CHAPTER ONE

HIGHLIGHTS OF ACTIVITIES FOR THE YEAR

Basic Responsibilities

The General Accounting Office operates in the legislative branch of the Federal Government and carries out several interrelated functions that are assigned by law:

Assisting the Congress in its legislative and oversight activities.

Providing legal services.

Auditing the programs and operations of Federal departments and agencies.

Assisting in the improvement of Federal agency financial management systems.

Settling claims and collecting debts.

GAO came into existence as an independent, nonpolitical arm of the Congress when the Budget and Accounting Act of 1921 was enacted. Two basic purposes underlie all activities of the Office:

Providing as much assistance to the Congress, its committees, and Members as it can, consistent with its responsibilities as an independent, nonpolitical agency.

Stimulating constructive actions that contribute to making Government operations more effective and more efficient.

Reorganization

During 1972 a major change was made in the organizational structure of the Office to strengthen and

improve its capability to carry out its assigned functions. This change represents the first major reorganization of the Office in over 15 years and will have an increasingly important bearing on the way in which the work of the General Accounting Office is carried out in future years. For these reasons the reorganization, which became effective April 3, 1972, is described in this chapter.

The former Civil and Defense Divisions were abolished and replaced by six new auditing divisions, each having Government-wide responsibility for assigned programs or functions. These six new divisions are: Logistics and Communications Division Procurement and Systems Acquisition Division Federal Personnel and Compensation Division Manpower and Welfare Division

Resources and Economic Development Division
General Government Division

The functions of the Financial and General Management Studies Division which was established on July 1, 1971, as described in the 1971 annual report, were expanded to include responsibility for GAO reviews of accounting systems in operation and settlement of the accounts of the Government's accountable officers except for military disbursing officers. These functions had previously been assigned to the Civil, Defense, and International Divisions.

The Transportation Division and the Claims Division were merged into a single division and the transportation and traffic management review functions performed by the former Transportation Division were assigned to the new Logistics and Communications. Division. The purposes of this change were (1) to concentrate all aspects of Government logistics—including the related functions of transportation, warehousing, distribution, and inventory control-in one audit division and (2) to provide better long-term opportunities for the utilization and development of the personnel assigned to the important claims and transportation payment audit functions.

The Field Operations Division remained unchanged except that it is now responsible for the annual audit of designated Government corporations and other business-type activities and the settlement of the accounts of military disbursing officers.

The International Division remained unchanged except that the responsibility for reviewing accounting systems in operation and related settlements with accountable officers was transferred to the Financial and General Management Studies Division.

The Office of Policy and Program Planning, established July 1, 1971, was divided into three new staff offices: the Office of Policy, the Office of Program Planning, and the Office of Internal Review.

Three new positions of Assistant Comptroller General were established.

One Assistant Comptroller General is responsible for the operations of the Financial and General Management Studies Division, the Logistics and Communications Division, the Procurement and Systems Acquisition Division, and the Federal Personnel and Compensation Division.

Another Assistant Comptroller General is responsible for the operations of the Manpower and Welfare Division, the Resources and Economic Development Division, and the General Government Division.

These two Assistant Comptrollers General are direct line representatives of the Comptroller General and are responsible for overseeing and assisting the divisions assigned to them. However, it is intended that the division directors have maximum latitude in identifying the most fruitful audit areas, preparing and executing audit plans, preparing reports, defending their reports before review groups, and representing GAO with the Congress and top agency officials.

The third Assistant Comptroller General is responsible for the direction and supervision of the Office of Policy, the Office of Program Planning, and the Office of Internal Review.

The new Office of Federal Elections was established to discharge the Comptroller General's responsibilities under the Presidential Election Campaign Fund Act and the Federal Election Campaign Act of 1971. (See p. 4 of this chapter and Chapter Three.)

The chart on page 2 depicts the broad outline of our new organizational structure and identifies our top officials as of June 30, 1972.

The foregoing changes in our organization were in large part the outgrowth of an internal study by a committee headed by Deputy Comptroller General Robert F. Keller. One conclusion of his committee was that the accounting and auditing divisions of GAO should be organized on a management function and program basis. Our 1972 reorganization reflects acceptance of this conclusion. In announcing the details of the reorganization, the Comptroller General identified four benefits expected to be achieved:

First, accelerate the growth of program and functional expertise among our senior staff. If we are

to respond to the demands for broad-based and program-type reviews, our senior staff must achieve a high degree of specialization in the subject matter of the areas assigned to them. We began moving in this direction in the Defense Division in 1966 when operating groups were established in functional areas such as manpower, procurement, research and development, etc.

