Obtaining an Unqualified Opinion on the U.S. Government's Consolidated Financial Statements

As has been the case for the last 14 years, GAO was unable to render an opinion on the U.S. government's accrual-based consolidated financial statements for fiscal year 2010.

• Three major impediments continued to prevent GAO from rendering an opinion on the federal government's accrual-based consolidated financial statements: (1) serious financial management problems at the Department of Defense (DOD) that have prevented DOD's financial statements from being auditable, (2) the federal government's inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government's ineffective process for preparing the consolidated financial statements.
• In addition to the material weaknesses underlying the major impediments, GAO noted three other material weaknesses involving the federal government's inability to (1) determine the full extent to which improper payments occur and reasonably assure that appropriate actions are taken to reduce improper payments; (2) identify and resolve information security control deficiencies and manage information security risks on an ongoing basis; and (3) effectively manage its tax collection activities.
• Until the material weaknesses related to financial systems, fundamental record keeping, financial reporting, and incomplete supporting documentation are adequately addressed, they will continue to (1) hamper the federal government's ability to reliably report a significant portion of its assets, liabilities, costs, and other related information; (2) affect the federal government's ability to reliably measure the full cost as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the federal government's ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the federal government from having reliable financial information to operate in an efficient and effective manner.
• With regard to the Statement of Social Insurance (SOSI), GAO was unable to, and did not, express an opinion on the 2010 SOSI because of significant uncertainties discussed by management in the consolidated financial statements, primarily related to the achievement of projected reductions in Medicare cost growth reflected in the 2010 SOSI.

^ Back to topWhat Needs to Be Done

Sustained attention is needed over the DOD’s efforts to resolve its serious financial management problems. In addition, action is needed to implement previous GAO recommendations. As of July 2010, GAO had more than 50 open recommendations to Treasury or OMB concerning internal control weaknesses relating to the federal government's ineffective process for preparing the U.S. government’s consolidated financial statements, including actions needed to

• adequately account for and reconcile intragovernmental activity and balances among federal entities,
• identify and either resolve or explain material differences between certain components of the federal budget deficit reported in Treasury’s records, and related amounts reported in federal entities’ financial statements and underlying entity financial information and records, and
• ensure that the information in all the federal government's consolidated financial statements is fully consistent with the underlying information in federal entities’ audited financial statements and other financial data.

^ Back to topKey Reports

U.S. Treasury, 2010 Financial Report of the United States Government (Washington, D.C.).

FY2010 Financial Report of the US Government (PDF, 268 pages)

U.S. Treasury, A Citizen’s Guide to the 2010 Financial Report of the United States Government (Washington, D.C.).

Citizen’s Guide (PDF, 14 pages)

U.S. Government Financial Statements

Management Report

Management Report

Fiscal Year 2008 U.S. Government Financial Statements

Fiscal Year 2010 U.S. Government Financial Statements

Financial Audit

U.S. Treasury, 2009 Financial Report of the United States Government (Washington, D.C.).

FY2009 Financial Report of the US Government (PDF, 254 pages)

U.S. Treasury, The Federal Government's Financial Health: A Citizen's Guide to the 2009 Financial Report of the U.S. Government (Washington, D.C.).

Citizen’s Guide (PDF, 14 pages)

More Reports