Government Oversight Roles and Value

Miniseries: Government Oversight of Built Infrastructure: Asset Management, Performance Audits, and Value Generation

This miniseries, titled “Government Oversight of Built Infrastructure: Asset Management, Performance Audits, and Value Generation,” explores the role of government oversight, both external and internal, and the value generated through disciplined asset management and performance audits. It includes an introduction, plus three articles: (1) Government Oversight Roles and Value; (2) Performance Audits of Built Infrastructure using a management systems approach; and (3) Internal Performance Audits of Built Infrastructure, a leadership playbook on how to drive performance through a robust internal audit program.

March 25, 2026[1]

By Amelia Shachoy,[2] Jack Dempsey,[3]

Introduction

Oversight is a longstanding and worldwide practice to foster accountability at all levels of government that is not always understood. Oversight institutions play a crucial role in improving the transparency of government activities. These institutions are independent of the agencies they oversee, and the executive and legislative branches of government. They have constitutional or legislative authority to audit the use of public funds, compliance with laws and regulations, and performance to evaluate the efficiency and effectiveness of government programs. This independent authority is designed to foster nonpartisan, fair, and fact-based reporting that is publicly available. This work plays a key role in ensuring government programs are working as intended, and decisions are made in the best interest of the users of products and services and taxpayers. The independence of oversight institutions also helps provide protection from retaliation when reporting cases of mismanagement or misuse of government funds. The results of their work shed light on activities, programs, and policies that need improvement or are vulnerable to fraud, waste, and abuse, holds agencies accountable for results, and informs future policymaking.

Oversight agencies include Supreme Audit Institutions (SAIs),[4] inspectors general (IGs) for individual agencies or programs, state and local governments, and public benefit corporations like transportation authorities and economic development corporations.[5] This article provides an overview of the oversight function including audit standards, measuring audit results, types of audits, follow-up, and insights into risks and opportunities based on audit results. It focuses on audits by the U.S. Government Accountability Office (GAO) and IGs at the federal, state, and local levels.[6]

National Supreme Audit Institutions

At the national level, Supreme Audit Institutions commonly have a national audit office headed by an independent Auditor General that performs these responsibilities and submit reports to the legislative branch. The International Organization of Supreme Audit Institutions (INTOSAI) develops public sector auditing standards and provides support to approximately 200 SAIs. In the U.S., the Government Accountability Office (GAO), headed by the Comptroller General of the United States who serves a term of 15 years, functions as the National Audit Office. GAO established and maintains two sets of standards for auditing the Federal government: Generally Accepted Government Auditing Standards (GAGAS) (known as the Yellow Book),[7] for auditing federal programs and functions and Standards for Internal Control in the Federal Government (known as the Green Book), which provides criteria for designing, implementing, and operating an effective internal control system.[8] These standards are applicable to any level of government and establish the standard of care GAO and IGs use in conducting their work.

Federal Agency Inspectors General

Below the national level, IGs perform the audit function within civilian or military organizations in countries around the world. In the U.S., IGs at the federal level were established with the purpose of creating independent units within each agency to prevent fraud, waste, abuse, and mismanagement of programs and operations and to promote economy, efficiency and effectiveness within the agencies they serve. To ensure their independence, IGs have authority to initiate work and are required to follow GAGAS and prepare semiannual reports, which are submitted to the agency head and to Congress. This independence from the agencies they serve ensures objectivity in their work. The Council of the Inspectors General on Integrity and Efficiency (CIGIE) addresses integrity, economy, and effectiveness issues that cut across federal agencies. It develops policies, standards, practices, and training to support approximately 70 offices of inspectors general (OIG). The federal concept of Independent, nonpartisan oversight expanded to state and local governments leading to the creation of more IGs at those levels.

State Inspectors General

Below the federal level, in the U.S., state government IGs perform audit functions similar to those of IGs at the federal level, such as, investigating allegations of fraud, waste, and abuse and conducting performance audits to evaluate efficiency and effectiveness of agency programs and operations at state and local executive branch agencies. The state IGs have authority to independently initiate work and are generally required to issue an annual report to the Governor and to the State Legislature. The responsibilities of state IGs vary by state.

