Gale Encyclopedia Of American Law 3Rd Edition Volume 5 P8 pps

Procurement Law Chief Operating Officer Chief Administrative Officer/CFO Strategic Issues Natural Resources and Environment Information Technology Financial Management and Assurance Defe

governments, quasi-governmental bodies, and private organizations in their capacity as recipients under, or administrators for, federal aid programs that are financed by loans, advances, grants, and contributions The interest of the GAO also extends to certain activities of those parties that have negotiated contracts with the government

The audit activities of the GAO also include examining and settling accounts of the certifi-cation, disbursement, and collection officers of the federal government, including determina-tions involving accountability for improper or illegal expenditures of public funds Balances that the comptroller general certifies are binding

GAO’s Organizational Chart

Congressional Relations

Opportunity and Inclusiveness Inspector General Strategic Planning

and External Liaison

General Counsel

Deputy General

Counsel/

Ethics Counselor

Managing

Associate G.C.

Goal 1

Managing Associate G.C.

Goal 2

Managing

Associate G.C.

Goal 3

Managing Associate G.C.

Legal Services

Managing Associate G.C.

Procurement

Law

Chief Operating Officer

Chief Administrative Officer/CFO

Strategic Issues

Natural Resources and Environment

Information Technology

Financial Management and Assurance

Defense Capabilities and Management

Teams

Acquisition and

Sourcing

Management

Applied

Research

and Methods

Legend:

CFO - Chief Financial Officer

The Executive Committee

Indicates a support or advisory relationship with the teams/units rather than a direct reporting relationship

Note: Everyone listed on this table, other than the Comptroller General, is an SES level manager Also, with the exception of the Comptroller General of the United

States, the Chief Operating Officer, the Chief Administrative Officer, the Deputy Chief Administrative Officer, the Inspector General, and the General Counsel, all managers are titled “Managing Director.”

Education, Workforce, and Income Security

Financial Markets and Community Investment

Homeland Security and Justice

International Affairs and Trade

Physical Infrastructure

Managing Associate G.C.

Mission and Operations

of the United States

Field Operations Quality and

Continuous Improvement

Health Care

Forensic Audits and Special Investigations Unit

Human Capital

Information Systems and Technology Services

Professional Development Program

Knowledge Services

Controller/

Administrative Services

Deputy Chief Administrative Officer

ILLUSTRATION BY GGS

CREATIVE RESOURCES.

REPRODUCED BY

PERMISSION OF GALE,

A PART OF CENGAGE

LEARNING.

58 GENERAL ACCOUNTING OFFICE

on the EXECUTIVE BRANCH; however, any settled

account can be reviewed on motion by the

comptroller general or another interested party

In its audit work, the GAO makes

recom-mendations for greater economy and efficiency

in government operations and for improving the

effectiveness of government programs Within

this audit authority is a responsibility to report

significant matters to Congress for information

and use in carrying out its legislative and

executive branch surveillance functions

Accounting

The comptroller general has the following

statutory responsibilities with respect to the

accounting systems of federal agencies:

nPrescribe the accounting principles,

stan-dards, and related requirements to be

followed by the agencies

nCooperate with federal agencies in

devel-oping their accounting systems

nApprove agency accounting systems when

they are deemed adequate and meet

pre-scribed principles, standards, and related

requirements

nReview, from time to time, agency

account-ing systems in operation

nConduct—jointly with the Office of

Management and Budget, the TREASURY

DEPARTMENT, and the Office of Personnel

Management—a continuous program to

improve accounting and financial

report-ing in the federal government

By law, the comptroller general cooperates

with the secretary of the Treasury and the

director of the Office of Management and

Budget in developing for use by all federal

agencies standardized information and

data-processing systems and also standard

terminol-ogy, definitions, classifications, and codes for

federal fiscal, budgetary, and program-related

data and information

Legal Services and Decisions

The legal work of the GAO is centered at the

headquarters office in its Office of the General

Counsel

The comptroller general makes final

deter-minations as to the legality of actions taken by

federal departments and agencies with regard to

accountability for the use of public funds These

determinations are made in connection with

actions that are already taken and on an advance

basis upon request by certain responsible officers

of the government Decisions of the comptroller general concerning the legality of payments may arise from the audit work of the GAO or may be applied for by the heads of departments or agencies or by certifying and disbursing officers with regard to payments to be made or as a result

