Most agencies receive clean financial audits

A record 21 federal agencies received clean financial audits for fiscal 2002, a sign that federal accounting operations are improving, the Office of Management and Budget announced Thursday.

For the first time ever, the Agriculture Department earned a clean audit, due to improved financial management at the Forest Service and better accounting of property departmentwide. The Education Department, Federal Emergency Management Agency and NASA all racked up clean opinions, boosting their fiscal 2001 audit grades. And the Treasury Department and Social Security Administration submitted their audits just 45 days after the end of fiscal 2002, meeting an OMB deadline for timely financial reporting two years before it takes effect.

"The fact that Treasury and SSA produced audited financial statements by the 45 day goal-compared with 151 days in the past-shows that the government's financial managers can meet this ambitious new standard," said Mark Everson, deputy director for management at OMB.

The audit results mean that all but three of the 24 agencies covered by the 1990 Chief Financial Officers Act received clean audits. Eighteen agencies earned clean audits in 2001 and 2000. The Defense Department received a disclaimer, or failing mark, on its latest audit, but OMB noted that Defense has made headway in its effort to consolidate more than 600 separate systems into a single financial system. The U.S. Agency for International Development received a qualified opinion, meaning portions of its financial statements were unreliable.

Only the Small Business Administration lost ground on its fiscal 2002 audit, receiving a disclaimer because of weaknesses in its loan asset sales. All 24 CFO Act agencies turned their audits in on time for the third straight year. For complete audit results, click here.

In another first, agencies submitted their audits along with their performance and accountability reports for fiscal 2002, as required by the 1993 Government Performance and Results Act. Some agencies, including the Veterans Affairs Department, have posted their performance reports online. As in previous years, the reports will be graded by the Mercatus Center, a libertarian think-tank affiliated with George Mason University. The Mercatus Center is hoping to unveil its ratings by April 30, according to spokeswoman Laura Hill.

Despite the gains that agencies have made in financial reporting, OMB officials cautioned that sound financial management requires more than clean audits. As agencies strive to comply with the Bush management agenda and improve financial management, some are experimenting with activity-based costing and other systems to provide managers with real-time financial information.

Only the National Science Foundation has received a "green" mark, indicating success, for financial management on the Bush management scorecard.