SCULPTURES AT THE "G" STREET ENTRANCE

(Compressed view) American laborers and professional workers are depicted in the bas-relief sculptures that decorate the red granite portals of the recessed entrance of the buff limestone GAO Building on " 0" Street. The sculptures were designed in 1951 by Joseph Kiselewskl. noted U.S. sculptor. of New York. Nine feet high and 15 feet long. the two panels curve around both sides of the entrance. They contain about 30 figures representing Americans most affected by Government programs. On the front and back covers of THE GAO REVIEW is a partial section of the two tiers that divide each panel. The panel on the right side of the entrance depicts agriculture in the top tier and mining in the bottom one. Among other themes included in this panel are fishing. warehousing. and transportation. The panel on the left side of the entrance shows the professional worker and the occupa­ tions that concerned the economy in the 19505. These included the themes of engineer­ ing. science. education. and art. Themes such as the military were left out at the time. 5 years after World War II. and themes such as space. welfare. crime. and atomic energy had not yet become areas of major national concern.

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REVIEW VOLUME 13 ISSUE I Contents Ellsworth H. Morse, Jr., Assistant Comptroller General of The United States ALLEN R. VOSS ...... 1 The Auditor's First Steps in Applying Computer Analysis FREDERICK GALLEGOS and NICHOLAS W. HORSKY ...... 13 Communicating Effectively Through GAO Reports DAVID M. ROSEN ...... 18 Maximizing GAO Resources Through Modernizing Audit Recording Techniques- A Concept That Works ROBERT L. MACLAFFERTY ...... 22 The Well-Being of Older People- A Unique GAO Study WILLIAM F. LAURIE ...... 24 The Need For More and Better Computer Auditing ELLSWORTH H. MORSE, JR...... 29 Being Responsive to the Congress ROBERT B. HALL...... 38 The One That Got Away JAMES B. DEEMER ...... 44 Regulatory Agencies: New Challenges for Auditors MARTIN M. FERBER ...... 46 Planning Audit Time RICHARD HEMBRA and RONALD E. MAXON 51 The 1977 Congressional Sourcebook- Federal Program Evaluations WALLACE COHEN, HARRY WEINTROB, STEVE BRYANT, and CALVIN MITCHELL ...... 55 How Should Costs Be Determined? ...... 62

News and Notes GAO Historical Collection to Honor Ellsworth H. Morse 66 International Accounting Organization Formed ...... 66 Bank Regulatory Agencies Audit Authority ...... 67 Domestic Intelligence Activities ...... 68 GAO Audit of IRS ...... 69 Consolidated Financial Statements ...... 69 Speaking of the Treasury Department ...... 70 More on Advisory Commissions ...... 70 Interesting Tidbits ...... 71 9th INCOSAI ...... 71 Seminars on Operational Auditing ...... 72 Reducing Paperwork ...... 72 FBI Accounting System Approved ...... 73 New Glossary of Budgetary Terms Published ...... 74 Evaluation of Federal Energy Data Programs ...... 74 Cost Accounting Standards Board ...... 74 Legislative Developments ...... 76 GAO Staff Changes ...... 79 Professional Activities ...... 83 New Staff Members 98 Readings of Interest Audit and Accounting Guide: The Auditor's Study and Evaluation of Internal Control in EDP Systems...... 99 Evaluation of Policy Simulation Models: A Conceptual Approach and Case Study ...... 100 Legislative Review of Government Programs: Tools for Accountability ...... 101

Selected articles in the REVIEW are indexed in the ACCOUNTANT'S INDEX published by the American Institute of Certified Public Accountants. Published quarterly for the professional staff of the United States Gen­ eral Accounting Office. ii Ellsworth H. Morse. Jr. Assistant Comptroller General of the United States ALLEN R. VOSS

Ellsworth H. Morse, Jr. Assistant Comptroller General of the United States

The GAO Review is privileged to publish in this issue the following memorial to Ellsworth H. Morse, Jr., Assistant Comptroller General of the United States, who passed away on November 29,1977, at the age of 63. Mr. Morse will long be remembered for his valuable contribution in promulgating accounting and auditing principles and standards for the Federal community and in fostering and nurturing operational auditing in the United States, as well as internationally.

The founder and editor of sen & Co. During World War II The GAO Review, Ellsworth H. he served as Lieutenant Com­ Morse, Jr., Assistant Comptroller mander in the Navy, and at the General of the United States, time of his discharge, he was a died November 29, 1977, in member of the Navy Price Ad­ Alexandria, Virginia. justment Board. Mr. Morse was born near In 1942, Mr. Morse married Shelby, Ohio, in Richland County Virginia F. Garbison, who be­ on December 1, 1913. He at­ came his partner and inspiration tended Shelby High School and for the rest of his life. graduated from Oberlin College "Mose" Morse, as he was affec­ in 1935 where he was elected to tionately known throughout the Phi Beta Kappa. He received his Nation, could claim credit for M.B.A. degree from the Univer­ many far-reaching accom­ sity of Michigan in 1937 and then plishments during his 31 years joined the staff of Arthur Ander- with the General Accounting Of-

Mr. Allen R. Voss is presently GAO's Philadelphia regional manager. During 1963-74, he worked closely with Mr. Morse for 9 years as Assistant Director of Auditing Policy, Associate Director of Auditing Policy, Deputy Director of Au­ diting Policy, and Director of the Office of Policy.

1 ELLSWORTH H. MORSE, JR. fice. At several critical times in was a chief mover in improving its history, the General Account­ the development and organiza­ ing Office was truly fortunate to tion of the Office's programs and have a man of Mr. Morse's in translating into action the calibre, courage, and foresight to broad accounting and a"Q.diting help guide the Office to a position concepts approved by the Con­ of national, even international, gress in 1945, 1950, and 1970. leadership in the field of account­ ing and auditing. His outstanding service during A Leader in Financial his tenure in the General Ac­ Management counting Office, from the day he reported to work on July 1, 1946, In and out of Government, Mr. to his last day of work on Morse was recognized as a leader November 29, 1977, was consist­ in accounting and financial man­ ently recognized by three Comp­ agement. trollers General. He was officially recognized on a One only needs to look at the number of occasions for his out­ challenging responsibilities be­ standing contribution to financial stowed upon him during his career management in the Federal Gov­ with the General Accounting Of­ ernment and served in various fice to recognize the high esteem capacities in professional or­ in which he was held. He served ganizations-including the Ameri­ as Director of Audits (1955-56), can Institute of Certified Public Director of the Civil Accounting Accountants, where he served on and Auditing Division (1956), Di­ the prestigious Auditing Stand­ rector of the Accounting and Au­ ards Committee, and the Associa­ diting Policy Staff (1956-66), Di­ tion of Government Accountants, rector of the Office of Policy and of which he was National Presi­ Special Studies (1966-71), Direc­ dent in 1970-71. tor of the Office of Policy and In the early fifties, and for many Program Planning (1971-72), years after, he served as the and Assistant Comptroller Gen­ Comptroller General's personal eral of the United States respon­ representative in the Joint Finan­ sible for Policy and Program cial Management Improvement Planning (1972-77). Program. The overall objective of The contributions made by Mr. this program is to improve finan­ Morse to the accounting and au­ cial management practices diting programs of the General throughout the Government so Accounting Office and to finan­ that they will most effectively cial management throughout the serve program and general man­ Federal establishment are of in­ agement purposes and achieve estimable value. Through his maximum efficiency and economy professional competence, plan­ in all operations. ning capability, executive lead­ Mr. Morse was a prolific writer ~rship, and sound judgment, he and many of his articles on finan-

GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR. cial management were published Morse became its first editor and in professional journals. In addi­ had just completed the arrange­ tion, in 1954 he directed the prep­ ments for the beginning of the aration of an internal quarterly fifth year of its publication at the journal devoted to accounting, au­ time of his death. The Journal is diting, and financial manage­ distributed throughout the world ment-The GAO Review. The Re­ in English, French, and Spanish. view has had such high praise that He accompanied the Comptroller it is now made available to a large General at the eighth INCOSAl in number of colleges and univer­ Madrid in 1974 and the ninth IN­ sities as well as to public account­ COSAl in Lima in October 1977. ing firms and Government agen­ Through his participation in the cies in the United States, as well activities of INTOSAl, he became as in other countries. well known in auditing circles in By 1968, Mr. Morse had been many countries. clearly recognized throughout the As a further example of his con­ United States as an outstanding cern with improving auditing civil servant. He was selected by standards outside the United the National Civil Service League States, Mr. Morse, at the time of to receive its 1968 Career Service his death, was serving as Chair­ award. Before receiving this man of the Board of External Au­ award, Mr. Morse had been pre­ ditors of the Organization of sented the First Award of the American States and was midway Annual Author's Contest for his in his third year of participation in outstanding contribution in the that body. Also, he was recently Federal Accountant, in 1966, and appointed a member of the Na­ the Comptroller General's tional Council of Beta Alpha Psi, Award, the highest award given which is the national accounting by the General Accounting Of­ fraternity. fice, in 1967. lllustrative of the many tributes In recent years, Mr. Morse's paid to him after. his death were interest in improving financial the following: management was extended to the Mr. Saburo Sato, President of international area. Beginning in the Board of Audit of Japan: 1970, he participated with repre­ His death leaves your Office without sentatives of Canada and Ven­ one of its most distinguished and re­ ezuela in developing a proposal for spected officials. The loss is not confined an International Journal of Gov­ to your Office either. His charming per­ ernment Auditing, which was sonality and his high accomplishments in agreed upon by the seventh Inter­ the field of accounting and auditing national Congress of Supreme earned him the high esteem and deep af­ fection not only of his countrymen but Audit Institutions (INCOSAI) at also of all foreigners who ever came into its triennial conference in contact with him officially or otherwise. Montreal in 1971. After financing His devotion to improvement of audit­ arrangements had been worked ing standards throughout the world is out to publish the Journal, Mr. evidenced by his distinguished leadership

GAO Review/Winter 1978 3 ELLSWORTH H. MORSE, JR.

Ellsworth H. Morse, Assistant Comptroller General, and Comptroller General Elmer B. Staats hold an informal conversation during a recess at the 9th International Congress of Supreme Audit Institutions, Lima, Peru, October 1977. in editing the International Journal of JO'rg Kandutsch, Secretary Government Auditing as well as the GAO General of INTOSAI and Presi­ Review, from which we have learned dent of the Court of Audit of the much. Republic of Austria: James J. Macdonell, Auditor In Lima just a couple of weeks ago we General of Canada: managed to experience Mr. Morse's fully The profession has lost an outstanding creative abilities and his full strength member whose contribution to govern­ and dynamic activity. An irreplace­ ment accounting and auditing will long able loss. be remembered nationally and interna­ Gale McGee, Ambassador to the tionally. Organization of American States: G. Rune Berggren, Auditor Gen­ As President of the External Board of eral of Sweden: the Organization of American States, he I met him first during my visit to GAO provided an example of personal rec­ in 1975 and this year in Lima at the titude and professional competence which INCOSAl and after that at the IPDEVI will serve as a model for his successors. I seminar, which was a considerable suc­ am confident you are aware of the high cess thanks to his excellent leadership. regard with which Mr. Morse was held by My staff and myself have always re­ those· fortunate. enough to have been as­ garded Mr. Morse as a firm and valuable sociated with him. link between GAO and my office. D. R. Steele Craik, Auditor Gen­ I. E. Nebenzahl, State Comp­ eral of Australia: troller of Israel: Even from this distance I am well Ellsworth Morse was held in great pro­ aware of the contribution he has made fessional and personal esteem. This is a over the years not only to GAO but also grievous loss to GAO and his colleagues to the government auditing community and many friends over the world and generally. He achieved world stature by especially to our Journal. his continuing and challenging ap-

4 GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR.

proaches to the problems which face us two outstanding presentations, one to all. the Comptroller General's senior staff Jf;Jrgen Bredsdorff, Auditor and one to a combined meeting of the Ecuador Chapter of the Institute of General of Denmark: Internal Auditors and the professional Government Audit Institutions all over accountancy societies. the world owe him a great deal. Both his I do not know of anyone who has in­ inspiring articles in The GAO Review fluenced me personally or helped me and his editorial work for the Interna­ professionally more than Mr. Morse. tional Journal were of lasting importance for all who worked with public auditing. D. G. Njorge, Controller and Personally I will miss him as a Iioble and Auditor-General of Kenya: friendly colleague and I will keep the I have personally met and known memory of his nice smile when we passed Mr. Morse during the conferences of each other or sat together in Montreal, INTOSAI and I had come to respect Madrid, and Lima. him as a person and his untiring ef­ Hans Schafer, President of the forts in the work of INTOSAI. His con­ Court of Audit of Germany: tribution to the International Journal of Government Auditing was invalu­ The GAO and the entire auditing able. profession have suffered a heavy loss with the premature death of Ellsworth Alejandro Orfila, Secretary Morse. We owe a very special debt to General of the Organization of Mr. Morse as the first editor of the In­ American States: ternational Journal. My wish is now Mr. Morse rendered signal service to that his anticipation and plans for the the inter-American community in his continued successful development of capacity of Chairman of the Board of Ex­ the Journal may be realized. This ac­ ternal Auditors of the Organization of complishment would fulfill a task left American States. The prestige of that us by the Journal's first editor, who to body was greatly enhanced both by vir­ many of us was such a sincere and re­ tue of the high office he held as Assistant liable friend. Comptroller General of the United James P. Wesberry, President, States, and by reason of the profound re­ The International Professional spect in which he was held by his profes­ sional colleagues. Development Institute, Ltd. The Permanent Council of the Organi­ In the two Supreme Audit Institu­ zation paid him well-merited tribute at tions where I have worked during the its special session yesterday, by preserv­ past eight years I have frequently ob­ ing a moment of silence in his memory. served that it is really a very small Richard L. Hunt, Acting Gover- number of persons who can really be nor, Panama Canal Zone: counted upon for outstanding and loyal service of any kind, any place, any His sincere and dedicated approach to time. For some time it has been ob­ a variety of situations was inspiring. vious to me that Mr. Morse was one of Marshall S. Armstrong, Chair­ that indispensable few in the GAO. I man, Financial Accounting Stand­ know his loss is your loss. ards Board: Mr. Morse was certainly responsible for the success of the two IPDEVI As you know, I have had the privilege seminars in Lima. In Quito he made of working with Mose on several different

GAO Review/Winter 1978 5 ELLSWORTH H. MORSE, JR.

professional assignments over the past national scene where he had a host of many years. My personal regard for him friends. cannot be overstated. He has been an outstanding leader in behalf of the GAO Susuma Uyeda, President of the for many years and your expression of Washington Chapter, Association loss merely confirms my own belief. I of Government Accountants: have been inspired by his personal integ~ Mr. Morse's death is a great loss to all rity and leadership. of us-to the Federal Government and to W. W. Cooper, Professor of Ac­ the accounting and auditing profession, counting, Harvard University: including the AGA. As a long standing member of AGA, he served as a national I have known Ellsworth Morse for president and his efforts and contribu­ many years as one of the really great tions can and should be considered hercu­ contributors to auditing, accounting and lean. As a prolific writer, he constantly government both in the United States explored and expanded the frontier of and abroad. Only those persons who had professional knowledge. As a person, he the privilege of seeing some of his contri­ was warm, understanding, thoughtful butions "up close" will ever know how and humble to those of us who had the much the world really owes to Ellsworth privilege to work for and with him. Morse-and will continue to owe him in the future. Mose was a remarkable man, one whom we all admired and respected. He Ralph E. Kent, Arthur Young & has left a legacy for all of us to emulate. Co.: Josephine M. Clark, secretary to My relationships with the Consultants' Mr. Morse for 25 years: Panel and the Financial Accounting Foundation provided an opportunity over I never met a person more devoted to the years for me to get to know Mose and his family, his profession, his job, and his to observe first-hand his fine personal country than Ellsworth Morse. He had a qualities and his unswerving commit­ deep sense of commitment and pride to do ment to high professional performance. his best in whatever he was engaged in and with the highest of standards. Mere Joseph Campbell, former Comp- words cannot do him justice. The world is troller General of the United a better place because of him. States: A member of the Congress, Sen­ A truly great person and a devoted ator Walter Huddleston, recog­ loyal friend. nized Mr. Morse's contribution to Maxwell Henderson, former Au­ promoting good financial man­ ditor General of Canada: agement in the Federal Govern­ ment. He inserted the following Ellsworth was a friend of mine of tribute in the Congressional Rec­ whom I was very fond as the 19 years of our friendship went by albeit too fast. We ord for December 7, 1977: did many things together and I respected Mr. President, I wish to call to the at­ his judgment and gentleness more than I tention of the Senate the sudden passing can express. His passing is not only a of Mr. Ellsworth H. Morse, Jr., Assistant tremendous loss to his colleagues but also Comptroller General of the United of a friend who was always ready to help States, on November 29. Mr. Morse, an others in need. In my experience this was employee of the GAO for 31 years, was nowhere more evident than on the inter- an extraordinarily able and experienced

6 GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR.

Mr. Ellsworth Morse and his wife, Virginia, at a recent reception. At left is Mr. Morse's secretary, Josephine Clark.

policy adviser to the Comptroller General pIes and standards to be followed for many years and was the deserved re­ by the Federal departments and cipient of the National Civil Service agencies. These are incorporated League Career Service Award. in title 2 of the General Account­ As chairman of the Legislative Appro­ ing Office Policy and Procedures priations Subcommittee, I have been very Manual. Under the law, these interested in the work of the General Ac­ counting Office in stimulating improve­ principles and standards are the ment in Federal Government accounting framework for all accounting sys­ practices. Mr. Morse was long active in tems in the Federal Government. both Federal and private efforts to pro­ Mr. Morse personally directed mote the' financial management disci­ and participated in the develop­ plines throughout the Federal Govern­ ment and improvement of these ment. principles and standards since 1956. In June 1965, a complete Accounting Principles and restatement of the principles and Standards standards in title 2 was issued, which was almost entirely Mr. One of the Comptroller Gener­ Morse's work. al's statutory responsibilities is He also was responsible for, prescribing the accounting princi- and personally participated in,

GAO Review/Winter 1978 7 ELLSWORTH H. MORSE, JR. the preparation of manuals illus­ through experience. Mter the 1960 trating certain procedures for the revision, Mr. Morse remained per­ benefit of Federal agencies. One sonally involved in overseeing the of these was an illustrative man­ updating and refining of the Audit ual on the application of accrual Manual, which is currently used in accounting; another was a man­ the day-to-day management and ual illustrating application of a supervision of work in the General simplified payroll system. These Accounting Office as well as in have been widely distributed to formal and on-the-job training op­ Federal agencies and used in de­ erations. veloping modern accounting Because the General Accounting methods. They have received Office is responsible to the Con­ high praise from authorities both gress for the results of its work, it inside and outside of the General is essential that its reports on ac­ Accounting Office. counting and auditing work be of the highest quality. Recognizing this, the General Accounting Of­ Auditing and Reporting fice issued a Report Manual in Standards and Policies 1954 setting forth the basic policies for planning, developing, In 1949 the General Accounting and writing its reports. Mr. Morse Office undertook a series of sub­ was primarily responsible for es­ stantial organizational changes in tablishing the policies contained in its accounting and auditing opera­ the early manual and, over the tions, and Mr. Morse played a years, he was personally involved leading role in these changes. Es­ in assuring the currency of the sential to this transition was a set manual. of written guidelines setting out Mr. Morse took action in the late the principles, policies, and prac­ sixties and early seventies to de­ tices to be followed in the new velop standards for audits of gov­ comprehensive audit, which was ernmental organizations and pro­ prepared under Mr. Morse's guid­ grams. Under his direction, a work ance and personal participation. group consisting of 10 Federal and These guidelines became the Com­ 5 non-Federal officials was estab­ prehensive Audit Manual of the lished to develop the audit stand­ General Accounting Office, issued ards and in June 1972 the Stand­ in 1952, a massive volume cover­ ards for Audit of Governmental ing practically every aspect of the Organizations, Programs, Ac­ audit activity of the General Ac­ tivities & Functions were pub­ counting Office. lished. Following their publica­ i The Audit Manual served its tion, Mr. Morse was a leading I purpose outstandingly well and in advocate of the standards, con­ 1960, again under Mr. Morse's di­ sistently promoting their use rection, was completely revised throughout the United States with and enlarged to incorporate addi­ his publications and speeches. tional audit techniques developed Nearly 100,000 copies of the

8 GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR. standards have been distributed to all management of the automatic date. These standards are increas­ data processing facilities (ADP) of ingly being followed in making the Government. audits of Government programs In 1963 Mr. Morse directed and and have been specified as the participated in a study showing audit standards, in circulars is­ the financial advantages of the sued by the Office of Management Federal Government's purchasing, and Budget and in many Federal as opposed to leasing, ADP equip­ agency audit guides. ment. As of that time, there were The standards were reviewed by slightly over 1,000 electronic com­ a committee of the American Insti­ puters in the Government, of tute of Certified Public Account­ which about 86 percent were ants during 1973. The committee's leased. Mr. Morse's study disclosed report stated: that if the Government would buy one-half of this rented equipment, The members of this Committee agree there would be a savings of ap­ with the philosophy and objectives advo­ cated by the GAO in its standards and proximately $150 million over a believe that the GAO's broadened defini­ 5-year period. Mter the 5 years, tion of aUditing is a logical and worth­ there would be further savings of while continuation of the evolution and over $100 million annually. growth of the auditing discipline. The 1963 report also recom­ mended that there be established, in the Executive Office of the Pres­ ADP Audits ident, a central management office with the responsibility and author­ Mr. Morse was one of the first to ity to make decisions with respect recognize the importance of the to the utilization and procurement business management aspects of of computers. computers to the Federal Govern­ Several bills were introduced in ment. In 1958 he directed that Congress to provide for the central studies be made of the manage­ management of the Government's ment and other problems related ADP operations. One of these bills to computers. That year a report was subsequently enacted into law was issued under his direction (Public Law 89-306). This law which showed that while large ex­ provided for the economic and effi­ penditures were being made for cient purchase, lease, mainte­ computers, there was no overall nance, operation, and utilization of Government plan for the man­ automatic data processing equip­ agement of these computers and ment by Federal departments and that there was a need to establish agencies. an effective and coordinated pro­ The foresight of Mr. Morse in gram of joint efforts by Govern­ recognizing the potential for econ­ ment agencies. omy and better management and The 1958 report was followed by procurement of computers had another, in 1960, which again em­ much to do with the passage of phasized the need for having over- this legislation.

GAO Review/Winter 1978 9 ELLSWORTH H. MORSE, JR.

Audit of Federal Bank and reporting phases of the re­ Supervision view. A comprehensive report on the audit was issued on January Mr. Morse played a major role 31, 1977, containing many recom­ over the years in attempts to ob­ mendations for improving Federal tain authority, through legisla­ supervision of State and national tion, for the General Accounting banks. Office to audit the Federal Reserve On February 2,1977, Mr. Morse System. In January 1976, after accompanied the Comptroller two major bank failures, the General to testify during a joint House Banking Committee re­ hearing before subcommittees of quested the Office to conduct a full the House Banking Committee scale audit of the three bank regu­ and the House Government Opera­ latory agencies: the Federal Re­ tions Committee on the results of serve System, the Federal Deposit the study. The study was well re­ Insurance Corporation, and the ceived. Even the three agencies Comptroller of the Currency. The testified that the study had been House Government Operations conducted in a professional man­ Committee and the Senate Bank­ ner and that their fears of disclo­ ing Committee later also joined in sure of confidential information the request. were unfounded. The major obstacle to such a re­ Mr. Morse assisted in several view was access to bank examina­ more hearings during the next tion reports and other agency rec­ several months, on bank supervis­ ords which contain confidential ory activities in general and on information about banks and their proposed legislation. Legislatjon customers. For 2 months Mr. was proposed to strengthen the Morse led the negotiations which powers of the bank supervisory eventually resulted in formal agencies, adopting many of the agreements between the Comp­ recommendations in the General troller General and the heads of Accounting Office's study, and to each of the three agencies, provid­ provide the General Accounting ing the General Accounting Office Office with continuing audit au­ with access to these records. This thority over the three agencies. represented the first time that the Mr. Morse played a major role in Office had been granted unre­ coordinating efforts with commit­ stricted access to bank examina­ tee staff to draft legislation that tion reports. would enable the General Ac­ In early April the Comptroller counting Office to conduct mean­ General established a task force to ingful audits and also alleviate the perform the review, made up of agencies' concerns about our ac­ staff members from all divisions cess to confidential information. and reporting to Mr. Morse. Mr. The legislation passed the House Morse provided day-to-day guid­ by an overwhelming majority in ance to members of the task force October 1977 and was referred to during the planning, execution, the Senate. Mr. Morse and the

10 GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR.

Comptroller General testified on Office were most appropriately this legislation before the Senate stated by Comptroller General Governmental Affairs Committee Elmer B. Staats on November 30, on November 29, 1977, the day of 1977, in a memorandum to the Mr. Morse's death. We are op­ staff of the General Accounting Of­ timistic that this legislation will fice: pass the Senate in 1978. Enactment of this legislation It is with great sorrow that I announce would have been one of Mr. the sudden passing last evening of Ellsworth Morse of a heart attack. His Morse's most satisfying achieve­ death is a severe loss to GAO, the ac­ ments and will be a fitting tribute counting and auditing profession, and to to his many years of effort to ob­ me personally. tain needed authority for the Gen­ Only yesterday, Mr. Morse assisted me eral Accounting Office to ~udit the at a hearing before a Senate Committee Federal Reserve System. on a bill which would make the General Accounting Office responsible for audit­ * * * * * ing the three Federal bank regulatory In a short written tribute, no agencies, a subject on which his great one could do justice to the contri­ knowledge would have been of incalcula­ butions that Mose Morse made to ble value if this new responsibility is the development of the General placed on the GAO as now expected. Accounting Office. However, his And only today, he was to have helped contributions and devotion to the me in a hearing before a House Commit-

Testifying before the Senate Governmental Affairs Committee on the Bank Audit Act on November 29, 1977, are (from left); Ellsworth H. Morse, Assistant Comptroller General; Elmer B. Staats, Comptroller General, and Donald C. Pullen, Assistant Regional Manager.