of congressional inquiries

The comptroller general also considers questions that arise in connection with the award of government contracts and certain contracts under government grants Statutory and regulatory procedures precisely define the manner in which these government awards are

to be made, and those competing for such awards who believe that requirements have not been met in any particular instance may apply

to the comptroller general for a determination

The legal work of the GAO also covers a wide range of advisory services: to Congress, its committees, and members, with respect to the legal effect of statutory provisions and implica-tions of proposed legislation as well as assistance

in drafting legislation; to theJUSTICE DEPARTMENT, primarily in the form of litigation reports on court cases generated by, or related to, the work

of the GAO; and to the courts in connection with cases involving the award of government contracts In addition, there is daily coordina-tion between the staff of the Office of the General Counsel and the audit and operating staffs with regard to the legal consequences of issues raised in the course of reviews of government activities

Claims Settlement and Debt Collection

The GAO settles claims by and against the United States as required by law Claims may involve individuals; business entities; or foreign, state, and municipal governments as claimant

or debtor Settlement of these claims by the GAO is binding upon executive branch agen-cies However, the comptroller general may review any settled claim on his or her own initiative or at the request of an interested party

Claimants and debtors have further recourse to the Congress or to the courts

Where an administrative agency has been unable to collect a debt due the government, the debt is certified to the GAO as uncollectible After determining the amount due the United States, the GAO superintends its recovery, and ultima-tely makes final settlement and adjustment

GENERAL ACCOUNTING OFFICE 59

Energy Data Verification

Under the Energy Policy and Conservation Act (42 U.S.C.A 6201), approved December 22,

1975, the comptroller general is empowered to conduct verification examinations of energy-related information developed by private busi-ness concerns under certain circumstances delineated in the act For the purpose of carrying out this authority, the comptroller general may issue subpoenas, require written answers to INTERROGATORIES, administer oaths, inspect business premises, and inspect and copy specified books and records Certain enforce-ment powers are provided, including, for some types of noncompliance, the power to assess civil penalties and to collect such penalties throughCIVIL ACTION

Rules, Regulations, and Decisions

The comptroller general makes such rules and regulations as deemed necessary for carrying on the work of the GAO, including those for the admission of attorneys to practice before it

Under theSEALof the office, he or she furnishes copies of records from books and proceedings thereof, for use as EVIDENCE in accordance with the act of June 25, 1948 (62 Stat 946; 28 U.S.C.A 1733)

The GAO Personnel Act of 1980 (94 Stat

27; 31 U.S.C.A 52–1), approved February 15,

1980, requires the comptroller general to establish an independent personnel manage-ment system for employees of the GAO The system would not be subject to regulation or oversight of executive branch agencies

Employ-ee rights, such as appeals from adverse actions, are protected by creation of a GAO Personnel Appeals Board

The GAO “Policy and Procedures Manual for Guidance of Federal Agencies” is the official medium through which the comptroller general promulgates principles, standards, and related requirements for accounting to be observed by the federal departments and agencies; uniform procedures for use by the federal agencies; and regulations governing the relationships of the GAO with other federal agencies and with individuals and private concerns DOING BUSINESS

with the federal government

All decisions of the comptroller general of general import are published in monthly pamphlets and in annual volumes

GAO Reports

As required by law, a list of GAO reports issued

or released during the previous month is furnished monthly to Congress, its committees, and its members

Copies of GAO reports are provided without charge to members of Congress and congressional committee staff members; offi-cials of federal, state, local, and foreign govern-ments; members of the press; college libraries, faculty members, and students; and nonprofit organizations

Since the late 1990s the GAO has worked to place more information on its web site It has placed a large archive of its reports online and publishes current reports These include legal decisions, opinions, and a vast array of resources to help both federal agencies and the general public In addition, it has placed its bid-protest DOCKET online and has established FraudNet, which allows persons to file allega-tions of government FRAUD online and it has established an email hotline for reporting small business fraud and abuse

FURTHER READINGS General Accounting Office Website Available online at www.gao.gov (accessed May 25, 2009).

