GAO Faults Weaknesses in Financial Management

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The Government Accountability Office (GAO) says problems in financial reporting and management continue to raise questions about the reliability of some federal data and add to uncertainties about the nation’s long-term fiscal challenges.

“While significant progress has been made in improving federal financial management over the past 20 years,” the agency said in a report released last week, “material weaknesses in internal control over financial reporting and other limitations continued to prevent GAO from expressing an opinion on the government’s accrual-based financial statements.”

In other words, GAO says it can’t vouch for the accuracy of the government’s financial data.

GAO cites three “major impediments,” starting with the continuation of “serious financial management problems” at the Defense Department, which represents 15 percent of the government’s net costs. The other key difficulties involve intragovernmental activities and balances between federal entities, and the “ineffective process” for preparing the government’s consolidated financial statements.

While efforts are underway to resolve these issues, GAO urges “strong and sustained commitment” by Defense and other federal entities — and “continued leadership” by the Treasury and the Office of Management and Budget.

GAO also warns that projections in government-wide financial statements as well as GAO’s recent simulations “show that absent policy changes, the federal government continues to face an unsustainable long-term fiscal path.”

External links:
Fiscal 2015 U.S. Government Financial Statements (GAO)
Financial Report of the United States (Treasury Department)

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