare: 7.58%; Total: 16.73%. Year: 2045; Social Security: 5.89%; Medicaid: 3.40%; Medicare: 8.01%; Total: 17.3%. Year: 2050; Social Security: 5.81%; Medicaid: 3.64%; Medicare: 8.40%; Total: 17.85%. Year: 2055; Social Security: 5.77%; Medicaid: 3.86%; Medicare: 8.78%; Total: 18.41%. Year: 2060; Social Security: 5.77%; Medicaid: 4.08%; Medicare: 9.21%; Total: 19.06%. Year: 2065; Social Security: 5.76%; Medicaid: 4.30%; Medicare: 9.63%; Total: 19.69%. Year: 2070; Social Security: 5.77%; Medicaid: 4.53%; Medicare: 10.03%; Total: 20.33%. Year: 2075; Social Security: 5.79%; Medicaid: 4.75%; Medicare: 10.38%; Total: 20.92%. Year: 2080; Social Security: 5.81%; Medicaid: 4.96%; Medicare: 10.69%; Total: 21.46%. Source: GAO analysis of data from the Office of the Chief Actuary, Social Security Administration, Office of the Actuary, Centers for Medicare and Medicaid Services, and the Congressional Budget Office. Note: Social Security and Medicare projections based on the intermediate assumptions of the 2008 Trustees’ Reports. Medicaid projections based on CBO’s January 2009 short-term Medicaid estimates and CBO’s December 2007 long-term Medicaid projections adjusted to reflect excess cost growth consistent with the 2008 Trustees intermediate assumptions. [End of figure] Federal Financial Management: Need to Continue Progress: * Significant improvements in federal financial management; but still a long way to go. * Important to ensure that information for decision-making is reliable. Federal Financial Management: Key Challenges: * Improve internal control—enhanced accountability and reduced improper payments. * Obtain clean opinion on U.S. government’s consolidated financial statements. * Improve extent and reliability of cost information for evaluating federal program operations. * Implement more effective federal financial management systems. * Improve federal grant accountability. * Streamline and enhance relevance and effectiveness of federal accountability requirements and practices. [End of section] On the Web: Web site: [hyperlink, http://www.gao.gov/cghome.htm] Contact: Chuck Young, Managing Director, Public Affairs: YoungC1@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.