Agency Financial Records Put Major Assets at Risk

(Washington, DC) ? Senate Governmental Affairs Committee Chairman Fred Thompson (R-TN) today released a disturbing GAO report indicating that financial management in federal agencies remains poor.

“Congress has introduced a series of management reforms and yet, despite our efforts, the majority of government agencies are still unable to accurately record and report on their own finances,” said Chairman Thompson. “Unlike American taxpayers, many agencies are conducting their financial activities without regard to whether money is being spent productively.”

To improve the accountability and credibility of the federal government and restore public confidence, Congress passed the Federal Financial Management Improvement Act (FFMIA) of 1996, Public Law 104-208. FFMIA requires auditors for each of the 24 major departments and agencies named in the Chief Financial Officers (CFO) Act to report whether agencies? financial management systems comply substantially with financial management requirements.

“These requirements are in place for a good reason,” continued Thompson. “They are critical to ensure timely, consistent and accurate financial record keeping that should maximize agency performance and assure the proper expenditure of taxpayer dollars.”

Although agencies are more aware of their financial management weaknesses and have started taking steps to address them, most have gained little ground. According to GAO, “[T]here has been little discernible progress since last year.” The Department of Energy, National Aeronautics and Space Administration (NASA) and the National Science Foundation (NSF) were the only agencies recognized by auditors as having made some progress, but still lacked results in key areas.

According to GAO, the federal government?s inability to utilize sound financial management practices means:

  • Agencies can?t properly account for and report billions of dollars of property, equipment, materials, and supplies.

  • Agencies can?t properly estimate the cost of most major federal credit programs.

  • Agencies can?t properly account for basic transactions, like purchases.

  • Agencies can?t report major portions of the cost of government operations.

To aid congressional oversight and keep the Congress advised on the status of federal financial management, GAO is required to report annually on FFMIA implementation by October 1 of each year.

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