Following the Money: The Audit Trail

Posted on November 01, 2016

You may remember from your elementary school civics class (or our previous Watchblog posts) that Congress allocates the money that executive branch agencies use to carry out their work.

But who makes sure these agencies are spending this money correctly? To answer this (and other questions), today’s WatchBlog explores the government audit process.

Where does the money come from?

Here’s a brief refresher of the budget cycle:

  • The President prepares a budget and submits it to Congress.
  • Congress considers the budget proposal and then passes laws that actually allocate the money.
  • The Treasury Department and the Office of Management and Budget distribute this money to executive branch agencies (such as the Department of Defense or the USDA) to fund their programs.

We’ve also previously blogged about how the President and Congress use the federal budget process to allocate federal funds.

Who’s following this money?

Federal auditors track the way agencies spend federal money—and that money trail can take us all the way to outer space or down to the local government level.

photo of a pile of money

GAO has a key role in monitoring how the money is spent. As part of the legislative branch, we examine spending or performance issues of executive branch agencies when requested by members of Congress, through laws, or under the authority of the U.S. Comptroller General (the head of GAO).

Many executive branch agencies also have their own independent inspector general, who investigates how their agency is administering its programs and operations.

And the United States isn’t the only country that audits government finances and activities—more than 190 countries are members of INTOSAI, the International Organization of Supreme Audit Institutions.

And what exactly is an audit?

When you hear the word “audit,” you probably think of a financial audit of a corporation, or an audit of your tax return—in other words, a careful review of a person or company’s financial records.

But GAO and inspectors general also audit the programs of federal agencies to ensure that they are accountable to legislators and the public.

Our Yellow Book lays out the standards for different types of government audits, such as:

  • Financial audits, which provide an independent assessment of whether an agency’s reported financial information (e.g., financial condition, results, and use of resources) are presented fairly in accordance with recognized criteria.
  • Performance audits, which help managers improve program performance and operations, reduce costs, and make appropriate decisions.
  • Attestation engagements, which cover a broad range of other financial or nonfinancial objectives.

So, what’s the bottom line?

After conducting audits, we make recommendations to help improve the government’s effectiveness—and save taxpayers’ money.

Our annual performance and accountability report showed that we produced a record $74.7 billion in financial benefits in 2015. In other words, we saved the federal government $134 for every $1 Congress invested in us.

That’s one heck of a return—if we do say so ourselves.



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