The GAO Review Summer 1985

Contents Volume 20 Issue 3

1 From Our Briefcase Federal and State Legislative Issues - 1985 and Beyond Intergovernmental Reference Sources Federal Waste Receding With Effective Detection Critical Thinking Is Career Key Review Is Read ‘Down Under’ New Ideas Sought

4 On Location GAO Awards Ceremony: 1984 Public Management: Strength Through Change GAO’s Second Annual Management Meeting Cincinnati Staff Inspect Houses

,J 8 0350 f4 5’- 1 Can An Auditing Organization Become ‘Sporty?’

9 Manager’s Corner Executive Leadership

10 Q3WtfG : Topics in Evaluation Secondary Analysis Strategy Carl E. Wisler

12 os3047 -/Government: A Financial Management Control Perspective John R. Cherbini

17 03y3Y- x * ,,,,’Auditingat the FBI: A Unique Experience Michael A. Burnett

1, 20 S83Qyq Motivating Subordinates: Making It Work Sande Lehrer

24 o?’i;oY* Governiltlg and the Media: A Forum With David ergen and Jody Powell Edited by Robert Levin

i I

I The GAO Review Summer 198&

Contents Volume BO Issue 8

27 033 05- I ’ Using the Computer in GAO Analysis: New Insights, New Unoertainties David F. Fiske

29 o’;;%%a Cleaning Out the Nation’s Attic: GAO Helps the Comptroller of the Currency Rachel B. Hathcock

31 S3305-3 Auditing. Long-Range Forecasts: Why Actuarial Assumptions Cannot Be Classified as Right or Wrong Antone Reeder

33 A Week’s Worth Becki Sue Hill

35 os30 $9 Legislative Developments

39 Bookmark ‘ Retirement Security and Tax Policy ’ By Sophie M. Korczyk Reviewed by Robert A. Katcher

40 GAO Staff Changes Senior Staff Changes Additional Staff Changes New Staff Members Attritions Retirements Deaths

45 Professional Activities

ii From Our Briefcase

Federal and State edition of the newsletter, entitled State chronicling intergovernmental events Legislative Issues Policy Reports, refers to the list and and pointing the way to change. Each - reports on these issues. issue contains articles on current 19S5 and Beyond The fact that education, the environ- issues and views. For example, the ment, and health care may be charac- summer 1984 issue contained articles Although the legislative sessions of terized as “non-fiscal” issues doesn’t on mass transit, financing trends, and 1985 are likely to concentrate on fiscal mean they lack financial ramifications, the state and local tax-limitation move- issues, many other issues will command only that their resolution will typically ment. For more information, call AClR attention. “Briefcase” discusses some take the form of bills not under the jur- at (202) 653-5640. of these issues in the following isdiction of the state legislative com- paragraphs. mittees that handle appropriations. For Government Finance Review example, questions about education Federal View continue to be raised by the educational This bimonthly publication of the quality movement; some states are set- Government Finance Officers Associa- At the federal level, energy, health, ting requirements affecting eligibility tion highlights key issues and statistics the environment, and genetic engineer- to participate in extracurricular activ- on state and local government finances ing served as focal points at a January ities. In many states, the environment and provides an annotated bibliography seminar for newly elected Members of is at issue because major chemical of recent books and journal articles in the Congress. The new Members met facilities pose regional safety dangers. the field. Recent issues covered such with some of the nation’s top scien- In addition, controlling health-care topics as state and local capital- tists to seek improvements in the tech- costs remains a preoccupation of budgeting trends and problems faced nical sophistication that will improve many state legislatures. Developing by states in matching federal highway the writing of laws in non-fiscal areas. adequate cost-containment strategies construction grants. For more informa- According to an article in the January presents difficult choices. Possible ap- tion, call Rebecca Russum at (312) 30, 1985, Washington Post, some new proaches range from using competi- 977-9700. avenues of research will likely affect tion to hold down prices to treating the legislative agenda of the mid-1980’s. health care as a public utility. SIAM Intergovernmental News They include: For more information, write for State Unraveling the biological action of Legislative Interim Study Activities This is a quarterly publication of the parasitic diseases whose causative - 7984 from The Council of State Govern- Section on Intergovernmental Adminis- microbes are major killers in the tropics. ments, Iron Works Pike, P.O. Box 11910, tration and Management of the Ameri- If developing countries can be freed Lexington, KY 40578. For a copy of can Society for Public Administration. from plagues, their prospects for eco- State Policy Reports, contact State In addition to news and notes on recent nomic development could be improved. Policy Research, Inc., 7706 Lookout intergovernmental developments, it Explaining the nature of “quarks” Court, Alexandria, VA 22306, (703) has covered such recent issues as and other subatomic particles in matter. 765-8389. state block grant management and High-energy physics has been a source trends in states’ relationships with of revolutionary practical advances in Intergovernmental local governments. For more informa- i nd us t ry . tion, contact the editor, John Kamen- Evaluating the risks posed by toxic Reference Sources sky, HRD, at (202) 275-6169. substances. Nuclear waste disposal practices could be directly affected. GAO’s Intergovernmental Relations State Policy Reports Assessing the state of current oil Group within the Human Resources reserves. An energy crisis may make it Division (HRD) subscribes to useful This is a biweekly series that dis- reasonable to develop costlier methods reference materials on federallstatel cusses trends in state policies and to force oil reserves out of the ground. local issues. Evaluators needing infor- management. Recent issues included The seminar was sponsored by the mation on, for example, state and local in-depth analyses of state health care National Academy of Sciences, the public interest groups or contacts in cost containment strategies and the American Chemical Society, and sev- state fiscal and program offices can eral other scientific societies and high- effects of court rulings on state budget visit headquarters, room 3350, or call priorities. For more information, con- tech corporations. Paul Posner and his staff at (202) tact State Policy Research, Inc., at 275-0547. The Review thanks Paul for (703) 765-8389. State View providing the following information, which should be helpful on many types At the state level, other studies indi- of assignments. Federal Contracts Report cate that education, the environment, and health care will be the top issues Intergovernmental Perspective This weekly publication of the Bureau for 1985. These issues lead the list of National Affairs details the latest compiled by The Council of State Gov- This is a quarterly magazine pub- congressional and federal agency ac- ernments in its annual tracking of lished by the U.S. Advisory Commission tions pertaining to grants management special studies commissioned by state on Int erg overnment a1 Relations (ACIR) and federal procurement policy. For legislatures. The December 24, 1984, which, in 1984, marked its 25th year of more information, contact Sheila

GAO Review/Summer 1985 1 4 Quigley at (202) 452-4200. tions have been obtained in the past Knowlton aimed this good advicy at 3% years, including 2,023 of them in undergraduate students in the Novem- Nation’s Cities Weekly the most recent 6 months. This in- ber 1984 Stanford Observer. Nonethe- crease is due, at least in part, to the less, by liberally substituting the words This weekly paper, published by the growing expertise of IG auditors and “auditing” for “liberal arts degree” and National League of Cities, highlights investigators, who are using more “assignment” for “course” or “class,” federal actions in key programs affect- sophisticated tools and applications readers can well apply his thoughts to ing cities, such as general revenue to broaden the activities surveyed and a career in such settings as GAO, an sharing, community development, and boost the success rate. For example, executive agency or professional asso- transportation. For more information, microcomputer technology, first in- ciation, and state or local government. contact Raymond Dick at (202) 626-3040. troduced 2 years ago, is now being Knowlton says that reading, writing, used by every IG, and more than 2,500 and critical thinking will never be ob- Publius: The Journal IG professionals are trained to make solete. These skills may seem less sub- of Federalism full use of microcomputers. stantive when compared to skills, such Since March 1981, PClE and actions as programming or bridge-building, This is a quarterly academic journal of its member IGs have resulted in $46 that one learns in engineering classes. devoted exclusively to the analysis of billion in federal funds being put to Because of the rapid progress of tech- federalism issues. Articles include dis- better use. Of that, a record $9 billion nology, however, many engineering cussions of federalism theory, analysis was the result of actions in the most skills become obsolete in 7 years. of federal intergovernmental programs recent 6-month period. Beginning in He also offers the following career and policies, and assessments of fis- fiscal year 1986, IG recommendations g u ideli nes. cal and managerial trends at the state will be considered during the reviews ‘Who’s going to pay me to read, and local levels. For more information, of agencies’ budgets. write, and think?’ ‘I need specific contact Ellis Kotz at the Center for the Increasingly, the IGs are concentrat- training to get a job. ’ To be honest, Study of Federalism, Temple Univer- ing their efforts on working as part of few people are going to pay you to sity, at (215) 787-1480. agencies’ management. These efforts read, write, and think about are a key in affecting internal agency whatever you choose. However, programs and budget and legislative many will pay you well to read, Federal Waste Receding initiatives and in developing sound and write, and think, and then make With Effective Detection realistic recommendations that affect decisions based on your thinking future agency actions and laws. For ex- about matters important to them. In a January 1985 report, the Presi- ample, the Department of Health and Analysts, managers, corporate dent’s Council on Integrity and Effi- Human Services’ IG recommended the executive officers, bakery owners, ciency (PCIE) noted that the federal development of a new reimbursement and salesmen all have to gather government is gaining ground in the system to reduce Medicare lab pay- the information, make a decision, fight against waste and fraud by more ments. Subsequently, the Deficit and then communicate that deci- effective detection and prosecution of Reduction Act of 1984 included a provi- sion, most often by writing it. wrongdoers and by teaming with agen- sion to lower Medicare payment rates cy managers to prevent waste and for lab services. Medicare savings are ‘But don’t I need specific train- fraud from occurring in the first place. estimated by the Congressional Bud- ing to work at a job, specific train- “Our battle with waste and fraud in get Office to be $974 million over a ing that a liberal arts degree can- the federal government has become a 5-year budget implementation cycle. not provide?’ You are absolutely very successful campaign,” said Two separate reports are available, correct. The training you need is Joseph R. Wright, Jr., chairman of PClE one on PClE activities in the period so specific that no university or and deputy director of the Office of April through September 1984, the college could provide you with the Management and Budget (OMB). “Vastly other a report on the cumulative skills you need. Each company is increased effectiveness of the Inspec- accomplishments of the Council since different; Genera I Motors has tors General (IGs) in detecting and its creation in March 1981 and on different methods and policies prosecuting offenders is beginning to future PClE directions. For copies, con- than Ford. When you go to work change the public perception that gov- tact OMB at (202) 395-7381. for a company, they are going to ernment is an easy mark. At the same train you; they expect you to have time, the IGs have become true partners the skills to learn quickly. That is, with management in identifying and Critical Thinking they expect you to be able to read, eliminating potential vulnerabilities Is Career Key write, and think critically. For ex- before serious problems develop. Now ample, IBM figures it takes new that is how to make real progress in The processes of deciding on or pur- employees nearly three years to this tough area,” he stated. suing a career share a common core learn the technical background of Successful prosecutions increased formed of several key skills. Whether a product. You could never get 15 percent in the second 6 months of you are a recent college graduate plan- that specific information about an fiscal year 1984 over the previous ning to become an accountant or an IBM product at any other place but 6-month period, a record for any similar experienced government executive an IBM school. period since President Reagan created seeking a promotion, employers ex- In short, don’t let your anxiety PClE in March 1981. It is a clear signal pect you to be able to read, write, and about your future career unduly to potential offenders that those who think critically. According to Jeffrey sway your choice of major. A seek to cheat the federal government Knowlton, a statistician from Federal liberal arts degree does not are more likely to get caught than ever Way, Washington, these skills are necessarily condemn you to a life before - and to be convicted and rooted in a liberal arts education. They of poverty, nor does it force you to punished. should be bolstered by basic business go to law school or business A total of 10,262 successful prosecu- and technical skills. school to avoid poverty. If you are

2 From Our Briefcase

b %onsidering pursuing a liberal arts in the permanent archives” of GAO. We anyone. An informal, featurish degree, and if you are concerned always appreciate such kind words! style is not appropriate. about your future employment, But, what happens when we receive An article for The GAO Review, you should know that most com- a draft we can’t use? Perhaps an issue however, must ’capture’ an au- panies like the broad background is full or the topic is not exactly right dience that hasn’t asked for a liberal arts graduate brings to for the Review. For Jack Pivowar, Re- anything - an audience which the job. They are looking for some sources, Community, and Economic may or may not be interested in basic business and technical Development Division, a “reject” what you have to say. It’s up to skills to accompany the liberal turned into two separate citations in you to determine your audience arts degree, too. These include the 1984. When we couldn’t use the topic and write the article with a slant equivalent of one course each in in the GAO Review, we encouraged him that will sell it. That is, your article statistics, computer science, basic to share his draft on the legal ramifica- has to have a wide enough appeal economics, and accounting. In tions of car pooling with the The GAO to make your audience, in this general, though, study what you Network newspaper and some outside case all GAO employees and will; if you are truly interested in publications. Jack took the suggestion many national and international engineering, study engineering. If and contacted the Network and the readers, want to read it. you have a fetish for physics, study American Automobile Association Don’t despair. Simply dial your unit’s physics. If you have a fancy for (AAA). His original article appeared, Review liaison (whose name appears in literature, study English. Allow with very minor changes, in the Net- the back inside cover of each issue), your mind to roam; sample.. . work’s fall 1984 issue and in the your unit’s writerleditors, or the Assis- many delicious intellectual offer- January 1985 AAA World. tant Editor. We can help develop your ings. Take a class on Renaissance idea, choose a slant, prepare an out- poets, or the philosophy of Nietz- New Ideas Sought line, even write your article. And don’t sche, or Greek vase painting, or think your topic is too narrow. The thermodynamics, or 18th century With author success stories in mind, Review has published articles ranging Russian history. . . to indulge and it seemed timely to publish an item on from nuclear waste to child care, and broaden your mind. Some.. . submitting articles to the Review. their respective ramifications. courses may even change the way Writing for the Review is a positive Once your article has been written, you think about the world. career activity that enhances your visi- we will help you choose illustrations to Besides, you’ll do better in the bility at GAO and allows others to complement your text. We’ll coordinate classes you’re interested in, and benefit from your work. The following any other graphics needs with the that will help you get a good job. thoughts are adapted from the spring photographer and designers from the 1979 issue: Visual Communications Branch and Review Is Read monitor your article’s progress through ‘Down Under’ Have you ever read a somewhat the production stages of typesetting, bland article in The GAO Review layout, and printing. and thought, ‘I can do better than So, if you have an idea for an article When you contribute to the Review, this’? An idea forms; sentences that you think would appeal to Review you never know where your article will take shape; you write. But later, readers, submit a proposal memo to be read, or who will read it! We recently when you read your words, you the Assistant Editor, room 7131. It received a call from Kansas City see, to your chagrin, something needn’t be long, but it should give us Regional Office writerleditor Marge that still resembles a GAO report an idea of what you’d like to say. GAO Vallazza, whose “Week’s Worth” fea- - not the featurestyle article you Order 1551.1 offers guidance on ture appeared in the summer 1984 thought you were writing. Review proposals and articles. After issue. She had received a call from a Where did all the flowing sen- considering your topic, we will call you fellow editor in the Auditor’s Office of tences go? Why couldn’t you put it to discuss your article and set a dead- the State of Victoria, Australia. The all on paper? You read what line for a “best and final” draft. You’ll caller, who inquired about Marge’s role you’ve written and it doesn’t even have a very good chance of seeing it in in report review conferences and writ- say what you meant! print thereafter. ing training, wanted to set up similar activities in Australia. You’re not alone. But at least The Review is mailed to some 1,600 you recognize your problem. Many readers in the United States and over- people spend years writing Govern- seas, to federal agencies, national and ment reports to please their state audit offices, businesses, profes- bosses and not themselves, and sional associations, and universities. find it difficult to rid their writing In addition, it is read by GAO staff and of bureaucratic language often alumni, who sometimes write to us, used not to inform but to impress. too. For example, Mrs. Margaret L. Or maybe you’ve deleted all the Macfarlane, who retired as chief of the meaningless words and phrases Legal Reference Services in the Office and still think there’s something of the General Counsel (OGC), enjoyed wrong. You’re on the road to the fall 1984 issue entitled “Historical recovery if you’ve recognized that Perspectives on GAO.” She thought the formal style of a GAO report is, that the articles by Elizabeth Poel (Of- indeed, not always best for a fice of Policy), on Harry Truman, and by Review article. A GAO report is not Eric Green (formerly of the Writing necessarily written to ‘grab’ the Resources Branch), on GAO’s roots “are reader but to give straight facts. It great and worthy of important places doesn’t have to be ’sold’ to On Location

GAO Awards Ceremony: their contributions toward keeping the servant, Comptroller General Bowsher I984 public informed are taken for granted. said in presenting the award. “Where- These negative characterizations are ever he has served, Mr. Flemming has The focus of attention was on the 62 unfair, Wicker said, but he saw little contributed his unflagging energies, individuals receiving awards at the hope of changing the public’s percep- his quick, sound decisions,. . .and will- November 28, 1984, GAO Awards Cere- tions because they are too deeply ingness to follow through on what he mony, from the cover of the program, rooted. What we in public service and has started. It is this devotion, this which featured the names of the award in the media must do is continue to attitude toward public service, that we recipients, to the words of the strive to do our best on the job and celebrate and honor tonight,” Mr. speakers, who praised the honorees measure our own accomplishments in Bowsher said. for setting the standards to which terms of the quality of service we pro- Accepting his award, Flemming said other public servants should aspire. vide the public, he said. he found GAO’s awards ceremony to In spite of a chilly autumn downpour, be an inspiring event. Listening to the the reception room in the Rayburn Awardees citations for the awards received by House Office Building was filled to the 61 GAO honorees made him even capacity for the evening ceremony. Arthur S. Flemming - the recipient more aware of the tremendous debt the Comptroller General Bowsher welcomed of GAO’s Public Service Award - ex- nation owes its career civil service, he the award recipients, their friends, emplified what it means to be a public told the audience. families, and coworkers. “I can’t help reflecting on how fortunate we all are to be part of an organization like the GAO. . .” he said. “And in reflecting on this good fortune, I am aware that we owe much to members of our staff, such as those we honor tonight.”

Speaker

Government workers and journalists must contend with a negative image in the eyes of the public, guest speaker and New York Times editor and colum- nist Tom Wicker told the audience. Because the public lacks a complete understanding of the role of govern- ment, its shortcomings become mag- nified and its accomplishments over- looked. Similarly, print and broadcast journalists are reviled as being too powerful, arrogant, and uncaring while “You must strive for excellence,” guest speaker Tom Wicker says.

4 GAO Review/Summer 1985 s TThe Comptroller General’s Award Varied Plenary Addresses lack of funds. But he never really had which, along with the Public Service to - his candidacy, the way he dealt Award, is GAO’s top honor, went to Na- In opening the conference, Comp- with issues, and his “media personality” tional Security and International Af- troller General Bowsher, the con- made him a feature on most evening fairs Division Director Frank Conahan ference chairman, highlighted the role news segments. in recognition of his “exceptional of government agencies, at all levels, in leadership in establishing and organiz- managing their institutions. For too Deficit and Taxes ing a new division and in guiding the long, he noted, central management defense and international programs” of entities have had the ultimate policy- After asking the audience “What’s GAO. Distinguished Service Awards and regulation-setting authority, and new about the deficit?” Brookings In- were presented to ten staff members; this reduces accountability and initia- stitution President Bruce K. MacLaury 45 received Meritorious Service tive in the other agencies. Mr. Bowsher suggested some responses to that Awards. Also presented were GAO’s noted that central management agen- question and related ones. The novelty Equal Employment Opportunity cies have a vital role in supporting the of the current deficit is its size in rela- awards and GAO Review awards. The operating agencies and in ensuring that tion to the gross national product - 5 evening ceremony concluded with a experiences are shared among them. percent now versus less than 2 per- reception and buffet. These central agency efforts, however, cent, in good times and bad, in the cannot substitute for the fundamental 1970’s. Accumulating as it is in a time Public Management: responsibilities that operating agen- of economic growth, this deficit is a cies have to initiate and sustain the structural one, a perhaps more serious Strength Through process of management improvement. economic issue than a deficit that has Change grown during a recession. Why should Media and Politics we care? Because it takes two thirds of A mounting budget deficit, tax net private savings to fund the deficit, reform proposals, and the announce- WRC news anchor Susan King gave as opposed to the one third of the past. ment of a proposed pay cut for federal an insightful and, at times, humorous workers provided the backdrop for the account of the 1984 election, highlight- 15th National Capitol Area Chapter/ ing the role of the news media, espe- Women in Government American Society for Public Adminis- cially television, in the electoral proc- tration (NCAClASPA) Conference, held ess and its outcome. The rise of Gary The final luncheon plenary speaker December 6-7, 1984, at the Washington Hart’s popularity and decline of John to address the 500 attendees was Eliza- Convention Center. However, confer- Glenn’s are obvious examples. A lesser- beth Hanford Dole, Secretary of Trans- ence attendees appeared undaunted known fact was that candidate Jesse portation. She touched on transporta- and peppered plenary and session Jackson had never bought a primary tion deregulation, public management speakers with questions. campaign commercial, largely due to improvement, and the role of women in

a

f, 2- ..

Mr. Bowsher congratulates Comptroller General’s Award recipient Frank Conahan, while Milt Socolar looks on. 5 4 government. Noting that the number of agers and executive candidates who can. A formal statement of GAO’s mis- women in the Department of Transpor- attended the second annual manage- sion, goals, and objectives is expected tation had increased little in the ment meeting, held November 15-17, to be issued in 1985. decade prior to her arrival, Mrs. Dole 1984, in Leesburg, Virginia. The Leesburg meeting provided the outlined the Department’s efforts to The purpose of the annual meeting, setting for beginning an in-depth dis- rectify this. While the 2 percent gain in which brings together GAO’s top offi- cussion of how GAO does its work. The the number of women may not sound cials from headquarters, regions, and analysis of “how we do our work” will great on the surface, in an entity of overseas, is to promote a mutual not be conducted by a new task force, 100,000 employees, this represents a understanding of the work of the entire Mr. Bowsher said. Rather, it will involve gain of 2,000 women. organization. The conference provides input from GAO’s line staff at all levels an opportunity for the agency’s leader- on how GAO can work more efficiently. Political-Career ship to look back at the past year’s ac- Issues to be explored in the future in- Relationships complishments and to build a common clude staffing jobs, fieldlHQ relation- framework for tackling the challenges ships, intermediate layers of review, The final afternoon saw a panel of the future. the number of jobs in the pipeline, and discussion, led by ASPA National Last year’s meeting - the first-ever administrative support. President Bradley Patterson of The gathering of all of GAO’s leadership - Brookings Institution, among senior was designed to begin the process of staff of the current and former admin- teamwork and communication essen- Ed. Note. Thanks to the GAO Management istrations entitled “The View From tial to achieving GAO’s mission. The News for this and the awards ceremony item. Here.” Personal experiences, as they focus of that meeting was Mr. relate to public management, were of- Bowsher’s presentation of his goals fered by Craig Fuller, Assistant to and operating philosophy, an update Cincinnati Staff President Reagan for Cabinet Affairs; on various management projects and Inspect Houses Antonia Handler Chayes, Under Secre- activities, and a discussion of future tary of the Air Force under President directions and expectations. This Carter; and Phillip (Sam) Hughes, year’s program continued along the Ed Note. John Ficociello, writer-editor with the whose varied career has led to his cur- same lines, with a new emphasis on Cincinnati Regional Office, sent us thls report rent position as Under Secretary of the developing GAO-wide goals and objec- on the audit experiences of two staff members Smithsonian Institution. tives and identifying how to improve The Review is always pleased to receive con- the way GAO does its work. tributions from regional readers. Active Discussions For example, in 1984, GAO completed a top-to-bottom reexamination of its Looking back on my thus-far rela- More attendee participation was built issue-area plans, putting the agency in a good position to deal with the nation’s tively short tenure with GAO, I’m struck into most individual sessions than at with the variety of jobs, people, and some past NCAClASPA conferences. emerging issues. Much time at the management meeting was devoted to places we encounter that makes our Among the sessions that sparked much profession pretty interesting. If the discussion were “Revitalizing Govern- learning about the major issues each GAO division planned to address in the truth be known, there are probably ment Operations Through Productivity,” scores of stories just like the following chaired by OMB Associate Director next 2-4 years. Also discussed was the need for a common understanding one that take place in GAO offices Arlene Triplett; “Management Control around the world. Systems: Help or Hindrance to Man- throughout GAO of the agency’s mis- agement Effectiveness?” chaired by AI sion, goals, and objectives. In this way, Old Houses Obstacles Zuck, director of the National Associa- all employees will be able to see how tion of Schools of Public Affairs and their work fits in the overall picture and When Cincinnati Regional Office Administration (NASPAA); and “Orga- will be motivated to do the best they evaluators Ed Browning and Vern nizational Culture: Do You Make a Difference?” led by Eileen Siedman of the Office of the Inspector General of the Department of Commerce. Several sessions were tape-recorded and will be summarized in a special NCAC publication. For more details on the conference, consult the January 1985 NCAClASPA newsletter (from which this column is adapted) or call newsletter editor Jim Carr at (202) 697-0174. GAO’s Second Annual Management Meeting

“GAO can make great contributions to the well-being of the nation and help solve problems facing national deci- sionmakers through the 1980’s and 199O’s,” Mr. Bowsher told the 175 Senior Executive Service (SES) man- Mr. Bowsher, Arthur Flemming, and Milt Socolar at GAO Awards ceremony.

