Issue Summary
GAO has been auditing the federal government’s consolidated financial statements since FY 1997 (as well as various other federal financial statements). The current consolidated financial statements and our audit report are included in the Fiscal Year 2024 Financial Report of the U.S. Government. The Executive Summary provides an overview of the federal government’s finances.
GAO continues to be unable to render an audit opinion on the government’s accrual-based consolidated financial statements—which present historical information such as assets, liabilities, revenue, and net cost. This is primarily due to:
- Serious financial management problems at the Department of Defense
- The federal government's inability to adequately account for intragovernmental activity and balances between federal agencies
- Weaknesses in the federal government’s process for preparing the consolidated financial statements
In addition, the Small Business Administration was unable to obtain an opinion on its FYs 2020 through 2024 financial statements, and the Department of Education was unable to obtain an opinion on its FYs 2022 through 2024 financial statements, because they could not reasonably estimate or adequately support the amounts of loans receivable and loan guarantees. Further, GAO continues to be unable to render an audit opinion on the government’s sustainability financial statements (which present projections of federal receipts and spending over the next 75 years) primarily due to significant uncertainties related to projected Medicare cost growth.
The federal government has made significant strides in improving financial management since key reforms were enacted in the 1990s. For example, 18 of the 24 agencies covered by the Chief Financial Officers Act of 1990 received unmodified (“clean”) opinions on their FY 2024 financial statements—up from six agencies in FY 1996. (Unmodified audit opinions are when the auditors conclude that the financial statements are presented fairly, in all material respects, in accordance with U.S. generally accepted accounting principles.)
Accounting and financial reporting standards have continued to evolve to provide greater transparency and accountability over the federal government’s operations and financial condition. In addition to addressing the weaknesses reported in our audit of the federal government’s consolidated financial statements, there are a number of areas where financial management can be improved, including standardizing the responsibilities of chief financial officers, preparing financial management plans, better linking performance and cost information for decision-making, and strengthening improper payment and fraud risk management reporting.
More About the U.S. Government’s Consolidated Financial Statements
The Financial Report of the United States Government provides the President, Congress, and the American people with a comprehensive view of the federal government's finances—its financial position and condition, revenues and costs, assets and liabilities, and other obligations and commitments. It also discusses important financial issues and significant conditions that may affect future operations, including the need to achieve fiscal sustainability over the medium and long term. The Financial Report also includes the consolidated financial statements for the U.S. government. Each year, we audit these statements, attempting to determine whether the federal government presented them fairly and in accordance with U.S. generally accepted accounting principles; maintained effective internal control over its financial reporting, and complied with applicable laws, regulations, contracts, and grant agreements. Thus far, we have been unable to make such determinations.
Federal Entity Financial Statements
The Financial Report is compiled primarily from individual federal agencies' audited financial statements and related information included in the agencies' financial reports. Inspectors General are generally responsible for annually auditing the financial statements for their respective agencies; however, various laws mandate that we audit the financial statements of the entities below.
- Securities & Exchange Commission (SEC)
- Department of the Treasury
- Federal Deposit Insurance Corporation (FDIC)
- Federal Housing Finance Agency (FHFA)
- Consumer Financial Protection Bureau (CFPB)
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