Skip to main content

Financial Audit: U.S. Government's Fiscal Years 2015 and 2014 Consolidated Financial Statements

GAO-16-357R Published: Feb 25, 2016. Publicly Released: Feb 25, 2016.
Jump To:
Skip to Highlights


What GAO Found

To operate as effectively and efficiently as possible and to make difficult decisions to address the federal government’s fiscal challenges, Congress, the administration, and federal managers must have ready access to reliable and complete financial and performance information—both for individual federal entities and for the federal government as a whole. Overall, significant progress has been made since the enactment of key federal financial management reforms in the 1990s; however, GAO’s report on the U.S. government’s consolidated financial statements underscores that much work remains to improve federal financial management and these improvements are urgently needed.

GAO found the following:

  • Certain material weaknesses in internal control over financial reporting and other limitations on the scope of its work resulted in conditions that prevented GAO from expressing an opinion on the accrual-based consolidated financial statements as of and for the fiscal years ended September 30, 2015, and 2014. About 34 percent of the federal government’s reported total assets as of September 30, 2015, and approximately 19 percent of the federal government’s reported net cost for fiscal year 2015 relate to three Chief Financial Officers Act agencies—the Department of Defense (DOD), the Department of Housing and Urban Development, and the U.S. Department of Agriculture—that received disclaimers of opinion on their fiscal year 2015 financial statements.
  • Significant uncertainties (discussed in Note 23 to the consolidated financial statements), primarily related to the achievement of projected reductions in Medicare cost growth, and a material weakness in internal control over financial reporting, prevented GAO from expressing an opinion on the sustainability financial statements, which consist of the 2015 Statement of Long-Term Fiscal Projections (a new comprehensive basic financial statement that provides information on the federal government’s long-term financial condition); the 2015, 2014, 2013, 2012, and 2011 Statements of Social Insurance; and the 2015 and 2014 Statements of Changes in Social Insurance Amounts. About $27.9 trillion, or 67.0 percent, of the reported total present value of future expenditures in excess of future revenue presented in the 2015 Statement of Social Insurance relates to Medicare programs reported in the Department of Health and Human Services’ 2015 Statement of Social Insurance, which received a disclaimer of opinion.
  • Material weaknesses resulted in ineffective internal control over financial reporting for fiscal year 2015.
  • Material weaknesses and other scope limitations discussed in the audit report limited GAO’s tests of compliance with selected provisions of applicable laws, regulations, contracts, and grant agreements for fiscal year 2015.

Three major impediments continued to prevent GAO from rendering an opinion on the federal government’s accrual-based consolidated financial statements: (1) serious financial management problems at DOD that prevented its financial statements from being auditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal entities, and (3) the federal government’s ineffective process for preparing the consolidated financial statements. Efforts are under way to resolve these issues, but strong and sustained commitment by DOD and other federal entities, as well as continued leadership by the Department of the Treasury (Treasury) and the Office of Management and Budget (OMB), are necessary to implement needed improvements. 

Material weaknesses, including those underlying these three major impediments, continued to (1) hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs, and other related information; (2) affect the federal government’s ability to reliably measure the full cost, as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the federal government’s ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the federal government from having reliable financial information to operate in an efficient and effective manner.

In addition to the three major impediments, GAO identified other material weaknesses. These are the federal government’s inability to (1) determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce them, (2) identify and resolve information security control deficiencies and manage information security risks on an ongoing basis, and (3) effectively manage its tax collection activities.

While the near-term outlook has improved, the comprehensive long-term fiscal projections presented in the Statement of Long-Term Fiscal Projections, and related information in Note 24 and in the unaudited Required Supplementary Information section of the Fiscal Year 2015 Financial Report of the United States Government, show that absent policy changes, the federal government continues to face an unsustainable long-term fiscal path.

In commenting on a draft of this report, Treasury and OMB officials expressed their continuing commitment to addressing the problems this report outlines.

Why GAO Did This Study

The Secretary of the Treasury, in coordination with the Director of OMB, 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. Treasury and OMB have elected to include certain financial information on the legislative and judicial branches in the consolidated financial statements as well.

For more information, contact J. Lawrence Malenich at (202) 512-3406 or or Robert F. Dacey at (202) 512-3406 or

Full Report

Office of Public Affairs


Budget obligationsCost analysisCost controlDebt held by publicFederal debtFinancial analysisFinancial recordsFinancial statement auditsFinancial statementsFiscal policiesInternal controlsPublic debt