GAO Review/Winter 1978 11 ELLSWORTH H. MORSE, JR.

tee on financial and administrative prob­ of Government Auditing of which he lems anticipated if the Panama Canal was the Editor. His leadership in edit­ Treaty comes into effect. ing the Journal and the GAO Review Mr. Morse's career in the General Ac­ were further manifestation of his con­ counting Office spans many years and his cern with the need to improve auditing contribution to its development is hard to standards throughout the world. overstate. He loved the GAO and was completely dedicated to its mission. High We will miss Mose Morse from our professional and ethical standards­ ranks. No request to him was too large or which he personally epitomized-were too small for him to undertake. His host basic to the policies and standards which offriends both in and outside the General he did so much to establish and maintain Accounting Office will feel this loss for the General Accounting Office. His deeply and will join with me in expres­ sights were high and he held these high sing our sorrow and sympathy to his fam­ standards always before us. ily at this time. Returning from the congressional hearing yesterday, Mr. Morse plunged Those of us who were fortunate into the final work to complete the to have known Mose personally GAO annual report for 1977 to the could not help but be influenced by Congress and to the launching of the the association. We will certainly fifth year of the International Journal miss him.

Positive Government

Every man wishes to pursue his occupation and to enjoy the fruits of his labors and the produce of his property in peace and safety, and with the least possible expense. When these things are accomplished, all the objects for which government ought to be established are answered. Thomas Jefferson 1801

12 GAO Review/Winter 1978 FREDERICK GALLEGOS and NICHOLAS W. HORSKY

The Auditor's First Steps in Applying Computer Analysis

Using a computer to accomplish some of the time-consuming tasks of auditing.

In an age when, more and termine what analytical tool he more, the auditor is being con­ will use and whether there would fronted with enormous amounts be a serious adverse effect on the of data to review, analyze, and accomplishment of the audit and draw conclusions about, the staff reporting objectives if the infor­ auditor must use a wide variety mation being analyzed was in­ of tools available to turn raw complete or inaccurate in any data into meaningful informa­ material respect. The auditor is tion. This article discusses a responsible for performing suffi­ method which could help the au­ cient evaluation to provide rea­ ditor decide whether data can be sonable assurance that informa­ analyzed with one of these tools, tion, whether processed by com­ the COMPUTER. puter or otherwise, is relevant, The decision path followed bJO accurate, and complete. people successful in applying Therefore, a general set of computer assisted techniques can criteria is needed to aid the au­ be very complex. On each as­ ditor in identifying when a situa­ signment the auditor must de- tion may warrant computer ap-

Mr. Gallegos, a management analyst of the Management Science Group' in the Los Angeles regional office, has a master's degree in business administration from California State Polytechnic University at Pomona. He provides computer-related assistance to the LARa audit staff, has taught COBOL pro­ graming and systems analysis at his alma mater, and has published other arti­ cles and texts on data processing. He has been with GAO since 1972. Mr. Horsky, an audit manager of the Management Science Group in the Los Angeles regional office, has a B.S. degree in accounting from California State University at Long Beach and a certificate in computer sciences from the Uni­ versity of California at Irvine. He is responsible for computer-related assistance and reviews in the automatic data processing and systems areas. He joined GAO in 1967.

GAO Review/Winter 1978 13 APPLYING COMPUTER ANALYSIS plication. These criteria comprise sider other alternatives in accom­ a "logic path" for computer anal­ plishing his objectives. ysis, illustrated in figure 1 and explained below. Step 2-QuantifiabJe Data Step I-Definable Data If the data is quantifiable, it will most likely provide the auditor The first step is for the auditor with meaningful figures or results to define the data he or she is that can be used in the audit. working with, such as employment Quantifiable data is that data records, welfare case histories, or which can be measured with some project performance reports. This degree of assurance and consis­ step leads the auditor into deter­ tency. Examples of such data for mining what sources of informa­ analysis are the tabulation of tion and data are available for questionnaire responses, compari­ analysis and issue development son of welfare recipient payments purposes. Mter defining the data, to Government employee payroll the auditor proceeds to the next payments, and calculating the step. If the data cannot be defined, number of hospital acute-care beds however, the auditor must con- based on historical usage data.

A LOGIC PATH FOR STOP IS DATA DEFINABLE COMPUTER ANALYSIS

STOP DOES ANAL YSIS INVOLVE. QUANTITATIVE DATA

TASK NO MANUAL

YES

YES D~~A I--____-o-~~~;~~R YES RELIABLE

NO NO REDEFINE REDEFINE ANALYSIS ANALYSIS Figure 1

14 GAO Review/Winter 1978 APPLYING COMPUTER ANALYSIS

Data that is not quantifiable is Step 4-Computerized Data not suited for automated data processing because it has no com­ If the data has the potential for mon attribute from which mean­ computer processing, the auditor ingful summarizations or analyses must first determine whether it is can be performed. Generally, such computerized or not. Information data must stand on its own. For presented in large volumes is usu­ example, counselors' comments re­ ally computerized, but many times garding medicare cases have no data or information does not ap­ common relationships to allow a pear to be computerized because mathematical description. Data the documents reviewed are re­ like this must be used as is, while ports to top management, which quantifiable data can be further tend to be typewritten summaries. scrutinized for computer applica­ However, on inquiring, the auditor tion. may find that the origin of the data used for summarization is Step 3 -Significant Quantities maintained in computer files. The auditor should also be aware of the of Data fact that not all data contained in One of the advantages of com­ a computer file is printed. There­ puter processing is the ability of fore, the auditor should eXf.mine the computer to process large the record layout of a data file to quantities of data, especially simi­ make sure that meaningful data lar data. For example, to analyze that could be used for analysis is the inventory of a veterans hospi­ identified. tal pharmacy store, the auditor If the data is maintained in a would want to examine the inven­ computerized file, the auditor can tory control log, if one existed, to then proceed to determine the re­ determine which drugs are on liability of it (step 6). If not, he or hand in what quantities. If the she can determine whether the in­ store has 50 items, the task can be formation is kept manually in a accomplished manually very eas­ retrievable form. ily. However, if 5,000 items are stocked, the auditor would have to Step 5-Manually Retrievable either statistically sample and Data analyze the items or find other methods for analysis. The large If the data is kept manually in a number of items should alert the retrievable form, it can be re­ auditor to the possibility of using viewed for feasibility of com­ the computer. However, we have puterization. Examples of such found that as few as 150 question­ data would be records with similar naires lend themselves to com­ elements, such as name, age, sex, puter analysis, because they usu­ and birthdate. The specific data ally involve the analysis and necessary to meet the auditor's summarization of at least 20 or needs must be reviewed to deter­ more variables. mine if the data can be captured

GAO Review/Winter 1978 15 APPLYING COMPUTER ANALYSIS on the data entry document and used data processing phrase of structured into a computerized "garbage in, garbage out," is an record. Each data field must be excellent description of the need to analyzed for its numeric, alphabe­ validate the reliability of data for tic, or alphanumeric characteris­ computer analysis. tics. A good illustration of the need to To illustrate, in a recent audit, validate data occurred during a re­ GAO staff reviewed about 400 cent audit. Field staff members manually stored case files in the were given computer-generated U.S. Attorney's Office. They iden­ reports concerning the equal tified common data elements that employment opportunity profile of they were interested in summariz­ various bureaus of a Federal ing. When each case was reviewed, agency. In their initial inspection the auditor extracted the data of these reports, the statistical in­ from the manual file and coded it formation appeared reasonable onto a computer coding sheet. The and reliable. However, indepth completed coding sheets were sent analysis revealed some questions to a service bureau where the data concerning the data's reliability. was keypunched and verified. A First, beginning and ending staff computer program was then writ­ balances could not be reconciled ten to edit and test the validity of because of unknown staff move­ the input data, while another ments, resulting from cost of living computer program tabulated and or step increases. Second, accord­ summarized the results of the re­ ing to the individuals who re­ view according to the audit staffs quested the statistical data for our output specification. This saved field auditors, the data was not the audit staff a significant validated for accuracy or appro­ amount of time in trying to com­ priateness. Discussions with pile and summarize this data. agency officials also revealed some However, had the data not been ethnic categories for new staff kept in a retrievable form, this were coded erroneously. Thus, the type of analysis could not have statistical reports provided to the been accurately performed in a audit staff were not reliable for timely manner and would have re­ their intended use. quired redefinition. If the data is not unreliable, then the use of such data should be redefined by the audit staff. In the Step 6-ReliabiIity of Data above case, such a redefinition process took place in order to be The final step in the logic path able to use the data. We asked the for computer analysis is validating agency to extract the data in the data-determining its impor­ summary form. The data was to tance and reliability. If the data is include all permanent full-time not reliable, the computer analysis and part-time employees, but was of such data cannot be accepted by to exclude temporary employees the auditor or agency. The much and those in the hourly category.

16 GAO Review/Winter 1978 APPLYING COMPUTER ANALYSIS

We insured ourselves of this data future employee ethnic and sex being valid through the use of edit ratios based on current employee and reasonableness checks. The trends. computerized summary data was also compared with the agency's published summary information to Conclusion assure its completeness. Ending balances were reconciled to deter­ Information is an essential and mine if summary figures were ac­ costly resource for managing and curate. These tests confirmed we evaluating organizational ac­ had an accurate summary of the tivities and programs. The com­ data contained in the file and that puter, like other valuable re­ the data was reasonably accurate. sources, should be used in a way Once the data was proven reli­ that will maximize benefits in re­ able, the tasks for analysis could lation to investment. be determined by the audit staff. Our logic path for computer In this specific instance, the data analysis is a process which we use was used in a GAO-developed to help the auditor decide whether computerized model designed to data and information needed can predict the agency's profile and to be reliably analyzed with the use evaluate the long-term effect of of the computer. By this method current policies and practices and the auditor can identifY the poten­ the implications of alternate tial for using the computer for policies. The objective of this tasks which would otherwise be model was to generate estimates of laborious and time-consuming.

Computers and M.anagement Control

The increasing use of computer and communications technology within the Federal Government has introduced a variety of new management problems. Among these is the need for assuring adequate management control over the automatic data processing (ADP) function. Auditing is an important tool used by agency management to monitor and control internal operations. We be­ lieve the ADP function should command more attention from agency managers for a number of reasons: (1) ADP impacts signif­ icantly upon virtually every aspect of an agency's operations, (2) by its nature ADP permits huge sums of money and large amounts of information to be handled by relatively few individuals, (3) computer users rarely have the ability or knowledge to verify the accuracy of computer systems, and (4) the large and rapidly grow­ ing cost of ADP itself. James T. McIntyre, Jr. Deputy Director, Office of Management and Budget July 1977

G40 Review/Winter 1978 17 DAVID M. ROSEN

Communicating Effectively Through GAO Reports

To effectively communicate audit findings to readers, a GAO report must be well organized and clearly written.

The purpose of a GAO report is During the past 3 months, I to communicate audit findings, have reviewed and edited about a conclusions, and recommenda­ dozen reports prepared by the tions about agencies and pro­ staff in the Boston regional of­ grams that use Federal money. fice, and have read many pub­ The reports usually discuss how lished reports prepared at other the money is spent, how a pro­ GAO locations. Based on this ex­ gram or agency is administered, perience I would like to suggest and whether the program or 10 general but practical steps agency is accomplishing congres­ GAO report writers can take to sional goals efficiently, for the in­ communicate more effectively.1 formation of Members and com­ mittees of the Congress, Gov­ ernment agencies, the news Make Points in Logical Order media, and the taxpayer. The audit work may be useless if The key to good writing is or­ the message is not effectively ganization. Before you write, iden­ communicated. tify major points, group all state­ For this reason, GAO reports ments relating to those points, and must be accurate, clear, easy to read, and when possible, interest­ 1 The GAO writing courses discuss ing. If a report is so dull or con­ these points. Pointers on good writing fusing that no one reads it, its can also be found in the GAO booklet, purpose will not be fulfilled. "From Auditing to Editing."

Mr. Rosen has been an editor and writer in the Boston regional office since August 1977. Before that, he was Massachusetts State House Bureau Chief for United Press International. He holds a B.A. degree in history and government and an M.S. degree in journalism, both from Boston University, where he is a lecturer in journalism.

18 GAO Review/Winter 1978 COMMUNICATING EFFECTIVELY discard any irrelevant informa­ Don't lead the reader through a tion. This procedure should be maze of background information or used whether you are writing a unimportant detail before getting paragraph, a summary, a chapter, to the main point, because it will or a complete report. Nothing in­ turn the reader off, and your mes­ furiates a reader (or editor) more sage will not be communicated. than having to constantly refer back and forth in a report to un­ derstand what he or she is Make the Point Clear reading. Remember that chronological Put complicated thoughts into order may not be the most logical their basic elements, and sum­ order. The best way to present marize your main thoughts into a facts in many cases is in the order short, simple sentence. Remember, of importance. A report is not a you cannot write clearly unless summary of working papers, but a you think clearly. Don't get bogged synthesis designed to communi­ down in complexities and con­ cate major findings and conclu­ tingencies when introducing new sions scattered throughout your material. Modify statements if you working papers. Your task as a re­ must, by using such phrases as "in port writer is to select the major general" or "with several excep­ facts to be communicated and tions." Once the point has been present them logically. stated clearly, the subtleties can So before you write, THINK. be discussed in the sentences Don't just write down random which follow. statements from working papers. Set those papers aside for a mo­ ment and ask yourself a simple Make the Point Forcefully question: "If I were a Member of Use simple and, when possible, Congress or an average citizen, strong statements which accu­ what would I want to know about rately make a point. Although this this program or agency?" Then, is often difficult within the format from memory, jot down major of a GAO report, it can be done. points. At this stage, you are ready For example, a recent draft report to draw a tentative outline and read: refer to your working papers as a guide for including pertinent Health care costs have increased 12 per­ cent a year from 1965 to 1976 increasing information. from $38.9 to $139.3 billion. The statement is straightforward Get to the Point and clear, although the clarity suffers from excessive use of State your main point first, numbers. I made the statement using details to support and ex­ stronger and clearer by adding: pand on the point. You are writing Health care costs in America have more a report, not a mystery novel! than tripled since 1965.

GAO Review/Winter 1978 19 COMMUNICATING EFFECTIVELY

Avoid Needless Repetition experts. Therefore, write in com­ mon, understandable English. The structure of a GAO report Avoid jargon and technical expres­ requires some repetition. But if sions. While we want to use simple ideas are properly grouped and English, accuracy and precision clearly stated the first time they are important also. If you select are presented, there will be no words carefully, your message will need to repeat them. I have edited be clear. reports where a statement was re­ peated verbatim three times in as many pages. If you must repeat Eliminate Needless Verbiage something for structure or em­ phasis, try to change the wording; Many published GAO reports make the same point in a different could be at least 20 percent shorter way. if unnecessary words were elimi­ nated. Here are some examples of Stress Substance Over how words can be removed without Procedure changing meaning. When auditing, procedure is im­ 1. The Navy is planning to build a total of 39 submarines. portant to ensure completeness. The Navy plans to build 39 subma­ When writing a report, substance rines. is most important because we 2. Training and other services provided want to communicate a message. under title 1 CETA are expected to A detailed listing of audit proce­ help participants maximize employ­ dures is necessary in working pa­ ment opportunities and enhance self­ pers, but superfluous in a report. sufficiency. Most procedural information in a Title 1 CETA services are expected to report belongs in the scope section. help participants get good jobs and Lengthy procedural discussions support themselves. elsewhere impede effective com­ 3. We found Chicago's management in­ munication. For example, avoid formation system to be lacking expressions such as "GAO inter­ adequate information necessary for de­ viewed the director of the State cisionmaking. Chicago's management system lacked Division of Employment Security information needed to make decisions. to get his views on Federal trade assistance programs. He told us that * * *." Instead, just say, "Ac­ cording to the director of the State Write in Active Voice Division of Employment Security, Make simple, direct statements Federal Trade assistance programs in which the subject does the ac­ could be improved by * * *." tion expressed in the verb. Con­ sider these two statements: Choose Words Carefully 1. GAO urges the Congress to tighten We are writing for laymen, not welfare eligibility requirements.

20 GAO Review/Winter 1978 COMMUNICATING EFFECTIVELY

2. It is recommended that welfare eligi­ Summary and Conclusion bility requirements be tightened by the Congress. A GAO report is a form of writ­ ten communication, with the The first statement uses active major findings, conclusions, and voice. It is more forceful than the recommendations of an audit con­ second statement, which uses pas­ stituting the message. If the mes­ sive voice. The first sentence sage is not communicated, the re­ clearly states who is urging what. port and the audit work that pre­ The second sentence does not. ceded it will be pointless. A report is most effective when the message is clearly presented. This means the report must be Use Examples to well organized and well written. Illustrate Points The key to both good writing and good organization is clarity of The best way to explain a com­ thought, and you cannot make plicated thought is illustrated by your own thoughts clear to a example. Consider how the follow­ reader unless they are clear to ing statement is illustrated by an you. example: When writing a report take the following steps:

Under the administration's tax proposal, 1. Organize ideas and present them in income tax rates for persons in high tax logical order. brackets would increase an average of 15 2. Get to the point. percent while rates for low- and middle­ 3. Make points clearly. income persons would decrease an aver­ 4. Make points forcefully. age 10 percent. 5. Avoid repetition. 6. Stress substance over procedure. For example, annual taxes for a typical 7. Choose words carefully. family of five earning $50,000 would in­ 8. Eliminate needless words. crease from $15,000 to $17,250. Taxes for a similar family earning $10,000 would 9. Write in active voice. decrease from $1,000 to $900. 10. Use examples to illustrate points.

A profession is an occupation which is pursued largely for others and not merely for oneself. Justice Louis D. Brandeis

GAO Review/Winter 1978 21 ROBERT L. MACLAFFERTY

Maximizing GAO Resources Through Modernizing Audit Recording Techniques- A Concept That Works

The San Francisco regional office has begun a pilot project to reduce fieldwork, calendar time, and audit oosts. The following article recounts one audit team's experience early in the project.

At a time when GAO must two audit team members realized meet critical product time that the number of interviews to frames, staff-years are in short be conducted, staff availability, supply, and budget reductions and critical time frames called are imminent, we must seek new for a departure from traditional and often innovative methods to auditing methods. They agreed use our human resources as effec­ that the method by which inter­ tively as possible. One such views were conducted and the in­ method is being explored by the formation documented in the San Francisco regional office in a workpapers would be most easily pilot project known as moderniz­ adaptable to change. Therefore, ing audit recording techniques. the team decided to have only one The early experience of one of the team member present at inter­ region's audit teams indicates views with the agency personnel, that using these techniques does record the interviews on mini­ increase GAO fieldwork produc­ tape recorders, and have the ad­ tivity. ministrative staff transcribe the In the early planning stages of interview tapes. The cooperation a survey of the Postal Service's of management and the adminis­ Labor Relations Program, the trative staff was obtained, along

Mr. MacLafferty is a supervisory auditor in the San Francisco regional office. He joined GAO in 1967 after graduating from Pacific Union College, California, with a B.S. degree in accounting. He is a member of the Association of Govern­ ment Accountants and the Commonwealth Club of California.

22 GAO Review/Winter 1978 MODERNIZING AUDIT RECORDING TECHNIQUES with two minitape recorders and The technique is not without a supply of tapes. some pitfalls. The audit team dis­ After ·overcoming an inherent covered that the administrative fear of hearing their own voices staffs ability to support other re­ on tape and learning to organize gional typing needs could cause their thoughts while in the proc­ excessive delays in transcription ess of dictating, the team discov­ turnaround time. Although such ered that dictating interviews delays were minimal on the sub­ and using transcription services ject survey, they could become could increase the auditors' pro­ critical in future assignments, ductivity while reducing audit especially if an entire regional of­ costs. During the 3-month audit fice attempts to use audit record­ segment which comprised most of ing techniques without providing the interviews, the two team additional typing support. Other members conducted 102 inter­ factors that should be considered views with postal officials and before using audit recording with local and area union repre­ techniques include: sentatives. (The interviews aver­ -Obtaining top management's aged 3.7 double-spaced typed support of the concept, at least pages each.) The information ob­ on an experimental basis. tained during the interviews was then summarized in schedule -Obtaining rec9rding devices and tapes. (Currently, ade­ format and was used to brief top postal management on several quate recorders cost about $200 labor relation areas needing im­ and tapes $3.95 each. Given a provement or closer study. 3- or 4-day turnaround, 6 The auditors estimate that the tapes are probably sufficient dictation-transcription auditing for 1 auditor.) technique enabled them to con­ -Searching for alternate typing duct an interview and document services, such as those avail­ it in the workpapers in about 25 able from outside contractors. percent of the staff time that This audit team's experience conventional interviewing and may have just scratched the sur­ manual writeups require. If this face of what can be accomplished method had not been used, a through modernizing audit re­ junior staff member would have cording techniques. The San had to spend about 2 months, Francisco region's pilot project full-time, attending and writing may demonstrate that other uses up the interviews, or the two of recording techniques, such as team members would have had to transcribing observations, sum­ perform these functions. The maries, letters, and initial draft method, therefore, allowed new reports, can make even more ef­ staff members to perform more fective use of GAO's human re­ meaningful work and reduced the sources. An overall reduction in total calendar time required to the quantity of workpapers will complete assignments. also occur.

GAO Review/Winter 1978 23 WILLIAM F. LAURIE

The Well-being of Older People­ A Unique GAO Study

This article discusses some new techniques for evaluating the well-being of older people and the effects of services on their lives.

Introduction not in institutions such as nursing homes. Using a questionnaire de­ Aging is a natural process of veloped by Duke University in col­ gradual changes in the well-being laboration with the Department of of people. These changes are ob­ Health, Education, and Welfare, servable and sometimes measura­ we interviewed 1,609 people in ble. GAO wanted to measure 1975. The questions explored five changes in the well-being of older areas: social, economic, mental, people and then determine how physical, and daily living ac­ this well-being is affected by serv­ tivities. ices over a period of time. A 2-year, 2-phase study is underway, The responses were used to and the results of phase I have categorize the person's status in been exciting-namely, we have each area as excellent, good, developed new techniques to mildly impaired, moderately im­ evaluate multiprogram effects on a paired, severely impaired, or com­ target population. pletely impaired. For example, after answering 22 detailed ques­ tions on physical health, a person would be placed in one of the fol­ Assessing Well-being lowing categories: of Older People 1. In excellent physical health­ Engages in vigorous physical We took a survey in Cleveland activity, either regularly or at of people who were 65 or older and least from time to time.

Mr. Laurie, an audit manager in the Detroit region, joined GAO in June 1957. He is a graduate of the University of Buffalo with a B.S. degree in accounting. He is a CPA (Ohio) and a member of the American Institute of CPAs, the Association of Government Accountants, and the Gerontological Society. In addition, he is a cer­ tified professional manager and a certified internal auditor. Mr. Laurie is a previous contributor to The GAO Review.

24 GAO Review/Winter 1978 WELL-BEING OF OLDER PEOPLE

2. In good physical health-No illnesses or disabilities significant illnesses or disabil­ which are either severely ities. Only routine medical painful or life threatening or care, such as annual check­ require extensive medical ups, required. treatment. 3. Mildly physically impaired -Has only minor illnesses 6. Totally physically im­ paired-Confined to bed and and/or disabilities, which requiring full-time medical might benefit from medical assistance or nursing care to treatment or corrective maintain vital bodily func­ measures. tions. 4. Moderately physically im­ paired-Has one or more However, since we wanted a diseases or disabilities picture of the person's overall which are painful or require well-being, we developed the substantial medical treat­ method shown in table 1 for com­ ment. bining his or her status in each of 5. Severely physically lm­ the five areas to form that paired-Has one or more picture.

