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Presentation by:
The Honorable David M. Walker:
Comptroller General of the United States:

Enhancing Government Performance, Accountability, and Foresight:

Nanjing Audit University of China (NAU): 
August 26, 2007:


United States Government Accountability Office:

Thank you, Mr. Li and Mr. Yin, for that kind introduction. I would also 
like to thank Mr. Wang and Mr. Li for your invitation to be an honorary 
professor of Nanjing Audit University and am delighted to accept.

It's a pleasure to be here today. Thanks to all of you for taking time 
out of your weekend to be here today.

Asia has a long and impressive history. But just as important, Asia's 
future has never looked brighter. Today, the nations around the Pacific 
Rim are playing a pivotal role in the world's economy. China, for 
example, is industrializing at a rapid pace and is now a leading 
supplier of consumer goods to the United States and many other 

China is also one of the largest investors in U.S. government debt. 
Thank you for lending us some of our savings. Most Chinese have a much 
better appreciation of the importance of savings than most Americans 
do. As you know, most Americans are great spenders and poor savers. 
Fortunately, I am not a typical American in this regard.

My first trip to China was in 1983. But my first official visit as 
Comptroller General was in 2001, when I met with my friend and 
colleague Mr. Li Jinhua. As you know, Mr. Li, who is here today, is the 
head of the Chinese National Audit Office (CNAO). He is also an 
honorary professor at NAU and the host for my current trip to China.

When I visited China in 2001, Mr. Li and I were honored to have a 
meeting with then-Premier Zhu Rongji. Our discussion was very 
productive, and I was impressed by the Premier's strong interest in 
fighting corruption and transforming the Chinese government to meet the 
demands of the 21st century.

At the end of our conversation, Premier Zhu asked me for one priority 
recommendation for his consideration. I thought for a few seconds and 
then said, "Make the CNAO's reports public." After all, transparency is 
a powerful force that can help fight corruption, improve performance, 
and ensure accountability.

The Premier listened carefully, but I knew that achieving such openness 
in China wouldn't be easy. After all, for centuries, Chinese government 
agencies had done much of their business behind closed doors and beyond 
the public view. But to his great credit, Premier Zhu acted quickly on 
my suggestion, and Mr. Li implemented it. As a result, many CNAO 
reports are made public. And as Mr. Li can tell you, that single step 
has made a huge difference for the CNAO and for China. Fortunately, it 
looks like Mr. Li and I will have the opportunity to meet with the new 
Premier, Wen Jiabao. I am looking forward to it, and appreciate Mr. 
Li's arranging of the meeting.

Today, I'd like to speak to you about a role that more supreme audit 
institutions (SAI) need to add to their portfolio of capabilities. That 
role has two components: first, providing government officials with 
more insight into which government programs and policies are working 
well and which ones are not. Second, providing government officials 
with foresight about key emerging issues. Such informative and forward-
thinking roles should supplement and complement the traditional audit 
responsibilities of SAIs.

Before addressing the issue of foresight, I'd like to touch on how SAIs 
can maximize their effectiveness and credibility. Over the years, I've 
found three elements are essential to maximizing value and mitigating 
risk. These three elements are incentives, transparency, and 
accountability. (See app. I, table 1.) They apply equally to the public 
and private sectors and can provide a benefit to many areas, from 
governance systems to tax systems to pension and health care programs.

For SAIs, the incentives element requires, among other things, an 
adequate degree of auditor independence and an adequate level of 
auditor resources. The transparency element involves a commitment to 
keeping elected officials and average citizens informed about what SAIs 
do and how they do business. For example, the U.S. Government 
Accountability Office (GAO) has adopted public protocols for dealing 
with clients, agencies, and fellow accountability organizations. We 
also make all our nonclassified reports public, and I'd urge other SAIs 
to do the same. Finally, the accountability element means that 
government auditors must have adequate access authority. At the same 
time, SAIs themselves need to be subject to independent financial 
audits and external peer reviews in order to "lead by example.":

These three elements--incentives, transparency, and accountability--
are critically important, and I consider them, along with our agency's 
core values of accountability, integrity, and reliability, in every 
major internal and external initiative that GAO undertakes. For 
example, these three elements have resulted in GAO adopting four key 
performance elements to better assess how we're doing today and how 
we're positioned for the future. These four dimensions are results, 
client feedback, employee feedback, and external partner or alliance 
organization feedback. Following my remarks, I'd be happy to answer 
questions about these or other issues.

Returning to the issue of foresight, nearly a century ago, one of my 
favorite U.S. Presidents, Theodore Roosevelt, said, "We have to, as a 
nation, exercise foresight...and if we do not exercise that foresight, 
dark will be the future."

