The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, annually consolidates individual agency financial statements to provide a comprehensive overview of the federal government’s finances. GAO is required to audit the consolidated financial statements of the U.S. government; and last week, we issued our report.
We were unable to render an audit opinion—i.e., a conclusion on whether the financial statements are reliable—on the government’s fiscal year 2013 consolidated financial statements. Major impediments that prevented us from rendering an opinion include:
- Serious financial management problems at the Department of Defense that prevented its financial statements from receiving a clean audit opinion;
- The federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal entities; and
- The federal government’s ineffective process for preparing the consolidated financial statements.
Despite these difficulties, federal financial management has improved significantly since the federal government began preparing consolidated financial statements 17 years ago, following enactment of a series of financial reform legislation beginning with the Chief Financial Officers (CFO) Act of 1990. This year, almost all of the 24 CFO Act agencies received clean audit opinions on their agency financial statements, compared with just 6 of the CFO Act agencies in 1996. In addition, this is the first time that the Department of Homeland Security has received a clean opinion on all of its financial statements.
The government’s annual consolidated financial statements are made available to the public in Treasury’s Financial Report of the U.S. Government. The Financial Report also includes a Citizen’s Guide and other information and analysis of the government’s financial condition. Such reports are essential for public accountability and for efficiency and effectiveness in government.