Management Report: Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements

The Secretary of the Treasury, in coordination with the Director of OMB, prepares the Financial Report of the United States Government , which contains the CFS. Since GAO's first audit of the fiscal year 1997 CFS, certain material weaknesses and other limitations on the scope of its work have prevented GAO from expressing an opinion on the accrual-based consolidated financial statements. As part of the fiscal year 2018 CFS audit, GAO identified material weaknesses and other continuing control deficiencies in the processes used to prepare the CFS. The purpose of this report is to provide (1) details on new control deficiencies GAO identified related to the processes used to prepare the CFS, along with related recommendations, and (2) the status of corrective actions that Treasury and OMB have taken to address GAO's prior recommendations related to the processes used to prepare the CFS that remained open as of the completion of GAO's audit of the fiscal year 2017 CFS.

During its audit of the fiscal year 2018 consolidated financial statements of the U.S. government (CFS), GAO identified control deficiencies in the Department of the Treasury's (Treasury) and the Office of Management and Budget's (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control that involve the federal government's inability to

adequately account for intragovernmental activity and balances between federal entities;

reasonably assure that the consolidated financial statements are (1) consistent with the underlying audited entities' financial statements, (2) properly balanced, and (3) in accordance with U.S. generally accepted accounting principles; and

reasonably assure that the information in the (1) Reconciliations of Net Operating Cost and Budget Deficit and (2) Statements of Changes in Cash Balance from Budget and Other Activities is complete, properly supported, and consistent with the underlying information in the audited entities' financial statements and other financial data.

During its audit of the fiscal year 2018 CFS, GAO identified three new internal control deficiencies.

Treasury did not have sufficient procedures to analyze and determine whether appropriate disclosures related to new federal accounting standards were included in the draft fiscal year 2018 Financial Report of the United States Government .

Treasury did not have sufficient procedures to properly support and consistently report restatements, reclassifications, and adjustments to beginning net position in the draft fiscal year 2018 Financial Report of the United States Government .

In addition, GAO found that various other control deficiencies identified in previous years' audits with respect to the processes used to prepare the CFS either were resolved or continued to exist. Specifically, Treasury, in coordination with OMB, implemented corrective actions that resolved the control deficiencies related to two of the 14 recommendations open as of the completion of GAO's fiscal year 2017 CFS audit, and as a result, GAO closed these recommendations. While progress was made, 12 of the 14 recommendations remained open as of March 20, 2019, the date of GAO's report on its audit of the fiscal year 2018 CFS. GAO will continue to monitor the status of corrective actions to address the four new recommendations made in this report as well as the 12 open recommendations from prior years as part of its fiscal year 2019 CFS audit.

GAO is making four new recommendations—three to Treasury and one to both Treasury and OMB—to address the control deficiencies identified during the fiscal year 2018 CFS audit. In commenting on GAO's draft report, Treasury concurred with the four new recommendations and noted its ongoing commitment to improving federal financial reporting. OMB generally agreed with the draft report and noted its continuing commitment to achieving sound financial management across the federal government.

In our March 2019 report on the results of our audit of the consolidated  financial statements of the U.S. government (CFS) as of and for the fiscal  years ended September 30, 2018, and 2017, we disclaimed an opinion  on the CFS. Since GAO’s first audit of the CFS, for fiscal year 1997,  certain material weaknesses in internal control over financial reporting  and other limitations on the scope of our work have resulted in conditions  that prevented us from expressing an opinion on the federal government’s  accrual-based consolidated financial statements. See appendix II of our  report on our audit of the fiscal years 2018 and 2017 CFS for details on  these reported material weaknesses. Internal control deficiencies related  to several of these material weaknesses were also reported along with  related recommendations by other auditors in their audit reports on  individual federal entities’ financial statements.

Several of these material weaknesses relate to the federal government’s  processes used to prepare the CFS. Such material weaknesses involve  the federal government’s inability to adequately account for intragovernmental activity and balances  reasonably assure that the consolidated financial statements are (1)  consistent with the underlying audited entities’ financial statements,  (2) properly balanced, and (3) in accordance with U.S. generally  accepted accounting principles; and  reasonably assure that the information in the (1) Reconciliations of  Net Operating Cost and Budget Deficit and (2) Statements of  Changes in Cash Balance from Budget and Other Activities is  complete, properly supported, and consistent with the underlying  information in the audited entities’ financial statements and other  financial data.

The Secretary of the Treasury, in coordination with the Director of the  Office of Management and Budget (OMB), prepares the Financial Report  of the United States Government (Financial Report), which contains the  CFS, on behalf of the federal government. The purpose of our  management report is to provide (1) detailed information on new control  deficiencies identified during our fiscal year 2018 audit that relate to the  processes used to prepare the CFS, along with related recommendations,  and (2) the status of corrective actions that the Department of the  Treasury (Treasury) and OMB have taken to address the 14  recommendations relating to the processes used to prepare the CFS that  were detailed in our previous reports and remained open as of February  7, 2018, the date of our report on the audit of the fiscal year 2017 CFS.

As part of our audit of the fiscal years 2018 and 2017 CFS, we  considered the federal government’s financial reporting procedures and  related internal control. Also, we determined the status of corrective  actions Treasury and OMB have taken to address open  recommendations relating to their processes to prepare the CFS, detailed  in our previous reports that remained open as of the completion of our  fiscal year 2017 audit. A full discussion of our scope and methodology is  included in our March 2019 report on our audit of the fiscal years 2018  and 2017 CFS. We have communicated each of the control deficiencies  discussed in this report to your staff. We performed our audit in  accordance with U.S. generally accepted government auditing standards.  We believe that our audit provides a reasonable basis for our findings and  recommendations in this report.

Control Deficiencies Identified during Our Fiscal Year 2018 Audit

During our audit of the fiscal year 2018 CFS, we identified three new  internal control deficiencies in Treasury’s processes used to prepare the  CFS. Specifically, we found that (1) Treasury did not have sufficient  procedures to analyze and determine whether appropriate disclosures  related to new federal accounting standards were included in the draft  fiscal year 2018 Financial Report; (2) Treasury did not have sufficient  procedures to properly support and consistently report restatements,  reclassifications, and adjustments to beginning net position reported in  the draft fiscal year 2018 Financial Report; and (3) Treasury and OMB did  not have adequate processes and procedures for reporting appropriate  information regarding legal contingency losses in the fiscal year 2018  CFS.

During our fiscal year 2018 CFS audit, we found that Treasury did not  have sufficient procedures to analyze and determine whether appropriate  disclosures related to new federal accounting standards were included in  the draft fiscal year 2018 Financial Report. Treasury uses working  groups, disclosure checklists, and other tools to assist in determining  appropriate reporting in accordance with new standards. Treasury’s  procedures include working with federal entities during the fiscal year to  determine the reporting required based on new standards. Treasury  presents the new standards for discussion at monthly Central Reporting  Team meetings that include financial reporting representatives from  federal entities. Treasury also establishes working groups for certain new  standards, such as the working group established for the Federal  Accounting Standards Advisory Board’s (FASAB) Statement of Federal  Financial Accounting Standards (SFFAS) 47, Reporting Entity, to work  with federal entities on their implementation. Treasury also utilizes a  financial reporting disclosure checklist to help determine that all  disclosures required by FASAB standards are included in the CFS.  Treasury updates this disclosure checklist throughout the fiscal year and  completes the checklist as a key focus of the CFS compilation process.

