United States Comptroller General

Gene L. Dodaro, Comptroller General of the United States and head of the Government Accountability Office (GAO), serves as the chief auditor for the federal government. The Senate confirmed Dodaro for that position in 2010, following his nomination by President Obama from a list of candidates selected by a 10-member, bipartisan, bicameral congressional commission. He is the eighth individual to hold the title of Comptroller General and the first to have been chosen from within the GAO’s own ranks. A career civil servant, Dodaro joined the GAO as an entry-level auditor in 1973 after graduating from Lycoming College. He is six years into his 15-year term. This interview took place in October 2016 during Dodaro’s visit to Northern Illinois University in DeKalb, Ill., to address the NIU accountancy students, faculty, and guests.

Donald E. Tidrick for The CPA Journal: Would you give readers a brief historical background about the Government Accountability Office (GAO) and a thumbnail sketch of what the GAO consists of today?

Gene L. Dodaro: The GAO was created in 1921 as part of a series of reforms passed after World War I. The federal government had incurred a lot of debt, and Congress wanted to establish greater control over the budget, particularly as the number of agencies began to increase. The 1921 Budget and Accounting Act created the General Accounting Office (now known as the Government Accountability Office), as well as the Bureau of the Budget [now known as the Office of Management and Budget (OMB), which is part of the Executive Office of the President]. That act required, for the first time, the President to submit a budget to Congress. The intent was to introduce greater discipline into the federal budgeting and accounting process. The GAO has evolved through three fundamental phases. Its initial responsibility was to verify all the federal government’s vouchers to ensure that proper payments were made for legitimate expenditures. At that time, the GAO consisted of a large number of clerks; at one point, it had approximately 14,000 people who performed these tasks.

Following the Great Depression and World War II, the GAO handed off the responsibility for approving the federal government’s expenditures to the executive branch and essentially became an auditing operation. The focus shifted to performing comprehensive financial audits of federal agencies.

As the government continued to evolve during the 1960s through the Great Society and its war-on-poverty programs, a number of new agencies were created, including the Environmental Protection Agency and the Energy Department. Congress began to question whether these new programs were achieving their objectives and whether these new departments were being properly managed. So, the GAO began to shift its focus to evaluating program effectiveness and efficiency.

Today, the GAO is a multidisciplinary organization consisting of about 3,000 people. We still have approximately 240 accounting and auditing professionals, including many who are CPAs, but only about 10% of what we do might be characterized as classic financial auditing related to the consolidated financial statements of the federal government. We also have social science researchers, public administration and public policy people, IT specialists, actuaries, economists, and healthcare experts, among others.

Most of our work involves performance audits that look at various federal programs and investments in such areas as major weapons systems, IT systems, and satellite systems. We have a Center for Science, Technology, and Engineering with scientists who help us with technology-related assessments. We also have a large legal practice. Last year, we adjudicated about 2,500 bid protests from entities contesting the award of agencies’ contracts. We are a full-service professional services organization that is still evolving to meet the needs of the Congress and the country.

CPAJ: What are your responsibilities as Comptroller General?
Dodaro: My primary responsibility is to ensure that the GAO executes its mission both now and in the future. The GAO exists to assist Congress in carrying out its constitutional responsibilities, which are vast, and to help improve the performance and accountability of the government for the benefit of the American people.

We provide services to virtually all of the congressional committees and to about half of the subcommittees. I am responsible for understanding the priorities of these committees and subcommittees, so that we meet their needs in a timely manner while performing our work properly. We need to prioritize our work to address the most important national issues, so we engage in strategic planning activities and constant dialogue with the members and staff to allocate our resources to best effect. Identifying high-risk and emerging national issues, so that we might alert Congress before such issues become crises, is also one of my most important responsibilities. Another responsibility is to lead the GAO workforce so that it is always as capable as possible and so that we consistently adhere to our core values—accountability, integrity, and reliability—and remain non-partisan, professional, objective, and fact based at all times.

