Report: Federal bookkeeping better, still inadequate

WASHINGTON -- Federal agencies are doing a better job of keeping their books but still keep inadequate financial records on programs worth billions of dollars, a government report concludes.

Getting a clear picture of government assets, liabilities and costs is difficult, Congress' General Accounting Office said, because of ''significant financial systems weaknesses, problems with fundamental record keeping and financial reporting, incomplete documentation and weak internal control.''

Still, the GAO said in a report compiled together with the Treasury Department and the White House Office of Management and Budget, there has been real progress compared to a decade ago, when almost no agencies prepared and issued audited financial statements.

''More agencies are completing their financial statements on time, and the quality of the data continues to improve,'' Treasury Secretary Lawrence Summers wrote in the report.

It found that in audits of 24 federal agencies for fiscal year 1999, 13 got clean ratings, up from six, when the first survey was conducted in 1996, and 12 last year.

Another four agency statements got qualified, or acceptable with problems, opinions, and five -- down from 13 in 1996 -- came back with disclaimers, meaning the auditors were unable to determine the reliability of significant portions of the statements. Two did not meet the filing deadline.

The Office of Management and Budget's Joshua Gotbaum said another ''significant milestone'' for the year was that the American Institute of Certified Public Accountants recognized federal accounting standards as ''generally accepted accounting principles.''

But Rep. Stephen Horn, R-Calif., who discussed the report Friday at a hearing of his House Government Reform Committee panel, said agencies as a whole still earned no better than a ''D+'' in providing reliable, accurate financial information.

Horn acknowledged some progress but said he was ''disheartened, but not surprised,'' that significant accounting discrepancies and financial weaknesses remain. Horn graded all 24 agencies, giving A grades only to NASA and the National Science Foundation.

House Majority Leader Dick Armey, R-Texas, said the comprehensive audit, the third in the nation's history, was an exercise in frustration. ''It is simply unacceptable that any federal agency,'' he said, ''cannot be held accountable for the way it spends taxpayer money.''

Horn also asked why trustees of the Medicare and Social Security trust funds came out with a report on Thursday, just a day before Treasury's report, that gave a far rosier outlook of the financial solvency of the two programs.

General Accounting Office Comptroller General David Walker agreed that the lack of coordination in the two reports ''makes the government look foolish.''

Walker praised the Social Security Administration for making good progress in financial management, while singling out the Pentagon, which holds a large percentage of government assets, for being unable to consistently produce auditable financial statements.

The government was ''unable to support significant portions of the $1.76 trillion reported as the total net cost of government operations,'' the GAO said.

It said $313 billion reported as a liability for remediation of environmental contamination and disposal of hazardous waste may not be complete, and data were not available for an accurate estimate of a reported $196 billion military retirement health benefits liability.

On the Net:

OMB site: http://www.whitehouse.gov/omb/

The GAO site: http://www.gao.gov/