This is the accessible text file for GAO report number GAO-07-127 
entitled 'Financial Audit: Bureau of the Public Debt's Fiscal Years 
2006 and 2005 Schedules of Federal Debt' which was released on November 
7, 2006. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as part 
of a longer term project to improve GAO products' accessibility. Every 
attempt has been made to maintain the structural and data integrity of 
the original printed product. Accessibility features, such as text 
descriptions of tables, consecutively numbered footnotes placed at the 
end of the file, and the text of agency comment letters, are provided 
but may not exactly duplicate the presentation or format of the printed 
version. The portable document format (PDF) file is an exact electronic 
replica of the printed version. We welcome your feedback. Please E-mail 
your comments regarding the contents or accessibility features of this 
document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

Report to the Secretary of the Treasury: 

November 2006: 

Financial Audit: 

Bureau of the Public Debt's Fiscal Years 2006 and 2005 Schedules of 
Federal Debt: 

GAO-07-127: 

GAO Highlights: 

Highlights of GAO-07-127, a report to the Secretary of the Treasury 

Why GAO Did This Study: 

GAO is required to audit the consolidated financial statements of the 
U.S. government. Due to the significance of the federal debt held by 
the public to the governmentwide financial statements, GAO has also 
been auditing the Bureau of the Public Debt’s (BPD) Schedules of 
Federal Debt annually. The audit of these schedules is done to 
determine whether, in all material respects, (1) the schedules are 
reliable and (2) BPD management maintained effective internal control 
relevant to the Schedule of Federal Debt. Further, we test compliance 
with selected provisions of significant laws related to the Schedule of 
Federal Debt. 

Federal debt managed by BPD consists of Treasury securities held by the 
public and by certain federal government accounts, referred to as 
intragovernmental debt holdings. The level of debt held by the public 
reflects how much of the nation’s wealth has been absorbed by the 
federal government to finance prior federal spending in excess of 
federal revenues. Intragovernmental debt holdings represent balances of 
Treasury securities held by federal government accounts, primarily 
federal trust funds such as Social Security, that typically have an 
obligation to invest their excess annual receipts over disbursements in 
federal securities. 

What GAO Found: 

In GAO’s opinion, BPD’s Schedules of Federal Debt for fiscal years 2006 
and 2005 were fairly presented in all material respects and BPD 
maintained effective internal control relevant to the Schedule of 
Federal Debt as of September 30, 2006. GAO also found no instances of 
noncompliance in fiscal year 2006 with selected provisions of the 
statutory debt limit and debt issuance suspension period laws we 
tested. 

As of September 30, 2006 and 2005, federal debt managed by BPD totaled 
about $8,493 billion and $7,918 billion, respectively. At the end of 
fiscal year 2006, debt held by the public as a percentage of the U.S. 
economy is estimated at 36.9 percent, compared to 34.1 percent at the 
end of fiscal year 2002. Further, certain trust funds (e.g., Social 
Security) continue to run surpluses, resulting in increased 
intragovernmental debt holdings. These debt holdings are backed by the 
full faith and credit of the U.S. government and represent a priority 
call on budgetary resources. As a result, total gross federal debt has 
increased 37 percent between the end of fiscal years 2002 and 2006. 
During fiscal year 2006, a debt issuance suspension period was invoked 
to avoid breaching the statutory debt limit. On March 20, 2006, 
legislation was enacted to raise the debt limit by $781 billion to 
$8,965 billion. This was the fourth occurrence since 2002 that the 
statutory debt limit had to be raised to avoid breaching the statutory 
debt limit. During that time, the debt limit has increased more than $3 
trillion, from $5,950 billion in 2002 to the current limit of $8,965 
billion. 

As shown in figure 1 below, total federal debt increased over each of 
the last 4 fiscal years. Debt held by the public increased during this 
4-year period primarily as a result of annual unified budget deficits. 
Intragovernmental debt holdings steadily increased during this 4-year 
period primarily due to excess receipts over disbursements in federal 
trust funds (e.g., Social Security). 

Figure 1: Total Gross Federal Debt Outstanding: 

[See PDF for Image] 

Source: BPD. 

[End of Figure] 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-127]. 

For a fuller understanding of GAO’s opinion on BPD’s fiscal years 2006 
and 2005 Schedules of Federal Debt, readers should refer to the 
complete audit report, available by clicking the link above, which 
includes information on audit objectives, scope, and methodology. For 
more information, contact Gary T. Engel at (202) 512-3406 or 
engelg@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Auditor's Report: 

Opinion on Schedules of Federal Debt: 

Opinion on Internal Control: 

Compliance with Laws and Regulations: 

Consistency of Other Information: 

Objectives, Scope, and Methodology: 

Agency Comments: 

Overview, Schedules, and Notes: 

Overview on Federal Debt Managed by the Bureau of the Public Debt: 

Schedules of Federal Debt: 

Notes to the Schedules of Federal Debt: 

Appendixes: 

Appendix I: Comments from the Bureau of the Public Debt: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Abbreviations: 

BPD: Bureau of the Public Debt: 

GDP: gross domestic product: 

OMB: Office of Management and Budget: 

November 7, 2006: 

The Honorable Henry M. Paulson, Jr. 
The Secretary of the Treasury: 

Dear Mr. Secretary: 

The accompanying auditor's report presents the results of our audits of 
the Schedules of Federal Debt Managed by the Bureau of the Public Debt 
for the fiscal years ended September 30, 2006 and 2005. The Schedules 
of Federal Debt present the beginning balances, increases and 
decreases, and ending balances for (1) Federal Debt Held by the Public 
and Intragovernmental Debt Holdings, (2) the related Accrued Interest 
Payables, and (3) the related Net Unamortized Premiums and Discounts 
managed by the bureau.[Footnote 1] 

The auditor's report contains our (1) opinion on the Schedules of 
Federal Debt for the fiscal years ended September 30, 2006 and 2005, 
(2) opinion on the effectiveness of relevant internal control as of 
September 30, 2006, (3) conclusion on the bureau's compliance in fiscal 
year 2006 with selected provisions of laws we tested, and (4) 
conclusion on the consistency between information in the Schedules of 
Federal Debt and the accompanying Overview on Federal Debt Managed by 
the Bureau of the Public Debt. 

