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2001 Performance and Accountability Highlights. U.S. General Accounting 
Office, Serving the Congress and the Nation. Accountability Report Fiscal 
2001, Performance Report Fiscal 2001, Performance Plan Fiscal 2003. 


Inside front cover figure: A diagram summarizing the key elements 
of GAO's strategic plan, which are: GAO's mission, the themes that drive 
GAO's work, strategic goals and objectives, and GAO's core values. 


Serving the Congress: GAO's Strategic Plan Framework for Fiscal Years 
2000 through 2005. 

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


Themes: GAO works with an awareness of forces that are likely to 
shape American society, the United States' place in the world, and the 
role of the federal government. These forces are assessed through six 
themes discussed in GAO's strategic plan: demographics, globalization, 
quality of life, security, technology, and government performance and 
accountability. 

Goals and objectives: Each of GAO's four strategic goals is supported 
by a specific set of strategic objectives. 

GAO's first strategic goal is to 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. To achieve this goal, GAO will provide information and recommendations 
on the following eight strategic objectives: health care needs and financing, 
retirement income security, social safety net, education/workforce issues, 
effective system of justice, community investment, natural resources 
use and environmental protection, and physical infrastructure. 


GAO's second strategic goal is to provide timely, quality service 
to the Congress and the federal government to respond to changing security 
threats and the challenges of global interdependence. To achieve this 
goal, GAO will provide information and recommendations on the following 
four strategic objectives: diffuse security threats, military capabilities 
and readiness, advancement of U.S. interests, and global market forces. 


GAO's third strategic goal is to support the transition to a more 
results oriented and accountable federal government. To achieve this 
goal, GAO will provide information and recommendations on the following 
four strategic objectives: fiscal position of the federal government; 
government financing and accountability; governmentwide management reforms; 
and economy, efficiency, and effectiveness improvements in federal agencies. 


GAO's fourth strategic goal is to maximize the value of GAO by being 
a model organization for the federal government. To achieve this goal, 
GAO will fulfill the following five strategic objectives: client relations, 
strategic and annual planning, human capital, core business and supporting 
processes, and information technology services. 

Core values: The foundation for GAO's efforts to meet these strategic 
goals and objectives is the agency's three core values of accountability, 
integrity, and reliability.
End of figure. 

From the Comptroller General.
(Photograph of David M. Walker, Comptroller General of the United 
States.)
Spring 2002. 

I am pleased to present the highlights of GAO�s performance and accountability 
report, which combines an assessment of our accomplishments in fiscal 
2001 with our plans for continued progress through fiscal 2003. In keeping 
with the spirit of the Government Performance and Results Act (GPRA), 
we want to let the Congress and the American people know what we have 
achieved and how we expect to continue to work on their behalf. I am 
confident that the financial information and the data measuring GAO's 
performance we are reporting are complete and reliable. 

The year 2001 was characterized by a series of unprecedented challenges 
for the federal government. After a lengthy waiting period to decide 
the results of the presidential election, the year began with a new 
administration and a new policy agenda. Within a short time, the leadership 
of the Senate changed as well. Although the year began with the nation 
at peace and with modest economic growth, by year�s end, the nation 
was at war and the economy was in recession. 

Against this backdrop, GAO served the Congress and the American people 
in a variety of ways. First, our 2001 "Performance and Accountability 
Series and High Risk Update" identified close to 100 major management 
challenges and program risks at 21 federal agencies and highlighted 
actions needed to address these serious problems. The series proved 
useful in carrying out our responsibility under the Presidential Transition 
Act to serve as a key source of information for the incoming administration 
and members of the 107th Congress. Among the issues we brought to their 
attention was the importance of addressing the strategic human capital 
needs of the federal government being triggered by the impending retirements 
of the baby boom generation, by inadequately planned downsizing in the 
1990s, by the knowledge and skills imbalances created by a changing 
economy and new technology, and by the need to create a more performance 
and results oriented work culture. 

Citizens benefited directly from GAO�s work as federal agencies took 
a wide range of actions based on our analyses and recommendations. The 
results ranged from improving services to low income children and disabled 
veterans, to protecting consumers from insurance fraud, to identifying 
billions of dollars in savings and resources that could be reallocated 
to meet other priorities. In total, GAO�s efforts helped the Congress 
and government leaders to save 26.4 billion dollars, a 69 dollar return 
on every dollar invested in GAO. 

Because of our past work and work in progress, we were able to provide 
timely, rapid assistance on the issues raised by the tragic events of 
September 11. In numerous congressional hearings, GAO�s witnesses offered 
suggestions for strengthening the security of the nation�s airports 
and air traffic control system, for protecting critical information 
technology infrastructure, and for enhancing government�s ability to 
analyze and manage security risks, including bioterrorism. We were also 
able to highlight a number of safeguards that could be used in structuring 
financial assistance to the airlines, several of which were incorporated 
in the emergency 15 billion dollar financial aid package that was enacted.  


Closer to home, 2001 was a significant year for GAO because it marked 
the 80th anniversary of our agency. It was also a year marked by changes 
designed to better position our agency for the future. As the seventh 
comptroller general of the United States, I am pleased and honored to 
be able to lead the more than 3,000 public servants who make up the 
GAO team. I also take great pride in the many years of service this 
agency has provided the nation. Building on this legacy, we at GAO look 
forward to continuing to help the Congress and the nation meet the challenges 
of the 21st century. 

Signed by David M. Walker, Comptroller General of the United States. 


Introduction.
Mission: Support the Congress in meeting its constitutional responsibilities 
and help improve the performance and accountability of the federal government 
for the benefit of the American people. 

Beginning of report text:
The U.S. General Accounting Office is an independent, professional, 
nonpartisan agency in the legislative branch that is commonly referred 
to as the investigative arm of the Congress. Created in 1921 as a result 
of the Budget and Accounting Act, GAO has seen its role evolve over 
the decades as the Congress expanded the agency�s statutory authority 
and called on GAO with greater frequency for oversight, insight, and 
foresight in addressing the growing complexity of government and society. 


Today, we examine the full breadth and scope of federal activities 
and programs, publish thousands of reports and other documents annually, 
and provide a number of related services. We also look at national and 
international trends and challenges to anticipate their implications 
for public policy. By making recommendations to improve the practices 
and operations of government agencies, GAO contributes not only to the 
increased effectiveness of federal spending, but also to the enhancement 
of the taxpayers� trust and confidence in their federal government. 


In our 80th year as the Congress�s "watchdog," we recorded 
more than 26 billion dollars in financial benefits for the American 
taxpayer along with nearly 800 other actions taken to improve government 
agencies� management or performance. Those numbers reflect not only 
the achievements of GAO�s staff but also those of the Congress and of 
the many federal agencies that acted on our findings and recommendations 
to improve their services and operations. 

Events of the year prompted rapid responses from GAO as the Congress�s 
priorities shifted. Early in the year, for instance, we began an extensive 
analysis of voter access and election reform. Our work yielded a series 
of reports and recommendations that the Departments of Defense and State 
have pledged to act on. Our work was also instrumental in enabling the 
House and Senate to develop election reform proposals. 

At the same time, we were pursuing solutions to the fragmentation 
we had found in federal efforts to combat terrorism. During the summer, 
for example, we recommended that the president appoint a single focal 
point to oversee the collective efforts of the many agencies involved. 
In the after math of the September 11 attacks, we were well prepared 
to provide the Congress with information it needed on the nation�s security 
and preparedness. 

To track GAO�s performance, we use six quantitative measures designed 
to show the extent to which our work is being used and whether our work 
is achieving the desired results. In fiscal 2001, we met all but one 
of our targets. The next few pages highlight our results for the year 
and provide our new targets. For fiscal 2002, we are introducing an 
additional performance measure on recommendations. 