Unfortunately, many in today's world, especially in the United States, 
are consumed with the here and now. Far too little thought is given to 
what's come before or what lies ahead.

* Too many individuals tend to focus on their next paycheck.

* Too many company executives focus on the next quarterly earnings 

* Too many politicians focus on the next election cycle rather than the 
next generation.

* And too many countries focus on their immediate and sovereign needs 
while forgetting that we're all inhabitants of planet Earth.

It's vital for all organizations to understand the big picture, to 
learn from the past, and to prepare for the future. We need to actively 
manage the opportunities and risks that come with change. After all, 
change isn't necessarily a bad thing. In fact, change is essential for 
progress and innovation.

I think it's important to understand how myopia, or shortsightedness, 
can undermine a nation's willingness and ability to act. In the case of 
the United States, strong economic growth, modest inflation levels, 
relatively low interest rates, and our current superpower status have 
given many policymakers and the American public a false sense of 
security about our nation's current financial position and future 
fiscal prospects. Even though we know that a demographic tsunami is 
building silently offshore--I'm referring to the huge costs associated 
with the impending retirement of our baby boom generation (those born 
between 1946 and 1964)--America continues to "party on" and pile up 
record levels of debt.

The reality is that we face an aging population, rising health care 
costs, and inadequate revenues as a percentage of the economy. Unless 
we change course, the United States faces decades of escalating 
deficits and debt.

As Comptroller General of the United States and my nation's chief 
accountability officer, I've been speaking out on this issue to ensure 
that we do change course. Things are far from hopeless, but we need to 
act, and act soon! In this regard, this past Wednesday, August, 22, the 
Financial Times published an op-ed that I authored. In that piece, I 
noted the need for the United States to learn lessons from the past 
while taking steps to focus on the future.

Importantly, some nations have begun to face up to their long-term 
fiscal challenges. Specifically, two nations in the Asia-Pacific region 
have made difficult decisions that involved short-term pain in the 
interest of long-term gain. I'm speaking about Australia and New 
Zealand. Like the United States, these two countries have aging 
populations. However, unlike the United States, these two countries 
have already stepped up to the plate and dealt with their long-range 
fiscal imbalances, including their overburdened and underfunded public 
pension and health care programs. In my view, SAIs can play an 
important professional and nonpolitical role in encouraging such 
prudent and sustainable policy choices.

As we all know, SAIs have traditionally been in the oversight business. 
Clearly, our financial audit compliance reviews and investigations are 
an important check on waste, fraud, and abuse. Many SAIs also undertake 
program evaluations and best-practice studies, which are designed to 
improve government efficiency and effectiveness. At the same time, SAIs 
may perform a range of additional insight activities designed to help 
identify which programs and policies work, which ones don't, and 
possible ways forward.

One key to an effective accountability system is strong government 
auditing standards. As most of you know, in the United States these 
standards are found in the so-called "Yellow Book," which is 
promulgated by GAO. This publication specifies the essential 
characteristics of sound audit work. The Yellow Book also describes the 
professional qualifications that government auditors should possess. 
I'm proud to say that many Asian SAIs are using the Yellow Book in 
their work, including Indonesia, Mongolia, and Vietnam.

For the fifth time since 1972, GAO recently updated the Yellow Book. 
With the advice of experts from government, private accounting firms, 
and colleges and universities, GAO made changes to strengthen and 
modernize audit quality systems and ethical standards. These new 
standards are available on our Web site at [hyperlink,].

But audit work is only one of a hierarchy of functions SAIs can and 
should be undertaking. Envision a pyramid with six layers, each 
describing a mission. (See app. I, fig. 1.) At the bottom is the most 
basic mission every government SAI should hope to achieve--fighting 
corruption. It's essential that civil servants be honest and committed 
to the public good. Any government run by corrupt officials anywhere in 
the world isn't going to accomplish much, other than picking the 
pockets of its own people.

The next level in the SAI pyramid is promoting transparency, which 
helps to facilitate progress on all fronts. The third level is assuring 
accountability, and I'd include here efforts like compliance reviews. 
The idea is that all aspects of government should be accountable to the 
taxpayer for results. At a minimum, every SAI, whatever its budget, 
whatever its expertise, should be combating corruption, promoting 
transparency, and assuring accountability.

The fourth level is enhancing government economy, efficiency, ethics, 
equity, and effectiveness. The fifth level is providing policymakers 
with options to make government work better by refining programs, 
consolidating redundant efforts, or adopting best practices.