In some states, like Virginia, the IG conducts both performance audits and criminal investigations. In other states, like Louisiana, the IG is a law enforcement agency with a sole mission to conduct criminal investigations. Similarly, the Ohio IG, while not a law enforcement agency, has a sole mission to conduct investigations of wrongful acts committed by state employees. Some states have IGs with missions solely focused on overseeing public assistance programs. For example, in Oklahoma, the IG has a mission to oversee Human Services; in Texas, the IG has a sole mission of overseeing the Health and Human Services Commission; and in Tennessee, the IG has a sole mission of overseeing TennCare—the state’s Medicaid program. Other states have a similar focus on overseeing public assistance programs with a dedicated IG for that purpose in addition to the state IG. For example, in New York State, the Office of the Welfare Inspector General oversees public assistance programs including SSI (Supplemental Security Income) and Medicaid.

In other states, like Massachusetts and Florida, the IG has extensive oversight responsibilities. Massachusetts created the first statewide Office of the Inspector General in the country, and, according to the IG, is the only state IG with jurisdictional authority over all state agencies and municipalities. Florida has an IG within every state agency that coordinates audit work for that agency, and the Office of the Chief Inspector General has responsibility for overseeing the work of each of the agency level IGs and for some statewide initiatives. For example, the Florida Chief IG conducted a statewide cybersecurity initiative including reviews of agency response, reporting, policies and procedures, and training available to all state agencies. Similar to the CIGIE role for federal IGs, the Association of Inspectors General (AIG) promotes quality standards and provides training to state IGs.

Local Inspectors General

At the local level, city and county IGs perform audit functions like those of the IGs at the state level also with varying responsibilities. Some states, such as Maryland and Florida, have IGs at the state, county, and municipal levels. The Miami-Dade County IG oversees county and local agencies as well as contracts for capital improvements at certain departments with large infrastructure projects, such as the departments of Aviation, Transportation and Public Works, and Water and Sewer. In addition to ensuring compliance with procurement practices, this can help in identifying savings or cost avoidance. Some individual city and county agencies also have their own IGs based on the scope or criticality of their mission. For example, the New York City Department of Investigation, one of the oldest law enforcement agencies in the country, serves as the independent IG investigating corruption, fraud, and mismanagement at all city agencies and public benefit corporations. Within the Department, the Commissioner oversees the work of individual IGs dedicated to overseeing specific agencies, the New York City Economic Development Corporation, New York City Housing Authority, and the New York City School Construction Authority.

Types of Audits

Generally Accepted Government Auditing Standards (GAGAS) define Financial Audits and Performance Audits, both of which can include investigations. All audits begin with objectives which determine the type of engagement to be conducted and the applicable standards to be followed. GAO and IGs follow these standards in conducting and reporting on their audits.

Financial audits provide independent assessments of whether an entity’s reported financial information is presented fairly, in all material respects, in accordance with recognized criteria. Financial audits conducted in accordance with GAGAS include financial statement audits and other related financial audits.

Performance audits provide objective analysis, findings, and conclusions to assist management and those charged with governance and oversight with improving program performance and operations, reducing costs, facilitating decision making by parties responsible for overseeing or initiating corrective action, and contributing to public accountability. Performance audits include assessments of program effectiveness, economy and efficiency; internal control; compliance with laws and regulations; and the status or condition of a program. This article focuses on performance audits by GAO and IGs and their applicability to asset management for built infrastructure.[9] 

For both financial and performance audits, guidance for investigations or legal proceedings states that laws, regulations, or policies may require auditors to report indications of the following to law enforcement or investigatory authorities before performing additional audit work: certain types of fraud or noncompliance with provisions of laws, regulations, contracts, and grant agreements. Federal IGs have investigative authority, and investigations are common at the state and local levels to address cases of fraud, waste, and abuse. Local level IGs tend to have more of a focus on these types of cases responding to allegations against agencies or individuals.

Performance Audits and the Elements of a Finding

Performance audit findings have four elements: criteria, condition, cause, and effect. They begin with a planning phase to establish objectives, determine the audit scope and methodology, and identify criteria, which requires background research.

Criteria identify the required or desired state or expectation for the program or operation under review. Criteria include relevant laws, regulations, standards, policies, procedures, measures, expected performance, and benchmarks against which performance is compared or evaluated. Criteria provide a context for evaluating evidence and understanding the findings, conclusions, and recommendations in the report.

The next step in the audit work is to determine condition. Condition is a situation that exists and is determined and documented during the audit work through document reviews, interviews, and fieldwork, such as site visits and case studies. Analysis of the evidence obtained on condition leads to determining cause and effect.

Cause is the factor or factors responsible for the difference between the criteria and the condition. Cause may serve as a basis for recommendations for corrective action. Common factors include poorly designed policies, procedures, or criteria; inconsistent, incomplete, or incorrect implementation; or factors beyond the control of program management. Identifying cause requires an assessment of whether the evidence provides a reasonable and convincing argument for why the stated cause is the key factor contributing to the difference between the condition and the criteria. There can be more than one causal factor, and it can be challenging to identify root cause—the underlying problem that needs to be addressed. Addressing causal factors can improve condition, but without addressing root cause, the condition is not prevented from persisting or recurring.