Table 1 Description based on five areas included Well-being in Duke University questionnaire Unimpaired Excellent or good in all five areas of human functioning. Slightly Excellent or good in four areas. impaired Mildly Mildly or moderately impaired in two areas, impaired or mildly or moderately impaired in one area and severely or totally impaired in another. Moderately Mildly or moderately impaired in three areas impaired or mildly or moderately impaired in two and severely or totally impaired in one. Generally Mildly impaired or moderately impaired in four impaired areas. Greatly Mildly or moderately impaired in three areas, impaired and severely or totally impaired in another. Very greatly Mildly or moderately impaired in all five impaired areas. Extremely Mildly or moderately impaired in four areas and impaired severely or totally impaired in the other, or severely or totally impaired in two or more areas.

GAO Review/Winter 1978 25 WELL-BEING OF OLDER PEOPLE

After applying this technique to sample received and the our sample, we projected that only source and intensity of those one of every five older people in services, during our inter­ Cleveland was not impaired. views with the older people About 23 percent were generally and from the records of the impaired or worse, including 7 agencies and of Medicare and percent considered extremely im­ Medicaid. paired. A complete breakdown of In defining and quantifying our projection is shown in table 2. services, we used five elements: Having assessed the well-being purpose, activity, relevant person­ of older people, we next wanted to nel, unit of measure, and example. identify factors that could affect For example, meal preparation this well-being. was defined as shown in table 3.

Identifying Factors That Following are individual serv­ ices we defined. Could Affect Well-being 1. Home help To identify these factors, we Personal care Checking -developed specific definitions Homemaker of services being provided to Administrative and legal older people in a technique for Meal preparation quantifying the services, Continuous supervision -identified the providers of the 2. Financial services--families and friends, Housing Medicare and Medicaid, and Groceries and food stamps over 100 social service agen­ 3. Social and recreational cies, and 4. Medical -obtained information about Psychotropic drugs the services each person in our Supportive devices

Table 2 1975 estimate of Assessed people 65 and over well-being Number Percent Unimpaired ...... 13,400 21 Slightly impaired ...... 13,200 21 Mildly impaired ...... 11,500 18 Moderately impaired ...... 10,300 17 Generally impaired ...... 5,700 9 Greatly impaired ...... 1,900 3 Very greatly impaired ...... 2,300 4 Extremely impaired ...... 4,300 7 Total ...... 62,600 100

26 GAO Review/Winter 1978 WELL-BEING OF OLDER PEOPLE

Table 3 Purpose: To regularly prepare meals for an individual. Activities: Meal planning, food preparation, and cooking. Relevant personnel: Cook, homemaker, and family member. Unit of measure: Meals. Examples: Meals provided under 42 U.S.C. 3045 (supp. V, 1975), the Older Americans Act (meals-on-wheels programs).

Nursing care - Those with more income and! Physical therapy or more education were less Mental health likely to be impaired. 5. Assessment and reference -Older people are not always Coordination, information, aware of their need for certain and referrals services, nor are they always Overall evaluation receiving assistance from the Outreach programs (including Federal) 6. Transportation for which they are eligible. Overview -More assessment and referral could help them receive all All the data we collected could appropriate services. be related to the individuals in our sample, enabling us to compare analyses of them for over 1,000 dif­ Conclusion ferent variables. This is part of the Phase I of this project is over­ methodology that accounts for the we have successfully measured the uniqueness of this study-it is the well-being of older people and first U.S. study of its kind to relate have related services to that well­ services to a defined, quantifiable being. This required a team effort well-being status of a person. And by HRD, FOD, FGMS, and con­ because of the extensive data base, sultants. We can now use these we gained gerontological insights techniques in studying other heretofore impossible. target populations, such as chil­ Following are some of our in­ dren or the handicapped; they can sights concerning older people and also be applied to studying the ways these insights can be "things," such as decaying cities or used by Federal agencies in ad­ pension funds. ministering service programs. Phase I data was included in a -The younger the people were, report to the Congress entitled the less likely they were to be "The Well-being of Older People in impaired; whites were less Cleveland, Ohio" (HRD-77-70, likely to be impaired than Apr. 19, 1977). After collecting blacks. and analyzing information for

GAO Review/Winter 1978 27 WELL-BEING OF OLDER PEOPLE

phase-II, we will report on the (1) have had and are having oil older changes in well-being over a year people and what could be done by and (2) factors influencing those the Congress, the executive changes. This information should branch, and State and local gov­ .1 help identify what effects services ernments to improve older people's lives.

The Drift of the Draft

Someday, I hope, the way I write Won't get my bosses all uptight. My summaries I never recognize; They really cut 'em down to size. Deleting a sentence, rearranging a clause Is done routinely, without a pause, But what really gives the boss a laugh Is deleting the entire paragraph. Once, when I handed in a report, I thought they were gonna take me to court. Their tools of trade are scissors and tape; When they get through it has a new shape. But once the product gets the 01' "blue lid," You feel kinda proud of what you did! James R. Barnhill Supervisory auditor Atlanta regional office

. 28 GAO Review/Winter 1978 ELLSWORTH H. MORSE, JR. ASSISTANT COMPTROLLER GENERAL

The Need for M.ore and Better Computer Auditing

Auditing in an environment of automatic data processing is a growing and gnawing problem for all auditors. The following remarks on this subject were delivered at the Fourth Annual Fall Seminar and First Annual Regional Seminar of the National Capital Area Chapter, EDP Auditors Association, Washington, D.C., October 13,1977.

The technical challenges that achieving them is widely recog­ face management officials whose nized as a most difficult task. systems include electronic com­ In our work in the General Ac­ puters and their auditors who counting Office in reviewing the must satisfactorily cope with those systems almost defy de­ nature and effectiveness of man­ agement control systems and scription. The objectives sought internal auditing in the Federal have not changed-accurate and prompt processing of data and agencies, we see an urgent need production of usable and useful for auditors to not only do more about computer auditing but also information for operational and improve greatly the quality of management control purposes. the auditing they are now doing. Tied in with these broad objec­ tives is the need to protect the se­ In our work we place great em­ curity of processed information phasis on having auditors on our and prevent fraud in any form. staff who have the capability to Auditors confronting such sys-­ audit automated systems, be terns have no real choice but to be these systems in the financial, technically equipped to test the operational, personnel, logistics, workings of the management's or other management areas. We information and control systems have no choice. The systems are and to recommend improvement there and must be examined. Au­ or correction of any serious prob­ tomatic data processing in the lems encountered-actual or po­ Federal Government is one of 34 tential. major priority issue or problem These homely truths are easy areas we have selected around for speechmakers to state. But, which to build our audit plans.

GAO Review/Winter 1978 29 MORE AND BETTER COMPUTER AUDITING NEEDED

Computer auditing is a major cope with. There is a shift in the component of this area. skills and understanding needed In the executive agencies of the to audit these systems. The chal­ Federal Government, with their lenge to auditors is one of hard vast inventory of computers, the work, acquisition of specialized tremendous annual cost of experience, new and demanding operating them, and the growing training, and developing an abil­ dependence of managers-at all ity to use the computer itself as a levels-upon computers and their tool for carrying out audit proce­ output products for the manage­ dures. ment of major programs, agency However, nothing in all this auditors must playa vital role in changes the fundamental princi­ helping assure management that ples of the auditor's profession. the computer systems are work­ The question remains, "Have au­ ing effectively, are producing ac­ ditors in general met this chal­ curate and reliable reports, and lenge?" In the Federal Govern­ are under adequate control. ment, we in GAO do not feel that GAO's role, as a legislative enough is being done by auditors branch audit agency, is to in auditing computer systems. evaluate these systems and the The integrity of computerized controls over them and promote systems continues to be the whatever changes are necessary target of much public criticism. to make them as effective as pos­ Certainly, one purpose of audit­ sible. ing those systems is to give man­ The questions we are facing to­ agement officials and policymak­ day, such as, "Can management ers information on whether the rely on auditors' reports in those systems are reliable and correctly areas where the computer is in­ produce or summarize the data volved?" or, "Can the public itself processed. Further, these officials depend on these assurances?" are should demand such information. most important. They go to the Auditors cannot avoid a measure heart of a long-established sys·· of accountability when computer tem of checks and balances in systems lack controls, are used which auditors have had a key inefficiently or uneconomically, role. What is really being asked or are tools for criminal activity. is, "Has the 'mystique' of com­ We are all well aware that the puter systems reduced the audit­ use of computers continues to or's effectiveness?" We should reach into every area of our soci­ welcome such questions and then ety. Each of us, whether we like address them forthrightly. it or not, is becoming more and It is in the formulation of an­ more dependent upon and af­ swers to these questions that we fected by computers and auto­ can demonstrate that there really mated systems. Representatives is no mystique in computer sys­ of the banking community, for tems. We will merely find a dif­ example, are very concerned with ferent and tougher technology to the questions and challenges pre-

30 GAO Review/Winter 1978 MORE AND BETTER COMPUTER AUDITING NEEDED sented by the electronic transfer that Federal managers will con­ of funds. tinue to rely even more heavily on How are auditors preparing to computer systems in solving com­ cope with these problems? How plex problems and for managing do we cope with the point-of-sale large programs and resources. systems which are steadily in­ Because of their importance creasing? How do we do our job in costwise, as well as from the service bureaus that support standpoint of impact on the pro­ large numbers of clients and grams and activities in which they where our task may just involve are used, automatic data process­ a small part of that operation? ing systems must be subjected to These are good questions. independent review and evalua­ I think the key question, how­ tion to find out whether they are ever, is one we must ask our­ reliable and to identify ways and selves; that is, "Are we as indi­ means to improve them. The very viduals ready for these chal­ magnitude of ADP costs, together lenges?" Have we as auditors with existing and potential prob­ made that personal commitment lem areas, compels us to evaluate to acquire the new knowledge, the impact of ADP on programs, new experiences, and new skills operations, and resource use. Au­ that we know are needed to re­ ditors should be helping top man­ spond to these challenges? agement find out whether these resources are used efficiently, managed effectively, and produc­ The Problem ing reliable and accurate informa­ in the Federal Government tion and reports. But-our work in GAO reveals Within the Federal Government, that too many audit organiza­ more than 10,000 computers are tions have avoided examining now in operation, and the best es­ computer systems and applica­ timate we have is that annual tions. In our most recent report to ADP costs exceed $10 billion. the Congress dealing with com­ Perhaps of more significance puter auditing in the executive than the dollar amount expended departments, released in Sep­ for these services is the impact tember,l we pointed out that they have on Federal programs there is a long history of Federal and activities. The Government's agency audit organizations' aver­ decisions resulting from com­ sion to work involving computers puter-produced information are and computer-based applications. evident through the accom­ We have noted that this aversion plishments made in such diverse was present in the private sector fields as space exploration, ag­ as well as in the Federal Gov- riculture, housing, transportation,

nuclear energy research, and 1 "Computer Auditing in the Executive large-scale clerical and accounting Departments: Not Enough Is Being operations. It seems inevitable Done" (FGMSD-77-82, Sept. 28, 1977).

GAO Review/Winter 1978 31 MORE AND BETTER COMPUTER AUDITING NEEDED ernment. The problem probably these tasks professionally. This exists at State and local govern­ may seem like an unimportant ment levels as well. step, but it is perhaps the most Does the auditor who avoids important one he can take. The the computer-or attempts to computer field is so wide that he audit around the computer-meet could attend courses indefinitely accepted audit standards? The and still not be focusing on his real answer has to be a resounding needs as an auditor. He should in­ vest his training time wisely and Our report concluded that not aim for specific results from the enough computer auditing was training. Otherwise, he and his being done by executive-branch employer may find themselves get­ agency auditors, and it presented ting frustrated and turned off be­ several recommendations to cause of unwise training choices. agency heads and their audit or­ With respect to compliance with ganizations for actions to auditing standards, the GAO strengthen this most important "Standards for Audit of Gov­ element of management control. ernmental Organizations, Pro­ grams, Activities & Functions" states: Questions for Individual If the audit work requires extensive re­ Auditors view of computerized systems, the audit staff must include persons having the appropriate skills. These skills may be In more personal terms, here is possessed by staff members or by con­ how we think individual auditors sultants to the staff. should look at what they are do­ ing. First, on every job, he should The Institute of ask himself, "Will the computer­ Internal Auditors' Report produced data have an influence on my findings?" If the answer is yes and he does not pursue the The need for auditors to develop trail into the computer (wherever their technical competence and it goes), then he is avoiding the perform work in the computer area computer. Sometimes these risks is further brought out by the re­ are taken to keep audit costs cent report of the Institute of down, but he should know that the Internal Auditors on systems au­ risks include having questions ditability and control. raised on the integrity of his work. Among the principal conclusions Secondly, the auditor should of that study were the following: identify the types of ADP audit • Internal auditors must par­ tasks that he might be confronted ticipate in the system de­ with in the next 3 years or so and velopment process to insure then identify the ADP knowledge that appropriate audit and and skills he will need to perform control features are designed

32 GAO Review/Winter 1978 MORE AND BETTER COMPUTER AUDITING NEEDED

into new computer-based in­ computer and successfully dis­ formation systems. (This tenet charge their responsibilities. To has also been an integral part repeat, we as auditors must take of GAO's published principles, the needed actions to acquire the standards and concepts of necessary technical skills and internal auditing for Federal knowledge to successfully audit in agencies for many years.) the computer environment. With­ • Controls must be verified both out these capabilities, our work before and after installation of will be substandard, and those computer-based systems. who rely on such audits will be • As a result of the growth in misled. Inadequate work in this complexity and use of area can badly damage the audit­ computer-based information or's reputation for reliability and systems, needs exist for competence. greater internal audit in­ I do not wish to convey nothing volvement relative to auditing but gloom and doom to you, how­ in the data processing envi­ ever. Many audit organizations ronment. have the capability to do excellent computer auditing, and many are • An important need exists for trying to further their capabilities. EDP audit staff development But, in many audit organiza­ because few internal audit tions, a structured, long-range ap­ staffs have enough data proc­ proach is needed to bring internal essing knowledge and experi­ auditors to the point where they ence to audit effectively in this can deal effectively with computer environment. systems and applications. To • Many organizations are not achieve the desired level, top adequately evaluating their management must provide strong audit and control functions in direction to auditors to develop a the data processing environ­ program for appropriate involve­ ment. Top management should ment and periodic reporting of initiate a periodic assessment progress made. of its audit and control pro­ grams. Categories of Computer Technical Competence Auditing Needed Computer auditing can be di­ vided into two broad categories. In today's environment, good One category consists of audit­ audits of computers and auto­ ing what is done by a computer­ mated applications require techni­ in other words, auditing a com­ cal competence far beyond that re­ puter application. An example quired of auditors in the past. The would be a review of an automated time is long gone that auditors can accounts payable system, an in­ both ignore the existence of the ventory system or the handling of

GAO Review/Winter 1978 33 MORE AND BETTER COMPUTER AUDITING NEEDED collections on receivables. The Automated Decisionmaking kinds of applications are almost endless. Such an audit might well To illustrate the need for closely encompass the adequacy of con­ scrutinizing ADP applications, let trols over input data, over the in­ me briefly describe the outcome of tegrity of the computer's process­ one of our computer audits. ing, and over computer output About a year ago, we released a products. report entitled "Improvements The second type of computer au­ Needed in Managing Automated diting is much broader and goes Decisionmaking by Computers far beyond the computer itself. Throughout the Federal Govern­ This type involves examining ment."2 In our audit work at a questions such as the following: naval installation, we observed that certain types of stocks in an • Is the system properly de­ signed? automated inventory system were building up, though they should • Is there a valid requirement not have been. Mter some digging, for the system or application? we discovered a quirk in the com­ • Is the computer being operated puter program which had the ef­ efficiently? fect of double counting requests for • Are the system procedures issuance of parts and supplies. documented properly, and are Naturally, the computer ordered they up to date? replacements automatically to ac­ • Are the functional users satis­ commodate this apparent increase fied with the output products? in the need for such parts and supplies. But the result was that • Is the computer configuration appropriate for the work to be unneeded stock was ordered. No one had questioned the com­ performed? puter's output. Before we looked • Are all personnel (ADP as well into the cases, the computer's ac­ as functional staff) adequately tions were assumed to be correct. trained for operation and use Our auditors worked to get the of the system? situation remedied. Then we Both types of computer auditing began to wonder how frequently are within the area of responsibil­ other situations of this type might ity of the internal auditor who is exist where a computer's input responsible to management for was resulting in actions-actions helping assure that operations are that could be wrong-being taken being carried out economically, ef­ automatically with no review by ficiently, and effectively in accord­ human beings. ance with the directives of man­ We reviewed the reports of agement. But, as I have already other internal audit agencies indicated, we have observed that within the Government to find too many internal audit groups out whether similar situations shun ADP auditing, particularly the second or broader aspect. 2 FGMSD--76-5, Apr. 23, 1976.

34 GAO Review/Winter 1978 MORE AND BETTER COMPUTER AUDITING NEEDED had been encountered elsewhere. periodic reviews of the output of These reports provided us the an­ automated systems to see swer in a short time. We were whether the decisions being somewhat surprised to find that made are correct. Another is to it was rather common for inter­ encourage early auditor involve­ nal auditors to encounter auto­ ment in the development of such mated systems turning out bad systems to make sure that appro­ decisions-decisions not being priate controls and audit trails detected by operators and users are built in. This report has made of the system. The internal au­ an important contribution to im­ ditors had unearthed the errors proving the use of computers in in automated systems, had run the Federal Government and to them down, and had corrective demonstrating the need for con­ actions taken. But-and here is tinued, careful surveillance by the important point-each of internal auditors of computer these had been treated as an in­ systems. dividual case when, in fact, there was a pattern of such bad deci­ sions. Eventually, we were able Current Computer Auditing to attribute these similar cases to bad programing, bad data, or a Practice combination of the two. These In our more recent report on factors, together with almost un­ computer auditing, we cited sev­ questioning acceptance of the eral examples of the avoidance of outputs of computers as correct, computer work by audit organiza­ had resulted in losses amounting tions. We also found in our review to hundreds of millions of dollars that some agencies have developed through erroneous payments, or­ the capability to perform computer dering of unneeded items, incor­ audits. True, the capabilities vary rect eligibility determinations, widely among the departments and the like. and agencies; nevertheless, we By establishing that this pat­ learned that, where such capabil­ tern existed rather generally ity had been developed, excel­ throughout the Government, and lent-even spectacular-audit in disclosing the magnitude of results have been reported. the errors being made, we were able to convince the Office of Air Force Example Management and Budget of the need to issue specific directives to One of these audits was per­ all Federal departments and formed by the Air Force Audit agencies directing them to take Agency. It reviewed proposed sys­ the broad corrective steps rec­ tem concepts, supporting ra­ ommended in our report. tionale, and documentation for an One of the most important of automated management informa­ these steps is the provision for tion system. Matters considered internal auditors to make included the adequacy of objectives

GAO Review/Winter 1978 35 MORE AND BETTER COMPUTER AUDITING NEEDED

in relation to user needs, cost re­ tecting the ever-present possibility liability, and whether technical of fraud. Fraud is a broad term requirements were valid. covering many kinds of sins, but, The auditors determined that in essence, it amounts to unlaw­ user needs, system capabilities, fully separating people or organi­ and resources had not been sub­ zations from money or resources stantiated in the original require­ that rightfully belong to them. ments document. Technical and Federal auditors have to keep a equipment specifications were not wary eye out for this possibility at substantiated by adequate studies, all times. The advent of computer and users indicated there was lit­ techniques and systems has not tle need for the proposed online lessened their concern or responsi­ data base. bility in any way. In fact, it has The original economic anal­ probably made it worse. ysis-which identified the esti­ Those of you who read The New mated costs and benefits-was in­ Yorker magazine saw the recent accurate and unsubstantiated, ac­ lengthy two-part article by cording to the auditors. Further Thomas Whiteside on this subject.3 examination disclosed that the His very readable article made it projected manpower reduction, clear that our society includes comprising most of the projected many who are quite willing to savings, was not realistic. tackle the technical challenge of This audit resulted in a major mastering the workings of com­ change in the scope, equipment, puter systems to divert money or and personnel requirements for other resources unlawfully for the system. The revised require­ their personal use. ments, approved at just under $5 GAO sent a report to the Con­ million, reflected a cost avoidance gress a little over a year ago sum­ directly attributable to the audit of marizing quite a number of com­ over $31 million. puter fraud cases in the Federal Of course, computer audits will Government. 4 These cases had not always provide such spectacu­ been brought to light through lar results. This is true of all au­ agency checks and audits-not by diting. This example also illus­ GAO-but the point of the report trates that in the automatic data was that managers and auditors processing area, as well as in have to be alert all the time to test many other areas, the auditor can their systems to detect fraud and often make an important contribu­ tighten them when fraud is found tion by getting involved before to prevent it in the future. final decisions are made.

3 "Annals of Crime-Dead Souls in the Computer," part I, Aug. 22, and part II, The Problem of Fraud Aug. 29, 1977. 4"Computer Related Crimes in Federal Before closing, let me bring out Programs," FGMSD-76-27, Apr. 27, one other problem-and that is de- 1976.

36 GAO Review/Winter 1978 MORE AND BETTER COMPUTER AUDITING NEEDED

The general public-the man centrating on the knowledge and or woman in the street-may techniques in which expertise was know little or nothing about the needed. technicalities of computers or We have also seen people internal management controls. trained in the computer sciences But when they read about frauds acquire the audit skills needed to involving the long-undetected perform expertly as auditors. stealing of money by milking an Thus, it is possible for audit or­ organization's system, compu­ ganizations to acquire the exper­ ter-based or not, the most likely tise they need. With that exper­ question to be raised in their tise, they should have the confi­ minds will be, "Where were the dence to tackle the difficult job of auditors?" examining the computer systems Auditors cannot escape accoun­ in their agencies. And, by doing so, tability for weak accounting and they can demonstrate to manage­ control systems. This is true even ment officials that they are on top though primary responsibility for of their job and are better prepared strong systems rests with man­ to constructively assist those offi­ agement. Management officials cials in discharging their respon­ have the job of designing and in­ sibilities. stalling good systems to start In closing, let me refer once with and including all necessary again to the recent GAO report on measures to prevent fraud. computer auditing. Management Internal auditors support those officials and auditors in the Fed­ highly laudable objectives eral agencies-and elsewhere­ through testing, evaluating, and should review it carefully and ask reporting on their findings. The themselves whether the shoe fits. computer age has not changed They should ask themselves this lineup in basic respon­ whether they are doing enough sibilities. It has only made the auditing of their systems. If they job technically harder to perform. conclude that they are not doing enough, they should then be able to recognize the risks that they are Concluding Observations taking. I would hope that such recognition would in turn lead We in GAO have seen auditors them to take the vigorous and de­ who knew little or nothing about cisive actions needed to shore up a computers become highly skilled serious weakness in their internal in a relatively short time by con- management control systems.

GAO Review/Winter /<;18 37 ROBERT B. HALL

Being Responsive to the Congress

"It is clearly the case that there is dissatisfaction in the Congress in the time GAO takes to provide its products." GAO Task Force November 1977

Crucial to being responsive to We at GAO can expect increas­ the Congress is our capability to ing demands from the Congress, discern congressional needs and for information and analysis, as priorities early and to respond well as a sense of competition quickly. This article explores from our sister agencies in meet­ ways to increase our effectiveness ing these needs. The Congress in both areas. will probably look to several In the 1970s the Congress reas­ sources for special studies and serted its constitutional respon­ analyses and congressional budg­ sibilities and quickened its pace etary information. We will, no by streamlining its handling of doubt, continue to be the primary the national budget, reorganizing source of agency management re­ committees, assigning GAO addi­ views and program evaluations. tional duties, and setting up new resources-the Office of Technol­ GAO responds to many ele­ ogy Assessment, the Congres­ ments in the Congress-ap­ sional Budget Office, and an en­ propriations committees, budget larged Congressional Research committees, oversight commit­ Service'! tees, and individual con­

1 Martin J. Fitzgerald, "The Expanded gressmen. How do these various Role of the General Accounting Office in elements judge our responsive­ Support of a Strengthened Congress," ness? First, are our reviews rel­ The Bureaucrat, January 1975. evant to their prime concerns?

