GAO UPDATE
The Bottom Line: The Nation’s Fiscal Policy Remains Unsustainable
By Jeanette Franzel and Maxine Hattery
On September 15, 2006, GAO issued its updated long-term fiscal simulations. GAO’s simulations continue to show ever-larger deficits resulting in a federal debt burden that ultimately spirals out of control. The timing of deficits and the resulting debt build up varies depending on the assumptions used, but under either optimistic or more realistic assumptions, current fiscal policy is unsustainable.
Over the next few decades, the nation’s fiscal outlook will be shaped largely by demographics and health care costs. As the baby boom generation retires, federal spending on retirement and health programs—Social Security, Medicare, and Medicaid—will grow dramatically. A range of other federal fiscal commitments, some explicit and some representing implicit public expectations, also bind the nation’s fiscal future. Absent policy change, a growing imbalance between expected federal spending and tax revenues will mean escalating and ultimately unsustainable federal deficits and debt.
Comptroller General David Walker is delivering this message in a series of town hall forums around the nation. In his talks on the Fiscal Wake-Up Tour, Walker discusses the country’s financial condition and growing long-term fiscal imbalances and various issues raised in GAO’s 21st Century Challenges report (GAO-05-325SP, February 2005).
The town hall forums are sponsored by a broad coalition, including GAO, the Concord Coalition, AARP, the Committee for Economic Development, the Heritage Foundation, and the Brookings Institution, with the backing of state, local, and federal government officials. Before each event the Concord Coalition sends out an alert to the local media, and an email to list subscribers. If you are interested in attending, you can subscribe to the e-mail list at http://www.concordcoalition.org/email-signup.html.
At the 2006 AAA Annual Meeting, members of the Auditing Section viewed a DVD produced by GAO, in which Comptroller General Walker delivered a brief but alarming version of this message. The DVD was distributed to the state treasurers across the United States. GAO anticipates making a version of the DVD available to the public on GAO’s Web site in early October under the long-term fiscal outlook section at http://www.gao.gov/special.pubs/longterm/.
GAO updates its long-term fiscal simulations three times a year as new estimates become available from CBO’s Budget and Economic Outlook (January), Social Security and Medicare Trustees Reports (early spring), and CBO’s Budget and Economic Outlook: An Update (late summer).
GAO’s September 2006 update and additional information about GAO’s work in this area can be found at http://www.gao.gov/special.pubs/longterm/. Additional information about the Comptroller General Walker’s speeches and related activities can be found at http://www.gao.gov/cghome.htm.
For more information about GAO’s long-term budget simulations, contact Susan J. Irving at (202) 512-9142 or irvings@gao.gov
The 2006 Yellow Book Getting Its Final Polishing Touches
On June 9, 2006, GAO issued an exposure draft of Government Auditing Standards, 2006 Revision (GAO-06-729G, June 2006). Comments were due on August 15, 2006. GAO staff are currently analyzing comment letters from 117 commenters, with over 2,000 individual comments.
Government Auditing Standards (the "Yellow Book") contains standards for audits of government organizations, programs, activities, and functions, and of government assistance received by contractors, nonprofit organizations, and other nongovernment organizations. They are widely used in audits of federal, state, and local government programs, as well as in audits of entities receiving federal assistance. They have also been adopted by many countries around the world.
Government auditing standards provide a framework to auditors so that their work can lead to improved government management, decision making, oversight, and accountability. The standards also provide an overall framework for ensuring that auditors have the competence, integrity, objectivity, and independence in planning, conducting, and reporting on their work.
The Comptroller General’s Advisory Council on Government Auditing Standards is scheduled to meet on November 17, 2006, to review the staff’s analysis of comments and the proposed 2006 revision of Government Auditing Standards. The Advisory Council includes experts in financial and performance auditing drawn from all levels of government, private enterprise, public accounting, and academia. The meeting is open to the public. If you are interested in attending the meeting, please contact Jennifer Allison at (202) 512-3423 or allisonj@gao.gov.
The final 2006 revision of the Yellow Book is expected to be released in December 2006, becoming effective July 1, 2007. For more information, contact Jeanette Franzel at (202) 512-9471 or franzelj@gao.gov; or Michael Hrapsky at (202) 512-9535 or hrapskym@gao.gov. Questions and inquiries are also welcome at yellowbook@gao.gov.
Selected GAO Financial Management and Accounting Profession Reports
In addition to its auditing of individual federal agencies and programs, GAO reports to Congress and the nation on issues of broad significance, including the implementation of the Sarbanes-Oxley and other public-company auditing reform and fallout from fraudulent practices involved in the response to hurricanes Katrina and Rita and the concomitant need for accountability in a crisis environment. Below are links to selected GAO reports.
Internal Control: Analysis of Joint Study on Estimating the Costs and Benefits of Rendering Opinions on Internal Control over Financial Reporting in the Federal Environment. GAO-06-255R September 6, 2006
[Abstract | PDF | Accessible Text]
Sarbanes-Oxley Act: Consideration of Key Principles Needed in Addressing Implementation for Smaller Public Companies. GAO-06-361 April 13, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Financial Restatements: Update of Public Company Trends, Market Impacts, and Regulatory Enforcement Activities. GAO-06-678 July 24, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Financial Restatement Database. GAO-06-1053R August 31, 2006
[Abstract | PDF | Accessible Text]
Financial Restatement Database. GAO-06-1079SP August 31, 2006
[Abstract]
United Nations: Oil for Food Program Provides Lessons for Future Sanctions and Ongoing Reform. GAO-06-711T May 2, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Expedited Assistance for Victims of Hurricanes Katrina and Rita: FEMA’s Control Weaknesses Exposed the Government to Significant Fraud and Abuse. GAO-06-655 June 16, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Hurricanes Katrina and Rita Disaster Relief: Improper and Potentially Fraudulent Individual Assistance Payments Estimated to Be Between $600 Million and $1.4 Billion. GAO-06-844T June 14, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Improper Payments: Federal and State Coordination Needed to Report National Improper Payment Estimates on Federal Programs. GAO-06-347 April 14, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Financial Management: Challenges Continue in Meeting Requirements of the Improper Payments Information Act. GAO-06-581T April 5, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
Fiscal Year 2005 U.S. Government Financial Statements: Sustained Improvement in Federal Financial Management Is Crucial to Addressing Our Nation’s Financial Condition and Long-term Fiscal Imbalance. GAO-06-406T March 1, 2006
[Abstract | Highlights-PDF | PDF | Accessible Text]
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