Federal Government Is Flunking Accounting, GAO Audit Finds

From $12.6 billion in improper Medicare payments to unaccounted-for bullets and bombs, the federal government still does a woeful job of keeping its financial books, an audit released Wednesday said.

Surprisingly, the second government-wide audit by the congressional General Accounting Office was praised as good news because things weren’t as bad in fiscal 1998 as they were the year before.

“Progress is coming, but we’ve sure got a lot to do,” said Rep. Stephen Horn (R-Long Beach), chairman of the House Government Reform Committee’s panel on management.

Comptroller General David Walker, who heads the GAO, told the panel that 24 major federal agencies don’t properly account for “a majority” of the $466 billion in assets they hold. These range from buildings to heavy equipment to ammunition.

It doesn’t necessarily mean the assets are missing, although some are. But it shows most government agencies don’t have the basic financial controls that are commonplace in any private business.

The government’s financial statements, Walker said, “do not provide a reliable source of information for decision-making by the government or the public.”

The audit revealed numerous other problems, including inadequate data on loans and liabilities such as veterans’ benefits, poor computer security, vast underestimates for costs such as environmental and nuclear cleanups and even lack of documentation to support the costs of many day-to-day government operations.

Although the full extent of improper payments made by government agencies is unknown, the Health and Human Services Department estimated that $12.6 billion of its fee-for-service Medicare payments, or about 7%, should not have been made in 1998.

Yet that’s down from $23.2 billion in 1996, which Walker cited as an example of why accurate accounting matters.