CROSS REFERENCES Congress of the United States; Federal Budget; Office of Management and Budget; Treasury Department.

GENERAL AGREEMENT ON TARIFFS AND TRADE

The GENERAL AGREEMENT ON TARIFFS AND TRADE

(GATT) originated with a meeting of 22 nations meeting in 1947 in Geneva, Switzerland By

2000 there were 142 member nations, with another 30 countries seeking admission The detailed commitments by each country to limit tariffs on particular items by the amount negotiated and specified in its tariff schedule is the central core of the GATT system of international obligation

The obligations relating to the tariff sche-dules are contained in Article II of GATT For each COMMODITY listed on the schedule of a country, that country agrees to charge a tariff that will not exceed an amount specified in the schedule It can, if it wishes, charge a lower tariff

60 GENERAL AGREEMENT ON TARIFFS AND TRADE

The World Trade Organization (WTO)

heavily influences the workings of the GATT

treaties through the efforts of various

commit-tees Representatives of member countries of

the WTO comprise the Council for the Trade in

Goods (Goods Council), which oversees the

work of 11 committees responsible for

oversee-ing the various sectors of GATT The

commit-tees focus on such issues as agriculture, sanitary

measures, subsidies, customs valuation, and

rules of origin

FURTHER READINGS

Bagwell, Kyle, and Robert W Staiger 2002 The Economics of

the World Trading System Cambridge, MA: MIT Press.

Irwin, Douglas A., Petros C Mavroidis, and Alan O Sykes.

2009 The Genesis of the GATT New York: Cambridge

Univ Press.

World Trade Organization Web site 2009 Available online

at http://www.wto.org/ (accessed September 3, 2009).

CROSS REFERENCES

Commodity; Tariff.

GENERAL APPEARANCE

The act by which a defendant completely consents

to the jurisdiction of the court by appearing before

it either in person or through an authorized

representative thereby waiving any jurisdictional

defects that might be raised except for that of the

competency of the court

A GENERAL APPEARANCE differs from aSPECIAL

submit to the JURISDICTION of the court for a

restricted purpose, such as to test whether the

SERVICE OF PROCESS made upon him or her was

legally sufficient

GENERAL AVERAGE LOSS

General average loss refers to the distribution of

maritime loss among various interests of vessels

and cargo

The general average rules apply to losses that

are incurred for the common benefit of

participants in a maritime venture These rules

establish that losses should be shared ratably by

those who participate in a venture The doctrine

ofGENERAL AVERAGE LOSSis based on the principle

that a voluntary sacrifice of a portion of the ship

or cargo to save the remaining property and lives

should be made good by all interests exposed to

the common peril and saved by the sacrifice

General average loss is the opposite of

PARTICULAR AVERAGE LOSS, which applies when a

sacrifice was made for a separate interest or for

a reason other than the common benefit of vessel and cargo

CROSS REFERENCES Admiralty and Maritime Law.

GENERAL CREDITOR

An individual to whom money is due from a debtor, but whose debt is not secured by property

of the debtor One to whom property has not been pledged to satisfy a debt in the event of nonpay-ment by the individual owing the money

GENERAL EXECUTION

A court order commanding a public official, such

as a sheriff, to take the personal property of a defendant to satisfy the amount of a judgment awarded against such defendant

When such officer is given the authority to seize only particular property or types of property, the writ or order is sometimes known

as a special execution

GENERAL INTENT

In criminal law and tort law, a mental plan to do that which is forbidden by the law

Unlike offenses that require a SPECIFIC INTENT, it is not necessary that the ACCUSED

intend the precise harm or result It is sufficient

if the person meant to do the act that caused the harm or result For example, BATTERY is a

GENERAL INTENToffense If aDEFENDANTcommits

a battery that results in harm to the victim, it does not matter if the defendant did not intend the harm

GENERAL JURISDICTION The legal authority of a court to entertain whatever type of case comes up within the geographical area over which its power extends

GENERAL JURISDICTION differs from special or limited JURISDICTION, which is the power of a