Second, provide more opportunities for staff growth and advancement. To do the quality of work, and make the creative contribution which is being demanded of GAO, we need to attract and retain professional personnel with outstanding capabilities and motivation-and to expand the opportunities for their advancement. I believe that our present divisional structure unnecessarily limits such opportunities. Congress has recently granted me authority to appoint up to five Executive-level Assistants in addition to our regular supergrade allocation. This new authority, plus the establishment of more divisions, will enable us to create additional positions at the Associate Director level and above.

Third, facilitate the timely completion of our work. The increased demands on Washington operating divisions tend to delay the timely completion of audit reports. Recent studies show that as much as 1 year elapses after completion of work in the field before the issuance of reports to the Congress. By creating more divisions to oversee the planning and execution of surveys and reviews, in collaboration with the regions, I believe that we can accelerate the completion of our reports.

Fourth, assist the Comptroller General to deal with his expanded responsibilities. At the same time that the variety and complexity of our accounting and auditing responsibilities have been increasing, the Comptroller General and his immediate office have become involved in new and important but very time-consuming responsibilities-the Cost Accounting Standards Board, the Procurement Commission, the Presidential Campaign Fund Act, and the Federal Election Campaign Act. These assignments are either not delegable, or they require the Comptroller General's personal attention. Hence, the Comptroller General needs additional top-management support in order to discharge his responsibilities effectively. One feature of our reorganization deserving special comment pertains to the establishment of a separate division concerned with Government procurement. Such procurement amounted to over $56 billion last

year, a substantial portion of the total Federal budget. It is extremely important that procurement activities be carried out as economically and efficiently as possible and that the Federal agencies follow common procurement practices whenever feasible. By concentrating in one division GAO activities pertaining to Federal procurement principally the operations of the Department of Defense, the General Services Administration, the National Aeronautics and Space Administration, and programs of other Federal agencies which involve substantial procurements including the acquisition of major systems-we believe that we can do a much better job for the Congress and the taxpayer in reviewing and reporting on the conduct of these operations. In addition, it will provide a focal point. for followup on recommendations to be made by the Commission on Government Procurement which will make its report to Congress in December 1972.

Federal Election Responsibilities

Since our last annual report, two Federal laws came into being which injected the Comptroller General and GAO into new machinery for financing and controlling campaign expenditures for Federal elections. These laws are the Presidential Election Campaign Fund Act, approved December 10, 1971, and the Federal Election Campaign Act of 1971, approved February 7, 1972.

The responsibilities assigned to us by these laws are entirely new to our traditional functions and operations. Because of their unique character, as part of our 1972 reorganization changes, we established a separate Office of Federal Elections. The responsibilities and operations of this office are described in Chapter Three.

Highlights of Operations for the Year

Accounting for and reporting on the activities of GAO statistically do not convey the most meaningful picture of our operations and our capabilities to assist the Congress in its legislative and oversight activities. However, statistics are useful in providing some insight into the volume of work performed and the variety of activities carried out.

Assistance to the Congress

Our efforts to serve the needs of the Congress continued to increase during the year. One measure of

this increase is the fact that 479 audit reports (an increase of 19 over the previous year) were sent to the Congress, its committees, and Members. Many other services were also provided, such as making special studies, supplying information, drafting legislation, and assigning staff members to work with congressional committees.

During fiscal year 1972:

GAO representatives testified on 38 occasions before congressional committees.

GAO staff members were assigned to the staffs of 22 committees or subcommittees.

528 reports were furnished to committees on pending bills-337 to the Senate and 191 to the House.

Overall, more than 25 percent of our professional staff's time was spent in direct assistance to the Congress.

A more complete discussion of our assistance to the Congress will be found in Chapter Two.

Legal Services

In carrying out his responsibility on behalf of the Congress to determine the legality of executive branch expenditures, the Comptroller General decides legal issues affecting virtually all of the Government's activities.

GAO's legal services directly or indirectly involve the full range of proposed or enacted social, economic, political, and military legislation. Legal assistance is furnished by formal decisions, comments on pending legislation, and internal advice to GAO operating divisions covering the resolution of legal issues in diverse fields of law.

During fiscal year 1972 our legal staff handled over 5,000 cases, the majority of which resulted in formal decisions prepared in the Office of the General Counsel and issued by the Comptroller General. Those decisions are final and conclusive upon the executive branch of the Government. Included in this total were 528 reports on proposed legislation, 405 advisory opinions to congressional committees or Members of Congress, and 74 reports to the Office of Management and Budget.

More complete information on our legal services is included in Chapter Four.

Auditing

GAO is perhaps most widely known for its audit