The sixth and final level in the pyramid is foresight, a function more 
mature and experienced SAIs should consider undertaking: I'm talking 
about providing policymakers with a focus on the future. Government 
decision makers need to develop a long-term perspective, understand the 
big picture, and appreciate the collateral implications of their 
actions. Too often, it's the immediate crisis that gets all the 
attention. Policymakers find it easier to ignore issues whose impact 
may not be felt for several years, even decades. Importantly, our 
government's historical "crisis management" approach to dealing with 
difficult and controversial policy issues is no longer prudent or 
appropriate, given the stakes involved.

Created by statute in 1921, GAO is a good example of a mature SAI. 
Today, GAO is working hard to help members of Congress better 
understand the trends and challenges facing the United States and its 
position in the world. We're also trying to help lawmakers grasp the 
long-term and collateral implications of current policy paths.

Our goal is for Congress to expand its horizon, improve its peripheral 
vision, and enhance its ability to act in a timely, evidence-based, and 
integrated manner. We want policymakers to better understand where we 
are, how we may look 30 or even 50 years out, and how various policies 
and programs can have ripple effects collaterally, across borders, and 
over time.

In this spirit and in an effort to lead by example, GAO has published 
an unprecedented report called "21st Century Challenges" that asks a 
series of probing, sometimes provocative, questions about current 
government policies, programs, and operational practices. The report 
brings home how much of the U.S. government reflects organizational 
models, labor markets, life expectancies, transportation systems, 
security strategies, and other conditions that are rooted in the past. 
Clearly, the U.S. government isn't alone in this respect. In this 
report, we've also sought to communicate important foresight concepts 
in language used and understood by policymakers. By the way, you can 
find this report free of charge on GAO's Web site at [hyperlink,]. I recommend it to you.

Today, our Congress and President need to decide which federal programs 
and policies remain priorities, which should be overhauled, and which 
have simply outlived their usefulness. I'm sure many other countries 
could also benefit from this kind of review.

To give you one example in the tax area: Just last year, the U.S. 
government announced it would stop collecting a 3 percent tax on long-
distance telephone calls. This doesn't seem particularly startling 
until you realize that the tax had been introduced in 1898 to help pay 
for the Spanish-American War--a war that only lasted a few months!:

So, what's been the reaction of policymakers to our 21st Century 
Challenges report? I'm pleased to say we're seeing some hopeful signs 
in several areas that GAO has highlighted. For example, our government 
is taking seriously the need to plan ahead for the possibility of a 
global influenza pandemic. To keep the pressure up, in February GAO 
published an unprecedented fiscal sustainability report and sent it to 
every member of the House and the Senate as well as the press and 
across America.

As a result of these and other efforts, we're finally starting to see 
greater concern about America's long-range fiscal challenges. For 
example, recently proposed legislation would convene a commission of 
leaders, including myself as Comptroller General, to study entitlement 
and tax reform issues and recommend changes. In addition, just last 
week, a major presidential candidate announced his intention to make 
our fiscal and other key sustainability challenges a centerpiece of his 

GAO continues to emphasize the need to take a more strategic, long-
range, cross-cutting, and integrated approach to a range of domestic 
and international sustainability challenges. We published two other key 
reports in April. The first was our updated strategic plan. The second 
was our first-ever strategic themes booklet, which examines the forces 
affecting the United States and other countries. You can also find 
these documents on our web site free of charge.

Most nations face similar long-term challenges. But the truth is in 
today's world, no nation, including the United States, should try to go 
it alone. In fact, most nations face a range of common challenges that 
know no geographic or political boundaries. I'd include here economic 
globalization, new security threats, diseases such as AIDS and avian 
flu, environmental concerns like climate change, and natural disasters. 
In fact, I spoke two years ago in Jakarta on tsunami relief just months 
before two major hurricanes devastated New Orleans and much of the Gulf 
Coast. My point here is that SAIs can and should help evaluate these 
challenges and develop solutions.

Increasingly, the process of developing solutions will require 
collaboration and "partnering for progress." Progress will depend on a 
willingness to cooperate with others, inside and outside of government, 
domestically and internationally. Frankly, all of us need to increase 
our efforts to join forces and apply our collective knowledge, 
experience, and expertise to solve shared problems. There's no question 
in my mind we can and should learn from each other.

This is why GAO has been working so closely with its counterparts in 
other countries and with international accountability organizations and 
standard setters--such as INTOSAI, IFAC, and IAASB. We all need to be 
working toward global convergence on major accounting and auditing 
standards as well as reporting models. This isn't just desirable, it's 
essential. In a world that grows smaller every day, accounting and 
reporting practices should be equally understandable to an auditor in 
Canada, China, Chile, the Czech Republic, and Cameroon.

