Promoting Sound Financial Management in the Federal Government: The Role of GAO for the 1980's and Beyond

The Comptroller General addressed a meeting of accountants concerning the promotion of sound financial management within the Federal Government. Strong policy and program decisions based on improved financial management are crucial to restoring public confidence in government at all levels. Federal officials are faced with establishing effective control over the budget, while within a few years the focus of many financial operations may shift from the Federal to other levels of government. This raises the question as to whether financial management systems within agencies at all levels of government are capable of accounting for and controlling such vast expenditures. Gaps and disparities exist between the separate and sometimes uncoordinated planning, budgeting, program management, accounting, auditing, and evaluation systems that have been installed in the Federal Government. A high priority has been established for GAO to break down the excessive compartmentalization of analysis and control functions in Federal agencies. GAO has recommended that consideration be given to funding programs for periods of 2 years or more and, perhaps, staggering the times at which appropriations would be required to reduce the number of funding decisions to be made each year. There is a need for the creation of a high-level budget study group to act as a catalyst for badly needed changes in budgetary concepts and procedures. GAO is in the process of developing a conceptual framework under which the current accounting principles and standards can be examined to determine what financial reporting disclosures should be made, to whom they apply, and where they should be made. In the past few years, audit efforts have disclosed numerous instances where Government agencies are operating control systems vulnerable to physical losses and waste of property and money, as well as susceptible to fraudulent or otherwise improper acts. Most fraud and abuse occurs because internal controls are either not in place or are not followed. Legislation has been proposed in Congress that would establish in each agency a continuous process of internal control system review and congressional reporting on internal control status. Widespread use of the computer is revolutionizing internal control systems. A systems-based approach to auditing will have a tremendous impact on understanding and evaluating the effectiveness of internal controls.