Auditor's Notebook

For the third year in a row, the Treasury Department has produced a governmentwide financial statement. And for the third year in a row, auditors at the General Accounting Office found the statement to be "inauditable." In testimony before the House Government Reform Committee in March, Comptroller General David Walker outlined the major challenges facing federal financial managers. GAO's auditors, he said, found that the government cannot:

• Account for and report material amounts of property, equipment, materials and supplies; and certain stewardship assets, primarily at the Defense Department.

• Estimate the cost of certain major federal credit programs and the related loans receivable and loan guarantee liabilities, primarily at the Agriculture Department.

• Estimate and reliably report material amounts of environmental and disposal liabilities and related costs, primarily at the Defense Department.

• Determine the proper amount of various reported liabilities, including post-retirement health benefits for military employees and accounts payable and other liabilities for certain agencies.

• Accurately report major portions of the net cost of government operations.

• Ensure that all disbursements are properly recorded.

• Properly prepare the federal government's financial statements, including balancing the statements, accounting for substantial amounts of transactions between governmental entities, properly and consistently compiling the information in the financial statements, and reconciling the results of operations to budget results.