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GAO-13-271R 1 (2013-01-17)

handle is hein.gao/gaobacgut0001 and id is 1 raw text is: i G A O Comptroller General A¢countabflity * Intedt Reyliabity of the United States United States Government Accountability Office Washington, DC 20548 January 17, 2013 The President The President of the Senate The Speaker of the House of Representatives Subject: Financial Audit: U.S. Government's Fiscal Years 2012 and 2011 Consolidated Financial Statements This report transmits GAO's report on the results of our audit of the U.S. government's fiscal years 2012 and 2011 consolidated financial statements, which is incorporated in the enclosed 2012 Financial Report of the United States Government prepared by the U.S. Department of the Treasury. During fiscal year 2012, the federal government continued to face economic and fiscal challenges in a slow-growth economy with high unemployment. To operate as effectively and efficiently as possible and to make difficult decisions to address the federal government's fiscal challenges, Congress, the administration, and federal managers must have ready access to reliable and complete financial and performance information-both for individual federal entities and for the federal government as a whole. Even though significant progress has been made since the enactment of key federal financial management reforms in the 1990s, our report on the U.S. government's consolidated financial statements illustrates that much work remains to improve federal financial management. Further improvements are urgently needed. Our report on the U.S. government's consolidated financial statements begins on page 223 of the enclosed financial report. In summary, we found the following: Certain material weaknesses' in internal control over financial reporting and other limitations on the scope of our work resulted in conditions that prevented us from expressing an opinion on the fiscal years 2012 and 2011 accrual-based consolidated financial statements.2 About 34 percent of the federal government's reported total assets 1A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. 2The accrual-based consolidated financial statements for the fiscal years ended September 30, 2012 and 2011, consist of the (1) Statements of Net Cost, (2) Statements of Operations and Changes in Net Position, (3) Reconciliations of Net Operating Cost and Unified Budget Deficit, (4) Statements of Changes in Cash Balance from Unified Budget and Other Activities, and (5) Balance Sheets, including the related notes to these financial statements. Most revenues are recorded on a modified cash basis. Two additional statements that do not interrelate with the accrual-based consolidated financial statements are also included: the 2012, 2011, 2010, 2009, and 2008 Statements of Social Insurance and the 2012 and 2011 Statements of Changes in Social Insurance Amounts, and related notes. GAO-13-271 R U.S. Government's 2012 and 2011 Consolidated Financial Statements Page 1

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