Most agencies pass audit

"The President's Management Agenda"

Most agencies were able to pass an audit of their financial records, the Office of Management and Budget announced last week.

All but three of the 24 largest agencies were able to obtain clean financial results for fiscal 2002. Only 18 agencies produced auditable books in fiscal 2001.

The laggards include the Defense Department, which is working to overhaul its financial management systems, the Small Business Administration and the U.S. Agency for International Development.

The result marks the first time that so many agencies passed the auditing tests, which are one component of overhauling federal financial management systems, OMB officials said. In fact, the fiscal 2002 audit was the first time that some agencies, such as the Agriculture Department, have ever been able to present auditable books.

"A clean audit is not proof positive of good management, but it is a prerequisite," said OMB Director Mitchell Daniels Jr. "You have to know where you are to know how far you have to go."

The Bush administration has been pushing agencies to move beyond merely getting a clean audit to deploying workable systems that could give senior management real-time data that would help run the organizations. Such data is essential to many performance measurements.

All federal agencies had to combine their audits with performance reports and deliver them to OMB by Feb. 1. This is the earliest agency audits have ever been available. The Bush administration instructed all agencies to produce clean audits within 45 days of the end of the fiscal year by 2004.

"The fact that [the Treasury Department] and [Social Security Administration] produced audited financial statements by the 45-day goal — compared with 151 days in the past — shows that the government's financial managers can meet this ambitious new standard," said Mark Everson, OMB's deputy director for management.

SBA slipped this year, according to the report, from six consecutive clean opinions to a disclaimer, or failing mark. Auditors found errors in the accounting for loan asset sales and the valuation of the Direct Disaster Loan portfolio.

SBA officials said they are working on an "aggressive action plan" to remedy the agency's financial management challenges.

DOD received another disclaimer, a regular occurrence with the unwieldy finances of the department, but is working on developing a financial management enterprise architecture to get its books in order. DOD has received disclaimers for at least five consecutive annual audits.

OMB has developed "standards for success" in each of the five governmentwide initiatives:

* Strategic management of the workforce.

* Expanded e-government.

* Competitive sourcing.

* Improved financial performance.

* Budget and performance integration.

A score card gives agencies green for success, yellow for mixed results and red for unsatisfactory.

To achieve success in expanding e-government, for example, an agency must have all major information technology projects operating within 90 percent of cost, schedule and performance targets, in addition to meeting other criteria.