Accounting and Accountability in Government

Saturday, July 14, 2007
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This is a story about Linda Combs, who cleaned up the government’s financial reporting process.

A remarkable fact jumps off the page at me: “Nineteen of the 24 agencies received unqualified audit opinions in 2005, a vast improvement compared to 1990, when only one had a clean audit opinion.” Then the article goes on to say that:

Still, many of the agencies have been dogged by lack of integrated controls, material weaknesses, and restatements. Many of them have consistently performed below par when it comes to being able to “produce reliable, useful, and timely financial information,” according to the Government Accountability Office’s most recent annual report on the progress of the Federal Financial Management Improvement Act of 1996.

…The government won’t be able to achieve a consolidated audit until the largest agency, the Department of Defense, achieves a clean audit, Combs says. The agency’s sordid financial history is rife with failed business systems and missed budget projections.

I don’t doubt this lady worked a zillion hours per week and cleaned up the financial reporting and accounting processes of these agencies. Nineteen of twenty-four (agencies that received an unqualified opinion) is still unacceptable and indicates that something is very wrong. However, my guess is that she was a superstar to even accomplish that much within the halls of ill repute. In fact, in 1996 only six agencies received clean opinions, and in 2000 there were eighteen clean audit opinions from the twenty-four agencies. Wait -back in 2002, David Walker, the comptroller general of the United States and head of the General Accounting Office (GAO), said this:

“If you look at the 18 departments and agencies that did receive clean opinions on their [FY2000] financial statements,” says Walker, “a majority of those received that clean opinion only because they engaged in ‘heroic efforts’

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