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WASHINGTON-By now the credit union community is aware that the General Accounting Office has been asked to complete a review of NCUA and credit unions, but just who is the GAO and should credit unions be nervous? A look at what the GAO is may provide some comfort for CUs in that it regularly conducts studies, and they are often not an indication that anything is wrong. Senator Paul Sarbanes (D-Md.) wrote a letter last year, while the Banking Committee chairman, requesting GAO to perform a study on the status of the credit union industry and whether it was fulfilling its statutory mission, a review of NCUA, and the impact of the Credit Union Membership Access Act of 1998. Sarbanes explained that the nature of the study is routine and ties in with the battening down of government oversight after the many accounting troubles recently. The final report is expected to be completed this spring, but it is only in the preliminary stages right now. “We’re in the process of trying to design the work,” GAO Financial Markets and Community Investment Managing Director Tom McCool explained. “It was a very broad request.” GAO is at the end of the design process, he said, and would be meeting with the lawmakers who requested it sometime this month to ensure it encompasses what the legislators envisioned. McCool pointed out that the last comprehensive study of credit unions and their regulator took place in 1991. In the process, GAO staff has met with NCUA, the credit unions trades, and-yes-some banker groups. McCool refused to characterize the bankers’ comments at this time. But, really, what is the GAO? The GAO, founded in 1921, is the investigative arm of Congress and supports the legislative body in its duty “to help improve the performance and ensure accountability of the federal government for the American people.” The agency, headquartered inside the Capitol Beltway, analyzes the use of public funds, federal programs and activities and makes suggestions to Congress to aid oversight, policy and funding decisions, as well as making recommendations to agency heads. GAO also investigates allegations into illegal or improper activities and issues legal opinions. It is like the balance to the executive branch’s check in America’s checks and balances system of government. The congressional watchdog is independent and nonpartisan. GAO does more than 1,000 reports a year, including more than a handful on NCUA and credit unions since 1975, and provides hundreds of testimonies. Nearly the entire federal government is subject to GAO review. The comptroller general, who is appointed to a 15-year term, heads GAO and its staff is almost completely made up of career employees to help ensure independence. The Budget and Accounting Act of 1921 transferred auditing, accounting, and claims responsibilities from the Treasury Department to the GAO when federal financial management was a shambles after World War I, which greatly increased national debt. Because of the government-spending explosion during and following World War II, GAO’s staff had grown to 14,000 by 1945, and was still overwhelmed by a stack of 35 million unaudited vouchers. After the war, it quickly cut its work force and refocused its job on examining the economy and efficiency of government operations instead of individual government transactions. Again in the 1950s spending escalated due to the Cold War and GAO’s work honed in once again on military spending. In 1952, it formally established a network of regional offices and opened international branches. The GAO opened an office in Saigon during the Vietnam War and investigated the Watergate incident in 1972 and studied President Lyndon Johnson’s Great Society program in 1967. Until the 1970s, the agency’s staff was mainly comprised of accountants, but then GAO started recruiting scientists, actuaries, health care and computer experts, just to name a few. In the last two decades, the GAO repeatedly warned of the troubles surfacing in the savings and loan industry and warned the government about its failure to rein in deficit spending. “Today,” the agency’s Web site reads, “the agency that once checked millions of government vouchers has become a multidisciplinary organization equipped to handle Congress’s toughest audit and evaluation assignments.” [email protected]

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