6 On Location

% Ni6porte began a routine inspection of local Housing and Urban Development old plant safe (this had been a residen- low-income housing, they were faced officers, and a couple of city building tial district for many years), just the at the outset with a barrage of inspectors. mention of radiation was disquieting. obstacles. The Cincinnati buildings Many times, a typical day’s sojourn Equally disturbing were the angry, anx- were old and decrepit, something took Nieporte and Browning on their ious, and evasive landlords who tried straight out of creaky-door fiction. knees through dark, rat-infested base- to steer inspectors from minor “imper- They contained what looked like pre- ments, up tall ladders, into stormy fections” in buildings, such as four historic basements (complete with weather, and out onto roofs. It didn’t stories of missing downspout. Day primordial ooze); old, creaky roofs and end there, either. Over and over they after day, the problems, the buildings, musty attics; dusty, cobwebbed hall- were called on to use unorthodox the people, the owners, and the ways; and a score of other barriers to methods in exceptional situations. The weather all conspired unsuccessfully an already difficult job. very human aspect of auditing became to kill the job. Attic to attic, basement to base- all too apparent all too quickly. In order But as they returned to the Regional ment, dust to dust, the two evaluators to evaluate the condition of housing Office every week or so, Nieporte dealt with all manner of inconvenience. units, they were forced into encounters spoke of the “miracles” they saw in the Morning to morning, as I saw Ed and with angry (sometimes hostile) resi- field: big and small developments and Vern trudging off to some new adven- dents. Access to the most remote cor- improvements that could probably be ture, I remember (now jokingly) think- ners of attics, hallways, or basements attributed to their visits. As if with a ing to myself, “and there go ‘Indiana’ required the regular use of flashlights; wave of their flashlights, walls were Browning and ‘Duke’ Nieporte off into eventually, flashlights were toted made clean again, wiring was repaired, who-knows-what temple of doom. ” around as standard equipment, as . . hallway trash was removed, and miss- Though I came to realize how unusual were electrical sensors used to detect ing downspouts reappeared. and trying this type of job must have faulty wiring inside walls. been, this was my first impression of Noting 230 violations of “decent, auditing and these evaluators’ role. What They Found safe, and sanitary” conditions, they had done a job they could be proud of. One old building they had to inspect Now Ed and Vern are hoping for some- A Typical Day lay next to an old, abandoned x-ray thing a little easier on their next equipment plant. Most of us would assignment, like finding a way to cut Vern told me that their inspection agree that even the thought of radia- the defense budget down to a few team often included as many as five or tion sets our cells shaking. And though dollars a year without any loss to na- six people: Ed and Vern, one or two authorities had long ago declared the tional security.

Winners of the GAO Review Best Article Awards for 1984, Paula 0. DeRoy, Washington Regional Office (L), and Arlene Alleman, Denver Regional Office (R), display their plaques after the awards ceremony.

7 Can an Auditing Organization Become ‘Sporty.-9

Has it ever crossed your mind that among divisions, the maximum con- Waivers the system used to identify, recruit, tract length varies from 3 years, for and maintain outstanding professional journeymen auditors, to 6 years, for In sports, players are put on waivers athletes may have broader application management auditors. Auditors must when the team no longer desires their to, for example, an audit organization rotate after their maximum contract services. This usually occurs when a such as GAO? An article by Ronell period with a division, unless the player is not performing up to par and Raaum, Office of Quality Assurance, in Auditor Admiral grants an extension. when the team has acquired a better the summer 1984 Government Ac- player or a player of equal ability at a countants Journal (published by the Drafting lower salary. Association of Government Account- In Apocryphal, an auditor is waived ants - AGA), explores this intriguing, In sports, teams use the draft to when a division director chooses not to if not startling, possibility. select new players. Usually the weak- renew the auditor’s contract. The Audi- Does it sound far-fetched? Stretch est teams select first; the strongest, tor Admiral considers the independent your thinking a bit more! There are in- last. Teams have scouts to check and decisions of directors as substantiat- teresting parallels. In professional rate the performance of prospective ing evidence of poor performance and sports and in audit organizations, draft picks. Apocryphal currently uses dismissal. Accordingly, auditors there are systems to periodically deter- drafting to select (1) new employees as receiving three consecutive waivers mine resource needs, appraise the well as (2) its free agents and waived are subject to dismissal after under- capabilities of available staff, and then employees. The latter may opt for intra- going a special briefing. somehow try to match and move the agency rotation. individuals to meet the organization’s Currently, Aprocryphal’s 10 operat- Trading needs and staff desires. Further, both ing divisions select in prescribed order systems need to find ways to motivate determined by random drawing. Most In sports, teams may trade players and “energize” assigned personnel divisions have a personnel system pretty much when they desire, provided through some combination of incen- “scout.” To assist directors in drafting they can work out a deal with another tives and awards. free agents and waived employees, team, and the players do not have a Ronell, from his experience as a Apocryphal has established a system trade restriction in their contract. Only part-time coach, has explored these to provide a history of auditor perfor- infrequently are trades made at a ideas in his article entitled “A Profes- mance in doing quality work within player’s request. sional Sports-Type Personnel System time and cost milestones. At Apocryphal, in contrast, the Audi- for Auditors.” It explains how the sys- tor Admiral encourages directors to ac- tem is progressing at the hypothetical Free Agents commodate auditor requests for trades, Apocryphal Audit Office headed by the believing that unhappy auditors are not Auditor Admiral. The article points out In sports, players become free as productive. that professional sports has long used agents when their contracts expire or a system based on competitive perfor- when they are waived. Free-agent Bonuses mance principles. While there are players are normally free to negotiate a variations, six basic ingredients are new, better contract with their present In sports, bonuses are paid to indi- the same: contracts, drafting, free team or with other teams in the league. agency, waivers, trading, and bonuses. vidual athletes for signing a contract Apocryphal follows a similar prac- and for demonstrating superior on-the- tice, allowing auditors to become free field performance. In contrast, most Contracts agents in the last year of their con- bonuses of Apocryphal are paid to tract. The free agency concept has two audit teams, reflecting the Auditor Ad- In sports, each player has a contract, main purposes in Apocryphal. First, it miral’s view that successful “winning” usually agreed to by the team general gives auditors a chance to test their audits are a team effort. There are no manager. Contracts have various nego- “market value,” of course, within bonuses for Apocryphal auditors’ sign- tiable terms, the common ones being Apocryphal. Second, it provides a com- ing contracts, but there are some trading restrictions, contract length, petitive means for rotating auditors special contract terms. bonuses, and salary rates. among divisions. Besides negotiating Mr. Raaum reports that the Auditor In Apocryphal, auditors have a con- new contracts with their present divi- Admiral is pleased with the system’s tractual agreement with their division sions or other divisions, free-agent results, believing it is accomplishing director. Directors and auditors, with auditors may choose to be put in the several desired goals. One, it focuses some restrictions, may negotiate con- free-agent draft pool. There are advan- increased attention on auditors’ per- tract length, trading restrictions, tages in choosing to be drafted from formance through strong recognition special training, flextime working the pool. The first 15 percent chosen hours, and office accommodations. receive a promotion, and the first 25 Salaries and bonuses are not yet nego- percent receive a salary increase, pro- tiable terms. To allow for rotation vided they did not qualify for promotion. See Sporty, pg. 36

8 GAO Review/Surnmer 1985 hamager’s Corner

This feature was coordinated by Kerry The Great Paradox of Democratic Citi- to be self-governing, they have to be St. Clair, Office of Organization and zenship and Public Personnel Adminis- sustained, encouraged, spoon-fed, and Human Development. tration. By Eugene B. McGregor, Jr. educated about public decisions by Reviewed by Herb McLure. the career public officials. He recog- nizes that careerists are not uniformly This issue of “Manager’s Corner” Informed citizens excited about nurturing a potentially addresses the issue of executive argumentative public, but believes that leadership in government. In April Can citizens of the United States informing citizens must be a dominant 1983, the American Society for Public count on their civil servants to keep ethic of public service for careerists. Administration, the National Academy them fully informed about what the Proposals for Public for Public Administration, and the government is doing and what the Charles F. Kettering Foundation spon- alternatives are? Mr. McGregor’s arti- Service sored a National Conference on Citi- cle poses this question because he This line of reasoning leads McGregor zenship and Public Service that dealt, believes it is central to the issue of to conclude that only a public service in part, with that issue. The proceed- whether a democratic government can of unassailable quality and sense of ings of this conference were published work effectively. The paradox he refers security is capable of providing the in a March 1984, special issue of the to is that while public affairs must be public with the intelligently organized Public Administration Review; two of managed by careerists, the democratic information it needs to make informed the articles from that issue are reviewed scheme requires that careerists place decisions. He thinks most careerists below. their jobs at risk by educating the expect that carefully drawn plans, Citizenship and public service re- public. The article itself tries to explain analytically neat budgets, rationalized main of crucial interest to public exe- why the paradox exists and how the organization charts, and smooth cutives since these two concepts public service might be reformed to en- operations will come under fire. He relate to the continuing sense of courage better interaction between also is not surprised that careerists are distrust and alienation that exists bet- public servants and the public. instinctively reluctant to expose them- ween the public and the bureaucracy. McGregor believes the public must selves to the vagaries of the public’s The idea for the conference began with be sophisticated enough to under- interest. His suspicion is that career a discussion between Eastern Wash- stand not only how things are, but how public servants work best when they ington University Professor H. George they might be different. He recognizes constantly seek ways to make them- Fredrickson and David Mathews, presi- that important decisions are made selves unnecessary by devolving dent of the Charles F. Kettering Foun- while options are being narrowed responsibility for service delivery and dation and former Secretary of Health, down, and that the public must have production back to the communities Education, and Welfare. The par- some access to this process if it is to where problems reside. ticipants included a distinguished have an effective hand in government. Recognizing that only unusually group of academicians and public ad- For example, nominations are often secure public servants look forward to ministrators. The articles reviewed more significant decision-making making themselves dispensable in the here represent a sampling of the views events than elections; the project- interest of enhancing public participa- that were expressed. They are development process often determines tion in governments and that some presented in the hope of stimulating the choice of prime contractor; and the citizens suspect that the public service further thought on and discussion of budget-formulation process contains is overstaffed and populated by the un- the role of public executives in general more choices than the appropriations productive, McGregor makes several and GAO executives in particular con- made as a reaction to the budget docu- proposals for reconciling public ser- cerning the continuing public debate ment. The problem is that public ser- vants and public participation. One is on the proper role of government and vice careerists - people who spend to defend career administrators. He the capability of public employees. The their lives working in specialized ways reasons that only a secure public serv- first article, The Great Paradox of on substantive problems - possess ice will be willing to make itself vulner- Democratic Citizenship and Public Per- much more knowledge about public able to an enlightened public, and that sonnel Administration, by Eugene B. programs than an informed citizen. an insecure service can become patho- McGregor, Jr., was reviewed by Herbert Thus, the citizens feel overwhelmed logical in its self-protective behavior. McLure, associate director, Resources, and, therefore, distrustful of the public A second proposal is to enhance Community, and Economic Develop- managers. Mr. McGregor clearly public affairs knowledge in the citizenry ment Division. The second article, en- believes that citizens would be more so that citizens can understand how titled The Virtuous Citizen, the Honor- likely to trust and support governmen- real public affairs operate, how prac- able Bureaucrat, and Public Adminis- tal decisions if they knew more about tical problems affect public affairs, tration, by David K. Hart, has been the alternatives that were possible and what the action options are, and what reviewed by Daniel Leary, associate had been considered in making the director, National Security and Inter- decisions. national Affairs Division. McGregor states that if citizens are See Manager’s, pg. 36

SA0ReviewlSummer 1985 9 Topics im Evaluation

What Do We Mean choose exactly what available data to use in the second analysis (a sampling by Secondary Analysis? issue) or how to scale questionnaire items (a measurement issue), data col- Investigations that capitalize on avail- lection methods are obviously not able data (PEMD,Des/gn,ng Evaluations, among the options. Methodology Transfer Paper 4, 1984) A design is a plan for answering eval- usually pursue one of two strategies: the evaluation synthesis or secondary anal- uation questions. Any design is devel- oped iteratively by trading off preferred ysis With the synthesis approach, we attempt to reconcile and combine find- approaches against what is feasible. In secondary analysis, these trade-offs ings across studies; the findings are syn- explicitly involve restatements of the thesized at a broad and aggregated evaluation questions to conform to the level. With the secondary analysis limitations of the available data. To approach, we drop down to a lower, consider our example, though it might disaggregated level. Synthesis is main- be desirable to ask how specific edu- Carl E. Wisler ly used on published results while cational programs are linked to eco- secondary analysis usually requires nomic success, that is usually not Mr Wisler is an associate director in GAO’s access to the original data bases for Program Evaluation and Methodology Divislon possible. So, the Jencks team phrased the purpose either of answering ques- its questions more generally. tions not posed by the primary investi- One question the team formulated This issue’s topic is the secondary gators or reexamining the same ques- was: To what extent does a man’s eco- analysis strategy. tions using different methods. nomic success depend on family back- The secondary analyst works within ground, academic ability, personality What factors determine the economic the constraints of existing data bases. traits, or schooling? From this ques- success of individuals? This question Evaluators who collect primary data or- tion another limitation of the data base rose to national prominence in the dinarily follow one of three broad strat- is evident: information with which to 1970’s as a variety of social programs egies: sample surveys, field experi- investigate the determinants of a were instituted in an effort to break the ments, case studies - or a combina- woman’s economic success was insuf- “cycle of poverty.” Many of these pro- tion of these. While secondary ficent to permit analysis. analysis, in principle, is possible using grams rested on the assumption that An important consideration in devel- data bases established by any of these education was an important determinant oping the design for a secondary approaches, in practice, it is more of economic success. Although short- analysis, or any evaluative approach common for surveys and field ex- term evaluations of such programs for that matter, is deciding the relation- periments than for case studies. could establish whether students ship between the constructs we want To illustrate some of the ideas of learned the desired skills, the question to make a statement about and the secondary analysis, we’ll use an impor- of how education affects future out- measures we will use for those con- tant study by Jencks and his col- comes, such as economic success, structs. A construct is an intangible at- could not be revealed by the usual leagues (1979) in which data from 11 tribute of the objects or subjects we sample surveys were reanalyzed in an methods of evaluation. The time frame are investigating. In our example, eco- effort to estimate the effects of family was simply too long to determine what nomic success is a construct. But you background, cognitive skills, personali- happened to specific students many can’t go out and measure economic ty traits, and education on economic years after they had participated in success directly. We have to adopt one success. This is an example of using educational programs. or more measures that, conceptually, secondary analysis to address ques- Although direct evaluations of long- attempt to capture the notion of the tions not considered by the primary term outcomes were generally not construct. One of the measures used analysts. Indeed, most of these sur- possible, the mounting of expensive by the Jencks team was annual earn- veys were carried out for reasons not and, sometimes, controversial pro- ings, something which was opera- grams led to a reconsideration of the directly connected to Jencks’ study, tionally defined but which may not be a but they included information in the general connection between education totally satisfying measure of economic and economic success. Evaluators rea- necessary categories. Thus, it was success. Frequently, multiple soned that if a strong (or slight) possible to use this data to examine measures are used to compensate for connection were found, the long-term the link between education and eco- the weakness of any single measure. effectiveness of education programs nomic success. So measurement issues are impor- might be indirectly supported (or Developing a Design tant in designing secondary analysis. doubled). Consequently, several in- for Secondary Analysis Decisions must be made as to whether vestigations into the determinants of the measures available are sufficiently economic success were carried out by Conducting secondary analysis of close to the constructs we have in using a strategy called secondary available data requires a design, just mind. This perspective is different from analysis. Because this approach can as any other approach to evaluation. an evaluation that involves new data be an important form of inquiry in The big difference is that the options collection, where we can try to devise many areas of concern to GAO, we are constrained to the use of existing measures that closely correspond to shall review some of the basic ideas. data. While it is usually necessary to the constructs we want to answer

10 GAO Review/Summer 1985 1 cplestions about. point. In the Jencks study, it was attempts to use the data. If the tapes Plans for analyzing the data are ob- necessary to associate the construct can’t be read, or the measures don’t fit viously central to secondary analysis. of education, a rather broad concept, the desired constructs, or missing data Given the available data, we must with a measure of the amount of can’t be accounted for, or . . ., then the devise analyses that give the soundest schooling, which is narrower in scope. strategy is a bad one. Unfortunately, answers to our evaluation questions, Worse yet, with the data bases that when doing a secondary analysis, subject to practical constraints, such were available, almost the only possi- these kinds of problems often appear as time and technical expertise. ble measures were some indirect in- in sequential fashion. Even though a In our example, the evaluation ques- dicators of amount of schooling, such series of difficulties are overcome, tion addressed the causal relationship as “highest grade attended” or there may be an insurmountable prob- between ecOnOmic and “highest grade completed.” The prob- lem lurking just around the corner. The variables, including education. The lem that must be faced is whether a lack of control can be aggravating and available data came from 11 sample measure like “highest grade com. time-consuming at the least and, in surveys, but since such designs are pleted” is so distant from our construct some cases, devastating. not very good for drawing conclusions of education that it would be inadvisa- On the other hand, the big advantages about cause and effect, the example ble to use the to draw a con. Of secondary analysis are that it may illustrates the kind of compromise clusionabout the relationship between be quicker and leSS expensive than that may be necessary if any answers economic and education. evaluation strategies that require new are to be given. The Jencks team chose Reliability tWanS the extent to data COlleCtiOn. For example, it has relatively straightforward regression which a measurement can be expected been estimated that at least 40 percent analysis as the way to estimate the to produce similar results On repeated of the cost of a sample survey comes strength of cause-and-effect relation- observations of the Same condition 01 from the data collection components. ships. While such analyses are easy to event. For example, a tire pressure In the face of such cost savings, to say carry out, they often result in much gauge is considered reliable if repeated nothing of time, the prospect of using debate about causal interpretations. I’neasUf‘ements on the Same tire produce someone else’s data tapes to answer The analysts hoped that using multiple the same pressure. Many measure- an evaluation question is indeed data bases would somewhat offset the ments, especially those that depend on attractive. weaknesses of this method. Data from responses from persons, tend to be un- each survey were kept separate reliable. Because unreliable measure- (although, in Some secondary ments can lead to erroneous conclu- Where TO Look analyses, data may be combined the secondary analyst needs to fop More Information two or data bases) and the know how reliable the available data analysts tried to reconcile the in- are. Sometimes reliability estimates evitable differences in the results that are Published, but usually the situation Boruch, R. F., Wortman, P. M., Cordray, occurred. is cloudy, and the analyst must spend D. S. and Associates. Reanalyzing considerable effort to ensure that Program Evaluations: Policies and errors in the data are tolerable. Practices for Secondary Analysis of Implementation Pitfaus Independently of whether the amount Social and Educational Programs. of measurement error seems reason- JosseyBass, 1981. The wary evaluator approaches the able, sampling error may render data Gives particular attention to second- analysis task with great caution. unusable. Even if the secondary analyst ary analyses of program effectiveness. Someone else’s data base seldom finds the intended sample appropriate turns out to be exactly as the analyst for the new evaluation question, it is Bowering, D-J.(ed‘) SecondaryAnalysis had envisioned it, and the effort required still necessary to verify that the sample Of Data Bases- Jossey- to answer the evaluation question is was drawn as intended and that nonre- likely to exceed planning estimates. To sponse was satisfactorily dealt with. Provides advice On Obtaining! pre- understand this difficulty, we’ll con- As when searching for measurement paring~and analyzing available data sider just four kinds of problems: ill- error, the secondary analyst may find it bases- defined data bases, misfits between difficult to be assured that all is well. Hyman, H. H. Secondary Analysis of constructs and measures, unreliability Aside from the problems arising from Sample Surveys: Principles, Proce- of measures, and sampling errors. unsatisfactorily documented primary dures, and Potentialities. John Just understanding the information studies, secondary analysis presents Wiley, 1972. in a data base may be a formidable hur- no really new pitfalls. The problems of presents an excellent discussion of dle. The secondary analyst must under- Construct validity, unreliability, and possible designs for the secondary c stand how samples were drawn, how sampling error, for example, are present analysis of sample surveys. the data were collected, how the data in any evaluation. However, because were coded, how nonresponse was these and other factors are largely Jacob, Using Published Data:Errors treated, and how the data were arranged beyond the control of the secondary and Remedies- 1984- on the storage media. These and other analyst and may seem to be less well- Provides a short but useful treat- related matters must be satisfactorily understood when control lies else- ment Of how to contend with sampling dealt with or the project will founder where, the implementation of the and measurement when using before a single piece of data is manipu- secondary analysis strategy often ap- available data. lated. Standards for documentation of pears fraught with new perils. Jencks, C., et at. Who Gets Ahead? The data bases are gradually improving, Determinants of Economic Success but that first hurdle is still a high one. The Pros and cons in America. Basic Books, 1979. Once the data base is understood, of Seoondary Analysis problems with the fit between con- structs and measures may stand out. The disadvantages of secondary An example will help illustrate this analysis are usually discovered during See Topics, pg. 36