In addition to our annual quantitative measures, we also set multiyear 
qualitative performance goals to help us assess whether we have done 
the work we planned to do for our congressional clients. We ran the 
first such assessment at the close of fiscal 2001 and present the results 
below. 

For a fuller discussion of our performance measures, our results, 
targets, and resources expended, please see the full length version 
of our performance and accountability report. It is online at www.gao.gov/sp.html 
along with our full family of strategic planning and performance and 
accountability publications. 

All of GAO's efforts are guided by three core values:
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. GAO accomplishes its mission 
through a variety of activities, including financial audits, program 
reviews, investigations, legal support, and policy analyses. 


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 reputation, and the GAO approach to work ensures 
both. 

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

GAO�s Performance.
In fiscal 2001, we exceeded all but one of the targets for GAO�s 
performance measures. As the charts displaying data for the past four 
years show, our results have steadily improved in nearly every instance. 
We have introduced an additional performance measure for fiscal 2002 
and have set targets for our performance through fiscal 2003. Here are 
the highlights: 

Financial benefits: 26.4 billion.
We achieve financial benefits when our findings and recommendations 
are used to make government services more efficient, to improve the 
budgeting and spending of tax dollars, or to strengthen the management 
of federal resources. Our work on military base realignments and closures, 
restructuring the defense acquisition work force, and recapturing unexpended 
balances in a major federal housing program, for instance, together 
yielded more than 12 billion dollars of the year�s financial benefits. 


Table: Financial Benefits.
Bar chart with six groups showing dollars in billions.
Group 1, 1998, Actual. 
Item 1, 19.7. 
Group 2, 1999, Actual. 
Item 1, 20.1. 
Group 3, 2000, Actual. 
Item 1, 23.2. 
Group 4, 2001. 
Item 1, Actual, 26.4.
Item 2, Target, 23.
Group 5, 2002.
Item 1, Target, 30. 
Group 6, 2003.
Item 1, Target, 35.
End of table. 

Other benefits: 799 actions taken to improve government agencies� 
management or performance.
Not all actions on our findings and recommendations produce measurable 
financial benefits. We measure these other types of improvements by 
tabulating the number of cases in which our findings and recommendations 
have prompted federal agencies or the Congress to improve management 
or performance. The 799 actions reported for fiscal 2001 include actions 
to combat terrorism, to strengthen public safety and consumer protection, 
to improve computer security controls, and to establish more effective 
and efficient government operations. 

Table: Other Benefits.
Bar chart with six groups showing number of actions.
Group 1, 1998, Actual.
Item 1, 537.
Group 2, 1999, Actual. 
Item 1, 607.
Group 3, 2000, Actual. 
Item 1, 788.
Group 4, 2001. 
Item 1, Actual, 799. 
Item 2, Target, 700.
Group 5, 2002, Target. 
Item 1, 770. 
Group 6, 2003, Target.
Item 1, 785.
End of table. 

Recommendations implemented: 79 percent of the recommendations made 
four years ago.
One way we measure our impact in improving the government�s account 
ability, operations, and services is by tracking the percentage of recommendations 
we made four years ago that have since been implemented. That is, 79 
percent of the recommendations we made in fiscal 1997 had been implemented 
by the end of fiscal 2001. These recommendations lead to the financial 
and other benefits, such as improvements in national security, health 
care programs, and controls over federal finances. We use a four year 
interval because our historical data show that agencies often need this 
time to complete action on our recommendations. 

Table: Recommendations Implemented.
Bar chart with six groups showing four year implementation rate.
Group 1, 1998, Actual.  
Item 1, 69%. 
Group 2, 1999, Actual.
Item 1, 70%.
Group 3, 2000, Actual. 
Item 1, 78%. 
Group 4, 2001. 
Item 1, Actual, 79%. 
Item 2, Target, 75%. 
Group 5, 2002, Target.
Item 1, 75%. 
Group 6, 2003, Target. 
Item 1, 77%.
End of table. 

Recommendations made: 1,563 recommendations.
Because it takes time for agencies to implement our recommendations, 
we also tabulate, as an interim measure of performance, the number of 
recommendations we make each year. In fiscal 2001, our recommendations 
targeted improvements in the economy, efficiency, and effectiveness 
of federal operations that could yield significant financial and other 
benefits. Our work on information security and federal financial management 
is largely responsible for the high number of recommendations in fiscal 
2001. We have found that in those two areas, highly specific (and therefore 
numerous) recommendations are the most helpful to the agencies in question 
as they work to improve their operations. 

Table: Recommendations Made.
Bar chart with six groups, showing number made.
Group 1, 1998, Actual.
Item 1, 987.
Group 2, 1999, Actual.
Item 1, 940. 
Group 3, 2000, Actual.
Item 1, 1,224. 
Group 4, 2001. 
Item 1, Actual, 1,563. 
Item 2, Target, 975.
Group 5, 2002, Target.
Item 1, 1,200.
Group 6, 2003, Target.
Item 1, 1,200.
End of table. 

Products containing recommendations: 44 percent, a new measure for 
fiscal 2002.
We are introducing this measure to track the percentage of our written 
products that contain recommendations to improve government operations 
and services because simply tracking the number of recommendations made 
each year does not tell the full story. A report with a single recommendation 
can produce far reaching improvements. To develop a fiscal 2002 target 
for this measure, we calculated previous years� percentages as benchmarks. 


Table: Products with Recommendations.
Bar chart with six groups.
Group 1, 1998, Actual.
Item 1, 33%.
Group 2, 1999, Actual. 
Item 1, 33%.
Group 3, 2000, Actual. 
Item 1, 39%. 
Group 4, 2001, Actual. 
Item 1, 44%.
Item 2, No Target.
Group 5, 2002, Target.
Item 1, 45%.
Group 6, 2003, Target.
Item 1, 50%.
End of table. 

Testimonies: 151 given before the Congress.
Because one of GAO�s primary functions is to support the Congress 
in its decision making and oversight responsibilities, the number of 
times our witnesses testify each year is an indicator of our responsiveness 
and the value our clients place on our work. Our target and results 
for fiscal 2001 were lower than those for previous years because external 
factors, such as a new Congress and a new administration both beginning 
work, reduced the number of congressional hearings. Nonetheless, we 
testified on a broad range of subjects, including combating terrorism, 
energy prices, and federal budget issues. 

Table: Testimonies.
Bar chart with six groups showing number given.
Group 1, 1998, Actual.
Item 1, 256. 
Group 2, 1999, Actual. 
Item 1, 229.
Group 3, 2000, Actual. 
Item 1, 263.
Group 4, 2001. 
Item 1, Actual, 151. 
Item 2, Target, 150.
Group 5, 2002, Target.
Item 1, 200.
Group 6, 2003, Target. 
Item 1, 210.
End of table. 

Timeliness: 95 percent of our products delivered on time.
For our work to be useful, our clients must have it on a timely basis. 
We therefore compare actual product delivery dates with the dates agreed 
to with our clients. We set an idealistic target of 100 percent for 
fiscal 2001 to emphasize the importance of providing timely information 
and will continue to strive to deliver all of our products when they 
are expected. Occasionally, external factors beyond our control may 
delay a product. To reflect that reality, we have reduced our target 
for fiscal 2002 and 2003 to 98 percent, still a challenge for our staff, 
but not an unattainable one. 

Table: Timeliness.
Bar chart with six groups showing products on time.
Group 1, 1998, Actual.
Item 1, 93%.
Group 2, 1999, Actual. 
Item 1, 96%.
Group 3, 2000, Actual. 
Item 1, 96%. 
Group 4, 2001. 
Item 1, Actual, 95%.
Item 2, Target, 100%. 
Group 5, 2002, Target.
Item 1, 98%.
Group 6, 2003, Target.
Item 1, 98%.
End of table. 

