Lawmaker lowers government’s financial management grade

The federal government earned a D on its annual financial report card issued by Rep. Stephen Horn, R-Calif., on Tuesday. Horn, a longtime critic of the government's financial management troubles, issues grades to each of the government's 24 largest agencies each year, gauging their ability to produce reliable financial information. Last year, he gave the government an overall C- rating. The government's overall grade dropped for fiscal 2001 because 16 of the assessed agencies got lower grades. "The failures of a few agencies continue to tarnish the overall record of the executive branch of government," said Horn, whose D rating was still more generous than the grade the General Accounting Office gave the federal government in its most recent annual financial audit. The federal government failed GAO's fifth straight financial audit in fiscal 2001. At a hearing before the House Government Reform Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations, which Horn chairs, Comptroller General David Walker told lawmakers that the government's overall financial statements were too unreliable to receive a clean bill of health in 2001. The Defense and Agriculture departments continue to weigh down the rest of the government, Walker said, although he commended Defense Secretary Donald Rumsfeld for his efforts to modernize Defense's financial systems. Pervasive problems with agency-to-agency transactions are another impediment to an overall clean audit, Walker said. "Without accurate financial information, we will never have financial accountability," he said. Horn did not give any of the agencies he graded an A, but the Social Security Administration earned a B and the General Services Administration got a B-. Three agencies that earned an A last year -- the Energy Department, NASA and the Small Business Administration - this year got, respectively, a C, an F and a D+. In NASA's case, new auditors took a fresh look at the agency's books and found several problems, Horn explained, and SBA did not comply with federal financial management laws. Walker and Office of Management and Budget Controller Mark Everson told Horn that the President's Management Agenda, the Executive Branch Management Scorecard and stepped-up reporting deadlines will all help to turn the situation around. The scorecard rates agencies in five areas: human capital management, competitive sourcing, financial management, electronic government and linking performance to budgets. "This president has been engaged with this problem and that is unusual," Walker said. "I'm hopeful that if we can sustain this momentum we will see much more progress."

Rep. Horn's Financial Management Status Report

Agency 2000 Grade 2001 Grade
Agriculture F F
AID F F
Commerce D+ D-
Defense F F
Education D- D-
Energy A C
EPA B- D+
FEMA D+ F
GSA B- B-
HHS D+ D
HUD D+ D
Interior D+ D
Justice D- D-
Labor B- C-
NASA A F
NRC D+ D-
NSF B- C-
OPM B- C
SBA A D+
SSA B- B
State D+ D-
Transportation D- D-
Treasury D+ D-
Veterans Affairs D+ D

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