GAO Says Federal Financial Statement Flawed, Incomplete

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The Government Accountability Office said on Wednesday it was not able to give an opinion on the Treasury Department‘s annual financial statement for the entire government.

In his 6-page statement accompanying the full report, Comptroller General Gene Dodaro cited “material weaknesses in internal control over financial reporting and other limitations on the scope of our work” as reasons why GAO could not give an opinion for the second straight fiscal year.

This was despite GAO giving a qualified opinion to all the financial statements of 20 of the 24 federal agencies. GAO was able to give qualified opinions to only six agencies when audits began in 1986.

GAO Chief Accountant Robert Dacey told Federal News Radio that the federal government has an ineffective process for producing a consolidated financial statement and that it does not accurately measure interagency transactions.

“It’s important to properly report intergovernmental transactions, because if two agencies don’t report the transactions between themselves in the same year and for the same amount, there’s going to be an error in the financial statements,” Dacey said in the interview.

Despite the problems, Dacey said some progress was made on the audit front. The Department of Homeland Security received a qualified opinion on its balance sheet and statement of custodial activity.

“DHS plans to expand the audit in the future to all of its statements and ultimately plans to receive a clean opinion on all of them,” Dacey said.

Dacey said the Defense Department is making progress toward achieving a clean audit by 2017. The Pentagon established the Financial Improvement and Audit Readiness plan to meet this goal and Secretary Leon Panetta told Congress in October that he wants a full audit by 2014.

“They are taking a number of steps and they’ve indicated that they are definitely dedicated to improving their financial management in the future,” Dacey said.

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