Qualitative performance goals: 89 percent achieved.
Our qualitative performance goals lay out the work we plan to do 
to achieve financial and other benefits. Among the 94 performance goals 
assessed this year were "identify ways to administer our nation�s 
immigration laws more efficiently and effectively" and "assess 
the effectiveness of federal food safety programs." For a goal 
to be met, we must have provided information or recommendations on the 
work planned under the goal�s key efforts, when viewed collectively. 
Our results, 89 percent of the goals met, were heavily influenced by 
our decision to synchronize our assessment and strategic planning cycles, 
which meant assessing our performance on these goals after two years 
instead of three years as originally planned. The work remaining under 
these goals has been carried forward in our updated strategic plan. 


Figure: Qualitative Performance Goals.
Pie chart with two items covering 94 qualitative performance goals.
Item 1, Not Met, 11%. 
Item 2, Met, 89%.
End of figure. 

Work examples: GAO at Work.
Achieving Financial Benefits.
Contributing to the Military Base Closure and Realignment Process.
GAO has issued a number of reports since 1979 documenting excess 
infrastructure within the Department of Defense and supporting the need 
for a base closure and realignment process. After the Congress�s authorization 
of such a process, GAO was legislatively required to provide the Congress 
with a series of reports and testimonies validating Defense�s implementation. 
GAO monitored and assessed all phases of the decision making process, 
including executive level sessions, for compliance with congressional 
requirements. In addition, GAO provided staff to each commission established 
to recommend base closures and realignments for rounds held in 1991, 
1993, and 1995. The staff helped shape the commissions� decisions through 
analysis of issues associated with closing or realigning specific installations. 
GAO estimated 6 billion dollars in net savings in fiscal 1999 and 2000 
for the three base closure rounds. 

Cutting the Cost of Defense�s Acquisition Infrastructure.
In a series of reports and comments on legislation for the House 
National Security Committee beginning in the mid 1990s, GAO examined 
numerous facets of Defense�s acquisition infrastructure, of which its 
acquisition workforce is a major component. GAO�s primary messages were 
that acquisition infrastructure reductions had not kept pace with reductions 
in other areas of Defense�s operations and that the acquisition workforce 
needed to be consistently defined to effect appropriate reductions. 
Consequently, Defense redefined the workforce and the Congress directed 
Defense to develop specific plans for reducing its acquisition workforce. 
These workforce reductions totaled 3.32 billion dollars and freed the 
funds for other high priority items. 

Recapturing Unexpended Balances in a Federal Housing and Urban Development 
Program.
GAO reviewed the unexpended balances in the Department of Housing 
and Urban Development�s Section Eight program, in which the department 
contracts with property owners to provide housing for low income families. 
GAO recommended that the department revise the procedures used to review 
unexpended balances and ensure that excess balances were recaptured 
from this program. Subsequently, the department recaptured nearly 3 
billion dollars of unexpended balances from prior years� budgets. According 
to department officials, the savings directly resulted from their implementation 
of GAO�s recommendation.
End of examples. 

Work examples: GAO at Work.
Improving Government Management and Performance.
Improving Department of Defense Antiterrorism Efforts.
At the request of the House Special Oversight Panel on Terrorism, 
GAO reviewed Defense�s antiterrorism efforts at domestic installations. 
GAO identified shortcomings that needed to be addressed to provide installation 
commanders with the necessary information to effectively manage the 
risk of a terrorist attack and develop an effective antiterrorism program. 
Defense agreed with GAO�s findings and has begun implementing all of 
the GAO recommended corrective actions. GAO also worked with Defense 
to update and improve antiterrorism standards and the secure communication 
capabilities between some Navy facilities. This work provided a foundation 
for developing a risk management approach that can be applied to other 
government operations. GAO presented information about this management 
approach to various congressional committees and other organizations. 


Strengthening Nuclear Nonproliferation and Safety Efforts.
Preventing the spread of weapons of mass destruction and ensuring 
the safety of Soviet designed reactors are important national security 
concerns. GAO�s work in this area continues to have major impacts, including 
the implementation of GAO�s recommendations designed to strengthen the 
Department of Energy�s program to secure nuclear materials in Russia 
and sustain the improvements. In addition, Energy has implemented GAO�s 
recommendations to fund only those safety projects that directly improve 
the operation of Soviet designed reactors and to focus its Nuclear Cities 
Initiative funding on only those projects designed to employ Russian 
weapons scientists. These changes will result in better targeting of 
limited resources by eliminating projects that did not meet mission 
goals. 

Improving Food Safety.
Over the years, public awareness of foodborne illness outbreaks has 
heightened concerns about the effectiveness of the federal system for 
ensuring the safety of the nation�s food supply. GAO has served as an 
honest broker of information on the shortcomings of the federal food 
safety system. In particular, GAO�s work has been used extensively in 
congressional deliberations and by federal program managers to improve 
the food safety system. For example, GAO�s work on seafood safety identified 
several important weaknesses that compromised the overall effectiveness 
of the Food and Drug Administration�s newly implemented science based 
system for seafood. In response, the agency made improvements in 2001 
to the science based system. GAO�s work identifying shortcomings in 
shellfish safety was instrumental in the 2001 adoption of the first 
national plan to reduce pathogenic bacteria in oysters.
End of examples. 

Highlights of Performance by Strategic Goal.
GAO's work is organized under four strategic goals. The following 
text provides the strategic objectives, some of the topics we testified 
on, and selected accomplishments for each strategic goal.
Strategic Goal One.
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. 

Objectives:
The health needs of an aging and diverse population,
A secure retirement for older Americans,
The social safety net for Americans in need,
An educated citizenry and a productive workforce,
An effective system of justice,
Investment in community and economic development,
Responsible stewardship of natural resources and the environment, 
and
A safe and efficient national physical infrastructure. 

Congressional Testimonies:
Air pollution,
Airline competition and federal assistance,
Alternative motor fuels,
Coast Guard investments,
Commercial fisheries,
Drug control,
Elections,
Energy prices and markets,
FBI oversight,
Food stamps,
Health care,
Housing,
Infrastructure,
Intellectual property,
Intercity passenger rail,
Medicare,
Milk prices,
Nuclear safety,
Pediatric drug research,
Postal Service transformation,
Prisoner releases,
Veterans� employment, training, and health care, and
Welfare reform. 

Selected Accomplishments.
Protecting Patients in Mental Health Facilities: GAO pointed out 
the dangers to patients from the use of restraint and seclusion in mental 
health facilities; poor reporting of serious incidents; and the uneven 
protection afforded to patients in differing residential treatment settings. 
This work informed the Congress and set the stage for the passage of 
the Children�s Health Act of 2000 (P.L. 106 310). The act specifies 
the circumstances in which restraint and seclusion can be used, requires 
facilities to notify the appropriate agency of restraint or seclusion 
related deaths, and requires facilities to train staff in the use of 
restraints and alternatives to them. In addition, the Centers for Medicare 
and Medicaid Services cited GAO�s work in its regulations that established 
standards for the use of restraint or seclusion in psychiatric residential 
treatment facilities. The regulations require such facilities to inform 
state authorities of any deaths or serious injuries involving seclusion 
or restraint, as well as informing the Centers of any deaths. 


