Agencies turn in audits on time--and most pass muster

For the first time ever, all 24 federal agencies covered by the 1990 Chief Financial Officers Act turned in audited financial statements on time this year, according to the Senate Governmental Affairs Committee. The CFO Act requires agencies to prepare audited financial statements annually. The 2000 Reports Consolidation Act requires that agencies submit their audited financial statements for the previous fiscal year to Congress by March 1. All 24 agencies covered by the law turned their fiscal 2000 reports in on time, although several waited until late March 1 to do so, according to a congressional source. Auditors gave 18 of the agencies clean audit opinions, an indicator of sound financial management. Only 15 agencies received clean audit opinions on their fiscal 1999 financial statements, and only 19 turned their statements in on time last year. "Compliance in reporting agency expenditures is the best we've seen it to date," said Sen. Fred Thompson, R-Tenn., chairman of the committee. This year the Treasury Department got a clean, or "unqualified," opinion for the first time ever. The State Department recorded its first ever on-time opinion. Treasury owes its clean audit to improvements by the Internal Revenue Service, according to a Treasury official. The IRS, the biggest agency within Treasury, received a clean audit for the first time this year. "The IRS getting a clean opinion this year enabled Treasury to get over the top," said Bill Hugh, deputy assistant inspector general for audit at Treasury. While the State Department recorded its fourth consecutive clean fiscal statement, this year marks the first time the department submitted its audit on time. State's fiscal 1999 audit was three months late. "Part of the reason we were so late last year is we tried so hard to get a clean opinion the year before," said Richard Berman, acting assistant inspector general for audit at the department. The Environmental Protection Agency matched its fiscal 1997 performance, the only other year in which the agency submitted a clean, on-time opinion. Thompson praised agencies for producing the most clean financial statements since passage of the CFO Act. But he cautioned that federal financial systems are still unreliable. "What the reports don't show is that most agencies still do not have the procedures in place to track their expenditures, debts, property, and equipment on a regular basis, and fixing that is the next challenge," he said. The General Accounting Office noted in its January High Risk Series Update that many agencies obtain clean audit opinions only through "heroic efforts" and "ad hoc procedures," and that most federal financial systems still cannot produce reliable information. President Bush has pledged to hold agency heads accountable for filing clean audits. "Heads of the agencies without clean opinions are expected to attack vigorously the long-standing difficulties and record-keeping deficiencies that prevent clean opinions," states the President's budget blueprint for fiscal year 2002.

The following chart shows the number of timely, clean and disclaimer audits received in each year agencies have submitted audited financial statements:

Year Timely Clean Disclaimer
1996 6 6 13
1997 13 11 8
1998 15 12 8
1999 19 15 5
2000 24 18 3
Federal Agencies' Financial Audit Results
Agency FY 2000
Audit Opinion*
FY 1999
Audit Opinion*
FY 1998
Audit Opinion*
Agency for International Development Disclaimer Disclaimer Disclaimer
Agriculture Disclaimer Disclaimer Disclaimer
Commerce** Unqualified Unqualified Unqualified/ Disclaimer
Defense Disclaimer Disclaimer Disclaimer
Education Qualified Qualified Disclaimer
Energy Unqualified Unqualified Qualified
Environmental Protection Agency Unqualified Qualified Unqualified
Federal Emergency Management Agency Unqualified Unqualified Unqualified
General Services Administration Unqualified Unqualified Unqualified
Health and Human Services Unqualified Unqualified Qualified
Housing & Urban Development Unqualified Disclaimer Unqualified
Interior Unqualified Unqualified (late) Unqualified
Justice Qualified*** Qualified Disclaimer
Labor Unqualified Unqualified Unqualified
NASA Unqualified Unqualified Unqualified
National Science Foundation Unqualified Unqualified Unqualified
Nuclear Regulatory Commission Unqualified Unqualified Unqualified
Office of Personnel Management Unqualified Disclaimer Disclaimer
Small Business Administration Unqualified Unqualified Unqualified
Social Security Administration Unqualified Unqualified Unqualified
State Unqualified Unqualified (late) Unqualified
Transportation Qualified Unqualified (late) Disclaimer
Treasury Unqualified Qualified Qualified
Veterans Affairs Unqualified Unqualified (late) Qualified

* 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.

*** In fiscal 2000, Justice received an unqualified opinion on its balance sheet and custodial activity statement.

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