Although Treasury has processes in place for the implementation of new  standards, certain disclosures required by new standards were not  included in the draft fiscal year 2018 Financial Report. For example, the  draft fiscal year 2018 Financial Report did not include disclosures related  to federal government land assets, such as the number of acres held at  the end of each reporting period, explanations of federal entities’ election  to include or exclude land and land rights from their opening balances,  and a reference to the component reporting entity’s financial report, as  required by SFFAS 50, Establishing Opening Balances for General  Property, Plant, and Equipment. In addition, the draft fiscal year 2018  Financial Report did not include disclosures related to significant  component entity amounts included in certain CFS line items that were  determined in accordance with Financial Accounting Standards Board  (FASB) standards rather than FASAB standards, in accordance with  SFFAS 47. SFFAS 34, The Hierarchy of Generally Accepted Accounting  Principles, Including the Application of Standards Issued by the Financial  Accounting Standards Board, provides that general purpose federal  financial reports prepared in conformity with accounting standards issued  by FASB also may be regarded as in conformity with U.S. generally  accepted auditing principles (U.S. GAAP). SFFAS 47 permits the  consolidation of amounts determined in accordance with FASAB and  FASB standards into a single line item without conversion for differences  in accounting policies and also provides application guidance that  emphasizes the need for disclosures of the different accounting policies  and the related amounts to aid financial statement users’ understanding  of the information provided.

Treasury’s disclosure checklist was not updated in sufficient detail for  Treasury accountants to identify appropriate disclosures for inclusion in  the draft fiscal year 2018 Financial Report in accordance with these new  federal accounting standards. The updated disclosure checklist used for  fiscal year 2018 did not include (1) specific details about disclosures  required by SFFAS 50 for land assets, such as the number of acres  added or disposed of during the reporting period, and (2) questions to  help determine the need for disclosures to communicate the effect on  certain CFS line items that include material amounts determined using  accounting policies in accordance with FASB standards rather than  FASAB standards, as SFFAS 47 allows. Also, Treasury did not calculate  in aggregate the amounts that are reported in the CFS on a FASB basis  by line item in order to determine line items where the disclosures were  needed. We communicated these matters to Treasury officials, who  conducted a comprehensive analysis and included disclosures in the final  fiscal year 2018 Financial Report, as appropriate. In addition, although  Treasury established a working group to help implement SFFAS 47,  Treasury’s procedures did not provide for sufficient consultation with  technical experts in interpreting new standards and updating the  disclosure checklist to reasonably assure that all requirements related to  the new standard were incorporated during implementation. Actively  consulting with technical experts, such as members of FASAB, the body  designated as the source of U.S. GAAP for federal reporting entities,  would help minimize the risk of misinterpreting the standards or  presenting and disclosing information in the Financial Report that is  incorrect, inconsistent, or incomplete.

Standards for Internal Control in the Federal Government states that one  of the key objectives of an organization’s internal control over financial  reporting is to provide reasonable assurance as to the reliability of its  financial reporting, including its financial statements and note  disclosures. Accompanying notes are an integral part of financial  statements and provide additional disclosures that are necessary to make  the financial statements more informative.

Without sufficient procedures for analyzing and determining the  appropriate reporting of disclosures required by new federal accounting  standards, Treasury cannot reasonably assure that disclosures included  in the Financial Report are reliable and complete.

We recommend that the Secretary of the Treasury should ensure that the  Fiscal Assistant Secretary develops and implements procedures to  enhance Treasury’s processes for reasonably assuring that the Financial  Report includes disclosures required by new federal accounting  standards, such as conducting an appropriate level of analysis to  determine whether disclosures are needed, consulting with technical  experts, and including additional details on these requirements in its  financial reporting disclosure checklists. (Recommendation 1)

Restatements, Reclassifications, and Adjustments to Beginning Net Position

During our fiscal year 2018 CFS audit, we found that Treasury did not  have sufficient procedures to properly support and consistently report  restatements, reclassifications, and adjustments to beginning net position  in the draft fiscal year 2018 Financial Report. Treasury identifies changes  to prior year amounts (either restatements or reclassifications) and  adjustments to current year beginning net position based on its review of  information that significant component entities submit to Treasury and  applicable FASAB standards. Treasury also performs procedures to  determine the consistency of such reporting with significant component  entities’ audited financial statements.

Treasury’s Subject Matter Analysis standard operating procedure  includes steps for Treasury’s staff to obtain financial information from  significant component entities and to prepare the draft Financial Report.  According to these procedures, Treasury’s staff uses third quarter  financial data that significant component entities report and other  information to obtain a preliminary understanding of potential changes to  prior year amounts and adjustments to beginning net position. Treasury’s  staff compares these preliminary results to the entities’ year-end  information and compares beginning net position amounts reported for  the current year to ending net position amounts reported the prior year to  identify changes to prior year amounts. The staff then prepares a table  categorizing such changes as restatements, reclassifications, or  adjustments to beginning net position. This table includes a separate line  for each of the significant component entities but does not include  separate lines for each line item or note disclosure affected. Treasury  uses this table to prepare a summary analysis of its conclusions for  reporting restatements, reclassifications, and adjustments to beginning  net position and related note disclosures presented in the draft Financial  Report. The subject area manager reviews the results of the procedures  that Treasury’s staff performed and documented.

Although Treasury’s staff followed these procedures for fiscal year 2018,  we found that Treasury did not always maintain sufficient support for  restatements, reclassifications, and adjustments to beginning net position  included in the draft fiscal year 2018 Financial Report. For example,  Treasury reported an adjustment to beginning net position but did not  identify errors made in prior years to support such an adjustment.  Treasury also reported that restatements affected the Statement of  Changes in Cash Balance from Budget and Other Activities, but  supporting documentation provided by Treasury for the draft fiscal year  2018 Financial Report did not clearly indicate how this statement was  affected by restatements. Treasury included a summary of significant  accounting policies in Note 1 to the CFS as required by U.S. GAAP,  which contained information about restatements, reclassifications, and  adjustments to beginning net position. However, Treasury did not disclose  consistent information in related line item notes, such as those for loans  receivable and loan guarantee liabilities, federal employee and veteran  benefits payable, and funds from dedicated collections in the draft fiscal  year 2018 Financial Report. Treasury included information in its summary  analysis and supporting documentation that was not consistent with  information that significant component entities reported. Although  Treasury’s processes did not identify these inconsistencies, Treasury  corrected them in response to our questions.

We found that Treasury did not identify these inconsistencies, in part,  because its subject matter review procedures did not include steps for  coordinating with Treasury managers of other subject matter areas to  reasonably assure consistency and appropriate support for conclusions.  Also, although Treasury’s process involved preparing a summary of  analyses performed, Treasury’s process did not include steps or other  tools to reasonably assure that consistent information was communicated  in all financial statement line items and note disclosures affected by  restatements, reclassifications, and adjustments to net position.

SFFAS 21, Reporting of Corrections of Errors and Changes in Accounting  Principles, requires that reporting entities restate prior period financial  statements for material errors discovered in the current period, if such  statements are provided for comparative purposes and if the effect of an  error would be material to the financial statements in either period. If not  material, corrections should be made to the beginning balance of  cumulative results of operations in the statement of changes in net  position. A reclassification is the movement of a prior year amount in  comparative financial statements in order to conform to the current year  presentation. Standards for Internal Control in the Federal Government  states that management should (1) design control activities to achieve  objectives and respond to risks, such as procedures to help reasonably  assure that financial information is completely and accurately reported,  and (2) implement control activities, such as documenting responsibilities  through policies and procedures. Management should periodically review  policies, procedures, and related control activities for continued relevance  and effectiveness in achieving objectives.

Without sufficient procedures for reporting restatements, reclassifications,  and adjustments to beginning net position, there is an increased risk of  presenting information that is inaccurate or incomplete in the Financial  Report.