As of September 30, 2006 and 2005, federal debt managed by the bureau 
totaled about $8,493 billion and $7,918 billion, respectively, for 
moneys borrowed to fund the federal government's operations. As shown 
on the Schedules of Federal Debt, these balances consisted of 
approximately (1) $4,843 billion as of September 30, 2006, and $4,601 
billion as of September 30, 2005, of debt held by the public and about 
(2) $3,650 billion as of September 30, 2006, and $3,317 billion as of 
September 30, 2005, of intragovernmental debt holdings. 

The level of debt held by the public reflects how much of the nation's 
wealth has been absorbed by the federal government to finance prior 
federal spending in excess of federal revenues. It best represents the 
cumulative effect of past federal borrowing on today's economy and the 
federal budget. To finance a cash deficit, the federal government 
borrows from the public. When a cash surplus occurs, the annual excess 
funds can then be used to reduce debt held by the public. In other 
words, annual cash deficits or surpluses generally approximate the 
annual net change in the amount of federal government borrowing from 
the public. 

Intragovernmental debt holdings represent balances of Treasury 
securities held by federal government accounts, primarily federal trust 
funds (e.g., Social Security), that typically have an obligation to 
invest their excess annual receipts over disbursements in federal 
securities. Most federal trust funds invest in special U.S. Treasury 
securities that are guaranteed for principal and interest by the full 
faith and credit of the U.S. government. The transactions relating to 
the use of the federal government accounts' surpluses net out on the 
federal government's consolidated financial statements because, in 
effect, they represent loans from one part of the federal government to 
another. These securities are nonmarketable; however, they represent a 
priority call on future budgetary resources. 

While both are important, debt held by the public and intragovernmental 
debt holdings are very different. Debt held by the public approximates 
the federal government's competition with other sectors in the credit 
markets. Federal borrowing absorbs resources that would otherwise be 
available for private investment and may put upward pressure on 
interest rates. In addition, interest on debt held by the public is 
paid in cash and represents a burden on current taxpayers. It reflects 
the amount the federal government pays to its outside creditors. In 
contrast, intragovernmental debt holdings perform an accounting 
function but typically do not require cash payments from the current 
budget or represent a burden on the current economy. In addition, from 
the perspective of the budget as a whole, interest payments to federal 
government accounts by the Treasury are entirely offset by the income 
received by such accounts. This intragovernmental debt and the interest 
on it represents a claim on future resources and hence a burden on 
future taxpayers and the future economy. Specifically, when trust funds 
redeem Treasury securities to obtain cash to fund expenditures, and 
Treasury borrows from the public to finance these redemptions, there is 
competition with the private sector and thus an effect on the economy. 

Over the past decade that we have audited the Schedule of Federal Debt, 
managing the federal debt has been a challenge as evidenced by the 
growth of total federal debt by $3,283 billion, or 63 percent, during 
this period, from $5,210 billion as of October 1, 1996, to $8,493 
billion as of September 30, 2006. As a result of the increasing debt, 
again this past year, Congress had to enact legislation to increase the 
debt limit to avoid breaching the statutory debt limit. On March 20, 
2006, Congress increased the statutory debt limit from $8,184 billion 
to $8,965 billion. This was the fourth occurrence since 2002 that 
Congress has raised the statutory debt limit, with the debt limit 
increasing over $3 trillion, from $5,950 billion to $8,965 billion, 
over that period. 

Over the last several years, we have noted a trend in the amount of 
Treasury securities held by foreign and international investors. 
According to amounts reported in the September 2006 Treasury Bulletin, 
Treasury estimates that the amount of Treasury securities held by 
foreign and international investors has increased $957 billion, from 
$1,135 billion as of June 30, 2002, to $2,092 billion as of June 30, 
2006. As of June 30, 2006, this represents an estimated 44 percent of 
debt held by the public, up from about 33 percent as of June 30, 2002. 
The United States benefits from foreign purchases of Treasury 
securities because foreign investors fill part of the U.S. government's 
borrowing needs. However, to service this foreign-held debt, the U.S. 
government must send interest payments abroad, which adds to the 
incomes of residents of other countries rather than to the incomes of 
U.S. residents. In addition, this increasing reliance on foreign 
investors to finance the deficits of the U.S. government presents 
potential risk to the U.S. economy, especially since the U.S. gross 
national saving rate is low by U.S. historical standards. 

The challenge of managing the federal debt is not likely to diminish 
any time soon. At the end of fiscal year 2006, debt held by the public 
as a share of gross domestic product (GDP) is estimated at 36.9 
percent, down from 37.5 percent last year but well above the 34.1 
percent at the end of fiscal year 2002. In addition, gross federal debt 
has increased 37 percent during the same period, from $6,213 billion, 
as of September 30, 2002, to $8,493 billion, as of September 30, 2006. 
This increase represents an additional burden on future generations and 
the future economy. Further, interest expense on debt held by the 
public continued to grow rapidly, rising about 22 percent above the 
fiscal year 2005 level. As federal debt is expected to continue rising 
in both the near and long term, the amount the government pays to 
finance that debt will grow as well and place increasing pressure on 
the federal budget. 

The pending retirement of the Baby Boom generation and rising health 
care costs will soon place unprecedented and long-lasting stress on the 
federal budget, raising debt held by the public to unprecedented levels 
as a share of GDP. GAO's long-range fiscal policy simulations show that 
the nation's current fiscal condition is but a prelude to a much more 
daunting long-term fiscal challenge.[Footnote 2] Absent significant 
changes on the spending or revenue sides of the budget, or both, these 
long-term deficits will encumber a growing share of federal resources 
and test the capacity of current and future generations to afford both 
today's and tomorrow's commitments. Continuing on this unsustainable 
path will gradually erode, if not suddenly damage, our economy, our 
standard of living, and ultimately our national security. 

As discussed earlier, federal debt managed by the bureau totaled about 
$8.5 trillion at the end of fiscal year 2006. However, that number 
excludes many items, including the gap between scheduled and funded 
Social Security and Medicare benefits, veterans' health care, and a 
range of other commitments and contingencies that the federal 
government has pledged to support. If these items are factored in, the 
present value of the total burden is estimated to be about $50 
trillion.[Footnote 3] Stated differently, the estimated current total 
burden for every American is more than $160,000--and every day that 
burden becomes larger. 

