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GAO Cites Weak Financial Management in Federal Government

February 26, 2010

No big surprises here, but the Government Accountability Office has found widespread material weaknesses in internal control in the federal government’s financial management.

The GAO said it could not render an opinion on the federal government’s consolidated financial statements for 2009 (aside from the Statement of Social Insurance) because of those weaknesses and other limitations.

Acting Comptroller General Gene Dodaro underlined serious financial management problems at the Department of Defense, the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between agencies, and “the ineffective process the federal government uses to prepare the consolidated financial statements.”

On top of those problems, Dodaro cited material weaknesses involving improper payments estimated to be at least $98 billion, information security across government, and tax collection activities. He noted that four major agencies — DOD, the Department of Homeland Security, the Department of State, and NASA — did not get clean audit opinions.

Dodaro may not be a CPA — which is one factor holding up his confirmation for a more permanent slot at the helm of the GAO, along with the AICPA’s efforts to push congressional legislation requiring the Comptroller General to be a CPA — but he can still spot fishy accounting when he sees it.

However, he noted that beginning this year, new financial reporting standards would require a clearer and more comprehensive assessment of the federal government’s financial condition over the long term.

Still, the long-term trends do not look all that rosy. “Long term, the federal government faces huge structural deficits driven by rising health care costs and demographics,” Dodaro said in a press release. “Focused attention from Congress and the administration is needed to address these problems and put the government on a more sustainable path.”

The report is available on the GAO’s Web site at

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