Effect or potential effect is the outcome or consequence resulting from the difference between the condition and the criteria. When the audit objectives include identifying the actual or potential consequences of a condition that varies from the criteria identified, effect is a measure of those consequences. Effect or potential effect may be used to demonstrate the need for corrective action in response to identified problems or relevant risks. This forms the basis for developing recommendations. Performance audit reporting includes presenting findings with all four elements—criteria, condition, cause, and effect—and conclusions and recommendations. Without identifying cause and effect, there is no basis for recommendations.

Audit Follow-up

Oversight agencies conduct regular follow-up on recommendations, monitor agency responses, and report on their status. For example, GAO routinely updates the status of each recommendation on its website, identifies priority open recommendations for each agency, and issues an annual letter to the agency head urging them to focus on those recommendations. GAO priority recommendations are those that, when implemented, have the potential to save large dollar amounts, help Congress make decisions on major issues, and substantially improve or transform major government programs. These priority recommendations include open recommendations to several federal agencies with large infrastructure portfolios that, if implemented, could improve management of built infrastructure and reduce the mission impacts of deferred maintenance within the agency.

Federal agency IGs have a similar process whereby they review audit findings and recommendations, identify the agency’s most significant management and performance challenges for the upcoming fiscal year, and issue an annual letter to the agency head detailing the challenges. Federal agency IGs also follow up on individual audit recommendations with implementation reviews of agency corrective action plans.

At the state level, for example, the Virginia IG issues an annual follow-up report on findings in areas identified as high-risk and the status of agency actions taken to address recommendations. The Illinois IG reports on policy changes resulting from investigations, and actions taken in response to recommendations, in its annual report. The Texas IG for Health and Human Services conducts follow-up assessments to determine the status of issues identified in previous reports and reissues recommendations that have not been addressed.

At the local level, for example, the Chicago IG evaluates each completed audit six months after publication to determine whether, when, and how to follow-up. Based on the findings and recommendations of the audit and circumstances at the audited agency, the IG decides to postpone follow-up to the next six-month period, conduct another full audit, or request and evaluate documentation of corrective actions taken by the audited agency. The District of Columbia IG also follows-up every six months and issues an annual report on recommendations with extensive details on the findings, recommendations, and status for all reports with open recommendations.

Measuring Audit Results

Oversight agencies measure their results in terms of contributions to government effectiveness and efficiency with both financial and nonfinancial results. GAO reports on these accomplishments in its annual Performance and Accountability Report (PAR). GAO reported for Fiscal Year 2025 that, over the past ten years, the average return on investment was $116 for every $1 spent. Based on its recommendations, GAO recorded $62.7 billion in financial benefits and 1,295 nonfinancial benefits, which include legislation and improvements to programs.[10] Federal IGs similarly report on their audit and investigative work and recommendations for potential cost savings in Semiannual Reports to the Congress—the first covering October 1 through March 31 and the second covering April 1 through September 30.

Some state IGs report on their accomplishments in similar annual reports detailing savings through investigations into potential fraud, waste, and abuse. For example, the Pennsylvania IG stated in its Fiscal Year 2023-2024 report that the return on investment for investigative activities was about $5 in cost savings for every $1 spent. It also reported savings of more than $56 million through its public assistance fraud prevention activities and collecting about $12.5 million in restitution for Long-Term Care benefit overpayments.

Local county and city IGs more commonly report savings from investigations for individual cases or agencies rather than for the city as a whole. However, some county and city IGs do report financial savings from cases of fraud, waste, abuse, or misconduct. For example, the Miami-Dade County IG reported in its Fiscal Year 2024 annual report that its audits led to about $1.5 million in recoveries, repayments, and court-imposed restitution. The Philadelphia IG described in its Fiscal Year 2023 annual report that its audits led to about $4.5 million in financial savings. The report breaks down savings by types of cases such as fines, financial recoveries, and salaries from employment terminations.