Mr. E:." is an assistant director in the Procurement and Systems Acquisition Di ·ision. He has worked in industry, in GAO field and headquarters offices, and as a staff member of the Commission on Government Procurement. He has been associated with over a dozen congressional reports which have used the "project team concept" and other approaches discussed in this article. ------

38 GAO ReviewlWintn 1978 BEING RESPONSIVE TO THE CONGRESS

CONGRESS HAS A CHOICE OFFICE OF TECHNOLOGY ASSESSMENT

Does GAO choose issues that are tionship and a continuing informal important and timely? Are the dialogue with oversight and programs under review emerging budget committees. Sometimes or ongoing and still growing? these kinds of relationships and Can the Congress still do some­ communications with congres­ thing meaningful about them? sional committees take years to These are tough standards to build and require patience and meet. It is becoming increasingly humility on our part. The benefit clear that we must zero in early is better information to help us de­ on what the needs and priorities cide what's really important, set of the Congress really are. out review priorities accordingly, and establish review objectives and deadlines useful to the Con­ Defining Congressional gress. Needs and Priorities Early Congressional inputs, therefore, help us choose specific subjects and To discern congressional needs, issues that are timely. As we begin we often dig into committee re­ to narrow down topics and for­ ports and hearings. We also malize jobs, we can keep checkinb try to "~eate an easy working rela- with committees as to their intet-

GAO Review/Winter 1978 39 BEING RESPONSIVE TO THE CONGRESS

est in the reviews and the priority ing decisions before and after they we should assign them. are put into effect. The most im­ Since GAO's charter mandates portant debates, of course, are a nonpolitical, independent those that occur before a policy or agency, some in GAO believe we program is set or the money is must keep our distance from the spent. Frequently, committees Congress to avoid being drawn have only a few months to prepare into political infighting. How­ for major decisions. Sometimes, ever, keeping one's distance can they must react instantaneously also mean lack of communication with staff work done on a real­ and insight on the important is­ time basis. A short review cycle for sues. As one committee staff di­ us is a long one for them. rector said, we should not be de­ Here is where the Congress terred from analyzing tough is­ judges our responsiveness in a sec­ sues and taking a stand backed ond way. Can we deliver the in­ by solid facts, or from developing formation before the committees or . hard-hitting recommendations the Congress itself must act? This for reform and letting the chips raises the question: Should we fall where they may. In conduct­ abandon or modify some of GAO's ing our work, he added, commit­ more traditional ways of carrying tees expect us to: out our assignments so as to work -Ask them for background in­ more in tune with congressional formation and the reasons for schedules? If we are perceived to their requests. be characteristically slow, some -Ask for their suggestions on congressmen may begin to use scope, objectives, and overall GAO as a "stalling mechanism" approach. and send us work only when they -Question the agency's posi­ want to delay action. tion. The obvious answer is that we -Report informally, in advance, must better attune ourselves to if the congressional schedule congressional schedules, even dictates. when the issues are complex. Cer­ -Address the issues directly tainly, it is not always easy to re­ and unequivocally. search complex matters fully, dig up the facts at various locations, do a proper analysis, and develop a We Need A Quick Response meaningful report-all within a Capability few months. But often that is what is needed. Once we have affirmed a con­ For several years, GAO has been gressional need for information, doing some things differently with the next question is whether we a view toward speeding up its can respond in time for the infor­ work. Experience shows that much mation to be useful. time can be saved without com­ The Congress reviews and de­ promising the quality of our re­ bates executive policies and spend- ports. These results come from a

40 GAO Review/Winter 1978 BEING RESPONSIVE TO THE CONGRESS variety of changes but two stand committees are experimenting out: with the new budget approach or -Using small, multidisciplinary have expressed an interest in it. project teams free of pa­ A major feature o( the project perwork, organizational re­ team is that members are devoted straints, and multiple reviews. almost exclusively to their as­ -Forgoing the requirement for signment. Thus, they have the obtaining formal, written time to research the literature; agency comments before the interview experts in the field; report is issued. make case studies; sit down with agency and industry people, both on the firing line and at policy Using Small, Multidisciplinary Teams levels; and go over report Project teams are staffed with material-without interruption for people whose varying backgrounds unrelated tasks. and talents are suited to the job's GAO project teams are more requirements. With their different motivated to plan and conduct perspectives, team members can their work with tight deadlines in analyze the subject matter quickly mind. Drafts are reviewed by and in depth. fewer persons. Allowed to bypass For example, one of the earliest the usual reviews, the teams are project teams made a review in quite sensitive about the responsi­ 1970 of the proliferation of air-to­ bility delegated to them. The ground missiles. The team in­ members' best ideas are integrated cluded a combat pilot, a missile into the report, and the give and engineer, an industrial engineer, a take between those with differing CPA, and a system analyst. Two of backgrounds results in a balanced these were consultants. Field office presentation. Members stretch members reported directly to the their abilities to achieve a quality team leader. The field members draft for top-level review. They participated in all phases of the don't want to risk losing their assignment. Four final reports new-found freedom and increased were released in 10 months time. responsibility. In a more recent case, a Team members share and accept headquarters-field project team personal accountability for results, developed a congressional report because responsibility is not dif­ on a new concept called mission fused between the field and Wash­ budgeting. They converted the ington or among the various levels President's fiscal year 1978 of review. The jobs are done only energy, defense, and space explo­ once from start to finish. The team ration budget requests to a mis­ approach offers greater challenge sion approach to illustrate how the and opportunity for recognition, new concept works. The Congress but your neck is on the line. Be­ received the report in mid-1977, cause of this, you may find your­ while it still had the fiscal year self working a lot harder. 1978 budget under review. Several Several kinds of GAO assign-

GAO Review/Winter 1978 41 BEING RESPONSIVE TO THE CONGRESS

INTEGRATING WASHINGTON AND FIELD EFFORTS-A TEAM APPROACH

;~.,

_----iBOSTON

CONGRESS

,--___-, DALLAS

:====~ ATLANTA

ments suggest the project team • complex and cross-discipli­ approach. They include-but cer­ nary. tainly are not limited to-those that are Forgoing Advance Formal Comments • important or congressionally sensitive, Some GAO project teams do not • needed promptly, or seek formal, written agency com-

42 GAO Review/Winter 1978 BEING RESPONSIVE TO THE CONGRESS ments, and this reduces the length publication should not be the of their assignments by several routine practice. Instead, written months. They have found that in­ comments need to be reserved for formal comments obtained directly cases where important positions or from people on the firing line and information is deemed to be worth at policy levels are more valuable several months' delay. 3 and serve the same purpose of in­ * * * * * suring that reports are fair, com­ To sum up, GAO staff have a plete, and objective. much greater opportunity and * * * the quality of the product does not potential for growth when they seem to suffer for lack of comments or be­ review a subject or issue of cause of a compressed report review proc­ known concern to the Congress ess. It is therefore somewhat painful and when procedures enable when the potential impact and utility of them to respond quickly enough a sound report is depleted because months have passed while waiting for to permit their work to be consid­ agency comments * * *. 2 ered. Reinforced with better in­ formation, the Congress can, in Incorporating the agency's for- turn, maintain its constitutional mal written position in our reports role as a coequal member of the frequently delays us. And, relying Federal Government. unduly on written agency replies encourages us to be lazy-why do 3 EDITOR'S NOTE: At the December the homework or manage jobs meeting of the division directors with carefully if we can depend on the the Comptroller General, upon the rec­ agency to straighten us out later? ommendations of the Task Force for Im­ Obtaining formal, written proving GAO's Effectiveness, agreement agency comments in advance of was reached that the divisions should have greater discretion in determining the means by which advance comments 2 Fitzgerald, op. cit., p. 394. on reports are obtained.

Viewpoint

The typical organization "wastes" its human resources, * * * the very process of unleashing talent is challenging and threatening * * * for there appear to be real constraints on the amount of creativity, concern, and enthusiasm which the typical organiza­ tion is equipped to handle. The Affluent Organization Raymond E. Miles

GAO Review/Winter 1978 43 JAMES B. DEEMER

The One That Got Away

This article gives the writer's reaction to the events that led to the loss of a major GAO accomplishment for 1977.

How many times have you effective weapon system. The heard the old line, "It was this concerns we expressed in our last big, a whopper, but * * *." Well, two reports were supported by this is not a fish story, but there independent Defense studies is a message. made after our 1975 report. For over 6 years GAO had been On April 6, 1977, the Secretary reviewing the Navy's patrol hy­ of Defense publicly announced drofoil missile ship (PHM) pro­ that the PHM program would be gram, one that will cost the De­ terminated because it was not partment of Defense $400 mil­ cost effective. As a result, five lion. The PHM is a high-speed production ships approved by the missile-firing gunboat intended Congress in fiscal year 1976 were to operate in the Mediterranean not to be purchased. The Secre­ Sea and other enclosed water­ tary of Defense stated that ways. The Navy's principal sell­ $125.8 million in appropriated ing point was the ship's speed­ funds would be returned to the over 48 knots, compared to other U.S. Treasury and another Navy surface ship speeds of $146.9 million would be repro­ 25-30 knots. The ship was capa­ gramed within the Department of ble of such high speed because it Defense to cover cost growth on "rode above" the water on foils other programs. This resulted in that extended from the hull. GAO's preparation and approval We reported our results annu­ of an accomplishment report in ally in the GAO staff studies is­ June 1977. sued by the Procurement and What may not be known is that Systems Acquisition Division. when an agency wants to return During the 1975-1976 reviews, unused appropriated funds to the GAO and Defense became in­ Treasury, it must, under the Im­ creasingly aware that the PHM poundment Control Act of 1974, was not going to be a cost- report this action (known as a re-

Mr. Deemer, an audit manager in the Washington regional office, joined GAO in 1963 .. He is a graduate of West Virginia Wesleyan College with a B.S. degree in accounting.

44 GAO Review/Winter 1978 THE ONE THAT GOT AWAY scission message) to the Con­ legislative branches disagree gress. Specifically, the act re­ over who has ultimate control quires that budget authority in­ over Government programs and tended for permanent withdrawal fiscal spending policy. For those be released for obligation and ex­ not aware of this "conflict," let penditure if, within 45 days, the this be evidence that it exists. Congress fails to pass legislation Secondly, there is disagree­ authorizing the withdrawal. ment about the way this "near" accomplishment was reported. A routine matter, you might The "auditing level" has say, for the Congress would not criticized the staff studies (now want money spent on a program they are blue-cover reports) as that an agency deemed unneces­ reports that do little more than sary and/or not worth the cost. In regurgitate information that al­ the case of the PHM program, ready has been provided to the congressional approval wasn't Congress. This criticism is simply routine, and for whatever rea­ unwarranted. Participating in sons, the Congress did not au­ weapon system reviews provides thorize the withdrawal of funds. a unique opportunity to pick and Thus, the Secretary of Defense choose meaningful subject areas was required to spend the money and, because of strict deadlines, and build five PHM ships. This weapon system reports are decision was publicly announced timely, thus meeting one of in the newspapers. On August 16, GAO's desired objectives. The 1977, our "accomplishment" was challenge and accompanying canceled and in October the Navy satisfaction is there for the ask­ awarded the PHM ship contract ing. to the Boeing Company, Seattle, The people in the Seattle and Washington. Washington regional offices who I would like to make two points reviewed this program over the about these events. First, the years have reason to feel satisfied situation described above illus­ with their work. We almost trates that the executive and caught a big one.

Good Advice for Auditors

What we anticipate seldom occurs; What we least expected generally happens. Benjamin Disraeli English statesman 1804-81

GAO Review/Winter 1978 45 MARTIN M. FERBER

Regulatory Agencies: New Challenges For Auditors

The impact of regulatory agencies is often debated but hard to determine. The author discusses the concepts of regulatory agencies that make auditing them difficult but challenging.

Questions on economic regula­ but there is much debate over tion: (1) Does GAO audit it? (2) If whether lower rates and better so, how? (3) Why? The answers service, resulting from increased are (1) yes, (2) the best we can, competition, are sacrificed. and (3) because the Congress is concerned about its impact. How Regulatory Agencies The impact or "program re­ sults" of economic regulation are Differ From not very visible to the general Other Audit Subjects public, unlike safety regulation, for example. However, economic Agencies that regulate an indus­ regulation directly affects the in­ try's economics do not spend much dustry regulated and ultimately money, compared to other Federal the Nation and the individual agencies, but they have a great consumer. For example, the In­ impact on the industry and the terstate Commerce Commission consumer. For example, the three was charged by the Congress to regulatory agencies in the trans­ develop a stable national surface portation industry had a combined transportation system. Today the 1978 estimated budget of $163 Nation enjoys a stable system, million, compared with the De-

Mr. Ferber, an audit manager with the Community and Economic Development Division, is responsible for audits at the Interstate Commerce Commission. He has a B.S. degree in accounting and is currently working towards an M.S.A. degree at George Washington University. He has been with GAO since 1968, serving in the European Branch between 1971 and 1973. He is a member of the American Society for Public Administration and a previous contributor to The GAO Review.

46 GAO Review/Winter 1978 REGULATORY AGENCIES: NEW CHALLENGES partment of Transportation's $4.9 sioners or board members billion budget (which excludes rather than by one individual. another $8.2 billion of trust funds). • Regulatory impact is difficult (See Table 1). to measure, because (1) it can Traditionally, GAO allocated its only be compared with a audit resources to agencies that hypothetical alternative and spent many Federal dollars. In the (2) some impacts are abstrac­ past several years, however, we tions and not easily quantified. have recognized the importance of Established in 1887 to regulate economic regulation to industry the Nation's growing railroad in­ and consumers, and thus paid dustry, ICC is the oldest regula­ more attention to regulatory agen­ tory agency. Its authority has been cies. For example, staff years spent expanded, so today it also regu­ at the three agencies named above lates interstate movements by increased tenfold in 2 years, from trucks, buses, and certain water 2.5 in fiscal year 1974 to 23.5 in and pipeline carriers. Generally, fiscal year 1976. ICC Our increased emphasis has en­ -controls the entry of new com­ abled us not only to issue a panies into the interstate number of useful reports to the transportation industry, Congress and the agencies but also -insures adequate, nondis­ to confront the regulatory concepts criminatory service to the that are difficult for auditors to public, and grapple with. Our work at ICC has -reviews transportation shown that the organization and charges. procedures of regulatory agencies are quite different from those of executive branch agencies. For Quasi-judicial example, The President has control over • Regulatory agencies are executive agencies but not regula­ quasi -judicial. tory commissions. Although he • Regulatory commissions are appoints ICC commissioners and headed by a group of commis- selects the Chairman, policy is set

Table 1 1978 budget (millions) Interstate Commerce Commission (ICC) (railroads, trucks, buses, inland water carriers) $ 61,336 Civil Aeronautics Board (airlines) 92,812 Federal Maritime Commission (international water carriers) 8,861 Total 163,009

GAO Review/Winter 1978 47 REGULATORY AGENCIES: NEW CHALLENGES

by the agency, within guidelines sioner testifies before a congres­ established by the Congress. ICC sional committee, for example, the budget requests are submitted commissioners approve his pre­ to the Office of Management and pared testimony. Budget, but a recent congres­ Proposed comments to our draft sional study has recommended reports are likewise voted on by that independent regulatory the commissioners. In addition to agency budgets be submitted the majority view presented in simultaneously to the Congress. the comments, an individual The Commission's authorizing commissioner may state a con­ legislation, the Interstate Com­ curring or dissenting view. In a merce Act (49 U.S.C. 1), provides concurring view, a commissioner broad policy and guidance which is may agree with the overall com­ subject to much interpretation. ments but further discuss and ICC rulemaking actions may be highlight a specific issue. reviewed by one of 60 administra­ Dealing with the views of sev­ tive law judges, who may hold eral individuals could create hearings and review evidence problems. The commissioners, submitted in rulemaking proceed­ however, have been both prompt ings. Their decisions may still be and responsive in their comments overturned by the Commission­ and statutory replies 2 to our re­ ers-then the appeal process is ports, because of their staffs will­ through the Federal courts. ingness to objectively discuss the issues we raise in our fact sum­ Commissioners maries, exit conferences, and drafts. Commenting recently on a Executive agencies usually have draft report,3 the Chairman one individual responsible for stated, "The dialogue on this sub­ agency comments-this is not the ject has already proven valuable case with independent regulatory to the Commission, since it has commissions. caused us to commence a ICC is headed by 11 commis­ reevaluation of long-standing sioners.1 As their 7-year terms ex­ policies * * * ." pire, the President appoints new commissioners and designates one M.easurement Is Difficult as chairman. The vice chairman is elected annually by the commis­ When a Federal program does sioners. not spend much money, GAO has Commission policy is set by a 2 As required by section 236 of the majority vote. Before a commis- Legislative Reorganization Act of 1970, an agency must tell the Congress, within 1 Although 11 commissioners are au­ 60 days of a report, what it is doing about thorized, only 7 positions are occupied, in our recommendations. keeping with President Carter's desire to 3 "Combined Truck/Rail Transporta­ reduce the number of regulatory commis­ tion Service: Action Needed to Enhance sioners. Effectiveness" (CED-7B-3, Dec. 2, 1977).

48 GAO Review/Winter 1978 REGULATORY AGENCIES: NEW CHALLENGES usually evaluated either the grams aren't useful at regulatory quality of its service to the public agencies. For example, auditors or its impact. These approaches can sometimes compare the pro­ pose some peculiar problems for gram being evaluated to similar the auditor in the economic regu­ programs which may be im­ latory area. plemented differently. If rail­ ICC's objective is to provide a roads were regulated and trucks stable national transportation were not, this technique might system that insures adequate apply. However, all interstate service to the public. Service, transportation is regulated. Fur­ however, cannot be quantified thermore, the interaction of the since it is a subjective term. different transportation modes The Nation has a stable trans­ makes it difficult to address them portation system, but the Carter individually. For example, a administration and the Congress change in trucking rates directly are questioning whether we sac­ affects the amount of freight car­ rifice something for this stability ried by railroads. Or consider the and whether stability would de­ impact on bus lines of a decision crease if changes were made. For not to subsidize railroad pas­ example, would more competition senger service. result in lower transportation A before-and-after analysis is prices and greater rewards for ef­ another technique often used to ficiency, or would service de­ show the worth of a program. The teriorate? Does stability and the circumstances leading to regula­ status quo waste energy? In this tion of railroads and motor car­ latter area, we reported to the riers were well documented and Congress that energy conserva­ warranted corrective action. The tion and regulatory objectives "after" is much better. The ques­ sometimes compete.4 tion now is whether what we The Congress wants answers to have is the most effective way of these and similar questions. A solving the original problem. quantified response, however, is Finally, cost-benefit analyses difficult. One thing is certain in are becoming more prominent in the regulatory area, no matter program evaluations. Analyzing what we say we will usually have cost and benefits of regulation, as many opponents as supporters. however, requires economic as­ sumptions. Cost benefit analyses of ICC have shown widely differ­ Some Measurement Techniques Don't Work ent results-from a $15.2 billion Some measurement techniques annual net cost,S to a $4.8 billion used by auditors to evaluate pro-

5 Studies by Thomas Moore: Freight Transportation Regulation, Washington, 4 "Energy Conservation Competes with D.C., 1972, and Deregulating Surface Regulatory Objectives for Truckers" Freight Transportation, Washington, CCED--77-79, July 8, 1977). D.C., 1975.

GAO Review/Winter 1978 49 REGULATORY AGENCIES: NEW CHALLENGES

annual net benefit.6 This is a var­ -Have changes occurred in the iance of $20 billion, in a program area regulated? How have with an annual budget of only they modified the agency's $61 million. effectiveness and the appro­ priateness of its original purpose? What Congress Wants to -What has been the agency's Know impact and its progress in accomplishing its purpose? It is our responsibility to design -Are the agency's operations a full-scope7 audit approach for cost effective and efficient? each regulatory agency. U nder­ -Could regulatory needs be standing the regulatory process, met more efficiently by dif­ the agency's quasi-judicial struc­ ferent approaches? ture, and the complexity of the in­ dustry is the first step towards re­ sponding to specific congressional The Challenge interest. This has been our ap­ proach at ICC. You do not pick up the Washing­ The focus of our future atten­ ton Post or New York Times and tion was appropriately outlined often see headlines or front-page in the proposed Regulatory Re­ articles about economic regulation. form Act of 1977 (S. 600). The But turn to the business section or proposal outlined areas that GAO pick up a trade magazine, you'll should consider in planning work find regulatory issues much dis­ at regulatory agencies. Some of cussed. The Congress has passed these we are currently address­ legislation on some aspects of rail­ ing: road and airline economic regula­ tion and is considering further -Why was the agency estab­ legislation on airlines and motor lished? carriers. Former President Ford and President Carter have also expressed concern about economic 6 Interstate Commerce Commission, Bureau of Economics A Cost and Benefit regulation of trucking. Evaluation of Surface Transport Regula­ The challenge to the auditor is tion, Washington, D.C., 1976. to evaluate an area of growing na­

7 Comptroller General's Standards for tional concern, where auditing Audit of Governmental Organizations, concepts and methods are still Programs, Activities, and Functions, evolving and our initiatives can 1972. guide future efforts.

50 GAO Review/Winter 1978 RICHARD HEMBRA and RONALD E. MAXON

Planning Audit Time

The co-authors believe that more attention should be given to the audit planning process to reduce work and time during the audit.

Planning the time needed to The Audit Overview complete on-site audit work in­ volves more than arbitrary esti­ In the spring of 1977, the Euro­ mates, especially when the audit pean Branch (EB), International site is in Africa. Costs, communi­ Division, in coordination with the cations, and distance dictate that division's Security and Interna­ if you don't obtain the informa­ tional Relations (ID/SIR) Group, tion you need before leaving the reviewed foreign military sales continent, you may have to work programs in five African na­ without it. tions-Ethiopia, Kenya, Morocco, Planning your time begins Nigeria, and Zaire. These coun­ with identifying the audit's ob­ tries were chosen because of their jectives; staff capabilities and de­ location, program contrasts, and velopment needs, supervision, program development. and administrative matters also The European Branch was given have to be factored in. Our recent primary auditing and reporting auditing experience in Africa responsibility. Visits between the emphasized to us the importance EB and ID/SIR staffs before, dur­ of considering each one. ing, and after the on-site audit

The authors are auditors with the International Division's European Branch. Mr. Maxon is a Missouri University graduate and a member of the American Society for Public Administration and the Association of Government Account­ ants. In 1974, after working for 3 years in GAO's St. Louis office, he transferred to the European Branch. In 1977, he received the International Division's Mid­ dle Manager award. Mr. Hembra is a West Liberty State College graduate and a member of the American Academy of Political and Social Science, American Society for Public Administration, and the Association of Government Accountants. Since joining GAO in 1973, he has received awards for superior performance from the former Resources and Economic Development Division and the Assistant Comptroller General for Management Services. He transferred to the European Branch in 1976.

GAO Review/Winter 1978 51 PLANNING AUDIT TIME work insured a coordinated pro­ formation in each country and the gram approach. Additionally, an estimated time for documenting ID/SIR staff member worked with each step. Eor example, we tried to the EB audit team during the in­ identify the amount of analytical country review, providing a valu­ work versus interviews and sub­ able source of information and as­ sequent writeups, recognizing the suring job continuity upon her re­ limitations inherent in trying to turn to Washington, D.C. specifically identify time-pro­ duction factors. We also allowed time to complete incountry work­ Audit Objectives­ paper summaries, which later the Baseline would minimize our report writing time. The summaries also served Defining program audit objec­ as a yardstick for measuring what tives is the first step in estimating we had planned to obtain versus the time needed to complete on­ what we did obtain. site audit work. Since our review The program's sensitivity re­ was GAO-initiated, we had to de­ quired that we allow time for han­ termine what program areas dling and shipping classified ma­ would be of greatest interest and terial. It also meant maintaining use to the Congress. classified control logs and recog­ At the job's outset, the EB audit nizing that staff members would supervisor visited with the ID/SIR not be able to catch up on their staff to determine program report­ reading after work. ing objectives. During the I-week visit, the team weighed various congressional concerns about Recognizing Staff Capabilities foreign military sales, narrowing and Developmental Needs them down to the topics we finally chose to address. A reporting out­ The actual time needed to do line was developed, highlighting on-site audit work depends on staff the areas of primary interest and capabilities, which also dictate recognizing the lesser points which how the audit supervisor divides could be important in certain hislher time between auditing and countries. supervising. The EB staff, building on the re­ The EB audit supervisor and porting outline, developed specific staff member (the authors) had audit guidelines. Our task was worked together before and knew made easier because of the exten­ each other's capabilities. We knew sive background material de­ that we could work independently veloped by the ID/SIR staff in and interchangeably on the vari­ Washington. Once completed, the ous issue areas, and that little audit guidelines served as a time would be necessary for ex­ framework for our time estimates. plaining work requirements, de­ We examined each audit step to tails, and format. identify the logical sources of in- Our ID/SIR team member was,

52 GAO Review/Winter 1978 PLANNING AUDIT TIME however, an unknown quantity. trative matters. Our Africa review We were aware that this member provided us with perhaps the had spent a great deal of time maximum challenge in allowing gathering material and becoming enough administrative time. It familiar with the subject matter. began with the "Fly America" re­ However, we were uncertain as to quirement, which meant we had to how an auditor with less than 6 use U.S. carriers flying only twice months' experience in conducting a week between Nigeria, Kenya, and developing interviews and and Zaire. As a result, our in­ analyzing documents would adapt country visits to these countries to our field audit approach. We had to be put in the timeframes of knew that we would have to de­ 4, 7, 11, or 14 days. (The "Fly termine the staff member's under­ America" requirements did not af­ standing of the job concepts and fect our planned visits to Ethiopia issues, and the depth of audit and Morocco.) analysis required for each area. Getting processed through an (As we found later, we had little airport in a foreign country, par­ reason for concern.) The ID/SIR ticularly in a developing nation, is staff member joined us 3 days be­ also a time-consuming experience, fore we began our incountry vis­ especially when it occurs during its, giving us an opportunity to working hours. Baggage-handling exchange ideas, evaluate facilities and administrative proc­ capabilities, and assign areas of essing resources bear little re­ audit responsibility. semblance to U.S. airports. Other Recognizing that our planning considerations include (1) the had limitations and that actual availability of U.S. and host coun­ events can and do overtake the try officials, (2) observing social best plans, we also considered protocol, (3) the need for staff staffing options should our meetings to discuss job strategies, planned time be insufficient or ex­ (4) arranging/confirming airline cessive. For example, if our reservations, and (5) exchanging planned time was insufficient, we currencies, to name a few. considered extending staff in one country while the remainder of the There Are Benefits team went on to scheduled meet­ ings in the next country. If we had Although time planning is not a extra time we would begin work­ panacea for effective and efficient ing in earnest on our report. GAO audits, there are benefits. Perhaps the most significant bene­ Administrative Matters Also fit is eliminating many of the "un­ expecteds" that normally surface Require Time _ during an audit. Time planning Past experience had taught us also benefits GAO's image. Agency that allowing inadequate time for personnel know if an audit has on-site audit work often resulted been thought out and planned in from failing to consider adminis- advance, and knowing about how

GAO Review/Winter 1978 53 PLANNING AUDIT TIM\:

CONSIDERATIONS IN PLANNING AUDIT TIME

Audit Objectives

POTENTIAL BENEFITS --Fewer "unexpecteds." --Enhancing GAO's image. --Complete audits. long it will take should provide a great importance. Although full more efficiently executed audit. consideration of these elements is Perhaps the best means to plan not a panacea for a carefree audit, time accurately is to have an there are certainly benefits to be adequate amount of time to plan. derived. And, whether you con­ In our case, it was possible because sciously or unconsciously go our team was staffed sufficiently through this process, there is al­ before we began our field work. ways opportunity for refinement and improvement. The nature of Conclusion GAO work does not lend itself to time production factors, nor should In many instances, as in our re­ it, but with appropriate considera­ view, recognizing and considering tion, program audit time can be ef­ the factors discussed above is of fecdvely planned and structured.

