Posted by Sanjay Vani
It may be a strange kind of reassurance to developing countries that governments in advanced economies can also have serious problems with getting their annual accounts certified by the Supreme Audit Institution (SAI). You may have read in the newspapers that the U.S. Government Accountability Office (GAO) has refused to provide an opinion on the fiscal year 2009 consolidated financial statements of the U.S. government. This is now for the 13th time in a row that such an opinion has been refused. The GAO can hardly be accused of not being consistent! Not providing an opinion is similar, but technically not exactly the same, as not certifying the accounts.
The GAO notes three major impediments that prevented it from rendering an opinion (see also http://www.gao.gov/financial/fy2009financialreport.html). First it notes serious financial management problems at the Department of Defense (DOD) that have prevented DOD’s financial statements from being auditable. In addition, the financial statements of the Department of Homeland Security and the National Aeronautics and Space Administration for fiscal years 2009 and 2008 were determined as not being auditable. Second, the U.S. federal government was unable to adequately account for and reconcile intragovernmental activity and balances between federal entities and the Department of Treasury’s (Treasury) records of disbursements. Third, the federal government’s process for preparing consolidated financial statements is seen as ineffective due to a number of important issues, including having inadequate systems, controls, and procedures to ensure that the consolidated financial statements are consistent with the underlying audited entity financial statements, properly balanced, and in conformity with U.S. generally accepted accounting principles (GAAP).
