Auditing Politics or Political Auditing?

Abstract

I investigate the relationship between Congress and the Government Accountability Office (GAO). The GAO is the federal legislature's primary auditor of the administrative state, evaluating agency programs on its own initiative, by statutory mandate, and at the request of members of Congress. I begin with a basic two-period principal-agent model between a legislature and an auditor, where the auditor must choose between two opportunities for self-initiated oversight in each period. The model identifies how the auditor, who must consider how neutrality or political bias, or the perceptions of either, acts given her own interests and the objectives of the legislature. The model also shows how the legislature can create socially optimal as well as socially perverse incentives for its auditor. I then explore empirically some of the model's assumptions and implications with data on the GAO's self-initiated investigations from 1978 to 1998. The empirical results support the theory that the GAO is a nonpartisan auditor facing some political constraints.

Keywords: Expertise, reputation, information, GAO, Congress

JEL Classification: C70, D72, D80, H11, K23