FINANCIAL AND 

PERFORMANCE 

MANAGEMENT

More Reliable and Complete 

Information Needed to 

Address Federal 

Management and Fiscal 

Challenges 

Statement of Gene L. Dodaro 

Comptroller General of the United States

Testimony 

Before the Committee on Oversight and 

Government Reform, House of 

Representatives

For Release on Delivery 

Expected at 9:30 a.m. EDT

Wednesday, July 10, 2013

GAO-13-752T

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-13-752T, a testimony 

before the Committee on Oversight and 

Government Reform, House of 

Representatives

July 10, 2013

FINANCIAL AND PERFORMANCE 

MANAGEMENT

More Reliable and Complete Information Needed to 

Address Federal Management and Fiscal Challenges

Why GAO Did This Study

To operate as effectively and efficiently 

as possible and to make difficult 

decisions to address the federal 

government’s management and fiscal 

challenges, Congress, the 

administration, and federal managers 

must have ready access to reliable and

complete financial and performance 

information—both for individual federal 

entities and programs and for 

government as a whole. GAO is 

required to annually audit the 

consolidated financial statements of 

the U.S. government. In addition, GAO 

is required to periodically report on 

federal agencies’ efforts to increase 

the use of performance information in 

government and to take a more 

crosscutting and integrated perspective 

on performance. 

This testimony presents the results of 

GAO’s recent audits and reviews 

related to (1) the U.S. government’s 

consolidated financial statements for 

fiscal year 2012, and (2) executive 

branch implementation of key 

provisions of the GPRA Modernization 

Act of 2010.

What GAO Recommends

Over the years, GAO has made 

numerous recommendations directed 

at improving federal financial 

management. The federal government 

has generally taken or plans to take 

actions to address GAO’s 

recommendations. GAO has also 

made numerous recommendations to 

OMB to more fully implement the 

GPRA Modernization Act of 2010. 

OMB staff agreed with these 

recommendations.

What GAO Found

Three long-standing major impediments prevented GAO from expressing an 

opinion on the U.S. government’s 2012 accrual-based consolidated financial 

statements: (1) serious financial management problems at the Department of 

Defense (DOD), (2) the federal government’s inability to adequately account for 

and reconcile intragovernmental activity and balances between federal entities, 

and (3) the federal government’s ineffective process for preparing the 

consolidated financial statements. Also, GAO was prevented from expressing 

opinions on the 2012 social insurance-related statements because of significant 

uncertainties primarily related to the achievement of projected reductions in 

Medicare cost growth reflected in the statements. 

DOD continues to work to address its financial management challenges with the 

goal of full financial statement auditability, but has much work to do if the 

department is to meet its audit readiness and financial management

improvement goals. In addition, the Department of the Treasury, in coordination 

with the Office of Management and Budget (OMB), is taking actions to address 

issues related to intragovernmental activity and preparation of the consolidated 

financial statements, but additional efforts and sustained commitment are 

required to fully resolve these issues. 

The 2012 Financial Report of the United States Government included 

comprehensive long-term fiscal projections, which provide a much-needed 

perspective on the federal government’s long-term fiscal position and outlook. 

These, like GAO’s simulations, include the savings provided by the Budget 

Control Act of 2011, yet still show an unsustainable long-term fiscal path.

As GAO reported in June 2013, the executive branch has taken a number of 

steps to implement key provisions of the GPRA Modernization Act of 2010 

(GPRAMA or the act), such as the development of interim cross-agency and 

agency-specific priority goals and use of data-driven quarterly performance 

reviews. However, the executive branch needs to do more to fully implement and 

leverage the act’s provisions to address governance challenges in the following 

five areas: (1) OMB and agencies have made some progress addressing 

crosscutting issues, but are missing additional opportunities such as assessing 

the performance of tax expenditures; (2) while key performance management 

practices hold promise, ensuring performance information is useful and used by 

managers to improve results remains a weakness. For example, GAO found little 

improvement in federal managers’ reported use of performance information or 

practices that could help promote its use, based on its periodic government-wide 

surveys of federal managers since 1997. Moreover, only 37 percent of managers 

reported that a program evaluation had been completed in the past 5 years of 

any program or operation they were involved in; (3) agencies have taken steps to 

align daily operations with agency results, but continue to face difficulties 

measuring performance in areas such as grants and contracts; 

(4) communication of performance information could better meet users’ needs; 

and (5) agency performance information is not always useful for congressional 

decision making. GAO found little evidence that meaningful consultations 

occurred with Congress related to agency strategic plans and agency priority 

goals.

View GAO-13-752T. For more information, 

contact Robert F. Dacey or Gary T. Engel at 

(202) 512-3406, or J. Christopher Mihm at 

(202) 512-6806.
Page 1 GAO-13-752T 

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee:

I appreciate the opportunity to be here today to discuss our reports on the 

U.S. government’s consolidated financial statements for fiscal years 2012 

and 2011,1 and on the federal government’s progress in implementing the 

GPRA Modernization Act of 2010 (GPRAMA or the act).2

To operate as effectively and efficiently as possible and to make difficult 

decisions to address the federal government’s management and fiscal

challenges, Congress, the administration, and federal managers must 

have ready access to reliable and complete financial and performance 

information—both for individual federal entities and programs and for 

government as a whole. The government has made important progress 

since the enactment of key federal financial management reforms in the 

1990s and continues to address significant financial management and 

long-term fiscal challenges. The act, which updated the Government 

Performance and Results Act of 1993 (GPRA),

The federal 

government is one of the world’s largest and most complex entities, with 

about $3.5 trillion in outlays in fiscal year 2012, funding an extensive 

array of programs and operations. Moreover, it faces a number of 

significant fiscal, financial management, and performance management 

challenges in responding to the diverse and increasingly complex issues 

it seeks to address.