11 Government: A Winaneial Management Control Perspective

government must operate necessitated Defining an Ideal that greater attention be directed at Financial Management the effectiveness of internal controls. As a result, in 1982 the Congress passed Process the Federal Managers’ Financial Inte- grity Act (P.L. 97-255), which requires The objective of financial manage- government agencies to continuously ment in government is to ensure that, John R. Cherbini evaluate their internal controls. The ob- to the maximum practicable extent, Ed. Note This article was adapted from a jective of the evaluation process is to resources are acquired and used law- paper Mr Cherbini presented in a session on identify internal control weaknesses fully, efficiently, and effectively. A sys- “The Role of Management Accounting in Inter- and institute needed improvements. tematic “management cycle” can be nal Management Control Systems” at the Inter- The legislation contains a key feature used to describe an ideal financial regional Seminar on Public Auditing and Inter- that ensures that the agencies will con- management process (see Fig. 1). The nal Management Control Systems in the Devel- scientiously implement the internal cycle provides a structure for guiding oping Countries The seminar, sponsored by control evaluation process. The head government managers in deliberations the United Nations and the International Orga- of each agency must submit an annual on what actions to take, taking those nization of Supreme Audit Institutions, was held report to the President and the Con- actions, drawing conclusions about in Vienna, Austria, October 1984 Mr gress that describes the internal con- Cherbini’s biography appears on page 40. the results of those actions, and using trol evaluation process, lists material those conclusions as input for subse- internal control weaknesses, and pro- quent deliberations. vides a schedule and plan for correct- The management cycle consists of The importance of effective financial ing the weaknesses. four distinct phases: planning and pro- management control systems today is This reporting focuses attention on gramming, budgeting, budget execution evident as governments are faced with the agency’s internal controls and pro- and accounting, and auditlevaluation. the dilemma of increased demand for vides a means for the President and The cycle is iterative; new plans are in- goods and services in a fiscally con- the Congress to monitor agency pro- fluenced by past results. Briefly stated, strained world economy. While seeking gress in improving control systems. By the planning and programming phase to administer accounting systems for requiring the agency head to sign the is the process of establishing objec- these goods and services, financial annual report, there is greater tives and designing the program that managers today and in the future will assurance that all parts of the organi- will achieve the objectives. The budget- depend increasingly on the systems zation will seriously carry out their in- ing phase determines the level of re- that serve their information needs. ternal control evaluation and improve- sources needed to reach those objec- As government programs increase in ment projects. This focus on control tives and sets policy for conducting number and complexity, managers systems’ evaluation and improvement the work. The budget execution and must increasingly rely on information in the United States presents a unique accounting phase consists of imple- and the systems that provide it. No opportunity to strengthen overall finan- menting the plan, directing activity longer can managers simply rely on cial management processes. toward results, and monitoring compli- L direct observation to monitor opera- Because of this opportunity and to- ance of how the work is conducted in tions, determine necessary corrective day’s complex environment, govern- light of established policies. The next steps, and plan future actions. Man- mental officials need to consider finan- phase, auditlevaulation, uses audits to -g agers’ increasing dependence on infor- cial management and its control sys- confirm the accuracy and reliability of mation heightens the need for reliable tems in a broader context. Regardless financial information, thus ensuring and timely data. Effective internal con- of the stage of evolution or the degree discipline in the management process. trol systems ensure that the informa- of sophistication of a government’s And, through evaluations, managers tion managers have is reliable and that financial management system, it is im- are provided with information about the resources entrusted to them are portant that managers have a perspec- the efficiency of operations and the protected. tive on their intermediate and long- effectiveness of programs in achieving The U.S. government has mandated range financial management require- their intended objectives. Reliable effective internal controls for more ments. With such a perspective, financial information, ensured through than 30 years. However, the increasing governments can design and imple- effective internal control systems, is size and complexity of government ac- ment the control systems they need so the key that links the four phases of tivities, the increasing need for infor- that they can address their immediate the management cycle. mation about those activities, and the financial management requirements How well each of these functions is rapidly changing environment in which while considering future needs. performed is management’s responsi-

12 GAO Review/Summer 1985 Figure 2

Match Costs With Services

Financial Information for Management

Budget authority

0 bligations Inventory When the recorded funding Outlay is provided When the order is placed When the I cost materials are delivered When the bill * e is paid When the Needed to control I I materials funds Needed for inventory control and management Needed to manage cash and debt Needed to plan programs effec- tively and rnan- age them effi- ciently must start-the line manager who After the relationship between in- related, programs through numerous makes the spending decisions. This puts and outputs has been measured, departments and agencies. Only through focus promotes self-discipline and the next step is to relate that measure consolidating and auditing depart- builds financial planning and decision- to program results. Relating the input/ mental operating results and financial making skills. output measures to program results positions can the complete picture of establishes the critical link between government activities be reliably por- Measure Onatputs program and budget choices. In the trayed. Also, information that com- pares the cost of operations with the as well as Inputs health example, the program result could be a lower incidence of the revenue available to fund those opera- disease resulting from the inoculation tions is important for effective cost A management system is incomplete program. analysis of government activities. Then if it only measures the financial the total value of government resources resources put into a process. A truly and the amounts owed for unpaid effective system must also measure Prepare Consolidated goods and services can be compared what is produced by using those Reports to reveal the financial position of the resources. For all significant adminis- government as a whole. This type of trative functions and program activities, From a policy and a control perspec- summary financial information is im- appropriate output measures should tive, it is as important to have a com- portant to the citizens and to govern- be identified and acceptable perfor- plete picture of total government activ- ment officials concerned with effective mance levels established. For exam- ities as it is to budget and account on government administration. ple, an output measure for a health pro- the same basis. Yet, since control can These financial management con- gram could be the number of inocula- best be exercised when it is focused on cepts establish a framework in which tions administered. the component organizations, it is only management responsibility can be Once output measures have been natural that this narrowed focus could more effectively discharged. It is very identified, long-term trends can be mean a loss of the policy perspective important that the concepts ensure developed, analyzed, and extrapolated that reporting on the whole organiza- that needed information be provided to to aid program planning and evalua- tion can provide. the right person at the appropriate tion. Spending levels that tend to move Each of the component organizations time. However, the means by which proportionally with output can be ini- may require assets, provide services, audit organizations communicate the tially developed by using estimates of and incur liabilities as part of its normal information are equally important. A output levels. Using the health pro- operations. Financial reports for those system of management reporting pro- gram example, variances between organizations may provide valuable in- vides accountability and feedback on planned inoculation levels and actual formation about their operation, but results, just as a system of effective in- spending can be analyzed by compar- they provide only a fragmented view of ternal controls helps ensure the relia- ing differences between the planned the entire agency. Governments operate bility and integrity of the system and and actual output. many independent, but often inter- information it produces. 14 L goods and services should be recog- F&ure 1 nized in financial reports in the same period in which they are provided. The Management Cycle These resources include such things as the value of personnel services, facilities used, material consumed, and direct payments made. Orders or payments for resources do not always occur in the same period in which those resources are used. Employees’ salaries are paid basically in the same period that the individuals work, but the retire- ment benefits earned during that period are paid years later. Charges for use of utilities are paid basically in the same period in which heat, light, and water are consumed, but stockpiled

Budget ~ parts and supplies may be ordered and execution and 1 paid for many periods before they are accounting actually used. Figure 2 illustrates this concept of timing differences. To better understand the relationship between what is delivered and its cost, the cost bility. But, in many cases, the work compare expectations to actual per- of the material or service must be must be delegated to others. There- formance. recorded in the same period that the fore, management must rely on infor- As with the systems that ensure reli- material is used or service provided. mation to execute its responsibilities. ability of information, the concepts Consequently, to be effective, informa- that establish the format, content, and By matching the use and cost of tion on plans, results, and evaluations timeliness of the data needed in the resources, government managers and must be reliable and timely. Manage- management cycle are vitally impor- policymakers will be better equipped ment can assure itself that the infor- tant. These concepts, as much as the to compare the results of operations mation it uses is reliable and timely by system of controls, are key if managers between reporting periods, to compare designing, implementing, and main- are to successfully meet the objective similar operations performed by mul- taining an effective system of internal of financial management. The follow- tiple agencies, and to make more in- controls. ing concepts represent sound manage- formed benefi tlcost evaluations. Properly designed and effectively ment practices: implemented controls lead to accurate 0 Budget and account on the same recording and summarization of finan- basis. Encourage Financial cial transactions, the foundation for Recognize the cost of resources used Accountability management reporting and control. in the period consumed. These controls should provide the Encourage financial accountability. basis for comparing actual operating Measure outputs as well as inputs. An underlying management princi- results to plans and for reporting Prepare consolidated reports. ple is that authority and responsibitity exceptions. However, the information Each of these concepts will be dis- go hand-in-hand. As decisionmaking and the transactions they represent cussed in the following sections. authority is delegated to lower levels in are only as good as the systems that the organization, the managers exer- capture, summarize, and report them. Budget and Account cising that authority are responsible on the Same Basis for the results of their decisions. Finan- cial accountability can be encouraged Financial Management The concept of budgeting and ac- by comparing the subordinate’s actual Consepts counting on the same basis recognizes accomplishments to expectations. But, that the manner in which program if subordinates are to be held responsi- Managers now realize that informa- costs are accounted for should be con- ble by their supervisors for performance, tion is as valuable a resource as per- sistent with the basis used to develop the standards against which they are sonnel and capital assets. The value of the budgets for those programs. By so to be judged should be meaningful and reliable and timely information is no doing, budgeting and accounting are mutually understood. less important to the successful opera- conducted under the same rules and Financial plans that form the basis tion of governmental entities than it is can be fully integrated. Thereafter, for performance evaluation should be to large corporations. The characteris- reliable, comparable information can developed at the organizational level to tics of financial information needed to be summarized and reported to assist which spending authority has been monitor and control operations are not in managing current activities, compar- delegated. Reports that compare ac- unique to government or to business. ing actual results with plans, and esti- tual costs to the financial plan should Although the technical terms and pro- mating future resource requirements. be provided periodically to the individ- cedures may differ, information must uals who have spending authority. be provided in the public and the Recognbe the Cost Supervisors should receive summary private sectors to of Resources Used reports showing how effectively sub- predict economic conditions/events, in the Period Consumed ordinates have exercised their cost establish budgets, responsibilities. This type of manage- monitor compliance with budgets, This concept means that the value of ment system focuses financial control determine costs of operations, and resources consumed in the delivery of at the level where financial control ? Mhnagement Reporting that will restrict obligations or expen- proved planning process. Without a ditures to the amounts appropriated (or system of management reporting, Management reporting is crucial to “provided”) for the current fiscal planning would be ineffective since the effectively planning and executing period. In addition, the system used to success of programs in meeting their organizational functions and activities. control funds administratively must financial objectives cannot be eval- Reliable, timely information enables identify the person responsible for uated, and the actions of personnel managers to monitor progress, take creating each obligation and incurring responsible for execution of program necessary corrective actions, and each expenditure. However, fund con- activities or administrative functions develop future plans. In other words, trol, by itself, is not a balanced man- cannot be easily monitored nor can the information is a tool that enables agerial perspective. A balanced per- personnel be held accountable. managers to effectively perform their spective also includes a focus on cost Three reporting dimensions, when duties. control. focused on cost, provide information However, reliability and timeliness necessary for decisionmaking and con- of information are not enough. The in- Cost Control trol. These include formation must also be summarized so program reporting, that it can be easily understood and Government managers have long organizational reporting, and directed at specific functions or ac- recognized the need for effective fund project reporting. tivities. Reports may be designed on a control. But, they have neither realized Each of these reporting dimensions number of different bases, including nor taken full advantage of managing will be discussed in the following organizational, program, or project, costs. The vast scope of government sections. depending upon managers’ needs. activities encompasses a wide range of Furthermore, the underlying basis of costs, from thousands to billions of Program Reporting the reports may focus on fund control, dollars. Therefore, activities must be cost control, or both. Each of these planned to maximize the benefits from reporting concepts is discussed in the A program can be defined as an the resources invested. The relation- organized set of activities, directed following sections. ships between benefits and costs toward a common purpose or goal, would provide an appropriate measure which an agency undertakes or pro- Fund Control to evaluate the success of a govern- poses to carry out its responsibilities. ment in meeting its objectives. Two key concepts are evident from this The term “fund control” refers to As governmental spending and bor- definition. First, programs are made up managing funds appropriated (or “pro- rowing has continued to grow, the of more than one activity, and second, vided”) for a program, organization, or need to evaluate the benefits and man- programs are directed toward a com- activity to ensure that (1) the funds are age the costs of government has be- mon purpose. Any system of program used only for authorized purposes, (2) come essential. With the increasing reporting for a government must be the obligations and disbursements do demands for goods and services and capable of establishing relationships not exceed the amounts authorized the mounting deficits incurred by many among overall program categories and and available, and (3) the monies governments, managers must know subcategories. A simplified example of authorized to be spent are not withheld the costs and results of previous and these relationships is depicted in without knowledge and approval of the current activities to make decisions Figure 3. government organization providing the concerning future programs. A system funds. of accrual-based management report- Once this hierarchical relationshipis We accomplish these goals by requir- ing will help ensure that program established, detailed budget and ing each federal agency to have an objectives are achieved and costs are accounting transactions should be administrative fund control system controlled and will result in an im- coded, starting with the lowest pro- gram entity where meaningful manage- ment control can be exercised. This Figure 3 coding will enable the agency to gener- Program-Reporting Hierarchy ate reports for any level of program ac- tivity. In Figure 4, each transaction would be related to research involving fertilizer, aeration, or crop rotation. As illustrated, detailed budget versus ac- Function Agricullure development - tual cost and performance reports would be prepared for each level of pro- gram management. The first report in the example focuses on individual pro- gram elements within the soil enrich- Program Farmer Research Financial Technical ment subcategory: fertilizer, aeration, education incentives assislance categories I and crop rotation. A separate line dis- closes actual and budget data for each program element. The totals of the soil enrichment report are then included as Program Crop Irrigation Soil a line item in the next higher-level hybrids methods enrichment subcategories report that covers the entire research program category. The data on the research report is similarly “rolled-up” and included as one of the line items in

Program Fertilizer Aeration Crop rotation the agriculture development report. elements This example illustrates the useful-

15 A Financial Management Control Perspective

Figure 4 inherent in an organizational struchre, provides the capability to monitor and PROGRAM RESPONSIBILITY COST REPORT control the activities of government REPORTS TO: AGRICULTURE DEVELOPMENT organizations. The key for this type of JUNE 30,1984 reporting lies in identifying controllable costs, assianina manaaement resDon- Total Current period Year to date sibility, and gi3ng managers the au- budget Program description BUD. ACT. VAR. BUD. ACT. VAR. thorib‘to direct the activities assigned to them. Managers can then be held ac- countable for their decisions. This ac- $ 250 Farmers’education $ 75 $ 68 -7 $ 155 $ 150 -5 countability can be achieved through a 1,400 Research 298 296 -2 620 61 8 -2 series of reports that summarize bud- 875 Financial incentives 220 224 +4 450 456 +6 get versus actual costs along organiza- 400 Technical assistance -85 -88 --+3 190 -188 --2 tional lines. $2,925 Total $678 $676 -2 $1,415 $1,412 -3 Projeet Planning

PROGRAM RESPONSIBILITY COST REPORT Project reporting is the third dimen- RES EARC H sion of management reporting. Project REPORTS TO: AGRICULTURE DEVELOPMENT reporting provides spec i a Iized reports JUNE 30,1984 to enable managers to monitor and control specific activities, such as con- Total Current period Year to date structing capital assets or immunizing children against diseases. Although budget Program description BUD. ACT. VAR. BUD. ACT. VAR. cost thresholds, such as all projects in- volving more than $1 million, may be $ 560 Crop hybrids $140 $135 -5 $290 $287 -3 used to determine significance, man- 640 Soil enrichment 108 109 +I 230 232 +2 agement must ultimately determine 200 Irrigation methods -50 -52 ~-+2 100 --99 -1 what activities require specialized pro- $1,400 Total $298 $296 -2 $620 $618 -2 ject reporting. The scope of project reporting differs from program or organizational report- ing that focuses on specific time PROGRAM RESPONSIBILITY COST REPORT periods, such as a month or fiscal year. SOIL ENRICHMENT Project reporting reflects information REPORTS TO: AGRICULTURE DEVELOPMENT that spans the entire life of a project. JUNE 30, 1984 That life starts with planning. The essential features of project planning Total Current period Year to date include budget Program description BUD. ACT. VAR. BUD. ACT. VAR. defining project phases, such as research and development, prototype construction and testing, and final $265 Fertilizer $ 60 $ 60 $130 $129 -1 construction and testing; 250 Aeration 18 19 +I 35 35 estimating resource requirements to -125 Crop rotation -30 -30 --65 --68 +3 completion; $640 Total $108 $109 +I $230 $232 +2 estimating the cost of those resources for each phase; estimating start and completion or milestone dates for each phase; and Legend identifying project funding sources. Once planning has been completed BUD.- Budgeted cost and the project is initiated, accounting ACT.-Actual cost records are kept on actual costs incurred VAR.-Variance between budgeted and actual cost and outputs produced by each phase. Frequent reports can be prepared to compare actual with planned costs, in- ness of program reporting as a tool basis of expected activity levels. In puts, and outputs. significant variances policymakers and managers can use to other words, if the unit cost of output can thus be analyzed, and changes measure outputs as well as inputs for can be estimated, then the total cost of reflecting the revised cost and output government programs at all levels in various production or service levels budget can be made. However, the the hierarchy. Program planning is can be projected. original “baseline” budget data is enhanced when outputs can be com- maintained, and actual costs are com- pared with the costs to achieve results Organizational Reporting pared to the baseline and revised bud- and when decisions to continue or ter- gets. This provides an historical per- minate programs are based on current The second reporting dimension is spective that enables managers to cost information. In addition, trend organizational reporting. Organizational analysis of unit costs permits projec- responsibility reporting, based on the tion of future program costs on the supervisorlsubordinate relationships See Control, pg. 36 16 1

f at the E‘BI: ue Experience

white collar crime, foreign counter- A visit to the FBI building for an inter- intelligence, and terrorism are the view can be even more difficult. Once FBI’s top investigative priorities, but in the building - even as members of its jurisdiction includes many kinds of the permanent audit site staff - GAO federal crimes, from government fraud evaluators must follow certain and public corruption to bank robbery administrative procedures to interview and kidnapping. staff, review files, and look for fin- The FBI budget for fiscal year 1984 dings; some areas of the building are was more than $1 billion for the second even restricted. year in a row and for only the second Michael A. Burnett time in FBI history. Increases are Written Notification planned for 1985. These funds support Mr Burnett, the senior evaluator-in-charge at FBI operations in its Washington, D.C., Begins Work the General Government Division’s FBI audit headquarters, 59 field offices, and Every assignment involving work at site, joined GAO in 1969 He has worked at the more than 400 resident agencies’ the FBI must begin with a letter to the FBI site since June 1980 Mr Burnett has also across the country. Despite this large served in the Human Resources Division. the FBI’s GAO liaison official. The letter number of geographically dispersed of- Office of Personnel Management, and the Civil must explain (1) the purpose, scope, Division He received a B S degree in indus- fices, the FBI is a highly centralized operation. Most investigations and any and objectives of the assignment; (2) trial management from Purdue University in the FBI headquarters divisions and Indiana expenditure of funds exceeding $5,000 must be approved by headquarters. field offices to be involved; and (3) the The FBI has a clear chain of com- GAO staff who will be responsible for mand it closely follows in all its ac- the work. Work can usually begin about J. Edgar Hoover, G-man, undercover tivities. The resident agencies report to a week after the letter is delivered to operations. To many people these the FBI. This notification procedure the appropriate field office’s Special terms are synonymous with the FBI. Agent-in-Charge. The field offices applies to almost every contact with Beyond the more publicized names report to 1 of 10 headquarters divisions, the FBI, even one-time interviews on and cases, however, not many people depending on the subject matter in- assignments that do not directly in- know much about FBI activities. Since volve the FBI. With anywhere from 10 volved. For example, a bank robbery or 1974, GAO has been evaluating many to 25 assignments involving the FBI in fraud investigation would be the of those activities domestic in- - responsibility of the Criminal Investi- process at any one time, the paperwork telligence, organized crime, bank rob- gative Division, foreign counterintelli- can be extensive. bery, fingerprint identification, and This authorization procedure is the gence investigations would be the undercover operations - to name a responsibility of the Intelligence Divi- reason GAO evaluators usually cannot get information over the phone from few. The work is difficult and, often, sion, and so forth. Assistant Directors frustrating because of burdensome are in charge of each division. They, in FBI officials. Headquarters and field ad mi n ist rat ive requirements, restricted turn, report to three Executive Assis- agents are instructed to contact the GAO liaison office on any GAO contact access to records, and problems in tant Directors who report to the Direc- measuring the results of FBI efforts. that has not previously been authorized. tor. The FBI has had only three Direc- However, satisfying results can often About once or twice a month the per- tors in its history. The first, J. Edgar be achieved. manent audit site staff get requests Hoover, served for 48 years. However, from the FBI liaison office to identify a because of the controversy surround- P acts ing Mr. Hoover’s actions during his last GAO employee who has called an FBI few years in office, the FBI Director, by agent and arrange for the preparation of the notification letter before any in- The FBI’s primary mission is to in- law, is now limited to a term of 10 vestigate violations of laws over which years. formation will be released. it has jurisdiction and provide informa- tion to the executive branch relating to Security Is Tight civil matters and the national security. It investigates all federal criminal Gaining access to the Hoover build- violations that are not specifically Adminiskratiom Can Be ing - the FBI headquarters in Wash- assigned by law or otherwise to ington, D.C. - to interview an FBI offi- another federal agency. FBI special cial is also difficult. Permanent access agents gather facts, locate witnesses, A call to FBI headquarters or a field and compile evidence that is used by office for information concerning an U.S. attorneys to prosecute the sub- evaluation will probably elicit an jects of investigations. Organ ized answer that the information cannot be ’Resident agencies are small local offices c r i me (in c I ud i ng d rug trafficking), released without proper authorization. that are subordinate to the field offices

GAO Kcview/Summer 1985 17 to and from the building requires a top poses starts with a basic understand- so GAO began the process‘required to secret security clearance; a continuing ing between the FBI and GAO. On May enforce its access to records by shd- need to be in the building; and an “Offi- 21, 1976, then-Comptroller General ing the FBI a letter demanding access cial Visitor” badge, similar to GAO’s Elmer Staats sent a letter to Clarence to the records. The FBI took the full 20 credentials, which is issued by FBI Kelley, Director of the FBI, which sug- days allotted to respond. It agreed to security. Otherwise, arrangements gested procedures that GAO could use provide the records, but only after fur- must be made to be escorted by one of to review FBI programs and operations. ther negotiations to resolve details of the permanent GAO audit site staff Three days later, Mr. Kelley agreed to how the access would be provided. As who has received an FBI security clear- the suggested procedures, which a result, GAO actually began audit ance. The escort is required to accom- became known as the “G Street work at the end of November, more pany the visitor everywhere, not only Treaty.” Mr. Staats was careful to point than 4 months later than planned. past the recently seized-and-dusted- out that GAO’s statutory authority On another congressionally requested for-fingerprints Mercedes in the base- clearly provides GAO access to FBI review of the costs of FBI undercover ment but also to the cafeteria for files and documents. However, to ex- operations, GAO had to report the total coffee or to the Xerox machine. pedite matters, he agreed to try an ar- costs of the operations for fiscal year Obtaining the proper badge does not rangement whereby the FBI would (1) 1979 to 1981 and the costs of several provide unlimited building access. For excise informants’ names, confidential individual operations. GAO had to do example, it is difficult for GAO staff to sources, and other appropriate individ- this without reviewing any detailed work overtime at the Hoover building. uals’ names from records; (2) provide cost records, such as expense vouchers, Permanent staff with “Official Visitor” only limited documents from investiga- because the vouchers contained the badges have access to the building only tive files; and (3) provide access to names of informants and undercover between the hours of 6 a.m. and 6 p.m. open investigations only when dis- operatives that the FBI would not weekdays. Special clearance must be closure of information contained in the release. As a result, GAO relied on cost obtained from FBI security for any ex- file would not prejudice the prosecu- figures developed by FBI internal ceptions. In addition, some parts of the torial process. This agreement became auditors and supplied by the FBI’s Ad- building are higher-security areas than the basic pattern for all GAO work at ministrative Service Division without others. For example, while reviewing the FBI. The FBI still uses it as a verifying their accuracy. the FBI’s Freedom of Information pro- guideline for GAO access to records. In a follow-up assignment on FBI cesses, the staff worked in a bar-gated, With the passage of the GAO Act of undercover operation accomplish- combination-locked area that could only 1980 (P.L. 96-226), the Congress gave ments, GAO had to obtain information be accessed by the FBI agents-in- GAO the authority to enforce its rights from closed investigative files that charge. Excellent working relation- of access to agency records. However, supported FBI accomplishment ships were maintained with those the act provides that GAO cannot bring claims. In this case, GAO agreed, with agents because none of the staff an enforcement action in court for the requester’s concurrence, to have wanted to be locked in or out. records if the Director of the Office of FBI agents review the files and extract Security must also be maintained at Management and Budget or the Presi- the necessary documents. Generally, the GAO office space inside the build- dent certifies that disclosure of the the agent reviewing the file was not the ing. Even though the room is locked material would (1) substantially impair agent who investigated the case and each night, all file cabinets must be the operations of the government and claimed the accomplishment. As a locked and security material stored in (2) be exempt from disclosure under 5 result, if the documents provided to the safe. All GAO workpapers involving U.S.C. 552(b)(7), the Freedom of Infor- justify the accomplishments were in- the FBI are kept inside the Hoover mation Act exemption for investigative adequate, GAO could not determine building. Those from old assignments and informant files. As a practical mat- whether the accomplishment was cor- are stored in locked file cabinets in the ter, GAO has never initiated an en- rectly claimed or if the agent who basement. Even the phone book cannot forcement action for FBI records, and reviewed the file simply overlooked the be taken outside the building. To en- the FBI has never sought the certifica- documents needed. sure that everything is secure, FBI tion. The two agencies have always On some assignments, negotiating security forces visit the site (as well as been able to negotiate access to access to records is less difficult. GAO all offices in the building) every night. records in a manner satisfactory to looked at the problems of FBI agent Any security violations noted must be both or to the Member of the Congress rotation during one recent assignment. The records the evaluators needed explained by memorandum to the FBI who requested GAO to study FBI contained no informant names or con- GAO liaison official. programs. fidential information, and GAO obtained them easily. The FBI agents we con- Access to Records Access Negotiations tacted were interested in this assign- Take Time ment. They have to rotate frequently, The FBI needs to protect the con- which uproots their families, requires fidentiality of its informants, investiga- The negotiation process makes it them to buy and sell houses in times of tive techniques, and open cases as difficult to forecast the timing of GAO high interest rates, and generally dis- well as its grand jury material. Informa- assignments at the FBI. For example, rupts their lives. tion is provided, even to FBI agents, GAO received a congressional request only on a need-to-know basis. At the involving FBllDrug Enforcement Ad- same time, GAO needs access to all ministration task forces in June 1981 Measuring FBI the information necessary to do its and was set to begin work in July. How- Achievements work. Sometimes the FBI readily pro- ever, FBI officials believed the timing vides GAO with needed access, but ac- of the audit was poor and refused ac- How will improved management of cess to most FBI records is difficult to cess to information needed to com- FBI operations affect the FBI’s ability obtain. plete the request. Initial negotiations to control and reduce crime? This Obtaining information for audit pur- with FBI officials were unsuccessful. question - the evaluator’s bottom-line 18 Auditing at the FBI

