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Federal Financial Accountability

GAO is required to report on the U.S. government’s consolidated financial statements, but three major impediments continue to prevent an audit opinion.

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The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, annually prepares consolidated financial statements for the U.S. government for Congress and the administration to use in fiscal decision making. GAO has been required to audit the consolidated financial statements since 1997, but is also mandated to audit various other federal financial statements.

While federal financial management has improved since the federal government began preparing these statements, GAO has been unable to render an audit opinion on the government’s consolidated financial statements because of the following impediments:

  1. 1. serious financial management problems at the Department of Defense;
  2. 2. the federal government's inability to adequately account for intragovernmental activity and balances between federal entities; and
  3. 3. weaknesses in the federal government’s process for preparing the consolidated financial statements.

It is important to note that while almost all of the 24 largest federal entities received unmodified (“clean”) opinions on their most recent financial statements, the Department of Defense has consistently been unable to receive such an audit opinion on its financial statements.

U.S. Government’s Consolidated Financial Statements

Federal Entity Financial Statements

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Management Report: Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements

GAO-19-624: Published: Sep 4, 2019. Publicly Released: Sep 4, 2019.

Every year we audit the consolidated financial statements of the U.S. government. During our FY 2018 audit, we found that corrective actions were not complete for certain previously reported deficiencies in the processes used to prepare the financial statements. We also identified additional deficiencies related to the preparation process: Certain disclosures related to new accounting standards...

Management Report: Continued Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements

GAO-18-540: Published: Jul 16, 2018. Publicly Released: Jul 16, 2018.

During its audit of the fiscal year 2017 consolidated financial statements of the U.S. government (CFS), GAO identified continuing control deficiencies in the Department of the Treasury's (Treasury) and the Office of Management and Budget's (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control that involve the federal government'...

Management Report: Improvements Are Needed to Enhance the Internal Revenue Service's Internal Control over Financial Reporting

GAO-18-393R: Published: May 7, 2018. Publicly Released: May 7, 2018.

During its audit of the Internal Revenue Service's (IRS) fiscal years 2017 and 2016 financial statements, GAO identified a new control deficiency involving the timely correction and posting of tax transactions to taxpayer accounts that contributed to IRS's continuing material weakness in internal control over unpaid assessments as of September 30, 2017. GAO also identified another new deficiency r...

Understanding the Financial Report of the United States Government

GAO-18-239SP: Published: Feb 15, 2018. Publicly Released: Feb 15, 2018.

Reliable, useful, and timely financial and performance information is needed to make sound decisions on the current results and future direction of vital federal programs and policies. The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, annually prepares the Financial Report of the United States Government (Financial Report). The Financial Repor...

Management Report: Improvements Needed in Controls over the Processes Used to Prepare the U.S. Consolidated Financial Statements

GAO-17-524: Published: Jul 12, 2017. Publicly Released: Jul 12, 2017.

During its audit of the fiscal year 2016 consolidated financial statements of the U.S. government (CFS), GAO identified control deficiencies in the Department of the Treasury's (Treasury) and the Office of Management and Budget's (OMB) processes used to prepare the CFS. These control deficiencies contributed to material weaknesses in internal control that involve the federal government's inability...

Fiscal Year 2015 U.S. Government Financial Statements: Need to Address the Government's Remaining Financial Management Challenges and Long-Term Fiscal Path

GAO-16-541T: Published: Apr 6, 2016. Publicly Released: Apr 6, 2016.

The Financial Report of the U.S. Government ( Financial Report ) provides important information to the Congress, federal agencies, and the public, including the government's financial condition and the reliability of data used to help support budget and financial decisions. While significant progress has been made in improving federal financial management over the past 20 years, material weaknesse...

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