3

 1

The Secretary of the Treasury, in coordination with the Director of the Office of 

Management and Budget, is required to annually submit audited financial statements for 

the U.S. government to the President and Congress. GAO is required to audit these 

financial statements. The Government Management Reform Act of 1994 has required 

such reporting, covering the executive branch of government, beginning with the financial 

statements prepared for fiscal year 1997. 31 U.S.C. 331(e). The federal government has 

elected to include certain financial information on the legislative and judicial branches in 

the consolidated financial statements as well.

was intended to help 

increase the use of performance information in government and to take a 

more crosscutting and integrated perspective on performance 

management. However, our reports on the U.S. government’s 

consolidated financial statements and on the implementation of the act 

illustrate that further improvements to federal financial and performance 

management are urgently needed. I would like to commend you, Mr. 

2

Pub. L. No. 111-352, 124 Stat. 3866 (Jan. 4, 2011).

3

Pub. L. No. 103-62, 107 Stat. 285 (Aug. 3, 1993).
 

Page 2 GAO-13-752T 

Chairman, and this committee, for holding this oversight hearing on these 

important subjects. Congressional oversight is critical to assuring 

continued progress.

This testimony is based on several reports issued in 2013. In January 

2013, we issued our report on the results of our audit of the U.S. 

government’s fiscal years 2012 and 2011 consolidated financial 

statements, which along with the financial statements, are contained in 

the fiscal year 2012 Financial Report of the United States Government

(Financial Report).4

The act includes provisions requiring us to review its implementation at 

several critical junctures.

We performed sufficient audit work to provide our 

report on the consolidated financial statements, internal control, and 

compliance with selected provisions of laws and regulations. We 

conducted our audit in accordance with U.S. generally accepted 

government auditing standards. Our audit report would not be possible 

without the commitment and professionalism of inspectors general 

throughout the federal government who are responsible for annually 

auditing the financial statements of individual federal entities.

5 In June 2013, we issued a report highlighting 

the key findings from several reports issued over the past 2 years 

covering the executive branch’s implementation of key provisions of the 

act and how the executive branch can more fully implement and leverage 

the act to address pressing governance challenges.6

 

4

GAO, Financial Audit: U.S. Government’s Fiscal Years 2012 and 2011 Consolidated 

Financial Statements, 

The report also 

included the results of our most recent survey of federal managers on the 

implementation of key performance management practices across 

GAO-13-271R (Washington, D.C.: Jan. 17, 2013). The Financial 

Report is available through the Department of the Treasury at 

http://www.fms.treas.gov/fr/index.html. Also, see GAO, Understanding the Primary 

Components of the Annual Financial Report of the United States Government, 

GAO-09-946SP (Washington, D.C.: September 2009).

5

For more information on our reports reviewing initial implementation of the act, see GAO, 

Managing for Results: Executive Branch Should More Fully Implement the GPRA 

Modernization Act to Address Pressing Governance Challenges, GAO-13-518 

(Washington, D.C.: June 26, 2013). For more details on the scope and methodology for 

this work, see app. I of GAO-13-518. 

6

See GAO-13-518. For the full results of our 2013 survey, see GAO, Managing for 

Results: 2013 Federal Managers Survey on Organization Performance and Management 

Issues, an E-Supplement to *$2, GAO-13-519SP (Washington, D.C.: June 

2013).
Page 3 GAO-13-752T 

government—the fifth such survey we have undertaken since 1997. In 

addition to the survey, we reviewed the act, related Office of Management 

and Budget (OMB) guidance, and our past and recent work related to 

federal performance management and the act, as well as interviewed 

OMB staff. Based, in part, on some of the results of our federal managers’

survey, we also issued a report in June 2013 on strategies to facilitate 

agencies’ use of program evaluations.7 In addition to the survey, we 

interviewed OMB staff and evaluators at five agencies within the 

Departments of Agriculture, Health and Human Services, and Labor 

selected for their evaluation experience. We conducted our performance 

audits in accordance with generally accepted government auditing 

standards.

The federal government was unable to demonstrate the reliability of 

significant portions of its accrual-based consolidated financial statements 

for fiscal years 2012 and 2011, principally resulting from limitations 

related to certain material weaknesses in internal control over financial 

reporting.8 For example, about 34 percent of the federal government’s 

reported total assets as of September 30, 2012, and approximately 21 

percent of the federal government’s reported net cost for fiscal year 2012, 

relate to the Department of Defense (DOD), which received a disclaimer 

of opinion on its consolidated financial statements. As a result, we were 

unable to provide an opinion on the accrual-based consolidated financial 

statements of the U.S. government. Further, significant uncertainties, 

primarily related to the achievement of projected reductions in Medicare 

cost growth reflected in the 2012, 2011, and 2010 Statements of Social 

Insurance,9

 7

GAO, Program Evaluation: Strategies to Facilitate Agencies’ Use of Evaluation in 

Program Management and Policy Making, 

prevented us from expressing opinions on those 

GAO-13-570 (Washington, D.C.: June 26, 

2013). For more details on the scope and methodology for this work, see app. I of 

GAO-13-570.