L mepure of the effect of recommended enforcement issues are highly publicized state, and local investigative agencies improvements - is difficult to answer. national concerns. Crimes and their were not being recognized on the Overall crime statistics are inconclu- results receive extensive daily expo- accomplishment reports. Responsible sive, and the effect of FBI efforts cannot sure in print and electronic media. FBI officials recognized the need for be easily separated from those of other Reducing street crime or violent crime change and made the change long criminal justice system components. has been a major national issue in before the report was issued. The FBI Criminals try to keep themselves every presidential and congressional agents who manage FBI operations and their crimes anonymous. Thus, the election for the past several years. The willingly make management changes full extent of crime is unknown. To results of evaluations at the FBI are a when they see the opportunity for im- make matters more confusing, the two part of the information and ideas GAO provement. Reportable findings get national measures of crime in the contributed to the formulation of the lost in this process, but management United States - the FBI’s Uniform recently passed Comprehensive Crime improvements are implemented quick- Crime Reports and the Bureau of Control Act of 1984 (P.L. 98-473). The ly. All in all, evaluating FBI programs Justice Statistics’ household surveys act is a significant attempt to improve can be a unique experience - one that - have presented differing pictures of and streamline the criminal justice is well worth the effort. Where else crime trends over the last 10 years. The system. GAO’s major accomplishments could evaluators have their pictures first had shown steady increases from at the FBI have been achieved through taken as part of an assignment while the early 1960’s until the last few years, its reports2 on domestic intelligence learning how to operate a Thompson when the trend reversed. The second and investigative priority; however, it is submachine gun from an FBI expert in- has shown relatively steady crime also possible to achieve accomplish- structor at the FBI indoor shooting rates over the last decade. Different in- ments without issuing reports. range? terpretations of these statistics lead to The revelations about FBI abuses in different conclusions about the need monitoring the activities of legitimate for and effectiveness of FBI efforts. domestic individuals and organiza- The Attorney General and the Direc- tions during the middle and late 1970’s Bibliography tor of the FBI have cited the recent were well-publicized in the media. declines in Uniform Crime Report sta- GAO’s reports in this area focused on “FBI Domestic Intelligence Operations tistics as evidence that the increased ways to improve inte,rnal management - Their Purpose and Scope: Issues use of law enforcement resources is and clarify legislative authority so that That Need To Be Resolved” (GGD-76- having a positive effect on a problem proper control and oversight could be 50, Feb. 24, 1976). of national significance. However, exercised over FBI domestic intelli- “FBI Domestic Intelligence Operations some criminologists argue that the gence operations. In a later study of in- - An Uncertain Future” (GGD-78-10, decreasing crime statistics reflect the vestigative priorities, GAO found that Nov. 9, 1977). increasing age of the general popula- the FBI emphasized arrests and con- “The FBI’s System for Managing Inves- tion; that is, as the average age of the victions in measuring its investigative tigative Resources and Measuring population increases, the number of in- results. This led its investigators to Results - Improvements Are Being dividuals in the most crime-prone focus their attention on cases that Made” (GGD-78-1, Feb. 15, 1978). years (ages 15 to 26) decreases and so could be completed quickly and prose- “Bank Robbery - The Federal Law En- does the crime rate. Still other observers cuted easily. GAO’s reports in this area forcement Role Should Be Reduced” say that the crime statistics now col- recommended shifting the emphasis (GGD-78-87,Aug. 18, 1978). lected are so flawed as to give an inac- away from making arrests and convic- “Impact of the Freedom of Information curate and incomplete picture of the tions to recognizing investigations of and Privacy Acts on Law Enforce- amounts and kinds of crimes actually high-level organized crime and white- ment Agencies” (GGD-78-108, committed. collar crime that take much longer to Nov. 15, 1978). Evaluation difficulties associated complete but have a more significant “Quantity to Quality: Changing FBI with the statistical problems are fur- effect. In addition to these ac- Emphasis on Interstate Property ther compounded because the FBI’s ef- complishments, GAO has contributed Crimes” (GGD-80-43, May 8, 1980). forts are only one part of the entire to reducing the number of agents and “Special Agents Should be Phased Out criminal justice system. The system - amount of agent time spent in such as FBI Crime Laboratory Examiners” other investigative agencies besides noninvestigative areas as the process- (GGD-80-60,July 18, 1980). the FBI, prosecutors, judges, probation ing of Freedom of Information Act re- and corrections officers, and others - quests and laboratory analysis, im- produces the results. The FBI has little proving the timeliness of Freedom of See bibliography on p 19 for reports on control over the results of its work Information Act request processing, domestic intelligence (GGD-76-50. Feb. 24. (prosecution, convictions, and incar- and improving the accuracy of ac- 1976, GGD-78-10. Nov 9. 1977, eg.) and in- ceration) that are managed by other complishment reporting and the qual- vestigative priority (GGD-78-1, Feb. 15, 1978; segments of the criminal justice system. ity of information-systems software GGD-78-87, Aug 18, 1978, e 9.) evaluations. GAO issued reports in all ’See bibliography on p 19 ‘for reports on pro- these areas? cessing Freedom of Information Act requests Despite the Difficulties, and laboratory analysis (GGD-83-64, May 23, Reports are not the only way GAO 1983; GGD-78-108, Nov. 15, 1978, e.g ), im- the Results Can Be was able to achieve results at the FBI. proving the timeliness of Freedom of Informa- Satisfyimg When the evaluator’s line-of-questioning tion Act request processing, and improving the or direct statements indicate potential accuracy of accomplishment reporting Problems in meeting administrative management weaknesses, changes are (GGD-84-79, Aug 21, 1984) and the quality of requirements, obtaining access to often made long before the report is information systems software evaluations records, and determining effect may issued. For example, one of the things (GGD-84-24, OCt. 18, 1983). make the work difficult and frustrating GAO noticed in its review of under- at times, but the FBI is still an exciting cover operation accomplishments was and rewarding agency to evaluate. Law that the contributions of other federal, See FBI, pg. 37 19 Motivating Subordinates: Making It Work

popularity of books on how to achieve Maintain Positive excellence in organizations suggests Expectations for Your that interest in management develop- Subordinates ment and organizational behavior has never been stronger than it is now. In response to the Japanese challenge to Managers’ expectations and treat- American technological supremacy, ment of subordinates will greatly affect books discussing management tech- those subordinates’ ability and desire niques and organizational behavior to perform effectively. Sterling Living- have proliferated on the best-seller ston’s widely read 1969 Harvard Busi- Sande Lehrer lists. Many of GAO’s internal manage- ness Review article, entitled “Pygmalion ment development training courses in Management,” convincingly describes Mr. Lehrer joined GAO’s Office of Organization (Elements of Supervision, Advanced this “Pygmalion Effect” or “self-fulfill- and Human Development in 1981 as a manage- ing prophecy.” The term “Pygmalion” ment development specialist He helped design Supervision, Managing for Productivi- t y) d i s c uss mot iva t io na I tech n iq ues derives from George Bernard Shaw’s an integrated management development pro- play entitled Pygmalion in which a gram for GAO and was responsible for its coor- and strategies. With all of this informa- dination and implementation He teaches sev- tion concerning management and country girl is transformed into a grand eral management courses and has helped organizational strategies for improving lady through the positive expectations develop the managerial and executive curricu- productivity and performance, why of her tutor. The Broadway musical My lum. In the spring of 1984, he was named haven’t managers been able to fully im- Fair Lady also was based on this idea. manager of GAO’s new Learning Center Mr. plement effective motivational tech- The essence of the Pygmalion Effect Lehrer received a 6.A in psychology from niques, and what can they realistically is that, through their efforts and expec- Case Western Reserve University in Ohio He do to improve the situation? tations, managers can influence the also received a master’s degree in counseling performance of subordinates. If a man- and guidance and a Ph D in education admin- ager does not believe that a subordi- istration and supervision, both from the Univer- Successful Managememt sity of Southern Mississippi. Before coming to nate can perform a particular task GAO, he taught on the secondary school and Strategies satisfactorily and expects that individ- college levels He has written several profes- ual to fail, those doubts will be commu- sional articles on education, management, and Even though an organization’s ulti- nicated (verbally andlor nonverbally) to career development issues mate success is highly dependent on the employee. A manager’s tone of the collective efforts of all its employ- voice or inappropriate word selection ees, managers are key resource people can convey certain expectations to a who perform critical roles in ensuring subordinate. Likewise, managers can A galaxy of popular books, magazine that the work gets done. Managers’ motivate or “demotivate” individuals articles, and academic theses has performance depends, to a large ex- through nonverbal behavior. Body been written about the subject of work tent, on how well their subordinates posture, lack of eye contact, inatten- place motivation, yet managers at GAO perform. “Managing people effectively tiveness, and facial expressions each and elsewhere often know surprisingly is the most critical and most intricate communicate some type of message little about the basic managerial task problem for the manager of today” to the receiver. Subordinates will even- of getting employees to do their work. (Badawy, 1983),one author says. “Suc- tually internalize perceived lack of con- This dearth of motivational expertise cess in management is largely deter- fidence in their ability and begin to reveals itself in the frustration-laden mined by the manager’s ability to question their own skill level. comments all managers seem to make understand, interact with, com- Managers who expect their subordi- from time to time: “I’ve done all I can, municate with, coach, and direct nates to perform ineffectively will be but she doesn’t seem interested;” subordinates.” Effective managers are rewarded with ineffective performance. “They just don’t seem to care;” or able to establish cohesive and mature Subordinates who lack confidence “What do you expect? He has always work teams that lead to greater subor- shun risks, avoid making decisions, been that way.” This article describes dinate commitment and motivation. In- withhold their opinions or suggestions, three systematic, common-sense, and effective managers, on the other hand, and rationalize lack of success. easy-to-follow approaches to motivat- generally lack interpersonal com- Unusual as it may seem, “managers i ng su bord inates that produce resu I ts. petence and have trouble motivating are more effective in communicating “The inability to motivate subordi- subordinates. Managers must not low expectations to their subordinates nates” is like a refrain from a popular forget that an organization’s most im- than in communicating high expecta- old song continually played. Motiva- portant resource is its people. The tions to them, even though most man- tional theories have been formulated, following three strategies are intended agers believe exactly the opposite” discussed, regurgitated, reformulated, to remind managers of successful (Livingston, 1969). discarded, and reinvented during the techniques they can use to motivate Participants in the GAO Advanced past 60 years. However, the enormous and challenge their staff. Supervision course view a demonstra-

20 GAO Review/Summer 1985 4 tiorp of the self-fulfilling prophecy at Employees will develop and rise to the correct standards. Unless the manager work through a videotape entitled, “The occasion if “they are convinced that takes the initiative and provides feed- Case of the Missing Person.” The others whom they respect expect them back to subordinates, their behavior re- videotape uses a case-study format to to do so and support them in their mains unchanged because the subor- explore the effect of a manager’s ex- endeavors” (Margerison, 1981). dinates will not realize that their work pectations on the performance of a is less than satisfactory. subordinate. It shows how a manager’s Provide Feedback Effective managers give feedback low expectations can transform a sub- to Your Subordinates continuously, not only at performance ordinate from a highly motivated indi- appraisal time. Positive feedback rein- vidual to a person who can accomplish Employees need to know how they forces current behavior and motivates very little. The videotape goes on to are doing, what tasks they are perform- employees to cont i n ue ex hibit i ng demonstrate how the manager can ing well, and what areas might need to appropriate actions. It reinforces the then make the “missing person” (the be improved. It is the unusual individ- motivation to succeed or achieve by productive employee) reappear by com- ual who does not want to know how providing recognition for accomplish- municating positive expectations both hislher work is perceived by the boss. ments. Most workers have the capability verbally and nonverbally. Many managers make the common to perform as required or desired. In Oftentimes, managers unconsciously mistake of providing feedback only fact, providing feedback about a per- (and sometimes consciously) affix when performance is not acceptable son’s behavior or performance may be labels to subordinates such as “loser,” and overlook or neglect providing feed- the only catalyst needed to return per- “average,” “over-the-hill,” or “lazy” back when performance is good. Man- formance to acceptable levels. Accurate because of information generated agers normally intervene only when and timely feedback enhances growth through the organizational grapevine things are not going smoothly, zeroing and learning. or gleaned from previous performance in on mistakes. Otherwise, they main- Providing feedback is a key to moti- appraisals. In addition, some managers tain their distance when things are pro- vating employees because it recog- have the tendency to assume that a ceeding properly. On the surface, that nizes the importance of their work, subordinate’s inability to successfully strategy seems logical. The capable communicates how they are perform- perform one task means that the same workers are performing adequately, so ing, and demonstrates the manager’s subordinate will have difficulty per- why bother with them? However, not interest and concern for their develop- forming other jobs. It is essential for providing individual feedback, even to ment. It is critical for the manager to managers to instill confidence in their the good worker, will eventually cause see not only the necessity of providing employees and not to delegate to a person’s morale to plummet, result- feedback on an ongoing basis but to “losers” those meaningless tasks that ing in lower productivity. know how to deliver it effectively as would reinforce or perpetuate their If subordinates go unrecognized for well. Such vital managerial function designated labels. It is extremely dif- good work, they will assume that their as developing subordinates cannot be ficult to remove labels once they have boss does not care about their output accomplished without giving effective been applied. Because subordinates and that their work lacks significance. feedback. are capable of growing, developing, It is critical for a manager to realize and changing, it is critical for that a good situation will deteriorate if Match Appropriate managers to continually reassess the no feedback is given. “Feedback and Consequences With appropriateness of these labels. knowledge of results are important ele- Appropriate Behaviors The self-fulfilling prophecy has been ments in motivating the employee. For studied in academic and business satisfaction, growth, and development, Quite naturally, people tend to environments. Students or subor- employees need to get feedback on repeat behaviors or actions that bring dinates randomly identified (to their what they have done particularly well, rewards or positive consequences. teachers or managers) as “intellectual what opportunities they have for im- Conversely, people avoid work that bloomers” or “fast4 rackers” rose to provement, and what they are doing results in negative sanctions. For ex- meet these expectations and did signi- just right” (Allenbaugh, 1983). ample, workers arriving at the office ficantly better than their counterparts It is essential for people to know early who find themselves having to who were not so identified. This how well they are doing. Oftentimes, make coffee or answer the telephones phenomenon has been consistently subordinates might not even realize because no one else is there might replicated in over 100 studies (Baird that they are not performing as ex- decide to arrive later in the workday to and Wieting, 1979). pected. Many managers assume (par- avoid doing what they perceive as The implication is clear: Managers ticularly in the case of more experi- unimportant tasks. Likewise, an ener- can inspire their subordinates and in- enced workers), that their subordinates getic subordinate who does a fine job crease productivity by displaying faith understand what they are expected to on a project and completes it ahead of and confidence in the abilities of their do and do not need any instruction, ad- schedule, but is “rewarded” with extra staff members. Managers get what vice, or assistance. More often than and seemingly inconsequential work, they expect. Effective managers believe not, however, subordinates do not might become reluctant to work as that most workers want to do well and know what is expected of them and are rapidly on future assignments. Man- are capable of doing good work. “Man- unaware if their present level of per- agers consciously and unconsciously agers who express high expectations formance is adequate. The only way influence their subordinates’ perfor- of their subordinates will be rewarded that poorly performing subordinates mances. with subordinates who.. .generally will discover that they are not meeting Selecting the appropriate conse- fulfill their superior’s expectations expected performance criteria is quences for performance requires a about their abilities” (Sherwood, 1983). through feedback. Negative feedback preplanned, systematic approach. Ap- Good managers or leaders want to should be constructive, nonthreaten- propriate actions should be reinforced make winners out of their subordinates ing, and specific. It should permit the by consequences that are perceived to and attempt to create an environment inadequately performing subordinates be valuable and desirable, while in- that will bring out their full potential. to adjust their performance to meet the appropriate performance should be 21 e

Managers should be Careful about labeling subordinates-Through their efforts and expectations, managers can influence the performance of subordinates. Once applied, a label is difficult to remove. followed by consequences thought to consistently do good work.” On the (that are probably less appropriate) to be undesirable. If managers do not pay other hand, recognizing or rewarding a handle a situation rather than apply close attention to how consequences staff member for mediocre performance the new skills that we are attempting are administered, some individuals will only encourage mediocrity. An to master. Thus, it is essential that may receive positive consequences for effective manager allows individuals GAO managers encourage their subor- undesired performance. Other individ- an opportunity to learn and do, gives dinates to learn, practice, and apply uals may receive insufficient positive them feedback on how the job is pro- new skills on the job. consequences for exhibiting desired gressing, provides assistance when GAO, through its Learning Center in behavior or, worse yet, negative conse- needed, and administers the appropri- Washington, D.C., now provides a quences for performing appropriately. ate reinforcement for the outcomes. unique opportunity for headquarters, Managers have the influence and Behavior is controlled largely by conse- regional, and international branch ability to structure consequences prop- quences, and reinforced behaviors are staff to assume responsibility for their erly. Subordinates can be actively influ- more likely to be repeated in the future. own development. Materials are sent enced by managers to perform better. to any GAO location upon request. The Staff members expecting to be posi- Opportunities GAO Learning Center is a resource tively rewarded for exhibiting certain To Develsp or area for self-instructional study that behaviors will tend to exhibit those Refine provides individualized training to ac- specific behaviors. Positively reinforc- Motivational Skills commodate different styles and rates ing or praising desirable actions will of learning. It’s a great way for individ- make people feel good about them- It is important that managers feel uals to acquire, practice, and refine selves. People who experience suc- sufficiently comfortable with the three their skills without feeling “uncomfort- cess and perceive that they are doing techniques described above to confi- able” about making “mistakes.” The well will want to do even better and, dently apply them in real-life situa- Learning Center provides all GAO thus, are likely to continue to improve tions. The process of learning and employees the opportunity to select their efforts in the desired direction. developing a new skill or refining an ex- from a variety of training packages and Success instills confidence. A person isting one can be frustrating, since in- media to meet specific interests and performing a job successfully will not dividuals are bound to make mistakes needs. only feel more confident about perfor- while attempting to “perfect” new Managers wishing to learn more ming that specific task again but also techniques. It is the unusual person about the motivational techniques (and will feel less anxious about trying new who immediately demonstrates profi- other management development con- assignments. ciency in a new task. When learning a cepts) discussed in this article and Proper management of consequences new skill, most people need support, who want to practice applying these is critical to maintaining desired per- encouragement, an opportunity to techniques can choose from a variety formance. Systematically reinforcing practice, and the flexibility to be allowed of management development software desired results is a powerful tool that to make a reasonable number of packages available at the Learning managers can use to motivate subordi- mistakes. Center. For example, the package nates. Praising or recognizing subordi- Each of us has a self-image to pro- Motivating To Achieve Results is nates for a job well done will help moti- tect; we are usually reluctant to prac- designed to increase a person’s under- vate them to continue moving in the tice our new skills in the real world for standing of motivation and its effect preferred direction. Specific praise is fear of appearing awkward, silly, or ig- on employee performance. Case more effective than general praise. In- norant. Some of us might even be afraid studies help users evaluate typical stead of saying, “You’re doing great,” to ask for advice, assistance, guidance, work situations to assess how they, as managers should say, “You did a great or training in a certain area for fear of managers, handle employee motiva- job on the Block Grant report. Your “publicly acknowledging” what we tion. The program assists managers in detailed analysis, the corresponding think might be perceived by others as a improving the motivation of their graphics, summary, and recommenda- “weakness.” The result is that we subordinates by examining a motiva- tions were succinct and insightful. You usually revert to more familiar behaviors tion model, analyzing how to improve

22 I motivation, and developing an action be practiced until mastered, and per- vate subordinates,” will no longer be plan to positively influence employee mit weaknesses to be diagnosed in heard. motivation. The outline of the program private. is illustrated in Figure 1. Related management development Motivation: An Efficient Bibliography software packages available through to Productivity the Learning Center include Means Assessing Personal Management Allenbaugh, G. E. “Coaching. . .A Man- Skills, Good managers or leaders recognize agement Tool For A More Effective Evaluating Organizational Effective- that their performances are judged Work Performance,” Management ness, primarily on the productivity of their Review, 72(5) (May 1983), pp. 21-26. Understanding Personal Interaction work groups. In other words, their suc- Badawy, M. K. “Why Managers Fail,” Styles, cess depends on the success of their Research Management, 26(3) Leading Effectively, subordinates. Effective managers take (MaylJune 1983), pp. 26-31. Motivating To Achieve Results, pride in the accomplishments of their Baird, J. E. and Wieting, G. K. “Nonver- Improving Employee Performance, subordinates and consistently develop bal Communication Can Be A Moti- Performance Appraisal, productive employees by displaying vating Tool,” Personnel Journal Managing Time Effectively, and certain attributes, such as respect, (Sept. 1979), pp. 607-610. Conducting Successful Meetings. concern, warmth, and a willingness to Livingston, S. “Pygmalion in Manage- Many of these programs give users listen. Ensuring that an organization’s ment,” Harvard Business Review, the opportunity to assess their own employees are motivated is probably 47(4) (JulylAug. 1969), pp. 81-89. managerial behavior and to compare the cheapest and easiest way for a Margerison, C. “Where’d You Learn To their self-assessments with either the company to improve its productivity. Be A Manager?” Supervisory Man- anonymous assessments of them by The three strategies described in this agement, 26(2) (Feb. 1981), pp. 40-43. their subordinates or the responses by article have proven to be successful. If Sherwood, W. B. “Developing Subordi- other managers across the nation to more managers begin to systematically nates: Critical to Managers and Their these same questions. The programs implement these techniques, it is likely Organizations,” Personnel, 60(1) simulate real situations, allow skills to that the refrain, “the inability to moti- (Jan.-Feb. 1983), pp. 46-52. Figure 1

I I Instructions and Exit This Program Discription Study Units Program

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I Exploring Analyzing The Understanding Understanding The Motivation Motivation Of The Manager’s Role Human Needs Model I Employees I

