In the nine years it has been trying, the U.S. government has never received a clean opinion on its consolidated financial statements. Now, in a move whose irony is not likely to be missed by public company CFOs, the government is trying to ease reporting standards in hopes of getting a passing grade.
Compiling the government’s consolidated financial statements is the job of the U.S. Treasury Department. In a new report, the U.S. Government Accountability Office (GAO) — the auditor of government agencies — told Treasury Secretary John Snow that it had discovered a number of new weaknesses in his department’s process for preparing the government’s financial statements for 2005.
The GAO added that of the 154 recommendations GAO made in May 2005 regarding the process for preparing the CFS, 131 had not been addressed as of December 2, 2005.
However, the Treasury Department hopes that some 76 of those 131 recommendations, which relate to specific disclosures required under GAAP, will simply go away.
According to the GAO’s report, Treasury has submitted a proposal to the Federal Accounting Standards Advisory Board seeking to amend previously issued standards and eliminate or lessen the disclosure requirements for the consolidated financial statements so that GAAP would no longer require some of the information that Treasury has been unable to report.
The GAO said it made 12 new recommendations to address compilation and reporting weaknesses identified during the fiscal year 2005 CFS audit, adding that the Office of Management and Budget generally agreed with the new findings in this report and that Treasury concurs with 11 of the recommendations.
In a letter to the GAO, Donald Hammond, fiscal assistant secretary of the Treasury, wrote, “We will continue to work with OMB and the agencies to adopt the other new recommendations and improve preparation and reporting practices. We have developed detailed corrective action plans to address the items in the report, some of which can be implemented in a short period of time while others will take longer than a year to resolve.”