Defense financial problems sink another federal audit

The Defense Department is one of four agencies whose serious financial-management deficiencies continue to be the biggest impediment to the federal government achieving a clean financial bill of health according to the Government Accountability Office.

Four of the 24 major agencies failed their audit: Defense, NASA, and the Energy and Homeland Security departments.

The inability of the government to adequately account for spending between agencies and agencies' ineffective processes to complete their consolidated financial statements also were major weaknesses, GAO said in a report last week. Despite these weaknesses, agencies still were able to meet requirements to file year-end statements on an accelerated schedule, within 45 days.

GAO was assessing the Treasury Department's Fiscal 2005 Financial Report of the U.S. Government. The federal fiscal year ended Sept. 30.

For the ninth consecutive year, the U.S. government failed to earn a clean financial audit because agencies had failed to put in place effective internal controls over financial reporting, the GAO said.

'Moreover, as a result of the material deficiencies we found, the amounts reported in the consolidated financial statements and related notes'may not be reliable,' said comptroller general David Walker in his statement.

He found the government's long-term debt and outlook for increasing health-care costs for the baby boomers even more troubling.

The government will not be able to grow out of the projected deficit. Although tough choices will have to be made on spending, Walker said new reporting approaches, budget processes and control mechanisms could help to better understand, monitor and manage spending and tax policies. Also, he urged new metrics to inform strategic planning, enhance performance and accountability reporting for spending programs and tax policies.

About the Author

Mary Mosquera is a reporter for Federal Computer Week.

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