This paper examines the U.S. General Accounting Office (GAO), the independent, nonpartisan congressional watchdog responsible for auditing federal spending and evaluating government programs. The paper traces the GAO's origins to 1921, explains its structure under a Comptroller General, and describes its core functions: program evaluation, financial auditing, and legal opinions. Three published GAO reports are analyzed as case studies — covering year-end government spending reforms, Federal Transit Administration grants management oversight, and the historical background of the decennial census — to assess whether the office effectively serves the public interest or represents a wasteful use of tax dollars.
In recent decades there has been a public outcry demanding greater scrutiny of government spending. The public was brought stories by the media about the government paying thousands of dollars for toilet seats and hundreds of dollars for a screwdriver and similar tools. When reports began to surface about wasteful government spending, the public became angry. Lobbyists across the nation began to demand an accounting not only of tax dollars but of why those dollars were being spent the way they were. The demand for such scrutiny is particularly striking given that a government office already exists to do exactly what the public has demanded.
The U.S. General Accounting Office (GAO) is a branch of government charged with the examination of many financial aspects of federal agencies and programs. The GAO compiles reports on an almost unlimited number of financial topics and questions. As the public continues to demand accountability for tax-dollar spending, the GAO works to answer those questions — questions posed by Congress but often driven by public demand.
While the GAO itself spends tax dollars for the purpose of examination, that spending is money well spent. The GAO provides the public and Congress with a thorough overview of the agency or area it examines, including the results of its studies, which often serve as decisive reports for government budgeting decisions. Though it is a government agency that spends dollars reviewing how other government agencies spend their dollars, it is a needed and effective office. Without it, the public would have nowhere to turn to obtain detailed information about how tax dollars are being spent, along with expert opinions on the effectiveness of such spending.
The U.S. General Accounting Office (GAO) is an independent, nonpartisan agency that works for Congress. The GAO is often called the "congressional watchdog" because it investigates how the federal government spends taxpayer dollars. It gathers information and compiles it into reports presented to Congress. These are public documents, meaning any taxpayer can read the content — though readers should remain mindful that the office is aware of the public nature of its reports and consider the possibility that findings may be shaped with that awareness in mind.
Among the main questions the office addresses is whether a studied agency, office, or branch of publicly funded activity is meeting its objectives and providing solid service to the public. Other core functions include:
— Evaluating how well government policies and programs are working;
— Auditing agency operations to determine whether federal funds are being spent efficiently, effectively, and appropriately;
— Investigating allegations of illegal and improper activities; and
— Issuing legal decisions and opinions.
The office produces over a thousand reports annually and hundreds of congressional testimonies. Each report provides a short summary of findings followed by an in-depth discussion of the problem, the question posed, and the findings reached. These published reports are open to the public and illuminate the workings of the offices and agencies under review.
The GAO is led by a Comptroller General appointed to a fifteen-year term, and employs over 3,000 staff members who bring expertise in program evaluation, accounting, law, and other specialized fields. The office was established in 1921 and has grown and evolved in response to the demands of both the public and Congress.
To evaluate whether the GAO is doing its job or represents a waste of public funds, the published reports of the office itself serve as solid reference sources. One study conducted a review of year-end government spending and assessed its purpose and effectiveness. This study was written to answer questions regarding spending reforms that had been implemented during the previous fiscal year (GAO, 1998). The published study examined the year-end spending pattern that is common among government agencies throughout the nation.
Year-end spending occurs when an agency has money left over in its budget as the fiscal year comes to a close. Because the agency will soon request new funds from the finance committee, it feels compelled to spend all remaining funds in order to justify its need for future appropriations and to avoid budget cutbacks. The agency finds ways to exhaust its excess funds before the year ends so that it can present a stronger argument for obtaining new funds.
The GAO report concluded that such spending had decreased over the preceding decade, and that limits placed on discretionary spending had helped to curtail year-end spending in many agencies. As the report states:
"Changes in the budget environment and procurement reforms have affected the opportunity and need to obligate funds quickly at year-end. Agencies spend far less today than they did in 1980 on providing goods and services directly, as payments to individual beneficiaries and grants to state and local governments have increased. This trend, combined with limits on discretionary spending, has significantly changed the budget environment for most agencies. At the same time, Congress has made funds available for longer periods for many agencies, which reduces the pressure to spend funds at the end of each year. In addition, systemic procurement reforms addressed most of the issues raised in the Subcommittee's report, although problems persist in certain agencies and with some procurements. Our work and that of others indicates that today there are more safeguards against unplanned year-end spending and, in most discretionary programs, fewer resources available for low-priority purchases than in 1980."
Despite these improvements, the report noted that it remains difficult to assess spending patterns throughout the year because reported quarterly budget execution data are not reliable. Without complete and timely information, the Office of Management and Budget (OMB) and other decision-makers do not have an accurate picture of the financial status of federal programs during the year. Even at year-end, significant discrepancies exist among three comparable sets of data that agencies report to OMB and the Department of the Treasury. Although OMB officials stated that a new joint system built with Treasury to collect year-end data starting in fiscal year 1999 should resolve or largely alleviate these discrepancies, more work was deemed necessary to ensure compliance with quarterly reporting requirements. Agencies' failure to report and reconcile budget execution information was found to mirror broader financial management problems identified in the GAO's financial audit of the fiscal year 1997 Consolidated Financial Statements of the United States Government.
The GAO's background analysis of the issue noted that wasteful year-end spending typically occurs when agencies rush to use funds before they expire — that is, before they are no longer available for new obligations after the fiscal year ends. A 1980 Subcommittee report had recognized that higher fourth-quarter obligations do not necessarily indicate wasteful spending, as some year-end expenditures reflect legitimate, planned, and worthwhile spending intended by Congress. However, that report had also found numerous examples in which agencies took shortcuts in the final weeks of the fiscal year, resulting in questionable contracts. Hurry-up procurement practices had led to the purchase of millions of dollars' worth of goods and services for which there was no demonstrated current need, with the government frequently paying inflated prices, incurring higher administrative overtime costs, and awarding contracts that were not in its best financial interest.
"GAO review of FTA grants management and compliance"
"GAO historical report on U.S. census background"
Though the GAO is a government agency that spends tax dollars reviewing how other government agencies spend their dollars, it is a needed and effective office. If the office did not exist, the public would have nowhere to turn for detailed accounts of how tax dollars are being spent, along with expert opinions on the effectiveness of such spending. The three reports examined in this paper — on year-end spending, transit grants oversight, and the decennial census — illustrate the breadth of issues the GAO investigates and the substantive value it delivers to Congress and the public alike.
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