We are making the following two recommendations to Treasury:

The Secretary of the Treasury should ensure that the Fiscal Assistant  Secretary enhances existing procedures for Treasury management to  perform additional reviews for restatements, reclassifications, and  adjustments to beginning net position to reasonably assure that they  are properly supported and accurately reported. (Recommendation 2)

The Secretary of the Treasury should ensure that the Fiscal Assistant  Secretary develops and implements steps to reasonably assure that  restatements, reclassifications, and adjustments to beginning net  position are consistently reported in the Financial Report, such as  developing a tool that identifies all affected financial statement line  items and note disclosures. (Recommendation 3)

Contingencies for Legal Representation Letters

During our fiscal year 2018 CFS audit, we found that Treasury and OMB  did not have adequate processes and procedures for reporting  appropriate information regarding legal contingency losses in the fiscal  year 2018 CFS. Significant component entities are responsible for  properly accounting for and reporting legal contingency losses in their  entity-level financial statements and submitting this information to  Treasury for inclusion in the CFS. For each entity-level financial  statement audit, U.S. generally accepted government auditing standards  require that component entity auditors obtain written legal representations  as part of the audit. The significant component entities provide interim  and final legal representation letters, along with management schedules,  to Treasury, the Department of Justice (DOJ), and GAO.

According to DOJ’s established process, its legal counsel reviews  individual cases included in these legal representation letters for which  the potential loss exceeds $500 million individually or in the aggregate for  similar cases. DOJ is responsible for preparing and submitting an interim  and final government-wide legal representation letter to Treasury and  GAO, containing its assessment of the potential litigation losses, including  whether there are litigation, claims, or assessments that were not  addressed in the significant component entities’ legal representation  letters that DOJ believes should have been reported or which DOJ  believes should have been reported differently.

Treasury’s procedures call for it to determine whether the financial  statement information that the significant component entities submitted  and Treasury used to compile the fiscal year 2018 CFS is consistent with  the significant component entities’ management schedules, legal  representation letters, and the government-wide legal representation  letter. For fiscal year 2018, Treasury identified various inconsistencies  among the significant component entities’ financial statement information,  management schedules, and legal representation letters as well as  inconsistencies between the government-wide legal representation letter  and the significant component entities’ management schedules and legal  representation letters. There may be appropriate reasons for these  differences. For example, although management often relies on advice of  legal counsel on the likelihood of loss and estimate of the amount or  range of potential loss, as reflected in the legal representation letter,  management is ultimately responsible for determining whether the loss  should be recognized as a liability or disclosed in the notes to the  financial statements. As such, management may make a different  determination as to the likelihood of loss or estimated loss amounts than  those in the legal counsel’s assessment. Also, differences between the  government-wide legal representation letter and the significant  component entities’ legal representation letters can occur in situations in  which DOJ has more current information on the likelihood of loss and  estimated loss amounts.

However, Treasury was not always able to timely determine whether  there were appropriate reasons for the differences it identified or whether  adjustments were needed to the legal contingency loss information  reported in the fiscal year 2018 CFS. Based on our work, we found that  certain of these differences required correction in the fiscal year 2018  CFS. For example, Treasury noted that one significant component entity  included estimated loss amounts for reasonably possible cases in its  management schedule and that such amounts were not reported in the  financial information provided to Treasury for consolidation. Because  Treasury was unable to timely resolve the issue, the fiscal year 2018 CFS  was not appropriately adjusted to include these amounts. Further, DOJ  did not provide us the final government-wide legal representation letter as  of our audit completion date.

Although Treasury has procedures for reviewing and analyzing the  significant component entities’ legal contingency loss information and the  government-wide legal representation letter, we found that Treasury  lacked effective processes and procedures to reasonably assure that  appropriate information regarding legal contingency losses was reported  in the fiscal year 2018 CFS. Specifically, Treasury did not have sufficient  processes and procedures to obtain the needed information in a manner  that would facilitate the timely compilation of the legal contingency loss  information for inclusion in the fiscal year 2018 CFS or for timely resolving  issues identified during its review. For example, as part of Treasury’s  procedures, it compares the estimated loss amounts for reasonably  possible and probable cases included in the significant component  entities’ management schedules with the financial statement information  that the significant component entities report for inclusion in the fiscal  year 2018 CFS. If discrepancies are greater than 10 percent, Treasury’s  procedures call for significant component entities to provide an  explanation. However, because of the extensive amount of time needed  to perform this analysis, Treasury was not always able to timely follow up  and resolve the differences with the significant component entities.

SFFAS 5, Accounting for Liabilities of The Federal Government, as  amended by SFFAS 12, Recognition of Contingent Liabilities Arising from  Litigation, contains accounting and reporting standards for loss  contingencies, including those arising from litigation, claims, and  assessments. An entity should recognize a liability and a related charge  to expense for an estimated loss from a loss contingency only when (1) a  past event or exchange transaction has occurred, (2) a future outflow or  other sacrifice of resources is probable, and (3) the future outflow or  sacrifice of resources is measurable. A contingent liability should be  disclosed if any of the conditions for liability recognition are not met and  there is at least a reasonable possibility that a loss or an additional loss  may have been incurred. Disclosure should include the nature of the  contingency and an estimate of the possible liability, an estimate of the  range of possible liability, or a statement that such an estimate cannot be  made. OMB Bulletin 19-01 provides guidance to federal agencies on the  preparation of legal letters and management schedules, and the Treasury  Financial Manual provides federal agencies the legal letter reporting  requirements. Also, Standards for Internal Control in the Federal  Government provides that management should design control activities to  achieve objectives and respond to risks. For example, management  should design control activities so that financial information is completely  and accurately reported.

Until the federal government implements effective processes and  procedures to obtain and assess information regarding legal contingency  losses, the reliability of amounts and disclosures associated with legal  loss contingencies reported in the CFS and the ability to assess their  potential effect on the financial condition of the federal government will be  limited.

We recommend that the Secretary of the Treasury should ensure that the  Fiscal Assistant Secretary, working in coordination with the Controller of  OMB, establishes effective processes and procedures to reasonably  assure that appropriate information regarding legal contingency losses is  reported in the CFS. (Recommendation 4)

Status of Recommendations from Prior Reports

At the completion of our fiscal year 2017 audit, 14 recommendations were  open from our prior reports regarding control deficiencies in the  processes used to prepare the CFS. During our fiscal year 2018 CFS  audit, we found that Treasury, in coordination with OMB, implemented  corrective actions that resulted in significant progress in resolving certain  of the control deficiencies addressed by our prior recommendations. For  two recommendations, the corrective actions resolved the related control  deficiencies, and we closed the recommendations.

While progress was made, 12 recommendations from our prior reports  remained open as of March 20, 2019, the date of our report on the audit  of the fiscal year 2018 CFS. These continuing control deficiencies  contributed to the three material weaknesses that relate to the federal  government’s processes used to prepare the CFS. Consequently, a total  of 16 recommendations need to be addressed—12 remaining from prior  reports and the four new recommendations we are making in this report.

Appendix I summarizes the status as of March 20, 2019, of the 14 open  recommendations from our prior years’ reports according to Treasury and  OMB, as well as our own assessment and additional comments, where  appropriate. Various efforts are under way to address these  recommendations. As part of our fiscal year 2019 CFS audit, we will  continue to monitor Treasury’s and OMB’s progress in addressing our  recommendations.

We provided a draft of this report to Treasury for comment. In its written  comments, reproduced in appendix II, Treasury concurred with our four  new recommendations. Treasury agreed that new processes and  procedures would enhance its internal controls over the processes used  to prepare the CFS. It also described actions it will take, and has taken, to  address these recommendations as well as certain open  recommendations from our prior reports that are summarized in appendix  I of this report. Treasury also provided technical comments, which we  incorporated as appropriate.