Understanding LI Decisions Case study your own needs

Actions

Results Assessing your Responding to motivational employee needs practices w Feedback From: Thoughtware. Inc., Coconut Grove, Florida Lc=I Edited by Robert E. Levin Governing the At the invitation of the GAO Executive and Resources Board, former White House press officials David Gergen and Jody Powell were Media: A Forum With featured in a September 1984 forum on “Gov- erning and the Media.” The forum was part of the Executive Speakers Program, a quarterly David Gergen and program that sponsors nationally prominent speakers who discuss issues of interest with GAO’s managers and executives Gergen, Jody Powell from the Nixon, Ford, and Reagan administra- tions, and Powell, from the Carter administra- tion, drew from their experiences to express concerns about the media and suggest ap- proaches that responsible governing officials can use to work with the media more effec- I’m told that when Harry Truman an- wants to have foreign policy follow tively. Toward the end of the discussion, Gergen and Powell focused on how these ap- nounced that the United States had public opinion. We find that the Con- proaches could be applied at GAO. They began dropped the bomb in Japan, he called gress wants to have a more forceful their remarks, edited for the GAO Revrew by in the White House press corps - es- hand in the conduct of foreign policy, Robert E Levin, Resources, Community, and sentially 12 reporters. Today, in the and the Congress, of course, is more Economic Development Division, with a gen- Reagan White House, there are 1,700 subject to public opinion than the ex- eral statement of philosophy about the media people in the press corps who have ac- ecutive branch. So, because the public cess to the White House. Many are has become much more essential to sound technicians, camera operators, the successful conduct of foreign Major Changes and producers, but most are reporters policy, it seems to me that the media andlor columnists who make their liv- has a greater responsibility to educate in Media Coverage ing trying to get on the air or in the and inform. newspaper with stories about the Unfortunately, today, the press is GERGEN: I think there are couple of President. shrinking from its commitment to obvious things about the modern This makes the White House an in- reporting overseas events. Let me give media that we all agree on. One is cer- credibly intense place, and people, you a couple of numbers that I find in- tainly the rapid changes that have such as Jody and myself, find that our teresting. The number of U.S. jour- taken place in technology over the last lives are consumed by trying to meet nalists posted overseas declined from 20 years. These changes have made the demands of a very, very hungry 515 in 1963 to 429 in 1975 to approx- the power of the media somewhat press corps. I find that most reporters imately 350 in 1983. larger and the press such a more im- take their responsibilities seriously. In the U.S. today, about 10 percent of mediate force in our lives. Word about They want to entertain, educate, and Lincoln’s assassination took 5 days to the space in our major newspapers is elevate, and I think they deserve a lot devoted to foreign coverage. When you reach London, but news of the assas- of credit. But I would tell you that I sination attempt against President go to Europe or other foreign places, think that anybody who has worked in major newspapers devote at least 15 to Reagan took about 5 minutes to reach this field for any length of time comes around the world. This brings to mind 20 percent (to that kind of coverage). away with a lot of reservations about The U.S. press tries to make up for its all kinds of changes and how rapidly how well that job is being done. The news now travels. lack of affirmative commitment to media presents institutional problems overseas posts by shifting people in There has also been a tremendous for those who attempt to govern in explosion in the amount of reporting, and out of assignments, and the result Washington, whether they are Demo- is that we get very disjointed, episodic particularly from Washington, D.C. In crats or Republicans. the last 20 years, public affairs pro- reporting. graming has doubled on the major net- The most obvious example has been works. The evening network news has Declining Quality of in El Salvador. At the beginning of the gone from 15 minutes in the early Foreign News Coverage Reagan administration, most people 1960’s to 30 minutes today. And there did not know where El Salvador was. are more programs now: the morning Let me talk briefly about two things As Americans became aware of the news shows; shows such as Nightline, that particularly trouble me. In foreign serious interests there, the press the (David) Brinkley show, the MacNeil- policy over the last 20 years or so, par- started picking up on that. I remember Lehrer Report; and cable news, which ticularly with the war in Vietnam, we the first report by CBS’ Cronkite on El reaches 40 percent of the U.S. homes shattered the bipartisan support for Salvador. Behind him was a map of that have televisions. In the two 1984 foreign policy. We no longer share Vietnam. Nothing was said about Viet- political conventions, C-SPAN (the common assumptions and values about nam, but the map sent a message. In Cable Satellite Public Affairs Network) what America’s role in the world ought any event, we got into that without the and CNN (the Cable News Network) to be. We have a lot of competing public’s understanding of what was at carried gavel-to-gavel coverage. views, and no one view seems to win stake. When El Salvador held an elec- What this has meant is that there is majority support. tion early in the Reagan administra- a proliferation of information. It has Second, it is very clear that the tion, the press poured all sorts of also meant a tremendous proliferation public wants to participate more fully reporters in to become instant experts of reporters here in Washington. Com- in the process. All sorts of surveys by on life in Central America. On the day pare what has happened at the White Daniel Yankelovich show that the after the election, it was like switching House over the last quarter century. public wants to be consulted and off a light. All those camera crews

GAO Review/Summer 198‘

Governing and the Media

gives a very false sense of what is really don’t. One of the best pieces of advice I ishing the ability of networks to pu? on going on. And I would make this argu- got when I came to the White House - good programs. ment: Negative reporting undermines and one that I had the most trouble POWELL: I don’t have any basic argu- public confidence in the officials who following - was “read the cables.” ments with what Dave said. But I am are trying to effectively lead govern- What this means is to make sure you also essentially pessimistic that if you ment institutions. I think dealing with know the background and develop- give networks a few extra dollars, the press is one of the great challenges ment on an issue before you strut out they will actually spend it on some- facing political leaders, and it doesn’t to that podium and begin to explain it thing worthwhile. The most fundamen- make much difference whether they to the press. Almost nothing is worse tal bias in journalism is economic in are Democrats or Republicans. The than stating publicly that such and origin. Ingrained in the whole institu- American people have a lot to talk such is the case and then finding out tion is the understanding that news about to make our press more respon- later that it is not. has to sell. Unfortunately, the differ- sible and our government institutions ence between the media and most more effective. Know Where You Are POWELL: If I had to pick three points other institutions is that there is not a in terms of dealing with the press, I Going countervailing threat that something guess the first would be “Do as I say, bad will happen to you if you yield to not as I did.” Beyond that, I suppose “Know where you are going” is the the temptations of greed and ambition. they would go something like this: third point. There is a great tendency in GERGEN: Network news organiza- tions have found that they must enter- know who you are talking to, know dealing with the press to concentrate tain their audiences. So they have cut what you are talking about, and know upon the brush fires and spend all your the length reports from well over where you are going. time in a reactive mode: never stepping of back to see how it all fits together; 2minutes to about a minute and 14 never doing the sort of planning that is seconds. They have got to quickly get Know Your Audience necessary if you are occasionally go- in and out of a story to keep their au- ing to be in the driver’s seat. I know of diences. In contrast, perhaps, is the The “know who you are talking to” no greater contrast between the Carter MacNeil-Lehrer show, which isn’t bears rather directly upon Dave and Reagan administrations than the driven by financial considerations Gergen’s comments about the proli- latter’s ability to be proactive in deal- because it gets grants to operate. Of feration of news organizations and in- ing with the media. course, it doesn’t have a big audience, dividuals here in Washington. One of I think that those people who are go- but at least it has the time to examine the major changes in my coming from ing to be involved in explaining and an issue more carefully and deeply. a state government to the federal gov- defending a particular proposal or pro- The saving grace may be the public ernment was not the complexity of the gram should be involved not at the end, itself. I have a very high regard for the issues nor the addition of national after all the decisions have been made basic common sense of the country, security matters, but just the sheer and all the alternatives have been re- and one of the things that a recent number of people who are involved in jected, but early in the process so they survey by Ruth Clark for the American that transmission point between gov- can understand why a decision is be- Newspaper Publishers Association ernment and the public. Even in such a ing made and what the arguments are showed is that people are clamoring large state as Georgia, maybe a dozen for rejecting those alternatives. for more serious consideration of reporters are covering that state house public issues in their news. They want full-time. to learn more about the world around Dave has already given you some in- Questions and Answers them. I think this is a very helpful sign. dication of how different that situation Question: In GAO we deal, for the is here. It’s extremely difficult to know Question: News organizations are most part, with rather serious subjects the sort of things that you ought to businesses that are quite attuned to - the efficiency and effectiveness of know about the journalists before you what sells. Can we ever avoid the less federal programs - and this does not have to deal with them. Understanding positive consequences that economic sell particularly well. But we do get a who they are and where they are com- pressures place on these organizations? fair level of press coverage, and some- ing from is, in my book, as important in GERGEN: Let me respond with a cou- times the need to sell a story and get it dealing with journalists as it is with ple of points. Yes, obviously television out quickly can affect accuracy. Do you any other aspect of human relation- pays a great deal of attention to rat- believe reporting was more accurate 20 ships - sales, the law, you name it. ings. This is particularly true with local years ago? This is particularly true here in Wash- news. Local news managers and sta- POWELL: My basic argument about ington, where the relationships be- tions pay a great deal of attention to what is wrong with (news reporting) is tween the press and politics are espe- the success of their local news pro- that it needs to make news interesting ically complex and involved. grams. News is more popular at the and exciting and that this does, on local level because of “happy talk” occasion, come in conflict with the that entertains and jazzes things up basic standards of accuracy, balance, Know What You Are but does not present much serious and fairness. I don’t know if it was bet- Talking About analysis. Networks find that their ter or worse 20 years ago. ratings are going down, and this makes GERGEN: Certainly there is competi- The second point, “know what you them do even less serious reporting. tive pressure to get a story out first and are talking about,” may sound relatively The quality of programming may go do the exotic angle on it. But it is also obvious and easy, but I can assure you down, and the news is going to be my experience that there are some it is not. The chief cause of pain, suffer- dominated more by cost considera- serious reporters here, particularly in ing, and death among press secretaries tions and popularity than news value. and those who deal regularly with the Public policy should be aimed at press is feeling that we know what we strengthening the financial founda- are talking about when, actually, we tions of news organizations, not dimin- See Media, pg. 37 26 Using the Computer in GAO Analysis: New Insights, New Uncertainties

Our work on performance appraisals chose 10 agencies for in-depth in the Senior Executive Service (SES) analysis. For each agency, we drew a was a case in point.’ When we finally statistical sample of executives. To got the data together and started ana- confirm our results, we also drew a lyzing it on a computer, our work took government-wide, statistical sample of David Fiske some unexpected turns. Computerized executives. In all, over 900 executives F. analysis of our questionnaire, in partic- were selected in our samples. Mr. Fiske, an evaluator in the San Francisco ular, revealed surprising hidden pat- All data from these sources were Regional Office, worked first in the Chicago terns that manual analysis would likely computerized. To evaluate this data on Regional Office He has been a Peace Corps never have discovered. This article is the computer, we used the Statisticai volunteer in Africa, a company commander in about those hidden patterns: how find- Package for the Social Sciences the US. Army, and an Office of Economic Op- ing them demolished one of our origi- (SPSS),5 a powerful statistical analysis portunity field representative. Before coming to nal hypotheses, changed our view of tool. (For a discussion of the technical GAO in 1980, Mr. Fiske worked at the Environ- another one, and provided an unex- “lessons learned” from computerizing mental Protection Agency and the Department pected new insight. of Health and Human Services. He has a B.A this type of data, see “Ask the degree in liberal arts from Wesleyan University Experts,” GAO Review, winter 1983.) in Connecticut and a J.D. degree from the John How We Started We also interviewed numerous senior Marshall Law School in Chicago. executives and experts outside and in- Our assignment was to evaluate the side government. effect of the requirement, in the Civil Almost everyone who has used a computer Service Reform Act of 1978, that senior One Hypothesis has experienced instances where computa- executives receive an annual perfor- Demolished tional results have sparked new insights’ un- mance appraisal? By law, SES perfor- covering mistakes in derivations or calcula- mance appraisals must be based on a tions; suggesting when to try a new analyti- Our first uncertainty arose when we management-by-objectives model: compared our content analysis of the cal method, or, occasionally, shining the light Senior executives and their superiors of inspiration into areas that had been thought performance plans with executive set objectives in individual perfor- opinions about performance appraisal devoid of new concepts or fundamental truths. mance plans; at the end of the period, -Norman J. Zabusky, University of Pitts- systems. One of our original expecta- burgh, quoted in Science News, the superiors appraise the executives’ tions was that we would find “star” ex- September 29, 1984 performance in meeting those objec- ecutives, or even agencies, where per- tives. formance plans were of high quality How would we evaluate the impact and where attitudes were positive. But Though the quotation comes from a of this requirement? After much dis- we couldn’t find this sort of pattern physicist, the startling impact of the cussion with staff from the General anywhere. We found technically ex- computer on our thinking is not confined Government Division and the Program cellent performance plans and apprai- to the physical sciences. As we increas- Evaluation and Methodology Division, sals where executives had negative ingly use the computer in our GAO we settled on a two-pronged approach. attitudes, and we found positive atti- work, we will be affected in much the We would evaluate the performance tudes where the plans were lacking. same way. Using the computer vastly plans themselves and executives’ at- In the end, we were unable to resolve increases our analytical power and titudes toward the process. stimulates new chains of thought and To evaluate the plans, we used a insight. quantitative method known as content But these new ideas are not always analy~is.~High-quality plans would ‘“An Assessment of Senior Executive Perform- comfortable. The computer increases conform to legal requirements and in- ance Appraisal Systems” (GGD 84-16, May 16, our certainty about some things, but it clude specific indicators of perform- 1984) also increases our uncertainties. As it ance. To evaluate the attitudes, we *Public Law 95-454, effective July 13, 1979 “sparks new insights,” or suggests used the data developed from our 5ee Methodology Transfer Paper 3: “Content Analysis A Methodology for Structuring and new truths, it doesn’t always provide q~estionnaire.~ Analyzing Written Material” (IPE, June 1982). the answer we originally expected. To Since our scope was government- 4GAO’s Program Evaluation and Methodology a great extent, learning to live with the wide, we had to select a sample that Division is drafting new guidance on question- computer means learning to live not would adequately represent the whole naire design only at a new level of analytical power government without generating an un- 5Statistical Package for the Social Sciences but also at a new level of uncertainty. manageable heap of data. First, we (SPSS) (New York McGrawHill, 1975)

GAO Review/Summer 1985 27 Using the Computer in GAO Analysis

this uncertainty, given our data and Figure 1 methodology. This enigma is for some future researcher, or GAO evaluator, to resolve. For us, however, it formed a Executive Responses on the Bottom Line classic example of the potential for un- certainty (and frustration) when we rely on computerized analysis. Ouestion: 35 Overall, how would you rate theadequacy of the The Importance system(s) used by your agency to set program of the Bottom Line objectives’) 1 Responses: 19% Sometimes, though, the computer “Much more than adequate” 15% comes through with a big hit. In our case, it didn’t happen the way we ex- “More than adequate” 27% pected, but it was a real thrill when the “Adequate” 33% “light of inspiration” shone into areas “Less than adequate” 19% that “had been thought devoid of new “Much less than adequate” 5% concepts or fundamental truths.” It started when we analyzed the results of our second expectation. Source: government-wide sample Graph shows responses to question. Our second expectation was that problems with organizational objec- the bottom-line question with responses tests showed statistical links between tives would be linked to problems with about whether performance appraisal these views of appraisal use and atti- individual objectives. To test this link, had a “positive effect on performance,” tudes about the effectiveness of an our questionnaire asked executives: was “worth its cost,” and “accurately” agency’s bonus system in ensuring Overall, how would you rate the reflected performance, we started to that “best performers get the best adequacy of the system@)or pro- get very strong significance numbers. rewards,” as well as attitudes about cedures used by your agency to As shown in Figure 2, for example, ex- whether the appraisal system was measure the accomplishment of ecutives who thought their agency had “worth its cost.” But the relative program objectives ? good objective-setting and measuring strengths of these correlations were We later called this our “bottom-line’’ systems also thought performance not what we expected. The links with question, since accomplishing a pro- appraisals had a positive effect on per- bonus decisions were weaker than the gram objective in the government formance. In other words, those who other links. seemed like making a profit, the well- were convinced that their agency knew Figure 4, based on our statistical known bottom line of the private sector. what the “bottom line” was and how to analysis, shows the strengths of con- We’d seen a lot of problems in gov- measure it considered the appraisal nection between these attitudes. Note ernment coming from poorly defined system accurate, effective, and that the “bonus” use of appraisal is at goals and unmeasured accomplish- worthwhile. the bottom of the first list and wasn’t ments. Thus, we expected a concentra- We were delighted. We finally had present at all in the second, while tion of negative responses to the solid statistical results that confirmed “training and development” and bottom-line question. Perhaps it would our original hypothesis: Individual and “downgrades in responsibility” are throw some light on problems with per- organizational performance were most near the top of both. formance appraisal. effectively linked (and optimized) when So the computer and statistical But it didn’t work the way we ex- organizational goals were clearly analysis uncovered a hidden message pected. Our interviews on the subject defined and well-measured. in executive questionnaire responses: with senior executives and outside ex- Agencies seeking to motivate their ex- perts were interesting, but we could The Uses of Appraisal ecutives should look beyond using ap- not see a clear analytical pattern. Next Results praisals in bonus decisions. Where we turned to executives’ written ques- agencies used appraisals in the full range of personnel decisions from tionnaire responses for evidence of an But the computer wasn’t done with - training and development to reassign- overall negative view of the bottom us. Our final surprise came when we ments and downgrades executive line, but in vain. As shown in Figure 1, looked at how agencies used perform- - we realized that some executives morale and motivation seemed to ance appraisals. Agencies are supposed increase! thought their agency had good bottom- to base bonus awards on final perform- line systems and some did not. We ance ratings. Since these decisions were stymied. have a direct impact on executives’ in- We then talked to some experts. They comes, we expected to find strong suggested we use chi-square tests to links between positive attitudes about analyze the data. These tests compare the use of appraisals to decide bonuses answers to two different questions, and other positive attitudes. 6SPSS, p 224 then estimate the statistical probability At first, we thought we were well on ’Since we administered the questionnaire, sev- that the pattern of answers could have our way. As Figure 3 shows, 75 percent eral of the restrictions on SES bonuses have happened by chance. The lower the of the senior executives thought their been relaxed These changes suggest that our significance number, the less chance agency used appraisal results in mak- questionnaire could yield different results if is involved, and the stronger the prob- ing bonus decisions. Smaller percent- administered today ability that a statistical relationship is ages thought appraisals were used for involved.6 We decided to try it. other personnel decisions. When we matched the responses to Again, as expected, our chi-square See Computers, pg. 37-38

28 Cleaning Out the Nation’s Attic: GAO Helps the Comptroller of the Currency

mained as caretaker, maintaining a a cigar butt purportedly smoked by large, closed receivership fund and President Rutherford B. Hayes. Those tens of thousands of unclaimed items things that had been stored in bank that had once been in safe deposit safe deposit boxes were neatly filed in boxes or bank vaults. shoe-sized boxes in coded cabinets. Rachel B. Hathcock The closed receivership fund con- Some items that had been kept in bank sisted of $2.7 million of delivered and Ms Hathcock is an assignment manager in the vaults were too large for these boxes; General Government Division’s Civilian Per- uncashed checks. A 1980 law3 author- these items had to be stored in trunks sonnel Group. She joined GAO in 1974 after ized OCC to terminate the fund and ab- or other containers. receiving a BSIBA degree, magna cum sorb the proceeds into its general As caretaker, OCC had listed in an laude. from East Carolina University in Green- operating account. The items remained inventory control ledger the contents ville, North Carolina. Ms. Hathcock spent 6 in OCC’s custody, stored in the vault of of each individual box, its owner, the years in the Federal Financial Institutions the main Treasury building, bank’s name, and the city and state. Group, where she received two cash awards , During the inventory, OCC matched for her suggested improvements to GAO opera- each item listed in the control ledger to tions as well as other Merit and Certificate of Appreciation awards Ms. Hathcock was not the actual items in the coded boxes. heir to any of the unclaimed inventory remain- There were numerous discrepancies: ing from OCC-liquidated banks Some listed items were not in the boxes, and some items found in the

_____ ~~ boxes were not listed on the control Ah, the joys of spring cleaning! As ledger. you wash the windows and clean out the garage, reflect on the Comptroller Treasure or Trash? of the Currency (OCC),’ who recently cleaned out his “attic.” It was filled not Since there had never been an ap- with a single year’s accumulation of GAO Gets Involved praisal of the inventory, OCC had no family junk, but with the contents of official estimate of its value. However, thousands of safe deposit boxes that Sometimes GAO’s attention to mat- the intrinsic value of much of the prop- had been left in the custody of the U.S. ters in need of audit arises from statu- erty probably would be overshadowed government for the last 50 to 100 years. tory requirements. Sometimes it arises by its appeal to collectors for its “an- The attic contained the unclaimed from information supplied by the Con- tique” or historic value. Also, it was property of over 22,000 individuals who gress or the public press. And some- possible that some of the items might had deposited money with or rented times it arises out of the initiative of an be “priceless” because of their condi- safe deposit boxes from national alert auditor who gets an unusual tip in banks that failed before 1934.2 an unusual place. In this case, it was at Why has so much of this property the coffee machine that GAO first gone unclaimed? When a national learned of the unclaimed items OCC bank failed, OCC appointed a receiver was preparing to move to permanent ’The Office of the Comptroller of the Curren- to wind up the affairs of the bank and storage at Fort Knox, Kentucky. It was cy is an agency of the US Treasury. It to return the assets to their rightful out of concern and curiosity that we charters, supervises, and regulates all U S owners. Before 1934, recordkeeping went to the vault to observe the un- banks that operate under a national charter and communication were not nearly as claimed property and OCC’s inventory 2Prior to the establishment of the Federal extensive or systematic as they are process. We could not have antici- Deposit Insurance Corporation (FDIC) in 1934, today. Thus, many of the owners of pated what we were to see. banks that failed were liquidated by the state property or funds held by these banks It was as if a time capsule had been or, in the case of nationally chartered banks, by could not located. After the receiver unearthed: We saw antique cameos, the Comptroller of the Currency OCC would had dispersed assets to the owners Civil War currency, rhinestone buttons, appoint a receiver to liquidate all assets, pay all claims, and settle the bank’s affairs OCC who could be located, the remaining ancient guns, silver pitchers, stock cer- liquidated its first bank in 1865 and its last in unclaimed property was turned over to tificates, stamps, love letters, gems, 1934. the OCC. Because neither the OCC nor watches, diaries, deeds, marriage cer- Sections 721 and 723 of the Depository In- the federal government had right nor tificates, false teeth, photographs, stitutions Deregulation and Monetary Control title to dispose of the property, OCC re- and, in a wad of ancient aluminum foil, Act of 1980. Public Law 96-221