Addressing the nation's long-term fiscal imbalance constitutes a major 
transformational challenge that may take a generation or more to 
resolve. Given the size of the projected imbalance, the U.S. government 
will not be able to grow its way out of this problem--tough choices 
will be required. Our report, 21ST Century Challenges: Reexamining the 
Base of the Federal Government, is intended to support Congress in 
identifying issues and options that could help address these fiscal 
pressures.[Footnote 4] 

We are sending copies of this report to the Chairmen and Ranking 
Minority Members of the Senate Committee on Appropriations; the Senate 
Committee on Homeland Security and Governmental Affairs; the Senate 
Committee on the Budget; the Subcommittee on Transportation, Treasury, 
the Judiciary, Housing and Urban Development, and Related Agencies, 
Senate Committee on Appropriations; the Subcommittee on Federal 
Financial Management, Government Information, and International 
Security, the Senate Committee on Homeland Security and Governmental 
Affairs; the House Committee on Appropriations; the House Committee on 
Government Reform; the House Committee on the Budget; the Subcommittee 
on Transportation, Treasury, and Housing and Urban Development, the 
Judiciary, District of Columbia, House Committee on Appropriations; and 
the Subcommittee on Government Management, Finance, and Accountability, 
House Committee on Government Reform. We are also sending copies of 
this report to the Commissioner of the Bureau of the Public Debt, the 
Inspector General of the Department of the Treasury, the Director of 
the Office of Management and Budget, and other agency officials. In 
addition, the report will be available at no charge on the GAO Web site 
at[Hyperlink, http://www.gao.gov]. 

If I can be of further assistance, please call me at (202) 512-5500. 
This report was prepared under the direction of Gary T. Engel, 
Director, Financial Management and Assurance. Should you or members of 
your staff have any questions concerning this report, please contact 
Mr. Engel at (202) 512-3406 or engelg@gao.gov. Staff acknowledgments 
are provided in appendix II. 

Sincerely yours, 

Signed by: 

David M. Walker: 
Comptroller General of the United States: 

Auditor's Report To the Commissioner of the Bureau of the Public Debt: 

In connection with fulfilling our requirement to audit the financial 
statements of the U.S. government,[Footnote 5]we have audited the 
Schedules of Federal Debt Managed by the Bureau of the Public Debt 
(BPD) because of the significance of the federal debt to the federal 
government's financial statements. 

This auditor's report presents the results of our audits of the 
Schedules of Federal Debt Managed by BPD for the fiscal years ended 
September 30, 2006 and 2005. The Schedules of Federal Debt present the 
beginning balances, increases and decreases, and ending balances for 
(1) Federal Debt Held by the Public and Intragovernmental Debt 
Holdings, (2) the related Accrued Interest Payables, and (3) the 
related Net Unamortized Premiums and Discounts managed by BPD.[Footnote 
6] 

In our audits of the Schedules of Federal Debt for the fiscal years 
ended September 30, 2006 and 2005, we found the following: 

* the Schedules of Federal Debt are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles; 

* BPD had effective internal control over financial reporting and 
compliance with laws and regulations relevant to the Schedule of 
Federal Debt as of September 30, 2006; and: 

* no reportable noncompliance in fiscal year 2006 with selected 
provisions of laws we tested. 

The following sections discuss, in more detail, (1) these conclusions 
and our conclusion on the Overview on Federal Debt Managed by the 
Bureau of the Public Debt and (2) the scope of our audits. 

Opinion on Schedules of Federal Debt: 

The Schedules of Federal Debt including the accompanying notes present 
fairly, in all material respects, in conformity with U.S. generally 
accepted accounting principles, the balances as of September 30, 2006, 
2005, and 2004, for Federal Debt Managed by BPD; the related Accrued 
Interest Payables and Net Unamortized Premiums and Discounts; and the 
related increases and decreases for the fiscal years ended September 
30, 2006 and 2005. 

Opinion on Internal Control: 

BPD maintained, in all material respects, effective internal control 
relevant to the Schedule of Federal Debt related to financial reporting 
and compliance with applicable laws and regulations as of September 30, 
2006, that provided reasonable assurance that misstatements, losses, or 
noncompliance material in relation to the Schedule of Federal Debt 
would be prevented or detected on a timely basis. Our opinion is based 
on criteria established under 31 U.S.C. § 3512 (c), (d) (commonly 
referred to as the Federal Managers' Financial Integrity Act) and the 
Office of Management and Budget (OMB) Circular A-123, revised December 
21, 2004, Management's Responsibility for Internal Control. 

We found matters involving information security controls that we 
consider not to be reportable conditions.[Footnote 7] We will 
communicate these matters to BPD's management, along with our 
recommendations for improvement, in a separate letter to be issued at a 
later date. 

Compliance with Laws and Regulations: 

Our tests for compliance in fiscal year 2006 with selected provisions 
of laws disclosed no instances of noncompliance that would be 
reportable under U.S. generally accepted government auditing standards 
or applicable OMB audit guidance. However, the objective of our audit 
of the Schedule of Federal Debt for the fiscal year ended September 30, 
2006, was not to provide an opinion on overall compliance with laws and 
regulations. Accordingly, we do not express such an opinion. 

Consistency of Other Information: 

BPD's Overview on Federal Debt Managed by the Bureau of the Public Debt 
contains information, some of which is not directly related to the 
Schedules of Federal Debt. We do not express an opinion on this 
information. However, we compared this information for consistency with 
the schedules and discussed the methods of measurement and presentation 
with BPD officials. Based on this limited work, we found no material 
inconsistencies with the schedules. 

Objectives, Scope, and Methodology: 

Management is responsible for the following: 

* preparing the Schedules of Federal Debt in conformity with U.S. 
generally accepted accounting principles; 

* establishing, maintaining, and assessing internal control to provide 
reasonable assurance that the broad control objectives of the Federal 
Managers' Financial Integrity Act are met; and: 

* complying with applicable laws and regulations. 

We are responsible for obtaining reasonable assurance about whether (1) 
the Schedules of Federal Debt are presented fairly, in all material 
respects, in conformity with U.S. generally accepted accounting 
principles and (2) management maintained effective relevant internal 
control as of September 30, 2006, the objectives of which are the 
following: 

* Financial reporting: Transactions are properly recorded, processed, 
and summarized to permit the preparation of the Schedule of Federal 
Debt for the fiscal year ended September 30, 2006, in conformity with 
U.S. generally accepted accounting principles. 

* Compliance with laws and regulations: Transactions related to the 
Schedule of Federal Debt for the fiscal year ended September 30, 2006, 
are executed in accordance with laws governing the use of budget 
authority and with other laws and regulations that could have a direct 
and material effect on the Schedule of Federal Debt. 

