TOPICS
TOPICS
Government flunks annual audit, again
For the ninth year running, the federal government failed to achieve a clean financial audit, largely because of accounting issues at the Pentagon.
This year's results, released on Thursday, looked much like those from recent years. Internal problems with government accounting systems prevented the Government Accountability Office from reaching a reliable conclusion about the accuracy of the Treasury Department's Fiscal Year 2005 Financial Report of the U.S. Government.
The failed audit was unsurprising, as accounting problems at the Defense Department alone -- given the size of its budget -- are sufficient to introduce uncertainty into the entire federal accounting process. DoD has told lawmakers it will not be able to meet a 2007 target to clean up its accounting procedures.
GAO cited three major factors for the audit failure. In addition to "serious financial management problems at the Defense Department," the report noted an inability to account for and reconcile balances that cross agency lines, and an ineffective process for preparing the financial statements.
DoD was not alone in receiving a disclaimer, or failing mark. It was joined by NASA, the Energy Department and the Homeland Security Department. Together, these agencies represent 58 percent of the government's total reported assets, the report said.
New to this report was a warning about restatements of previous years' results. Of the 24 agencies required to submit financial statements under the 1990 Chief Financial Officers Act, seven have restated their results for fiscal year 2004. GAO's audit report warns that such restatements can harm the credibility of the accounting process.
Tabetha Mueller, a spokeswoman for the House Government Reform Subcommittee on Government Efficiency and Financial Management, said the high level of uncertainty expressed in the audit report could have several explanations.
"One of the reasons could be that the auditors are getting better at auditing," she said. "In other words, as they turn over more rocks, they're finding more."
GAO chief David Walker said the Treasury report raises broad concerns.
"The current financial reporting model does not clearly and transparently show the wide range of responsibilities, programs and activities that may either obligate the federal government to future spending or create an expectation for such spending," he wrote in a statement accompanying the audit. "Thus, it provides a potentially unrealistic and misleading picture of the federal government's overall performance, financial condition, and future fiscal outlook."
COMMENTS
- USAF Engineer, It not only is the DoD IG but spills into your services financial management organization. The Air Force does not have a qualified comptroller to issue meaningful accounting and finance policy. The Air Force financial managers rely on engineers to tell them what is proper accounting (guess what you get). Every audit of SAF/FM has listed the total incompetence of the financial management staff as a serious problem for the Air Force. However, those in financial management continue to hire people that are not qualified for the positions. They avoid detection because they continue to do nothing whenever possible. Likewise, they do not administer or provide policy and oversight for the financial functions. The SAF/FM has divested itself of any meaningful policy and oversight function and should be eliminated. SAF/FM has designated DFAS as the financial and accounting arm of the AF. SAF/FM does next to nothing and expects it to be done by DFAS and does not even provide DFAS direction. Whatever DFAS does is what the AF gets and SAF/FM never takes exception to DFAS rulings. SAF/FM has allowed their accounting agent to run the financial affairs of the AF. The AF either should strengthen SAF/FM or get rid of it because in its present state it is worthless! Taxpayer Posted January 13, 2006 7:15 AM
- While some of the accounting problems are the result of carelessness and waste in federal agencies, quite a bit of problem has more to do with federal agencies deliberately misreporting where the money goes. There are agencies in DoD that lose huge amounts of money to mismanagement. Many fudge their annual numbers when they file their annual reports. Otherwise, they risk being shut down. The Department of Labor Office of Workers Compensation Programs uses some very interesting accounting practices to cover up the real cost of some of its activities. Otherwise, people might start asking why the funding isn't going to help injured federal employees and why certain doctors get paid thousands of dollars for examinations they don't actually do. Cooking the books has been a practice of other forms of organized crime for decades. It won't stop until there is real accountability with real consequences. Some of the most established members of Congress help cover the misdoings. So, I don't see any change coming any time soon. Robert M. Posted December 21, 2005 7:30 PM
- Of course the DoD IG is useless! Do you think they'd actually staff those positions with anyone who'd be able to give an unbiased opinion? Accounting in DoD equates to fraud, waste, and abuse. Where'd the $20 billion in Iraq go? GovExec.com reader Posted December 21, 2005 2:38 PM