8

A material weakness is a deficiency, or combination of deficiencies, in internal control 

such that there is a reasonable possibility that a material misstatement of the entity’s 

financial statements will not be prevented, or detected and corrected, on a timely basis. A 

deficiency in internal control exists when the design or operation of a control does not 

allow management or employees, in the normal course of performing their assigned 

functions, to prevent, or detect and correct, misstatements on a timely basis.

9

These uncertainties are discussed in Note 26 to the consolidated financial statements.

Results of Our Audit 

of the U.S. 

Government’s 

Consolidated 

Financial Statements 

for Fiscal Years 2012 

and 2011
Page 4 GAO-13-752T 

statements,10

The federal government did not maintain adequate systems or have 

sufficient, reliable evidence to support certain material information 

reported in the U.S. government’s accrual-based consolidated financial 

statements. The underlying long-standing material weaknesses in internal 

control contributed to our disclaimers of opinion on the U.S. government’s 

accrual-based consolidated financial statements for the fiscal years 

ended September 30, 2012 and 2011.

as well as on the 2012 and 2011 Statements of Changes in 

Social Insurance Amounts. Given the importance of social insurance 

programs, such as Medicare and Social Security to the federal 

government’s long-term fiscal outlook, the Statement of Social Insurance 

is critical to understanding the federal government’s financial condition 

and fiscal sustainability.

11

• satisfactorily determine that property, plant, and equipment and 

inventories and related property, primarily held by DOD, were properly 

reported in the accrual-based consolidated financial statements;

Specifically, these weaknesses 

concerned the federal government’s inability to

• reasonably estimate or adequately support the amounts reported for 

certain liabilities, such as environmental and disposal liabilities, or 

determine whether commitments and contingencies were complete 

and properly reported;

• support significant portions of the reported total net cost of operations, 

most notably related to DOD, and adequately reconcile disbursement 

activity at certain federal entities;

• adequately account for and reconcile intragovernmental activity and 

balances between federal entities;

• ensure that the federal government’s accrual-based consolidated 

financial statements were (1) consistent with the underlying audited 

 10We expressed unqualified opinions on the 2009 and 2008 Statements of Social 

Insurance.

11A more detailed description of the material weaknesses that contributed to our 

disclaimer of opinion, including the primary effects of these material weaknesses on the 

accrual-based consolidated financial statements and on the management of federal 

government operations, can be found on pages 237 through 242 of the Financial Report.
Page 5 GAO-13-752T 

entities’ financial statements, (2) properly balanced, and (3) in 

conformity with U.S. generally accepted accounting principles (U.S. 

GAAP); and

• identify and either resolve or explain material differences between 

(1) components of the budget deficit that are used to prepare certain 

information in the consolidated financial statements and (2) related 

amounts reported in federal entities’ financial statements and 

underlying financial information and records.

These material weaknesses continued to (1) hamper the federal 

government’s ability to reliably report a significant portion of its assets, 

liabilities, costs, and other related information; (2) affect the federal 

government’s ability to reliably measure the full cost as well as the 

financial and nonfinancial performance of certain programs and activities; 

(3) impair the federal government’s ability to adequately safeguard 

significant assets and properly record various transactions; and (4) hinder 

the federal government from having reliable financial information to 

operate in an efficient and effective manner.

We also reported certain other material weaknesses,12 including the 

federal government’s inability to (1) determine the full extent to which 

improper payments occur and reasonably assure that appropriate actions 

are taken to reduce improper payments,13

Since the enactment of key financial management reforms in the 1990s, 

important progress has been made improving financial management 

activities and practices. For fiscal year 2012, 21 of 24 Chief Financial 

Officers (CFO) Act agencies were able to attain unqualified audit opinions 

on their accrual-based financial statements, up from 6 CFO Act agencies 

for fiscal year 1996.

and (2) identify and resolve 

information security control deficiencies and manage information security 

risks on an ongoing basis.

14

 12A more detailed discussion of these weaknesses, including the primary effects of the 

material weaknesses on the accrual-based consolidated financial statements and on the 

management of federal government operations, can be found on pages 243 through 245 

of the Financial Report.

Also, for the first time, the Department of Homeland 

13Federal entities reported estimates of improper payment amounts that totaled 

$107.7 billion for fiscal year 2012, which represented approximately 4.4 percent of about 

$2.5 trillion of reported outlays for the associated programs.

14See app. I for the fiscal year 2012 audit results for the 24 CFO Act Agencies.
Page 6 GAO-13-752T 

Security (DHS) was able to obtain a qualified audit opinion on its 

department-wide financial statements—a significant achievement for 

DHS. Further, the preparation and audit of financial statements have 

identified numerous deficiencies, leading to actions to strengthen controls 

and systems. However, many of the CFO Act agencies continue to 

struggle with financial systems that do not meet the needs of 

management for reliable, useful, and timely financial information.

The Federal Financial Management Improvement Act of 1996 (FFMIA) 

was designed to lead to system improvements that would result in CFO 

Act agency managers routinely having access to reliable, useful, and 

timely financial-related information with which to measure performance 

and increase accountability throughout the year.15

For both fiscal years 2012 and 2011, auditors for 11 of the 24 CFO Act 

agencies reported that the agencies’ financial management systems did 

not substantially comply with one or more of the three FFMIA 

requirements. Often, federal entities expend major time, effort, and 

resources to develop financial information that their systems should be 

able to provide on a daily or recurring basis. Therefore, it is important for 

the individual federal entities to remain committed to maintaining the 

progress that has been achieved in obtaining positive audit results and to 

build upon that progress to make needed improvements in federal 

financial management systems.