Treasury stated that it implemented process improvements that  addressed three of the new recommendations, which resulted from our  review of the draft fiscal year 2018 Financial Report, prior to the  publication of the final report. These three recommendations are aimed at  enhancing Treasury’s processes related to (1) including appropriate  disclosures required by new federal accounting standards in the Financial  Report and (2) supporting and consistently reporting restatements,  reclassifications, and adjustments to beginning net position. In our report,  we acknowledged that Treasury addressed the need for certain additional  disclosures related to new federal accounting standards and  inconsistencies related to restatements, reclassifications, and  adjustments to beginning net position in the final fiscal year 2018  Financial Report. However, addressing the specific issues we identified in  the draft fiscal year 2018 Financial Report does not fully address our  recommendations and Treasury did not provide sufficient documentation  supporting its efforts to develop and implement or enhance procedures or  other steps to reasonably assure that the Financial Report is complete  and accurate related to these areas. Treasury also stated that it will work  on addressing the remaining recommendation.

Regarding five open recommendations from our prior year reports related  to treaties and other international agreements, Treasury stated that its  existing controls provide reasonable assurance that there are no material  misstatements in the Financial Report and that it worked with federal  entities in fiscal year 2018 to obtain reasonable assurance that proper  amounts and disclosures are reported as commitments and  contingencies. As noted in appendix I, Treasury established three broad  categories to help agencies in classifying treaties and other international  agreements with respect to their potential financial implications. The  establishment of three standard categories provides some guidance for  identifying and reporting treaties and other international agreements;  however, as stated in appendix I, we continue to believe further guidance  is needed to determine whether additional disclosure in the CFS is  required by U.S. GAAP. The guidance should be consistent with FASAB  standards and provide procedures for identifying and assessing all  treaties and other international agreements for potential contingencies.

Treasury also stated that its efforts to validate the material completeness  of budgetary information included in the Financial Report and verify the  consistency of such information with federal entity reports are sufficient to  address the two open recommendations from our prior year reports  related to the Reconciliations of Net Operating Cost and Budget Deficit  and the Statements of Changes in Cash Balance from Budget and Other  Activities (Reconciliation Statements). As noted in appendix I, Treasury  has improved its process by documenting its detailed analyses related to  the accrual-based and cash-based effects of federal entities’ transactions  included in net operating cost and the budget deficit and by continuing to  identify items needed to prepare the Reconciliation Statements. However,  as noted in appendix I, we continue to believe additional work is needed  to (1) reconcile line items to audited federal entity financial statements  and (2) determine the appropriate presentation for the reconciling items,  which could affect the line items included.

Treasury stated that it appreciates our perspective and will continue to  focus its efforts on cost-beneficial solutions to resolve the material  conditions that preclude having an opinion rendered on the CFS.  Treasury also indicated that it plans to work with GAO as it fulfills its  commitment to improving federal financial reporting. As part of our fiscal  year 2019 CFS audit, we will determine the status of corrective actions to  address the four new recommendations made in this report and the 12  remaining open recommendations from our prior year reports.

We provided a draft of this report to OMB for comment. In oral comments,  OMB staff in the Office of Federal Financial Management stated that  OMB generally agreed with the draft report and Treasury’s written  response. OMB noted that the current administration is committed to  continuing to work with Treasury and federal agencies to achieve sound  financial management across the federal government.

This report contains three recommendations to the Secretary of the  Treasury and one recommendation to the Secretary of the Treasury,  working in coordination with the Controller of OMB. The head of a federal  entity is required by 31 U.S.C. § 720, to submit a written statement on  actions taken or planned on our recommendations to the Senate  Committee on Homeland Security and Governmental Affairs and to the  House Committee on Oversight and Reform, the congressional  committees with jurisdiction over the programs and activities that are the  subject of our recommendations, and GAO not later than 180 days after  the date of this report. A written statement must also be sent to the  Senate and House Committees on Appropriations with the entity’s first  request for appropriations made more than 180 days after the date of this  report. Please send your statement of actions to me at  simpsondb@gao.gov.

We are sending copies of this report to appropriate congressional  committees, the Fiscal Assistant Secretary of the Treasury, the Controller  of the Office of Management and Budget’s Office of Federal Financial  Management, and other interested parties. In addition, the report is  available at no charge on the GAO website at http://www.gao.gov/.

We acknowledge and appreciate the cooperation and assistance that  Treasury and OMB staff members provided during our audit. If you or  your staffs have any questions or wish to discuss this report, please  contact me at (202) 512-3406 or simpsondb@gao.gov. Contacts points  for our Offices of Congressional Relations and Public Affairs may be  found on the last page of this report. GAO staff members who made  major contributions to this report are listed in appendix III.

Appendix I: Status of GAO’s Prior Recommendations Related to the Processes Used to Prepare the CFS

Table 1 shows the status of GAO’s prior year recommendations related to  the processes used to prepare the consolidated financial statements of  the U.S. government. The abbreviations used are defined in the legend at  the end of the table.

Appendix II: Comments from the Department of the Treasury

In addition to the contact named above, the following individuals made  major contributions to this report: Carolyn M. Voltz and Paul F. Foderaro  (Assistant Directors), LaTasha L. Freeman (Auditor-in-Charge), Youssef  R. Amrani, Maria Hasan, W. Stephen Lowrey, Fabian J. Mendive, Maria  M. Morton, and Kristine A. Papa.

Every year we audit the consolidated financial statements of the U.S. government.

During our FY 2018 audit, we found that corrective actions were not complete for certain previously reported deficiencies in the processes used to prepare the financial statements. We also identified additional deficiencies related to the preparation process:

Certain disclosures related to new federal accounting standards were not included

Restatements and adjustments to beginning net position were not consistently supported

All appropriate information regarding potential losses from litigation was not reported

We made 4 recommendations to address these new issues.


2020 Census: Update on the Census Bureau's Implementation of Partnership and Outreach Activities

The decennial census is used to apportion seats in Congress, redraw congressional districts, and allocate hundreds of billions of dollars in federal assistance annually and helps to guide public policy decisions based on social, economic, and demographic data.

While recent censuses appear to have been increasingly accurate, measurement errors are not evenly distributed across the population. Given the uses of census data, ensuring an accurate count is important.

As part of its partnership and outreach efforts, the U.S. Census Bureau's (Bureau) Partnership Program works with local and national organizations, businesses, and governments to promote awareness of and participation in the census, as well as to help recruit census workers.

GAO was asked to review the Bureau's partnership and outreach efforts, including paid advertising and targeted communications. This report examines the Bureau's progress in addressing selected prior census challenges in these areas. GAO reviewed relevant Bureau planning documentation, collected regular Bureau reports on progress, and interviewed Bureau officials responsible for partnership and outreach efforts.

GAO provided a draft of this report to the Bureau. The Bureau agreed with the report's findings.

The Partnership Program, a core component of the Bureau's partnership and outreach activities, delivers outreach to partnering organizations at the national and local levels in order to ensure a more complete and accurate count. These partners include retail associations, tribal, state, and local governments, local businesses, and non-profit organizations, among others. Roughly 1,500 partnership specialists, who are temporary Bureau employees responsible for building relationships with and obtaining commitments from these partners, help to implement the Partnership Program, which exists alongside several other components of the Integrated Partnership and Communications operation, as shown below. The Bureau experienced delays, however, in getting these employees onboarded.

The Bureau has taken important actions to address challenges that GAO, the Bureau, and others have previously identified. These challenges include: (1) Enumerating hard-to-count groups; (2) Mobilizing partnership and outreach resources; (3) Coordinating outreach across the Bureau's organization and operations; and (4) Measuring outcomes.