54 GAO Review/Winter 1978 WALLACE COHEN, HARRY WEINTROB, STEVE BRYANT, and CALVIN MITCHELL

The 1977 Congressional Sourcebook- Federal Program Evaluations

The Congressional Sourcebook, Federal Program Evaluations, is a useful reference document for GAO audit divisions. Before conducting audits, program evaluations or studies, our staff can quickly research both the agency's evaluations and related GAO reports by turning to the Sourcebook. Recently updated, a new edition of the Sourcebook will be available to GAO, the Congress, and the public early in 1978.

Origins of the Sourcebook Congress in its oversight function. Millions of dollars are spent One of the landmark pieces of each year on evaluation research legislation in the history of the and reports (the Office of Man­ General Accounting Office was the agement and Budget estimated Congressional Budget and Im­ $240 million in fiscal year 1977), poundment Control Act of 1974, yet the results have remained which created a new legislative largely unknown. Congressional mandate for GAO to assist the decisionmakers need that informa-

Mr. Cohen is an assistant director in the Program Analysis Division. Prior to joining GAO in 1972, he worked at the Office of Education, Department of Health, Education, and Welfare, and at International Telephone and Tele­ graph Corporation and Price Waterhouse and Co. Mr. Bryant, a management analyst in the Program Analysis Division, joined GAO in 1977. He has a Ph.D. degree in political science from the University of Florida. Mr. Mitchell, a budget analyst in the Program Analysis Division, received his M.P.A. degree from Syracuse University. Before joining GAO in 1976, he was a budget analyst with the District of Columbia and the Department of Health, Educa­ tion, and Welfare. Mr. Weintrob is an operations research analyst. He has his B.S. degree from the Massachusetts Institute of Technology and an M.B.A. degree from the University of California, Los Angeles.

GAO Review/Winter 1978 55 FEDERAL PROGRAM EVALUATIONS tion in reviewing programs and ports which address important is­ legislation during the budget proc­ sues and problems associated ess; therefore, title VIII of the 1974 with these proposed reviews. act specified that GAO provide the Further, GAO studies can be Congress with data on "program cited in a context that includes evaluations conducted or commis­ both GAO reports on similar top­ sioned by any executive agency." ics and evaluations by the agen­ This requirement engendered one cies themselves. of the volumes in the congres­ Internal auditors at Federal sional sourcebook series, Federal agencies can use the sourcebook Program Evaluations, which con­ to determine whether their col­ tains a citation section listing up leagues have evaluated similar to 17 data elements each on evalu­ activities and can profit from ation reports found in the docu­ their experience. Also, when ment. Figure 1 shows a typical ci­ agency officials set program tation. priorities and budget levels, the These data elements include sourcebook can lead them to such items as the agency sponsor­ evaluations of their activities. ing the study, the authors of the These are just some of the study, the program reviewed, the sourcebook's uses. In essence, legislation involved, and the pub­ Federal Program Evaluations lic availability of the report, serves to link evaluators, con­ among other things. Several in­ gressional policymakers, agency dexes follow the citation section executives, researchers, GAO di­ so that the reports can be refer­ visions, and even State and local enced by subject, agency, legisla­ government evaluation special­ tion, budget function, congres­ ists. It establishes access to sional committee, and program. evaluation information where ac­ (See table 1.) cess was either limited or Since few Federal agencies nonexistent. The need for im­ have reference centers for evalu­ proved access to evaluation in­ ation data, they are finding the formation is exemplified by the sourcebook useful for identifying fact that the initial printing of relevant studies produced by 5,000 copies was depleted within other agencies. Even the De­ 6 months, including the stock of partment of Health, Education, 500 copies at the Government and Welfare, although it has an Printing Office Bookstore. evaluation documentation center, used the sourcebook to identify evaluations omitted from its Preparations for the files. Update Effort The publication is also useful to GAO. For example, during the All three volumes in the source­ survey phase of an audit, audit­ book series have been updated and ors will find the sourcebook help­ their second editions either have ful in identifying relevant re- appeared or will soon be released.

56 GAO Review/Winter 1978 FEDERAL PROGRAM EVALUATIONS

Figure 1: Sample Citation from Federal Program Evaluations

E00500-032 Evaluation of Lead-Poisoning Prevention Programs. Benjamin C. Duggar. Bio Dynamics, Inc., Cambridge, Mass. February 1972. 3 vols. (351 pp. + appendixes). Agency Sponsoring Evaluation: Assistant Secretary for Planning and Evaluation, HEW. Agency Managing Program: Center for Disease Control, PHS. Program(s) Evaluated: Childhood Lead-Based Paint Poisoning Control (13.266). Budget Function/Subfunction: Prevention and control of health problems (553). Program Authorization: Lead-Based Paint Poisoning Preven­ tion Act, Title I, as amended (P.L. 93-151; 42 USC 480). Public Availability: NTIS, Order Nos. PB 215 255/1 (vol. 1); PB 215 256/9 (vol. 3); Bio Dynamics, Inc. (vol. 2). Volume I, Program Directory, of the final report of this survey includes a detailed description of the procedures carried out in conducting the survey. Questionnaires were sent to the health agency in each of 147 cities having 100,000 or over populations which had jurisdiction in that city. Furthermore, nine cities of populations of 100,000 were selected for in-depth analysis of their programs. Descriptions of these analyses are included in this volume. Also presented in this volume is a directory, city by city, state by state, of the present status of the awareness or movement against lead paint poisoning. Appendixes A through C present sample questionnaires: the lead-based paint poisoning program questionnaire, the health or community agency ques­ tionnaire, and the housing or enforcement agency questionnaire. Volume III of the final report of this study includes a summary of the evaluation study, an evaluation of nine on-going pro­ grams, an assessment of the magnitude of the problem, a deter­ mination of replicable and effective program elements, and rec­ ommendations for future action. Results indicate a widespread problem with differing degrees of severity on a regional basis. Programming activity is evident but not proportionate to the real problem. There appears to be confusion about techniques in screening and laboratory analysis and great differences in pro­ gram approach. Only two programs, New York and Chicago, could be termed comprehensive and effective.

GAO Review/Winter 1978 57 FEDERAL PROGRAM EVALUATIONS

TABLE 1 Evaluation Directory Indices and Their Purposes INDEX PURPOSE Evaluation reports indexed by: 1. Subject Key words and phases from the abstract provide a reference to subject area that is largely independent of any knowledge of Federal agencies or programs.

2. Agency The agency index lists the reports according to the unit managing the program.

3. Budget Function This index enables the user to find evalua­ tions by Federal budget functions and sub­ function codes, providing a reference point for budget committees.

4. Law Legislation authorizing programs may re­ quire certain evaluations. This index allows mandated studies to be found easily. Also, the "sunset law" concept already applies to some programs, and committees reauthoriz­ ing those programs can use this index to lo­ cate evaluations.

5. Congressional This index organizes the reports according to Committee each congressional committee's areas of re­ sponsibility. A report may be cited under more than one committee.

6. Program This index lists the reports under the names of programs.

Preparations for updating the pub­ GAO. We decided that the second lication began even before the first edition should be expanded to sur­ edition was released in January vey nearly 100 readily identifiable 1977. This first edition had iden­ Federal agencies, ranging from the tified reports produced in fiscal American Battle Monuments years 1973 through 1975 for 18 Commission to the Department of major executive agencies and by Health, Education, and Welfare.

58 GAO Review/Winter 1978 FEDERAL PROGRAM EVALUATIONS

Of the 100 agencies contacted, not physically-gets lost in the nearly 50 submitted evaluation welter of documents flowing across reports produced between July 1, a desk. In drafting the question­ 1975, and June 30, 1977. Collect­ naire, we had focused on explain­ ing these citations involved an ing the background and purpose of interesting and rewarding in­ the sourcebook, while making the teraction between the Program instructions as clear and simple as Analysis Division and other Fed­ possible. This time, after the usual eral agencies. internal development process, we enlisted the aid of the Publishing Contacting the Agencies and Graphics Branch to design a brochure that would both explain The groundwork for contacting what was to be done and imply most Federal agencies had been that the task was important and laid by the task forces working on worth doing well. The profes­ the other volumes of the source­ sionalism that editors Mimi book series. In August 1976, a few Stockdell and Karen Gray and months before our effort began, graphic artist Sharon Sebastian the Comptroller General wrote to contributed made for a handsome all agencies, citing our respon­ booklet that facilitated agency re­ sibilities under the Congressional sponses considerably. Agency per­ Budget Act of 1974 and requesting sonnel repeatedly commended us that each agency identify a liaison on the clarity of the instructions. person who would either work with our sourcebook groups or di­ rect them to appropriate persons. Visiting the Agencies If no liaison person for pro­ The initial contact with the gram evaluation was identified, agencies was made through a let­ we used the Inventory of Infor­ ter from our director, Harry Ha­ mation Resources, a report com­ vens, to the liaison person. In addi­ piled by the House Commission tion to the letter, which announced on Information and Facilities, the beginning of the evaluation di­ which lists the names and ad­ rectory data collection, a copy of dresses of individuals responsible the original Comptroller General's for program evaluation. letter and a copy of the instruction booklet and forms were included. Developing Instructions We then telephoned the recipient, usually within 5 working days, ar­ We recognized the need for in­ ranged an appointment, and then structions and forms to transmit invited a representative from the both a "why" and a "how" message GAO audit site to attend the meet­ to the persons who would respond ing. to our update survey. Our ap­ The heart of the data collection proach in 1975 had been a process was the interview with straightforward, typed question­ agency personnel by assistant di­ naire, the kind that mentally-if rector Wallace Cohen and analysts

GAO ReviewfWinter 1978 59 FEDERAL PROGRAM EVALUATIONS

Harry Weintrob, Steve Bryant, counts from GAO's legislative and Calvin Mitchell, and Johnny program information system de­ Bowen. These meetings provided a veloped by our information re­ gamut of experiences. Some per­ quirements group. The system is a sons had a sophisticated under­ data base containing most agen­ standing of evaluation technology cies' program budget structures; and methodology and a detailed its output filled the gaps in agency knowledge of the agency's evalua­ understanding about what types of tion function. At the other extreme information we were seeking. were agencies with no formal pro­ Our survey took in all divisions gram evaluation effort separate of GAO, and OMB as well. First, from the management process. each GAO division director re­ Thus, each meeting was a new ex­ ceived a memorandum outlining perience, and our approach was the data collection effort and ask­ constantly modified. The most ing the divisions to cite evalua­ common problem was that the con­ tions of Federal programs they had cepts "program" and "program completed. Special forms and in­ evaluation" have various interpre­ structions described the types of tations in Federal agencies. Fur­ reports that should be included. thermore, the organizational The divisions responded with over structure in some agencies, such 400 submissions-illustrating the as regulatory commissions and the magnitude of GAO's program U.S. Postal Service, is organized, evaluation activity. not along "program" lines, but along functional lines-a situation Meetings with OMB's Evalua­ not conducive to identifying each tion and Implementation Divisions program evaluation activity. were held before the survey began. Thus, we learned of a coinciding OMB survey of agencies' evalua­ Defining Program Evaluation tion and Implementation Divisions To define program evaluation, We tried to use common defini­ we provided some guidance in the tions of terms so agencies could re­ printed instructions and sup­ spond to both surveys with the plemented them with some ideas same concepts of evaluation in from a current Office of Manage­ mind. ment and Budget bulletin on pro­ gram evaluation. This was suffi­ Agency Response cient to get the identification proc­ ess started. Also, copies of the first In general, most Federal agen­ edition of Federal Program Evalu­ cies, and GAO divisions as well, ations were given out to provide were very receptive to the program examples of what other agencies evaluations sourcebook effort and considered to be evaluation re­ responded by supplying extensive ports. Finally, the liaison person data on their reports. These re­ received a program listing based sponses ranged from the over 250 on his or her agency's budget ac- report citations that HEW sub-

60 GAO Review/Winter 1978 FEDERAL PROGRAM EVALUATIONS mitted, to the single citations from lished a program evaluation in­ many smaller agencies like the formation center. These centers Federal Election Commission. simplify access to program evalua­ Agencies showed an eagerness tion information, whether the re­ to report on their work and to shed quest comes from GAO, the Con­ light on their evaluative activities. gress, or agency management. In sum, they felt that the source­ In our survey we were re­ book would focus different levels of peatedly asked if we would con­ decision and policy makers' at­ tinue collecting data. We are tention on evaluation. planning to review the evaluations We have received approximately directory, along with the other 1,500 submissions. These re­ volumes in the sourcebook series, sponses will be processed and then to determine from users the value published in the second edition of which the series holds and what the sourcebook early in 1978. In format and frequency of issue is addition, the contents of this edi­ best. Such a review, we think, will tion will be entered on the Library propel more agencies toward es­ of Congress data bank, SCORPIO. tablishing a systematic means of This will enable congressional collecting this information and staffers and other legislative making it generally accessible. branch employees to have on-line At the smaller agencies there is access to the data. more of a "missionary" flavor to our efforts on behalf of program Improving Program Evaluation evaluation. Often, formal evalua­ tion of programs does not exist. It is somewhat presumptuous to These agencies have the advan­ attribute changes in agency tages of a small organization­ evaluation efforts to our question­ close communication, knowledge of ing and requests for information. personnel, quick feedback on pro­ On the other hand, we are perhaps gram results. Under these condi­ part of a trend. Zero-base budget­ tions, management learns rapidly ing and the prospect of "sunset of program problems. However, legislation" contained in the pro­ even for these agencies, evaluation posed "Program Evaluation Act of is valid as an in-depth review of 1977" have increased the emphasis program results-necessary for on evaluation, and it likely will small organizations as well as for become even more integrated into large ones. Our hope is that the management processes as agencies publication of Federal Program consider these proposed require­ Evaluations will encourage agen­ ments that affect resource alloca­ cies to accept the idea of evalua­ tion. In some instances, our survey tion and to make the results of has promoted this integration. A their efforts more accessible to the number of agencies have estab- Congress.

GAO Review/Winter 1978 61 How Should Costs Be Determined?

The method for computing costs for purposes of determining the comparative costs of alternative courses of action or for comparing costs with benefits can have an important effect on the results. Should costs be determined on the basis of fully allocating all appli­ cable costs or should they be determined on the basis of including only the incremental costs incident to a change? The method used normally assumes the greatest importance in costing an additional activity or in measuring the savings which would result from discon­ tinuance of an existing activity. The following sketch provides a useful as well as entertaining in­ sight into some of the considerations involved in this issue.

What Price Progress 1

In discussing the costs incident to various types of operations, the analogy was drawn of the Restaurant which adds a rack of peanuts to the counter, intending to pick up a little additional profit in the usual course of business. This analogy was attacked as an over­ simplification. However, the accuracy of the analogy is evident when one considers the actual problem faced by the Restauranteur (Joe) as revealed by his Accountant-Efficiency-Expert. Eff Ex: Joe, you said you put in these peanuts because some people ask for them, but do you realize what this rack of peanuts is costing you? Joe: It ain't gonna cost. 'Sgonna be a profit. Sure, I hadda pay $25 for a fancy rack to holda bags, but the peanuts cost 6¢ a bag and I sell 'em for 10¢. Figger I sell 50 bags a week to start. It'll take 121;2 weeks to cover the cost of the rack. After that I gotta clear profit of 4¢ a bag. The more I sell, the more I make. Eff Ex: That is an antiquated and completely unrealistic approach, Joe. Fortunately, modern accounting procedures permit a more accurate picture which reveals the complexities in­ volved. Joe: Huh? Eff Ex: To be precise, those peanuts must be integrated into your

1 EDITOR'S NOTE: We have not been able to locate the original source of this paper. If any of our readers can provide us with this information, we will be glad to ac­ knowledge its authorship.

62 GAO Review/Winter 1978 HOW SHOULD COSTS BE DETERMINED?

entire operation and be allocated their appropriate share of business overhead. They must share a proportionate part of your expenditures for rent, heat, light, equipment deprecia­ tion, decorating, salaries for your waitresses, cook,- ~ Joe: The cook? What'sa he gotta do wit'a peanuts? He don' even know I got 'em! EffEx: Look, Joe, the cook is in the kitchen, the kitchen prepares the food, the food is what brings people in here, and the people ask to buy peanuts. That's why you must charge a portion of the cook's wages, as well as a part of your own salary to peanut sales. This sheet contains a carefully cal­ culated cost analysis which indicates the peanut operation should pay exactly $1,278 per year toward these general overhead costs. Joe: The peanuts? $1,278 a year for overhead? The Nuts? EffEx: It's really a little more than that. You also spend money each week to have the windows washed, to have the place swept out in the mornings, keep soap in the washroom and provide free cokes to the police. That raises the total to $1,313 per year. Joe: (Thoughtfully) But the peanut salesman said I'd make money-put 'em on the end of the counter, he said-and get 4¢ a bag profit-. EffEx: (With a sniff) He's not an accountant. Do you actually know what the portion of the counter occupied by the peanut rack is worth to you? Joe: Ain't worth nothing-no stool there-just a dead spot at the end. EffEx: The modern cost picture permits no dead spots. Your counter contains 60 square feet and your counter business grosses $15,000 a year. Consequently, the square foot of space occupied by the peanut rack is worth $250 per year. Since you have taken that area away from general counter use, you must charge the value of the space to the occupant. .Joe: You mean I gotta add $250 a year more to the peanuts? EffEx: Right. That raises their share of the general operating costs to a grand total of $1,563 per year. Now then, if you sell 50 bags of peanuts per week, these allocated costs will amount to 60¢ per bag. Joe: WHAT? EffEx: Obviously, to that must be added your purchase price of 6¢ per bag, which brings the total to 66¢. So you see, by selling peanuts at 10¢ per bag, you are losing 56¢ on every sale. Joe: Somethin's crazy! EffEx: Not at all! Here are the figures. They prove your peanut operation cannot stand on its own feet.

GAO Review/Winter 1978 63 HOW SHOULD COSTS BE DETERMINED?

Joe: (Brightening) Suppose I sell lotsa peanuts-thousand bags a week 'stead of fifty? Err Ex: (Tolerantly) Joe, you don't understand the problem. If the volume of peanut sales increases, our operating costs will go up-you'll have to handle more bags, with more time, more depreciation, more everything. The basic principle of accounting is firm on that subject; "The Bigger the Opera­ tion the More General Overhead Costs that Must be Allo­ cated." No. Increasing the volume of sales won't help. Joe: Okay. You so smart, you tell me what I gotta do. Err Ex: (Condescendingly) Well-you could first reduce operating expenses. Joe: How? Err Ex: Move to a building with cheaper rent. Cut salaries. Wash the windows bi-weekly. Have the floor swept only on Thursday. Remove the soap from the washrooms. Decrease the square foot value of your counter. For example, if you can cut your expenses 50 percent, that will reduce the amount allocated to peanuts from $1,563 to $781.50 per year, reducing the cost to 36¢ per bag. Joe: (Slowly) That's better? Err Ex: Much, much better. However, even then you would lose 26¢ per bag if you charge only 10¢. Therefore, you must also raise your selling price. If you want a net profit of 4¢ per bag you would have to charge 40¢. Joe: (Flabbergasted) You mean even after I cut operating costs 50 percent I still gotta charge 40¢ for a 10¢ bag of peanuts? Nobody's that nuts about nuts! Who'd buy em? Err Ex: That's a secondary consideration. The point is, at 40¢ you'd be selling at a price based upon a true and proper evalua­ tion of your then reduced costs. Joe: (Eagerly) Look! I gotta better idea. Why don't I just throw the nuts out-put 'em in a ash can? Err Ex: Can you afford it? Joe: Sure. All I got is about 50 bags of peanuts-cost about three bucks-so I lose $25 on the rack, but I'm outa this nutsy business and no more grief. Err Ex: (Shaking head) Joe it isn't that simple. You are in the peanut business! The minute you throw those peanuts out you are adding $1,563 of annual overhead to the rest of your operation. Joe-be realistic-can you afford to do that? Joe: (Completely crushed) It'sa unbelievable! Last week I was a make money. Now I'm in a trouble-justa because I think peanuts on a counter is a gonna bring me some extra

64 GAO Review/Winter 1978 HOW SHOULD COSTS BE DETERMINED?

profit-justa because I believe 50 bags of peanuts a week is a easy. EffEx: (With raised eyebrow) That is the object of modern cost studies, Joe-to dispel those false illusions.

