May 3, 2021, letter commenting on the International Ethics Standards Board for Accountants’ January 2021 Exposure Draft, “Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code”

This letter provides GAO’s response to the exposure draft, Proposed Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code. GAO promulgates generally accepted government auditing standards (GAGAS) in the United States. GAGAS provides a framework for conducting high-quality audits of government awards with competence, integrity, objectivity, and independence. Our comments reflect the importance we place on reinforcing the values promoted in both the International Code of Ethics for Professional Accountants (Code) and GAGAS.

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    Why This Matters The Department of Education gives grants to schools and organizations that provide disadvantaged students with services to help them attend college. These eight grant programs are collectively known as “TRIO”, named for the original three programs. Congress provides over $1 billion each year to these programs, but Education could do more to understand how well these grants work to help students. Key Takeaways Education could improve the information it has about TRIO programs in two areas: (1) grantee performance data, and (2) program assessments. Schools and organizations report data to Education to show how the TRIO grants they receive have been working. For example, organizations that receive grants to encourage students to complete college report on the numbers and percentages of students who received services and earned degrees.  Education evaluates grantees’ performance using the self-reported data, but has done little to verify the data. Accurate performance data are important because returning grantees can earn points for past performance in the next grant competition—increasing the likelihood that they will receive new grants. Almost 80 percent of recent TRIO grants went to returning grantees.  Therefore, grantees may have an incentive to report a more positive picture than warranted. Officials from an organization representing TRIO grantees told us there is a risk that some grantees may report inaccurate information.  As for assessing the individual TRIO programs, studies of some programs are outdated. In addition, Education has never assessed the effectiveness of three of the seven TRIO programs that serve students, and did not have any new assessments planned as of August 2020. How GAO Did This Study We analyzed data from Education about TRIO grantees and applicants. We also reviewed relevant federal laws and regulations and agency documents, and interviewed Education officials and other TRIO stakeholders. Education should take additional steps to ensure the reliability of grantees' performance data and develop a plan for assessing the effectiveness of the TRIO programs that serve students. Education generally agreed with our recommendations. For more information, contact Melissa Emrey-Arras at (617) 788-0534 or emreyarrasm@gao.gov.
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    The Department of Defense (DOD) has encouraged the use of fixed-price-incentive (FPI) contracts where appropriate. These contracts can provide defense contractors with a profit incentive for effective cost control and performance depending on how they are structured. Over the 10-year period from fiscal years 2010 through 2019, obligations on FPI contracts for major defense acquisition programs (MDAPs) grew to account for almost half of the $65 billion in obligations for fiscal year 2019. Percentage of Obligations by Contract Type for Major Defense Acquisition Programs from Fiscal Years 2010 through 2019 DOD guidance, including Better Buying Power initiatives, influenced DOD's use of FPI contracts over the last decade for the selected contracts GAO reviewed. In addition, when selecting a contract type, contracting officers also considered factors including the availability of cost or pricing data, previous experience with the contractor, and the previously used contract type. DOD has not assessed the extent to which use of FPI contracts has contributed to achieving desired cost and schedule performance outcomes. DOD spends billions of dollars annually using fixed-price type contracts to acquire its MDAPs, among other things. In 2010, DOD's Better Buying Power guidance encouraged the use of FPI contracts as a way to obtain greater efficiency and productivity in defense spending. Congress included a provision in statute for GAO to report on DOD's use of fixed-price type contracts, including FPI. This report examines (1) the extent to which DOD has awarded FPI contracts associated with MDAPs from fiscal years 2010 through 2019, and (2) the factors that influenced DOD's decision to use FPI contracts and the extent to which DOD assesses their use, among other objectives. GAO analyzed government contracting data by contract type for fiscal years 2010 through 2019 on contracts for 101 MDAPs. GAO further analyzed a non-generalizable sample of 12 contracts including six FPI and six firm-fixed-price (two of each type from each of the three military departments); conducted file reviews; reviewed policy documentation; and interviewed DOD officials. GAO recommends that DOD conduct an assessment of its use of FPI contracts for major defense acquisition programs, including the extent to which share lines and other contract elements contributed to achieving desired cost and schedule performance outcomes. DOD agreed with GAO's recommendation. For more information, contact W. William Russell at (202) 512-4841 or russellw@gao.gov.
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