I should also emphasize that I take the GAO’s standards setting responsibilities very seriously. Specifically, the GAO is responsible for establishing Generally Accepted Government Auditing Standards through our Yellow Book. As Comptroller General, I am also responsible for setting internal control standards for the federal government, which are found in the Green Book. In 2014, we updated those internal control standards to reflect the 2013 revision of COSO’s Internal Control— Integrated Framework. The OMB takes these internal control standards and embeds them in its own circulars, which also establishes them as regulations throughout the executive branch. The GAO’s Financial Management and Assurance practice assists me in meeting these standards-setting responsibilities.

The Yellow Book was last issued in 2011, and we are in the process of issuing an update, which we expect to release in 2017. We plan to modify the requirements related to continuing professional education (CPE) to ensure that some of the existing hours of CPE be specific to the particular type of auditing that one is doing, such as single audits or ERISA audits. We are also looking at the performance auditing standards to see whether any refinements are needed, and we always want to make sure that our standards related to ethics and independence are appropriate.

The Role of Leadership

CPAJ: Of the eight men to hold the title of Comptroller General, you are the first to have risen through the ranks from an entry-level position. When you were acting Comptroller General, were you optimistic that you would be selected for your own 15-year term?
Dodaro: Well [laughing], I am an optimist by nature. Actually, this was the second time that I applied for the position. I applied for it after Chuck Bowsher completed his term in 1996, and I made the short list that went to the president, but I was not selected. Dave Walker was chosen, and he offered me the position as GAO’s Chief Operating Officer. I never really expected to have another opportunity to serve as Comptroller General, but Dave left the GAO in 2008 nine-and-a-half years into his term. I became acting Comptroller General in March 2008 and served in that role for two-and-a-half years. I decided to apply for the permanent position a second time.

I believe that we helped ensure that TARP was carried out in an effective and well-managed manner; the government ended up getting back a large amount of those resources, so it was not as costly as many people expected.

The global financial crisis was beginning to unfold about the time I became the acting Comptroller General. I believed that the GAO leadership team needed to help Congress and the country during that challenging time. We offered to provide accountability under the Troubled Asset Relief Program (TARP), which was the $700 billion bailout. We took on additional responsibilities to audit portions of the $800 billion stimulus bill, the American Recovery and Reinvestment Act (ARRA), which in part was distributed through state and local governmental entities. In both instances, we had responsibilities for conducting bimonthly reviews and reporting to Congress every 60 days. I also testified on the requests from the major automakers for federal financial support. We were very visible during this time of national need. While serving as acting Comptroller General, I had the opportunity to demonstrate leadership, which I believe contributed to my credibility when I was under consideration for the permanent position. Of course, the competition for such a prestigious appointment is always tough, and the selection process is rigorous.

The appointment is for 15 years, which is the longest in government outside the judicial branch. There is a 10- member congressional commission consisting of the leadership of both parties in the House of Representatives and the Senate. They have to agree on a list of three or more names to be forwarded to the president for selection with the consent of the Senate.

CPAJ: What thoughts do you have when you reflect upon your remarkable four-decade career at GAO and your time serving under three prior Comptrollers General?
Dodaro: We were extremely fortunate to have had Elmer Staats (1966–1981), Chuck Bowsher (1981–1996), and Dave 18 Walker (1998–2008) serve as Comptroller General. Each brought exceptional vision, integrity, and professionalism to the job. They were fully committed to the mission of the GAO and established good policies to ensure that its work was conducted in a professional and nonpartisan manner. Each introduced significant changes, made lasting contributions to the GAO, and enhanced the agency’s reputation.

Elmer charted the course for the modern GAO by leading the transition into performance auditing and program evaluation. He expanded the GAO’s influence internationally by creating an international fellowship program that has brought several hundred people from audit offices around the world to the GAO for a four-month training program. Some of them have gone on to become the heads of their respective offices around the world. Elmer also led the way for the GAO to join the International Organization of Supreme Audit Institutions, where it has been active in facilitating improved auditing standards worldwide.

Chuck set the groundwork for instituting better financial management practices throughout the federal government, such as implementing the chief financial officer structure. When we first started in 1996, only six of the 24 major departments in the federal government received unqualified opinions on their financial statements; now almost all of those major departments do.