COURTto hear only certain types of cases, or those

in which theAMOUNT IN CONTROVERSY is below a certain sum or that is subject to exceptions

GENERAL LEGACY

A monetary gift, payable out of the collective assets

of the estate of a testator—one who makes a will—and not from a designated source

GENERAL LEGACY 61

Unlike aSPECIFIC LEGACY, aGENERAL LEGACYis not subject toADEMPTION, extinction that results when

a testator revokes his or her intention to leave designated property to another either by altering the property or removing it from the estate

GENERAL SERVICES ADMINISTRATION The GENERAL SERVICES ADMINISTRATION(GSA) was established by section 101 of the FEDERAL

Property and Administrative Services Act of

1949 (40 U.S.C.A § 751) The GSA sets policy for and manages government property and records More specifically, GSA duties include

the construction and operation of buildings; procurement and distribution of supplies; utilization and disposal of property; manage-ment of transportation, traffic, and commu-nications; and management of the government’s automatic data processing resources program Like a large business CONGLOMERATE, the GSA conducts business in many different areas and operates on different levels of organization: the central Washington, D.C., office, 11 regional offices, and field activities

The GSA is a large organization, the structure

of which consists of several tiers of adminis-trators, offices, bureaus, and support agencies

U.S General Services Administration

White House

Liaison

Under the Office of

the Administrator

New England Region 1 Boston, MA

Northeast and Caribbean Region 2 New York, NY

Mid-Atlantic Region 3 Philadelphia, PA

Southeast Sunbelt Region 4 Atlanta, GA

The Heartland Region 6 Kansas City, MO

Greater Southwest Region 7

FT Worth, TX

Rocky Mountain Region 8 Denver, CO

Pacific Rim Region 9 San Francisco, CA

Great Lakes Region 5 Chicago, IL

Northwest/Arctic Region 10 Auburn, WA

National Capital Region 11 Washington, DC

Deputy Administrator

Administrator

Office of the Administrator

Chief of Staff

Federal

Acquisition

Service

Public

Buildings

Service

Office of

Inspector

General

Civilian Board

of Contract Appeals

Office of the Chief Acquisition Officer

Office of the Chief Financial Officer

Office of the Chief Information Officer

Office of the Chief Human Capital Officer

Office of Congressional and Intergovernmental Affairs

Office of Emergency Response & Recovery

Office of General Counsel

Office of Governmentwide Policy

Office of Citizen Services and Communications

Office of Performance Improvement

Office of Civil Rights

Office of Small Business Utilization

ILLUSTRATION BY GGS

CREATIVE RESOURCES.

REPRODUCED BY

PERMISSION OF GALE,

A PART OF CENGAGE

LE-ARNING.

62 GENERAL SERVICES ADMINISTRATION

The first level in the HIERARCHY of the GSA

consists of the administrator, the deputy

admin-istrator, and the chief of staff The administrator

is the principal director for the entire

organiza-tion, assisted by a deputy and chief of staff

The second tier in the GSA organization

consists of four main offices: the Federal Supply

Service, Federal Technology Service, Public

Buildings Service, and the Office of

Govern-mentwide Policy These four offices oversee the

majority of the agency’s work and collectively

form the public face of the GSA

The Federal Supply Service (FSS) provides

low-price, quality goods and services to federal

departments and agencies Its services include

governmentwide programs for the management

of transportation, mail, and travel; audits of

transportation; management of a federal fleet;

and management of aircraft owned or operated

by civilian agencies in support of government

missions

The FSS provides more than $25 billion

annually in common-use goods and services to

federal agencies It emphasizes purchasing

en-vironmentally safe products, and services and

supplies more than 3,000 environmentally

ori-ented products to the federal government, such

as retread tires, shipping boxes made with

recycled materials, and water-saving devices

The service also coordinates a worldwide

program for the management of government

property, through the Office of Property

Dis-posal, which is responsible for allocating excess

personal property among the agencies and

donat-ing or disposdonat-ing of property through public sales

The FSS Interagency Fleet Management

Program controls approximately 185,000

vehi-cles, purchasing more than 58,000 new vehicles

annually The FSS also acts as the government’s

civilian freight manager by providing rating and

routing services to customer agencies and

overnight delivery of small packages at reduced

rates, and managing the postpaymentAUDIT of

freight and passenger transportation bills

Information Technology Service The Federal

Technology Service (FTS) directs

government-wide programs for automated data processing

and local TELECOMMUNICATIONS equipment and

services, coordinates programs for federal

records and information management practices,

and provides information to the public through

the Federal Information Center

The FTS helps federal agencies manage information resources through the Office of Information TechnologyINTEGRATION(ITI) The ITI provides assistance through three programs:

