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GAO: Many federal financial books are so sloppy they can’t be audited


By Johnny Kampis  /   January 18, 2017  /   News  /   2 Comments

The Government Accountability Office says many federal agencies’ financial books are in such bad shape that they cannot be audited.

In a report released last week, the GAO said material weaknesses in accounting procedures “hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs and other related information.”

The GAO said those weaknesses also:

Affect the federal government’s ability to reliably measure the full costs and financial performance of certain programs and activities.
Impair the federal government’s ability to adequately safeguard significant assets and properly record various transactions.
Hinder the federal government from having reliable financial information to operate in an efficient and effective manner.

The GAO said its report on the U.S. government’s consolidated financial statements for fiscal years 2015 and 2016 “underscores that much work remains to improve federal financial management.” The agency couldn’t even express an opinion on the balance sheets because of the weak financial reporting.

“It’s another way of saying ‘we wash our hands of this,’” Bill Bergman, director of research for Truth in Accounting, said of the internal government watchdog.

Bergman said the sorry situation is nothing new. The GAO has highlighted such sloppy record-keeping for two decades. And he said such dismal reports wouldn’t fly in the private sector.

“A private corporation wouldn’t have a record like this for so many years,” Bergman told

GAO noted that 34 percent of the federal government’s reported assets and 18 percent of its reported net cost relate to federal entities that were unable to issue audited financial statements, were unable to receive audit opinions on the complete set of financial statements or received a disclaimer of opinion on their statements.

The GAO called out the Department of Health and Human Services and Department of Defense, in particular, for weak internal controls.

The agency also took a shot at the Department of the Treasury and the Office of Management and Budget, noting that some of the “numerous recommendations” GAO made to those agencies in previous years to address internal control deficiencies remain unaddressed. The secretary of the Treasury and director of OMB are required to annually submit financial statements for the U.S. government, audited by the GAO, to the president and Congress.

“It’s a sad state of affairs,” Bergman said. “It comes with the territory when you’ve got a government this big and this complex.”