The Accountant's Problem

I concur with your conclusion in "Thumb on the scales" (Edito­ rials, Oct. 31) that Congress is not qualified to write accounting rules. However, to believe that the Financial Accounting Stand­ ards Board represents the "private sector" is pure folly. These fel­ lows are so afraid of Moss and Metcalf they will jump through any hoop to save their own skins. The problem with the accounting profession is the concentration of power in ivory-tower techno­ crats who live in a vacuum. David R. Loar Mill Valley, Calif Business Week November 21, 1977

GAO Review/Winter 1978 65 new, & note,

GAO Historical Collection included in the collection will be pictures, articles, and furniture To Honor Ellsworth H. Morse pertaining to the signing of impor­ Comptroller General Elmer tant laws relating to GAO, the Staats has established a committee dedication of the GAO Building, to set up a GAO historical collec­ important events in the develop­ tion to honor Ellsworth H. Morse, ment of GAO, etc. A plaque dedi­ Assistant Comptroller General, cating the collection to Mr. Morse who died recently. will be placed at the entrance of Paul Dembling will chair the the historical room. committee. Other members are John Heller, Clerio Pin, Stewart McElyea, Larry Herrmann, Susan International Accounting Burns, and Josephine Clark. Organization Formed Mr. Morse had a great interest in the history and development of On October 7, 1977, just before the General Accounting Office. He the start of the 11th International played a major role in organizing Congress of Accountants in the lecture series commemorating Munich, Germany, representatives GAO's 50th anniversary in 1971. of professional accounting societies He had been working with Walter from all over the world met to Frese on a history of the Joint Fi­ form a new organization called the nancial Management Improve­ International Federation of Ac­ ment Program, and in his spare countants. Membership in the new time at home he was engaged in organization is restricted to pro­ writing a history of the General fessional organizations like the Accounting Office. He was always American Institute of Certified on the lookout for anything of his­ Public Accountants and the Insti­ torical value. tutes of Chartered Accountants. The collection will be located on Professional organizations of 57 the seventh floor of the GAO nations joined at the conference Building near the G Street and became charter members. elevators. Some of the items to be The new organization was

66 GAO Review/Winter 1978 NEWS AND NOTES

created in recognition of the fact meeting, the 11th International < that we are becoming "one world" Congress of Accountants was held from a business viewpoint. There from October 8 to October 14, in are so many multinational corpo­ the Olympichalle and other sites rations and other multinational in Munich. About 6,200 persons organizations that differences in attended the conference represent­ nations' accounting and auditing ing the following areas: practices cause many accounting headaches. The International Fed­ North America 800 eration of Accountants will pro­ Central and South America 300 mote greater uniformity in ac­ Asia 500 counting and auditing throughout Africa 100 the world, including ethical and Australia 900 educational requirements for prac­ Europe 3,600 ticing accountants and auditors. The Federation will be under 6,200 the general direction of a 15- nation council which will act as a The purpose of the conference was sort of general assembly. Officers to discuss current international of the Federation, elected for a problems in the accounting sphere, 2-year term, are: such as accounting for changes in the purchasing power of money, President-Reinhard Goerdeler meeting the needs of users of fi­ (Germany) nancial statements, accounting Vice Presidents-B. L. Kabra (In­ and forecasting for management dia), Gordon H. Copperthwaite use, and accounting for develop­ (Canada) ment and research expenses. GAO Treasurer-Gabriel Macera was represented at the conference (Mexico) by Donald L. Scantlebury, direc­ Secretary-Robert N. Sempier tor, Financial and General Man­ (USA) agement Studies Division. The organization's offices will be located in New York City. The Federation will not issue Bank Regulatory Agencies accounting standards at the out­ Audit Authority set. That is already being done by an organization called the Inter­ By a vote of 336 to 24, the House national Accounting Standards of Representatives passed and sent Committee, which was created at to the Senate H.R. 2176, the Fed­ the 10th International Congress eral Banking Agency Audit Act. of Accountants, held in Australia The bill grants GAO the authority in 1972. The Federation and the to audit the operations of the Fed­ International Accounting Stand­ eral Deposit Insurance Corpora­ ards Committee are expected to tion, the Office of the Comptroller be closely allied. of the Currency, and the Federal Following the organizational Reserve System. These three

GAO Review/Winter 1978 67 NEWS AND NOTES

agencies supervise and regulate (OCG-77-1) was issued on most of the Nation's banks. January 31, 1977. Matters of great concern during Opening the Senate Governmen­ the House consideration of the bill tal Affairs Committee's hearings were GAO's access to the Federal on the bill, Senator Sasser re­ Reserve System's monetary policy marked: operations and the disclosure of It makes good sense to include these confidential information about in­ banking agencies under the scope of the dividual banks. To insulate the GAO auditing authority. Because these Federal Reserve from "second agencies are responsible for the safe and guessing" of its monetary policy sound operation of our nation's banks decision, the bill prohibits GAO and banking system, it is essential for from auditing the System's mone­ proper Congressional oversight for Con­ tary policy operations. The bill gress' investigating arm, the GAO, to be prohibits GAO also from disclosing able to judge the quality of the work that the identity of specific open banks is being done. in its public reports and severely The Comptroller General, in his limits the disclosure of such in­ testimony before Senator Sasser's formation to congressional com­ committee, pointed out that GAO: mittees. It also makes GAO audit­ ors subject to fines and/or impris­ * * * made a comprehensive study last onment for the unauthorized dis­ year of Federal supervision of State and closure of individual bank infor­ national banks * * *. We received many mation. The three agencies' bank favorable comments on this work, includ­ ing those from the Federal Reserve, the examiners are already subject to Comptroller of the Currency, and the those penalties. FDIC. We believe that our successful ex­ In the past, Representative perience in this effort not only under­ Wright Patman, as Chairman of scores the desirability of providing our the House Banking Committee, Office with continuing authority to re­ had attempted to give GAO the view the supervisory policies and prac­ authority to audit the Federal Re­ tices of the three bank regulatory agen­ serve. One of the major reasons cies but also other operations as set forth behind the favorable House action in the House-passed bill. on H.R. 2176 was GAO's 1976 The Senate is expected to com­ study of the effectiveness of State plete action on the bill early in the and national bank supervision by second session of this Congress. the three agencies. That study, undertaken at the request of sev­ eral committees and by special Domestic Intelligence agreements with the agencies, Activities demonstrated that GAO could pre­ serve the confidentiality of sensi­ GAO has spent nearly 3 years tive banking information while reviewing domestic intelligence. providing valuable insight on the The latest report, "FBI Domestic manner in which the Nation's Intelligence Operations: An Un­ banks are supervised. The report certain Future" (GGD--78-10, Nov.

68 GAO Review/Winter 1978 NEWS AND NOTES

9, 1977), was based on testimony view activities of these tax collect­ given on November 9, 1977, before ing agencies. the Civil and Constitutional Rights Subcommittee of the House The Internal Revenue Service Judiciary Committee. This review interpreted the Internal Revenue was conducted as a followup to a Code as prohibiting the Commis­ previous report on FBI domestic sioner from making any docu­ intelligence operations (GGD-76- ments or records on the adminis­ 50, Feb. 24, 1976). In addition to tration of the tax code available to these two reports, GAO has tes­ GAO and questioned GAO's au­ tified twice before (in February thority to make independent man­ and March 1976), issued a letter agement reviews. Under the new report in March 1976, and pro­ law, the two Treasury Depart­ vided comments on two in­ ment agencies will be treated as telligence-related bills in August any other Federal agencies, in that 1976. GAO will have access to any rec­ ords needed for reviews of their Since GAO began its first review administrative practices and pro­ of the FBI in late 1974, FBI cedures. The law contains strin­ domestic intelligence operations gent provisions to guard the confi­ have changed significantly in dentiality of tax return informa­ scope, level of effort, and inves­ tion and provides that GAO re­ tigative controls. There are vari­ views will not affect IRS rulings ous reasons for this, including the on individual tax cases. Attorney General's guidelines and other valuable efforts of the De­ partment of Justice and the FBI. Consolidated Financial GAO approves of the direction of Statements these efforts, but still believes that if domestic intelligence investiga­ Once again this fall, there was tions are to continue, legislation is both good news and bad news in needed to clearly authorize such the area of sound Federal financial investigations and set forth the ob­ management. Knowledgeable ob­ jectives, scope, and controls servers from the fields of account­ needed. ing and public administration greeted the issuance of the second GAO Audit of IRS annual Consolidated Financial Statements of the United States On October 7, 1977, President Government. The product of a Carter signed S. 213, which pro­ 16-member Advisory Committee vides for GAO authority to audit on Federal Consolidated Financial the Internal Revenue Service and Statements (which includes the the Bureau of Alcohol, Tobacco, Comptroller General) and the De­ and Firearms. The new law (Pub­ partment of Treasury, the report lic Law 95-195) ended a long de­ attempts to measure and state the bate over GAO's authority to re- operations of the Federal Govern-

GAO Review/Winter 197'8 69 NEWS AND NOTES ment for the fiscal year ending memorandum from President Car­ September 30, 1976, using the ac­ ter to the heads of all executive crual basis of accounting. While departments and agencies. GAO did not audit or express an opinion on the figures, the state­ I have directed my reorganization staff, ment by Mr. Staats (printed in conjunction with the Treasury De­ alongside one by Treasury Secre­ partment, to conduct a comprehensive review of cash management policies, tary Blumenthal) is an endorse­ practices and organization throughout ment for accrual accounting of the Federal government. government operations and an in­ dication of six areas where finan­ The purpose of this effort is to identify cial data could be more accurately further opportunities to apply modern stated. For both the Federal Gov­ cash management techniques to our mas­ ernment and for Mr. Staats per­ sive cash flow. Within the constraints of sonally, this report represents only monetary and economic policy, and build­ ing on the continuing work of the Treas­ the latest effort to transfer gov­ ury Department, the effort will seek ernment accounting to the accrual ways to use our cash more efficiently basis-the First Hoover Commis­ with a view toward reducing Federal sion recommended a Govern­ debt requirements and interest costs. The ment-wide change to accrual ac­ study will pay special attention to how counting in 1949, and Mr. Staats, effectively the government collects and then Deputy Budget Bureau Di­ disburses money, compensates banks and rector, served on the President's other financial institutions for services, Committee on Budget Concepts, controls cash balances, and provides in­ which advocated similar improve­ centives to make Federal managers more aware of the cash management implica­ ments in 1966. tions of their decisions. Now for the bad news: the fiscal year 1976 deficit of $85.2 billion The President further stated his (accrually stated) was an increase own endorsement of the effort and of almost $22 billion over 1975 and his means of accomplishing it: an increase of $20 billion over the traditional, cash-basis budget fig­ Representatives of my reorganization ures for the same period. staff will contact you. They may ask you for help, advice, staff resources, or to par­ ticipate in reviewing your own cash Speaking of the treasury management activities. Inasmuch as I consider this to be a major management Department ... improvement effort, I trust you will share Often, amidst the more popular my enthusiasm and cooperate to the cries for efficiency and economy in fullest extent possible. goverr.!•• ant, GAO staff feel like In order to inform all affected parties the "lone wolf' in calling for im­ that this review is underway, I have di­ proved agency financial manage­ rected that this memorandum be pub­ ment. It is with a great deal of lished in the Federal Register. pride and satisfaction that we re­ produce a November 14, 1977, (signed) Jimmy Carter

70 GAO Review/Winter 1978 NEWS AND NOTES

More on Advisory Congress, the Office of Technology Commissions Assessment, received a new direc­ tor, as the appointment of Russell Two more top-level Government W. Peterson was announced. The commissions announced their former Governor of Delaware and long-awaited recommendations, is­ Chairman of the Council on En­ sued final reports, and promptly vironmental Quality takes over a went out of business this fall. Both 139-person staff charged with pro­ the National Commission on Elec­ viding nonpartisan assistance to tronic Fund Transfers and the the Congress on the potential ef­ Commission on Federal Paperwork fects of technological changes. included Comptroller General Staats as a statutory member, and As many Senators mobilize to they each furnished Congress and block ratification of the adminis­ the President with encyclopediac tration's proposed Panama Canal sized and scoped recommenda­ Treaty, and many Representatives tions. If the similar experience of await court action on their bid to the Procurement Commission is require approval of the treaty by any guide, GAO can expect plenty both Houses of Congress, it is no of new work in aiding the im­ surprise that congressional com­ plementation of these commis­ mittees have heard the testimony sions' recommendations and Mr. of a plethora of witnesses on impli­ Staats can anticipate additional cations of the Canal Treaty. One future commission assignments. such witness was Comptroller General Staats, who testified on Interesting Tidbits November 30,1977, stating GAO's position on the need for continuing After 1 year of experience under audits of the work being done by the new system, the New York the Treaty Planning Commission, Times reported "Women at Four as well as for an independent as­ Service Academies Viewed as sessment of the treaty's implica­ Equal to Men." Readers of earlier tions. One historical sidelight: GAO reports on the topic should prior to his appointment as the not be surprised by the results. last Comptroller of the Trea­ Less than 2 months after GAO sury-before the independent of­ issued its fairly critical report to fice of Comptroller General of the the Congress on adverse noise United States was created­ pollution by the Concorde super­ Walter W. Warwick served as U.S. sonic aircraft, the courts over­ auditor of the Panama Canal and turned the Port Authority of New as Associate Judge of the Canal York's refusal to allow Concorde Zone Supreme Court (1908-11). landings at Kennedy Airport. The initial indication is that the twice-daily flights are here to Ninth INCOSAI stay. A "';:lster" agency supporting the The Office of the Comptroller

GAO Review/Winter 1978 71 NEWS AND NOTES

General of Peru was host for the seminars were sponsored by the Ninth International Congress of International Professional De­ Supreme Audit Institutions in velopment Institute, Ltd. Lima, October 17-26, 1977. As The first seminar (October Comptroller General of the host 21-23) was conducted in Spanish. country for this congress, General James Wesberry, Jr., president of Luis Montoya Montoya will serve the sponsoring Institute, led 37 as Chairman of the Governing participants from 5 countries. Board of INTOSAI for the next 3 Guest lecturers were Dr. I.E. years. Nebenzahl, State Comptroller of Delegates from 95 countries and Israel; General Oscar Vargas 7 observers from various interna­ Prieto (ret.), former Comptroller tional organizations attended the General of Peru; and General congress. Comptroller General Solon Espinosa Ayala (ret.), Elmer B. Staats and Assistant former Comptroller General of Comptroller General Ellsworth Ecuador. Morse participated. The second seminar (October 27-29) was conducted in English The following four topics were by E. H. Morse, Jr., Assistant discussed and formal recommenda­ Comptroller General of the United tions were adopted on each. States, and Mr. Wesberry. In this • Principles of external auditing seminar, 20 participants attended of public finance. from 13 countries (Australia, • Auditing of decentralized Bangladesh, Fiji, Ghana, In­ agencies of public administra­ donesia, Libya, Malaysia, the tion. Netherlands Antilles, Nigeria, the • Role and requirements of the Philippines, South Africa, the Supreme Audit Institutions in United States, and Western the reform of public adminis­ Samoa). Guest lecturers were G. tration. Rune Berggren, Auditor General • Auditing public health and of Sweden, and General Vargas of environmental protection Peru. agencies. The next congress of INTOSAI Reducing Paperwork will be held in 1980 in Nairobi, On October 17, Victor L. Lowe, Kenya. General Government Division di­ rector, presented, to the Subcom­ mittee on Government Informa­ Seminars on tion and Individual Rights, House Operational Auditing Committee on Government Opera­ tions, GAO's views on certain rec­ Two 3-day seminars on opera­ ommendations of the Commission tional auditing in the public sector on Federal Paperwork. were held at the Granja Azul Inn GAO personnel worked closely near Lima, Peru, in October. Both with the Commission throughout

72 GAO Review/Winter 1978 NEWS AND NOTES its 2-year life. GAO agrees with system was approved by Mr. and fully endorses the overriding Staats on April 27, 1977, in a for­ message of the Commission's mal signing ceremony in his con­ studies-that Government pa­ ference room. In attendance were perwork and reporting burdens are representatives of GAO, the De­ not being properly managed and partment of Justice, and the FBI, that comprehensive changes are including Mr. Kevin Rooney, As­ sorely needed in policies, practices, sistant Attorney General for Ad­ and procedures. GAO also agreed ministration, and Mr. Clarence M. with the Commission's recommen­ Kelley, Director of the FBI. dation that the Congress assign committee responsibility to insure Approval of the FBI accounting that when legislation is developed, system caps many years of dedi­ potentially heavy paperwork bur­ cated and cooperative work by dens and statistical problems re­ staffs at the Department of Jus­ ceive adequate attention. How­ tice, FBI, and GAO. This ceremony ever, in his role as a member of was the first held by GAO to mark the Commission, Mr. Staats dis­ the approval of less than a de­ sented from the Commission's rec­ partmentwide accounting system. ommendation to establish a De­ GAO officials thought that the partment of Administration. ceremony was appropriate, how­ ever, because the system is a major one and one of the best we FBI Accounting System have worked with in some time. Approved When fully operational, the new The Federal Bureau of Investi­ accounting system will greatly gation's administrative accounting improve budget execution and will

Comptroller General Staats approving the FBI's accounting system design on April 27, 1977. To the left of Mr. Staats is Clarence Kelley, FBI's director, and Mrs. Kelley. Vari­ ous GAO and FBI representatives who participated in the project are also shown.

GAO Review/Winter 1978 73 NEWS AND NOTES

allow useful evaluations of the sociate director, Energy and Min­ relative merits of management ob­ erals Division) designated by the jectives in terms of resource costs Comptroller General and five by objective. The Bureau antici­ members designated by the heads pates implementing the new ac­ of the Bureau of Labor Statistics, counting system in fiscal year the Bureau of the Census, the Se­ 1978. curities and Exchange Commis­ sion, the Federal Trade Commis­ sion, and the Council of Economic New Glossary of Budgetary Advisers. Terms Published The report described actions The General Accounting Of­ needed to improve the credibility fice has published a new booklet of energy data by (1) validating entitled Terms Used in The Budg­ and verifying data, (2) separating etary Process (PAD-77-9, July the data programs from the energy 1977). It incorporates definitions of policy function, and (3) document­ budgetary terms published earlier ing and testing computer models in Budgetary Definitions (OPA- used for forecasting energy supply 76-8, November 1975) and also in­ and demand. The Secretary of cludes Energy agreed with the findings e terms and definitions appli­ and said that corrective actions cable to zero-base budgeting, have been taken or are planned. which were developed by the Office of Management and Budget, and Cost Accounting Standards • economic terms used in con­ Board nection with national gov­ ernmental budgeting, espe­ At the Cost Accounting Stand­ cially in discussions of eco­ ards Board meeting of November nomic assumptions underlying 28, 1977, the Chairman announced budget proposals and esti­ that he had accepted, with regret, mates. the resignation of Board member Robert K. Mautz. Dr. Mautz had been prominently associated with Evaluation of Federal the study ordered in 1968 by the Energy Data Programs Congress, in which the General Accounting Office considered the On December 5, 1977, the Pro­ feasibility of establishing cost ac­ fessional Audit Review Team counting standards. That study led (PART) reported to the President to the August 1970 legislation au­ and the Congress its evaluation of thorizing a Cost Accounting the Federal Energy Administra­ Standards Board. Dr. Mautz was tion's Office of Energy Information one of the original Board mem­ and Analysis. PART consists of a bers, appointed early in 1971. The Chairman (Richard W. Kelley, as- Chairman expressed sincere ap-

74 GAO Review/Winter 1978 NEWS AND NOTES preciation for his many contribu­ Chairman announced that Noah tions to the work of the Board. Minkin has been appointed Gen­ On December 8, 1977, the eral Counsel for the Board.

No Black Boxes

* * * expectations are still too high about the knowledge that can be gained from any given evaluation. The Congress needs iriformation about the cost of programs and their impact on beneficiaries and others. A realistic expectation is that a well planned and managed evaluation will help supply that information. * * * But evaluations are not black boxes into which evaluation funds can be poured and optimum decisions come out. Only the political process can judge the value of program results and compare their priority to the results of other programs competing for a limited budget. There is no black box for that. Harry S. Havens Director, Program Analysis Division October 6, 1977

GAO Review/Winter 1978 75 Legislative DeYelopments

By Judith Hatter Chief, Legislative Digest Section

The GAO is the investigative arm of Congress and a valuable resource in assuring the legality and propriety of governmental expenditures and the effectiveness of governmental programs. 1

Medicare-Medicaid The study is to determine to Anti-Fraud and what extent claims administra­ tion could be made more efficient Abuse Amendments by (1) reducing the number of On October 25, the President participating intermediaries and signed the Medicare-Medicaid carriers, (2) making a single or­ Anti-Fraud and Abuse Amend­ ganization responsible for proc­ ments, to strengthen the Govern­ essing claims in a particular geo­ ment's ability to detect, prosecute, graphic area under both Part and punish fraudulent activities A-Hospital Insurance Benefits under the medicare and medicaid for the Aged-and Part B­ programs. (Public Law 95-142 91 Supplementary Medical Insur­ Stat. 11 7 5) , ance Benefits for the Aged, (3) Section 12 of the law requires providing for claims processing the Comptroller General to com­ on the basis of a prospective fixed prehensively study and review the price, (4) providing incentive administrative structure estab­ payments for the most efficient lished for processing claims under organizations, or (5) otherwise the Social Security Act, Title modifying the structure and re­ XVIII: Health Insurance for the lated procedures. The results of Aged. the study and the Comptroller General's findings and recom­ mendations are to be reported to the Congress no later than July 1 H. Rept. 95-492, July 12, 1977, p. 2. 1,1979.

76 GAO Review/Winter 1978 LEGISLATIVE DEVELOPMENTS

The law also adds a new sec­ that as a consequence of this lack of in­ tion 1125 to the Social Security dependent audit capability, IRS and ATF Act, giving the Comptroller Gen­ management practices and administra­ eral the power to issue subpenas tion of the tax laws have not been as effi­ in connection with any audit, in­ cient as they otherwise would have been; and that many committees and indi­ vestigation, examination, analy­ vidual Members of Congress have been sis, review, evaluation, or other denied meaningful information on IRS function authorized by law for and ATF operations.2 any program under the act. The subpoena power will allow the Comptroller General to gain in­ Federal Banking Agency Audit formation and facilitate his re­ view of medicaid and the mater­ Act nal and child health programs, particularly regarding investiga­ The House of Representatives tions of fraud and abuse. amended and passed H.R. 2176 on October 14. This legislation au­ thorized GAO to audit the Federal Internal Revenue Service Audit Reserve System, the Comptroller of the Currency, and the Federal Public Law 95-125, October 7, Deposit Insurance Corporation. 1977, 91 Stat. 1104, amends the The bill was amended to require Accounting and Auditing Act of GAO to review statistically mean­ 1950 to provide for independent ingful samples of bank examina­ audit by the Comptroller General tion reports in its audits and to ex­ of the Internal Revenue Service tend to GAO auditors the same (IRS) and the Bureau of Alcohol, penalties for unauthorized disclo­ Tobacco, and Firearms (ATF) of sures that now apply to bank the Department of the Treasury. examiners. The purpose of the legislation is to resolve differences between GAO and IRS over GAO's access to rec­ Cargo Preference ords necessary to regular audits of the Service. On October 5, Harry S. Havens, The law safeguards from unau­ director, Program Analysis Divi­ thorized disclosure the privacy and sion, discussed the findings of a integrity of income tax returns September 9 GAO report, "Costs of and information. Cargo Preference," before the Sen­ In describing the provisions of ate Committee on Commerce, Sci­ the bill during debate by the ence and Transportation. On Oc­ House of Representatives on Sep­ tober 19, the Energy Transporta­ tember 27, Congressman Benja­ tion Security Act of 1977 (H.R. min S. Rosenthal of New York 1037) failed passage by the House made the following observation:

The committee vote in support of this 2 Congressional Record, vol. 123 (Sept. legislation is an expression of our belief 27, 1977), p. H10164.

GAO Review/Winter 1978 77 LEGISLATIVE DEVELOPMENTS of Representatives. During the de­ generally. He stated GAO's belief bate, GAO estimates of the legisla­ that the responsibility for ad­ tion's cost were mentioned again ministering a financial disclosure and again as various Members system should rest with each presented their positions on the branch of Government. bill. The measure reported by the Committee requires that officials Financial Disclosure and top-level employees of the executive and judicial branches of On November 2, the House Government, and certain candi­ Judiciary Committee reported, dates for Federal office, disclose with amendment, H.R. 1, the their income, assets, and financial Ethics in Government Act of 1977 transactions by annual financial (H. Rept. No. 95-800). reports which would be made On September 9, the Deputy available to the public. To ad­ Comptroller General had testified minister the system it establishes before the Subcommittee on Ad­ (1) in the Civil Service Commis­ ministrative Law and Governmen­ sion, an Office of Government tal Relations of the House Ethics and (2) in the Judicial Con­ Judiciary Committee concerning ference of the United States, a financial disclosure legislation Judicial Ethics Committee.

GAO's Energy Role

* * * Our basic position can be summed up by stating that ef­ fective energy planning must r.eflect the dynamic, changing na­ ture of the energy situation. It must be flexible enough to handle changing circumstances, to insure that our attention stays on the questions which bear most heavily on the Nation's energy problems. But, at the same time, policies must be sufficiently stable over time so that energy producers and consumers will have a reasonable basis for making future plans. The long lead times between conception and completion of many energy proj­ e~ts require that we come to grips with thelle policy problems early and make sufficiently sound decisions that, hopefully, will not entail a lot of later changes. Monte Canfield, Jr. Director, Energy and Minerals Division September 14, 1977

78 GAO Review/Winter 1978 GAO STAFF CHANGES

John D. Heller

Mr. John D. Heller was designated Assistant to the Comptroller General December 14 and has assumed responsibility for the Office of policy and the Office of Program Planning. He will also become editor of the International Journal of Government Auditing and The GAO Review and will be responsible for the Annual Report of the Comptroller General. Mr. Heller will coordinate GAO liaison arrangements with other congressional support agencies (the Congressional Research Service, the Congressional Budget Of­ fice, and the Office of Technology Assessment), with help from the Program Analy­ sis Division concerning CBO and OTA. Mr. Heller will serve as a member of the GAO Library Committee, and will assist on miscellaneous other assignments, such as preparing speeches and lecture!? and handling special projects. Mr. Heller has been with the General Accounting Office since 1959, serving in a number of positions of increasing responsibility. Before his present appointment, Mr. Heller was Director of the Office of Program Planning-responsible for establishing internal planning principles and standards; monitoring program and assignment planning; advising the Comptroller General, the Deputy Comptroller General, and the Program Planning Committee; and assisting the divisions and offices. Mr. Heller has also been the Deputy Director of the General Government Division and the person responsible for GAO examinations of all federally funded or assisted health programs. Mr. Heller received his bachelor of science degree in accounting from King's College in 1959 and attended the program for management development at Harvard in 1968. He is a CPA (Virginia), a member of the American Institute of CPAs and the National Association of Accountants, and the recipient of several awards recognizing his Fed­ eral service.