We are also responsible for testing compliance with selected provisions 
of laws and regulations that have a direct and material effect on the 
Schedule of Federal Debt. Further, we are responsible for performing 
limited procedures with respect to certain other information appearing 
with the Schedules of Federal Debt. 

In order to fulfill these responsibilities, we: 

* examined, on a test basis, evidence supporting the amounts and 
disclosures in the Schedules of Federal Debt; 

* assessed the accounting principles used and any significant estimates 
made by management; 

* evaluated the overall presentation of the Schedules of Federal Debt; 

* obtained an understanding of internal control relevant to the 
Schedule of Federal Debt as of September 30, 2006, related to financial 
reporting and compliance with laws and regulations (including execution 
of transactions in accordance with budget authority); 

* tested relevant internal controls over financial reporting and 
compliance, and evaluated the design and operating effectiveness of 
internal control relevant to the Schedule of Federal Debt as of 
September 30, 2006; 

* considered the process for evaluating and reporting on internal 
control and financial management systems under the Federal Managers' 
Financial Integrity Act; and: 

* tested compliance in fiscal year 2006 with the (1) statutory debt 
limit (31 U.S.C. § 3101(b), as amended by Pub. L. No. 107-199, § 1, 116 
Stat. 734 (2002), Pub. L. No. 108-24, 117 Stat. 710 (2003), Pub. L. No. 
108-415, § 1, 118 Stat. 2337 (2004), and Pub. L. No. 109-182, 120 Stat. 
289 (2006)); (2) suspension and early redemption of investments from 
the Civil Service Retirement and Disability Trust Fund (5 U.S.C. § 
8348(j)(k)); and (3) suspension of investments from the G-Fund (5 
U.S.C. § 8438(g)). 

We did not evaluate all internal controls relevant to operating 
objectives as broadly described by the Federal Managers' Financial 
Integrity Act, such as those controls relevant to preparing statistical 
reports and ensuring efficient operations. We limited our internal 
control testing to controls over financial reporting and compliance. 
Because of inherent limitations in internal control, misstatements due 
to error or fraud, losses, or noncompliance may nevertheless occur and 
not be detected. We also caution that projecting our evaluation to 
future periods is subject to the risk that controls may become 
inadequate because of changes in conditions or that the degree of 
compliance with controls may deteriorate. 

We did not test compliance with all laws and regulations applicable to 
BPD. We limited our tests of compliance to selected provisions of laws 
that have a direct and material effect on the Schedule of Federal Debt 
for the fiscal year ended September 30, 2006. We caution that 
noncompliance may occur and not be detected by these tests and that 
such testing may not be sufficient for other purposes. 

We performed our work in accordance with U.S. generally accepted 
government auditing standards and applicable OMB audit guidance. 

Agency Comments: 

In commenting on a draft of this report, BPD concurred with the 
conclusions in our report. The comments are reprinted in appendix I. 

Signed by: 

David M. Walker: 
Comptroller General of the United States: 

October 25, 2006: 

[End of section] 

Overview, Schedules, and Notes: 

Overview on Federal Debt Managed by the Bureau of the Public Debt: 

Overview on Federal Debt Managed by the Bureau of the Public Debt: 

Gross Federal Debt Outstanding[Footnote 8]: 

Federal debt managed by the Bureau of the Public Debt (BPD) comprises 
debt held by the public and debt held by certain federal government 
accounts, the latter of which is referred to as intragovernmental debt 
holdings. As of September 30, 2006 and 2005, outstanding gross federal 
debt managed by the bureau totaled $8,493 and $7,918 billion, 
respectively. The increase in gross federal debt of $575 billion during 
fiscal year 2006 was due to an increase in gross intragovernmental debt 
holdings of $333 billion and an increase in gross debt held by the 
public of $242 billion. As Figure 1 illustrates, both intragovernmental 
debt holdings and debt held by the public have steadily increased since 
fiscal year 2002. The primary reason for the increases in 
intragovernmental debt holdings is the annual surpluses in the Federal 
Old-Age and Survivors Insurance Trust Fund, Civil Service Retirement 
and Disability Fund, Federal Hospital Insurance Trust Fund, Federal 
Disability Insurance Trust Fund, and Military Retirement Fund. The 
increases in debt held by the public are due primarily to total federal 
spending exceeding total federal revenues. As of September 30, 2006, 
gross debt held by the public totaled $4,843 billion and gross 
intragovernmental debt holdings totaled $3,650 billion. 

Figure 1: 

Total Gross Federal Debt Outstanding (in billions): 

[See PDF for image] 

[End of figure] 

Interest Expense: 

Interest expense incurred during fiscal year 2006 consists of (1) 
interest accrued and paid on debt held by the public or credited to 
accounts holding intragovernmental debt during the fiscal year, (2) 
interest accrued during the fiscal year, but not yet paid on debt held 
by the public or credited to accounts holding intragovernmental debt, 
and (3) net amortization of premiums and discounts. The primary 
components of interest expense are interest paid on the debt held by 
the public and interest credited to federal government trust funds and 
other federal government accounts that hold Treasury securities. The 
interest paid on the debt held by the public affects the current 
spending of the federal government and represents the burden in 
servicing its debt (i.e., payments to outside creditors). Interest 
credited to federal government trust funds and other federal government 
accounts, on the other hand, does not result in an immediate outlay of 
the federal government because one part of the government pays the 
interest and another part receives it. However, this interest 
represents a claim on future budgetary resources and hence an 
obligation on future taxpayers. This interest, when reinvested by the 
trust funds and other federal government accounts, is included in the 
programs' excess funds not currently needed in operations, which are 
invested in federal securities. During fiscal year 2006, interest 
expense incurred totaled $404 billion, interest expense on debt held by 
the public was $221 billion, and $183 billion was interest incurred for 
intragovernmental debt holdings. As Figure 2 illustrates, total 
interest expense decreased from fiscal year 2002 to 2003, but increased 
in fiscal years 2004 through 2006. Average interest rates on principal 
balances outstanding as of September 30, 2006 and 2005 are disclosed in 
the Notes to the Schedules of Federal Debt. 

Figure 2: 

Total Interest Expense (in billions): 

[See PDF for image] 

[End of figure] 

Debt Held by the Public: 

Debt held by the public reflects how much of the nation's wealth has 
been absorbed by the federal government to finance prior federal 
spending in excess of total federal revenues. As of September 30, 2006, 
and 2005, gross debt held by the public totaled $4,843 billion and 
$4,601 billion, respectively (see Figure 1), an increase of $242 
billion. The borrowings and repayments of debt held by the public 
decreased from fiscal year 2005 to 2006 primarily due to Treasury's 
decision to finance current operations using more long-term securities. 

