Auditing and Financial Management:
The Growing Need for Reform
Jan 1, 1988
This article, which appeared in the GAO Journal, No. 2, Summer 1988, discusses the current problems in federal financial management and efforts to solve them. A recent GAO study spotlighted problem areas in the federal government's financial management practices, including: (1) lack of cost information; (2) lack of reliable information on weapon systems and other major projects; (3) inadequate disclosure of costs and liabilities; (4) unstructured planning for capital investment; (5) antiquated financial management systems; and (6) piecemeal approaches to solutions. Recent efforts to reform federal financial management reflect a growing consensus to: (1) recognize internal control weaknesses; (2) standardize government accounting data; (3) require auditing reviews; and (4) deal with waste, fraud, and abuse. To ensure that this progress continues, GAO proposed legislation that would provide for centralized financial leadership in executive branch agencies and annual preparation and audit of governmentwide financial statements to foster accountability and system integrity.