Events taking place during implementation of partnership and outreach activities, such as the COVID-19 outbreak, provide a salient basis for which to continue to monitor these challenges and any effects they may have on the census. Moreover, continued monitoring of the Bureau's survey of public awareness of and sentiment toward the census, for example, will provide information on whether difficulties experienced in getting partnership specialists onboarded had an effect on the success of the Bureau's outreach.

The decennial census is used to apportion seats in Congress, redraw  congressional districts, and allocate hundreds of billions of dollars in  federal assistance annually. The census also provides social,  demographic, and economic profiles of the nation’s people to guide policy  decisions at each level of government. The goal of the decennial census  is to count the entire population of the United States once, only once, and  in the right place—a task made even more difficult with the Coronavirus  Disease 2019 (COVID-19) outbreak affecting the U.S. Census Bureau’s  (Bureau) plans and the ability of individuals to have basic interactions like  in-person interviews.

When the census misses a person who should have been included, it  results in an undercount. An overcount occurs when an individual is  counted more than once or in the wrong place. While recent censuses  appear to have been increasingly accurate, measurement errors are not  evenly distributed across the population. In the 2010 Census, Black and  American Indian races were statistically undercounted, as were  respondents of Hispanic origin. Lifestyle characteristics, such as being a  renter versus a homeowner, also were associated with undercounts.

As part of its partnership and outreach efforts, the Bureau’s Partnership  Program works with local and national organizations, businesses, and  governments to promote awareness of and participation in the census, as  well as to help recruit census workers. The Bureau notes that trusted  voices in the community are among those best suited to disseminate the  Bureau’s message on such topics as data privacy and the benefits of  participating in the census.

You asked us to review the Bureau’s partnership and outreach efforts,  including paid advertising and targeted communications. This report  examines the Bureau’s progress in addressing selected prior census  challenges with the Bureau’s partnership and outreach. To select  challenges for follow-up with the Bureau, we reviewed our relevant prior  reports, prior Department of Commerce Office of Inspector General  reports, Bureau evaluations and assessments from the 2010 Census, and  recommendations made by third-party groups such as the Bureau’s  National Advisory Committee on Race, Ethnic and Other Populations,  which serves as a stakeholder to monitor and consult with the Bureau on  its decennial operations.

To determine the Bureau’s progress in addressing the selected  challenges, we reviewed Bureau planning documentation to identify how  the Bureau was planning to implement its partnership and outreach  activities and what planned actions, if any, were designed to try to  address those prior challenges. We received and reviewed regular  Bureau reports, such as weekly updates on the level of Partnership  Program activity, to determine where the Bureau’s reported progress was  in relation to its operational goals. We also interviewed Bureau officials to  get their perspectives on the goals of the partnership and outreach efforts  and obtain their views of the progress toward those goals.

In addition, we distributed a survey to the population of 248 area census  office managers at the local level from February 25 through March 2,  2020, to get their perspectives on the effectiveness of the Partnership  Program and how well related efforts had been coordinated with census  field operations. We received responses from 175 area census office  mangers for a response rate of 71 percent. We also reviewed open- ended responses provided as part of this survey to develop broad themes  to share with relevant Bureau officials.

We conducted this performance audit from November 2019 to May 2020  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.

The Partnership Program is part of the Bureau’s Integrated Partnership  and Communications (IPC) operation, which contains the Bureau’s varied  partnership and outreach activities aimed at spreading the word about the  importance of participating in the census. Specifically, the IPC operation  is intended to: engage and motivate people to self-respond;  raise and keep awareness high throughout the entire 2020 Census to  encourage response;  support field recruitment efforts for a diverse, qualified census  workforce; and  support dissemination of census data to stakeholders and the public.

Several components of the IPC operation, including the Partnership  Program, are described in more detail below. Figure 1 also demonstrates  these components in example situations.

The Partnership Program has two main components that deliver outreach  at the national and local levels, respectively: the National Partnership  Program (NPP) and the Community Partnership and Engagement  Program (CPEP), as shown in table 1. NPP and CPEP are intended to  complement and leverage their respective expertise to help maximize  participation by partners. According to Bureau officials, the Bureau’s  Census Open Innovation Labs is another important component that aims  to integrate these partnership activities and provide guidance at the  national and local levels on various strategies for messaging with  partners.

The roughly 1,500 Partnership specialists hired for 2020 are temporary  Bureau employees who implement CPEP and are responsible for, among  others things, establishing local partnerships and engaging those partners  to host activities and events (known as “commitments”) within the  communities they serve. These commitments could include activities and  events such as conducting knowledge-sharing seminars, issuing press  releases, providing questionnaire assistance, producing pamphlets, and  hosting field recruiting events, among others. For the 2020 Census, the  Bureau had a goal of establishing 300,000 community partners  nationwide. In 2010, the Bureau secured approximately 256,000 local  partners.

The Partnership program also supports inter-governmental census  outreach activities through state complete count commissions (SCCCs) at  the state level and complete count committees (CCCs) at the tribal and  local levels. These groups foster a collaborative partnership between  political, business, and community leaders to deliver messages on the  importance of participation in the census. The Bureau had a goal of  encouraging every state to create an SCCC, formed at the highest level  of state government, such as the governor’s office. SCCCs seek to  leverage the state’s vested interest in a timely and complete population  count.

According to Bureau planning documentation, CCCs are usually formed  by the highest elected official in that jurisdiction, such as a tribal leader, a  mayor, county commissioner, or regional chairman. The Bureau notes  that partnership specialists are the primary contact between the Bureau  and the CCC. Partnership specialists may conduct workshops, train CCC  members, and provide or direct CCCs to census promotional materials.  Bureau officials noted that initial partnership specialists were hired earlier  in the decennial cycle for 2020 in part to help form CCCs. Partnership  specialists are also to play a role in assisting CCCs with identifying hard- to-count populations within their respective communities and assist in  developing strategies to reach those communities.

Similar to previous censuses, for 2020, the Bureau plans to use multiple  paid media outlets such as radio, television, newspapers, magazine, and  billboards as one of its means to promote awareness and encourage  participation in the census. Along with the traditional advertising, the  Bureau also plans to use digital advertising such as web banner ads,  video ads, digital extensions of traditional outlets, and social media  channels. According to Bureau officials, they plan to be able to use paid  advertising modes to target specific audiences including hard-to-count  populations that may be more apt to trust such communication.

For example, the Bureau’s 2020 communication plan cites research that  states that the majority of Asian-Americans use traditional media— whether in print, online, or from a mobile device—as their primary source  of local news. The Bureau plans to implement its 2020 paid media  campaign in four phases (see table 2).

As of early May 2020, the Bureau has not yet indicated the revised  timeframes for the phases of paid advertising to reflect the COVID-19  disruptions. Bureau officials told us that they are planning to spend an  additional $160 million on advertising as part of its public education and  outreach campaign, originally estimated to cost over $500 million.  According to the Bureau, its paid advertising campaign is designed to  reach more than 99 percent of the nation’s 140 million households.

For the 2020 Census, to distribute these messages, the Bureau will  conduct outreach to the media including providing talking points, media  lists, news releases, fact sheets, frequently asked questions, and other  scripts and messaging for multiple media platforms, such as a variety of  radio, podcasts, and special events. Media-focused materials such as  press kits and press releases will be available in the media section of  2020Census.gov.

As part of its media relations effort, the Bureau has also developed a  crisis communications plan for handling major events and potential  messaging disturbances. According to the Bureau, its crisis  communication plan is intended to allow it to respond quickly and  effectively to any events or actions that jeopardize the public’s  confidentiality or reduce its willingness to respond to the 2020 Census.  For example, the Bureau stated that in response to the COVID-19  outbreak, it adapted part of its advertisement messaging to re-emphasize  the importance of responding to the census online, avoiding the need for  in-person follow-up interviews.

