We now have both the need and the opportunity to enhance the  effectiveness of federal oversight through more strategic and ongoing  coordination of efforts between GAO and the IGs in the following areas: addressing major management challenges and program risks, monitoring the top challenges the government faces, such as  implementation of the President’s Management Agenda, and conducting the audit of the government’s consolidated financial  statements. With our respective areas of expertise in long-term challenges and agency- specific issues, GAO and the IGs can provide useful insights and  constructive recommendations on programs that may warrant additional  resources, consolidation, revision, or even elimination. Closer periodic  strategic planning and ongoing engagement coordination between GAO  and the IGs would help to ensure continued effective oversight of these key  issues facing government. A practical issue that should also be dealt with is the adequacy of resources  to provide for the agency financial statement audits. Over the years, a  number of IGs have told us that the cost of agency financial audits has  taken resources away from their traditional work. In the private sector, the  cost of an annual financial audit is a routine business expense borne by the  entity being audited, and the cost of the audit represents a very small  percentage of total expenditures for the audited entity. We also considered the conversion of  agency-appointed IGs to presidential appointment where their budgets  were comparable to the presidentially appointed IG offices. We believe that if properly structured and implemented, the conversion or  consolidation of IG offices could increase the overall independence,  efficiency, and effectiveness of the IG community. These IG  councils have been effective in coordinating the activities of the IGs in their  efforts to prevent and detect fraud, waste, and abuse throughout the  federal government and in reporting these results to both the President and  Congress. Matters for Congressional Consideration

As I stated at the beginning of my testimony, IGs have made a significant  difference in federal performance and accountability during the last quarter  century.
Why GAO Did This Study

On the 25th anniversary of passage of the Inspector General (IG) Act, Congress sought GAO's views on the role of the IGs in providing independent oversight within federal agencies and to discuss the new and continuing challenges faced by government performance and accountability professionals.

What GAO Found

The IGs have made a significant difference in federal performance and accountability during the past 25 years as indicated by their reports of billions of dollars in savings to the public and numerous civil and criminal referrals. They have earned a solid reputation for preventing and detecting fraud and abuse; promoting improvements in government operations; and providing helpful analyses on a host of governmentwide initiatives. Notwithstanding the accomplishments of the past, our nation now faces new challenges that demand even more from government performance and accountability professionals. For example, we are fighting international terrorism while facing a large and growing structural deficit. In addition, recent corporate failures have shaken public confidence in financial reporting and accountability in the private sector. Federal auditors can learn important lessons from the accountability breakdowns in the private sector and the resulting legislation passed by Congress. Closer strategic planning and ongoing coordination of audit efforts between GAO and the IGs would help to enhance the effectiveness and impact of work performed by federal auditors. Working together and in our respective areas of expertise in long-term challenges and agency-specific issues, GAO and the IGs can provide useful insights and constructive recommendations on a broad range of high-risk programs and significant management challenges across government. A practical issue that has arisen is who pays the cost of agency financial statement audits. Many IGs have told us that the cost of agency financial audits has taken resources away from their traditional work. In the private sector,the cost of financial audits is a routine business expense borne by the entity being audited and represents a small percentage of total expenditures for the audited entity. In a prior study, we considered the benefits of consolidating the smallest IG offices with those of presidentially appointed IGs and converting agency-appointed IGs to presidential appointment where their budgets were comparable. We believe that, if properly implemented, conversion or consolidation of IG offices could increase the overall independence, economy, efficiency, and effectiveness of IGs.