Dave introduced a focus on human capital management in the government, which remains a significant challenge. He helped refine the GAO’s high-risk strategy, and he was instrumental in establishing congressional protocols that govern how we interact with Congress and prioritize our work. Under Dave’s leadership, we changed the agency’s name from the General Accounting Office to the Government Accountability Office while retaining the GAO acronym—one of the strongest brand identities anywhere.

I have been privileged to work with thousands of dedicated GAO professionals over the years. They are highly educated, very professional, and work very hard to improve the performance of the federal government for the benefit of the American people. They are among the finest public servants in the world.

CPAJ: Having served as Comptroller General for the past six years and as acting Comptroller General for two years before that, what accomplishments would you point to on your watch?
Dodaro: As I mentioned earlier, I believe that we helped ensure that TARP was carried out in an effective and wellmanaged manner; the government ended up getting back a large amount of those resources, so it was not as costly as many people expected. The problems were relatively few. Likewise, with the ARRA, we put teams in 16 states across the country for two or three years, to work proactively to implement appropriate controls to ensure that expenditures were proper within the requirements of the law and to minimize the occurrence of fraud.

Over the past five years, we have been given a mandate by Congress to identify areas of overlap, duplication, and fragmentation within the federal government. We have issued more than 600 recommendations, of which 41% have already been implemented, with an expected savings in excess of $125 billion. I think that is significant.

I have also worked with Congress to establish some important management reforms. The Digital Accountability and Transparency Act will introduce data standards throughout the federal government so that there will be comparable data across departments and agencies. It will create a website with machine-readable and downloadable information on all federal spending. This will enhance transparency and introduce better practices to improve the reliability of that data.

The GAO has also worked with Congress on the Federal Information Technology Acquisition Reform Act to strengthen the role of chief information officers across the government to give them more budget oversight of procurements. I had worked with Congress in the mid-1990s to create chief information officers across the federal government; the act will give them more teeth and provide greater transparency. Each agency will have to provide information about its IT investments, the risks associated with its projects, and how it is managing its portfolios, data centers, and so forth.

We continue to work diligently on the GAO’s High Risk List. In the latest update in 2015, we added several issues, including healthcare for veterans. I have been very concerned that the federal government has not consistently delivered high-quality care and timely access to our veterans. We also added large-scale information technology acquisitions and operations across the federal government. We made major contributions to help improve the government’s cybersecurity profile. Of course, there is much more that needs to be done, and we have been working on this for years, but over the past three years, Congress has passed five different pieces of legislation related to this topic.

CPAJ: What is the purpose of the GAO’s High Risk List, and has it changed much over time?
Dodaro: The High Risk List was started in 1990. Congress had been caught off guard by scandals at the Departments of Housing and Urban Development and Defense, so they asked us to identify high-risk issues to be addressed on a timely basis before they became crises. Initially, we focused on identifying issues across the federal government that were at highest risk of fraud, waste, abuse, or mismanagement.

Over time, we added issues that we believed warranted broad-based reforms. An example would be the Postal Service, which is losing a lot of money every year as first-class mail has declined as a result of technology. The financial regulatory system also needs to be modernized and reformed. We identified cybersecurity as a high-risk issue across the federal government in 1997. I shudder to think how bad this situation would be currently if the government had not been making some improvement over the past decade, but the threat is evolving faster than entities in government and the private sector have been able to cope. The High Risk List currently consists of 32 identified topics, and we update the list every two years.

Our job is not only to identify these issues, but to also work with the agencies to solve these problems. The goal is to get issues off the High Risk List. To remove an issue, the problem does not have to be completely solved, but we have to be comfortable that the agency is on the right path. Over the years, we have probably removed about one-third of the issues placed on the High Risk List.

I personally meet with the OMB and Executive Office of the President people on a regular basis, as well as each agency on the High Risk List, to talk about progress on these matters and to share our suggestions as to what else they need to do to get off the High Risk List. In my opinion, the High Risk List has been one of the longest running, good government, bipartisan-supported efforts in the federal government’s history.

CPAJ: How does the GAO decide which projects to take on, and how much latitude do you have to initiate projects at your discretion?
Dodaro: “Priority one” is work that is required by congressional statute or committee and conference reports. “Priority two” is requests from committee chairs and ranking members. I also have broad authority to exercise my judgment as Comptroller General.