the Federal Systems Integration and Manage-ment System, Federal Computer Acquisition Center, and Federal Information System Sup-port Program The ITS also procures automatic data processing and telecommunications hard-ware, softhard-ware, and services involving informa-tion resources of governmentwide agencies

In addition to technical assistance, the service provides various management assistance programs and policies to governmentwide agencies concerning information-related func-tions and activities It is in charge of the GSA’s governmentwide telecommunications service and assists with the interagency Information Resources Management infrastructure It also provides internal information systems manage-ment for the GSA

The FTS’s Office of Information Security supports all government activities conducting sensitive and classified national security, diplo-matic, andDEFENSE DEPARTMENTmissions

Another program overseen by FTS is the Federal Information Center Program, which is

a clearinghouse for information about the federal government The center answers ques-tions regarding government programs and refers people to the appropriate agency Depending upon their geographic location, residents may be able to access the center through a toll-free telephone number Another resource, the Federal Domestic Assistance Catalog Program, provides information on federally operated programs that offer domestic assistance, such as loans, grants, andINSURANCE, to interested persons

The FTS also offers the Federal Information Relay Service to help hearing-impaired and speech-impaired individuals communicate with the government The service manages numerous programs that maintain information on equip-ment, goods, and services bought by the govern-ment The information is available to the public

The Public Buildings Service (PBS) designs, builds, leases, repairs, and maintains approxi-mately 7,300 federally controlled buildings in the United States The service is also responsible for property management information systems throughout the government and for the main-tenance of public utilities and their costs

GENERAL SERVICES ADMINISTRATION 63

The Office of Governmentwide Policy (OGP) functions to ensure that governmentwide policies allow and encourage agencies to develop and utilize the best, most cost effective management practices for the conduct of their specific programs The OGP consolidates GSA govern-mentwide policy-making activities within one central office These activities include the government’s plans for acquiring some $200 billion per year in goods and services, the $8 billion a year the government spends on government travel, and the tens of billions of dollars spent each year on internal administrative management systems The OGP is focused on re-engineering the traditional policy development model to emphasize collaborative development

The third tier in the organizational structure

of the GSA contains 11 regional offices: New England Region, Northeast and Caribbean Re-gion, Mid-Atlantic ReRe-gion, Southeast Sunbelt Region, Great Lakes Region, The Heartland Region, Greater Southwest Region, Rocky Moun-tain Region, Pacific Rim Region, Northwest/

Arctic Region, and the National Capitol Region

These offices are distributed to facilitate the work

of the GSA in diverse areas of the country

The fourth level in the structural hierarchy

of the GSA consists of ten offices that support all GSA services: the Offices of the Chief Financial Officer, Office of the Chief People Officer, Office of Congressional & Intergovern-mental Affairs, Office of Services and Commu-nications, Office of the Chief Information Officer, Office of Small Business Utilization, Office of Performance Improvement, Office of General Counsel, Office of CIVIL RIGHTS, Office

of Inspector General, along with the GSA Board

of Contract Appeals

The Office of Portfolio Management man-ages all aspects of the portfolio management business line at the national level

FURTHER READINGS General Services Administration 2003 U.S General Services Administration Guide to Federal Government Sales.

Washington, D.C.:.U.S Independent Agencies and Commissions.

U.S General Services Administration Available online at http://www.gsa.gov (accessed July 25, 2009).

U.S Government Manual Website Available online at http://

www.gpoaccess.gov/gmanual/index (accessed July 21, 2009).

CROSS REFERENCES Personal Property; Telecommunications.