Reducing Nuclear Waste Treatment Costs: Starting in 1996, through 
a series of reports and testimonies, GAO questioned the reasonableness 
of the Department of Energy�s "privatized" approach to treating 
liquid high level radioactive wastes at its Hanford, Washington, site. 
Under this approach, financing and constructing treatment facilities 
would have cost at least 8 billion dollars. In June 2000, GAO reported 
that Energy�s privatized approach had not been successful for other 
complex cleanup projects and suggested that Energy reassess the cost 
effectiveness of this approach at Hanford, including analyzing different 
contracting and financing alternatives. Subsequently, Energy terminated 
its privatized contract because of dramatic cost growth and contractor 
performance problems. Consistent with GAO�s suggestions, Energy assessed 
alternative contracting and financing strategies and awarded a new contract 
in December 2000. It expects to save about 1.3 billion dollars in fiscal 
2001 and 2002 and expects additional savings in future years. 


Controlling Pollution: GAO�s work on pollution control issues has 
resulted in both tangible program impacts and significant budgetary 
savings. For example, in a series of reports and testimonies, GAO documented 
serious deficiencies in states� water quality monitoring programs and 
recommended that the Environmental Protection Agency (EPA) improve the 
information collected on water quality conditions across the country. 
EPA and the Congress have since responded with steps designed to improve 
the quality and consistency of state monitoring programs. Taken together, 
these actions are expected to improve the prospects that the right waters 
will be targeted for cleanup, saving millions of dollars and ensuring 
that scarce resources are applied where they are most needed. In another 
example, GAO recommended reduced appropriations across an array of environmental 
programs, including EPA�s Climate Technology Initiative, Clean Air Partnership 
Fund, and the Great Lakes Cleanup Grants. As a result, over 400 million 
dollars in savings was achieved without compromising important environmental 
objectives.
End of strategic goal one accomplishments. 

Strategic Goal Two.
Provide timely, quality service to the Congress and the federal government 
to respond to changing security threats and the challenges of global 
interdependence. 

Objectives:
Responding to diffuse threats to national and global security,
Ensuring military capabilities and readiness,
Advancing and protecting U.S. international interests, and
Responding to the impact of global market forces on U.S. economic 
and security interests. 

Congressional Testimonies:
A-76 competitive sourcing program,
Anthrax vaccine,
Aviation security,
Cannibalizing military aircraft,
Combating terrorism,
Computer security,
Debt relief,
Defense infrastructure,
Defense maintenance,
Democracy programs,
Export controls,
F-22 fighter aircraft production,
Free Trade Area of the Americas,
Homeland security,
International disaster assistance,
Military base closures,
Nuclear nonproliferation, and
Peacekeeping operations. 

Selected Accomplishments.
Informing the Debate Over Aviation Security: Improving the screening 
of airline passengers and their baggage moved to the top of the national 
agenda following the September 11 terrorist attacks. Building upon a 
considerable body of work on aviation security completed in recent years, 
GAO delivered four testimonies and two statements for the record during 
the two weeks following the attacks. These efforts, as well as discussions 
with the Congress since the hearings, helped bring into focus the root 
problems with our nation�s aviation security system and, in particular, 
the screening process. Subsequently, the Congress passed legislation 
that addressed the screening concerns GAO identified. In earlier work, 
GAO had recommended that the Federal Aviation Administration consider 
pursuing procedures common in other countries, such as limiting access 
to ticketed passengers, placing armed police at checkpoints, and placing 
armed militia throughout airports. The agency has begun adopting some 
of these security screening strategies and procedures. 

Improving Accountability Over Defense Inventory: In response to various 
congressional requests, GAO issued several reports on the Department 
of Defense�s inventory management practices that resulted in significant 
management improvements, financial savings, and enhanced congressional 
oversight. GAO identified key factors causing parts shortages for military 
weapon systems and the adverse impact these shortages were having on 
mission performance, morale of military personnel, and actions Defense 
is taking to address these problems. The work also resulted in recommendations 
to improve quality deficiency reporting for parts purchased or repaired. 
Related work further showed that Defense was not effectively tracking 
the use of funds earmarked for reducing spare part shortages and recommended 
actions for improving oversight of such funds. GAO also recommended 
actions to improve the accountability over defense inventory that was 
being shipped from contractor or Defense facilities. GAO�s work showed 
that these items, which were cumulatively valued at billions of dollars, 
were often vulnerable to theft and undetected loss. This work resulted 
in savings of about 1.8 billion dollars. We made further recommendations 
to improve the account ability over items containing sensitive military 
technology that were being disposed. Lastly, GAO made recommendations 
to improve the practices for determining when to retain or dispose of 
Defense�s multibillion dollar inventory of spare parts. 

Strengthening Federal Information Security: Numerous federal agencies 
implemented improvements based on GAO�s recommendations to better protect 
the integrity, confidentiality, and availability of their critical computer 
supported operations. Improvements stemming from prior years� and recent 
follow up work included actions by the Departments of the Treasury, 
Veterans Affairs, and Defense and by EPA. Also, audits issued during 
fiscal 2001 prompted newly initiated actions at the Departments of Interior, 
Commerce, and Education. Improvements included strengthening access 
controls, developing and testing service continuity plans, and implementing 
management processes for ensuring that security controls appropriately 
address current threats and operate as intended. In addition, GAO�s 
reports and testimonies facilitated congressional oversight by highlighting 
significant vulnerabilities in critical federal systems and providing 
detailed information on new viruses and other cyber related events.
End of strategic goal two accomplishments. 

Strategic Goal Three.
Support the transition to a more results oriented and accountable 
federal government. 

Objectives:
Analyzing the federal government�s long term and near term fiscal 
position, outlook, and options;
Strengthening approaches for financing the government and determining 
accountability for the use of taxpayer dollars;
Facilitating governmentwide management and institutional reforms 
needed to build and sustain high performing organizations and more effective 
government; and
Recommending economy, efficiency, and effectiveness improvements 
in federal agency programs. 

Congressional Testimonies:
Alternative minimum tax,
Contracting for services,
Controls over federal payments,
District of Columbia reforms,
Electronic government,
Federal budget issues,
Federal rulemaking requirements,
Federal telecommunications services,
Financial statement reliability,
Human capital,
Implementation of the Government Performance and Results Act,
Information security,
Information technology workforce,
Intergovernmental fiscal issues,
IRS modernization,
Presidential transition,
Reusable launch vehicles, and
Tax filing season. 

Selected Accomplishments.
Improving Collection of Nontax Debt: GAO has continued to report 
on the government�s serious collection problems with nontax debt, debt, 
other than taxes, that is owed to the federal government. GAO promoted 
centralizing the offset of delinquent debt against federal payments 
prior to the enactment of the Debt Collection Improvement Act of 1996. 
GAO was also instrumental in the successful merging of the tax refund 
and administrative offset programs, now better known as the Treasury 
Offset Program. Since the program�s inception in January 1999 and through 
July 2001, collections of federal nontax debt from tax refund offsets 
have increased by 931 million dollars, including 677 million dollars 
during fiscal 1999 and 2000. 

Focusing Attention on Major Management Challenges and High Risk Issues: 
In our 2001 Performance and Account ability Series and High Risk Update, 
GAO identified almost 100 major management challenges and program risks 
at 21 federal agencies and 22 high risk areas. GAO also highlighted 
the actions needed to address these serious problems. New to the high 
risk list were the Postal Service�s transformational efforts and long 
term outlook, and strategic human capital management, a pervasive challenge 
across the federal government. Congressional leaders, who have historically 
referred extensively to the series in framing oversight hearing agendas, 
have strongly urged the administration and individual agencies to develop 
specific performance goals to address these pervasive problems. In addition, 
the president�s recently issued management agenda for reforming the 
federal government mirrors many of the issues that GAO has focused and 
reported on in these series, including a government wide initiative 
to focus on strategic management of human capital. 