The Bureau’s social media strategy for 2020 reflects the increased  number of social media platforms that were not available during the last  census, such as Snapchat, Instagram Live Stories, and Facebook  Messenger. According to the Bureau, social media will play a critical role  in raising awareness of the census—particularly among hard‐to‐count  audiences—as well as enhancing customer service efforts, promoting  recruiting efforts, driving online completion of the census, assisting with  data dissemination, and mitigating disinformation.

The Bureau’s social media outreach efforts are to leverage source  material on the Bureau’s website. Such material includes prepared  language for posts and graphics, lists of influential partners, messages for  those partners, customer service-themed frequently asked questions that  are tailored for social media, methods for sharing content across the  Bureau’s regional offices, and social media events.

In March 2020, the Bureau kicked off its Statistics in Schools (SIS)  program. During the week of March 2-6, 2020, prior to the widespread  closure of schools due to the COVID-19 outbreak, the Bureau provided  daily modules to educators for dissemination to students. These modules  included such topics as an introduction to the census, a virtual tour of the  Bureau headquarters, and a take-home assignment in which students  and their families were asked to summarize a discussion of what they  want to see in their communities.

According to the Bureau planning documentation, the SIS materials were  to encourage students to pass along the importance of counting everyone  to an adult in their home who will complete the census. SIS was also  intended to raise awareness among students themselves, which can be  important in instances where the presiding adult(s) have limited English  proficiency and have to rely on children to translate or interpret  information from English into their native language.

The Bureau Has Taken Actions to Address Prior Challenges, but Issues for Continued Monitoring Remain

We, the Bureau, and others, such as the Bureau’s National Advisory  Committee, have previously identified several challenges the Bureau has  faced related to its partnership and outreach efforts in prior censuses.  While the Bureau has taken important actions to address these  challenges, current events such as the COVID-19 outbreak provide a  salient basis for which to continue to monitor these challenges and any  effects they may have on the census.

Challenge 1: Enumerating Hard-to-Count Groups

Nature of Challenge. The Bureau strives to conduct an accurate count of  the nation’s population. However, some degree of inaccuracy is  inevitable. While the Bureau reported that the 2010 Census did not have  a significant net undercount or net overcount nationally, the Bureau also  reported that errors in coverage were unevenly distributed through the  population, as figure 2 shows. In addition to the undercounted groups  shown below, prior censuses, such as the 1990 Census, also showed  statistically significant undercounts of Non-Hispanic Asians, American  Indians off (as well as on) Reservations, and Native Hawaiian or Pacific  Islanders.

These errors are problematic because certain groups such as minorities,  young children, and renters are more likely to be missed in the census,  while other groups such as those who may own a second, seasonal home  are more likely to be counted more than once. The Bureau has noted  these historical trends and has classified these and other subpopulations  as hard to count. According to the Bureau, hard-to-count groups can  share some or all of the following characteristics:

Hard to Locate: Some groups are hard to locate because where they  live is unknown, or they move frequently.

Hard to Persuade: Other groups are hard to persuade to participate in  the census.

Hard to Interview: Some groups may have communication barriers,  such as limited English proficiency.

Hard to Contact: Other groups may live in places with access barriers,  such as residents of gated communities or renters with doormen and  locked buildings.

Adding to the challenge in 2020 is the possibility that, as the Bureau  adapts its timing and procedures for outreach and promotion, as well as  data collection, there is a possibility of uneven effects resulting on the  participation rates of different groups. For example, messaging and  operations that emphasize the importance of filling out the census online,  in response to the COVID-19 outbreak, may not be applicable to  communities or groups with limited internet access. If social distancing  measures result in fewer successful interviews during Non-Response  Follow-Up, for instance, then these groups with less internet access will  be at relatively greater risk of being missed by the census. Adapting field  enumeration procedures to implement social distancing might also be  less effective in addressing respondent concerns about interacting with  strangers in apartment buildings or other densely populated areas if a  census worker cannot practically distance themselves from the door.

Actions Taken. As part of its integrated communications plan, the  Bureau’s lead communications contractor segmented the market and  developed a series of strategic frameworks targeting advertising and  messaging to hard-to-count subpopulations through demographic profiles.  These groups include: persons experiencing homelessness; households with young children;  lesbian, gay, bisexual, transgender, queer, and questioning persons; persons with disabilities;  the young and mobile.

In addition to demographic profiles for each of these groups, the  contractor compiled lists of relevant community partners and consulted  with stakeholders to construct a “day-in-the-life” analysis and develop  advertising strategies to align tailored census advertising with the  experiences of each group. According to Bureau documentation, these  strategic frameworks provide the NPP data to decide how to best target  related outreach resources.

The Bureau also developed for 2020 a publicly-available tool that displays  the areas of the country that are considered hard to count, according to  an index of demographic indicators known as the Low Response Score.  Using this index, the Bureau is able to monitor incoming census data for  those areas, such as response rates and hiring and recruitment numbers,  to see if efforts to reach hard-to-count areas are succeeding amid  challenging current events, such as the COVID-19 outbreak, which could  affect willingness of workers to participate in work taking them door-to- door to nonrespondents.

Using funds appropriated under the Further Continuing Appropriations  Act, 2020, the Bureau also developed a mobile questionnaire assistance  (MQA) initiative to deploy census workers to specific locations, such as  grocery stores, houses of worship, and community centers, or at specific  events, such as festivals, to assist residents of low-response areas in  filling out the census. For the beginning of the self-response period,  partnership specialists identified the initial locations and times for the  initiative within hardest-to-count census tracts. The Bureau plans to then  monitor actual self-response data later in the operation to target those  areas reporting the lowest response rates. In April 2020, the Bureau  announced an indefinite delay of this latter stage of MQA in response to  the outbreak of COVID-19.

Basis for Continued Monitoring. Participation in the census and  availability of nonrespondents for follow-up will help indicate whether the  Bureau is successfully reaching hard-to-count groups. With self-response  and follow-up for nonrespondents still ongoing, it is too early to know the  effectiveness of the Bureau’s outreach efforts. However, multiple streams  of data will provide indications of Bureau success in enumerating areas  and demographic groups considered hard to count:

As during the 2018 Census Test, the Bureau is monitoring active data  on self-response rates at the local level, which it can compare across  areas it deems hard to count.

The Non-Response Follow-Up operation will yield data on interview  rates—namely, the rate at which census workers are able to complete  interviews with residents who had not yet responded to the census.  These rates can also be compared across areas deemed hard to  count.

Demographic evaluation data and the Bureau’s post-enumeration  survey will further provide insight into whether racial, ethnic, and other  demographic groups were counted accurately.

Challenge 2: Mobilizing Partnership and Outreach Resources

Nature of Challenge. For its partnership and outreach strategies to be  effective, the Bureau must have the necessary people and resources in  the right places to execute those strategies. In prior censuses, we have  reported on issues related to staffing and promotional materials faced by  the Partnership Program. Specifically, during the 2000 Census we noted  that partnership resources were stretched thin and in some cases took  effect too late in the decennial cycle. We recommended that the Bureau  review its staffing levels to ensure adequate support to partners, a  recommendation the Bureau subsequently implemented.

During the 2010 Census, partnership specialists expressed concern  about the timely availability of promotional materials, and the impact on  their ability to build relationships with potential partners. We  recommended in December 2010 that the Bureau ensure that  promotional materials are provided to partnership staff when they are  hired, a recommendation that the Bureau agreed with but that remained  open at the beginning of our audit work in December 2019.