FFMIA requires 

auditors, as part of the 24 CFO Act agencies’ financial statement audits, 

to report whether those agencies’ financial management systems 

substantially comply with (1) federal financial management systems 

requirements, (2) applicable federal accounting standards, and (3) the 

federal government’s U.S. Standard General Ledger at the transaction 

level.

Three long-standing major impediments continued to prevent us from 

expressing an opinion on the U.S. government’s accrual-based 

consolidated financial statements: (1) serious financial management 

problems at DOD, (2) the federal government’s inability to adequately 

account for and reconcile intragovernmental activity and balances 

 15FFMIA, which is reprinted in 31 U.S.C. 3512 note.

Addressing Impediments 

to an Opinion on the 

Accrual-Based 

Consolidated Financial 

Statements
Page 7 GAO-13-752T 

between federal entities, and (3) the federal government’s ineffective 

process for preparing the consolidated financial statements.

DOD continues to work toward the long-term goal of improving financial 

management and full financial statement auditability. The National 

Defense Authorization Act (NDAA) for Fiscal Year 2010 requires that 

DOD’s Financial Improvement and Audit Readiness (FIAR) Plan set as its 

goal that the department’s financial statements be validated as ready for 

audit by September 30, 2017.16 In addition, the NDAA for Fiscal Year 

2013 requires that the FIAR Plan also describe specific actions to be 

taken and the cost associated with ensuring that DOD’s Statement of 

Budgetary Resources (SBR) is validated as ready for audit by 

September 30, 2014.17

Based on difficulties encountered in auditing the SBR of the Marine 

Corps, in August 2012, DOD’s FIAR Governance Board approved a 

significant change to the FIAR methodology that will limit the scope of 

first-year SBR audits for all DOD components. As outlined in the March 

2013 revised FIAR Guidance, the scope of the SBR audits beginning in 

fiscal year 2015 will be on budget activity only in the current-year 

appropriations as an interim step toward achieving an audit of the SBR. In 

subsequent years, the components will commence audits of schedules of 

both current-year and prior-year audited appropriations and all related 

activity against those appropriated funds.

DOD’s FIAR Plan and semiannual status reports 

define the activities, corrective actions, and interim milestones the 

department has deemed necessary to achieve auditability and the 

availability of reliable, useful, and timely information for management 

decision making. Under its FIAR Plan, DOD is focusing on improving 

controls, systems, and processes relied on to provide financial 

information in two areas that are critical to managing its operations: 

(1) budgetary information and (2) accountability over its mission-critical 

assets.

 16Pub. L. No. 111-84, § 1003(a)(2)(A)(ii), 123 Stat. 2190, 2440 (Oct. 28, 2009) (reprinted 

in 10 U.S.C. § 2222 note). Prior to enactment of this law, DOD had been using the 

September 30, 2017 date as its internal goal since 2008.

17NDAA for Fiscal Year 2013, Pub. L. No. 112-239, § 1005(a), 126 Stat. 1632, 1904 

(Jan. 2, 2013) (reprinted in 10 U.S.C. § 2222 note).

Improving Financial 

Management at DOD
Page 8 GAO-13-752T 

While DOD has made efforts to improve its financial management, we 

found significant internal control, financial management, and systems 

deficiencies in DOD’s processes and procedures for maintaining 

accountability for billions of dollars in funds and other resources. For 

example, we found that

• the Army and the Defense Finance and Accounting Service (DFAS) 

could not readily identify the full population of payroll accounts 

associated with the Army’s $46 billion active duty military payroll 

because of deficiencies in existing procedures and nonintegrated 

personnel and payroll systems,18

• DFAS could not detect and correct all errors in active duty military 

payroll disbursements because of deficiencies in its processes,19

• DOD’s improper payment estimates reported in its fiscal year 2011 

Agency Financial Report were neither reliable nor statistically valid 

because of long-standing and pervasive financial management 

weaknesses and significant deficiencies in the department’s 

procedures related to estimating improper payments,20

• DOD continues to encounter difficulties in implementing its planned 

Enterprise Resource Planning (ERP) systems on schedule and within 

budget,

and

21 due to significant operational problems and significant 

delays in deploying key ERP systems.22

 18GAO, DOD Financial Management: The Army Faces Significant Challenges in Achieving 

Audit Readiness for Its Military Pay, GAO-12-406 (Washington, D.C.: Mar. 22, 2012).

19GAO, DOD Financial Management: Actions Needed to Address Deficiencies in Controls 

over Army Active Duty Military Payroll, GAO-13-28 (Washington, D.C.: Dec. 12, 2012).

20GAO, DOD Financial Management: Significant Improvements Needed in Efforts to 

Address Improper Payment Requirements, GAO-13-227 (Washington, D.C.: May 13, 

2013).

21The effective implementation of ERP systems will be critical to the success of all of 

DOD’s planned long-term financial improvement efforts. ERP systems are integrated, 

multifunction systems that perform business-related tasks such as general ledger 

accounting and supply chain management. DOD considers their implementation essential 

to transforming its business operations and achieving its goals of audit readiness by fiscal 

year 2017.