Audit Insight: Risks and Opportunities

Audit recommendations and follow-up provide oversight agencies with insight into risks and opportunities for improving operations and savings in government programs. The federal IG’s annual management and performance challenges report also serves to highlight risks facing their agencies for the upcoming fiscal year. GAO reports on risks across the federal government on its High-Risk List. Begun in 1990 and updated every two years at the start of each new Congress, the High-Risk list identifies programs and operations with serious vulnerabilities to waste, fraud, abuse, or mismanagement, or in need of transformation. As of the February 2025 update, there were 38 areas that cut across the federal government on the list.[11] This list includes ”Managing Federal Real Property,“ which was added in 2003 and covers the need to address data reliability, excess space and space utilization, building condition, and facility security. Over time, GAO estimates that progress on the High-Risk List has led to about $811 billion in savings.[12]

GAO also reports annually on opportunities to reduce fragmentation, overlap, and duplication in federal programs and achieve cost savings based on its audit recommendations. Since the first report in 2011, GAO estimates that implementation of its work highlighted in these reports has led to about $725 billion in savings for the federal government. The 15^th annual report, issued in May 2025, added 148 new measures in 43 topic areas that Congress and federal agencies could take to reduce costs, improve programs, and increase revenues.[13] GAO estimates that implementing these measures could result in additional savings of over $100 billion.[14]

The May 2025 report identified “DOD Underutilized and Excess Facilities” as a new topic area with fragmentation. GAO reported in March 2025 on inconsistent use of utilization rate guidance across the military services that resulted in inaccurate data for identifying unneeded or underused facilities.[15] GAO recommended that DOD develop actions to enforce its utilization rate guidance consistently and accurately for all facilities across the military services. If implemented, this recommendation could help military service officials better manage fragmentation in approaches to measuring and reporting on use of facilities. This would more fully inform DOD and congressional decisionmakers about the services’ real property portfolios and how to manage DOD’s property needs, potentially saving operating costs, such as leases and maintenance, on divested facilities.

Conclusion

Government oversight, with a consistent mission at each level of government, and a consistent approach to conducting audit work, is designed to prevent fraud, waste, abuse, and mismanagement and to ensure government resources are used efficiently and effectively for their intended purpose. This happens, in part, through audits with findings of improper actions or use of funds, or inefficiently managed programs, and recommendations to address them. Transparent audit follow-up and measuring results also play a key role in ensuring accountability and communicating value to the executive and legislative branches of government and the public.

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[1] First published on the AMP Newsletter,

[2] https://www.linkedin.com/in/amelia-shachoy-mpa-pmp-4644aa5/

[3] https://www.linkedin.com/in/jack-dempsey-assetmanagementpartnership/

[4] A Supreme Audit Institution is a public body of a state or supranational organization which exercises the highest public sector auditing function of the state or supranational organization. SAIs exercise their public sector audit functions in an independent, objective manner. The audit and jurisdictional responsibilities of SAIs vary based on their specific mandates and the legal frameworks in which they operate.

[5] In some state and local governments, the Comptroller, an elected official, has similar oversight authority to an Inspector General. This article does not include those officials and covers only independent inspectors general.

[6] At the federal, state, and local levels, other organizations support the legislative branch with research and analysis. These organizations mostly conduct budget, fiscal policy, and legislative impact analysis. At the federal level, the Congressional Budget Office fills this role by producing independent analysis of the budget and economic forecasts. Most states and some cities have similar organizations. These organizations do not perform audit work and are not covered in this article.

[7] GAO, Government Auditing Standards: 2024 Revision, GAO-24-106786 (Washington, D.C.: Feb. 2024).

[8] The Federal Managers’ Financial Integrity Act requires the Comptroller General to issue standards for internal control in the federal government. Office of Management and Budget Circular No. A-123 defines management’s responsibility for internal control in federal agencies. It provides specific requirements for assessing and reporting on controls in the federal government.

[9] This article describes performance audits conducted by an external entity such as an inspector general. The third article of this series describes internal performance audits conducted within an organization.

[10]GAO, Performance and Accountability Report, Fiscal Year 2025, GAO-26-90644 (Washington, D.C.: Jan. 29, 2026).

[11]GAO, High-Risk Series: Heightened Attention Could Save Billions More and Improve Government Efficiency and Effectiveness, GAO-25-107743 (Washington, D.C.: Feb. 25, 2025).

[12] GAO-25-107743.

[13]GAO, 2025 Annual Report: Opportunities to Reduce Fragmentation, Overlap, and Duplication and Achieve an Additional One Hundred Billion Dollars or More in Future Financial Benefits, GAO-25-107604 (Washington, D.C.: May 13, 2025).

[14] GAO-25-107604.

[15] GAO, DOD Real Property: Actions Needed to Improve Oversight of Underutilized and Excess Facilities, GAO-25-106132 (Washington, D.C.: Mar. 3, 2025).