Auditing the Nation's Finances:

Fiscal Year 1998 Results Highlight Major Issues Needing Resolution

T-AIMD-99-131: Published: Mar 31, 1999. Publicly Released: Mar 31, 1999.

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Pursuant to a legislative requirement, GAO discussed its report on the U.S. government's financial statements for fiscal year 1998, focusing on the importance of improving how federal departments and agencies manage the finances of the national government.

GAO noted that: (1) significant financial systems weaknesses, problems with fundamental recordkeeping and financial reporting, incomplete documentation, and weak internal controls, including computer controls, continue to prevent the government from accurately reporting a significant portion of its assets, liabilities, and costs; (2) widespread and serious computer control weaknesses affect virtually all federal agencies and significantly contribute to many material deficiencies; (3) the federal government does not have adequate systems and controls to ensure the accuracy of information about the amount of assets held to support its domestic and global operations; (4) as a result, the government could not satisfactorily determine that all assets were included in the financial statements, verify that reported assets actually exist, or substantiate the amounts at which they were valued; (5) most federal credit agencies responsible for federal lending programs were unable to properly estimate the cost of these programs in accordance with federal accounting standards and budgeting requirements; (6) liabilities for remediation of environmental contamination and disposal of hazardous waste, reported at $225-billion, were materially understated by at least tens of billions of dollars primarily because no estimate was reported for environmental and disposal liabilities associated with certain major weapons systems; (7) adequate systems and cost data were not available to accurately estimate the reported $223-billion military postretirement health benefits liability included in federal employee and veteran benefits payable; (8) some agencies do not maintain adequate records or have systems to ensure that accurate and complete data were used to estimate a reported $90 billion of accounts payable and a reported $155 billion in other liabilities; (9) the government was unable to support significant portions of the more than $1.8 trillion reported as the total net cost of government operations or determine the full extent of improper payments; (10) the federal government cannot ensure that the information in the financial statements of the U.S. government is properly and consistently compiled in an accurate manner; and (11) continuing serious and widespread computer security weaknesses are placing enormous amounts of federal assets at risk of fraud and misuse, financial information at risk of unauthorized modification or destruction, sensitive information at risk of inappropriate disclosure, and critical operations at risk of disruption.

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