GAO Review/Winter 1978 79 GAO STAFF CHANGES

Thomas P. McCormick

Thomas P. McCormick was designated an associate director in the Human Resources Division on July 21. He is responsible for audits of health financing, quality control, and automatic data processing systems that support agency missions and programs. Since joining the General Accounting Office in 1963, Mr. McCormick has had diverse assignments, including audits at the Veterans Administration, the Department of Justice, the National Institutes of Health, the Atomic Energy Commission, the De­ partment of Defense, and the Civil Service Commission. Mr. McCormick received a bachelor of science degree, with a major in accounting, from St. Vincent College, Latrobe, Pennsylvania. He is enrolled in the key executive program at American University in Washington, D.C. He is a CPA (Virginia) and a member of the American Institute of CPAs. Mr. McCormick received a Group Meritorious Service Award in 1972, the GAO Career Development Award in 1973, and a Meritorious Service Award in 1976.

80 GAO Review/Winter 1978 GAO STAFF CHANGES

Morton A. Myers

Morton A. Myers was designated deputy director in the Program Analysis Division, effective October 10, 1977. In his new capacity, Mr. Myers will concentrate on pro­ gram evaluation. He will continue to corrdinate GAO activities with the Office of Technology Assessment and provide staff to support the Comptroller General's re­ sponsibilities as a member of the OTA Council. Mr. Myers received a bachelor of science degree with a major in accounting from Quinnipiac College in 1961. After joining the General Accounting Office in the same year, he was on active duty in the U.S. Army until February 1962. He attended the George Washington University Graduate School of Business, and in 1969-70 was a graduate fellow at the University of California under the Federal Government's edu­ cational program in systems analysis. Previous GAO positions held by Mr. Myers include assistant director, Office of Policy and Special Studies; assistant director, Civil Division; assistant director, Manpower and Welfare Division; and deputy director, Procurement and Systems Acquisition Division. He is a member of the National Conference for the Advancement of Research's pro­ gram plan,ning committee for 1978, the National Association of Accountants, the As­ sociation of Government Accountants, the Association for Public Program Analysis, and the Phi Theta Kappa National Honorary Society. In 1970 he received the GAO Special Educational Award, and in 1972 and 1973, GAO Meritorious Service Awards.

GAO Review/Winter 1978 81 GAO STAFF CHANGES

Other Staff Changes

New Assistant Directors New Senior Attorneys Field Operations Division John P. Competello Office of the General Counsel General Government Division John G. Brosnan Ralph L. Lotkin John M. Lovelady

Human Resources Division Retirements John J. Eglin, Jr.

Program Analysis Division International Division Robert A. J axel Lawrence J. Sabatino

82 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

P,oFellioftal Activitie

Office of the Comptroller American City: What Is Its Fu­ General ture?" Philadelphia, Pa., Dec. 6. Following is a recently pub- The Comptroller General, Elmer lished article of the Comptroller B. Staats, addressed the following General: groups: "Auditoria Gubernamental AICPA National Conference on Ayer, Hoy y Manana" (Govern­ Federally Assisted Programs on ment Auditing-Yesterday, To­ "Shortcomings with Grant Au­ day, and Tomorrow)-adapted diting and Suggestions on What from an address to a joint con­ Needs to be Done," Washington, ference of the Intergovernmen­ D.C., Nov. 8. tal Audit Forum, Latino America Association of Government Ac­ Control (ILACIF) Quito, Ecuador, countants, Washington chapter 1977 Segundo Semestre. monthly luncheon meeting, on The Comptroller General, a "A Good Accounting System-A member of the Governing Board of Key to Good Management," the International Organization of Washington, D.C., Nov. II. Supreme Audit Institutions and National Intergovernmental chairman of the Commission on Audit Forum meeting, "The the Revision of INTOSAI Standing Fifth Anniversary of the Na­ Orders, participated in the Con­ tional Intergovernmental Audit gress of that organization in Lima, Forum," Washington, D.C., Nov. Peru, Oct. 17-26. 15. E. H. Morse, Jr., Assistant Seminar on Intergovernmental Comptroller General, addressed Administration and Growth the fourth annual seminar of the Management on "Inter­ National Capital area chapter of governmental Relations," Eas­ the EDP Auditors Association on ton, Md., Nov. 27. "Need for More and Better Com­ Philadelphia Bar Association, puter Auditing," Washington, Section on Corporation, Banking D.C., Oct. 13. and Business Law, 'On "The Mr. Morse participated in the

GAO Review/Winter 1978 83 PROFESSIONAL ACTIVITIES

9th Congress of the International Department of Labor, Labor­ Organization of Supreme Audit Management Services Adminis­ Institutions, Lima, Peru, Oct. tration, in Chicago, Aug. 9. 17-26 and conducted an interna­ Paul Shnitzer, associate general tional seminar on "Operational counsel: Auditing in the Public Sector," in Lima, Oct. 27-29. Spoke before the Western Brief­ ing on Government Contracts on Office of the General Counsel "Significant Contract Formation Developments of 1977," in Santa Paul G. Dembling, general coun- Monica, Oct. 18. sel: Addressed the White Sands Addressed an Air Force Systems chapter of the National Contract Command procurement and Management Association on manufacturing conference on "GAO, Bid Protest and You," "The Impact of GAO on Gov­ Las Cruces, N.Mex., Oct. 2l. ernment Procurement," Oct. 5. Seymour Efros, assistant gen- Addressed the Secretary of eral counsel, spoke before the Gov­ Health, Education, and Welfare's ernment Contracts Association of First Procurement Conference Michigan on "GAO Bid Protests," on "wny GAO Looks at Federal in Troy, Nov. 17. Procurement," Oct. II. Ronald Berger, senior attorney, Chaired the 18th annual West­ spoke before the Defense advanced ern Briefing Conference on Gov­ procurement management course ernment Contracts sponsored on "Problems in Formal Advertis­ jointly by the Federal Bar As­ ing," in Los Angeles, Dec. 2. sociation and the Bureau of Na­ Robert Evers, senior attorney, tional Affairs, Oct. 17-19, in addressed a group of graduate en­ Santa Monica. gineers from the French Ministry Addressed the Space Applica­ of Defense on the organization, tions Board of the National Re­ functions, and operation of GAO search Council, National on Sept. 6. Academy of Science, on "The Johnnie Lupton, attorney­ Genesis of NASA," Oct. 26. adviser, spoke on "Classification Spoke before the ninth annual and GAO Decisions" before the National Contract Management Classification and Compensation Education Symposium on "GAO Society's eighth annual confer­ and Federal Procurement," in ence, Oct. 18. Houston, Nov. 10. Milton J. Socolar, deputy gen­ ()ffice of Congressional eral counsel, spoke on "GAO's Relations Role in Federal Sector Labor Re­ lations" before a labor relations Martin J. Fitzgerald, director, conference sponsored by the U.S. spoke before the Civil Service

84 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

Commission's executive workshop Peter J. McGough, legislative on the management of a legisla­ adviser, spoke on the functions of tive liaison office on July 15. On GAO before the Civil Service September 12, he spoke before the Commission's Seminar for Execu­ American University Washington tives on Legislative Operations on semester program on the role and July 22 and the Corporate Execu­ responsibilities of GAO. On Sep­ tive Development Program of the tember 26, he was a panel member U.S. Chamber of Commerce on to answer questions on GAO at a Sept. 26 and Nov. 28. session held by the Congressional Clearinghouse on the Future. He spoke on the role of GAO in assist­ Office of Policy ing the Congress at the Capitol Donald J. Horan, director: Hill workshops held by the Fed­ eral Executive Institute Alumni Participated in the Performance Association on Sept. 26 and Nov. Auditing Workshop Panel, An­ 30. nual Conference of American In­ stitute for Decision Sciences, Mr. Fitzgerald and Samuel W. Chicago, Oct. 19. Bowlin, legislative adviser, jointly appeared before the Ad­ Spoke before the Accounting As­ ministrative Assistants' Associa­ sociation of King's College, tion of the House of Representa­ Wilkes-Barre, Pa., on "The Role tives on Sept. 27, to discuss the of the GAO," Oct. 25. role of GAO. Addressed the annual confer­ Mr. Bowlin spoke on the need ence of the National Association for better information for Congress of Accountants for the Public to students in the science depart­ Interest on "Effective Communi­ ment of American University on cation in Report Writing," Oct. 26. Miami, Nov. 15. M. Thomas Hagenstad, legisla­ tive adviser, was a member of the Theodore Roman, Jr., senior pol­ Paperwork Commission Roundta­ icy advisor, explained the several ble discussing paperwork reduc­ roles of GAO to key personnel of tion activities on July 7. On Au­ the Department of Agriculture's gust 2, he spoke before the Civil Forest Service staff attending the Service Commission's Legislative Lewis & Clark College seminar for Operations Roundtable for Execu­ mid-career management person­ tives on the functions of GAO. nel, Dec. 8. T. Vincent Griffith, legislative Jennie Stathis, policy advisor, attorney, spoke on the role and spoke at the Civil Service Com­ responsibilities of GAO before mission's seminar for 1977 Inter­ training seminars conducted by governmental Affairs Fellows, on the Civil Service Commission on her experiences as a 1976 Fellow, Aug. 4, Sept. 15, and Nov. 3. Oct. 6.

GAO Review/Winter 1978 85 PROFESSIONAL ACTIVITIES

Office of Program Planning of the Federal Government in Expanding the Use of Coal," John D. Heller, director: Reston, Va., Nov. 7. Spoke on GAO's role in evaluat­ The American Institute of Min­ ing program performance at the ing, Metallurgical and Petro­ Civil Service Commission's leum Engineers' Mineral Eco­ executive center, Kings Point, nomics Symposium, on "The New York, Nov. 3. GAO and Its Role in Energy Is­ Spoke to the Los Angeles chap­ sues," Washington, D.C., Nov. 9. ter of the Association of Gov­ The Georgia General Assembly ernment Accountants on Nov. Conference on Energy, The Uni­ 17. The subject was "Setting versity of Georgia Center for Priorities in GAO and Setting Continuing Education, on "Na­ Priorities in Your Life." tional Energy Policy: Myth or Reality," Athens, Ga., Dec. 8. Energy and Minerals Division J. Dexter Peach, deputy director: Monte Canfield, Jr., director, Spoke before the Twenty-Second addressed the following groups: Annual Petroleum Accounting Conference on "The Increasing The Washington Journalism Role of the General Accounting Center conference on the energy Office in Providing Congress outlook on "The GAO and Its with Energy Information and Role in Energy Issues," Wash­ Analyses," Wichita, Ks., Sept. ington, D.C., Sept. 14. 22. The American Law Institute/ American Bar Association Spoke at a workshop on program Committee on Continuing Pro­ evaluation sponsored by the fessional Education on "The University of South Carolina, Role of the GAO with Respect to Columbia, S.C., Nov. 28. Nuclear Power," Washington, D.C., Oct. l. Financial and General The Brookings Institution Pub­ Management Studies Division lic Policy Conference for Gov­ ernment Executives on "Energy Donald L. Scantlebury, director: Issues and Public Policy," As­ Spoke on GAO's interest and pen, Colo., Oct. 3. role in measuring and increas­ The National Association of Pe­ ing productivity at the National troleum Investment Analysts on Productivity Center workshop "Energy Issues and Public Pol­ on productivity improvement in icy," Tarpon Springs, Fla., Oct. field inspections, Sept. 21, 2l. Washington, D.C. The METREK division of the Spoke on GAO uniform financial Mitre Corporation on "The Role compliance guidelines at the

86 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

AICPA Conference on Federally national productivity at the an­ Assisted Programs on Nov. 7, nual meeting of the European As­ Washington, D.C. sociation of National Productivity Harold L. Stugart, deputy direc­ Centers, Oct. 26, Athens, Greece. tor, participated in a panel discus­ Robert J. Ryan, assistant direc­ sion at the Conference on Feder­ tor, was named as general chair­ ally Assisted Programs, sponsored man for a 2-day AGA/MFOA con­ by the American Institute of Cer­ ference, "Emerging Issues­ tified Public Accountants on Nov. Government Accounting and Au­ 8, in Washington, DC. He spoke on diting," to be held on Jan. 26-27, "Practical Problems and Experi­ 1978, in Atlanta. ences in Economy, Efficiency, and Earl M. Wysong, Jr., assistant Program Results Audits." director, made a presentation enti­ Harry Kensky, associate direc­ tled, "GAO's Views on Uniformed tor, and John Cronin, assistant di­ Services' Military ADP Systems," rector, conducted a seminar enti­ at the Annual Commanders' Con­ tled "The Dynamics of Auditing ference Information Exchange Under the Value for Money Con­ Program for the Uniformed Serv­ cept" for the Canadian Society of ices, Oct. 18, in Arlington. Management Accountants in Ot­ tawa, Canada, on Nov. 17. Benjamin I. Gottlieb, assistant director, spoke to the Baltimore Ernest H. Davenport, assistant Actuaries' Club on pension costs director: charged to Government contracts, Was elected to a 3-year term as on Sept. 8, in Baltimore. Council member-at-Iarge of the Mike Morris, consultant, and American Institute of Certified Charles Davidson and Ted Ganter, Public Accountants. computer systems analysts, spoke Was elected secretary and direc­ on "Using Software Physics as an tor of the District of Columbia Audit Tool" at the computer per­ Institute of CPAs. formance evaluation users group Served as a member of the Ad meeting in New Orleans, Oct. II. Hoc Committee of the District of Don Ingram, management au­ Columbia Institute of CPAs on ditor, spoke on "Computer Per­ the D.C. accounting bill. formance Evaluation as an Audit Was the recipient of the Na­ Tool" before the Denver chapter of tional Association of Minority the Association of Government Ac­ CPA Firms' Outstanding Service countants, Oct. 13. Award in October. William C. Kennedy, supervisory Brian L. Usilaner, assistant di­ systems accountant: rector, spoke on GAO's evaluation Was recently appointed to a of the National Center for Produc­ 3-year term on the Association tivity and Quality of Working Life of Government Accountants' Na­ and the Federal role for improving tional Research Board.

CAO Review/Winter 1978 87 PROFESSIONAL ACTIVITIES

Developed a new AGA National of member relations for the Na­ Research Award Program. The tional Association of Accountants' program is designed to stimulate Northern Virginia chapter. new research activities and pro­ vides for national research awards to individuals, groups, Human Resources Division and AGA chapters. Ronald F. Lauve, associate di­ rector, attended the Executive General Government Division Leadership and Management Program at the Federal Execu­ William J. Anderson, deputy di­ tive Institute in Charlottesville, rector, addressed a group at the Va., Sept. 12-30. Also, Mr. Oak Ridge Federal Executive Cen­ Lauve-together with Mr. Joseph ter on GAO's reviews of program F. Delfico, assistant director, Pro­ management on Nov. 10. gram Analysis Division­ addressed a combined session of Randell Conley, audit manager, the "Program Evaluation: Issues spoke before the University of and Problems" and the "Budgeting Maryland chapter of the Beta and Fiscal Management" work­ Alpha Psi accounting honorary shops, held at the Institute on fraternity on Oct. 5. Nov. 16. Their topic was GAO's Theodore C. Gearhart, assistant role and responsibilities in the director, spoke at the Federal area of program evaluation.

Statistics Users' 21st annual meet- 0 Beryce W. MacLennan, assistant ing which was held in Washing­ director, presented a feature paper ton, D.C., on Nov. 16. on "Environmental Tolerance and Richard B. Groskin presented a Opportunity Structure as Factors paper on "Evaluation in Criminal in Evaluating the Impact of Justice" and was a panel member Therapeutic am! Rehabilitative for the American Society of Crim­ Programs" at the Evaluation Re­ inality on Nov. 17. search Society meeting in Wash­ ington, D.C., on Oct. 11. Ms. Mac­ Dessie P. Kambanides, auditor, Lennan was also a workshop has been elected associate director leader on "Mental Health Re­ of member relations for the N a­ search and the Citizen" at the tional Association Accountants' Mental Health Association na­ Northern Virginia chapter. tional conference in Washington, Robert A. Korinchak partici­ D.C. on Oct. 28. pated in the Intergovernmental Affairs Fellowship Program in Denver, Colo., during April, May, International Division and June. J. K. Fasick, director, spoke to a Wrightly T. Reed, supervisory group of middle to top manage­ auditor, has been elected director ment officials of public accounting

88 GAO Review/Winter 1978 PROFESSIO NAL ACTIVITIES firms, government agencies, and thropy, in Washington, D.C., on two universities on the subject of Oct. 18. "The Evaluation of U.S. Overseas Eleanor Hadley, assistant direc­ Programs" at the Accountants tor, presented a paper on "U.S.­ Round Table Forum of the Brook­ Japanese Trade Relations: Some ings Institute in Washington, Reflections, Autumn 1977," at the D.C., on Nov. 17. mid-Atlantic regional meeting of Frank C. Conahan, associate di- the Association for Asian Studies, rector: at Princeton University, Oct. 31. Was a guest speaker, together John D. Redell, assistant direc- with Jerome H. Stolarow, dep­ tor: uty director, Procurement and Systems Acquisition Division, at Presented a paper relative to a gathering of executives of the GAO's reviews of international Military District of Washington, and language and area studies sponsored by the Federal Execu­ programs at a meeting of direc­ tive Institute Alumni Associa­ tors of 80 international studies tion, and spoke on the subject of centers of American univer­ GAO's work concerning weapons sities, in Washington, D.C., systems and foreign military Oct. 16. sales, on Sept. 20. Participated, together with Was a guest speaker, together Paul G. Atkins and Dan J. with John D. Redell, assistant Gowen, supervisory auditors, director, at a seminar sponsored in a 2-day meeting of directors by the American Council on of 80 international studies cen­ Education in Washington, D.C., ters of American universities, on Nov. 7. sponsored by the Office of Edu­ cation, Department of Health, J. Allen Hovey, international re- Education, and Welfare, in lations specialist: Washington, D.C., on Oct. 16 Addressed two successive meet­ and 17. ings of the U.S. Advisory Com­ Presented a paper on the sub­ mission on International Educa­ ject of GAO reviews of tional and Cultural Affairs on exchange-of-persons programs the opportunities and problems to the International Education of interagency coordination and Advisory Group to the Interna­ data-sharing among U.S. ex­ tional Education Project of the change and training programs, American Council on Educa­ in Washington, D.C., on Sept. 26 tion, in Washington, D.C., on and Dec. 9. Nov. 7. Participated in a discussion of Participated in a meeting of a philanthropy and world affairs task force established by the at a meeting convened by the Modern Language Association National Council on Phil an- for the promotion and de-

GAO Review/Winter 1978 89 PROFESSIONAL ACTIVITIES

velopment of foreign language Architect-Engineer Services at the study in the United States, in Federal Programs Conference of Washington, D.C., on Nov. 5. 1977 regarding opportunities and issues on A-E selection and the use of life-cycle cost estimates as an Logistics and element on Feb. 24. Communications Division Ron King, project manager, Allen W. Sumner, assistant di­ computer-aided building design rector, and John Cramsey, super­ study, addressed the fall confer­ visory management auditor, ad­ ence of the Civil Engineering Pro­ dressed the Defense Advanced graming Applications Group on Traffic Management Class at the "Observations on Software Cen­ U.S. Army Transportation School, ters" relating to the use of com­ Fort Eustis, Va., on Sept. 27. puters in engineering and the transfer on computer technology, Richard Davis, assistant direc· in San Juan, P.R., Sept. 27. tor, attended the Autofact I Con­ ference on Industrial Technology Paul Spitz, audit manager, ad­ sponsored by the Society of Man­ dressed the Great Plains Inter­ ufacturing Engineers, Detroit, Oct. agency Motor Equipment Advisory 31-Nov. 2. He also attended an av­ Committee at St. Louis, Mo., on ionics symposium at Warner Ro­ Oct. 12-14 and the Interagency bins Air Logistics Center in Geor­ Motor Equipment Advisory Com­ gia on Nov. 8--9. mittee of the Southeast at Mobile, Ala., on Oct. 26 and 27. Carmen E. Smarrelli, assistant director, addressed the annual con­ ference of the Arizona State Program Analysis Division Emergency Preparedness Associa­ tion on Nov. 4 and 5, at Tucson, Harry S. Havens, director, par­ Ariz. Mr. Smarrelli discussed the ticipated in a meeting on "How civil defense policies which were artists can be drawn more effec­ the subject of a GAO report to the tively into the practical operations Congress. of business and government." The meeting was sponsored by the Na­ Wilbur Bailey, assistant direc­ tional Endowment· for the Arts, tor, addressed the Washington sec­ and was held on Oct. 18 in Wash­ tion of the Institute of Navigation ington, D.C. in Washington, Nov. 15. He spoke on "Navigation Planning-A New Morton A. Myers, deputy director: Direction is Needed." Bob Car­ Spoke on "The Broadening Role penter also participated in a of GAO," before the Akron, question-and-answer session that Ohio, chapter of the National followed. Association of Accountants, Oct. Frank J. Oberson, assistant di­ 19. rector, addressed the Committee Also, with Osmund T. Funding­ on Federal Procurement of sland, assistant director, par-

90 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

ticipated in the 31st National sity of New York at Albany's pub­ Conference on the Advancement lic executive project program, in of Research, held in Albuquer­ Lake George, N.Y., Nov. 1. que, N.M., Oct. 2-5. The theme Steve Bryant, supervisory man­ of the conference was "Current agement analyst, spoke on "Ap­ Issues in Research and De­ praising Program Results" at the velopment: Management and Philadelphia regional meeting of Policy." The conference brought the American Society for Public together leaders in research ad­ Administration, Oct. 13. ministration from Government, industry, and universities for Michael Kurgan, management the purpose of assessing re­ analyst: search needs in the coming dec­ Spoke on "Zero-Base Budgeting ade in areas of national priority. in the Federal Government" at Mr. Fundingsland participated in the New York/New Jersey In­ the "Seminar on the U.N. Confer­ tergovernmental Audit Forum ence on Science and Technology in New York City, Sept. 6. for Development: Congressional Spoke on "Zero-Base Budgeting Initiatives and Expectations" at and the Appropriations and Au­ the Library of Congress on thorizations Processes of Con­ Nov. 10 to acquaint congressional gress," at the American Insti­ staff with issues that warrant at­ tute of Industrial Engineers con­ tention or action by the Congress ference in Washington, Nov. 1. during the preparatory phase of the U.N. Conference, scheduled Wallace M. Cohen, assistant di- for 1979. rector: Dennis Dugan, associate direc­ Spoke on program evaluation tor, participated in a panel discus­ processes at the National Sci­ sion on "The Northeast in Finan­ ence Foundation to the Inter­ cial Crisis," at a regional confer­ Agency Consumer Program Re­ ence sponsored by the American lated Committee, Washington, Society for Public Administration D.C., Dec. 1. at Kean College, N.J., Oct. 11. Was a member of the American Society for Public Administra­ Allan Mendelowitz, assistant di­ tion panel on "Program Evalua. rector, spoke on "Regulation and tion and Management" at the the Economy" before the Brook­ National Capital area chapter of ings Insti tu tion Seminar on the American Society for Public "Business-Government Relations Administration conference, on Regulatory Reform: Issues and Washington, D.C., Dec. 2. Alternatives," in Washington, D.C., Oct. 20. Michael A. Redisch, economist: Waverly Sykes, program analyst, Discussed a paper by Sungwoo spoke on "Assessing Program Ef­ Kim and Harold Goldstein of fectiveness," for the State Univer- Northeastern University, enti-

GAO Review/Winter 1978 91 PROFESSIONAL ACTIVITIES

tIed "An Inter-industry Analysis director, participated in a panel on of Health-Medical Sectors in the "An Overview of Government Con­ United States," at the Atlantic tracting Out" at a conference on Economic Conference, Washing­ Government procurement of goods ton, D.C., Oct. 13. and services from the private sec­ Spoke on "The Impact of Physi­ tor, sponsored by the Chamber of cian Reimbursement Practices Commerce of the United States, in on Hospital Costs: The Case of Washington, D.C., Oct. 3. Hospital Based Physicians," at Dr. Robert P. Koontz, supervis­ the 105th annual meeting of the ory management analyst, was ap­ American Public Health Associ­ pointed to the American Society ation, Washington, D.C., Nov. l. for Public Administration's Task Discussed a paper by Ronald Force on Reorganization of Science Hansen, University of Roches­ and Technology in Government. ter, entitled "Drug Discovery, Robert D. Balderston, manage­ Use, and Regulation: A Problem ment auditor, participated in a of Information," at the 47th an­ panel discussion on Federal tech­ nual meeting of the Southern nology transfer policy at the Fed­ Economic Association, New Or­ eral Laboratory Consortium's leans, Nov. 4. meeting, in Philadelphia, Oct. 19. Spoke on "A Critique of Efforts to Model the Impact of National Field Operations Division Health Insurance," at the an­ nual meeting of the Operations Research Society of America, At­ Atlanta lanta, Nov. 8. Marvin Colbs, regional man­ ager, spoke on "The Roles and Procurement and Systems Missions of GAO" to the Control­ Acquisition Division ler's course of the Air University, Maxwell AFB, Alabama, Sept. 6. Richard W. Gutmann, director, moderated a panel entitled "GAO Chicago Impact on Policy" at the Air Force Gil Stromvall, regional man- Systems Command's annual Pro­ ager: curement and Manufacturing Con­ ference at Andrews Air Force Discussed "Forum Viewpoints Base, Oct. 5. on the Joint Funding Simplifica­ tion Act," with a team from the Frank P. Chemery, associate di­ Office of Management and rector, spoke on the role of GAO in Budget, at the request of the major weapon systems acquisition joint funding coordinator of the at the Defense Systems Manage­ Federal Regional Council and as ment School, Fort Belvoir, Va., on chairman of the Midwestern In­ Nov. 15. tergovernmental Audit Forum, Andrew B. McConnell, associate July 13.

