General Accountability Office: The So-Called Performance Audit Is a Weak Analytical Tool; Continued Use Is Offensive to the Taxpayer

The General Accountability Office (GAO), one of the legislative agencies, produces so-called performance audit reports on governmental operations. If these reviews were limited to the strengths of accountants and auditors–financial statements and financial records–the agency would do well.

When accountants and auditors venture into non-financial operations and dare to offer opinions through so-called performance audits, the weakness of the agency is made manifest. This weakness leads to damaging, reckless, and information-free yet jargon-filled reports. (Note: I have found similar results with some reports of some Inspectors General offices.)

Performance audits evaluate evidence against stated criteria, such as specific requirements, measures, or defined business practices. This definition of performance auditing is consistent with international auditing standards.

The Washington Post published two exasperating columns based on this flimsy GAO report, GAO-16-520R, Federal Workforce: Distribution of Performance Ratings Across the Federal Government, 2013.

The GAO report writers stated on page 1 and 2 that Senator Ron Johnson (R-Wisc.) asked the GAO to review the performance management systems across the 24 Chief Financial Officer Act agencies. (See Pub. Law. 101-576, sec. 5.) The GAO’s “review” approach was to complete a performance audit listing the results of the implementation of the agencies’ performance management systems, specifically how many employees got each rank level.

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This methodology made the resulting report useless, uninformative, and damaging to civil service employees burdened with unfair ratings, managers, agencies or any combination of the previous three factors. Notably, the report failed to do the following, at a minimum:

  • The structure of each of the agencies’ programs were not reviewed.
  • The evaluation as to how the agencies programs satisfied the merit principles was not done.
  • The academic research reviewing performance management is nowhere in the report.

The agency goes through great effort to support the status quo and uses only its own research to support its findings. This error is produced by the myopic methodology for the report.

The methodology is the most important part of any GAO report as it governs the method that the report would be put together. However, it also is the greatest weakness of the report as it excludes any finding that does not fit the methodology. As a result, GAO performance audit reports are not truly investigatory but rather a fancy way of self-congratulating the report writers’ “intelligence”.

The painful side effect of such a limited “review” is that civil servants who suffer unfairness are ill-served by such a report. An example is the painful, waste-of-human-resources manner that the Federal Reserve Board (Board) (not a CFO Act agency, but its operations serve as an example) does its performance management system, the so-called PMP.

The Board, using “rank and yank” policies fires a percentage of staff every year through targeting some employees with low ratings. Such low ratings place these employees on a list to be fired. Before losing the position, the target is offered a settlement agreement, in which severance is offered and, most importantly, the low rating is raised to satisfactory level. In exchange, the target is asked to release the agency from any legal claims of liability.

In this way, the Board can publish numbers showing that all employees got satisfactory or above ratings, while simultaneously covering up its firings.

Thus, the weakness of the GAO’s performance audit method is demonstrated with these facts from the Board, and shows the GAO as an impotent, insular, ineffective, and insulting-to-the-conscience agency when it does work in the performance management area.

I continue to be unimpressed and disgusted with the GAO; I will not give credibility to any of its work unless serious improvements are made in its reporting operations. Namely, extensive research and analytical work product that considers all facts and possibilities, not just proving an insular hypothesis.

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