Summary: Last year, in the first-ever audit of the U.S. government's financial statements, GAO reported serious deficiencies in the government's systems, recordkeeping, documentation, financial reporting, and controls. This report on the government's 1998 financial statements finds similar shortcomings that call into question the reliability of the financial statements. These deficiencies also affect the government's ability to accurately measure the full cost and financial performance of its programs and manage its operations. Among other things, the government was unable to (1) account for billions of dollars in property and equipment, (2) estimate the cost of most major federal credit programs and the related loans receivable and loan guarantee liabilities, (3) estimate and reliably report environmental and disposal liabilities, (4) determine the proper amount of such reported liabilities as postretirement health benefits for military employees and accounts payable, and (5) ensure that all disbursements were properly recorded. These deficiencies prevented GAO from forming an opinion on the reliability of the financial statements and represent material weaknesses in internal control. The government's long-standing inattention to financial issues, combined with the size and complexity of government operations, makes corrective actions difficult. The pace of improvement will be greatly influenced by agencies' progress in modernizing their information systems and internal controls, in revamping human capital practices to build greater capacity, and in implementing change management to achieve the discipline needed to follow sound financial management and reporting practices. The Comptroller General summarized this report in testimony before Congress; see: Auditing the Nation's Finances: Fiscal Year 1998 Results Highlight Major Issues Needing Resolution, by David M. Walker, Comptroller General of the United States, before the Subcommittee on Government Management, Information and Technology, House Committee on Government Reform. GAO/T-AIMD-99-131, Mar. 31 (14 pages).
