DEFINITION of 'Government Accountability Office - GAO'

The Government Accountability Office (GAO) is an agency of the U.S. government that monitors and audits government spending and operations. The GAO tracks how the legislative and executive branches of the government use taxpayer dollars, and then reports the findings directly to Congress. The Comptroller General serves as head of the GAO.

BREAKING DOWN 'Government Accountability Office - GAO'

The GAO serves as a financial watchdog over government spending. It monitors the operating results, financial positions and accounting systems used by the various governmental agencies. The GAO also conducts routine audits on all branches of government.

The Government Accountability Office (GAO) is an independent and non-partisan government agency that reports to the U.S. Congress.

Function and Management

The GAO conducts audits of federal government agencies to ensure that funds are spent efficiently and as intended. The agency reviews government programs and policies to determine if they are achieving their intended goals, and investigates allegations of illegal activity within the government. The GAO also issues legal determinations on proposed rules regarding other government agencies.

The GAO has broad authority to review the Federal Reserve's function and operations, and it conducted reviews of the emergency lending programs that were enacted following the 2008 financial markets collapse. It does not have the authority to review individual meetings and monetary policy decisions made by the Fed.

The Comptroller General is appointed by the President from a bipartisan list of Congressional recommendations. Gene L. Dodaro was appointed to the position in 2010; his 15-year term will expire in 2025.

Background

The GAO was established in 1921, taking over budget, accounting and auditing responsibilities from the U.S. Treasury Department. Government spending and debt had risen sharply during World War I, which ended in 1918, and both review and control were needed. The Budget and Accounting Act, which established the GAO, also required the President to prepare an annual budget for the federal government.

Government programs and expenditures expanded sharply in the 1930s during President Roosevelt's New Deal to combat the Great Depression. The GAO's role, which originally focused on ensuring payments were made properly, grew in importance. By 1945, at the end of World War II, government spending had again soared, and the GAO began auditing government agencies to ensure they worked as intended.

By the 1970's, the GAO's work had expanded to include reviews of agency work on consumer protection, the environment and social welfare. Agency employees, who had originally been only accountants, began to include scientists, health care professionals and computer scientists. The GAO also conducts audits and reviews of the Pentagon, including U.S. military spending on both personnel and weapons systems.

RELATED TERMS
  1. Farmers Home Administration - FmHA

    The Farmers Home Administration - FmHA is an agency of the U.S. ...
  2. Internal Revenue Service - IRS

    The IRS is the United States government agency that is responsible ...
  3. Audit Cycle

    An audit cycle is the accounting process that auditors employ ...
  4. Audit Committee

    An audit committee is one of the main operating committees of ...
  5. Limited Government

    Limited government is a political system in which legalized force ...
  6. Associate In Premium Auditing - ...

    Professional designation awarded by the Insurance Institute of ...
Related Articles
  1. Investing

    Your 401(k) Plan: Just How Outdated Is It?

    A recent GAO report indicates that many 401(k) plans are still clinging to archaic rules that hinder plan participants’ ability to save.
  2. Investing

    Live Ventures Board Member Adds Shares (LIVE)

    Dennis Gao, board member at diversified holding company Live Ventures Inc., has purchased 12,671 shares of the company's stock.
  3. Investing

    Audit the Fed: Is Trump Right? (JPM)

    Find out why Donald Trump has a point when he claims it is vitally important to audit the Federal Reserve, the central banking authority in the United States.
  4. Taxes

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.
  5. Personal Finance

    A Day In The Life Of An Auditor

    If you like the idea of examining and attesting to a company's financial performance for a living, a career in auditing might be right for you.
  6. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  7. Insights

    IT Security Auditing

    Find out about this promising career that can match IT with business studies.
  8. Taxes

    America's Missing $15 Billion in Corporate Taxes

    The “Starve the IRS” strategy cuts the supply of corporate auditors. Result: Big-money tax cheats go free and ordinary taxpayers pay every penny they owe.
  9. Insights

    A Look At Accounting Careers

    More than just crunching numbers, this career blends detective work with trouble shooting.
  10. Managing Wealth

    Make $1 Million? Expect an Audit

    If you make $1 million or more, the IRS has its eyes on you. Here's what you can do about it.
RELATED FAQS
  1. Who sets fiscal policy, the president or congress?

    Discover how fiscal policy is set in the United States, including how all three branches of government can affect a given ... Read Answer >>
  2. What are the pros and cons of operating on a balanced-budget?

    Take a brief look at some of the major arguments for and against balanced budgets for the U.S. government, the largest debtor ... Read Answer >>
  3. What are some examples of expansionary fiscal policy?

    Learn about expansionary fiscal policy – tax cuts and government spending – that are used by governments to boost spending ... Read Answer >>
  4. What impact does economics have on government policy?

    Learn about the impact of economic conditions on government policy and understand how governments engineer economic conditions ... Read Answer >>
  5. How long has the U.S. run fiscal deficits?

    Read about the history of deficit spending in the United States, dating back to 1789, and learn about then-Treasury of the ... Read Answer >>
Hot Definitions
  1. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
  2. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing a company that measures its current share price relative ...
  3. Internal Rate of Return - IRR

    Internal Rate of Return (IRR) is a metric used in capital budgeting to estimate the profitability of potential investments.
  4. Limit Order

    An order placed with a brokerage to buy or sell a set number of shares at a specified price or better.
  5. Current Ratio

    The current ratio is a liquidity ratio that measures a company's ability to pay short-term and long-term obligations.
  6. Return on Investment (ROI)

    Return on Investment (ROI) is a performance measure used to evaluate the efficiency of an investment or compare the efficiency ...
Trading Center