GAO-13-271R, Published: Jan 17, 2013. Publicly Released: Jan 17, 2013.
To operate as effectively and efficiently as possible and to make difficult decisions to address the federal governments fiscal challenges, Congress, the administration, and federal managers must have ready access to reliable and complete financial and performance informationboth for individual federal entities and for the federal government as a whole. Even though significant progress has been made since the enactment of key federal financial management reforms in the 1990s, GAOs report on the U.S. governments consolidated financial statements illustrates that much work remains to improve federal financial management. Further improvements are urgently needed.
GAO found the following:
While significant progress has been made in improving federal financial management since the federal government began preparing consolidated financial statements 16 years ago, three major impediments continued to prevent GAO from rendering an opinion on the federal governments accrual-based consolidated financial statements over this period: (1) serious financial management problems at DOD that have prevented its financial statements from being auditable, (2) the federal governments inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal governments ineffective process for preparing the consolidated financial statements.
In addition to the material weaknesses underlying these major impediments, GAO identified four other material weaknesses. These are the federal governments inability to (1) determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce improper payments, (2) identify and resolve information security control deficiencies and manage information security risks on an ongoing basis, (3) effectively manage its tax collection activities, and (4) effectively monitor and report loans receivable and loan guarantee liabilities.
The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, is required to annually submit audited financial statements for the U.S. government to the President and Congress. GAO is required to audit these statements. The Government Management Reform Act of 1994 has required such reporting, covering the executive branch of government, beginning with financial statements prepared for fiscal year 1997. The federal government has elected to include certain financial information on the legislative and judicial branches in the consolidated financial statements as well.
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