GENERAL TERM

A sitting of the court en banc, with the participation of the entire membership of the court rather than the regular quorum A phrase used in some jurisdictions to signify the ordinary session of a court during which the trial determin-ation of actions occur

GENERAL TERMis distinguishable fromSPECIAL TERM, in that the latter entails the HEARING of motions, which are applications for court orders, arguments, the DISPOSITION of various types of formal business, or the trial of a special list or class of cases

GENERAL VERDICT

A decision by a jury that determines which side in

a particular controversy wins, and in some cases, the amount of money in damages to be awarded

GENERAL WARRANTY DEED Another name for aWARRANTY DEED

GENERAL WELFARE The concern of the government for the health, peace, morality, and safety of its citizens Providing for the WELFARE of the general public is a basic goal of government The

PREAMBLE to the U.S Constitution cites promo-tion of theGENERAL WELFAREas a primary reason for the creation of the Constitution Promotion

of the general welfare is also a stated purpose in state constitutions and statutes The concept has sparked controversy only as a result of its inclusion in the body of the U.S Constitution The first clause of Article I, Section 8, reads,

“The Congress shall have Power To lay and collect Taxes, Duties,IMPOSTSand Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” This clause, called the General Welfare Clause or the

SPENDING POWERClause, does not grant Congress the power to legislate for the general welfare

of the country; that is a power reserved to the states through the TENTH AMENDMENT Rather, it merely allows Congress to spendFEDERALmoney for the general welfare The principle underlying this distinction—the limitation of federal power—eventually inspired the only important disagreement over the meaning of the clause According to JAMES MADISON, the clause authorized Congress to spend money, but only

64 GENERAL TERM

to carry out the powers and duties specifically

ENUMERATEDin the subsequent clauses of Article I,

Section 8, and elsewhere in the Constitution, not

to meet the seemingly infinite needs of the

general welfare.ALEXANDER HAMILTONmaintained

that the clause granted Congress the power to

spend without limitation for the general welfare

of the nation The winner of this debate was not

declared for 150 years

In United States v Butler, 56 S Ct 312, 297

U.S 1, 80 L Ed 477 (1936), the U.S Supreme

Court invalidated a federal agricultural

spend-ing program because a specific congressional

power over agricultural production appeared

nowhere in the Constitution According to the

Court in Butler, the spending program invaded

a right reserved to the states by the Tenth

Amendment

Though the Court decided that Butler was

consistent with Madison’s philosophy of limited

federal government, it adopted Hamilton’s

INTERPRETATION of the General Welfare Clause,

which gave Congress broad powers to spend

federal money It also established that

determi-nation of the general welfare would be left to the

discretion of Congress In its opinion, the Court

warned that to challenge a federal expense on

the ground that it did not promote the general

welfare would“naturally require a showing that

by no reasonable possibility can the challenged

legislation fall within the wide range of

discre-tion permitted to the Congress.” The Court

then obliquely confided, “[H]ow great is the

extent of that range we need hardly

remark.” “[D]espite the breadth of the legislative

discretion,” the Court continued, “our duty to

hear and to render judgment remains.” The

Court then rendered the federal agricultural

spending program at issue invalid under the

Tenth Amendment

With Butler as precedent, the Supreme

Court’s interest in determining whether

congres-sional spending promotes the general welfare has

withered In South Dakota v Dole, 483 U.S 203,

107 S Ct 2793, 97 L Ed 2d 171 (1987), the

Court reviewed legislation allowing the secretary

of transportation to withhold a percentage of

federal highway funds from states that did not

raise their legal drinking age to twenty-one In

holding that the statute was a valid use of

congressional spending power, the Court in Dole

questioned “whether ‘general welfare’ is a

judicially enforceable restriction at all.”

Congress appropriates money for a seem-ingly endless number of national interests, ranging from federal courts, policing, IMPRISON-MENT, and national security to social programs, environmental protection, and education No federal court has struck down a spending program on the ground that it failed to promote the general welfare However, federal spending programs have been struck down on other

CONSTITUTIONALgrounds

FURTHER READINGS Rosenthal, Albert J 1987 “Conditional Federal Spending and the Constitution ” Stanford Law Review 39.

Sky, Theodore 2004 To Provide for the General Welfare: A History of the Federal Spending Power Newark, DE:

Univ of Delaware Press.