92 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

Was one of the 10 agency heads each made presentations on invited by the regional director, GAO's organization, functions, Civil Service Commission, to and activities. meet with the Presidential Task Karen Bell, secretary, spoke at Force on Government Personnel the Chicago area Postal Service Management, June 30. Women's Day Seminar on "Ac­ Was appointed to the Federal tivities of the Chicago Federal Executive Board, region V, June Executive Board Women's Sub­ 1977, and elected to the execu­ committee," May 24. Ms. Bell has tives club of Chicago on Oct. 17. also been appointed to the follow­ Led a panel discussion in Madi­ ing Federal Executive Board po­ son, Wis., concerning "Transfer sitions: chairperson of the va­ of Techniques within the Audit cancy announcement exchange Community," during an audit program, and editor, Federal interchange program between Women's Program resource GAO and the Wisconsin legisla­ handbook. tive audit bureau, Aug. 9-10. Velma Butler, auditor, spoke on Bill Schad, assistant regional "The Advantages of Being a CPA manager: and the Opportunities Available to Young People in the Accounting Moderated the 2-day program Profession," at the Archdiocese of which was attended by top legis­ Chicago Schools, Aug. 19. lative audit officials from Wis­ consin, Illinois, Ohio, Min­ Bob Rodriguez, auditor, was nesota, and Michigan. GAO staff elected president of the board of members Frank Kielpinski, Mel directors for 1977-78 of Associa­ Koenigs, Mary Quinlan, Ken cion Latino de Serpicos Boehne, Clem Preiwisch, Bobbie Educacionales, Incorporated, Lake Sellers, Jim Musial, Pat Dolan, County, Ind., a community and Gerald Kelly each made clearing-house and counseling presentations on topics of par­ service primarily for Hispanic per­ ticular interest to State audit­ sons seeking information on post­ ors. secondary education and career opportunities. Chaired the Midwestern InterGovernmental Audit Verne Gilles, supervisory au­ Forum meeting at St. Charles, ditor, served as an instructor in Ill., Oct. 17-18. "The 1977 Fundamental Account­ Hosted a program for North­ ing and Financial Management western University's Graduate Training Course for Minority School of Business, and also dis­ Business Persons," sponsored cussed GAO's emerging roles, jointly by the Association of Gov­ Nov. 16. GAO staff members ernment Accountants and the Of­ Neil Gottlieb, Mary Quinlan, Pat fice of Minority Business Enter­ Dolan, Pete Larson, Ken Boehne, prise. Clem Preiwisch, and Jim Musial Cecile Trop, auditor, was ap-

GAO Review/Winter 1978 93 PROFESSIONAL ACTIVITIES pointed to the Committee on Con­ Dallas tinuing Education of the Prac­ Paul C. deLassus, assistant re­ titioner Advisors to the Public gional manager, participated in a Management Program, North­ panel discussion on "Careers in western University Graduate Accounting: Opportunities and School of Management. Educational Needs" at the Third Harriet Drummings, auditor, Annual Seminar for Accounting participated in the "Women's Educators at the Southern Career Fair," University of Il­ Methodist University, Oct. 28. linois, Nov. 10. Bobbie Sellers, auditor, served Denver as a consultant for the "Youth Motivation Task Program" at Herman Valasquez and Lowell Stillman College in Tuscaloosa, Hegg, supervisory auditors, gave a Ala., Oct. 19-2l. presentation on operational audit­ ing to students participating in an Pete Larson, supervisory au­ honors seminar on this subject at ditor, spoke to an internal audit­ the University of Denver, Oct. 11. ing class at the Roosevelt Univer­ sity Graduate School on "GAO's Randy Bauer, auditor, gave a Functions and Responsibilities," presentation on the findings in Nov. 14. GAO's report on learning disabil­ ities to the school coordinators and Ken Boehne, supervisory au­ counselors of the Giles Education ditor, participated in the fall Pub­ Center of Colorado Springs, lic Management Program advisors Sept. 8. meeting., Northwestern Univer­ sity, Oct. 27. Detroit Mr. Boehne and Mary Quinlan, auditor, represented GAO at a Bill Laurie, audit manager, and cooperative education program Tom Walsh, supervisory auditor, meeting, Maudelein College, conducted a symposium at the Nov. 17. 30th Annual Scientific Meeting of the Gerontological Society in San Lee Kovale, supervisory auditor, Francisco, Nov. 20. At the sym­ recei ved recognition from the posium, entitled "Impact of Inter­ Chicago chapter, Institute of vention on Well-being Status of Internal Auditors, for his service Older People," they discussed as chairman of the membership GAO's longitudinal -study of the committee. The Chicago chapter well-being of older people. won second place in the Institute's 1976-77 worldwide membership competition. Kansas City Wally Trauten, supervisory au­ David Hanna, regional man­ ditor, also served on this commit­ ager, and Tom Wolters, audit tee. manager, spoke to the Kansas

94 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

State University Accounting Club velopment of a Computer-Based on GAO's operations, Oct. 13. Hospital Sizing Model" to the Charles Reese and Michael Hig­ University of California, Los gins, audit managers, conducted a Angeles, Graduate School of seminar for auditors in the Kansas Management, Apr. 22 Department of Social and Re­ Jan H. Goldstein, Pierre F. habilitation Services. The seminar Crosetto, Gretchen E. Bornhop, and covered GAO's role in auditing Rose M. Imperato, auditors, were medicaid and social services, Oct. discussion leaders at the Inter­ 17. governmental Audit Forum's workpaper seminar held in Los Los Angeles Angeles, June 21. Roger W. Flann, supervisory au­ ditor, and M. John Franklin, au­ Norfolk ditor, participated in panels at the Otto Williams, supervisory au­ tenth annual meeting of the Soci­ ditor, has been appointed chair­ ety of Nutrition Education, July man, membership committee, of 11-14, in Washington, D.C. The the Virginia Peninsula chapter of themes of the panels were "Gov­ the Association of Government Ac­ ernment Priorities: Where Does countants for the year 1977-78. Nutrition Education Fit?" and "National Nutrition Policy: Impact on Nutrition Education." Philadelphia Victor Ell, audit manager, made Dick Halter, audit manager, and the following speeches: Tom Cassidy, auditor, addressed the Council of State Adminis­ "Health Systems Planning-Can trators of Vocational Rehabilita­ the Auditor Help?" and "The Fu­ tion at its annual meeting held in ture of the AGA" to the Associa­ San Diego, Calif., Sept. 27-30. The tion of Government Accountants council is an association composed San Bernardino chapter, Apr. of top administrators of all State 14, and San Diego chapter, Mar. rehabilitation agencies for the 23, respectively. physically and mentally handi­ "Program Evaluation in the capped. Dick and Tom spoke on F~deral Government" to the "New Challenges and Directions University of Southern Califor­ for the Social SecurityNocational nia graduate seminar-public Rehabilitation Programs." administration, Apr. 18. "GAO and Its Role in Gov­ San Francisco ernmental Financial Manage­ William N. Conrardy~ regional ment" to the California State manager; Jack Birkh()lz~ audit University, Los Angeles, gov­ manager; and Mona Cannon and ernmental and institutional Kenneth J. Howard~ supervisory accounting class, Dec. 6. auditors, participated in the West­ "GAO Case Study on the De- ern Intergovernmental Audit

GAO Review/Winter 1978 95 PROFESSIONAL ACTIVITIES

Forum meeting and audit work­ west Intergovernmental Audit paper seminar, Sept. 13. Forum in Olympia, Washing­ Jack Birkholz spoke to the ton, on "HEW Inspector Gen­ California Association of Auditors eral Concept," Oct. 6. for Management concerning audit A special symposium at the standards and program and report American Water Resource As­ writing, July 5-6. He and Mona sociation Conference on Urban Cannon spoke at the Western In­ Quality Assessments in Tucson, tergovernmental Audit Forum Ariz., on "Benefits of Good seminar in Los Angeles, Calif., on Water Quality Data Collection," the development of audit evidence Nov.3. and workpapers, June 2l. M.B.A. update seminar at Port­ Mr. Birkholz also participated land State University on "Prob­ in a panel discussion on "Prelimi­ lem Identification," Nov. 21. His nary Surveys" before the Institute subject was putting out organi­ of Internal Audtors, San Jose area zational fires before they start chapter, Sept. 13. and GAO problem identification Mr. Birkholz was selected to approaches. serve on the Governmental Ac­ Mr. Mosher also represented counting and Auditing committee GAO in the GAO information for the San Francisco chapter of exhibit at the national meeting of the California State Society of the Public Sector Section of the CPAs for 1977 and 1978. American Accounting Association, Portland, Ore., Aug. 22-24. Seattle Roger D. Hayman, supervisory auditor, addressed a technical Charles D. Mosher, audit man­ meeting of the Washington State ager, addressed the following Society of CPAs, Sept. 13. His groups: topic was "The Significance of the Meeting of the Pacific North- GAO Audit Standards to CPAs."

96 GAO Review/Winter 1978 PROFESSIONAL ACTIVITIES

Successful GAO Candidates­ May 1977 CPA Examination

Name Region State Susanna K. Keetch Atlanta Georgia Paul A. Sweeney Boston Massachusetts James A. Evans Chicago Illinois Karen J. Frey Chicago Illinois Gregory E. Pugnetti Chicago Illinois Gerald E. Hensley Los Angeles California Raymond P. Griffin New York New York Robert G. Murray New York New York David H. Englert Norfolk Virginia Perry G. Datwyler San Francisco California Owen D. Ellis San Francisco California Thomas E. Birmingham Seattle Washington Charles H. Shervey Seattle Washington Jack L. Strayer Seattle Oregon David L. Clark Falls Church Maryland Donald R. Neff Falls Church Virginia Jose L. Rodriguez Falls Church Virginia

Name Division State Michelle Roman Community and Economic Maryland Development Ruth Ann Harrold Community and Economic Pennsylvania Development Sandra L. Steffler Financial and General Virginia Management Studies Gerald Thomas Federal Personnel and Maryland Compensation Jean C. Swanson General Government Maryland Thomas Blair Human Resources Maryland Everette Orr Office of Policy and Virginia Program Planning

GAO Review/Winter 1978 97 PROFESSIONAL ACTIVITIES

The following new professional staff members reported for work during the period August 16, 1977, through November 15, 1977.

Energy and Minerals Donnelly, Mary K. Georgetown University Division

Financial and General Cohen, Sheila P. George Washington Management Studies University Division Dillman, Audrey D. General Services Administration Dittmar, Richard P. George Washington University Slomba, Thomas E. Kent State University Cunningham, Patricia A. Howard University Kaeppel, Paul H. Air Force Insitute of Technology Logistics and Mallory, Joseph St. Marys College, Md. Communications Morgan, Debra University of Texas, Austin Division

Management Services Mathur, Vinita C. London University

Office of Ubrarian Lusignan, Louise J. University of Western Ontario Program Analysis Cherlow, Jay R. University of Michigan Division

REGIONAL OFACES Detroit Tokay, Adrian V. University of Dayton Philadelphia Bietler, David C. Krusen Evans & Byrne Law Firm

98 GAO Review/Winter 1978 ReQdift91 of Interelt

The reviews of books, articles, and other documents in this section represent the views and opinions of the individual reviewers, and their publication should not be construed as an endorsement by GAO of either the reviewers' comments or the books, articles, and other documents reviewed.

Audit and Accounting Guide: general controls and application The Auditor's Study and controls. General controls are those applicable to all EDP ac­ Evaluation of Internal tivities of an organization; they Control in EDP Systems are categorized as follows: American Institute of Certified -Organization and operation Public Accounts, 1977; 67 pp., pa­ controls. perback, $4.50. -Systems development and documentation controls. This AICPA publication for -Hardware and systems soft- CPAs must be considered the most ware controls. authoritative guide available on -Access controls. EDP controls in accounting sys­ -Data and procedural controls. tems. For this reason, it deserves Each category contains a list of the attention of those of us as­ "basic" controls; there are 19 signed to review Federal agency under the general controls classifi­ accounting system designs and op­ cation. For each basic control a list erations and those performing fi­ of suggested techniques for review nancial statement audits. I was and test of compliance is given. pleased to find that the guide rein­ Application controls are those forces our perception of EDP con­ relevant at the specific task level. trols and our approach to their The guide categorizes these as (1) review. input, (2) processing, and (3) out­ In the guide, EDP accounting put controls. (These are the clas­ controls are broadly classified as sifications we've used for some

GAO Review/Winter 1978 99 READINGS OF INTEREST time in our accounting system de­ nique contributes also to the au­ sign reviews.) Again, lists of basic ditor's understanding of how controls and review and com­ important EDP is in the system. pliance testing techniques are The perspective acquired in the given for each category; there are preliminary review provides a 12 basic application controls. basis for detailed review efforts. Some of the guide's philosophy I was pleased that the guide in­ of accounting control deserves cluded a chapter on documenta­ serious attention. Accounting con­ tion. Lack of adequate documenta­ trol, as defined by AICP A, "com­ tion is a source of continuing prises the plan of organization and frustration in our review work. the procedures and records that The guide does not include con­ are concerned with the safeguard­ trol techniques for advanced sys­ ing of assets and the reliability of tems due, in part, to the belief that financial records ..." The guide most EDP accounting system ap­ stresses that this definition is plications are batch-oriented. This objective-oriented; that is, account­ is consistent with our experience ing control is not defined in terms with Government systems; how­ of a standard set of control tech­ ever, as the guide acknowledges, niques to be applied to each and this could change with time. every system, nor is it defined in I believe Government auditors terms of any given mix of manuai (e.g., those in audit agencies and and EDP controls. An easy trap, I internal audit groups) should believe, for an auditor or analyst avoid "re-inventing the wheel," to fall into is to become so taken and should use the AICPA's EDP with a given control technique or internal control guidelines (as set control mix that he immediately forth in the guide) instead of de­ assumes that a system which lacks veloping their own. The guidelines it is inadequate. The old adage could be used as a focal point or as "there's more than one way to skin a point of departure when they a cat" is nowhere more applicable don't thoroughly address an agen­ than in achieving the objectives of cy's situation. accounting control. The guide makes the further point that the Lee S. Beaty absence of one accounting control Financial Systems Analyst (ADP) may be compensated for by the Financial and General presence of another. Management Studies Division The guide stresses the auditor's preliminary review as a means of understanding the "basic structure Evaluation of of accounting control," encompas­ Policy Simulation Models: sing both its manual and EDP as­ A Conceptual Approach pects. The guide suggests tracing and Case Study selected transactions through the system (often referred to as a "sys­ By Robert E. Pugh, Information tem walk-through"). This tech- Resources Press, 1977; 350 pp.

100 GAO Review/Winter 1978 READINGS OF INTEREST

There seems to be no neutral it comprehensive and boldly ground with respect to computer representative of interrela­ models. One extreme view, often tionships among model sec­ held by some operations and sys­ tors. tems analysts and associated fel­ C for principle. He found serious low travelers, is that if a model is deficiencies in the supporting new, esoteric, quantitative and research. sophisticated it must be good. At D for practice. He felt there was the other extreme are some hard­ little connection with reality. nosed accountants and adminis­ The author also emphasizes the trators who feel if a model can't be importance of model evaluation as validated to the nearest penny it feed back to model research and can't be good. development. This evaluation is Both groups need to read a new essential if simulation models are book by Dr. Robert E. Pugh on to be useful to policy making. If evaluating policy simulation mod­ one is going to make an objective els. Dr. Pugh recommends what evaluation of computer models for one might call the three P's as policy analysis, I believe this book criteria for assessing models­ is a necessity. perspective, principle and practice. Perspective deals with evaluat­ Heber D. Bouland ing the subject area the model ad­ Assistant Director dresses and assessing the ques­ Financial and General tions the model attempts to Management Studies Division answer. The second facet, princi­ ple, is concerned with supporting theory and assumptions behind Legislative Review the model. Thirdly, practice deals of Government Programs: with the model's performance. Tools for Accountability The book goes into considerable detail on explaining these three by Edgar G. Crane, Jr.; . facets of evaluation. It illustrates Praeger Publishers, 1977. the concepts by applying them to This book is comprehensive in an evaluation of Jay Forrester's its treatment of the function of urban dynamics model. The mod­ legislative overview and program el's capability of representing control by American State Legisla­ real-world problems is tested on tures and the potential for use of socioeconomic parameters of the the techniques of program effec­ District of Columbia. Another tiveness analysis and program more specific test is made on an evaluation in that function. The analysis of housing problems in research basis of the study is D.C. stated to be a national study of My interpretation of the au­ State legislative program review, thor's report card for the urban including in-depth study of 5 dynamics model is: States, field work in 15 States, A for perspectivB. He considered surveys of 14 States through meet-

GAO Review/Winter 1978 101 READINGS OF INTEREST ings and interviews and by tele­ mation was not updated between phone, and studies of the remain­ the issuance of the original survey ing 16 by written inquiry. In addi­ report in 1975 and the issuance of tion to the survey data, the book the book (e.g., reference 15, p. 85, contains an extensive bibliography should have been replaced with a and is well referenced to that bib­ reference to a final document is­ liography. sued by GAO entitled "Evaluation The discussion of program re­ and Analysis to Support De­ view is placed in the context of a cisionmaking," PAD--76-9, Sept. 1, concept of legislative control, de­ 1976). signed to include legislative policy The chapter on environmental formulation, appropriations ac­ characteristics associated with tions, and program overview or legislative review efforts describes oversight in addition to program and attempts to establish a numer­ review. Legislative control is dis­ ical scale for the degree of inten­ cussed from historical references, sity with which program review is in terms of some early results of conducted, and a numerical scale the use of program reviews in for the degree of integration with legislative control, and in terms of the legislative process charac­ a conceptual model. terized by the different types of or­ There is an interesting and help­ ganizations for program review. ful description of tradeoffs in the These variables have been related, selection of alternative organiza­ through the use of several statisti­ tional structures for program re­ cal techniques, with a large view, including post-audit (either number of variables describing under the legislature or under an characteristics of the State such as independent elected office), total State employees, total Fed­ special-purpose agencies (e.g., ex­ eral aid, etc. This reviewer finds, penditure review, economic and as a minimum, some interest in fiscal program review, audit and the fact that there is even any sig­ oversight, budget, performance nificant relationship at all be­ evaluation, and audit and review), tween the product and organiza­ fiscal or appropriations offices tional variables and the other (both partisan and nonpartisan), variables. However, the author in­ augmented standing committee dicates the substantial judgment staffs, general research agencies, needed to classify States unam­ and hybrid agencies (including, for biguously in accordance with the example, budget review, post­ variables established. The experi­ audit, and program evaluation or mental nature of this particular fiscal analysis). The discussion of analysis suggests the need to test alternative operating procedures its usefulness independently in a and methods of utilization in pro­ selection of States and, if found gram control is interesting as a useful, to establish a confidence checklist of some important con­ level in the data through some re­ siderations, but the value in guid­ analysis by independent analysts. ing any particular State is not The discussion of requirements entirely clear. Some of this infor- for SUccess of legislative program 102 GAO Review/Winter 1978 READINGS OF INTEREST review is both theoretical and de­ ation functions and Federal evalu­ scriptive. Many readers might ation functions, both executive and have found the book more helpful legislative. if the assessment of legislative ex­ The author does credit GAO perience in States had been ex­ with taking the lead in establish­ panded in the seven States which ing and integrating governmental are described and perhaps audit standards and evaluation broadened in its coverage of the guidelines covering this kind of States. The book would have comprehensive program review. benefited here particularly by in­ The author indicates also the clusion of case studies describing many similarities-as well as def­ typical reviews conducted and initional peculiarities-which re­ the kind of problems and con­ late audit work to program evalu­ straints encountered in each. ation and which distinguish na­ This would have set the stage tional legislative (congressional) more convincingly for the pro­ program review from that of the posed practical application and States. Citing the sizable Federal research opportunities in the budget for conducting program final chapter. The author men­ evaluations, the author indicates tions the limitation in finding also how GAO has attempted to enough reviews completed for a serve congressional needs by ap­ case study approach and suggests praising, verifying, and synthesiz­ that there can be more definitive ing the work already performed in concl usions on the success of the executive branch. This is con­ these decision tools from more trasted with recent initiative in adequate scrutiny of legislative legislative program review by the utilization and program impact. States in which various offices of The referenced 1975 report by the legislatures have conducted in­ the author, "Legislative Review of tensive and pioneering reviews Program Effectiveness for Gov­ without much reliance on the ernment Accountability," contains executive. more extensive descriptive analy­ The author indicates that both sis of developments in legislative performance of intensive evalua­ program review in New York tions and effective utilization of State and in the United States existing evaluations require a Congress. It is understandable high degree of interdisciplinary that, when the later book went to competence. The book should be press, describing "Washington" quite useful to those considering methods as a guide to State audi­ the nature of staff development ences might have seemed unat­ and training needed to provide for tractive. However, it seems unfor­ evaluations which will be, and tunate in a book as comprehensive should be, used by decision­ as this one that the opportunity makers. was missed to discuss and demon­ Keith E. Marvin strate the increasing common Associate Director interepf: of State legislative evalu- Program Analysis Division

GAO Review/Winter 1978 103 Annual Awards for Articles Published in The GAO Review

Cash awards are available each year for the best articles written by GAO staff members and published originally in The GAO Review. Each award is known as the Award for the Best Article Published in The GAO Review and is presented during the GAO awards program held annually in October in Washington. One award of $500 is available to contributing staff members 35 years of age or under at the date of publication. Another award of $500 is available to staff members over 35 years of age at that date. Staff members through grade GS--15 at the time of publication are eligible for these awards. The awards are based on recommendations of a panel of judges des­ ignated by the Comptroller General. The judges will evaluate articles from the standpoint of the excellence of their overall contribution to the knowledge and professional development of the GAO staff, with particular concern for: Originality of concepts. Quality and effectiveness of written expression. Evidence of individual research performed. Relevancy to GAO operations and performance.

Statement of Editorial Policies

1. This publication is prepared primarily for use by the professional staff members of the General Accounting Office. 2. Except where otherwise indicated, the articles and other submis­ sions generally express the views of the authors, and they do not necessarily reflect an official position of the General Accounting Office. 3. Articles, technical memorandums, and other information may be submitted for publication by any staff member. Submission should be made through liaison staff members who are responsible for rep­ resenting their offices in obtaining and screening contributions to this pUblication. 4. Articles submitted for publication should be typed (double-spaced) and generally not exceed 14 pages. The subject matter of articles appropriate for publication is not restricted but should be deter­ mined on the basis of presumed interest to GAO professional staff members. Articles may be submitted on subjects that are highly technical in nature or on subjects of a more general nature.

104 GAO Review/Winter 1978 THE GAO REVIEW

Editor Logistics and Communications E. H. Morse, Jr. Division Jacob W. Sprouse Editorial Assistance Procurement Systems Acquisition Office of the Comptroller General Division Josephine M. Clark Philip W. Pennington Management Services Program Analysis Division Michael Carlson Peter A. Smith Carmelo Ciancio Management Services Jon Silverman Tom Franklin Mimi Stockdell Field Operations Division Grace Williamson J. P. Competello Atlanta A. L. Patterson Liaison Staff Boston Office of the General Counsel Lester P. Slater, Jr. Vincent A. LaBella Chicago Office of Internal Review Daniel C. White Willis L. Elmore Cincinnati Office of Policy David P. Wilton Frank Borkovic Dallas Office of Program Planning James J. Jodon Daniel L. Johnson Denver Claims Division John T. Lacy James C. Farley, Jr. Detroit Community and Economic Milo L. Wietstock Development Division Kansas City James P. Hunt Arnett E. Burrow Energy and Minerals Division Los Angeles Jack Bachkosky Eugene T. Cooper, Jr. Federal Personnel and New York Compensation Division Ngaire Cuneo Joseph J. Kline Norfolk Financial and General Management Lindsay B. Harwood Studies Division Philadelphia Ronell B. Raaum Maurice Sady General Government Division San Francisco O. D. McDowell Mathew J. Lopez Human Resources Division Seattle James F. Walsh Alvin S. Finegold International Division Washington Charles E. Hughes Val J. Bielecki