Congress and the President need reliable, useful, and timely financial information so they can make difficult budget choices and deal with the nation’s long-term fiscal challenges.
Each year, we audit the governmentwide financial statements to help make sure good information is available. These statements show what money is coming in, what the government owns and owes, and how federal agencies spent their money. Today’s WatchBlog explores this year’s audit, and why we couldn’t sign off on the government’s books—again.
The government’s books come with a disclaimer
After completing our audit of the governmentwide financial statements, we can give 1 of 4 possible opinions. If everything is in order, we can give the best opinion—unmodified—which means that the information follows accounting standards and is reliable. Other types of opinions include qualified, also known as modified—meaning we found problems in specific areas, but no overall show stoppers; and adverse—the problems we found are bad and extensive. Finally, we may issue no opinion, which is referred to as a disclaimer.
We have to issue a disclaimer when we can’t complete the audit steps needed to provide an opinion. And, for fiscal year 2015, that’s what we again gave the governmentwide financial statements, because of
- serious financial management problems at the Department of Defense,
- problems with how the governmentwide financial statements are prepared,
- poor accounting when federal entities engage in activities with one another, and
- significant uncertainties about projected spending for the Medicare program.
For fiscal year 2015, the annual governmentwide financial statements included a new comprehensive basic financial statement that provides information meant to help decision makers see whether current tax and spending policies are sustainable over the long term.
A sustainable policy is one where the ratio of debt held by the public to Gross Domestic Product—how much money the nation produces—is stable or declining over the long term.
Both the new financial statement and our own similar long-term fiscal simulations show that, without changes to our revenue and/or spending policies, the federal government’s long-term fiscal path is unsustainable.
It’s not all bad news. This year, almost all of the 24 major federal agencies that roll up into the governmentwide financial statements again received unmodified opinions on their individual agency financial statements. 20 years ago, just 6 received unmodified opinions.
Last month we shared the results of our audit with Congress, along with our recommendations to help make sure this progress continues. Check out what we said, and read the entire audit on our website.