One example of where we initiated work on our own was after the global financial crisis, when we examined why our financial regulatory system failed to identify the emerging risks associated with the housing sector and subprime loans. We created a framework for how that system should be reformed. Congress used that work, in part, to create the Dodd-Frank Wall Street Reform and Consumer Protection Act. Congress did not deal with Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), which remain under federal conservatorship. More recently, I launched a study on the different options that Congress might pursue to resolve their status. GAO does not recommend specific policy decisions, but we try to provide Congress with the relevant facts.

Another area of concern was the recurring impasse over raising the federal debt ceiling and the fact that the debt ceiling does not provide any real control over our growing national debt. Basically, raising the debt ceiling only authorizes the Treasury Department to borrow the money that Congress has already authorized to be spent. When there is an timely manner, it makes the markets nervous. We studied this issue and found that it was negatively affecting liquidity in the secondary market and causing the federal government to pay tens of millions of dollars in higher interest costs to borrow its own money. We made a number of recommendations on different approaches that Congress might consider in setting these debt ceilings.

We have also been concerned about the number of children in poverty, so we have begun a study to look at the various dimensions of that issue, such as what the federal programs are currently doing in that area and what else should be considered. We try to address important financial issues and important social issues that affect the well-being of our citizens.

These are examples of areas where we had not received congressional requests, but the issues are important to the nation’s economic well-being and the effectiveness of government, so we launched our own studies.

There is a conspicuous structural imbalance between revenues and expenditures, which the GAO has independently identified over time.

Working in a Political Environment

CPAJ: Is the GAO adversely affected by the political division that is so evident across the country and on Capitol Hill, especially when dealing with politically charged issues such as entitlement reform and healthcare challenges?
Dodaro: We are a nonpartisan professional organization that happens to work in a political environment. One needs to understand that environment, but it cannot drive how we do our work. We have a very strong culture at the GAO that emphasizes the importance of always being nonpartisan and independent. We have sound protocols that govern how we interact with Congress in deciding whether to accept requests and how we conduct projects.

When we take on new projects, we want to address the issues that are important to Congress, but it is important that we frame the research questions in an objective manner. We design our own methodologies and we control our reports. After seeing our draft report, if people in Congress who had requested the project decide that they do not want it addressed to them, we will not address the report to them, but we will still issue the report for the benefit of Congress, in general.

I regularly meet with members of both parties in both chambers to facilitate open communication. I encourage Congress to pass statutory mandates to request GAO work, which facilitates transparency in working with both parties, builds trust, reduces surprises, and increases our access to relevant issues while we are doing our work.

CPAJ: The fiscal path of the federal government has been in the news over many years, including recently due to the effects of sequestration. What is the GAO’s role in these debates, and are its efforts getting more traction with Congress?
Dodaro: We have a couple of distinct roles in these matters. First, we are the auditors of the consolidated financial statements of the federal government. Unfortunately, we have had to disclaim an overall opinion because some agencies continue to be unauditable, although progress is being made. The key is the Department of Defense (DOD). At this point, none of their major departments or service branches has been auditable. They are now auditing their budgeting numbers, which is a step in the right direction, but they have yet to obtain an opinion on one year of budget execution information. We have pointed out numerous areas where improvements are needed, and I believe the DOD is committed to addressing these issues. Treasury also needs to make some improvements in preparing the consolidated financial statements and eliminating intergovernmental transactions among federal agencies. I hope that, before my term ends in 2025, we might be able to express an opinion on the government’s consolidated financial statements, but there is still a long way to go.

We have worked closely with FASAB (Federal Accounting Standards Advisory Board) to introduce a new standard that requires federal agencies to prepare sustainability statements; such statements show the ability of governmental entities to sustain their policies into the future and what the fiscal strain would be. Those statements have caused Treasury and the OMB to acknowledge that the federal government is on an unsustainable fiscal path. There is a conspicuous structural imbalance between revenues and expenditures, which the GAO has independently identified over time.

In a broader sense, the GAO serves as a fiscal advisor to Congress. I take every opportunity to draw attention to these issues. We do long-range simulations, and we have advised Congress on issues related to the debt limit. I have testified before the Senate Budget Committee, and Congress is actively considering reforms to the budget process. Ultimately, decisions will have to be made to put the federal government on a more sustainable fiscal path. That will require action on entitlement and discretionary spending as well as increases in revenues. I have also advocated a more simplified tax system.