GAO Review/Summer 1985 29 Cleaning Out the Nation’s Attic

1 tion, history, or uniqueness. We had, caused particular concern, as the p,rop- however, no idea whether we were erty to be returned included the 50-year looking at an invaluable historical old adoption papers of the claimant. collection preserved by a long- Rather than return these papers to the standing legal quirk or at a closely possibly unsuspecting adoptee, OCC guarded pile of junk. asked for more information about the Regardless of its value, the property family. In subsequent communica- had been unseen and unused for a half tions, the claimant revealed that he century or more. It seemed a shame to knew he was adopted. Without trepida- hide the items indefinitely at Fort tion, OCC returned the claimant’s Knox. We expressed our concern to adoption papers. OCC and, at our suggestion, the agen- Other returned property included cy transferred the physical inventory to such odd items as a bug collection, a the Smithsonian Institution’s Museum notices appeared not as paid advertise- piece of 50-year-old wedding cake, a jar of American History. Museum curators ments, but as human-interest news of teeth (not false teeth, either), and reviewed the property and tagged stories written as a result of an agency some “art” magazines (pornography, about 600 items that would comple- press release. Articles were written in in less delicate terms) from the roaring ment the present historical collec- over 90 publications, including such 20’s. Although the value of the returned tions. Surprisingly, these items were newspapers and magazines as Good property is not known, OCC estimates not those with the most intrinsic value. Housekeeping and Jet. Also, several that the most valuable claim involved a For example, the Smithsonian expressed radio and television news programs small box of loose gem stones returned interest in old buttons that completed publicized the project, including NBC’s to the surviving daughter-in-law of the an authentic period costume and in In- “Today Show” and local television sta- original owner. dian land deeds that added to the tions in Indianapolis and Miami. OCC estimates that the location of existing collection of documents on In a newscast informing its viewers owners and the return of the property this subject. of the unclaimed property and OCC’s cost about $250,000. This includes While the Smithsonian was examin- efforts to return it, a lccal television mailing and phone charges, computer ing the inventory, the legal staff of station in Washington, D.C., filmed one time, personnel, advertising, and mov- GAO and OCC worked out mutually ac- of the verified claimants as he opened ing expenses. Because OCC is funded ceptable draft legislation to authorize up the contents of his father’s safe by supervisory fees paid by national the disposal of the unclaimed property. deposit box. The box did not contain banks rather than appropriated funds, Claims on the ownership of the prop- diamonds or rubies, but only some old the extra expense is not financed by erty by heirs and the states in which family papers, including the deed to the taxpayer. the failed banks had been located, his grandparents’ home. The house however, thwarted the Smithsonian’s had long since been sold, but the docu- desire to add items from OCC’s attic to ment elicited fond memories of child- the national collection. GAO issued a hood afternoons playing on the back- Remaining Unclaimed report to the Congress on the need to yard swing (high drama, but bad TV). Property Awarded authorize the disposal of the property4 OCC was particularly concerned to the States and testified on the legislation before that its efforts receive adequate ex- the Senate Committee on Banking, posure in those towns and cities where In most cases, the remaining un- Housing, and Urban Affairs. the liquidated banks had been located. claimed property was awarded to the Because it appeared that OCC had After the initial publications appeared, state in which the bank was located. made little or no effort to locate the OCC, deciding that some additional All but 6 of the 45 states that had owners of the property since it had notification was needed, contracted unclaimed property from OCC bank taken over as caretaker, the legislation with a specialized information service liquidations filed claims for this prop- mandated efforts to return the un- to advertise in a variety of publications erty under their state escheat laws? claimed property to its rightful owners. around the country. Ohio even changed its statutes to It charged OCC with the responsibility During the 12-month statutory filing allow it to claim and accept this prop- for advertising the existence of this period, OCC received over 27,000 in- erty; the state’s prior escheat law only property and returning it to the rightful quiries from the general public about allowed it to confiscate money. OCC owners. Thus began the biggest attic- this inventory. In total, 4,728 claims has not determined what to do with cleaning in the federal government’s were received and verified. Of these, property from those six states that history. 1,989 were single claims from one indi- have not filed claims. vidual for a parcel of property. The re- As OCC staff were counting and Returning the Property maining 2,739 were conflicting claims checking the items one last time for from two or more individuals for the shipment to the states, someone drop- Upon the recommendation of GAO same parcel of property. One parcel and the mandate of the Congress, OCC was claimed by 16 cousins. began to return this property to its In cases where there were multiple owners or, in most cases, heirs. The verified claims but no agreement agency established a special Claims among the claimants for identifying a 4GGD-81-94,Sept. 25, 1981. Processing Unit to advertise the ex- 5E~~heatis the right of a state to take or con- single recipient of the property, OCC fiscate property when there is a failure of istence of the inventory, answer in- shipped the valuables to the closest, legally qualified persons to inherit or claim the quiries, accept and verify claims, and oldest relative. property. ultimately, return the property. Most of the property returned involved OCC’s first public notice of the exist- paper: wills, insurance policies, stock ~~~ ence of these valuables appeared in certificates (long ago replaced), or the Federal Register. Subsequent other family documents. One claim See Attic, pg. 38

30 Auditing LongmRange Forecasts: Why Actuarial Assumptions Cannot Be Classified as Right or Wrong

expectations about the future. As with past is not necessarily a good indica- any other estimate, the accuracy of an tion of what to assume for the long- Antone Reeder actuary’s estimate can be established term future. For example, interest rates only in the future, after actual experi- have been at unprecedented high levels Mr. Reeder, an actuary in the Program Evalua- ence has become known. for the past few years. This recent ex- tion and Methodology Division, has been with Although an actuarial estimate carries perience might justify the assumption GAO since graduating from Utah State Univer- no guarantee of absolute accuracy, that interest rates exceeding 12 per- sity in 1965 with a combined undergraduate especially when it extends far into the cent should apply to short-range fore- degree in accounting and economics He future, an estimate may prove to be a casts, but there is little reason to worked as an evaluator in the New York and reasonable indication of the financial believe that very high interest rates will Denver Regional Offices until 1971, studied ac- condition of the plan or program over tuarial science at Georgia State University, and continue unwaveringly for as long as then became an actuary for GAO He is a Certi- the period covered by the estimate. In 75 years. fied Public Accountant (Utah) and has profes- reviewing long-range actuarial fore- To answer the question of whether a sional certification as an Associate of the Soci- casts, PEMD’s actuaries work through particular set of assumptions is within ety of Actuaries two phases: a review of methods and a the range of what is reasonable, GAO’s review of assumptions. actuaries must place themselves in the In reviewing a pension plan, for ex- shoes of the forecasting actuary and ample, we first review the set of mathe- address a number of key points, includ- The Congress and the executive matical equations that were used in ing the six that follow. agencies use long-range forecasts in deriving the forecast and the applica- making policy decisions about such tion of those equations in allocating federal programs as Social Security, costs to each year of participation in What Is the Purpose Medicare, Railroad Retirement, and the plan. This review of the actuarial of the Forecast? Federal Employees’ Group Life Insur- method is usually straightforward ance and in determining how to reim- because there is general agreement on Suppose one were estimating how burse contractors for pension costs the criteria for acceptable methods. much an employer should contribute to allocated to federal contracts. One of Within a group of acceptable methods, a pension plan designed to provide GAO’s responsibilities is to audit or however, there may be a difference of benefits to employees. The objective eva I ua te these Iong-term projections. opinion about which method is best would be to find out what accumula- The six actuaries in the Program Eval- suited for a particular forecast, and the tion of contributions would enable the uation and Methodology Division difference is not easily resolved until employer to pay all promised benefits (PEMD) review mathematical aspects the forecasted events have actually as they fall due. of federal insurance and pension pro- happened. The consequence of being too con- grams. We sometimes have difficulty In the other phase, we review the ac- servative (or pessimistic, from the em- convincing GAO evaluators that it is tuarial assumptions that were used in ployer’s point of view), by assuming not possible to predetermine whether a arriving at the partial forecasts within that contributions will have to be forecast, or a particular set of assump- the overall forecast. For instance, to higher than they actually need be, is tions, is right or wrong. forecast payments to the beneficiaries the loss of the opportunity to use the No one can predict, with any certainty, of Old Age and Survivors Insurance, ac- excess for other corporate purposes. what will happen in the future. It is tuaries in the Social Security Adminis- Later, a correction will have to be possible, however, to make an esti- tration must first estimate future made, by either reducing future contri- mate of what might be expected to employment rates, wage increases, in- butions or raising the benefit levels. happen. An estimate made by an ac- terest rates, increases in the Consumer The consequence of erring in the tuary or any forecaster represents a Price Index, death rates, birth rates, other direction is the depletion of the professional judgment of (1) what to retirement rates, and so on. These trust fund to the extent that it falls expect, given past and present experi- intermediate forecasts are called below an adequate level and, ultimately, ence; (2) what observable trend exists “assumptions.” leaves the employer unable to pay among the factors considered in the It is not as easy as one might suppose promised benefits when they come forecasts; and (3) what additional infor- to define a reasonable set of actuarial due. Later, this will have to be corrected, mation exists that is likely to influence assumptions. The experience of the by either raising contributions higher

GAO Review/Summer 1985 SI Auditing Long-Range Forecasts

than planned or reducing the benefits. mists, demographers, and other spe- a key assumption can gieatly qffect The Employee Retirement Income cialists for advice in their areas of ex- the program and its forecast. For ex- Security Act (ERISA) established the pertise. However, few forecasts outside ample, if the forecaster overreacts to protection of employee’s pension the government extend as far into the current experience by frequently rights as the first priority of private future as, for example, estimates of the changing long-range assumptions to pension plan administrators. Even if long-range status of Social Security reflect present events, the cost of the the act had not been passed, employers trust funds. Therefore, long-range fore- program may shift alarmingly from would always find it easier to raise casters of government programs and year to year. The program’s administra- benefits or reduce expenditures rather their reviewers generally have little tors will not be able to systematically than raise expenditures or cut back on guidance in setting and judging plan for future commitments, and they benefits. Therefore, pension-plan ac- assumptions for the distant future. will lose confidence in the forecasts. tuaries tend to shade their assump- Nevertheless, actuaries can usually Actuaries who have avoided this prob- tions on the conservative side. This count on one characteristic they have lem may have adopted the view that a means, for example, that an actuary in common with other professionals: certain amount of inertia is desirable. might adjust assumptions to forecast avoiding the extremes in the practice Long-range assumptions should be a 65-percent chance that the money of their profession. In forecasting a changed slowly and only when the the employer contributes will be too pension plan, for example, most actu- forecaster is convinced that they are much and a 35-percent chance that it aries would feel uncomfortable using no longer appropriate. will be too little. an interest rate higher than that used Insurance actuaries, too, tend to be in all other comparable plans. Both the conservative in setting the assump- actuary who forecasts and the actuary How Do the Forecast’s tions that are used to calculate premium who reviews forecasts would require rates. Their conservative approach very strong justification for using or Assumptions Interact? seeks to ensure that unforeseen approving an assumption as extreme events will not draw funds down so far as this. as to endanger the payment of bene- In any given long-range forecast, one fits. These actuaries cannot be overly assumption may offset the effect of conservative, however, or the premium How Much Money and another. We can take the Social Security rates will not be competitive with those trust fund as an example. An increase of other insurers. How Many People Are in covered earnings helps the trust Other actuarial forecasts are judged Involved in the fund; an increase in the Consumer by different criteria. The actuary who Program? Price Index hurts the trust fund. The reviews a forecast looks for the most critical element in forecasting is the accurate estimate of what will happen difference between the two, that is, the while keeping the forecaster’s objec- A very large program, such as Social assumed rate of increase in “real” tive in mind. Security, justifies elaborate forecast- covered earnings. Obviously, it would ing methods and assumptions. The be desirable to have a reasonable fore- actuary might start with realistic short- cast of this rate of increase based on How Will the Past range assumptions and then blend accurate estimates of earnings and the Affect the Future? them with slightly more conservative index. However, the forecast will be in long-range assumptions. A small pro- significant error only if the difference The actuary who reviews a forecast gram, such as a pension plan for an in increases in covered earnings and also must be mindful of (1) recent ex- employer with only 10 employees, is Consumer Price Index is unreasonable. perience, (2) average experience over a generally forecast with simple methods What does this all add up to? After long period, and (3) trends. In addition, and assumptions. The actuary may set evaluating a long-range forecast from the actuary must examine factors that assumptions in accordance with aver- the standpoint of the forecaster, we would make either that experience or age long-range expectations, incorpo- must ask ourselves whether we would those trends inappropriate for the long- rating them into the forecast with con- have chosen significantly different range future. For example, if the Civil siderable conservatism to protect the assumptions or employed significantly Service Reti remen t Sys tern were employer against the greater uncer- different methods. It makes little sense changed to reduce benefits for retirees tainty that accompanies predictions to criticize someone else’s methods under 65, the previous experience as to for smaller numbers. In reviewing fore- and assumptions when they differ only retirement rates would have to be casts, it is necessary to keep in mind slightly from those we would use. To altered in the actuarial projection. The that, for most assumpfions, the degree do so, we not only must determine that actuary would anticipate lower rates of of confidence increases dramatically they are significantly outside the range retirement under age 65. as the number of participants and the we would consider reasonable but also number of dollars increase-and that demonstrate this conclusively, either the forecaster is likely to have taken by making a rigorous statistical analysis these factors into account. or by accepting the weight of expert What Assumptions opinion. Would Other Actuarial forecasts of federal pro- Forecasters Make? How Would Changiug grams have a certain “official” status. the Assumptions Affect More importantly, actuaries who devel- a Forecast? op these forecasts are schooled in PEMD’s actuaries review the short- forecasting and are experts in the field. term assumptions that have been used We must make a very strong case in- by actuaries and other forecasters. Depending on the structure of a pro- deed to convince an impartial third party Most government agencies involved in gram, that is, its benefit formulas and that our assumptions are reasonable long-range forecasting employ econo- funding procedures, a small change in and the forecaster’s are not.

3% A Week’s Worth

to the entire organization. Because our San Francisco, San Antonio, Philadel- study group includes Neil Donovan phia, and Denver. I’ve ridden on a (from Albany), Frank Marsh (from Nor- Mississippi River boat and a San Fran- folk), and four others here in Washing- cisco cable car, seen the Rockies and ton, D.C., we meet to organize our com- the Alamo, toured the wine country, ments before our meetings with the and attended a Red Sox game. PSDP staff. My 3 p.m. meeting is with Luann We have an 8:30 meeting in the Moy, a member of HRD’s Design, PSDP conference room with Greg Methodology, and Technical Assist- Ahart, Assistant Comptroller General ance Group, and Candy Thompson, a for Human Resources, and Gil Fitz- volunteer from Hood College (in Mary- hugh and Dave Thompson, PSDP staff- land), who also is working with the members. Our discussions, as usual, group. Luann explained the important are very frank. While we often ask points to remember when conducting Becki Sue Hill questions or provide comments about ~ our pretest of the questionnaire tomor- specifics, we also discuss such issues Ms. Hill joined GAO in 1981 after participating row. Because neither Candy nor I had in the graduate co-op program She has eval- as the kind of reward and incentive ever participated in a pretest, Luann uated a wide variety of programs at the Human system we would like GAO to adopt. served as a coachlteacher for the two Resources Division’s (HRD) Veterans Adminis- This is a very exciting role for those of of us. tration health audit site She has chaired us in the study group and is well-worth Tonight, typical of most weekday HRD’s Junior Management Council and repre- the time we spend reviewing the drafts evenings, I catch the 4:55 train and sents HRD as a member of the Career Level and attending meetings. Council and the Career Level Personnel Sys- arrive at the station near home at After lunch, Art Fine, Mark Nathan, 6:30 p.m. tems Development Project Study Group. Ms. and Ellen Coleman of the Boston Hill received a master’s degree in public ad- ministration from George Washington Univer- Regional Office joined Frank Ackley, sity (GWU) in 1981, specializing in personnel my assignment manager, and me for a Tuesday She received her undergraduate degree in meeting on Capitol Hill with the Senate business and economics from Shepherd Col- Veterans Affairs Committee (SVAC) Candy, Luann, and I left National Air- lege in West Virginia in 1979. Ms. Hill is also a staff. We briefed them on all our ongo- port on an 8 a.m. flight for Islip, Long member of the American Society for Public ing VA mental health work. I discussed Island. During the flight, Luann gave us Administration and vice chair of Pi Alpha Alpha, my current assignment as an evaluator- some last-minute pointers. We arrived the GWU honorary public administration in-charge of a “Survey of the Impact of on time at lslip and then picked up our society Reducing Veterans’ Pensions By Earn- rental car to drive out to the Northport ings From VA’s Work Therapy Pro- VA Medical Center. grams.” I told them we were develop- We had a 10:30 a.m. entrance confer- ing a questionnaire to be sent to 160 ence with the hospital director, William Monday VA Medical Centers to collect basic Hodson. During our conversation with program information and to measure him, I explained the purpose of our visit My alarm clock awakens me at 4:15 the impact of the pension offset on the and what we hoped to gain through our a.m. I have a 2-hour-and-15-minute veterans’ health and well-being, the pretest. Mr. Hodson was pleased that commute from my home in Shepherds- work-therapy programs and program GAO was examining this issue because town, West Virginia, to the Human staff, and the hospitals. he was concerned about the impact of Resources Division’s (HRD) Veterans Bill Brew, professional staff mem- the pension offset on the patients at Administration (VA) audit site at 1425 K ber, SVAC, said that Senator Alan his hospital. Street NW in Washington, D.C. Every Cranston had reintroduced legislation After a tour of the work-therapy facil- work day, I travel a total of 170 miles by exempting the work-therapy income ities, we pretested Bob LaTerza, chief car, train, and subway through West earned from the veterans’ pension of one of the work-therapy programs. Virginia, Maryland, Virginia, and the calculations. He asked us to continue While he completed the questionnaire, District of Columbia. to provide updates on our progress and we observed the time he took to com- This morning, I have a 7:30 a.m. added that the information GAO would plete each page and noted any diffi- breakfast meeting in the GAO cafeteria be providing would be critical to the culty he had in answering questions, with my fellow members of the Career debate on the issue. etc. After he finished, we asked for any Level Council (CLC) Personnel Sys- On my way to a 3 p.m. meeting in the observations and suggestions he had tems Development Project (PSDP) main building, I stopped by the travel to improve the questionnaire. Because Study Group. The members of the office to pick up my tickets and money Mr. LaTerza worked on the question- group are volunteers from CLC’s Per- for tomorrow’s day-trip to the North- naire in his office, we had a very sonnel Committee who meet once a port VA Medical Center on Long Island, realistic idea of the typical setting. The month (or, more frequently, at the re- New York, where we will pretest the phone rang constantly and he was in- quest of the PSDP staff) to provide our questionnaire. This past year, I’ve terrupted frequently by program par- opinions on the latest proposals before traveled to some terrific places ticipants with questions about their they are released in draft for comment through GAO: Boston, New Orleans, assignments.

GAO Review/Summer 1985 88 A Week’s Worth

a Before we went to our next meeting, We also discussed our trip to Houston, staffing specialist, to talk to him about Mr. LaTerza drove us into the charming something we’re all excited about. I getting more help. Unfortunately, I am town of Northport for a quick lunch. At hope that we’ll find time to visit The not the only one who needs more staff! 2:30, we met Steve Ferello, the other Galleria one evening while we’re there. Frankly, I am glad I do not have that program director, and repeated the That evening, I attended a local job! I am keeping my fingers crossed pretest with him. Mr. Ferello was deep- board of realtors dinner meeting with and hoping (against great odds) that ly concerned about the impact of the my husband, a CPA and attorney, who we will get some more help. possible offset on his patients and of- spoke on recent changes in the tax Because most of the employees at fered many helpful suggestions for code concerning deductions for busi- audit site have cleared out by 5 o’clock, questions to add to the questionnaire. ness expenses and automobiles. my last hour was extremely productive. We then left the hospital and got I used this time to catch up on all the caught in the traffic coming from New Thursday materials in my in-box, write thank-you York City. I managed (with assistance letters to the Northport VA Medical from Candy and Luann) to get us to the Thursdays are my long days because Center director and work therapy pro- airport on time for a 5 p.m. flight. This I take advantage of flextime to take a gram staff, and plan my schedule for was quite a feat for someone who health care law class at George Wash- the next week. learned to drive in a town so small ington University. I try to take one or Tonight, I caught the 650 p.m. train the only stoplight was removed for lack two classes a semester to enhance my and got home at 8:45 p.m. of traffic. knowledge of the subject area I’m That evening, I joined my two working in or to update my skills, such Friday younger sisters - Cyndi, a consultant as programming. I also try to attend at the World Bank, and Suzi, a medical conferences or professional meetings This morning, I completed self- student on “break” - for dinner at related to the health care area. Last paced, data-retrieval training on VA’s Blossoms and an evening of theater, in year, I attended the American Hospital TARGET system, a pension-information this case, the play 42nd Street. Association’s National Convention in data base. Access to this data base is Denver, which featured not only the critical to our analysis of individual pa- latest health care management and tient’s pension income and any changes Wednesday technology but also such speakers as to that income. John Peters, coauthor of In Search of We had a special luncheon at the VA From 7:30 until my 10:30 meeting Excellence. audit site. We all brought in food with Norm Rabkin, my group director, I spent most of the morning writing a according to a predetermined menu and Frank Ackley, I transcribed the legislative history of the work-therapy and ate together in the conference interviews from the Northport trip, filled program on our microcomputer, using room. Today, we had Gary Machnowski’s out my travel voucher, and made ar- PEACHTEXT computer software. It is and Norm Rabkin’s chili and other rangements for another trip to conduct such a joy to move away from the days delicious dishes, including Michelle a second pretest. I also talked with Sue of “cut and paste!” Each time 1 work Roman’s chili con quesa and Judy Sullivan, the chair of HRD’s Junior with the micro, everything gets easier, Shelly’s California salad. Management Council (JMC) about the although I am still glad I can get assist- We really have an incredible audit JMC meeting next week. As the CLC ance from either Gary Machnowski, at site. In addition to doing a lot of good representative, I am responsible for our audit site, or from Mike Benner, work in an exciting area, we enjoy be- briefing the local council on the issues HRD’s micro “expert.” I hope to master ing here. We also have birthday parties, addressed at the CLC meetings and for LOTUS 1,2,3 (another brand of com- summer and fall picnics, and an out- carrying the local council representa- puter software) in the next few weeks standing Christmaslholiday party each tives’ concerns back to the national so I can more effectively present the year at Jim Galloway’s house. After meetings. data I will be collecting and analyzing. lunch, I interviewed officials in VA’s At the 10:30 meeting, Norm, Frank, At 11:45, I took a cab over to George Department of Veterans Benefits. and I talked about our Northport trip, Washington University. Our professor, After I returned from my interview, proposed changes to the question- Dr. Hirsh, who is also an attorney, lec- Frank Ackley, Luann Moy, and I joined naire, and discussed my plans for the Jim Cantwell, HRD’s health economist, upcoming Houston trip. tured on torts and recent court deci- sions concerning suits brought against to discuss what kinds of data we need During lunchtime today, we had a the VA and other federal hospitals. to collect to perform either cost-benefit “brown-bag” training seminar led by After class was dismissed at 2 p.m., I analysis andlor cost-effectiveness Bruce Layton at the audit site. Bruce analysis of the pension offset on the taught us the basics for operating the rode the METRO over to the Manage- ment Development Center to serve on a patients, the program staff, and the MICOM word processor. hospitals. After offering us practical That afternoon, I met with Dr. Helen panel for the course, “Managing the Transition to Supervisor.” The course advice, Jim gave me several texts to Rovinski, director of VA’s Rehabilita- read so I could familiarize myself with tion Medicine Service, which is respon- director, Theresa Buffalow, had con- tacted me a month ago to ask if I wanted the issues involved in the analyses. sible for the work-therapy program at After an incredibly busy week, I am VA headquarters in Washington. I told to serve on the panel made up of indi- viduals who had taken the class and looking forward to a relaxing trip with her about our experience at Northport my husband this weekend. and our upcoming trip to Houston. I had recently supervised employees. I also gave her a rough timetable for shared some of my interesting experi- mailing out the questionnaire, analyz- ences and anxieties about being a ing the data, making follow-up visits to first-time supervisor with the class and a sampling of the hospitals, and draft- picked up some helpful ideas from ing a report. their comments, too. I also met with Candy and Luann to On my way back to the audit site, I go over changes to the questionnaire. stopped to see Derek Stewart, HRD’s ,

