Agencies still lag behind in tracking finances

Financial Management Status Report

Problems with federal financial management systems remain a "huge" obstacle in the government's efforts to have auditable financial statements, according to the head of the General Accounting Office. "Agencies have made marked strides in obtaining unqualified audit opinions on their annual financial statements," Comptroller General David Walker said March 30 during testimony before the House Government Reform Committee's Government Efficiency, Financial Management and Intergovernmental Relations Subcommittee.

In fact, for the first time in four years, all 24 of the government's major agencies filed statements by the March 1 deadline, and a number of agencies received clean audit opinions.

Yet despite those improvements, the government's financial books could not be audited. "We have made incremental progress each year, but incremental progress may not prove to be sufficient," said Donald Hammond, the Treasury Department's acting undersecretary for domestic finance.

Overall, the government received a C-minus for its efforts in balancing its books, according to Rep. Stephen Horn's (R-Calif.) most recent report card. "The failures of a few agencies continue to tarnish the overall record" of improvement, said Horn, the subcommittee chairman.

Most agencies undertake Herculean efforts to produce their annual financial statements, Walker said. "The need for such time-consuming procedures, which often represent "heroic efforts' by agency and contractor personnel, primarily result from inadequate financial management systems."

Such efforts are misleading about the true state of the government's financial books, Walker said. "In such a case, an unqualified opinion would become an accomplishment without much substance," he said. True success will come when agencies have and use financial data to make informed decisions. Mitchell Daniels Jr., director of the Office of Management and Budget, said the Bush administration is going to make the annual audits a priority. But he noted that those audits are "meaningless unless they lead to the next step — the generating of reliable financial information."

Horn said he was disturbed by the "abysmal lack of achievement" by the departments of Defense and Agriculture and the Agency for International Development, all of which received failing grades.

Financial management systems are a huge problem, Walker said. "A central challenge is the need for agencies to generate timely, accurate and useful data through the year by overhauling financial and related management information systems."

Dorobek is a freelance writer based in Arlington, Va.

the best and the worst

These agencies received an A for financial management: n Energy Department

n NASA

n Small Business Administration

These agencies got an F: n Agriculture Department

n Defense Department

n U.S. Agency for Inter- national DevelopmentFor a look at all the agency report cards, visit www.house.gov/reform/gmit/hearings/2000 hearings/fiscal_year_2000.htm.