Accountability & Transparency in the TARP & ARRA: GAO’s RoleSusan OffuttChief Economist

15 October 2009Society of Government Economists

Types of supreme audit institutions

Napoleonic Westminster Board

Audit responsibilities

Financial audits assess accuracy and fairness of financial statements

Compliance audits review gov’t taxing and spending for conformance with law

Performance audits aim to establish whether taxpayers have gotten what they paid for

Performance audits

Performance measurement entails regular assessment of progress made toward goals

Program evaluation judges effectiveness of a program Process or implementation Outcome Impact Cost-benefit

American Recovery & Reinvestment Act

Signed February 17, 2009 Total cost (tax and spending): $787 billion Purposes

Preserve and create jobs and promote recovery

Assist those most impacted by recession Invest in science and health care

technology Invest in infrastructure Stabilize state and local gov’t budgets

GAO responsibilities under the Recovery Act

Conducting bimonthly reviews of selected states’ and localities’ use of funds

Commenting on recipient reports on the numbers of jobs created or preserved

Reviewing areas such as trade adjustment assistance, new education incentive grants, and efforts to increase small business lending

Monitoring downturn’s long term effect on states (primarily in change in health care costs)

State & local reporting for bimonthly reviews

Longitudinal study of 16 states and DC Represents about 2/3rds of US population

and 2/3rds of intergovernmental assistance funds

Localities sampled within selected states

Describe use of funds Assess up-front safeguards and ongoing

monitoring, audits, and evaluations Review plans to evaluate impact of funds

American Recovery & Reinvestment Act

1. Arizona

2. California

3. Colorado

4. Florida

5. Georgia

6. Illinois

7. Iowa

8. Massachusetts

9. Michigan

10. Mississippi

11. New Jersey

12. New York

13. North Carolina

14. Ohio

15. Pennsylvania

16. Texas

17. Washington, D.C.

Programs in GAO Review: 87% of estimated Fiscal Year 2009 Recovery Act Outlays to States and Localities

Source: GAO analysis of data from CBO and Federal Funds Information for States.

Projected versus Actual Federal Outlays to States and Localities under the Recovery Act

Source: GAO analysis of data from CBO, Recovery.gov and Federal Funds Information for States.

0

20

40

60

80

100

120

2009 2010 2011 2012 2013 2014 2015 2016

Fiscal year

Estimated

$51.1 billion in Actual Federal Outlaysas of September 25, 2009

Outlays in billions of dollars

Comparison of State and Local Recovery Act Funding

Source: GAO analysis of CBO and FFIS data.

GAO recommendations

Accountability and transparency

Reporting on impact

Communications and guidance

Implementing and overseeing the Recovery Act

Expectations for “an unprecedented level of transparency and accountability”

Qualified personnel need to implement proper controls and accountability at all levels of gov’t

Close and ongoing coordination needed among federal, state, and local gov’ts

Accountability community has special responsbility to ensure collective efforts are coordinated well

GAO’s work onfinancial markets and institutions

Oversight of Troubled Asset Relief Program (TARP)

Audits of FDIC Deposit Insurance Fund, FHFA, TARP, and US Gov’t Financial Statements

Evaluation of financial regulatory system Participate in INTOSAI task force on the

global financial crisis

TARP components

$700 billion in TARP funds As of September, $364 billion disbursed

Capital purchase program ($200b) Targeted investment program ($40b) Systemically significant failing institutions

($43b) Automotive industry financing ($76b) Consumer & business lending ($.1b)

Anticipated Home affordable mortgage program Public-private investment program

GAO oversight

Must report to Congress every 60 days Reports address range of management

and program concerns Recommendations to date

Better monitoring of use of TARP funds Better articulation of purposes of programs Improve management structure