Financial Audit:

1998 Financial Report of the United States Government

AIMD-99-130: Published: Mar 31, 1999. Publicly Released: Mar 31, 1999.

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Robert F. Dacey
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Pursuant to a legislative requirement, GAO reviewed the annual audited financial statements for 24 major departments and agencies of the U.S. 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) these deficiencies affect the reliability of the financial statements and much of the related information in the financial report, as well as the underlying financial information; (3) they also affect the government's ability to accurately measure the full cost and financial performance of programs and manage its operations; (4) major problems included the federal government's inability to: (a) properly account for and report billions of dollars of property, equipment, materials and supplies and certain stewardship assets; (b) properly estimate the cost of most federal credit programs and the related loans receivable and loan guarantee liabilities; (c) estimate and reliably report material amounts of environmental and disposal liabilities and related costs; (d) determine the proper amount of various reported liabilities, including postretirement health benefits for military employees, accounts payable, and other liabilities; (e) accurately report major portions of the net cost of government operations; (f) determine the full extent of improper payments that occur in major programs and that are estimated to involve billions of dollars annually; (g) ensure that all disbursements are properly recorded; and (h) properly prepare the federal government's financial statements, including balancing the statements, accounting for billions of dollars of transactions between governmental entities, and properly and consistently compiling the information in the financial statements; (5) these deficiencies prevented GAO from being able to form an opinion on the reliability of the financial statements and represent material weaknesses in internal controls; (6) the executive branch recognizes the extent and severity of the financial management deficiencies and that addressing them will require concerted improvement efforts across the government; (7) the administration has set goals for completing timely audits and receiving unqualified opinions for individual agencies as well as the financial statements of the U.S. government; and (8) annual financial audits represent an important means to ensure continued progress in connection with improving federal financial management.

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