Sorenson, Leonard 1995 Madison on the “General Welfare”

of America New York: Rowman & Littlefield.

CROSS REFERENCES Congress of the United States; Constitution of the United States; Federal Budget; Federalism.

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES

(GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad ACCOUNTING principles and specific practices For example, accountants use GAAP standards to prepare financial statements

In response to the STOCK MARKET crash of

1929 and the ensuing Great Depression, Con-gress passed theSECURITIESAct in 1933 and the Securities Exchange Act in 1934 Among other things, these acts established a methodology for standardizing accounting practices among pub-licly held companies The task of creating and maintaining accounting standards was handled

by the American INSTITUTE of Certified Public Accountants (AICPA) from 1936 until 1973 In

1973, the responsibility was taken over by the Financial Accounting Standards Board (FASB), which was established the same year

The Financial Accounting Standards Advi-sory Council (FASAC), which is composed of

33 members from both the public and private sectors, advises the FASB on matters that may affect or influence GAAP rules These 33 individuals meet quarterly to discuss accounting GENERALLY ACCEPTED ACCOUNTING PRINCIPLES 65

issues and gather information, which they then present to FASB Essentially, FASAC serves as FASB’s sounding board FASAC is overseen by the Financial Accounting Foundation, an inde-pendent organization whose 16-member board

of trustees chooses FASAC’s 33 members The FASB is also monitored by the Corporation Finance division of the SECURITIES AND EXCHANGE COMMISSION(SEC) Among the organizations that influence GAAP rules are the AICPA and the

INTERNAL REVENUE SERVICE(IRS)

Other countries have their own GAAP rules, which are set by their versions of the FASB For example, the Canadian Institute of Chartered Accountants (CICA) sets GAAP standards in Canada

Publicly held companies are required to conform to GAAP standards Specifically, the Securities Act and the Securities Exchange Act established a requirement that publicly held companies must undergo an external AUDIT by

an independentACCOUNTANTonce per year In the early 2000s, companies faced increased scrutiny

in light of the widely publicized cases involving such major corporations as Enron and World-Com, along with the firm of Arthur Andersen, one of the world’s largest accountancy firms In the case of Enron, for example, the company manipulated its financial information to give the appearance that revenues were much higher than they actually were After the company declared

BANKRUPTCYin 2001, Arthur Andersen came under attack because its auditors had signed off on Enron’s financials despite numerous misgivings

Andersen was found GUILTY of obstruction of justice by a jury in Houston, Texas, in June 2002

In July 2002, President GEORGE W BUSH

signed the Sarbanes-Oxley Act, which estab-lished new regulations for accounting reform and investor protection Among the provisions

of Sarbanes-Oxley was the creation of the five-member Public Company Accounting Over-sight Board, overseen by the SEC Accounting firms that audit publicly held companies are required to register with the board, which has the authority to inspect audits Sarbanes-Oxley also requires chief executive officers and chief financial officers of publicly held companies to provide a statement attesting to the veracity of their financial statements

FURTHER READINGS Financial Accounting Standards Board Web site Available online at http://www.fasb.org (accessed July 26, 2009).

Schilit, Howard, 2010 Financial Shenanigans: How to Detect Accounting Gimmicks and Fraud on Financial Reports New York: McGraw-Hill.

Squires, Susan E., et al 2003 Inside Arthur Andersen: Shifting Values, Unexpected Consequences Upper Saddle River, NJ: Prentice-Hall.

United States Securities and Exchange Commission Web site Available online at http://www.sec.gov (accessed July 26, 2009).