As of September 30, 2006, $4,284 billion, or 88 percent, of the 
securities that constitute debt held by the public were marketable, 
meaning that once the government issues them, they can be resold by 
whoever owns them. Marketable debt is made up of Treasury bills, 
Treasury notes, Treasury bonds, and Treasury Inflation-Protected 
Securities (TIPS) with maturity dates ranging from less than 1 year out 
to 30 years. Of the marketable securities currently held by the public 
as of September 30, 2006, $2,813 billion or 66 percent will mature 
within the next 4 years (see Figure 3). As of September 30, 2006 and 
2005, notes and TIPS held by the public maturing within the next 10 
years totaled $2,709 billion and $2,558 billion, respectively, an 
increase of $151 billion. 

Figure 3: Maturity Dates[Footnote 9] of Marketable Debt Held by the 
Public as of September 30, 2006: 

[See PDF for image] 

[End of figure] 

The government also issues to the public, state and local governments, 
and foreign governments and central banks nonmarketable securities, 
which cannot be resold, and have maturity dates from on demand to more 
than 10 years. As of September 30, 2006, nonmarketable securities 
totaled $559 billion, or 12 percent of debt held by the public. As of 
that date, nonmarketable securities primarily consisted of savings 
securities totaling $204 billion and special securities for state and 
local governments totaling $239 billion. 

The Federal Reserve Banks (FRBs) act as fiscal agents for Treasury, as 
permitted by the Federal Reserve Act. As fiscal agents for Treasury, 
the FRBs play a significant role in the processing of marketable book- 
entry securities and paper U.S. savings bonds. For marketable book- 
entry securities, selected FRBs receive bids, issue book-entry 
securities to awarded bidders and collect payment on behalf of 
Treasury, and make interest and redemption payments from Treasury's 
account to the accounts of security holders. For paper U.S. savings 
bonds, selected FRBs sell, print, and deliver savings bonds; redeem 
savings bonds; and handle the related transfers of cash. 

Intragovernmental Debt Holdings: 

Intragovernmental debt holdings represent balances of Treasury 
securities held by over 230 individual federal government accounts with 
either the authority or the requirement to invest excess receipts in 
special U.S. Treasury securities that are guaranteed for principal and 
interest by the full faith and credit of the U.S. Government. 
Intragovernmental debt holdings primarily consist of balances in the 
Social Security, Medicare, Military Retirement, and Civil Service 
Retirement and Disability trust funds.[Footnote 10] As of September 30, 
2006, such funds accounted for $3,188 billion, or 87 percent, of the 
$3,650 billion intragovernmental debt holdings balances (see Figure 4). 
As of September 30, 2006 and 2005, gross intragovernmental debt 
holdings totaled $3,650 billion and $3,317 billion, respectively (see 
Figure 1), an increase of $333 billion. 

The majority of intragovernmental debt holdings are Government Account 
Series (GAS) securities. GAS securities consist of par value securities 
and market-based securities, with terms ranging from on demand out to 
30 years. Par value securities are issued and redeemed at par (100 
percent of the face value), regardless of current market conditions. 
Market-based securities, however, can be issued at a premium or 
discount and are redeemed at par value on the maturity date or at 
market value if redeemed before the maturity date. 

Figure 4: Components of Intragovernmental Debt Holdings as of September 
30, 2006: 

[See PDF for image] 

Social Security trust funds 55%: 

Other programs and trust funds 13%: 

Civil Service Retirement and Disability trust fund 18%: 

Medicare trust funds 9%: 

Military Retirement trust fund 5%: 

[End of figure] 

Significant Events in FY 2006: 

Statutory Debt Ceiling Raised: 

From February 16 to March 20, 2006, Treasury faced a period that 
required it to depart from its normal debt management procedures and to 
invoke legal authorities to avoid breaching the statutory debt limit. 
During this period, actions taken by Treasury included suspending 
investment of receipts of the Government Securities Investment Fund (G- 
Fund) of the federal employees Thrift Savings Plan, the Exchange 
Stabilization Fund (ESF), and the Civil Service Retirement and 
Disability Fund (Civil Service Fund); redeeming Civil Service Fund 
securities early; and suspending the sales of State and Local 
Government Series securities. On March 20, 2006, Public Law 109-182 was 
enacted, which raised the statutory debt ceiling by $781 billion to 
$8,965 billion. Subsequently, Treasury restored all losses to the G- 
Fund and Civil Service Fund in accordance with legal authorities 
provided to the Secretary of the Treasury. 

TreasuryDirect: 

Full Range of Products: 

Beginning with the October 3, 2005 auction of 13-and 26-week Treasury 
bills, individuals with TreasuryDirect online accounts were able to 
purchase marketable Treasury securities (bills, notes, bonds, and TIPS) 
on a non-competitive basis in TreasuryDirect. With the addition of 
marketable securities to TreasuryDirect, investors are able to hold the 
full range of Treasury retail securities in a single account, providing 
24/7 convenience for tracking and managing all Treasury consumer 
securities. 

Risk Management: 

In September 2005, BPD defined a comprehensive approach to risk 
management in TreasuryDirect and established a Risk Management Group 
(RMG) to identify and monitor patterns of behavior, establish 
precedents and procedures, and network with private and public sector 
industry groups. In FY 2006, the RMG reviewed TreasuryDirect reports 
for unusual activity, watched blogs for TreasuryDirect references and 
news reports for scams and alerts, and participated in interagency 
identity theft workgroups. 

Thirty-Year Bond: 

The re-introduction of the regular semi-annual auctions of the thirty- 
year bond began with the auction on February 9, 2006, followed by a 
reopening of the thirty-year bond, which was issued on August 15, 2006. 
Also, during February 2006, the auction and issuance of the monthly 5- 
year note was shifted to month end to accommodate the re-introduction 
of the 30-year bond. Beginning in February 2007, Treasury will issue 30-
year bonds on a quarterly basis. A quarterly issuance pattern will 
benefit the Separate Trading of Registered Interest and Principal of 
Securities (STRIPS) market by creating interest payments for February, 
May, August and November. 

Last Bearer Bond Called: 

In July 2006, Treasury called 30-year bonds issued in November 1981 for 
redemption on November 15, 2006. The call of this high-interest rate 
bond marks the end of the bearer program that began in March 1859, when 
Congress authorized the issuance of bearer instruments. 