I'm happy to say that INTOSAI is making significant strides when it 
comes to international partnering. As I noted earlier, I'm a big 
believer in partnering for progress in order to share success stories 
and avoid common mistakes. We've also seen progress in developing 
ethical codes for government auditors and establishing best practices 
on vital issues like public debt management, environmental auditing, 
and privatization.

As some of you may know, I was honored to chair INTOSAI's strategic 
planning task force, and I know firsthand the contributions that 
regional members like Korea and other task force members have made to 
this historic effort. I'm confident INTOSAI's new strategic plan will 
help raise the organization and its members to new heights in the 
coming years.

A strategic plan is just one of many tools that SAIs have at their 
disposal to promote a forward focus. Other tools include key national 
(outcome-based) indicators and scenario planning. Unfortunately, not 
all governments, including my own, have taken full advantage of these 

The value of a strategic plan is probably obvious to everyone in this 
room. By thinking more comprehensively, governments can better set 
priorities and target their efforts, not just over months or years but 
over decades. In our case, GAO's strategic plan defines our agency's 
mission, goals, and objectives. Our plan also includes a range of key 
public policy trends and challenges that warrant attention from 
lawmakers and our agency. The plan also incorporates our agency's core 
values and protocols as the foundation for everything we do. In my 
view, an entity that doesn't have a strategic plan has little hope of 
maximizing value and mitigating risk. In addition, in my view, "core 
values" represent an excellent way to convey institutional beliefs and 
boundaries that will help to facilitate timely, sound and consistent 
decision making.

Key national indicators represent another tool that can help 
governments focus on current performance and develop a more positive 
future path. Key national indicators allow policymakers to better 
assess a nation's status, its progress over time, and its position 
relative to other nations on issues like public safety, health care, 
housing, education, and the environment. Such indicators can help guide 
strategic planning, enhance performance and accountability reporting, 
and encourage more informed decision making and effective oversight, 
authorization, and appropriations decisions.

Key indicator systems are now used by various supranational and 
international entities, including the European Union, the Organization 
for Economic Co-operation and Development (OECD), and the United 
Nations. For years now, several countries, including Australia, Canada, 
and the United Kingdom, and even some U.S. states and municipalities, 
have been using indicators to prioritize and target public resources. 
It's time the U.S. federal government and other countries developed 
their own systems.

We at GAO are working with our National Academies of Sciences, the 
OECD, and others to help make key national indicators a reality in the 
United States and elsewhere. Furthermore, INTOSAI has adopted key 
national indicators as one of two main themes for its 2007 congress in 
Mexico City. The United States is chairing this theme and we look 
forward to addressing it with our colleagues in Mexico City this 

U.S. civilian agencies, including GAO, have started using another 
foresight tool long familiar to our defense agencies: scenario 
planning. For years, GAO has used this technique to analyze America's 
long-range fiscal imbalance. More recently, we've used scenario 
planning concepts to assess our nation's preparedness for natural 
disasters like hurricanes and earthquakes, and plan to expand its use 
to other areas.

In closing, enhancing government performance and focusing on foresight 
are important but often thankless jobs. Frankly, these vital tasks have 
too few real and devoted advocates. But when you return to your 
offices, I hope you'll consider the things I've said in connection with 
your own work. It's time that policymakers everywhere focus more on 
achieving real results today while taking steps to build a better 
future. In my view, it's the best way to ensure a brighter tomorrow for 
our countries, our families and citizens, and our planet. And in my 
view, accountability professionals have the opportunity to lead the 

Thank you for your time and attention.

[End of section]

Appendix I:

Table 1: Illustrative Key Elements for Successful Supreme Audit 

Key elements: Incentives; 
Examples: Independence; Resources.

Key elements: Transparency; 
Examples: Protocols; Public reporting.

Key elements: Accountability; 
Examples: Enforcement of access rights; Peer review.

Source: GAO.

[End of table]

Figure 1: Supreme Audit Institution Maturity Model:

This figure is a pyramid with the following statements stacked from base to peak:

Combating Corruption;
Promoting Transparency;
Assuring Accountability;
Enhancing Economy, Efficiency, Ethics, Equity, and Effectiveness;
Increasing Insight;
Facilitating Foresight.

Source: GAO.

On the Web:

Web site: [hyperlink,]:


Susan Becker, Acting Manager, 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149:
Washington, D.C. 20548:


This is a work of the U.S. government and is not subject to copyright 
protection in the United States. The published product may be 
reproduced and distributed in its entirety without further permission 
from GAO. However, 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.