Similarly, in a 2012 Bureau evaluation of the 2010 NPP, the Bureau found  that some national partners felt that promotional materials needed to be  better tailored to target their audiences’ needs and that these partners  had difficulty accessing relevant census data for their audiences. The  Bureau also observed that improvements were needed in the distribution  of promotional materials by region.

Actions Taken. The Bureau increased its partnership specialist hiring  from roughly 800 in 2010 to a little more than 1,500 in 2020. As figure 3  shows, collectively these partnership specialists were able to secure more  than 307,000 community partners by the end of February 2020—higher  than the Bureau’s goal of 300,000 and the roughly 256,000 local partners  the Bureau had by the end of the 2010 Census. Partnership staff were  also able to encourage the creation of state complete count commissions (SCCCs) in every state and territory except Nebraska and South Dakota.  These SCCCs are complemented across the country by more than  10,000 complete count committees (CCCs) at the local level.

The Bureau also set a priority of getting partners in the right places. In  addition to the Bureau’s overall goal for community partners, the Bureau  also set out to get at least one community partner in 100 percent of  census tracts that, according to their predicted indicator of low response,  are hardest to count. As of late March 2020, the Bureau had made  progress towards this goal, establishing partnerships in 85 percent of  such areas.

The Bureau also provided partnership specialists a centralized website  where they can access promotional materials for distribution to partners.  These materials included fact sheets, brochures, and marketing  messages translated into 13 languages. Bureau officials indicated that  these materials were developed and published on the website prior to the  completion of partnership specialist training. According to officials, the website was made available to partnership specialists when they started  work. In addition to national and community partners, tribal, state, and  local CCCs also have access to these materials. The Bureau also  provided guidance on how to order hard copies of such materials through  the U.S. Government Publishing Office. We found during the course of  our audit work that these actions implemented our December 2010  recommendation.

Basis for Continued Monitoring. The Bureau encountered some issues  in onboarding partnership specialists and tracking the establishment of  partnerships in hard-to-count areas. We will continue to monitor any  effects of these issues as part of our ongoing work:

The Bureau experienced delays in onboarding partnership specialists,  which resulted in less time to form partnerships and meant less time  for community engagement and education activities leading up to the  census. While the Bureau was able to increase the number of  partnership specialists from 2010, the Bureau did not get all of its  more than 1,500 partnership specialists on board until November  2019, more than 4 months later than its initial goal.

The Bureau successfully surpassed its nationwide goal for registering  more than 300,000 community partners. However, we reported in  February 2020 that the Bureau missed interim goals for getting at  least 200,000 partners in place by January 1, 2020, and at least  250,000 partners in place by February 1, 2020. We reported during  the 2000 Census on the benefits of having Partnership Program  resources on the ground earlier in the decennial cycle.

The Bureau varied by region in terms of getting community partners  located in hard-to-count areas. As noted, the Bureau had a goal of  getting at least one partner in each of the hardest-to-count census  tracts by March 2020. Nationwide, the Bureau was able to achieve  this in 85 percent of such areas as of late March 2020. According to  Bureau data, five of the six regional offices reached at least 82  percent of this goal, with the Los Angeles region the farthest along at  90 percent as of late March 2020. On the other hand, only 70 percent  of the hardest-to-count tracts in the Philadelphia region, which covers  the Mid-Atlantic States, had at least one community partner.

Bureau officials noted that partners in adjacent tracts can provide  relevant services to the hardest-to-count tracts. Officials indicated that  they would continue monitoring progress using this measure.

Given the effect of the COVID-19 outbreak on partner activities, having  partnership specialists on boarded and partnerships formed later than  anticipated meant several months less time for in-person community  engagement and education activities leading up to the census in some  areas. In April 2020, Bureau officials told us that partnership specialists  had been instructed to continue interactions with partners via conference  calls, text, email, and other virtual means. Officials also cited the ability of  partnership specialists to support virtual partner commitments such as  radio interviews and virtual town halls, and officials noted that the  Government Publishing Office could continue to directly supply hard  copies of promotional materials to partners. Going forward, response  rates the Bureau achieves in areas where the Bureau lagged in  registering partners may shed light on whether or not having full  partnership coverage in certain hard-to-count areas is associated with  lower response rates.

Additionally, the Bureau is conducting a survey of public awareness of  and sentiment toward the 2020 Census, with a goal of evaluating the  effectiveness of public communication efforts. This survey will also  provide data that could help answer the question of whether having less  time on the ground than anticipated for the full complement of partnership  specialists and community partners affected community awareness of the  census.

Challenge 3: Coordinating Outreach across the Bureau’s Organization and Operations

Nature of Challenge. Partnership and outreach activities, along with  local enumeration activities, span numerous decennial operations and  phases of data collection, and the Bureau has at times struggled to fully  integrate these efforts. For instance, we reported in July 2018 that, during  the planning stages for the 2020 Census, the Bureau’s management of  initiatives aimed at enumerating hard-to-count groups was decentralized  and not fully integrated across operations. We recommended that the  Bureau take steps to ensure greater integration of efforts going forward.

Coordination across regions of the country can also be a challenge.  Bureau officials overseeing CPEP told us that during the initial staffing of  partnership specialists, they observed variations in how job expectations  were communicated across regional offices through training. The COVID-19 outbreak further complicates coordination across the country where  state, tribal, and local public health rules, guidance, and enforcement may  affect how partners in different locations need to interact with the census,  and messaging to Bureau partnership staff and partners may not be  amenable to a one-size-fits-all approach nationwide.

The challenge of coordination can also have effects on how local  managers of census activities perceive the efficiency of census efforts.  Partnership specialists are expected in 2020 to work on initiatives, such  as MQA, to which area census office staff also contribute. However,  partnership specialists do not report to managers within the area census  office, but directly report to the Bureau’s regional offices. As part of our  December 2010 report on hard-to-count populations, we found that about  half of all local census office managers we surveyed were dissatisfied  with the level of coordination between local census office staff and  partnership staff, noting duplication of effort in some cases. We  recommended that the Bureau develop mechanisms to increase  coordination between partnership and local census office staff, a  recommendation that remains open.

Actions Taken. In January 2020, in response to our July 2018  recommendation cited above, the Bureau provided us evidence of  ongoing, multi-team discussions focused on integrating perspectives on  decisions and planning for hard-to-count enumeration activities. In closing  the July 2018 recommendation, we noted that the Bureau’s use of such  an integrated approach will help ensure that the Bureau’s otherwise  decentralized efforts to address hard-to-count challenges will be more  effective.

For field operations, the Bureau is holding a series of weekly  teleconferences, to which area census office managers and all  partnership specialists are invited to hear about updates from Bureau  management on field operations and partnership and outreach activities.  Bureau officials told us that having these calls, along with providing  emailed summaries of the calls, helps to standardize any updates to  guidance on field procedures or messaging across the area census office  and partnership staff. For example, the Bureau sent an email in mid- March 2020 to partnership staff that included guidance on emphasizing  the importance of internet self-response when responding to inquiries on  the COVID-19 outbreak.

The Bureau indicated taking steps to standardize partnership staff training  and integrate partnership staff into field enumeration operations.  Specifically, officials told us they convened a nationwide, standardized  training curriculum after the Bureau had hired all of its partnership  specialists. This curriculum replaced what had been a regional office- specific approach.

The Bureau developed guidance for partnership specialists on how to  provide direct feedback to area census offices when they become aware  of a potential facility or location that should be added to the Bureau’s  database for enumeration. Specifically, if partnership staff become aware  of soup kitchens, homeless shelters, and other locations potentially being  missed, they are instructed to submit information including the address,  type of living quarters, and any applicable contact information to the  relevant area census office. Moreover, the Bureau indicated it had  assigned at least one partnership specialist to every area census office to  improve coordination between the Partnership Program and local census  operations.

