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                          WASHINGTON, D.C. 20503
November 19, 2008
Contact: OMB Communications, 202-395-7254
          Federal Agencies Achieve Historic Milestones in Financial Reporting
Washington, DC — In Fiscal Year 2008, Federal agencies achieved unprecedented results in their ongoing efforts to improve the timeliness and reliability of government financial reporting. Federal agencies achieved these results by having the right people, processes, and technology in place to account for taxpayer dollars effectively.
The number of agencies achieving a “clean” opinion on their financial statement audits increased to 20 of the 24 major agencies, reflecting the highest total in the past 6 years. In addition, the number of material weaknesses government-wide declined by 18%, from 39 to 32. This is the fifth consecutive year that material weaknesses have declined, with a nearly 50% decrease in weaknesses since 2001. When an agency achieves a clean opinion or eliminates material weaknesses, the independent auditor is verifying the reliability of the agency’s financial information and further signaling that the Federal agency has effective controls over its financial operations, including the stewardship of taxpayer dollars.
Also, for the fourth consecutive year, all major Federal agencies met the 45-day financial audit deadline as required by the rigorous reporting guidelines set by the Office of Management and Budget (OMB). Since 2004, agencies are required to complete the financial report 45-days after the end of the Fiscal Year, compared to the previous five month (150 days) window for completion. The accelerated deadline results in more immediate availability of financial information to agency decision-makers and requires agencies to employ rigorous disciplines throughout the year to ensure readiness for year-end reporting.
This year’s government-wide results are complemented by important milestones for several individual agencies. Most notable:
•  The U.S. Army Corps of Engineers achieved its first ever clean audit opinion. The Army Corps is the largest organization within the Department of Defense (DoD) to achieve this milestone. This accomplishment is a critical building block for DoD’s overarching effort to achieve a clean opinion.
•  As the Federal government took action to stabilize the economy, the Treasury Department faced the challenge of accounting for an unprecedented and complex array of financial activities that took place within a few days of the end of the fiscal year. The Treasury Department’s achievement of a clean audit opinion this year demonstrates they were equal to the challenge.
•  The Department of Transportation (DOT), for the first time in its history, achieved a clean opinion with no material weaknesses. DOT joins the ranks of the Departments of Justice and Housing and Urban Development as one of the government’s larger and more complex Federal agencies to achieve the important milestone of a clean opinion with no material weaknesses.
Fiscal Year 2008 was also an important year for the initiative to report on, and eliminate, improper payments (i.e., the right amount, to the right recipient, and on time). Full transparency of annual improper payment totals allows the public to understand the extent of payment errors and assess the government’s efforts to eliminate them. With this year’s financial reports, Federal agencies are now reporting improper payment measurements for nearly 95% of all high-risk programs (up from 85% in Fiscal Year 2007).
The results from the past four years of reporting on improper payments demonstrate that once an agency has measured and reported program errors, it is able to implement corrective actions to reduce those errors in subsequent years. The error rate for the first programs measured for errors, in Fiscal Year 2004, was 4.4% (or $45.1 billion in improper payments). For these programs, the error rate has declined to 3.0% (or a $7.0 billion reduction in improper payments).
The preliminary government-wide error rate for Fiscal Year 2008 is 3.9% (or $71.7 billion). As the improper payments for 12 programs were measured for the first time, including parts of Medicaid and Medicare, the estimate of improper payments increased $16.7 billion from Fiscal Year 2007. The cause of a significant portion of all improper payments is insufficient documentation, meaning that all of the supporting documentation necessary to verify the accuracy of the claim was not provided. If all the supporting documentation had been received, the agencies could have better determined whether the payment was appropriate or made in error. As documentation of payments improves, it is anticipated that the amount of payment errors reported will decline significantly.
Specific accomplishments in Fiscal Year 2008 include:
•  The error rate for the Old Age, Survivors & Disability Insurance program fell from .5% to .3%, a $541 million reduction in improper payments.
•  The error rate for the Public Housing / Rental Assistance program fell from 5.5% to 3.5%, a $527 million reduction in improper payments. In Fiscal Year 2004, the program reported a 6.9% error rate.
•  The error rate for the Medicare Fee-For-Service program declined from 3.9% to 3.6% this year, a $400 million reduction. This is the fifth consecutive year of error rate reductions in this program. In Fiscal Year 2004, the Medicare Fee-for-Service program reported a 10.1% error rate
•  The error rate for the Food Stamps program fell from 6.0% to 5.6%, an $81 million reduction in improper payments and the lowest error rate in history of this program.
“Federal agencies should be congratulated for the results achieved this year,” said Clay Johnson, Deputy Director for Management, OMB. “In particular, the financial reporting staff at the Treasury Department should be recognized for the professionalism and dedication they showed in overcoming the unique accounting and reporting challenges that emerged at the end of the fiscal year. I also want to acknowledge the U.S. Army Corps of Engineers and the Transportation Department who have joined the list of numerous other agencies that have overcome significant financial management challenges and are achieving financial results that are critical to making the government more effective.”
Included with this press release is an attachment for the Fiscal Year 2008 audit results for the major Federal agencies.
Attachment A
CFO Act Agency:FY 2008 Audit Opinion
Department of Agriculture (USDA)Unqualified
Department of Commerce (DOC)Unqualified
Department of Defense (DOD)Disclaimer
Department of Education (Education)Unqualified
Department of Energy (DOE)Unqualified
Department of Health and Human Services (HHS)Unqualified
Department of Homeland Security (DHS)Disclaimer
Department of Housing and Urban Development(HUD)Unqualified
Department of the Interior (DOI)Unqualified
Department of Labor (DOL)Unqualified
Department of Justice (DOJ)Unqualified
Department of State (State)Disclaimer
Department of Transportation (DOT)Unqualified
Department of the Treasury (Treasury)Unqualified
Department of Veterans Affairs (VA)Unqualified
Agency for International Development (USAID)Unqualified
Environmental Protection Agency (EPA)Unqualified
General Services Administration (GSA)Unqualified
National Aeronautics and Space Administration(NASA)Disclaimer
National Science Foundation (NSF)Unqualified
Nuclear Regulatory Commission (NRC)Unqualified
Office of Personnel Management (OPM)Unqualified
Small Business Administration (SBA)Unqualified
Social Security Administration (SSA)Unqualified
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