22GAO, DOD Financial Management: Implementation Weaknesses in Army and Air Force 

Business Systems Could Jeopardize DOD’s Auditability Goals, GAO-12-134 (Washington, 

D.C.: Feb. 28, 2012).
Page 9 GAO-13-752T 

We have made numerous recommendations to DOD to address these 

financial management issues. While we are encouraged by DOD’s 

sustained commitment to improving financial management and achieving 

audit readiness, several DOD business practices, including financial 

management, remain on GAO’s list of high-risk programs.23 DOD faces 

considerable challenges and has much work to do if it is to meet its audit 

readiness goals. DOD’s continued oversight and monitoring will play a 

key role in ensuring that the FIAR Plan is implemented as intended, and 

lessons learned are identified and effectively disseminated and 

addressed.24

Since the first audit of the U.S. government’s fiscal year 1997 

consolidated financial statements, we have reported a material weakness 

related to the federal government’s inability to adequately account for and 

reconcile intragovernmental activity and balances between federal 

entities, as well as between federal entities and the General Fund.

While DOD’s May 2013 FIAR Plan status report reiterated 

the department’s commitment to achieving its audit readiness goals, it 

noted that absent a stable budget environment, DOD’s efforts were 

subject to increased risk. Continued congressional oversight of DOD’s 

financial management improvement efforts will be critical to helping 

ensure DOD achieves its audit readiness goals. To assist Congress in its 

oversight efforts, we will continue to monitor DOD’s progress and provide 

feedback on the status of its financial management improvement efforts.

25

 23GAO, High-Risk Series: An Update, 

When preparing the consolidated financial statements, intragovernmental 

activity and balances between federal entities and between federal 

entities and the General Fund should be in agreement and must be 

subtracted out, or eliminated, from the financial statements. If the two 

federal entities engaged in an intragovernmental transaction do not both 

record the same intragovernmental transaction in the same year and for 

the same amount, the intragovernmental transactions will not be in 

agreement, resulting in errors in the consolidated financial statements.

GAO-13-283 (Washington, D.C.: Feb. 14, 2013).

24GAO, DOD Financial Management: Challenges in Attaining Audit Readiness and 

Improving Business Processes and Systems, GAO-12-642T (Washington, D.C.: Apr. 18, 

2012).

25The General Fund is a central reporting entity that tracks core activities fundamental to

funding the federal government (e.g., issued budget authority, operating cash, and debt 

financing activities).

Reconciling Intragovernmental 

Activity and Balances
Page 10 GAO-13-752T 

The Department of the Treasury (Treasury) has grouped 

intragovernmental activity and balances into the following five categories 

and is working with federal entity personnel to identify and resolve 

reported unreconciled differences.

• Fiduciary activities include investments in Treasury securities with 

the Bureau of the Fiscal Service (Fiscal Service),26

• Benefit activities include contributions by federal entities into 

employee benefit programs (retirement, life insurance, workers’

compensation, and health benefits) administered by the Office of 

Personnel Management and the Department of Labor.

borrowing from the 

Fiscal Service and the Federal Financing Bank and related interest 

receivable and payable, interest expense and revenue, and federal 

loans receivable and payable.

• Buy/Sell activities between federal entities include buy and sell costs 

and revenues, accounts receivable and payable, and advances to and 

from others.

• Transfers of funds include transfers payable and receivable, and 

transfers in and out without reimbursement.

• General Fund transactions and balances include fund balance with 

Treasury, appropriations received and warrants, and custodial and 

non-entity collections.

The federal government has made progress in reconciling 

intragovernmental differences and the degree of progress varies by 

category. However, the federal government continues to be unable to 

adequately account for and reconcile intragovernmental activity and 

balances. For fiscal year 2012, amounts reported by federal entity trading 

partners for certain intragovernmental accounts were not in agreement by 

significant amounts. OMB and Treasury require the CFOs of 35 

significant federal entities to reconcile, on a quarterly basis, selected 

 26According to Treasury officials, on October 7, 2012, the Secretary of the Treasury 

(1) established the Bureau of the Fiscal Service as a bureau within the Department of the 

Treasury, (2) consolidated and redesignated the Bureau of the Public Debt and the 

Financial Management Service as the Bureau of the Fiscal Service, and (3) transferred 

the duties of the Bureau of the Public Debt and Financial Management Service 

commissioners to the Commissioner of the Bureau of the Fiscal Service.
Page 11 GAO-13-752T 

intragovernmental activity and balances with their trading partners. As in 

prior years, a substantial number of the entities did not adequately 

perform the required year-end reconciliations for fiscal year 2012. Further, 

there continue to be hundreds of billions of dollars of unreconciled 

differences between the General Fund of the U.S. government and 

federal entity trading partners related to appropriations and other 

intragovernmental transactions. Currently, federal entities report their 

activity with the General Fund; however, the General Fund activity is not 

centrally reported, and therefore, a process does not exist for entities to 

confirm and reconcile all of their activity and balances with the General 

Fund. As a result of these circumstances, the federal government’s ability 

to determine the impact of the unreconciled differences between trading 

partners on the amounts reported in the accrual-based consolidated 

financial statements is significantly impaired.

Over the years, we have made several recommendations to Treasury to 

address these issues. Treasury has taken or plans to take actions to 

address these recommendations. During fiscal year 2012, Treasury 

expanded its ongoing efforts to help resolve and eliminate material 

differences in intragovernmental activity and balances. These efforts 

included developing and implementing a formalized resolution plan and 

related corrective actions intended to address long-standing 

intragovernmental challenges. As part of its plan, Treasury monitors 

entities’ reconciliation efforts and compliance with Treasury Financial 

Manual guidance. For example, in fiscal year 2012, Treasury began a 

pilot program with 14 entities that included providing them with quarterly 

metrics and scorecards highlighting differences requiring attention. In 

fiscal year 2013, Treasury expanded the distribution of the quarterly 

metrics and scorecards to include all 35 significant entities. Further, 

Treasury is in the process of establishing separate reporting for the 

General Fund, which includes intragovernmental transactions. Resolving 

the intragovernmental transactions problem remains a difficult challenge 

and will require a strong and sustained commitment by federal entities to 

timely resolve differences with their trading partners, as well as continued 

strong leadership by Treasury and OMB.

