GAO: Fed finances still tangled

Government Accountability Office auditors continue to be stumped by the federal government's problems in producing a consolidated financial statement.

According to a recent report, GAO auditors say that a lack of proper systems and processes makes it difficult for the federal government to produce a single financial statement that can be reconciled with the statements provided by individual agencies. They have identified problems in seven areas in the fiscal 2003 statement.

But as was the case in the past seven years, the lack of systems and processes means GAO auditors do not have the information they need to offer an overall opinion on the government's fiscal 2003 statement.

The problems cannot be solved all at once, GAO officials said.

"The first priority is to secure the significant financial problems at the Department of Defense in order for the government to get an opinion," said Gary Engel, a director of financial management and assurance at GAO.

According to the report, problems in 2003 included the methodology for allocating certain costs in the statement of net costs, statement of changes in cash balance from unified budget and other activities, and reporting of criminal debt.

GAO also found that certain disclosures were omitted or not in conformity with generally accepted accounting principles. The four areas were payable federal employee and veteran benefits, environmental and disposal liabilities, research and development, and deferred maintenance.

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