WASHINGTON -- Senator Fred Thompson, Chairman of the Committee on Governmental Affairs, today said he is, "deeply disappointed that only 11 of 24 major federal agencies are able to produce reliable financial statements for Fiscal Year ‘99." Agencies are required, under the Chief Financial Officers Act, to report on their financial statements by March 1 of each year.

Requiring agencies to submit financial statements is one way to ensure that federal operations have the benefit of basic information with which to manage the expenditure of taxpayer dollars. Without basic financial information, agencies cannot accurately and in a timely manner, measure the full cost and financial performance of programs, cannot effectively and efficiently manage their operations, and/or cannot ensure compliance with laws and regulations.

Senator Thompson said, "We’ve been working under the Chief Financial Officers Act since 1990. Ten years later, less than half the agencies can demonstrate that they have adopted the sound financial management practices that the act requires. Perhaps that’s because OMB’s goals for implementation of the act are somewhat of a moving target. And if agencies couldn’t produce satisfactorily audited financial statements by March 1, they certainly didn’t have the information they needed to manage their operations last year."

In June ‘99, OMB set a goal of clean opinions on 21 of 24 agency financial statements. On February 7, 2000, OMB revised that goal downward to 18 clean opinions on agencies’ FY ‘99 financial statements. As of today, only 11 federal agencies have received a clean opinion on their financial statements.

Two agencies -- the Department of Housing and Urban Development and the Environmental Protection Agency -- fell back in their efforts to implement sound financial management practices. HUD, which last year received a clean opinion on its financial statements, this year received a disclaimer of opinion on its financial statements. The audit shows that HUD suffers from severe financial management weaknesses which, for instance, caused it to make over $900 million in excess subsidy payments and prevented it from spending $151 million which Congress had authorized for public housing.

"Many people think that financial management is an issue that doesn’t affect ordinary people," said Chairman Thompson. "But, at HUD and other agencies, poor financial management means that crooks are stealing from the government and people that need these funds are going without."

Information provided to the Committee on Governmental Affairs by agency Inspectors General showed that 11 agencies received an unqualified (clean) opinion on their financial statements, four agencies received a qualified opinion, five agencies received a disclaimer of opinion, and four agency Inspectors General were unable to complete their audit of financial statements by the March 1, 2000 deadline. An unqualified opinion means the agency's financial statements were reliable. A qualified opinion means segments of the statements were not reliable. A disclaimer of opinion means the auditor could not determine if the information in the statement was reliable for reasons that could include lack of documentation or otherwise unavailable information.

Agency Financial Statement chart is attached.