Summary: Pursuant to a legislative requirement, GAO provided information on the results of the audit of fiscal year (FY) 1997 consolidated financial statements of the federal government about the reliability of financial data included in agency budget information presented to Congress.
GAO noted that: (1) the consolidated and agency financial statement audits suggest that some data presented in agency budget requests concerning prior year obligations and expenditures may not be fully reliable; (2) however, it is difficult to quantify the extent of this problem because: (a) historically, the systems used for budgetary reporting are different from those used for financial reporting; and (b) to date, budgetary reporting systems have not been separately audited nor reconciled fully to audited financial statements; (3) this problem is being addressed as part of the financial management reforms mandated by the Chief Financial Officers Act, the Government Management Reform Act, and the Federal Financial Management Improvement Act; (4) the first part of this reform effort has focused on the development of basic financial management and reporting systems; (5) while serious issues surrounding the reliability of reported information still remain, most agencies are now able to prepare basic financial statements; (6) beginning with FY 1998, agencies are scheduled to provide more explicit information in the financial statements on the status of budgetary resources and outlays and to reconcile this information with the net costs of operations reported in the statement of net cost; (7) there is a critical need for this link between financial statements and budgetary reporting; (8) as part of the FY 1998 financial statement audits, agency auditors and GAO will be assessing the reported budgetary information and reconciliations of financial and budgetary information; (9) it is expected that some agencies will initially have difficulty preparing the reconciliations; (10) therefore, the near-term usefulness of this information could be somewhat limited for those agencies; and (11) as agencies progress in their ability to prepare budgetary reports and reconciliations of budgetary and financial statement information, and as that financial statement information becomes more reliable, confidence in the accuracy and reliability of the budgetary information used to manage and make critical decisions about the use of taxpayer funds to carry out federal agencies' missions will be enhanced.