Treasury, in coordination with OMB, implemented corrective actions 

during fiscal year 2012 to address certain internal control deficiencies 

detailed in our previously issued reports regarding the process for 

preparing the consolidated financial statements, including obtaining and 

utilizing certain interim financial information from federal entities in 

preparing initial consolidated financial statement drafts and 

supplementing staff during the financial report preparation process. 

Preparing the Consolidated 

Financial Statements
Page 12 GAO-13-752T 

Treasury also began to develop a methodology to reconcile the budget 

deficit to the consolidated financial statements. Nevertheless, the federal 

government continued to have inadequate systems, controls, and 

procedures to ensure that the consolidated financial statements are 

consistent with the underlying audited entity financial statements, properly 

balanced, and in conformity with U.S. GAAP.27

• Treasury’s process did not ensure that the information in three of the 

accrual-based consolidated financial statements (Statement of 

Operations and Changes in Net Position, Reconciliations of Net 

Operating Cost and Unified Budget Deficit, and Statement of Changes 

in Cash Balance from Unified Budget and Other Activities) was fully 

consistent with the underlying information in the 35 significant federal 

entities’ audited financial statements and other financial data.

For example:

• Treasury is unable to properly balance the accrual-based 

consolidated financial statements. To make the fiscal years 2012 and 

2011 consolidated financial statements balance, Treasury recorded 

net increases of $20.2 billion and $15.6 billion, respectively, to net

operating cost on the Statement of Operations and Changes in Net 

Position, which were identified as “Unmatched transactions and 

balances.”28

 27Most of the issues we identified in fiscal year 2012 existed in fiscal year 2011, and many 

have existed for a number of years. Most recently, in June 2013, we reported the issues 

we identified to Treasury and OMB and provided recommendations for corrective action. 

See GAO, Management Report: Improvements Needed in Controls over the Preparation 

of the U.S. Consolidated Financial Statements, 

Treasury recorded an additional net $1.8 billion and 

$6.0 billion of unmatched transactions in the Statement of Net Cost for 

fiscal years 2012 and 2011, respectively. The material weakness in 

federal entities’ ability to account for and reconcile intragovernmental 

activity and balances, discussed above, significantly contributes to the 

unmatched transactions and balances and consequently impairs 

Treasury’s ability to fully eliminate such intragovernmental activity and 

balances.

GAO-13-540 (Washington, D.C.: June 28, 

2013). A detailed discussion of control deficiencies regarding the process for preparing the 

consolidated financial statements can be found on pages 239 through 241 of the Financial 

Report.

28Although Treasury was unable to determine how much of the unmatched transactions 

and balances, if any, relates to net operating cost, it reported this amount as a component 

of net operating cost in the consolidated financial statements.
Page 13 GAO-13-752T 

• Treasury’s reporting of certain financial information required by U.S. 

GAAP continues to be impaired and will remain so until federal 

entities, such as DOD, can provide Treasury with complete and 

reliable information required to be reported in the consolidated 

financial statements.

Resolving these internal control deficiencies remains a difficult challenge 

and will require a strong and sustained commitment from Treasury and 

OMB as they continue to execute and implement their corrective action 

plans.

Significant uncertainties, primarily related to the achievement of projected 

reductions in Medicare cost growth reflected in the 2012, 2011, and 2010 

Statements of Social Insurance, prevented us from expressing opinions 

on the 2012, 2011, and 2010 Statements of Social Insurance, as well as 

on the 2012 and 2011 Statements of Changes in Social Insurance 

Amounts.29 The Statement of Social Insurance presents the actuarial 

present value of the federal government’s estimated future revenue to be 

received from or on behalf of participants and estimated future 

expenditures to be paid to or on behalf of participants, based on benefit 

formulas in current law and using a projection period sufficient to illustrate 

the long-term sustainability of the social insurance programs.30

These significant uncertainties include the following:

• Medicare projections in the 2012, 2011, and 2010 Statements of 

Social Insurance were based on benefit formulas in current law and 

included a significant decrease in projected Medicare costs from the 

2009 Statement of Social Insurance related to (1) reductions in 

Medicare payment rates for physician services (totaling almost 31 

percent in January 2013, as estimated in the 2012 Medicare Trustees 

 29About $27.2 trillion, or 70.5 percent, of the federal government’s reported total present 

value of future expenditures in excess of future revenue presented in the 2012 Statement 

of Social Insurance relates to Medicare programs reported in the Department of Health 

and Human Services’ 2012 Statement of Social Insurance, which received a disclaimer of 

opinion.

30The projection period used for the Social Security, Medicare, and Railroad Retirement 

social insurance programs is 75 years. For the Black Lung program, the projections are 

through September 30, 2040.

Significant Uncertainties 

Result in Disclaimers of 

Opinion on the 2012, 2011, 

and 2010 Statements of 

Social Insurance, as Well 

as on the 2012 and 2011 

Statements of Changes in 

Social Insurance Amounts
Page 14 GAO-13-752T 

Report)31 and (2) productivity improvements for most other categories 

of Medicare providers, based on full implementation of the provisions 

of the Patient Protection and Affordable Care Act, as amended 

(PPACA).32

• As discussed in note 26 in the Financial Report, actual future costs for 

Medicare are likely to exceed those shown by the current-law 

projections presented in the 2012, 2011, and 2010 Statements of 

Social Insurance due, for example, to the likelihood of modifications to 

the scheduled reductions in Medicare payment rates for physician 

services.