In addition, the Bureau created a rumor control page on its website to  quickly disseminate factual content in response to misinformation.  Examples of misinformation that the Bureau has detected include the  false suggestion of a citizenship question being on the census and the  posting of a potentially fraudulent census job website. The Bureau’s  rumor control page includes the email address rumors@census.gov for  the public to report possible misinformation and disinformation. The web  page also has a set of frequently asked questions on topics such as data  confidentiality and ways to participate in the census, thus helping to  ensure that partnership staff, partners, and the public alike with access to  the internet have access to accurate online information.

As the Bureau experiences inevitable turnover in partnership  specialists and needs to update its messaging and outreach to reflect  changing conditions on the ground, such as the COVID-19 outbreak,  ensuring consistent training and guidance across its partnership staff  and keeping all staff abreast of changes will be important.

As noted above, our December 2010 recommendation for the Bureau  to increase coordination between the Partnership Program and its  area census offices remains open. While partnership specialists  were assigned to area census offices, the Bureau has not put in place  formal expectations for how partnership staff should support area  census office staff and their activities. To fully implement this  recommendation, the Bureau would need to document how  partnership specialists and area census office staff are expected to  work together.

We will also continue to monitor how area census office managers  express their perspectives on the effectiveness of the Partnership  Program in supporting implementation of census field operations. For  example, we surveyed area census office managers in March 2020  and found that nationally a plurality (42 percent) who responded said  they were dissatisfied with the level of communication and  coordination between the Partnership Program and their offices, while  41 percent said they were satisfied. A plurality of respondents (44  percent) were also dissatisfied with the level of clarity of roles and  responsibilities between the Partnership Program and their offices,  while 38 percent of respondents were satisfied.

Open-ended comments we received from survey respondents  contained ideas for improving the level of communication between  partnership staff and area census office staff, such as having  partnership staff be more integrated within the area census office  structure. We are sharing such suggestions with the Bureau in near- real time as we receive them for the Bureau to consider moving  forward. We will continue to periodically survey the office managers  throughout the summer of 2020.

Nature of Challenge. We have previously reported on challenges the  Bureau has faced across operations in measuring outcomes. Namely,  during the 2018 Census Test we reported that the Bureau’s primary  measure of operational progress during Non-Response Follow-Up  overstated the amount of completed workload because it emphasized the  number of follow-up attempts made instead of the number of cases in  which the Bureau got the data it needed—the preferred outcome of the  operation.

Similarly, our 2017 review of in-office address canvassing—when the  Bureau attempted to use aerial imagery to identify areas of the country  called blocks that did not require fieldwork to validate the address list— found that the Bureau’s performance measures looked at how many of  the addresses in the address list were reviewed in-office, rather than how  many addresses did not require additional fieldwork.

Separately measuring the contributions of partnership and outreach  activities on the desired outcome of maximizing the number of residents  who respond to the census is inherently difficult. In one of its evaluations  of the 2010 Census, though, the Bureau noted that the Partnership  Program needed to do a better job of measuring and rewarding the  intensity of partner effort throughout census operations, rather than  simply looking at the number of contacts made or the number of partners.  As Bureau officials noted to us, the quality of partners ultimately matters  more than the quantity.

Actions Taken. In its performance measures of the Partnership Program,  the Bureau has taken steps beyond measuring the number of partners  nationwide. For example, as noted previously, the Bureau prioritizes and  tracks the extent to which it secures partnerships in hard-to-count areas,  acknowledging that partnerships are needed everywhere but are  particularly critical in areas that may otherwise be less likely to have high  response rates. Additionally, the Bureau tracks the number of events  partners complete and the number of commitments partners signed up for  but did not fulfill by their planned dates (known as overdue commitments).  As of early March 2020, community partners had fulfilled more than  270,000 committed events nationwide, while nearly 14,000 commitments  were overdue.

Basis for Continued Monitoring. Going forward, Bureau evaluations of  the 2020 Census will demonstrate what, if any, lessons learned the  Bureau is able to draw regarding the quality of its 2020 partnership and  outreach efforts. The Bureau has multiple sources of data that it is, and  will be, collecting to better understand how success can be defined:

While the Bureau monitors and reports the number of overdue  partnership commitments (cited above), it is not clear what the current  level of nearly 14,000 overdue commitments means in the context of  the universe of more than 270,000 total committed events. When we  asked about this issue, Bureau officials indicated that they monitor the  status of overdue commitments mostly to see if partners are staying  active in their communities. Officials also said they use the metric to  verify that partnership specialists are recording any follow-up they do  with partners that have not fulfilled their commitments.

Similarly, the Bureau’s plan for the MQA initiative cites the number of  census questionnaire responses received through MQA as an  indicator of how successful the Bureau is in connecting partners and  other census questionnaire assistance resources to areas that need  them. Yet, it is unclear from Bureau documentation what levels of  MQA uptake, if any, would constitute success. While low MQA uptake,  for instance, could mean that partnership specialists and census  response representatives were not successful in identifying the right  times and locations for MQA, it could also mean that residents were  successfully able to respond to the census via other means, or that  they did not attend MQA events due to the COVID-19 outbreak.

When we followed up with Bureau officials, they indicated that they  have planned a series of required debriefings and exit interviews with  partnership specialists, which will include MQA effectiveness as a  topic. Such debriefings and exit interviews will likely be particularly  important, given the MQA change necessitated by the COVID-19  outbreak.

Lastly, the COVID-19 outbreak could further complicate the Bureau’s  ability to determine the ultimate effectiveness of its partnership and  outreach—how well the Bureau achieves the goal of counting  everybody once, only once, and in the right place. The Bureau plans  to estimate census quality by relying in part on interviews conducted  door-to-door in a nationwide sample of households, scheduled for the  summer and fall of 2020. The COVID-19 outbreak could prompt the  Bureau to delay the related field operation to collect the data or affect  household responsiveness to in-person visits.

As the timing of this report coincides with ongoing implementation of the  self-response period and field enumeration operations, planned Bureau  evaluations and assessments will be best positioned to identify any  lessons learned and determine whether, in light of the challenges cited  above, the Bureau’s partnership and outreach efforts were successful in  maximizing participation in the census.

We provided a draft of this report to the Department of Commerce. In its  written comments, reproduced in appendix I, the U.S. Census Bureau  said it agreed with the findings of our report and would continue to work to  implement related open recommendations from our prior reports.

We are sending copies of this report to the Secretary of Commerce, the  Undersecretary of Economic Affairs, the Director of the U.S. Census  Bureau, and the appropriate congressional committees. In addition, the  report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report please contact  me at (202) 512-6806 or mihmj@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix II.

Appendix I: Comments from the Department of Commerce

Appendix II: GAO Contact and Staff Acknowledgments

J. Christopher Mihm, (202) 512-6806 or mihmj@gao.gov  In addition to the contact named above, Ty Mitchell (Assistant Director),  Devin Braun (Analyst-in-Charge), Mark Abraham, Carole J. Cimitile,  Alexandra Edwards, Amalia Konstas, Kerstin Meyer, Cynthia Saunders,  Kate Sharkey, Farrah Stone, Jon Ticehurst, Peter Verchinski, and Alicia  White made key contributions to this report.

The Census Bureau’s Partnership Program works with local and national organizations and businesses to promote awareness of and participation in the census. The Bureau hired about 1500 temporary employees to help build relationships with these partners. However, we found that the Bureau experienced delays in getting these employees hired and trained.

The Bureau has worked to address this and other challenges with its partnership efforts, including enumerating hard-to-count groups and coordinating outreach operations. These challenges will continue to be monitored amid the COVID-19 outbreak, which severely reduced in-person partnership events.