Trust Fund - FDIC Merger: 

Prior to June 1, 2006, the Federal Deposit Insurance Corporation (FDIC) 
maintained three investment funds in the Federal Investments Program. 
Two of the larger funds, however, were affected by Public Law 109-173 
that merged the Bank Insurance Fund (BIF) and the Savings Association 
Insurance Fund (SAIF) into the Deposit Insurance Fund (DIF). On June 1, 
2006, the combined balances of BIF and SAIF of $45.7 billion were 
transferred to the new fund. Since June 1, 2006, all new investment 
activity has taken place in the DIF. 

Treasury Hunt: 

Treasury Hunt is an online application that helps the public identify 
bonds they may hold that have stopped earning interest. There are 
nearly 13 million savings bond records with taxpayer identification 
numbers (TINS) now available for searching in the Treasury Hunt 
database. This represents over 2.8 million unique TINS. In FY 2006, 
customers searched the system 840,000 times, with 17,000 possible 
Series E matured, unredeemed debt matches. In addition, BPD re-mailed 
685 bonds, replaced 302 bonds, and released about $3,000 in interest 
payments. 

Gulf Coast Recovery Bonds: 

To encourage support for ongoing recovery efforts in areas devastated 
by last year's hurricanes, Treasury has designated paper Series I 
Savings Bonds bought through financial institutions from March 29, 2006 
through September 30, 2007 as Gulf Coast Recovery Bonds. The bonds 
contain the special inscription, "Gulf Coast Recovery Bond." The Gulf 
Opportunity Zone Act of 2005 contained a provision that encouraged 
Treasury to make this designation. As of September 30, 2006, BPD had 
issued 930,000 Gulf Coast Recovery Bonds worth $775 million. 

Historical Perspective: 

Federal debt outstanding is one of the largest legally binding 
obligations of the federal government. Nearly all the federal debt has 
been issued by the Treasury with a small portion being issued by other 
federal government agencies. Treasury issues debt securities for two 
principal reasons, (1) to borrow needed funds to finance the current 
operations of the federal government and (2) to provide an investment 
and accounting mechanism for certain federal government accounts' 
excess receipts, primarily trust funds. Total gross federal debt 
outstanding has dramatically increased over the past 25 years from $998 
billion as of September 30, 1981 to $8,493 billion as of September 30, 
2006 (see Figure 5). Large budget deficits emerged during the 1980's 
due to tax policy decisions and increased outlays for defense and 
domestic programs. Through fiscal year 1997, annual federal deficits 
continued to be large and debt continued to grow at a rapid pace. As a 
result, total federal debt increased more than five fold between 1981 
and 1997. 

Figure 5: Total Gross Federal Debt Outstanding; [Empty]. 

[See PDF for Image] 

Source: Monthly Statement of the Public Debt. 

Figures shows prior to 1996 are unaudited and include securities issued 
by the Federal Financing Bank. 

[End of Figure] 

By fiscal year 1998, federal debt held by the public was beginning to 
decline. In fiscal years 1998 through 2001, the amount of debt held by 
the public fell by $476 billion, from $3,815 billion to $3,339 billion. 
However, not withstanding the strong rebound of the economy from the 
2001 recession, higher Federal outlays and tax policy decisions have 
resulted in an increase in debt held by the public from $3,339 billion 
in 2001 to $4,843 billion in 2006. 

Even in those years where debt held by the public declined, total 
federal debt increased because of increases in intragovernmental debt 
holdings. Over the past 4 fiscal years, intragovernmental debt holdings 
increased by $990 billion, from $2,660 billion as of September 30, 
2002, to $3,650 billion as of September 30, 2006. By law, trust funds 
have the authority or are required to invest surpluses in federal 
securities. As a result, the intragovernmental debt holdings balances 
primarily represent the cumulative surplus of funds due to the trust 
funds' cumulative annual excess of tax receipts, interest credited, and 
other collections compared to spending. 

As shown in Figure 6, interest rates have fluctuated over the past 25 
years. The average interest rates reflected here represent the original 
issue weighted effective yield on securities outstanding at the end of 
the fiscal year. 

Figure 6 Average Interest Rates of Federal Debt Outstanding: 

[See PDF for image] 

Source: Prior to fiscal year 2001: Monthly Statement of the Public Debt 
Fiscal year 2001 and after: Public Debt Online Average Interest Rates. 

[End of figure] 

Schedules of Federal Debt: 

Managed by the Bureau of the Public Debt: 

For the Fiscal Years Ended September 30, 2006 and 2005 (Dollars in 
Millions): 

[See PDF for Image] 

[End of Figure] 

The accompanying notes are an integral part of these schedules. 

Notes to the Schedules of Federal Debt: 

Notes to the Schedules of Federal Debt Managed by the Bureau of the 
Public Debt: 

For the Fiscal Years Ended September 30, 2006 and 2005: 

(Dollars in Millions): 

Note 1. Significant Accounting Policies: 

Basis of Presentation: 

The Schedules of Federal Debt Managed by the Bureau of the Public Debt 
(BPD) have been prepared to report fiscal year 2006 and 2005 balances 
and activity relating to monies borrowed from the public and certain 
federal government accounts to fund the U.S. government's operations. 
Permanent, indefinite appropriations are available for the payment of 
interest on the federal debt and the redemption of Treasury securities. 

Reporting Entity: 

The Constitution empowers the Congress to borrow money on the credit of 
the United States. The Congress has authorized the Secretary of the 
Treasury to borrow monies to operate the federal government within a 
statutory debt limit. Title 31 U.S.C. authorizes Treasury to prescribe 
the debt instruments and otherwise limit and restrict the amount and 
composition of the debt. BPD, an organizational entity within the 
Fiscal Service of the Department of the Treasury, is responsible for 
issuing Treasury securities in accordance with such authority and to 
account for the resulting debt. In addition, BPD has been given the 
responsibility to issue Treasury securities to trust funds for trust 
fund receipts not needed for current benefits and expenses. BPD issues 
and redeems Treasury securities for the trust funds based on data 
provided by program agencies and other Treasury entities. 