Identifying Strategies for a More Cost Effective Census: In a series 
of congressionally requested reports over the last year, GAO examined 
the lessons learned from the 2000 Census. GAO identified financial savings 
and best practices that could help improve the planning and conduct 
of the next national headcount in 2010. For example, GAO�s recommendations 
for improving the methods the Bureau of the Census used for calculating 
the productivity of census enumerators provided the Congress and the 
bureau with better data for future planning and budgeting decisions. 
Likewise, GAO�s work on the bureau�s program for partnering with local 
governments and nonprofits prompted the bureau to implement improvements 
to make this key promotion and outreach effort more accountable and 
performance oriented. In addition, GAO�s review of certain assumptions 
behind the bureau�s fiscal 2000 budget alerted the Congress to the availability 
of unobligated funds. Subsequent action taken by the bureau and House 
and Senate Appropriations Committees led to financial savings of 360 
million dollars.
End of strategic goal three accomplishments. 

Strategic Goal Four.
Maximize the value of GAO by being a model organization for the federal 
government. 

Objectives:
Cultivating and fostering effective congressional and agency relations,
Implementing a model strategic and annual planning and reporting 
process,
Aligning human capital policies and practices to support GAO�s mission,
Developing efficient and responsive business processes, and
Building an integrated and reliable information technology infrastructure. 


Selected Accomplishments.
Strengthening Relationships with GAO�s Clients and Stakeholders: 
In fiscal 2001, GAO implemented a set of congressional protocols. policies 
and procedures to guide interactions with the Congress and to ensure 
GAO�s accountability to the Congress. Responding to client requests, 
GAO and the Congressional Budget Office developed materials on legislative 
branch services for new members of the Congress and their staff. GAO 
also expanded and improved access to information for its congressional 
clients through a Web accessible active assignments list. To assist 
in the congressional and presidential transitions, GAO worked with Office 
of Management and Budget and Cabinet level officials to provide new 
legislators and officials with information about the challenges facing 
them; much of the information about GAO�s work was made available on 
a transition Web site. GAO continued its efforts to work across boundaries 
and encourage knowledge sharing by networking through various boards 
and panels, including the Comptroller General�s Advisory Board, the 
Educators� Advisory Board, the Accountability Advisory Board, and the 
global and domestic working groups of accountability organizations. 


Aligning GAO�s Resources with Our Strategic Goals: To enhance our 
ability to achieve the goals and objectives of GAO�s strategic plan, 
we completed a major organizational realignment in fiscal 2001. The 
realignment provides for a clearer and more transparent delineation 
of responsibilities for achieving strategic goals and in meeting the 
needs of the Congress. In addition, the realignment centralized certain 
administrative support services to more efficiently provide human capital, 
report production and publishing, budget and financial management, information 
systems desk side support, security and safety, property management, 
copying and reproduction services, supplies, and mail to agency staff. 
The centralization will allow us to devote more resources to GAO�s mission 
work and to obtain economies of scale by providing central and shared 
services. 

Aligning Human Capital Policies and Practices to Support GAO�s Mission: 
We have made significant progress toward reshaping GAO�s human capital 
profile to better support the agency�s mission. In fiscal 2001, under 
new personnel management authorities provided by human capital legislation 
enacted in 2000, GAO offered qualified staff opportunities for early 
retirement and hired several senior level specialists. GAO also instituted 
new recruiting strategies to bring in diverse, high caliber staff with 
the skills needed to meet GAO�s strategic goals, particularly as senior 
GAO staff begin to retire in increasing numbers. As part of GAO�s overall 
workforce planning, we also developed an inventory of staff knowledge 
and skills that was used in conjunction with an employee preference 
survey to realign staff to better meet our strategic goals. Finally, 
GAO completed the development of a new performance appraisal system, 
to be implemented in 2002, based on the strategic plan and needed competencies; 
new training and professional development programs are being developed 
to support these competencies.
End of strategic goal four accomplishments. 

Strategies and Challenges: Achieving Our Goals.
For GAO, achieving our goals and objectives rests, for the most part, 
on providing professional, objective, fact based, nonpartisan, nonideological, 
fair, and balanced information. We develop and present this information 
in a number of ways to support the Congress, including the following: 


Evaluations of federal policies 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 help guide their efforts toward positive results;
Legal opinions to 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. 

To broaden our institutional knowledge and, in turn, improve our 
service to the Congress and the American public, GAO builds strategic 
working relationships with other national and international government 
accountability and professional organizations as these next sections 
show. 

Planning with Others.
A number of advisory groups support GAO�s strategic and annual performance 
planning. GAO works actively with the Comptroller General�s Advisory 
Board, for instance, which includes more than 40 members from the public 
and private sectors whose areas of expertise mirror GAO�s strategic 
objectives. GAO meets with the board once a year and works with individual 
members throughout the year on our strategic objectives and initiatives, 
including future work GAO should conduct on counterterrorism issues. 
In addition, GAO uses the National Intergovernmental Audit Forum chaired 
by the comptroller general, 10 regional intergovernmental audit forums, 
and other means to consult regularly with federal inspectors general 
and state and local auditors. 

We also work with a number of issue specific and technical panels 
to improve our strategic and annual planning. For example, we meet periodically 
with our Accountability Advisory Council to obtain advice on vital and 
emerging issues pertaining to financial management and accountability 
reporting, with our Executive Council on Information Management and 
Technology to obtain advice on critical information management issues, 
and with our Educators� Advisory Panel to identify the best practices 
for recruiting and developing GAO�s staff. 

In the international area, GAO participates actively in the International 
Organization of Supreme Audit Institutions (INTOSAI), the professional 
organization of about 180 national audit offices from around the world. 
At the 17th International Congress of Supreme Audit Institutions in 
Seoul, Korea, in October 2001, the comptroller general chaired an overall 
theme on strengthening the role of supreme audit institutions in administrative 
and government reform efforts and agreed to chair a 10 country task 
force charged with developing a strategic planning framework for INTOSAI. 
The comptroller general is a member of the INTOSAI Governing Board and 
also participates each year in an informal global working group, in 
which the heads of GAO�s counterparts from the G-7 and other selected 
countries meet to discuss strategic plans and issues of mutual concern. 


Collaborating with Others.
GAO collaborates on crosscutting issues with numerous organizations 
to strengthen professional standards, provide technical assistance, 
leverage resources, and develop best practices. For example, in response 
to a statutory mandate, the comptroller general convened the Commercial 
Activities Panel to review the government�s policies and procedures 
for deciding whether commercially available services should be performed 
by federal employees or by the private sector. The panel, which includes 
senior leaders from government agencies, federal labor unions, contractor 
groups, and academia, will develop a set of principles to guide agencies� 
sourcing decisions and make related recommendations. 

GAO has long collaborated with others in carrying out its leadership 
role in the area of financial management. We work closely with the Office 
of Management and Budget, the Department of the Treasury, the inspector 
general community, and others in developing federal accounting standards 
and preparing and auditing the U.S. government�s financial statements. 
In July 2001, GAO and the President�s Council on Integrity and Efficiency 
jointly issued a Financial Audit Manual for performing financial statement 
audits of federal entities. The manual provides common methodologies 
and ground rules for conducting these audits and will improve consistency 
among agencies� audits. GAO also sets the internal control standards 
and the auditing standards for government and provides technical advice, 
training, and other outreach to the governmental community to ensure 
that the standards are understood and accepted. 

As chair of the Joint Financial Management Improvement Program (JFMIP), 
the comptroller general initiated a series of sessions at which the 
JFMIP principals (the comptroller general, the secretary of the treasury, 
the director of the Office of Management and Budget, and the director 
of the Office of Personnel Management) discussed pressing governmentwide 
financial management issues. These summits were the first time the JFMIP 
principals had gathered in 10 years. They focused on key issues such 
as restructuring the Federal Accounting Standards Advisory Board to 
allow more input from the public, establishing audit committees for 
the major federal agencies, defining success measures for financial 
management that go beyond an unqualified audit opinion on financial 
statements, addressing the impediments to an audit opinion on the U.S. 
government�s consolidated financial statements, and promoting improved 
financial management systems and human capital practices. Through this 
initiative, the JFMIP principals have reinvigorated efforts to improve 
financial management across government. They will continue to review 
and monitor strategies critical to the full and successful implementation 
of existing statutes on federal financial management reform. 


Addressing Management Challenges That Could Affect Our Performance.
Two of the management challenges that may affect GAO�s performance 
in fiscal 2003, human capital and information technology issues, were 
identified in our previous performance and account ability report. We 
have made progress in addressing these issues through the work we carry 
out under our fourth strategic goal, but we continue to view them as 
significant challenges. In light of the far reaching effects of the 
September 11 terrorist attacks, we are adding a third management challenge: 
security and safety. 

After a decade of downsizing and curtailed investments in human capital, 
it became increasingly clear that GAO needed new human capital strategies 
if the agency is to meet the current and emerging needs of the Congress 
and the nation�s citizens. The initiatives we have in progress or plan 
to begin in the coming months should build on the progress we have made 
in the past two years, yielding further improvements in how we recruit, 
develop, evaluate, compensate, and retain our staff. We will continue 
to develop a human capital strategic plan that both supports our strategic 
goals and ensures that diversity, skills, leadership, and retention 
issues are addressed. 

As with human capital, information technology (IT) investments at 
GAO declined significantly during the mid to late 1990s as a result 
of mandated spending reductions. Consequently, information technology 
became a management challenge as we entered the 21st century. We have 
made progress in building an integrated and reliable IT infrastructure 
that supports the achievement of our goals and objectives, but we must 
sustain these efforts and begin others to ensure that GAO can continue 
to provide quality, timely, efficient, and effective services to the 
Congress and the public. Our IT plan for fiscal 2001 through 2004 is 
providing a foundation for initiatives and investments, and we are expanding 
and accelerating our efforts to protect our agency�s information assets. 


The safety and security of GAO�s people, information, and assets 
are necessarily a top priority for GAO. In the aftermath of the September 
11 terrorist attacks and the subsequent anthrax incidents, we designated 
safety and security a management challenge for our agency. We are conducting 
threat assessments and a comprehensive evaluation of security that we 
plan to complete in early 2002. Guided by these assessments, we will 
develop an implementation plan to strengthen security and safety within 
GAO. We also plan to review and update our emergency preparedness and 
response plan and develop a continuity of operations plan so that we 
are prepared for, can respond to, and will recover from any major threat 
or crisis. 

Mitigating External Factors That Could Affect Our Performance.
Several external factors could affect the achievement of our performance 
goals, including national and international upheavals, the resources 
we receive, and limitations imposed on our work by other organizations 
or limitations on the ability of other federal agencies to make the 
improvements we recommend. For example, as the Congress focuses on unpredictable 
events, such as the global threat posed by sophisticated terrorist networks, 
international financial crises, or natural disasters, the mix of work 
we are asked to undertake may change, diverting our resources from some 
of our strategic objectives and performance goals. We can and do mitigate 
the impact of these events on the achievement of our goals in various 
ways: 

Being alert to possibilities that could shift the Congress�s, and 
therefore our, priorities;
Continuing to identify in our products and meetings with the Congress 
conditions that could trigger new priorities; and
Quickly redirecting our resources, as appropriate, so that we can 
deal with major changes that do occur. 

At the same time, with concerns about operational security unusually 
high at home and abroad, it may be more difficult for us to obtain information 
and report on certain issues. Historically, GAO�s auditing and information 
gathering has been limited where the intelligence community is concerned. 
Nor have we had the authority to access or inspect records or other 
materials held by other countries or by multinational institutions that 
the United States works with to protect its interests. These limitations 
may hamper our ability to fully assess what progress is being made in 
addressing homeland security issues, and because some of our reports 
may be subjected to greater classification reviews than in the past, 
their public dissemination may be limited. 

Resources Needed to Achieve Our Fiscal 2003 Performance Goals.
GAO has requested a budget of 458 million dollars for fiscal 2003 
to maintain current operations to support the Congress as outlined in 
our strategic plan and to enhance the safety and security of GAO�s staff. 
This funding level would allow us to support our authorized level of 
3,269 full time equivalent personnel. Almost 80 percent of GAO�s fiscal 
2003 budget will provide for employee compensation and benefits. The 
next largest portion of our budget about 50 million dollars, is for 
contract services supporting both GAO�s mission work and administrative 
operations. 

The president has proposed a governmentwide initiative to transfer 
account ability for accruing retirement benefits and postretirement 
health benefits costs from the Office of Personnel Management to individual 
agencies. This initiative is a shift in the accounting treatment of 
these costs, which are presently a component of mandatory costs and 
in future could be included in discretionary budget authority. Implementation 
of this proposal is contingent on enactment by the Congress of authorizing 
language submitted by the administration. If this proposal is enacted, 
GAO is requesting budget authority of about 21.3 million dollars to 
cover fiscal 2003 costs. 

During fiscal 2003, we plan to increase our investments in maximizing 
the productivity of our workforce by continuing to address two of our 
management challenges: human capital and information technology. For 
example, we will target increased resources to continue initiatives 
to address skill gaps, maximize staff productivity, and increase their 
effectiveness; to update our training curriculum to address organizational 
and technical needs; and to train new staff. We will continue to focus 
our hiring efforts in fiscal 2003 on recruiting talented entry level 
staff. On the information technology front, we plan to continue initiatives 
designed to increase our employees� productivity, facilitate knowledge 
sharing, maximize the use of technology, and enhance the tools available 
at the desktop. Finally, we will also make the investments necessary 
to address our third management challenge, enhancing the safety and 
security of GAO�s people, facilities, and other assets. 

Table: GAO�s Proposed Budget, Fiscal 2003.
Strategic goal one; 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; Dollars 
in thousands; 178,454; Full time equivalent staff; 1,293. 

Strategic goal two; Provide timely, quality service to the Congress 
and the federal government to respond to changing security threats and 
the challenges of global interdependence; Dollars in thousands; 124,945; 
Full time equivalent staff; 884. 

Strategic goal three; Help transform the federal government�s role 
and how it does business to meet 21st century challenges; Dollars in 
thousands; 136,420; Full time equivalent staff; 948. 

Strategic goal four; Maximize the value of GAO by being a model federal 
agency and a world class professional services organization; Dollars 
in thousands; 17,983; Full time equivalent staff; 144. 

Note: In updating GAO�s strategic plan, the wording for goals three 
and four was revised for fiscal 2002 and 2003. Elsewhere in this report, 
the wording in effect for fiscal 2000 and 2001 is used. The wording 
for goals one and two did not change.
End of table. 

Financial Systems, Internal Controls, and Condensed Financial Statements.
GAO recognizes 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. 

GAO is committed to fulfilling the internal control objectives of 
31 U.S.C. 3512, formerly the Federal Managers� Financial Integrity Act 
(FMFIA) and of the Federal Financial Management Improvement Act (FFMIA) 
of 1996. GAO�s management assesses compliance with these controls through 
a series of comprehensive internal reviews and action is taken to correct 
deficiencies as they are identified. 

We have assessed GAO�s internal controls as of September 30, 2001, 
and we believe that we have effective internal controls in place, as 
of that date. Additionally, GAO�s independent auditor found that GAO 
maintained effective internal controls over financial reporting and 
compliance with all applicable laws and regulations. Consistent with 
GAO�s evaluation, the auditor found no material internal control weaknesses. 
In addition, on the basis of assessments of our financial systems, we 
believe that we have implemented and maintained financial systems that 
comply substantially with the objectives of FFMIA for the fiscal year 
ended September 30, 2001. 

GAO�s 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 to ensure 
compliance with laws and regulations relevant to GAO�s financial operations. 
The committee has three members:
Sheldon S. Cohen (chairman) is a certified public accountant and 
practicing attorney in Washington, D.C.; former commissioner and chief 
counsel of the Internal Revenue Service; and senior fellow of the National 
Academy of Public Administration, Alan B. Levenson is a practicing attorney 
in Washington, D.C., and a former senior official at the Securities 
and Exchange Commission, and Katherine D. Ortega is a certified public 
accountant, former treasurer of the United States, former commissioner 
of the Copyright Royalty Tribunal, and a former member of the President�s 
Advisory Committee on Small and Minority Business. 

Condensed financial statements for GAO follow. Our detailed statements 
with their accompanying notes appear in the full length version of this 
report. Our financial statements for the fiscal year ended September 
30, 2001, were audited by an independent auditor, Cotton and Co., LLP. 
Our financial statements for the fiscal year ended September 30, 2000, 
were audited by Clifton Gunderson, LLP, also an independent auditor. 
Clifton Gunderson�s five year contract with GAO ended with fiscal 2000. 


Cotton and Co., LLP, rendered an unqualified opinion on GAO�s financial 
statements and an unqualified opinion on the effectiveness of GAO�s 
internal controls over financial reporting and compliance with laws 
and regulations. GAO�s auditor also reported that GAO had substantially 
complied with the applicable requirements of FFMIA and found no reportable 
instances of noncompliance with selected provisions of laws and regulations. 
In the opinion of the independent auditor, the financial statements 
are presented fairly in all material respects and are in conformity 
with generally accepted accounting principles. 

Financial statement one:
U.S. General Accounting Office.
Condensed Balance Sheet.
As of September 30, 2001 and 2000 (dollars in thousands). 


Assets:
2001; Intragovernmental assets including funds with the U.S. Treasury; 
56,736.
2000; Intragovernmental assets including funds with the U.S. Treasury; 
55,602. 

2001; Property and equipment, net; 66,318.
2000; Property and equipment, net; 74,863. 

2001; Other; 401.
2000; Other; 369. 

2001; Total Assets; 123,455.
2000; Total Assets; 130,834. 

Liabilities:
2001; Intragovernmental liabilities; 17,062.
2000; Intragovernmental liabilities; 19,999. 

2001; Accounts payable and salaries and benefits; 28,636.
2000; Accounts payable and salaries and benefits; 25,248. 


2001; Accrued annual leave and other; 27,836.
2000; Accrued annual leave and other; 27,573. 

2001; Workers� compensation; 7,954.
2000; Workers� compensation; 8,008. 

2001; Capital leases; 5,360.
2000; Capital leases; 7,730. 

2001; Total Liabilities; 86,848.
2000; Total Liabilities; 88,558. 

Net Position:
2001; Unexpended appropriations; 21,258.
2000; Unexpended appropriations; 23,515. 

2001; Cumulative results of operations; 15,349.
2000; Cumulative results of operations; 18,761. 

2001; Total net position; 36,607.
2000; Total net position; 42,276. 

2001; Total Liabilities and Net Position; 123,455.
2000; Total Liabilities and Net Position; 130,834.
End of financial statement one. 

Financial statement two:
U.S. General Accounting Office.
Condensed Statement of Net Cost.
For Fiscal Years Ended September 30, 2001 and 2000 (dollars in thousands). 


Net Costs by Goal:
Goal One: Well being/financial security of American people; 2001; 
161,112; 2000; 153,448. 

Goal Two: Changing security threats/challenges of global interdependence; 
2001; 93,440; 2000; 96,993. 

Goal Three: Results oriented and accountable federal government; 
2001; 139,459; 2000; 134,637. 

Goal Four: Maximize the value of GAO; 2001; 20,695; 2000; 19,760. 


Less: Reimbursable services not attributable to goals: 2001; (1,652); 
2000 (712). 

2001; Net Cost of Operations; 413,054.
2000; Net Cost of Operations; 404,126.
End of financial statement two. 

Financial statement three:
U.S. General Accounting Office.
Condensed Statement of Changes in Net Position.
For Fiscal Years Ended September 30, 2001 and 2000 (dollars in thousands). 


2001; Balances, Beginning of Fiscal Year; Cumulative Results of Operations; 
18,761.
2000; Balances, Beginning of Fiscal Year; Cumulative Results of Operations; 
17,328.
2001; Balances, Beginning of Fiscal Year; Unexpended Appropriations; 
23,515.
2000; Balances, Beginning of Fiscal Year; Unexpended Appropriations; 
22,777. 

2001; Reinstatement of the GAO Building and Land as Multi Use Heritage 
Asset; Cumulative Results of Operations; 0.
2000; Reinstatement of the GAO Building and Land as Multi Use Heritage 
Asset; Cumulative Results of Operations; 9,963.
2001; Reinstatement of the GAO Building and Land as Multi Use Heritage 
Asset; Unexpended Appropriations; 0.
2000; Reinstatement of the GAO Building and Land as Multi Use Heritage 
Asset; Unexpended Appropriations; 0. 

2001; Balances, Beginning of Fiscal Year, as Adjusted; Cumulative 
Results of Operations; 18,761.
2000; Balances, Beginning of Fiscal Year, as Adjusted; Cumulative 
Results of Operations; 27,291.
2001; Balances, Beginning of Fiscal Year, as Adjusted; Unexpended 
Appropriations; 23,515.
2000; Balances, Beginning of Fiscal Year, as Adjusted; Unexpended 
Appropriations; 22,777. 

Budgetary Financing Sources:
2001; Current year appropriations; Cumulative Results of Operations; 
0.
2000; Current year appropriations; Cumulative Results of Operations; 
0.
2001; Current year appropriations; Unexpended Appropriations; 384,020.
2000; Current year appropriations; Unexpended Appropriations; 377,561. 


2001; Appropriations used; Cumulative Results of Operations; 387,148.
2000; Appropriations used; Cumulative Results of Operations; 376,640.
2001; Appropriations used; Unexpended Appropriations; (387,148).
2000; Appropriations used; Unexpended Appropriations; (376,640). 


2001; Other; Cumulative Results of Operations; 0.
2000; Other; Cumulative Results of Operations; 0.
2001; Other; Unexpended Appropriations; 871.
2000; Other; Unexpended Appropriations; (183). 

Other Financing Sources: 
2001; Employee benefit costs imputed to GAO; Cumulative Results of 
Operations; 19,681.
2000; Employee benefit costs imputed to GAO; Cumulative Results of 
Operations; 19,009.
2001; Employee benefit costs imputed to GAO; Unexpended Appropriations; 
0.
2000; Employee benefit costs imputed to GAO; Unexpended Appropriations; 
0. 

2001; Other; Cumulative Results of Operations; 2,813.
2000; Other; Cumulative Results of Operations; (53).
2001; Other; Unexpended Appropriations; 0.
2000; Other; Unexpended Appropriations; 0. 

2001; Total Financing Sources; Cumulative Results of Operations; 
409,642.
2000; Total Financing Sources; Cumulative Results of Operations; 
395,596.
2001; Total Financing Sources; Unexpended Appropriations; (2,257).
2000; Total Financing Sources; Unexpended Appropriations; 738. 


2001; Net Cost of Operations; Cumulative Results of Operations; (413,054).
2000; Net Cost of Operations; Cumulative Results of Operations; (404,126).
2001; Net Cost of Operations; Unexpended Appropriations; 0.
2000; Net Cost of Operations; Unexpended Appropriations; 0. 


2001; Balances, End of Fiscal Year; Cumulative Results of Operations; 
15,349.
2000; Balances, End of Fiscal Year; Cumulative Results of Operations; 
18,761.
2001; Balances, End of Fiscal Year; Unexpended Appropriations; 21,258.
2000; Balances, End of Fiscal Year; Unexpended Appropriations; 23,515.
End of financial statement three. 

Financial statement four:
U.S. General Accounting Office.
Condensed Statement of Budgetary Resources.
For Fiscal Years Ended September 30, 2001 and 2000 (dollars in thousands). 


Budgetary Resources:
2001; Current year appropriations; 384,020.
2000; Current year appropriations; 377,561. 

2001; Transfers of budget authority; 983.
2000; Transfers of budget authority; 125. 

2001; Unobligated appropriations, beginning of fiscal year; 4,264.
2000; Unobligated appropriations, beginning of fiscal year; 4,477. 


2001; Reimbursements; 3,676.
2000; Reimbursements; 8,490. 

2001; Total Budgetary Resources; 392,943.
2000; Total Budgetary Resources; 390,653. 

Status of Budgetary Resources:
2001; Obligations incurred; 385,319.
2000; Obligations incurred; 386,081. 

2001; Unobligated appropriations, end of fiscal year; 7,512.
2000; Unobligated appropriations, end of fiscal year; 4,264. 


2001; Lapsed budget authority; 112.
2000; Lapsed budget authority; 308. 

2001; Total Status of Budgetary Resources; 392,943.
2000; Total Status of Budgetary Resources; 390,653. 

Relationship of Obligations to Outlays:
2001; Obligations incurred; 385,319.
2000; Obligations incurred; 386,081. 

2001; Obligated balance, net, beginning of fiscal year; 50,851.
2000; Obligated balance, net, beginning of fiscal year; 48,866. 


2001; Less: Obligated balance, net, end of fiscal year; (48,970).
2000; Less: Obligated balance, net, end of fiscal year; (50,851). 


2001; Total Outlays; 387,200.
2000; Total Outlays; 384,096. 

Outlays:
2001; Disbursements; 387,200.
2000; Disbursements; 384,096. 

2001; Collections; (3,676).
2000; Collections; (8,490). 

2001; Net Outlays; 383,524.
2000; Net Outlays; 375,606.
End of financial statement four. 

Financial statement five:
U.S. General Accounting Office.
Condensed Statement of Financing.
For Fiscal Years Ended September 30, 2001 and 2000 (dollars in thousands). 


Resources Used to Finance Activities:
Budgetary Resources Obligated:
2001; Obligations incurred; 385,319.
2000; Obligations incurred; 386,081. 

2001; Less: Reimbursements; (3,676).
2000; Less: Reimbursements; (8,490). 

2001; Net obligations; 381,643.
2000; Net obligations; 377,591. 

Other Resources:
2001; Employee benefit costs imputed to GAO; 19,681.
2000; Employee benefit costs imputed to GAO; 19,009. 

2001; Other; 2,813.
2000; Other; (53). 

2001; Net other resources used to finance activities; 22,494.
2000; Net other resources used to finance activities; 18,956. 


2001; Total resources used to finance activities; 404,137.
2000; Total resources used to finance activities; 396,547. 


Resources Used to Finance Items Not Part of the Net Cost of Operations:
2001; Net decrease (increase) in unliquidated obligations; 5,505.
2000; Net decrease (increase) in unliquidated obligations; (951). 


2001; Costs capitalized on the balance sheet; (13,983).
2000; Costs capitalized on the balance sheet; (9,204). 

2001; Total resources used to finance items not part of the net cost 
of operations; (8,478).
2000; Total resources used to finance items not part of the net cost 
of operations; (10,155).  

2001; Total resources used to finance the net cost of operations; 
395,659.
2000; Total resources used to finance the net cost of operations; 
386,392. 

Costs That Require Resources in Future Periods:
2001; Expenses to be funded by future appropriations; 298.
2000; Expenses to be funded by future appropriations; 1,159. 


Costs That Do Not Require Resources:
2001; Depreciation; 17,097.
2000; Depreciation; 16,575. 

2001; Net Cost of Operations; 413,054.
2000; Net Cost of Operations; 404,126.
End of financial statement five. 

The following text is the exact content of an original independent 
auditor's report letter sent by Cotton and Company LLP to GAO dated 
December 15, 2001. 

Cotton and Company LLP, established 1981.
333 NORTH FAIRFAX STREET, SUITE 401, ALEXANDRIA, VIRGINIA 22314.
(703)836-6701, Fax: (703)836-0941.
www.cottoncpa.com
dcotton@cottoncpa.com 

Auditors and advisors: David L. Cotton, CPA, CFE, CGFM; Charles Hayward, 
CPA, CFE, CISA; Michael W. Gillespie, CPA, CFE; Catherine L. Nocera, 
CPA, CISA; Matthew H. Johnson, CPA, CGFM; Sam Hadley, CPA, CGFM; Colette 
Y. Wilson, CPA; and Alan Rosenthal, CPA. 

Independent Auditor�s Report.
We audited the General Accounting Offices (GAO) Balance Sheet as 
of September 30, 2001, and the related Statements of Net Cost, Changes 
in Net Position, Budgetary Resources, and Financing for the year then 
ended. GAO�s financial statements as of September 30, 2000, and for 
the year then ended, were audited by other auditors whose report dated 
December 15, 2000, expressed an unqualified opinion on those statements, 
before the restatement of the Statement of Net Cost as discussed below. 


In our report dated December 15, 2001, we stated that we found:
The 2001 financial statements referred to above are fairly presented, 
in all material respects, in conformity with U.S. generally accepted 
accounting principles,
GAO maintained effective internal control over financial reporting 
(including safeguarding of assets) and compliance with laws and regulations 
as of September 30, 2001,
GAO�s financial management systems substantially complied with the 
applicable requirements of the Federal Financial Management Improvement 
Act of 1996 (FFMIA), and
No reportable noncompliance with laws and regulations tested. 


As discussed in our report, GAO changed its fiscal year 2001 presentation 
of net operating costs consistent with its strategic planning process, 
and restated the presentation of fiscal year 2000 costs for consistency. 
We audited the basis and methodology GAO used to restate the presentation 
of the fiscal year 2000 net operating costs. In our opinion, such restatement 
is appropriate and has been properly applied. 

In our opinion, the information set forth in the accompanying condensed 
financial statements is fairly presented, in all material respects, 
in relation to the financial statements from which it has been derived. 


We performed our audit and examinations in accordance with "Government 
Auditing Standards", U.S. generally accepted auditing standards, 
the American Institute of Certified Public Accountants� attestation 
standards, and Office of Management and Budget (OMB) Bulletin No. 01-02, 
"Audit Requirements for Federal Financial Statements". 


With respect to our opinion on internal control, misstatements, losses, 
or noncompliance may nevertheless occur and not be detected because 
of inherent limitations in internal control. Also, projections of any 
evaluation of internal control to future periods are subject to the 
risk that internal control may become inadequate as the result of changes 
in conditions, or that the degree of compliance with the policies or 
procedures may deteriorate. 

With respect to our opinion on GAO�s financial management systems� 
compliance with FFMIA, our examination does not provide a legal determination 
of GAO�s financial management systems compliance with specified requirements. 


We are 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 those laws 
and regulations required by OMB audit guidance that we deemed applicable 
to the financial statements for the fiscal year ended September 30, 
2001. We caution that noncompliance may occur and not be detected by 
these tests and that such testing may not be sufficient for other purposes. 
Our conclusion on compliance with laws and regulations is intended solely 
for the information and 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. However, this report is a matter of public 
record and its distribution is not limited. 

Cotton and Company LLP
Signed by: Charles Hayward, CPA, Alexandria, Virginia, December 15, 
2001.
End of independent auditor's report letter.