The results of many of these audits will be presented in reports to be published during the next fiscal year. The nature of GAO's audit operations are described at length in Chapters Four, Five, Six and Seven.

A total of 975 formal audit reports, relating to almost every aspect of Federal Government operations, were issued, as follows:

173 reports were sent to the Congress, all of which are also available to the public except those classified for national security reasons. Reports on audit findings, conclusions, and recommendations are submitted by the Comptroller General to the Congress when required specifically by law and when they are judged to be of such significance as to warrant the attention of the Congress.

287 reports were sent to congressional committees, officers of the Congress, or individual Members in response to requests for special audits or investigations, inquiries, or other types of informa tion.

515 reports were sent to Federal department and agency officials. These reports contain audit findings, conclusions, and recommendations calling for agency attention and action but not deemed to be of sufficient significance to address to the Congress. However, copies of many of these reports are also sent to congressional committees interested or concerned with the subject matter.

Almost all GAO reports present information, and recommendations where appropriate, relating to the manner in which Federal agencies manage, administer, and report on their programs and operations.

The following listing of selected reports issued to the Congress during fiscal year 1971 provides a quick grasp of the variety, range, and depth of GAO's audit work.

Health and Safety

Problems in Providing Proper Care to Medicaid and Medicare Patients in Skilled Nursing Homes.

Ways To Reduce Payments for Physician and X-ray Services to Nursing Home Patients Under Medicare and Medicaid.

Substantial Cost Savings From Establishment of Alcoholism Program for Federal Civilian Employees.

Problems in Implementation of the Federal Coal Mine Health and Safety Act of 1969. Procurement

Multiyear Leasing and Government-Wide Purchasing of Automatic Data Processing Equipment Should Result in Significant Savings.

Application of "Should Cost" Concepts in Reviews of Defense Contractors' Operations.

Opportunities for Savings by Increasing Competition in Procurement of Commercial Equipment.

Price Increase and Change in Criteria for Uranium Enrichment Services.

Evaluation of Information From Contractors in Support of Claims and Other Pricing Changes on Ship Construction Contracts.

Acquisition and Use of Software Products for Automatic Data Processing Systems in the Federal Government.

More Competition in Emergency Defense Procurements Found Possible.

Fair Prices Paid for Small Purchases by the Department of Defense.

Manpower Training

Opportunities for Improving Training Results and Efficiency at the East Bay Skills Center, Oakland, Calif., under the Manpower Development and Training Act.

Evaluation of Results and Administration of the Job Opportunities in the Business Sector (JOBS) Program in Five Cities.

National Defense

Acquisition of Major Weapon Systems.

Potential for Improvement in Department of Defense Maintenance Activities Through Better Cost Accounting Systems.

International Activities

Opportunities for Better Use of U.S.-Owned Excess Foreign Currency in India.

Improved Financial Administration and Revision of Fees Needed-Consular Services Program.

Long Missing Government-Owned Materials in Vietnam Still Unaccounted For.

Other

Administration of Metroliner and Turbo-Train

Projects.

Audit of Federal Deposit Insurance Corporation for the Year Ended June 30, 1970, Limited by Agency Restriction on Access to Bank Examination Records.

Postage Due and Handling Costs for Processing Mail With Insufficient Postage Are Not Being Recovered.

Management of Federally Financed Research by the University of Michigan-A Case Study.

Access to Agency Records

During the year, GAO experienced increased difficulties in obtaining access to agency information and documents needed to carry out its responsibilities. These difficulties occurred principally in relation to international matters. The Departments of Defense and State have applied procedural restrictions in the foreign affairs area on an increasing scale. These retrictions have had the effect of seriously hampering the efficient and effective conduct of GAO audit work in a field in which there is increasing congressional interest.

Absolute denial of access to documents is rare but the restrictions imposed on obtaining access to them results in obstruction and delay and impairs our capability to serve the Congress as intended. Complete information on our access-to-records problems has been presented to three Senate committees. (See Chapter Two.)

Legal Services

The Comptroller General of the United States is responsible on behalf of the Congress for determining, with certain exceptions, the legal propriety of executive branch expenditures.

GAO's legal services cover a wide range of subject matter and activity. Legal assistance is furnished in the form of formal decisions, comments on proposed legislation, and internal advice on GAO audit findings. To appreciate the range of GAO's legal activities, it is necessary to reflect upon the growing complexity of the legislative approaches being taken to deal with our social, political, economic, and military needs and to recognize that GAO is responsible for determining the legality of a major portion of all Government expenditures.

Within the broad areas of civilian personnel, military personnel, contracts, transportation, and general Government matters, over 400 legal decisions a month are prepared by our Office of the General Counsel. This work involves all fields of law and requires expertise in statutory construction procedure, evidence, and contract interpretation.

During fiscal year 1971, decisions issued by the Comptroller General and other legal matters handled by the legal staff totaled 5,612. Included in this output were 643 reports on proposed legislation and 427 advisory legal opinions to congressional committees or Members of Congress. Also included were 77 reports for the Office of Management and Budget.

More complete information on GAO's legal services is included in Chapter Nine.

Financial Management Improvement

Under the Budget and Accounting Procedures Act of 1950, GAO assists agencies in the improvement of their accounting systems and approves these systems when they are deemed adequate and in conformity with principles and standards prescribed by the Comptroller General.

In fiscal year 1971, GAO approved the designs of nine complete accounting systems, six parts or segments of systems, and 12 statements of accounting principles and standards submitted by civil and international departments and agencies.

Of 148 civil and international department and agency accounting systems subject to approval, the complete accounting systems designs of 80 organizational entities had been approved as of June 30.

No accounting systems were approved for the Department of Defense during the year.

Details of GAO's work in this area will be found in Chapter Three.

Transportation

In meeting its responsibility for determining the correctness of charges claimed for freight and passenger transportation services furnished the United States, GAO audited $2 billion in transportation charges this year. This amount consisted of $1.2 billion paid for 5.3 million freight shipments and $800 million for 2.9 million passenger movements.

A total of 102,326 claims of overcharges by the United States against carriers were settled for $16 million, while 15,957 claims against the United States by carriers were settled for $18.87 million.

Assistance was furnished to the Department of Justice in some 22 legal actions involving claims against the United States for approximately $353,646 covering 1,254 shipments. Twenty-seven suits, the subject of reports in this or prior years, were settled for about $185,000, or about $322,000 less than claimed.

Carriers filed 401 suits covering 230,100 shipments. Three hundred and seventy-five of these suits and about 228,333 of the shipments covered overseas movements of household goods by the Department of Defense. The amount sued for is not stated in the petitions. However, court decisions have been rendered in connection with certain issues common to the 795 household goods suits filed to date. Using these decisions and other issues raised in the case, GAO estimates potential liabilities to the Government of nearly $10 million if the final rulings of the Court are adverse to the Government. (For details see Chapter Seven.)

Claims Settlement and Debt Collection

General claims against the United States in fiscal year 1971 involved Government contracts, compensation due civilian employees (including overtime and premium pay), quarters and cost-of-living allowances, travel, transportation of household effects, per diem, allowances on changes of official station, pay and allowances due military personnel, retired pay, compensation due deceased civilian officers and employees, pay due deceased members of the Armed Forces and National Guard, and miscellaneous claims by Government personnel and public creditors.

GAO settled 8,686 claims against the United States for $117.8 million and collected 20,394 claims by the United States totaling $2.9 million. At the end of the year 7,853 claims under collection represented accounts

receivable of about $5.4 million. GAO reported 2,084 claims to the Department of Justice for collection by suit. (For details see Chapter Eight.)

Operating Expenses

Operating expenses for fiscal year 1971 amounted to $79.8 million. Approximately 83 percent of this amount $66 million-was for salaries and other personnel costs.

Financial statements showing our financial position, summary of operating expenses, and sources and application of funds are included in this report as Exhibits 7, 8, 9, and 10.

Staffing and Training

At June 30, we had 4,751 employees, an increase of 119 over the number at the end of the previous year. Of the total, 2,989 were members of the professional staff representing nearly a dozen different disciplines. Over 3,100 members of our staff were provided with special training during the year through our own training facilities. About 1,400 staff members participated in training or career development programs conducted in other agency or non-Government facilities. (See Chapter Ten.)

Organization

An organization chart for the General Accounting Office at June 30, 1971, appears on page 8. Such charts for the principal divisions and offices of GAO appear in the chapters of this report in which their activities are discussed.

As of July 1, 1971, several changes in our organizational structure became effective. These are impor tant enough to highlight here since they were made for the purpose of strengthening our operating and planning capabilities.

The Office of Policy and Program Planning was formed to:

Advise and assist the Comptroller General and the Deputy Comptroller General in (1) policy formulation, guidance, and review with respect to all GAO functions, (2) establishing long-range objectives and direction-of-effort planning, and (3) formulating the annual budget.

Conduct internal reviews of all GAO operations.

449-406 O-72-2

Coordinate the preparation of GAO publications as assigned by the Comptroller General, including the Comptroller General's Annual Report and The GAO Review.

The audit policy functions of the former Office of Policy and Special Studies and the functions of the former Program Planning Staff were transferred to the Office of Policy and Program Planning.

The Division of Financial and General Management Studies was created to carry on the remaining functions of the former Office of Policy and Special Studies, as follows:

Financial management improvement
ADP studies

Systems analysis

Actuarial work

Statistical sampling advisory services
Intergovernmental relations

The Office of Policy and Special Studies (originally established in 1956 as the Accounting and Auditing Policy Staff) and the Program Planning Staff (established in 1966) were superseded by the new organizations.

To head up the new organizations, the following were designated:

E. H. Morse, Jr., formerly Director, Office of Policy and Special Studies, to be Director, Office of Policy and Program Planning.

Donald L. Scantlebury, formerly Manager, Washington Regional Office, to be Director, Division of Financial and General Management Studies.

The internal review function assigned to the Office of Policy and Program Planning will be concerned with examining operations and performance of all GAO divisions and offices and preparing reports for the Comptroller General and the Deputy Comptroller General. It will include:

Evaluating GAO performance under established policies and procedures, and identifying ways of achieving more effective, efficient, and economical performance.

Examining and evaluating the extent and nature of compliance with prescribed GAO policies, plans, and procedures.

Reviewing the system of management controls over operations and resources.

Examining accounts, financial transactions, and other management reports from the standpoint of reliability and usefulness.

Making specific examinations requested by the Comptroller General.

Lloyd G. Smith, formerly an associate director of the Civil Division, has been designated deputy director for internal review, Office of Policy and Program Planning, to be responsible for carrying out this important function.