Basis of Accounting: 

The schedules were prepared in conformity with U.S. generally accepted 
accounting principles and from BPD'S automated accounting system, 
Public Debt Accounting and Reporting System. Interest costs are 
recorded as expenses when incurred, instead of when paid. Certain 
Treasury securities are issued at a discount or premium. These 
discounts and premiums are amortized over the term of the security 
using an interest method for all long term securities and the straight 
line method for short term securities. The Department of the Treasury 
also issues Treasury Inflation-Protected Securities (TIPS). The 
principal for TIPS is adjusted daily over the life of the security 
based on the Consumer Price Index for all Urban Consumers. 

Note 2. Federal Debt Held by the Public: 

As of September 30, 2006 and 2005, Federal Debt Held by the Public 
consisted of the following: 

[See PDF for Image] 

[End of Figure] 

Treasury issues marketable bills at a discount and pays the par amount 
of the security upon maturity. The average interest rate on Treasury 
bills represents the original issue effective yield on securities 
outstanding as of September 30, 2006 and 2005, respectively. Treasury 
bills are issued with a term of one year or less. 

Treasury issues marketable notes and bonds as long-term securities that 
pay semi-annual interest based on the securities' stated interest rate. 
These securities are issued at either par value or at an amount that 
reflects a discount or a premium. The average interest rate on 
marketable notes and bonds represents the stated interest rate adjusted 
by any discount or premium on securities outstanding as of September 
30, 2006 and 2005. Treasury notes are issued with a term of 2 - 10 
years and Treasury bonds are issued with a term of more than 10 years. 

Treasury also issues TIPS that have interest and redemption payments, 
which are tied to the Consumer Price Index, the leading measurement of 
inflation. TIPS are issued with a term of 5 years or more. At maturity, 
TIPS are redeemed at the inflation-adjusted principal amount, or the 
original par value, whichever is greater. TIPS pay a semi-annual fixed 
rate of interest applied to the inflation-adjusted principal. The TIPS 
Federal Debt Held by the Public inflation-adjusted principal balance 
includes inflation of $43,927 million and $29,001 million as of 
September 30, 2006 and 2005, respectively. 

Federal Debt Held by the Public includes federal debt held outside of 
the U. S. government by individuals, corporations, Federal Reserve 
Banks (FRB), state and local governments, and foreign governments and 
central banks. The FRB owned $765 billion and $733 billion of Federal 
Debt Held by the Public as of September 30, 2006 and 2005, 
respectively. These securities are held in the FRB System Open Market 
Account (SOMA) for the purpose of conducting monetary policy. 

Treasury issues nonmarketable securities at either par value or at an 
amount that reflects a discount or a premium. The average interest rate 
on the nonmarketable securities represents the original issue weighted 
effective yield on securities outstanding as of September 30, 2006 and 
2005. Nonmarketable securities are issued with a term of on demand to 
more than 10 years. 

As of September 30, 2006 and 2005, nonmarketable securities consisted 
of the following: 

Domestic Series; 
2006: $29,995;
2005: $29,995. 

Foreign Series; 
2006: 2,986; 
2005: 3,086. 

R.E.A. Series; 
2006: 1; 
2005: 1. 

State and Local Government Series; 
2006: 238,835; 
2005: 225,283. 

United States Savings Securities; 
2006: 203,701; 
2005: 203,690. 

Government Account Series; 
2006: 78,129; 
2005: 67,961. 

Other; 
2006: 5,670; 
2005: 5,170. 

Total Nonmarketable; 
2006: $559,317; 
2005: $535,186.

[End of table] 

Government Account Series (GAS) securities are nonmarketable securities 
issued to federal government accounts. Federal Debt Held by the Public 
includes GAS securities issued to certain federal government accounts. 
One example is the GAS securities held by the Government Securities 
Investment Fund (G-Fund) of the federal employees' Thrift Savings Plan. 
Federal employees and retirees who have individual accounts own the GAS 
securities held by the fund. For this reason, these securities are 
considered part of the Federal Debt Held by the Public rather than 
Intragovernmental Debt Holdings. The GAS securities held by the G-Fund 
consist of overnight investments redeemed one business day after their 
issue. The net increase in amounts borrowed from the fund during fiscal 
years 2006 and 2005 are included in the respective Borrowings from the 
Public amounts reported on the Schedules of Federal Debt. 

Fiscal year-end September 30, 2006, occurred on a Saturday. As a result 
$31,656 million of marketable Treasury notes matured but not repaid is 
included in the balance of the total debt held by the public as of 
September 30, 2006. Settlement of this debt repayment occurred on 
Monday, October 2, 2006. 

Note 3. Intragovernmental Debt Holdings:

As of September 30, 2006 and 2005, Intragovernmental Debt Holdings are 
owed to the following:

[See PDF for Table] 

[End of table] 

* On June 1, 2006, the Federal Deposit Insurance Corporation (FDIC) 
merged the Bank Insurance Fund (BIF) and the Savings Association 
Insurance Fund (SAIF) into the Deposit Insurance Fund (DIF).

FDIC's Holdings as of September 30, 2005: The Bank Insurance Fund; 
GAS Securities: $32,733. 

FDIC's Holdings as of September 30, 2005: The Savings Association 
Insurance Fund; 
GAS Securities: 12,325. 

Total; 
GAS Securities: $45,058. 

[End of Table] 

Social Security Administration (SSA); Office of Personnel Management 
(OPM); Department of Health and Human Services (HHS); Department of 
Defense (DOD); Department of Labor (DOL); Federal Deposit Insurance 
Corporation (FDIC); Department of Energy (DOE); Department of Housing 
and Urban Development (HUD); Department of the Treasury (Treasury); 
Department of State (DOS); Department of Transportation (DOT); 
Department of Veterans Affairs (VA).

Intragovernmental Debt Holdings primarily consist of GAS securities. 
Treasury issues GAS securities at either par value or at an amount that 
reflects a discount or a premium. The average interest rates for both 
fiscal years 2006 and 2005 were 5.2 percent. The average interest rate 
represents the original issue weighted effective yield on securities 
outstanding as of September 30, 2006 and 2005. GAS securities are 
issued with a term of on demand to 30 years. GAS securities include 
TIPS, which are reported at an inflation-adjusted principal balance 
using the Consumer Price Index. As of September 30, 2006 and 2005 the 
inflation-adjusted principal balance included inflation of $19,576 
million and $8,268 million, respectively.

Fiscal year-end September 30, 2006, occurred on a Saturday. As a result 
$360 million of GAS securities held by Federal Agencies matured but not 
repaid is included in the balance of the Intragovernmental Holdings as 
of September 30, 2006. Settlement of this debt repayment occurred on 
Monday, October 2, 2006.

