GAO Financial reports arent reliable

The federal government still can’t provide a reliable accounting of its finances despite individual agencies’ progress in the past year, the Government Accountability Office said.

Major problems in agency financial systems, accounting processes and reporting again prevented GAO from making an unqualified opinion on the government’s annual financial report, the auditors said in a report released Dec. 15. It accompanied the Fiscal Year 2008 Financial Report of the U.S. Government.

The same major weaknesses have hobbled the government for 12 consecutive years and kept it from obtaining a clean bill of financial health, according to GAO. Those weaknesses are serious financial management problems at the Defense Department,  agencies’ inability to reconcile balances when they do business with one another and an ineffective process for preparing financial statements, GAO said.

The government also can't determine the full extent of the improper payments it has made, identify and resolve vulnerabilities in information security controls, or manage risk, the auditors said. The government also needs to more effectively manage its tax-collection activities, they added.

As a result of its accounting problems, the government cannot reliably account for a major portion of its assets, liabilities and costs nor can it measure the full cost and performance of certain programs, the report states. For example, the government could not satisfactorily determine that property, facilities and equipment primarily held by DOD were properly reported, said Gene Dodaro, acting comptroller general at GAO.

“The material weaknesses hinder the federal government from having reliable financial information to operate in an efficient and effective manner,” he said.

Agencies need to modernize their financial management systems to be able to generate reliable and timely financial and performance information throughout the year and at year's end, he added.

Meanwhile, the Office of Management and Budget noted in its part of the annual consolidated financial report that some agencies made significant progress this year toward improving the reliability of their financial information.

OMB said it plans to clarify guidance for agencies to help them comply with federal financial management requirements so they will interpret the guidance more consistently and ultimately improve management of their financial systems.

Of the 24 major federal agencies, 20 received clean opinions. That’s one more than reported last year and the highest total in the past six years, OMB said.

In addition, the number of material weaknesses governmentwide declined by 18 percent, from 39 to 32, OMB said. It is the fifth consecutive year that material weaknesses have declined, with a nearly 50 percent decrease since 2001, OMB said.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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