Most departments fail annual financial test

For the third year in a row, most federal agencies failed to get clean opinions on their finances, missing a March 1 deadline set in law, a Senate Governmental Affairs Committee analysis revealed Thursday.

Auditors gave clean opinions to only 11 of the 24 largest federal departments and agencies' fiscal 1999 books as of March 1, the deadline under the 1990 Chief Financial Officers Act for agencies to submit their annual audited financial statements. Clean audited financial statements are an indicator of sound financial management.

"We've been working under the Chief Financial Officers Act since 1990," said Sen. Fred Thompson, R-Tenn., chairman of the Senate Governmental Affairs Committee. "Ten years later, less than half the agencies can demonstrate that they have adopted the sound financial management practices that the act requires."

By this time last year, only seven agencies had received clean, or unqualified, opinions from their inspectors general, whose auditors perform the annual financial check-up. Eventually, five additional agencies managed to get their fiscal 1998 books in order.

While more agencies can still turn their financial statements around this year, a committee source noted that fiscal 1999 ended six months ago.

"If your financial systems were in place, you should have been able to push print at the end of the fiscal year," the source said.

A spokesperson for the Office of Management and Budget, which oversees federal financial management, could not be reached for comment Thursday evening.

Last June, the OMB-led Chief Financial Officers Council set a goal of getting clean opinions on 21 agencies' fiscal 1999 financial statements. Last month in President Clinton's fiscal 2001 budget, that goal was downgraded to 18 clean opinions, with at least 16 clean opinions by the March 1 deadline.

The Senate Governmental Affairs Committee contacted the offices of each inspector general this week to find out what opinion they would be issuing on their agencies' statements. By April 1, the Treasury Department will release its third annual consolidated report on all of the government's finances. The General Accounting Office will also release a review of the audited statements.

Two agencies that received clean opinions last year-the Environmental Protection Agency and the Housing and Urban Development Department-failed to receive a clean opinion this year. Three agencies improved, with the Health and Human Services, Commerce and Energy departments each earning a clean opinion this year.

Federal Agencies' Financial Audit Results

* An unqualified opinion means the agency's financial statements were reliable. A qualified opinion means segments of the statements were not reliable. A disclaimer of opinion means the auditor could not determine if the information in the statement was reliable. Late means the agency did not turn in its financial statement on time.

** In fiscal 1998, Commerce received an unqualified opinion on its balance sheet and a disclaimer on its other financial statements.