Note 4. Interest Expense:

Interest expense on Federal Debt Managed by BPD for fiscal years 2006 
and 2005 consisted of the following:

[See PDF for table] 

[End of table]

The principal for TIPS is adjusted daily over the life of the security 
based on the Consumer Price Index for all Urban Consumers. This daily 
adjustment is an interest expense for the Bureau of the Public Debt. 
Accrued interest on Federal Debt Held by the Public includes inflation 
adjustments of $14,512 million and $8,582 million for fiscal years 2006 
and 2005, respectively. Accrued interest on Intragovernmental Debt 
Holdings includes inflation adjustments of $607 million and $419 
million for fiscal years 2006 and 2005, respectively.

Note 5. Fund Balance With Treasury:

Appropriated Funds Obligated; 
As of September 30, 2006: $152; 
As of September 30, 2005: $142. 

[End of table] 

The Fund Balance with Treasury, a non-entity, intragovernmental 
account, is not included on the Schedules of Federal Debt and is 
presented for informational purposes. 

[End of section] 

Appendix I: Comments from the Bureau of the Public Debt: 

Department Of The Treasury: 
Bureau Of The Public Debt: 
Washington, DC 20239-0001: 

November 3, 2006: 

Mr. Gary T. Engel: 
Director: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Engel: 

This letter is our response to your audit of the Schedules of Federal 
Debt Managed by the Bureau of the Public Debt for the fiscal years 
ended September 30, 2006, and 2005. We agree with your audit report's 
conclusions. 

As we conclude the tenth consecutive year of our professional 
relationship, we appreciate the experience and professional attitude of 
your audit team. As your audit team expands, their ability to grasp the 
complexities surrounding the schedule greatly enhances the audit 
process. We would like to thank you and your staff for conducting an 
efficient and thorough audit of these schedules with increasingly 
stringent audit requirements. The usability of these reports continues 
to develop through combined efforts, and we look forward to continuing 
this productive and successful relationship. 

Sincerely, 

Signed by: 

Van Zeck: 
Commissioner: 

www.treasurydirect.gov: 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Gary Engel, (202) 512-3406: 

Acknowledgments: 

In addition to the individual named above, Dawn B. Simpson, Assistant 
Director; Cara L. Bauer; Theresa M. Bowman; Erik A. Braun; Dean D. 
Carpenter; Dennis L. Clarke; Chau L. Dinh; Jennifer L. Henderson; Erik 
S. Huff; Brent J. LaPointe; Nicole M. McGuire; Jay McTigue; Timothy J. 
Murray; and Danietta S. Williams made key contributions to this report. 

(198410): 

FOOTNOTES 

[1] Intragovernmental Debt Holdings represent federal debt issued by 
Treasury and held by certain federal government accounts, such as the 
Social Security and Medicare trust funds. 

[2] See GAO, Our Nation's Fiscal Outlook: The Federal Government's Long-
Term Budget Imbalance, [Hyperlink, 
http://www.gao.gov/special.pubs/longterm]. 

[3] The total burden is estimated based on the federal government's 
liabilities, commitments, and contingencies reported in the Financial 
Report of the U.S. Government for Fiscal Year 2005 adjusted for growth 
in debt held by the public during fiscal year 2006 and updated 
estimates of future social insurance obligations as reported in the 
2006 Trustees reports. 

[4] GAO, 21ST Century Challenges: Reexamining the Base of the Federal 
Government, GAO-05-325SP (Washington, D.C.: February 2005). 

[5] 31 U.S.C. § 331(e). 

[6] Intragovernmental Debt Holdings represent federal debt issued by 
Treasury and held by certain federal government accounts, such as the 
Social Security and Medicare trust funds. 

[7] Reportable conditions are matters coming to our attention that, in 
our judgment, should be communicated because they represent significant 
deficiencies in the design or operation of internal control, which 
could adversely affect the organization's ability to meet the internal 
control objectives described in the Objectives, Scope, and Methodology 
section of this report. 

[8] Federal debt outstanding reported here differs from the amount 
reported in the Financial Report of the United States Government 
because of the securities not maintained or reported by the bureau and 
which are issued by the Federal Financing Bank and other federal 
government agencies. 

[9] Callable securities mature between fiscal years 2012 and 2015, but 
are reported by their call date. 

[10] The Social Security trust funds consist of the Federal Old-Age and 
Survivors Insurance Trust Fund and the Federal Disability Insurance 
Trust Fund. In addition, the Medicare trust funds are made up of the 
Federal Hospital Insurance Trust Fund and the Federal Supplementary 
Medical Insurance Trust Fund. 

GAO's Mission: 

The Government Accountability Office, the investigative arm of 
Congress, exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and accountability 
of the federal government for the American people. GAO examines the use 
of public funds; evaluates federal programs and policies; and provides 
analyses, recommendations, and other assistance to help Congress make 
informed oversight, policy, and funding decisions. GAO's commitment to 
good government is reflected in its core values of accountability, 
integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through the Internet. GAO's Web site ( www.gao.gov ) contains 
abstracts and full-text files of current reports and testimony and an 
expanding archive of older products. The Web site features a search 
engine to help you locate documents using key words and phrases. You 
can print these documents in their entirety, including charts and other 
graphics. 

Each day, GAO issues a list of newly released reports, testimony, and 
correspondence. GAO posts this list, known as "Today's Reports," on its 
Web site daily. The list contains links to the full-text document 
files. To have GAO e-mail this list to you every afternoon, go to 
www.gao.gov and select "Subscribe to e-mail alerts" under the "Order 
GAO Products" heading. 

Order by Mail or Phone: 

The first copy of each printed report is free. Additional copies are $2 
each. A check or money order should be made out to the Superintendent 
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or 
more copies mailed to a single address are discounted 25 percent. 
Orders should be sent to: 

U.S. Government Accountability Office 

441 G Street NW, Room LM 

Washington, D.C. 20548: 

To order by Phone: 

Voice: (202) 512-6000: 

TDD: (202) 512-2537: 

Fax: (202) 512-6061: 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 

Web site: www.gao.gov/fraudnet/fraudnet.htm 

E-mail: fraudnet@gao.gov 

Automated answering system: (800) 424-5454 or (202) 512-7470: 

Public Affairs: 

Jeff Nelligan, managing director, 

NelliganJ@gao.gov 

(202) 512-4800 

U.S. Government Accountability Office, 

441 G Street NW, Room 7149 

Washington, D.C. 20548: