Financial systems still troubled

2001 Financial Report of the U.S. Government

For the fifth consecutive year, the federal government was unable to present auditable financial books, the General Accounting Office has found.

GAO said the Defense Department's pervasive financial management problems were the single largest obstacle to a clean audit opinion. But problems with other agencies' financial systems also are critical, said David Walker, the government's comptroller general.

"Federal agencies have started to make progress in their efforts to modernize their financial management systems," Walker said in his audit report, released March 29. "However, the need for timely, accurate and useful financial and performance management information is greater than ever given the increasing demands of the federal budget."

The financial report for fiscal 2001, published by the Treasury Department, acknowledged the government has pervasive problems with financial systems.

"The federal government faces agency-specific and governmentwide challenges in modernizing its financial management systems," the financial report said." Many financial management systems need upgrading or replacing before they can provide information to support efforts to achieve the president's goal of a citizen-centered, results-oriented and market-based government."

GAO found that 18 of the 24 agencies identified by the Chief Financial Officers Act were able to attain unqualified audit opinions on their financial statements, the same number as last year, but up significantly from the six agencies in fiscal 1996 that attained that level.

The departments of Justice and Transportation moved from qualified to clean opinions. And the Federal Aviation Administration, which had been on GAO's "high-risk" list, has cured many of its financial management weaknesses, the report said.

However, GAO warned that many agencies have been able to obtain unqualified audit opinions only by making Herculean efforts. Those efforts necessitate "significant resources...extensive ad hoc procedures and...billions of dollars in adjustments to derive financial statements months after the end of a fiscal year," GAO said.

Walker noted that even though they have unqualified opinions on their financial statements, "many agencies do not have timely, accurate and useful financial information...with which to make informed decisions and to ensure accountability."

DOD officials said last month that they had abandoned efforts to obtain a clean opinion and were instead focusing on fixing the core financial management problems.

The audit report praised the DOD's broad effort to clean its financial house. The department is close to making a contract award for its financial management system architecture, which will act as a roadmap for fixing its financial systems.

About the Author

Christopher J. Dorobek is the co-anchor of Federal News Radio’s afternoon drive program, The Daily Debrief with Chris Dorobek and Amy Morris, and the founder, publisher and editor of the DorobekInsider.com, a leading blog for the Federal IT community.

Dorobek joined Federal News Radio in 2008 with 16 years of experience covering government issues with an emphasis on government information technology. Prior to joining Federal News Radio, Dorobek was editor-in-chief of Federal Computer Week, the leading news magazine for government IT decision-makers and the flagship of the 1105 Government Information Group portfolio of publications. As editor-in-chief, Dorobek served as a member of the senior leadership team at 1105 Government Information Group, providing daily editorial direction and management for FCW magazine, FCW.com, Government Health IT and its other editorial products.

Dorobek joined FCW in 2001 as a senior reporter and assumed increasing responsibilities, becoming managing editor and executive editor before being named editor-in-chief in 2006. Prior to joining FCW, Dorobek was a technology reporter at PlanetGov.com, one of the first online community centers for current and former government employees. He also spent five years at Government Computer News, another leading industry publication, covering a variety of federal IT-related issues.

Dorobek is a frequent speaker on issues involving the government IT industry, and has appeared as a frequent contributor to NewsChannel 8’s Federal News Today program. He began his career as a reporter at the Foster’s Daily Democrat, a daily newspaper in Dover, N.H. He is a graduate of the University of Southern California. He lives in Washington, DC.


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