I Effective internal controls (such as by then, the reports on the budget were sound management reporting) in finan- Media, cont’d from pg. 26 quite accurate. Under the competitive cial management systems are key pressures of today, the embargo has aspects of any financial management the print media. These reporters want been broken, and reporting has become structure. This perspective can help to take the time to be accurate, and a lot sloppier. I would think that, with guide improvements in systems of they care a lot about their credibility. GAO reports, there might be time to internal controls and ultimately GAO’s reports are detailed and deal work with the serious journalists. strengthen overall financial manage- with complicated subjects and require ment processes. As with internal con- some educational background in the POWELL: I agree 100 percent with trols, the importance of the concepts subject on the part of the reader to fully everything that Dave has said here, used to accumulate and report finan- understand them. In the White House, and I would add that it underlines the cial information should not be over- we sought those serious reporters and point I was trying to make earlier - the looked. So, as institutions continually designated certain people to sit down importance of knowing where you are assess their respective control sys- with them for a couple of hours, if neces- going, what you are trying to do. One of tems, it is very important to be mindful sary, to get the right story out. If you the situations that certainly makes it of how the systems and the informa- take the time, answer their questions, more difficult to govern is when you tion provided by them support the over- and put an embargo on a report in have a very complicated issue that is all financial management structure we order to give them time to read it, I bet bubbling up through the decision- ultimately want to achieve. it would make a big difference. One of making process and you have been set- the best traditions in the government ting up a process to brief the press was that, for many years, the budget methodically. Then, someone in an Glossary was given out on Friday and embar- agency somewhere drops the material goed over the weekend so the reporters in the hands of a reporter and all of a CostcBased Budgeting could study it. On Monday, there were sudden, you are in a totally reactive extensive briefings by the Budget mode. That is particularly hard to deal This term refers to budgeting in Director and Treasury Secretary and, with. terms of costs to be incurred, that is,

the resources to be consumed in carry- ~ ~ ~ ing out a program, regardless of when the funds to acquire the resources Computers, cont’d from pg. 28 were obligated or paid, and without Figure 4 regard to the source of funds (e.g., ap- propriation). For example, inventory Analysis of Questionnaire Responses- items become costs when they are Chi-square Tests Ranked by Relative Significance withdrawn from inventory, and the cost of buildings is distributed over time, Reward Perceptions through periodic depreciation charges, Executives who responded that the bonus system in their agency has been rather than in a lump sum when the effective in ensuring that the “best performers get the best rewards” also buildings are acquired. responded that they believed their agency used performance appraisals in decisions regarding: Obligation-Based Budgeting Decision TvDe significance Rank Financial transactions involving the use of funds are recorded in the ac- Training and development .0028 1 counts primarily when obligations are incurred, regardless of when the re- Reassignments .0060 2, sources acquired are to be consumed. Pay adjustments .0186 3

Downgrades in responsibility .0252 4 FBI, cont’d from pg. 19 Support for professional travel and meetings .0287 5 “Fewer Agent Transfers Should Benefit the FBI and Its Agents as Well as Bonuses .0768 6 Save Money” (8-204589, Sept. 24, 1981). Worth Perceptions “FBI-DEA Task Forces: An Unsuccess- ful Attempt at Joint Operations” Executives who responded that the performance appraisal system in their (GGD-82-50,Mar. 26, 1982). agency was “worth its cost” also responded that they believed their agency “Costs of FBI Undercover Operations” used performance appraisals in decisions regarding: (GGD-83-51, Mar. 7, 1983). “Freedom of Information Act Operations Decision Type Significance Rank at Six Department of Justice Units” (GGD-83-64, May 23, 1983). Downgrades in responsibility .0036 1 “FBI Management of Its Information Systems” (GGD-84-24, Oct. 18, 1983). Training and development .0162 2 “Accomplishments of FBI Undercover Operations” (GGD-84-79, Aug. 21, Note: Chi Square significance tests of less than .lo00 are not included in 1984). this chart. 37 < asked ourselves, would we do another Computers, cont'd from pg. 28 job relying, to this extent, on computer- ized analysis? Our answer was "yes." Figure 2 Like many GAO efforts, our results

Responses of all executives to the question "What elfect has the SES perlormance appraisal system had in your agency on the occupy only a small portion of the final performance of your unit or program?" report. However, having the results 36% available helped us place our other findings in perspective. For example, knowing the hidden importance of "Substantial" or "Little" or "no" "some" or "positive positive executive attitudes towards or negative eflect' eflect" 64% agency bottom-line systems helped us avoid some potentially erroneous con- clusions, such as asserting that the only thing that would raise executive morale was improved appraisal techniques. Responses to the same questton by executives who said their agency had a system for measuring the accomplishment of From a practical standpoint, we had program objectives lhat was. to use a computer. Simply assembling the data for analysis via chi-square testing would have been prohibitively "More than adequate" "Adequate" or "less than adequate" time-consuming, if done manually. After all, we had approximately 900 questionnaires to process, and each had 87 questions. Computerized analysis is difficult and uncertain, but the results are worth the effort.

Attic, cont'd from pg. 30 Nole We obtained ~fmilarresults regardrng eiec~liveatliludes loward perlormance appralralr being worlh (heir COLI and accurately rellecllYe 01 per1ormance ped a bottle cap stuffed with dirty cot- Figure 3 ton. (Some people will save anything!) Executive Responses on Appraisal Use The cotton fell out, and four loose diamonds rolled on the floor. Question: In your opinion, to what extent, if at all, are the results of SES performance A Few of My Favorite appraisals used in making decisions concerning each of the personnel matters listed below in your agency? Things

Response: This assignment was unusual because the actions that we sought Percent responding that their agency used appraisal to "some" or to a greater were obtained with a minimum of staff extent in making decisions on: effort - about 50 staff days for GAO. Also,the element of mystery surround- ing the contents of the safe deposit Bonuses boxes provided an unlimited source of questions. For example, in looking at Pay adjustments the contents of one box that contained Training and development many colored stones, we wondered if activities 7148% the stones were genuine. What were they worth? Where did they come from? Downgrades in Why hadn't they been claimed? In look- responsibility 1-1 46% ing at the many boxes of legal docu- Reassignments 1-1 43% ments, such as wills, deeds, and life in- surance policies, we wondered if the Separations/terminations 7135% documents would become the founda- tions of any legal contests. Had estates Support for professional been divided correctly? Had insurance travel and meetings IZI22% been collected? But the most striking aspect of this audit was the meticulous Sabbaticals [-I 19% and sympathetic care big federal orga- Source: Ouestionnaire responses, government-wide sample of SES executives nizations like OCC, the Smithsonian, and GAO took with some of the favorite Looking Back happen, did: things of ordinary, forgotten people. Expected results were not obtained. If you think you might be the heir to Using the computer and statistical Other expected results were obtained, an unknown fortune, all is not lost. The analysis represents a brave new world but in unexpected ways. states allow claims against any confis- for us, one that is not always so easy to Wholly unexpected results arose cated property to be filed for several live in. In our SES performance apprai- from our analysis. years. Who knows what you might find sal job, almost everything that could Looking back at the experience, we in the attic? 3s ~ experience programs.” His other sug- compulsion of rules, and , Sporty, cont’d from pg. 8 gestions are probably not practical at devoting themselves to the concept all. These include citizens’ peer of noblesse oblige (the more one bene- of competitive principles. Two, it gives reviews of public programs and crea- fits in a society, the more one is obli- the Auditor Admiral an independent tion of a “national service” that gets gated to benefit the society). means of identifying consistently high- everyone into the public-service performing auditors. Three, through business. Another View free agency, the draft, and trades, auditors have a respectable way of get- The GAO View I cannot accept Hart’s postulate that ting out of a job situation they view as bureaucrats actively advocate what undesirable. Four, although little used, I think McGregor’s analysis is in- they understand to be the body of the waiver provision has served as an teresting because its central theme is regime values. His notion is based on effective means of identifying con- why GAO exists. The desire for better the premise that those values are sistently low-performing auditors. information about the appropriateness apparent and static and that public So, the system seems to be succeed- of decisions being made is GAO’s administrators have a unique calling to ing at the hypothetical Apocryphal “bread and butter,” and the need for an defend those values. Neither of these Audit Office. Could it work at GAO or organization like ours is in inverse pro- premises is true, in my opinion. other “real world” organizations? We portion to the conditions he suggests The people of the United States con- wouldn’t want to speculate, but are characteristic of an ideal public stitute a society that prizes diversity “pieces” of the system seem already service. His suggested reforms are not and multiplicity of values. Our political to exist at some audit organizations. At bad ideas. They,just seem like so little processes - not public administration GAO, application of this system to the against the tide of distrust the public - provide the mechanisms, such as following functions is conceivable: an- has built up over the years. elections, laws, and courts, that con- nual needs determination and realloca- stitute the underpinning of our democ- tion of division staff levels, staff rota- The Virtuous Citizen, the Honorable racy. At no time did the Founders con- tion, annual rating and promotion cy- Bureaucrat, and Public Administration. template or encourage the substitution cle, and the incentive award system. By David K. Hart. Reviewed by Dan of public administrators’ judgment for Even if the concept couldn’t apply in its Leary. these mechanisms. Our values are con- entirety, any creative ideas that might tinually being debated and refined push the audit profession to higher through our democratic processes. I levels of excellence are worth reflect- would not care to have bureaucrats, no ing upon. The author argues that public admin- matter how honorable, judge the coun- istration has lost its identity as a try’s values pertaining to current Ed. Note: We thank Ronell Raaum and Tom unique discipline and has become a issues, such as budget levels for fed- O’Connor, Office of Organization and Human lesser variation of the more prestigious eral social programs, the appropriate- Development, for summarizing their thinking discipline of business administration. ness of prayer in public schools, or the on this topic at the request of Review staff Hart concludes that public administra- morality of abortion. tion will never recover its rightful If Hart is correct that public adminis- status until it rediscovers and regains tration, as a discipline and a profes- sion, is widely and wrongly held in low Manager’s, cont’d from pg.9 its “public” character and the notion that the discipline must be treated as a esteem, the understanding of these the criteria are by which options can be form of “moral endeavor.” problems and a formulation of solu- judged. Unfortunately, Hart provides no per- tions are not to be found in this article. His third proposal is to broaden the suasive evidence for his contention Then, again, part of the reason for this meaning of public service so as not to that public administration has become negative perception may be the public’s limit it to the government civil service. a subdiscipline of business adminis- belief that Mr. Hart’s proposals have The public and private sectors in our tration and that the values of business already been implemented. economy are largely merged, he says, administration are grossly inappropri- and there is no choice but to redefine ate for the public sector. In fact, the re- and expand the scope of public service cent emergence of public administra- Topics, cont’d from pg. 71 to include our large industrial corpora- tion as a separate discipline in higher tions and others. This raises the spec- education is contrary evidence. Not- Provides the details of major second- tre of corporate executives in our soci- withstanding, the author argues that ary analyses illustrating both substan- ety having the same responsibilities to the Founding Fathers envisioned a role tive and methodological points. the public for explaining and subject- for public administrators as “Honor- ing decisions to oversight that cabinet able Bureaucrats” who pursue public Program Evaluation and Methodology secretaries do, a novel idea indeed! administration with honor and virtue by Division. Designing E valuations. McGregor recommends a number of being active proponents of “regime U.S. General Accounting Office, reforms to make public service more values.” Public administrators are to 1984. secure, increase citizen knowledge of achieve the quest for the highest exer- Puts secondary analysis in the con- public affairs, and redefine public cise of their role by text of other major evaluation strategies. service. Some are possible to do but, in having a complete understanding of my opinion, would not be especially and belief in the American regime effective. These include an honors values, Control, cont’d from pg. 76 system for outstanding public ser- developing the capacity to care gen- vants, broader career structures, an uinely for the citizens they serve, evaluate variances from the original achievement-based upward-mobility conducting public affairs on the plans and to improve their planning for system, and an expansion of “shared basis of trust rather than through the future projects. Legislative Developments

The Comptroller General, among Business Administration (SBA) to others, is to prepare briefing papers for assign to each major procurement the Commission and, for a period of 4 center, a breakout procurement center years after the Commission ceases to representative who is to be an ad- exist, monitor the implementation of vocate for the breakout of items for the Commission’s recommendations procurement through full and open for the Congress. competition. Federal Polygraph Limitation and The Administrator and the Comptroller Anti-Censorship Act of 1985. Referring General are to establish standards for Judith Hatter to the GAO report concerning National measuring cost savings achieved Security Decision Directive 84, Con- through the efforts of breakout pro- gressman Jack Brooks of Texas rein- curement center representatives and troduced the “Federal Polygraph Limi- for measuring the extent to which com- The 98th Congress Ends tation and Anti-Censorship Act of petition has been increased as a result and the 99th Begins 1985,” H.R. 39, relating to the adminis- of such efforts. tration of polygraph examinations and SBA is to report annually to the Con- On October 12, 1984, the 98th Con- prepublication review requirements by gress and, following submission of the gress adjourned, having amassed 54,785 federal agencies. second annual report, the Comptroller pages of proceedings in the Congres- General is to submit to the Congress sional Record and enacted 623 public an evaluation of SBA’s adherence to laws. The President signed 150 of these Federal Capital the standards jointly established and laws after the date of adjournment. Investment Programs of the accuracy of the information The 99th Congress convened on Information Act of 1984 submitted. January 3, 1985, with the Senate intro- ducing 194 bills and 59 resolutions and Public Law 98-501, October 19, 1984, the House of Representatives, 482 bills contains, at Title II, the “Federal and 117 resolutions. The real work of Capital Investment Program Informa- the Congress began after the Presiden- tion Act of 1984.”This title requires the tial Inauguration on January 21. Among President to submit to the Congress an the newly introduced bills were the analysis for the ensuing fiscal year for following: each major public civilian or military 0 Audit of the Federal Reserve. Con- capital investment program. gressman Philip M. Crane of Illinois in- Criteria and guidelines for use in troduced H.R. 70 to require that GAO identifying public civilian and military conduct a complete and thorough capital investments, for distinguishing audit of the Federal Reserve System between public civilian and military and banks. capital investments, and for distin- Biennial Budgeting Act of 1985. The guishing between major and nonrnajor Biennial Budgeting Act of 1984, H.R. capital investment programs are to be 382, was reintroduced by Congress- issued by the Office of Management man Leon E. Panetta of California. In and Budget after consultation with the his remarks, Mr. Panetta pointed out Comptroller General and the Congres- that the Comptroller General praised sional Budget Office. the 2-year concept in testimony before the Rules Committee’s Task Force on the Budget Process. The Congressman Small Business and also referred to GAO’s examination of Federal Procurement the experience certain states have had Competition with 2-year budgets. Commission on More Effective Gov- Enhanoement Act ernment. Senator William Roth of of 1984 Delaware introduced S. 35, to establish a Commission on More Effective Gov- The Small Business and Federal Pro- ernment, which would seek to improve curement Competition Enhancement the quality of government in the United Act Of 1984 (P.L. 98-577, OCt. 30, 1984) States and restore public confidence amends the Small Business Act to re- in government at all levels. quire the Administrator of the Small

GAO Review/Summer 1985 35 8 Bookmark

Retirement Secnrity wages) by the employer when the con- ents will have their retirement income and Tax Policy. tributions are made. However, unlike supplemented by employer-sponsored By Sophie M. Korczyk. wages, the contributions are not taxed retirement benefits, it is difficult to Employee Benefit Research to the employee until the benefits are ascertain from the study what percent- Institute, 1984. distributed. The deferral of taxes until age of the work force is not covered by retirement results in three advantages tax-favored retirement plans. that compensation, in the form of A regular item on the news menu However, the goal of federal tax retirement contributions, holds over or- these days is tax reform. During the policy, at least since 1942, has not 98th Congress, at least eight major tax- dinary wages. First, each dollar of been to require universal coverage. contribution, without reduction for in- reform proposals were introduced. In Rather the goal has been to encourage, come tax, is available for investment early 1985, the Treasury put forth its through favorable tax provisions, the own reform proposal. The 99th Con- during an employee’s working years. use of tax-favored plans to ensure gress promises continued tax-reform This contrasts to a dollar paid as greater retirement security for employ- activity. Commentators and pundits wages and invested by the employee ees in general, not just the highly-paid. expound on which of thevarious propo- only after paying taxes on that dollar. Indeed, Ms. Korczyk believes that the Second, no tax is paid on investment sals will, as they each purport, make federal tax system has been the most the tax system simpler, more equi- income from accumulated retirement important factor influencing benefit table, and less influential in shaping plan assets, whereas interest earned by growth. In addition, she contends that an employee on ordinary savings is cur- economic decisions. A major policy retirement plans are not primarily tax rently taxable. Third, when benefits are issue that must be addressed by any shelters for the wealthy that provide serious tax reformers is how their par- distributed they are likely to be taxed few, if any, benefits for others. Rather, ticular reform package will affect the at a lower rate than if they had been the data presented in the study demon- millions of retirees, employees, and taxed as they accrued. strates that pensions are primarily a their dependents who have (or expect In these days of increasing federal middle-class benefit. Indicative of this to have) their retirement security deficits, some have questioned whether is Ms. Korczyk’s finding that younger enhanced by participating in tax- the revenue loss under the current law employees currently earning $50,000 or favored retirement plans. is justified. While the tax concessions less will receive more than 75 percent The Employee Benefit Research In- for retirement plans result in lost of their age group’s total pension- stitute, a public policy think-tank revenues, Ms. Korczyk disputes a related tax benefits. devoted to the study of retirement popular contention that the govern- In summary, Ms. Korczyk presents benefits, published a study by Sophie ment recovers only a small percentage an enlightened and timely study of M. Korczyk, Retirement Security and of the tax benefits conferred on retire- retirement income policy and its sym- Tax Policy, that documents and ment plans. Using 1982 figures sup- biotic relationship with our current tax analyzes the role federal tax laws have plied by the Treasury Department, system. This relationship, she argues, had in providing for the economic well- taxes deferred on retirement plan con- has resulted in advancing the social being of retired persons. The study will tributions and earnings amounted to goals of increased and more widely be a valuable tool for those interested about $54 billion, while tax payments distributed savings, higher retirement in or wishing to become conversant totaled about $9 billion (or 17 percent income, and increased benefit security. with assessments of the costs and of the deferred tax payments). Ms. The message to policymakers seems social benefits of tax-favored retire- Korczyk argues that retirement plan to be to proceed with caution. What ment plans. tax expenditures should, however, be you have consciously created over the measured on a lifetime basis because last 40 years has bettered society as a in any year, far more money is paid into whole. Thus, deliberate care is required Retirement Plans retirement plans than is drawn out. to ensure that fundamental changes in and Taxes Thus, for example, she calculates that, the tax code do not adversely impact in inflation-adjusted terms, 60 percent on national retirement income policy - The federal tax law provisions that of each tax dollar deferred by younger the need for establishing a minimum affect retirement plan coverage are pension participants (aged 25 to 34) level of retirement income and for legendary in complexity. Ms. Korczyk’s will be repaid to the Treasury. maintaining the adequacy of the total use of “plain English” in describing benefit throughout the retirement those provisions and their historical Retirement Benefits period. development is refreshing even (or especially) for someone familiar with Nevertheless, the revenue loss is the elliptic language of tax profes- Reviewed by Robert A. Katcher substantial and all taxpayers must pay General Government Division sionals. A brief summary of the higher taxes to make up for these fore- favorable tax treatment afforded retire- gone revenues. Some may contend ment plans is useful. that those not covered by employer- Compensation, in the form of em- sponsored retirement plans are espe- ployer contributions to qualified retire- cially burdened. Although 75 million ment plans, is tax-deductible (as are employees, retirees, and their depend-

GAO Review/Summer 1985 39 GAO Staff Changes

Senior Staff Changes

John R. Cherbini Victor L. &owe Carl R. Palmer On November 25, 1984, Mr. Cherbini After a 35-year GAO career, Mr. Vic- Dr. Palmer has been appointed asso- was appointed associate director tor L. Lowe retired on January 2, 1985. ciate director for the Defense and for the Integrated Financial Manage- Since September 1984, he had served Aeronautics Mission Systems Group in ment Systems Group in the Accounting as special assistant to Assistant the Information Management and and Financial Management Division Comptroller General for Operations Technology Division (IMTEC). Dr. (AFMD). Frank Fee. Palmer has been acting group head for Mr. Cherbini joined GAO in October After joining GAO in 1949, Mr. Lowe the Defense, State, and NASA systems 1983 after 10 years with Arthur served in the Corporation Audits Divi- area since January 1984. He was a Andersen & Co. and the State of Loui- sion, the Division of Audits, the Inter- member of the Comptroller General’s siana. Since joining GAO, Mr. Cherbini national Division, and the Civil Divi- ADP Task Force in 1982, the Informa- has served as project director for sion. He was named director of the tion Resources Management Transi- Comptroller General Bowsher’s project General Government Division upon its tion Team, and the initial management to develop a conceptual framework for establishment in 1972 and held that team for the new IMTEC Division when improving federal financial manage- post until 1978, when he became man- it was formed in July 1983. ment. He has also served as an advisor ager of the Far East Office. Previously, Dr. Palmer was a group to the GAO Information Systems Steer- Mr. Lowe completed the Program for director in the Accounting and Finan- ing Committee. Management Development at the Har- cial Management Division and its pred- After serving in the U.S. Navy, Mr. vard University Graduate School of ecessor, the Financial and General’ Cherbini received a B.B.A. (magna cum Business Administration in 1960 and Management Studies Division. laude) from Northeast Louisiana Uni- the Residential Program in Executive Prior to joining GAO in 1974, Dr. versity in 1972. Education at the Federal Executive In- Palmer was an assistant professor of In 1984, Mr. Cherbini received the stitute in 1970. He served with the Navy accounting and management informa- AFMD Director’s Award for his out- in 1945 and 1946. tion science at the Tulane University standing effort in developing the Mr. Lowe is a CPA (Georgia) and a Graduate School of Business Adminis- report, “Managing the Cost of Govern- member of the American Institute of tration. ment: Building an Effective Financial Certified Public Accountants, the Na- He received his bachelor of arts Management Structure” (AFMD-85-35; tional Association of Accountants, the degree in economics from Alfred Uni- 85-35A, Feb. 1985). Association of Government Account- versity in New York in 1963 and his ants, and the American Society of M.S. and Ph.D. degrees in business Public Administration. He received the administration from Penn State Univer- GAO Distinguished Service Award in sity in 1968. He is a member of several 1971. professional associations.

40 GAO Review/Summer 1985 ~ Additional Staff Changes

Supervisory GAO Evaluator Senior Attorney Manager National Security and Office of the General Counsel Latin America International Affairs Division Agazarian, David Lucas, Louis Hathaway, Brad H. Barker, Jonathan H. Jaxel, Robert A. Jacobson, Jeffrey A. Schulz, Thomas J. Deputy Director for Operation Research Analyst Operations National Security and Office of Information Resources International Affairs Division Management Sykes, Waverly E. Campbell, James T.

New Stpff Members

The following new staff joined GAO during the approximate period October 1through December 22, 1984.

Division / Offioe Name From

Office of the General Counsel Cooper, Sabina K. Department of Energy Goodrich, Robert D. King & Nordlinger Kopocis, Kenneth J. General Services Administration Murphy, Robert P. Chapman, Duff, and Paul Shimamura, Amy S. Department of Energy

General Government Division Baldwin, John Department of Energy Carpenter, Rosemary M. George Mason University Freedman, Marla A. Comprehensive Marketing Systems, Inc. Hutner, Michael Expand Associates Jones, Mary Lynn George Mason University Joyce, M. Kathleen Indiana University Lauver, Roderick University of Maryland Lieber, Susan 1;. Penn State University Martin, Stephen C. Maryland Criminal Justice Coordinating Council Plautz, Elizabeth Indiana University

General Services and Controller Capati, Eduardo Department of the Navy Kelsey, Richard National Capital Planning Commission

National Security and Greer, Joel W. Cornel1 University International Affairs Division

Office of Organization and Glazer, Ralph R. Fairfax County government Human Development

Personnel Beard, Nina Temporary employment Cole, Elaine Department of the Army Frederick, Patricia Department of the Navy Griggsby, Dinah R. George Mason University Traupel, Melodye L. Department of the Navy

Program Evaluation and Boone, Margaret S. Veterans Administration Methodology Division Chatlos, William R. Georgia State University

41 New Staff (con&) Name From

Cordray, David S. Northwestern University Fremming, James L. The World Bank Ganson, Harriet C. CSR, Inc. Hanford, Terry J. University of Maryland Heinberg, John D. Department of Health and Human Services Longshore, Douglas Y. UCLA Miller, Judith D. George Washington University Scudder, David F. Puget Sound Research Associates Siegel, Cynthia I,. George Washington University Surber, Monica L. The Urban Institute

Resources, Community, and Andranovich, Gregory Prospect Management, Inc. Economic Development Division Bachman, Jonathan West Virginia Tax Study Commission Barber, Beverly Department of Defense Barton, Karen Butler Shoe Corporation Clifford, Thomas University of California Culbreth, Juanette Dorothea B. Lane Business School Estes, DeAna Department of Agriculture Greene, Richard Andrews Air Force Base Hunt, Marjorie Catholic University , McNeill, Bonita Physician’s office Procter, Robert Michigan State University Simpson, Sherri U.S. Army Weldon, Katherine Environmental Protection Agency

Regional Offiee

Atlanta Lootens, Linda University of Maryland Lucas, Ann Miami University

Chicago Brown, Lisa C. U.S. Customs Service Chapman-Cliburn, Leslie Illinois Legislative Investigating Commission Dunlap, Lennette J. Department of the Treasury Juskewicz, Jane M. Great Lakes Naval Base

Denver Bame, Carolyn J. Freelance writer Elliott, Vernal F. Emily Griffith Opportunity School Vargas, Maria P. Office of Management and Budget

Detroit Dobrovich, Mary Wayne State University Stephens, Robert City of Cleveland Heights, Ohio

Los Angeles Alexander, Sharon Los Angeles School District Brodie, Les California State University Donaldson, Rae California State Polytechnic University Luevano, Amparo Fremont Indemnity Insurance White, Gloria Western Park Emergency Medical Group

Philadelphia Loscalzo, Barbara Co-op conversion

San Francisco Johns, David Lighthouse for the Blind

Seattle Williams, Elizabeth Department of Housing and Urban Development

42 GAO Review/Summer 1985 *

Attritions

The following staff members left the agency during the approximate period October 1, 1984,through December 22,1984. Division Name

General Government Division Barnes, Cheryl S. Broy, David M. Cozart, Larry A. Hendrickson; Anna M. Miller, Marjorie A. Morgan, Stephen A.

