Congress created the U.S. General Accounting Office (GAO) in 1921 as a nonpartisan office to assist with oversight of general government operations by independently auditing federal agencies. As part of the legislative branch, the GAO is independent of the executive branch. Its name is somewhat misleading in that it does not engage primarily in routine accounting activities. Rather it is responsible for overseeing the accountability of government operations to Congress.

The GAO's chief officer is the comptroller general of the United States, who is appointed by the president for a single term of fifteen years with the advice and consent of the Senate. Removal of the comptroller general from office requires the passage of a joint resolution of Congress signed by the president. The protection of office afforded to the comptroller general strengthens the independence of the GAO.

Much of the work that the GAO performs originates as requests from committees of Congress or from individual members of Congress. Other work fulfills GAO mandates or legislative requirements.

HISTORY AND ESTABLISHMENT BY CONGRESS

The GAO was established by the Budget and Accounting Act of 1921, which transferred powers previously held by the Treasury Department to the GAO. The position of comptroller of the Treasury was abolished and that of comptroller general was created. The transfer of powers out-side the executive branch represented a substantial change in federal financial management. With the creation of the GAO, an office outside the executive branch had the power to audit the financial affairs of the executive branch. As the presidency became the dominant focus of government in the twentieth century, the GAO became a powerful investigative office of Congress, with authority to examine all matters related to the receipt and disbursement of public funds.

EVOLVING NATURE OF RESPONSIBILITIES

The GAO has broad responsibility for the over-sight of financial activities in the executive branch and wide discretion in the application of its responsibilities. Over time the GAO's interpretation of its responsibility has evolved through four phases of dominant orientation: bookkeeping, auditing, evaluation, and systems development. Until the end of World War II, the GAO had a bookkeeping orientation. Its work consisted of checking the accuracy and legality of transactions. Operations were centralized and personnel lacked professional credentials.

Following World War II, responsibility for bookkeeping practices was transferred to executive agencies, and the GAO's orientation shifted to auditing. It began to conduct financial audits of government corporations such as the Tennessee Valley Authority and economy and efficiency audits of particular activities within selected agencies. Additionally, the GAO was aggressive in auditing defense contracts for cost overruns and other abuses. Many of the auditors were military veterans who were educated in accounting.

Starting around 1965 with the adoption of Great Society programs, the GAO's orientation shifted to program evaluation and service to Congress. Personnel with a variety of educational backgrounds were recruited for their expertise.

Since the early 1980s, the GAO's focus has centered on the development of financial and management systems. Resources have been directed to improving internal control systems and financial reporting systems, as well as advancing performance-based management systems.

NATURE OF ACTIVITIES

The GAO has broad responsibilities that include(1) audits and evaluations, (2) accounting and information management policy, (3) legal services, and (4) reporting. Although the GAO has broad powers, the U.S. Supreme Court held in Bowsher v. Synar (106 S. Ct. 3181, 1986) that the comptroller general could not exercise executive branch decision-making authority.

GAO audits tend to differ from private-sector financial audits. The scope of GAO audits may be broader or narrower than the scope of nongovernmental audits. To provide the necessary expertise, personnel on GAO audit teams often have academic backgrounds in fields other than accounting. GAO audits tend to be initiated by request and usually are not performed on a routine periodic basis. However, the GAO is responsible for the audit of consolidated government-wide financial statements of the executive branch.

With respect to accounting and information management policy, the GAO participates in the development of accounting principles and standards for the executive branch and advises federal agencies about fiscal policies and procedures. Additionally, it establishes standards for auditing and evaluating government programs, including standards for governmental entities subject to the Single Audit Act of 1984.

The GAO provides legal advice to Congress, reviews legislative proposals, and assists with drafting legislation. Its staff investigates possible civil and criminal misconduct arising out of audits and evaluations. Within its judicial functions, the GAO resolves bid protests that challenge government contract awards, interprets laws governing public expenditure, and adjudicates claims for and against the government.

Findings and recommendations of the GAO are published as reports to Congress, delivered as testimony to Congress, or conveyed in oral briefing. Additionally, the GAO publishes comptroller general decisions. All unclassified reports are available to the public.

To motivate improvements in the performance of federal agencies, the GAO has pursued two important initiatives. These are the High Risk Series and the Performance and Accountability Series. Preliminary work for the High Risk Series began in 1990. High-risk program areas are ones that are vulnerable to waste, fraud, abuse, and mismanagement. These reports identify high-risk program areas, assess causes of risk, recommends ways to reduce risk, and monitor the status of efforts to sustain improvement. Designation as a high-risk program area is a signal of severe weakness. Removal of the designation is recognition of improvement in financial systems and reporting.

The Performance and Accountability Series was introduced in 1999. It includes a general report and separate reports on each cabinet department and most other major independent agencies. The general report discusses the challenges that the federal agency faces in working to improve performance, management, and accountability. This series is oriented to understanding ways performance-based management can be applied to achieve economy, efficiency, and effectiveness in government operations.

The URL for the GAO is http://www.gao.gov. This location provides directions about ways to obtain reports, testimony, decisions, and other information, as well as describing indexes, catalogues, and other means for locating GAO publications.