However, there are significant uncertainties concerning 

the achievement of these projected decreases in Medicare costs.

33

• The Financial Report includes an illustrative alternative projection that 

is intended to provide additional context regarding the long-term 

sustainability of the Medicare program and to illustrate the 

uncertainties in the Statement of Social Insurance projections. The 

present value of future estimated expenditures in excess of future 

estimated revenue for Medicare, included in the illustrative alternative 

projection, exceeds the $27.2 trillion estimate in the 2012 Statement 

of Social Insurance by $10.1 trillion.

The extent to which actual future costs exceed the 

projected current-law amounts due to changes to the scheduled 

reductions in Medicare payment rates for physician services and 

productivity adjustments depends on both the specific changes that 

might be legislated and whether such legislation would include further 

provisions to help offset such costs.

Projections of Medicare costs are sensitive to assumptions about future 

decisions by policymakers and about the behavioral responses of 

consumers, employers, and health care providers as policy, incentives, 

 31Subsequent to our audit, the 2013 Medicare Trustees Report was issued on May 31, 

2013.

32PPACA, Pub. L. No. 111-148, 124 Stat. 119 (Mar. 23, 2010), as amended by the Health 

Care and Education Reconciliation Act of 2010, Pub. L. No. 111-152, 124 Stat. 1029 

(Mar. 30, 2010).

33Statutes have been enacted with provisions that prevented scheduled reductions in 

Medicare payment rates for physician services from taking effect from 2003 through 2013, 

including the most recent provision enacted in the American Taxpayer Relief Act of 2012 

(ATRA), Pub. L. No. 112-240, § 601, 126 Stat. 2313, 2345 (Jan. 2, 2013). Some of these 

statutes also included provisions that reduced the federal government’s spending on other 

categories of health care, which had the effect of helping to offset the increased costs 

related to the physician payment updates. 
Page 15 GAO-13-752T 

and the health care sector change over time. Such secondary impacts are 

not fully reflected in the Statement of Social Insurance projections but 

could be expected to influence the excess cost growth rate used in the 

projections.34 Key drivers of uncertainty about the excess cost growth rate 

include the future development and deployment of medical technology, 

the evolution of personal income, and the cost and availability of 

insurance, as well as federal policy changes, such as the implementation 

of PPACA. Both the Statement of Social Insurance projections and the 

illustrative alternative estimate summarized in Note 26 in the Financial 

Report indicate that the Social Security and Medicare programs are not 

sustainable under current financing arrangements.

The 2012 Financial Report includes comprehensive fiscal projections for 

the U.S. government that, consistent with GAO simulations, show that 

without changes in current policy, the federal government continues to 

face an unsustainable long-term fiscal path.35

 34The excess cost growth rate is the increase in health care spending per person relative 

to the growth of gross domestic product per person after removing the effects of 

demographic changes on health care spending.

Such reporting provides a 

much needed perspective on the federal government’s long-term fiscal

position and outlook. The projections included in the Financial Report and 

our simulations both continue to highlight the need to focus attention not 

only on the federal government’s near-term budget outlook but also on its 

longer-term fiscal path. In the near term, deficits are expected to continue 

to decline from the recent historic highs as the economy recovers and 

actions taken by Congress and the President begin to take effect. Debt 

held by the public as a share of gross domestic product (GDP), however, 

remains well above historical averages. Debt held by the public at these 

high levels could limit the federal government’s flexibility to address 

emerging issues and unforeseen challenges such as another economic 

downturn or large-scale natural disaster.

35GAO, The Federal Government’s Long-Term Fiscal Outlook, Spring 2013 Update, 

GAO-13-481SP (Washington, D.C.: Apr. 11, 2013), and The Federal Government’s LongTerm Fiscal Outlook: Fall 2012 Update, GAO-13-148SP (Washington, D.C.: Dec. 3, 2012). 

The key difference between these two is that the Spring 2013 update reflects the 

enactment of ATRA, which among other changes, modified the 2013 and 2014 

discretionary spending limits, permanently extended many of the tax provisions that were 

previously set to expire under current law and limited the reach of the Alternative Minimum 

Tax. The overall effects of ATRA on the longer-term outlook under GAO’s alternative 

simulation are relatively small.

Long-Term Fiscal 

Challenges
Page 16 GAO-13-752T 

Both the projections in the Financial Report and our long-term simulations 

reflect enactment of the Budget Control Act of 2011 (BCA).36 BCA set 

limits on discretionary spending for fiscal years 2012 through 2021. Under 

the enacted discretionary spending limits, discretionary spending as a 

share of the economy in 2021 would be lower than any level seen in the 

last 50 years. Even with the reductions from BCA, the government 

continues to face a significant structural imbalance between revenues 

and spending, driven on the spending side largely by the aging of the 

population and rising health care costs. Changing this path will not be 

easy, and it will likely require difficult decisions affecting both federal 

spending and revenue. Significant action to change the long-term path 

must be taken soon to minimize the risk that eventual policy changes will 

be disruptive to individuals and the economy, while also taking into 

account concerns about near-term economic growth.

As we reported in June 2013, the executive branch has taken a number 

of steps to implement key provisions of the GPRA Modernization Act of 

2010 (the act). OMB has developed interim cross-agency priority goals, 

and agencies developed agency-specific priority goals.37

 36The Budget Control Act of 2011, Pub. L. No. 112-25, § 302, 125 Stat. 240, 256-59 

(Aug. 2, 2011), classified, as amended, in 2 U.S.C. § 901a.