GENETIC ENGINEERING The human manipulation of the genetic material

of a cell

GENETIC ENGINEERINGinvolves the process of isolating individual DNA fragments, coupling them with other genetic material, and causing the genes to replicate themselves Introducing this newly created complex to a host cell causes

it to multiply and produce clones that can later

be harvested and used for a variety of purposes Current applications of the technology include, but are not limited to, medical investigations of gene structure for the control of genetic disease (particularly through antenatal diagnosis); food crop development to resist plant disease or harsh weather; the creation of new antibiotic and antiviral drugs; genetic cloning to save endangered species; and the development of sustainable energy through bio-fuels The syn-thesis of hormones and other proteins (e.g., growth hormone and insulin), which are otherwise obtainable only in their natural state,

is also of interest to scientists

International Codes and Ethical Issues for Society

An international code of ethics for genetic research was first established in the World Medical Association’s Declaration of Helsinki in 1964 The guide prohibited outright most forms of genetic engineering and was accepted by numer-ous U.S professional medical societies, including theAMERICAN MEDICAL ASSOCIATION(AMA)

In 1969 the AMA promulgated its own ethical guidelines for clinical investigation, key provisions

of which conflicted with the Helsinki Declaration For example, the AMA guidelines proposed that when mentally competent adults were found to be unsuitable subjects for genetic engineering stu-dies, minors or mentally incompetent subjects could be used instead The Helsinki Declaration did not condone testing on humans

The growth of genetic engineering in the 1970s aroused international concern, but

66 GENETIC ENGINEERING

governments and medical societies took only

limited measures to control it Concern focused

on the production of dangerous bacterial

mutants that could be used as harmful eugenics

tools or WEAPONS The Genetic Manipulation

Advisory Group was established in England

based on the recommendations of a prominent

medical group, the Williams Committee

Scien-tists were required to consult this group before

carrying out any activity involving genetic

manipulation in England Additional measures

required scientific laboratories throughout

the world to include physical containment labs

to prevent manipulated genes from escaping

and surviving in natural conditions These

policies were subsequently adopted in the

United States

In 2000 a group of 138 countries, including

the United States, approved the Cartagena

Protocol on Biosafety Environment

Interna-tional concerns over the handling of genetically

modified organisms (GMOs) prompted the

passage of the protocol It governs such issues

as the safe transfer, handling, use, and disposals

of GMOs among member countries

Another area of developing law, summarized

by Sonia Miller in a May 29, 2007, article in The

New York Law Journal, concerns genetic privacy

With the advancement of genetic engineering

technology comes the human benefit of having

disease, deformity, and DISABILITY potentially

eradicated, enhancing life and health

expectan-cies, and a better world as a whole However, the

same innovation has the potential to be misused

for purposes of creating, and perceiving as

superior, “designer babies,” and genetics-based

economic or social communities Critics of the

developing field warn thatINSURANCEcompanies

and employers may misuse private genetic

information about individuals to discriminate

Both houses in Congress have contemplated

LEGISLATIONthat would prohibitDISCRIMINATIONon

the basis of genetic information, and would

extend privacy and confidentiality requirements

(See, e.g., prior legislative efforts such as the

Genetic Information Nondiscrimination Act of

2007 (H.R 493, S 358).)

The Breakdown of Regulation:

Genetic Inventions and Patents

in the United States

In 1980 the U.S Supreme Court created an

economic incentive for companies to develop

genetically engineered products by holding that

such products could be patented In Diamond v

Chakrabarty, 447 U.S 303, 100 S Ct 2204, 65 L

Ed 2d 144, theCOURTheld that aPATENTcould

be issued for a novel strain of bacteria that could

be used in the cleanup of oil spills In 1986 the U.S DEPARTMENT OF AGRICULTURE approved the sale of the first living genetically altered organism

The virus was used as a pseudorabies vaccine, from which a single gene had been cut Within the next year, the U.S Patent and Trademark Office announced that non-naturally occurring, non-human, multicellular living organisms, in-cluding animals, were patentable under the Patent Act of 1952 (35 U.S.C.A § 101)

The Department of Agriculture formally became involved in genetic engineering in April

1988, when the Patent and Trademark Office issued the first animal patent, granted on a genetically engineered mouse used in cancer research U.S scientists began experiments with the genetic engineering of farm animals, such as creating cows that would give more milk, chickens that would lay more eggs, and pigs that would produce leaner meat These developments only raised more objections from critics who believed that genetic experimentation on animals violated religious, moral, and ethical principles

In spite of the controversy, the U.S House of Representatives approved the Transgenic Animal

In 1997, a team

of scientists at the Roslin Institute in Edinburgh, Scotland, cloned the first adult mammal, a sheep named Dolly.

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