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GAO again finds shortcomings in government's financial reporting

Dec. 29, 2011 - 06:00AM   |  
By SEAN REILLY   |   Comments
GAO's Eugene Dodaro testifies during a September hearing in Washington, D.C.
GAO's Eugene Dodaro testifies during a September hearing in Washington, D.C. (Alex Wong / Getty Images)

Deep-rooted problems continue to hobble the federal government's ability to reckon accurately its financial assets and liabilities, the Government Accountability Office found in a newly released review.

Although 21 of the 24 agencies covered by the Chief Financial Officers Act had fully auditable books in fiscal 2011, two of the largest the Defense and Homeland Security departments still did not. The State Department's books also were not fully auditable. As a result of those and other problems, GAO was again unable to provide a clean audit opinion on the government's consolidated financial statements.

DoD, for example, could not provide solid estimates for key parts of its environmental cleanup liabilities, GAO said in its "http://www.gao.gov/financial/fy2011/11gao2.pdf">auditor's report."

Nor did the Pentagon have the systems and records needed to provide accurate information on its holdings of property and equipment.

More broadly, many agencies had trouble reconciling financial transactions with each other, with a significant number of agency chief financial officers citing "differing accounting methodologies, accounting errors and timing differences" as reasons for the disparities.

Despite the launch of several Treasury Department initiatives to make improvements, "resolving the intragovernmental transactions problem remains a difficult challenge" that will take strong leadership from Treasury and the Office of Management and Budget, the report said.

And although GAO auditors cited some headway in efforts to combat improper payments, they also found the government still faced challenges in accurately measuring and reducing those payments.

The report's criticisms echo many of those from previous years. "Much work remains to be done to improve federal financial management," Gene Dodaro, who heads GAO as comptroller general, said in a news release.

Other concerns GAO cited include the government's inability to effectively manage tax collection activities and to identify and fix problems with information security.

GAO has reviewed the government's consolidated financial statements since fiscal 1997 but has never provided a clean audit opinion.

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