In addition to necessary fiscal policy changes, especially in the area of entitlement programs, there are big opportunities for the federal government to be more efficient. For example, improper payments across federal agencies were estimated to be $136 billion for FY 2015. At our urging, Congress has required agencies to estimate such improper payments since 2003, and that total now exceeds $1 trillion. That estimate is not even complete, because certain programs are not yet reporting and some methodologies are weak. Some of the highest improper payments occur in Medicare and Medicaid, which are two of the fastest growing programs. So those are big opportunities that I have testified about on a number of occasions.

I am also concerned about the gap between taxes owed and taxes collected. Recently, the IRS estimated that gap to be more than $400 billion annually. The country is only about 80–83% monetary tax compliant. That may be better than a lot of other countries, but there is still room for improvement. We have made a number of recommendations to better regulate tax preparers and collect third-party information that the IRS could use to collect taxes owed. A large share of the gap results from underreporting, particularly by small businesses and sole proprietors. About 9% of the gap is associated with filers who fail to pay their taxes due; about 7% of people do not file required returns at all. More could be done to address these issues.

CPAJ: Does the GAO have a role in facilitating the transition to a new administration when a new president is elected?
Dodaro: Yes, we are involved with that transition. In fact, we have been working on a smartphone application that lists all of our outstanding recommendations for each department and agency in the federal government. We will also list all of the management challenges and risks for each major department and agency in the federal government, including the issues identified on the High Risk List. We are also formulating a proposed management agenda for the next administration’s consideration. All of that is made available to the incoming administration, the new Congress, and the general public as soon as a president-elect is decided.

CPAJ: The GAO is widely regarded as a very desirable place to work, and I understand that turnover in personnel is low. Would you comment on some of the GAO’s human resources policies that you view as noteworthy?
Dodaro: One of the reasons that the GAO is consistently rated as one of the best places to work is because of the interesting nature of our work. People come to the GAO because they want to make a difference. We work on issues that are important to America. Over many years, about 80% of our recommendations have been implemented. This past year, the GAO achieved measurable benefits to the American people of $112 for every dollar of its budget, which I think is a noteworthy rate of return. GAO employees get to work with smart, highly motivated professionals. A lot of our people have professional certifications and advanced degrees, and they are experts in their fields. Talented people like to work in an intellectually stimulating environment.

In addition, we try to ensure that we have a desirable work-life balance at the GAO. We have flexible work hours and telework options. We have a fitness center, and we even have a childcare facility in the GAO Building called Tiny Findings, which has been very popular. We have a program to assist employees with the repayment of their student loans.

I meet regularly with employee groups, in both formal and informal settings, and we survey GAO employees every year with the goal of making continuing improvements to our work environment. The GAO is tied for number two for mid-sized agencies across the entire federal government and is number one in the same category for our commitment to diversity and inclusion, which is very important. We have great people, and we are committed to treating them well while remaining focused on the GAO’s mission.

CPAJ: As an executive of a major federal agency and as an accounting professional yourself, is there anything else that you might wish to say to readers of The CPA Journal?
Dodaro: I am honored to lead the GAO, which is a wonderful organization where I have been privileged to work since 1973. We are committed to improving the performance of the federal government for the benefit of the American people and to enhancing the GAO’s contributions to the accountability profession, both in the public and private sectors. We are also committed to helping national audit offices in other countries around the world. The accountability profession is a noble profession, and I want to ensure that we make every contribution we can to strengthen our organizations and our society. I invite interested readers to view the resources and information available on the GAO’s website at http://www.gao.gov.

We had two rounds of extensive interviews. When one has been part of an organization for many years, people will want to know how one might ensure that the organization stays vibrant and responsive to changing conditions. I was able to address those issues satisfactorily and was fortunate to have been selected.

Donald E. Tidrick, PhD, CPA, CMA, CIA is the Deloitte Professor of Accountancy at Northern Illinois University, DeKalb, Ill. He is a member of the Comptroller General’s Educators Advisory Panel.