General Services and Controller Anthony, Beverly Chapman, William Ciancio, Linda Feldsott, Cheryl Leavitt, Jon Powell, JoAnne

Human Resources Division Goldman, Howard

National Security and International Affairs Division Deering, John S. Salisbury, Elizabeth B. Victs, Raymond B.

Office of Information Resources Management Ferguson, Linda McCurdy, Robert

Personnel Blue, Delona Brown, Denise Davis, Arlene V Wallace, Judy

Resources, Community, and Economic Development Division Brown, John Connolly, Michael Gerace, Delia Grieco, Rita Mounts, Gregory Oshinski, Renee Pettit, Michele Stormer, Beverly Windsor, Donna

Regional Office

Atlanta Garrett, Steven Rovere, Donna Watson, Lyndon D.

Boston O’Malley, Sharon A. Varney, Philip R.

Chicago Damasco, Mary Hofland, Darrell Noble, Steven C. Simpson, Tarrand

Cincinnati Donohue, Darla J. Wilhelm, Theresa A.

GAO Review/Summer 1985 43 Attritions (Cont.)

Regional Office Name

Denver Lucero, Sylvia A. Wilson, Sammy G.

Detroit Blanda, Lynette Chock, Lin-Lin Griesmayer, Ronald Katz, Steven

Los Angeles Maple, Karen McPherson, Harry

San Francisco Petitdemange, Yvonne Schmidt, Mike

Seattle Kirkreit, Mary Tomlinson, Gary Zitkovich, Mark

Retirements

The following employees retired from the agency during the approximate period October 1through December 22, 1984.

Division / Office Name Title

General Government Division Browne, Marion E. Secretary

General Services and Controller Renfrow, Emma Visual information specialist

Joint Financial Management Improvement Uyeda, Susurnu Executive director Program

National Security and International Affairs Carter, Jr., Andrew F. Clerk Division

Program Evaluation and Methodology Division Dana, Franklin B. Supervisory actuary

Regional Office

San Francisco Brunner, Felix Senior evaluator

Deaths

Richard S. Kuss, an evaluator in the National Security and International Affairs Division, passed away December 14, 1984.

Gregory Lingafelter, a personnel management specialist in Personnel, passed away December 9, 1984.

John Navarre, an evaluator in the Kansas City Regional Office, passed away on December 25, 1984.

44 GAO Review/Summer 1985 Professional Activities

Office of the Comptroller Agriculture Graduate School’s Annual stitute of Internal Auditors, 1984. Financial Management Seminar, General Moderated a workshop on “Audit Washington, Oct. 25. Life Cycle” at the fifth annual Collo- Charles A. Bowsher, Comptroller John F. Simonette, associate direc- quium on Auditing in Government, General, addressed the following cosponsored by the Institute of Inter- tor, spoke on “Implementation of the groups: nal Auditors and the Georgetown Financial Integrity Act: GAO’s Perspec- tive” at the Second National Confer- University School of Business Ad- Southwest Intergovernmental Audit ministration, Washington, Nov. 16. Forum, Arlington, TX, Oct. 17. ence on Reform 88 sponsored by the Public Management Institute, George S. systems accountant, New York University’s School of Mason University, Arlington, VA, Lee Beaty, is 1984-85 newsletter committee chair- Business Administration and Grad- Oct. 16. uate School of Public Administra- person and newsletter editor, Washing- tion, New York, Oct. 22. Jeffrey C. Steinhoff, deputy asso- ton Chapter of AGA. National Association of Schools of ciate director, spoke on “Audit Quality Control” at the 5th Annual Colloquium Amanda E. Flo, accountant, spoke Public Administration, 1984 confer- the recently issued title 2 at a joint on Auditing in Government, Washing- on ence, Washington, Nov. 2. meeting of the Northern Virginia ton, Nov. 16. American Association for Budget chapters of the Society of CPAs and the National Association of Account- and Program Analysis, Washington, William A. Broadus, group director, ants, Tyson’s Corner, VA, Jan. 10. Nov. 2. spoke on “Governmental Auditing In- Conference for Business Executives cluding Single Audit and Standards” on Understanding the Federal Gov- before the following groups: ernment, Washington, Nov. 26. Office of the General Arkansas Society of CPAs’ Industry, Counsel National Capital Area Chapter, Government, and Commerce Confer- American Society for Public Admin- ence, Little Rock, Oct. 12. Harry R. Van Cleve, general counsel: istration (ASPA), Washington, Dec. 6. Louisiana Society of CPAs’ Govern- Washington Chapter, Institute of In- ment Accounting and Auditing Con- Discussed GAO’s role and purpose ternal Auditors, Washington, Dec. 12. ference, New Orleans, Oct. 25. and interagency coordination with the Congress and the various depart- and Financial AGA Atlanta Chapter’s Annual Work- ments and agencies with partici- Accounting shop on Governmental Auditing, pants in the Corporate Executive Management Division Atlanta, Dec. 7. Development Program, U.S. Cham- Served as vice-chair of American ber of Commerce, Washington, Kenneth Hunter, senior associate Oct. 24. director, chaired a panel at the Na- Assembly of Collegiate Schools of tional Conference on Public Adminis- Business accounting accreditation tration, American Society for Public visit to Villanova University, Served as a panelist at the NCMA Administrators, Indianapolis, Dec, 6-7. Villanova, PA, Nov. 4-7. East Coast National Symposium dis- cussion, “The CAS Board-Who John Cherbini, associate director: Lawrence Sullivan, group director: Needs It, Where and Why?” Crystal R. City, VA, Nov. 1. Spoke on “Government: A Financial Discussed fraud and abuse in gov- Discussed “Bid ProtestslMistakes In ernment programs before the Ithaca- Management Control Perspective” Bid” at the Government Contract at the Interregional Seminar on Cortland Chapter of the National Series of the Legal Education In- Public Auditing and Internal Man- Association of Accountants, Ithaca, stitute, Department of Justice, agement Control Systems in the NY, Oct. 17. Washington, Nov. 7. Developing Countries, sponsored by Gave a presentation entitled, “Are the International Organization of You Able To Identify Fraud?” at a Discussed the Competition in Con- Supreme Audit Institutions, Vienna, seminar on fraud detection, preven- tracting Act at a special government Austria, October. tion, and prosecution sponsored by contracts program, at the Epstein, Was appointed a member of the Fed- the Detroit Chapter of the Associa- Becker, Borsody & Green Briefing eral Government Committee, Asso- tion of Government Accountants, Conference, New York, Nov. 9. ciation of Government Accountants Detroit, Oct. 31. Participated in an executive work- (AGA), 1984-85. shop on “Bid Protest Procedures Charles Culkin, evaluator: Under the Competition in Contract- Virginia Robinson, associate direc- ing Act” of the Computer and Com- tor, spoke on government accounting Was appointed secretary of the munications Industry Association, systems at the Department of Northern Virginia Chapter of the In- Arlington, VA, Dec. 13.

GAO Review/Summer 1985 45 1 Rollee H. Efros, associate general ment League Annual Training Con- Gave a presentation on “Finaicial counsel: ference and served as a panel Management Initiatives” at the moderator on the subject, “Manage- Washington Chapter of the Ameri- Discussed “Fiscal Control and the ment Reform: How To Make It Sur- can Society of Military Comptrollers, General Accounting Office” before vive Elections,” Arlington, VA, Washington, Oct. 17. the 19th Fiscal Law Course, at the Oct. 30. Spoke on “Current Management Ini- Judge Advocate General School, Spoke at the Office of Personnel tiatives in Financial Management” Charlottesville, VA, Nov. 1. Management Development Seminar at the Cincinnati Chapter of AGA, Discussed fiscal law at the Justice on “Working Effectively With Over- Cincinnati. Oct. 22. Department’s government contracts sight Organizations: The General Spoke at aid moderated a workshop course, Washington, Nov. 7. Accounting Office,” Oak Ridge, TN, on Management Issues,, Nov. 14. for the Federal Executive Board, Cin- Seymour Efros, associate general cinnati, Oct. 23. counsel: Human Resources Gave a presentation on financial Spoke before the North Alabama Division management initiatives to the Vir- Chapter of the FBA on “Bid Protests- ginia Battlefield Chapter of AGA, GAO and the Justice Department Dick Fogel, director: Nov. 20. Perspective,” Huntsville, AL, Oct. 31. Participated in a panel discussion of Spoke before the Coalition for Com- the single audit concept, before the Kenneth Winne, senior project direc- mon Sense in Government Procure- National Intergovernmental Audit tor, spoke on the “Role of JFMIP in ment’s Fall Procurement Conference Forum, Washington, Nov. 9. Federal Financial Management,, to the on the Competition in Contracting Washinaton Chapter of AGA. Washina-- Act as it applies to protest pro- Spoke on evaluating policy out- ton, Oct: 23. cedures, Alexandria, VA, Nov. 8. comes and the mananement- of fed- era1 agencies, at a seminar on Ad- Spoke before the American Bar ministration of Public Policy held at National securityand Association, Public Contract Law the Executive Seminar Center, KinQs- International Affairs Section Fall Program, on “lmple- Point, NY, Dec. 3. Division mentation of the New Bid Protest Law,” San Antonio, Nov. 16. Gaston Gianni, group director: Frank Conahan, director: Spoke before a George Washington University National Law Center Gov- Participated in a panel discussion Spoke on “The Role of GAO in the ernment Contract Claims course on on the first-year implementation of National Security Process” before “Bid Protests,” Washington, Dec. 4. the Job Training Partnership Act class members of the American Uni- before the National Council on Em- versity Foreign policy Semester Ronald Berger, assistant general ployment Policy, Oct. 18. Seminar. Mr. Conahan also discussed counsel, spoke at the Acquisition Law Participated in a panel discussion GAO’s mission and its interface with Workshop on Protests at the Army on oversight and monitoring of the other legislative branch agencies, Materiel Development and Readiness Job Training Partnership Act at the such as the Congressional Research Command Continuing Legal Education National Association of Countiesy Service, the Congressional Budget Program, Williamsburg, VA, Oct. 22. 13th Annual Employment Office, and the Office of Technologi- Conference, Dec. 4. cal Assessment, and its work in Leslie L. Wilcox, senior attorney, security assistance, burden sharing, chaired a panel on “Ethics in Govern- Jerry C. Fastrup, evaluator, spoke on and embassy security measures, ment Act: Too Much or Too Little?” at the role of general revenue sharing in Washington, Oct. 5. the American Society for Public Admin- the federal grants system, before the Spoke on “GAO’s Involvement in istration, National Capital Area Chapter US. Treasury’s advisory group on fed- Public Policy Issues” before partici- conference, Washington, Dec. 6. eralism reform, Sept. 26. pants at the Executive Seminar Center, Oak Ridge, TN, Oct. 29. Suzanne Stover-Carr, attorney- Paul Posner, evaluator, discussed Spoke on “The Role of GAO in the adviser, spoke on “The Effect of Miss- GAO’s block grant reviews before the Review and Audit Phase of the Fed- ing Participant Data on the Actuarial midwestern conference of the National eral Budgeting Process” before the Valuations on Multiemployer Pension Assistance Management Association, class of 1985 at the Air Command Plans,” at the American Law Institute- Chicago, Dec. 7. and Staff College, Maxwell Air Force American Bar Association interna- Base, AL, Dec. 17. tional conference on ERISA (Employee John Kamensky, evaluator, is the Retirement Income Security Act), author ot “Budgeting for State and Washington, Oct. 21. Local Infrastructure: Developing a Bill Thurman, deputy director, testi- Strategy,” published in the autumn fied on “Reducing the Cost of Weapons issue of Public Budgeting and Finance. Acquisition” before the Ad Hoc Task General Government Force on Selected Defense Procure- Division Joint Financial ment Matters, Senate Committee on Armed Services, Dec. 18. He was ac- William J. Anderson, director: Management companied by Don Day and Paul Math. Improvement Program Attended the Senior Executives Donald E. Day, senior associate Association’s Professional Develop- Susumu Uyeda, executive director: director, spoke on “The Role of the

46 t GAQ in the Acquisition Process” operations, Nov. 25 - Dec. 2. Meeting as a member of the Govern- before the Defense Systems Manage- mental Relations Committee, ment College, Fort Belvoir, VA, Nov. 14 John Landicho, senior associate AACSB, Washington, Oct. 15. and Dec. 20. director, attended the 1984 Seapower Forum, sponsored by the Center for Participated as a panelist in the ses- Paul Math, associate director: Naval Analyses on Nov. 27 and 28. sion, “The Changing Environment, the Workforce in the Year 2000,” of Participated in a panel discussion Jim Morris, group director, spoke at the 1984 IPMA International Confer- on “Procurement Reform: Changes a seminar on “U.S. Ports and National ence on Public Personnel Adminis- in Law and Policy,” Washington, Defense Strategies” conducted by the tration, Miami, Oct. 22-23. Dec. 6. American Association of Port Authori- Participated as a panelist in the ses- ties, Charleston, November 28. He was Participated in a panel discussion sion, “Managing People: Cooperate accompanied by Ed Cramer, evaluator. on “Defense Financial and Invest- or Complex?” ASPA Conference, The discussion revolved around GAO’s ment Review (DFAIR): Contract Washington, Dec. 7. report, “Observations Concerning Finance Issues It Raises,” Elec- Plans and Programs To Assure The tronics Industry Association, Scotts- Stephen J. Kenealy, national recruit- Continuity of Vital Wartime Move- dale, AZ, Nov. 13. ment program manager: ments Through United States Ports.” Rich Davis, associate director, has Was selected as a presenter at the Rose Imperato, evaluator, was been named seminar director for the Mid-Atlantic Placement Association’s recently selected as chairperson for third class of the National Security June 1985 conference. His presenta- the Armed Forces Communications Management Program. The program tion will be entitled “Public Sector and Electronics Association (AFCEA), reflects the curricula of both the In- Placement.” Northern Virginia Chapter, Publicity dustrial College of the Armed Forces Committee Newsletter. Was appointed to the Cooperative and the National War College, thereby Education Association National providing a broad understanding of na- J. senior evalua- Committee. tional security policy formulation, Kenneth Brubaker, tor, served as guest lecturer at the U.S. strategy, and mobilization. Was appointed to a 3-year term on Army Transportation School, Defense editorial board of the Journal of Irv Boker, evaluator, spoke on “One Advanced Traffic Management Course, Cooperative Education. Face to Industry: Special Access Pro- Ft. Eustis, VA, Sept. 7. Was appointed book reviewer for the grams and Requirements” at the An- Journal of College Placement. nual Govern men tll ndust ry Security Irene Robertson, evaluator, was Seminar, sponsored by the Washing- selected as a member of the National ton Chapter of the American Society Association for Female Executives, Program Evaluation for Industrial Security, Silver Spring, Inc., Nov. 1. and Methodology Nov. 14. Paul Francis, evaluator, spoke on Division Eve Burton, evaluator, spoke on “The Transition of Weapon Systems “The Role of International Organiza- from Development into Production” Wallace M. Cohen, group director, tions in World Relief” at a Harvard Uni- before the Defense Systems Manage- organized two Federal Evaluation versity seminar on international af- ment College, Fort Belvoir, VA, Oct. 23. Directors Seminars. One was held at fairs, Cambridge, MA, Nov. 14. She also the Veterans Administration and con- participated in a panel discussion on cerned User-Based Evaluation, Oct. “Refugee Women: A Problem for the In- Office of Organization 1984. The other was held at the Depart- ternational Community” at a con- and Human Development ment of Health and Human Services ference on “Northern Virginia: One and concerned Evaluation in the In- Area, Many Communities,” sponsored Arley F. Franklin, director: spector General’s Office at three major by Northern Virginia Community Col- federal departments, November. lege, Oct. 29. Participated in a panel discussion on “Measuring Success Through Robert York, evaluator, spoke on Susan Aaronson, evaluator, moder- Management’s Eyes” at the Federal GAO’s Evaluation of Federal Programs ated a panel discussion on “Govern- Training Managers’ Workshop, Em- to Aid Mathematics and Science ment Intervention” at an Urban Institute mitsburg, MD, Nov. 20. Teaching at a meeting of the Man- conference on International Steel power Analysis and Planning Society, Trade, Washington, Nov. 30. Chaired a panel discussion on Washington, Nov. 14. “Creating an Effective Image: Inside and Outside” at ASPA’s National Tim Stone, evaluator, visited the Linda Morra, group director, dis- Capital Area Chapter Conference, U.S.S. Halsey (CG-23), the U.S.S. O’Brien cussed “Assessing the Use of Tax Washington, Dec. 6. (DD-975), and the U.S.S. Knox (FF-1052) Credits for Families Who Provide in the Western Pacific to observe ship- Health Care to Disabled Elderly Rela- board operational readiness, May 14 - Personnel tives” at the National Association of June 14. State Units on Aging‘s symposium on Felix R. Brandon II. director: “State Tax Policy and the Impact on Ken Newell, evaluator, visited the Older People,” Washington, Dec. 7. aircraft carrier U.S.S. Dwight D. Eisen- Participated in the American Assem- hower (CVN-69), which was on patrol in bly of Collegiate Schools of Busi- Lottie Lisle, actuary, was elected the Mediterranean Sea, to observe ness’ (AACSB) Subcommittee on vice president of the Middle Atlantic Naval aircraft maintenance and carrier Bus i nesslGovern ment I n terf ace Actuarial Club, a regional organization 47 Professional Activities

1 of actuaries who work in the District of “Single Audit Act of 1984” at a regional Certified Public Accountantsr San Columbia, Maryland, Virginia, and conference sponsored by the National Bernadino, Dec. 6. North Carolina. Assistance Management Association, Dec. 7. Ken Anderson, evaluator, spoke on “The Anatomy of an Audit,” at the an- Resources, Community, Kansas City nual meeting of California Conserva- and Economic tion Corp. mid-level managers, San Development Division David A. Hanna, regional manager, Luis Obispo, Nov. 28. received the Excellence in Government Mark Nadel, group director, chaired award from the Greater Kansas City Seattle a panel on “Congress as a Consumer Federal Executive Board (FEB) for his of Policy Airalysis” at the Annual outstanding leadership and contribu- Susan L. Pazina, senior evaluator: Research Conference of the Associa- tions in FEB activities, including the tion for Public Policy Analysis and Federal Managers’ Financial Integrity Taught a training program for 16 Management, New Orleans, Oct. 19. Act outreach efforts, Kansas City, new loaned executives in the King Oct. 3. County Combined Federal Campaign Hugh Wessinger, associate director, Program, Seattle, Sept. 12-14. discussed GAO’s role in assisting the Cos Angeles Congress, before the senior class of Developed and taught a seminar on Chapin High School, Chapin, SC, Nov. 1. microcomputer applications, in- Fred Gallegos, manager, manage- cluding their interface with the ment science group: Philips MICOM system, for Los Regional Offices Angeles Regional Office auditors, Spoke before the Data Processing Nov. 29. Management Association - 1984 Atlanta Conference on the subject of “EDP Along with Walter R. Eichner, taught Auditing,” Anaheim, CA, Nov. 6. an Office of Personnel Management (OPM) course on “Developing and Marvin Colbs, regional manager: Taught an undergraduate course in Implementing Internal Controls in EDP auditing, during the fall quarter, the Federal Government” to staff Spoke on “Peer Review of Intergov- for the Computer Information Sys- members from the General Services ernmental Audit Activities” before tem Department of California State Administration, the Army Corps of the Mid-American Intergovernmental Polytechnic University, Pomona. Engineers, the Department of the Audit Forum, Kansas City, MO, Wrote an article, entitled “Planning Navy, and the State of Washington, July24, and the Midwestern Inter- EDP Audit Career Development,” Seattle, Dec. 6-7. The course was governmental Audit Forum, Minne- which appears in Auerbach Pub- developed for OPM earlier in 1984 by apolis, Sept. 10. lishers’ EDP Audit Series. Mr. Eichner. Spoke on “Carrying Out Oversight Functions - How GAO Interfaces San Francisco with DOD,” before the Comptroller’s Course at the Air University, Maxwell Jack Birkholz, senior evaluator: AFB, AL, Aug. 22. Gave a one-day seminar on “Gem erally Accepted Government Audit Chicago Standards” to federal, state, and local auditors and independent Del Koenigs, evaluator, discussed public accountants, San Francisco, GAO’s role in identifying and resolving Dec. 10. The seminar was sponsored fraud and abuse problems in the fed- by the California Association of eral government before the Ethics in Auditors for Management. Public Administration class, University of Illinois, Chicago, Nov. 12. He also discussed the new, single- audit legislation at: John Rose, evaluator, discussed “Program Evaluation” and “Effective A two-day seminar, “Auditing the Report Writing” at the U.S. Forest Ser- Job Training Partnership Act in vice’s Management Seminar and Work- California,” sponsored by the shop, Milwaukee, Nov. 27-28. Western Intergovernmental Audit Forum, San Mateo, CA, Nov. 15-16. Detroit A meeting of the Southern California William F. Laurie, evaluator, served Chapter of the National Assistance as chairperson of a paper session at Management Association, Los the Gerontological Society. The paper, Angeles, Nov. 27. entitled “Mega-Planning: Issues on Ag- A meeting of the California County ing,” was presented at the meeting, Audit Chiefs’ Committee, Santa Bar- held in San Antonio, Nov. 20. bara, Dec. 14. Robert Piscopink, evaluator, partici- A seminar sponsored by the Citrus pated in a panel discussion on the Belt Chapter, California Society of The GAO Review

Editor Office of the General Counsel Kansas City Harry S. Havens Marilynn M. Eaton Bernard G. Farrell Assistant Editor Office of Information Los Angeles Carol A. Codori Resources Management Robert Brown John Butters Features Coordinator New York Alberta E. Tropf Office of Internal Evaluation Eric Johnson Arley Whitsell Publishing Servioes Norfolk Office of Organization Melissa van Tine Editing Staff and Human Development Judy Oberdick-Merrill Don O’Sullivan Philadelphia Gerard S. Burke Louis Rodrigues

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General Services and Controller Atlanta Susan B. Burtner William Ball

Human Resources Division Boston Joseph Eglin Paul Slater, Jr.

Information Management and Chicago Technology Division Stewart Herman Daniel Long Cincinnati National Security and Elmer Taylor International Affairs Division Irene Robertson Dallas Frank Bizzell Office of the Chief Economist Nancy Hamilton Denver Pamela K. Tumler Office of the Comptroller General Detroit Alberta E. Tropf Randall Conley

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