Agency officials 

reported that their agencies have assigned performance management 

leadership roles and responsibilities to officials, such as performance 

improvement officers, who generally participate in performance 

management activities, including data-driven quarterly performance 

reviews. Further, OMB developed Performance.gov, a government-wide 

website, which provides quarterly updates on the cross-agency priority 

goals and agency priority goals. The Performance Improvement Council, 

which consists of agency performance improvement officers, has also 

taken steps to facilitate the exchange of useful practices and tips and 

tools to strengthen agency performance management. Nevertheless, our 

work has shown that the executive branch needs to do more to fully 

implement and leverage the act’s provisions to address governance 

challenges.

37GAO-13-518.

The Executive Branch 

Needs to More Fully 

Implement the GPRA 

Modernization Act to 

Address Pressing 

Governance 

Challenges
Page 17 GAO-13-752T 

Many of the meaningful results that the federal government seeks to 

achieve, such as those related to protecting food and agriculture and 

providing homeland security, require the coordinated efforts of more than 

one federal agency, level of government, or sector. For almost two 

decades we have reported on agencies’ missed opportunities for 

improved collaboration through the effective implementation of GPRA. 

Under the act, OMB and agencies have identified many programs and 

activities that contribute to goals, as required, but our recent work 

continues to show that they are missing additional opportunities to 

address crosscutting issues. While agencies have implemented some of 

the act’s provisions, their efforts have not included all of the relevant 

agency, program, and other contributors. For example, few have 

identified tax expenditures, which represent about $1 trillion in foregone 

revenue in fiscal year 2012, due to a lack of OMB guidance and 

oversight. Therefore, the contributions made by tax expenditures toward

broader federal outcomes are unknown. In June 2013, we recommended 

that OMB take several actions to ensure that the contributions of tax 

expenditures to crosscutting and agency goals are identified and 

assessed.38

In addition, agencies are not consistently including all relevant 

stakeholders as they implement key provisions of the act in the following 

areas:

OMB staff agreed with these recommendations.

• Cross-agency priority goals: In May 2012, we identified additional 

agencies that should be named as contributors for 10 of the 14 interim 

cross-agency priority goals.39

• Agency priority goals: In April 2013, we found that agencies 

identified contributors within the agency for each agency priority goal, 

but did not identify external contributors for 29 of the 102 agency 

priority goals we reviewed. In some cases, the goals seem to be 

internally focused, but in other cases, our work has shown that there 

are external contributors that were not listed.40

 38GAO-13-518.

39GAO, Managing for Results: GAO’s Work Related to the Interim Crosscutting Priority 

Goals under the GPRA Modernization Act, GAO-12-620R (Washington, D.C.: May 31, 

2012). 

40GAO, Managing for Results: Agencies Should More Fully Develop Priority Goals under 

the GPRA Modernization Act, GAO-13-174 (Washington, D.C.: Apr. 19, 2013).

OMB and Agencies Have 

Made Some Progress 

Addressing Crosscutting 

Issues but Are Missing 

Additional Opportunities
Page 18 GAO-13-752T 

• Quarterly performance reviews: In February 2013, we reported that 

while we found that quarterly performance reviews have shown 

promise in improving internal agency coordination and collaboration, 

few agency performance improvement officers reported that they were 

using the reviews to coordinate or collaborate with other agencies that 

have similar goals.41

We made recommendations to the Director of OMB to address each of 

these areas. OMB staff agreed with these recommendations.

As we reported in June 2013, we found little improvement in federal 

managers’ reported use of performance information or practices that 

could help promote its use, based on our periodic government-wide 

surveys of federal managers since 1997. In particular, as figure 1 

illustrates, the results from our 2013 managers survey show almost no 

statistically significant changes in managers’ perceptions of their leaders’

and supervisors’ attention and commitment to use of performance 

information since our last survey in 2007—with the exception of a decline 

in the percentage of managers who agreed to a great or very great extent 

that their agencies’ top leadership demonstrates a strong commitment to 

achieving results.

 41GAO, Managing for Results: Data-Driven Performance Reviews Show Promise But 

Agencies Should Explore How to Involve Other Relevant Agencies, GAO-13-228 

(Washington, D.C.: Feb. 27, 2013).

Ensuring Performance 

Information Is Useful and 

Used by Managers to 

Improve Results Remains a 

Weakness, but Key 

Performance Management 

Practices Hold Promise
Page 19 GAO-13-752T 

Figure 1: Less Than Two-Thirds of Federal Managers Agreed in 2013 to a “Great” or 

“Very Great” Extent with Statements about Leadership and Supervisor Commitment 

and Attention to Performance Information

Notes: Percentage estimates for 2013 and 2007 have 95 percent confidence intervals within +/- 4 

percentage points of the estimate, and percentage estimates for 1997 have confidence intervals 

within +/- 6.1 percentage points of the estimate.

Some survey items were abbreviated. For the full text, see items 10g, 10h, 11a, and 12c in 

GAO-13-519SP.

a

Statistically significant decrease between 2007 and 2013.

b

Survey item was introduced in 2007.

c

Importantly, agencies’ quarterly performance reviews show promise as a 

leadership strategy for improving the use of performance information in 

agencies. According to our 2012 survey of performance improvement 

officers at 24 agencies, the majority (21 out of 24 agencies required to 

Statistically significant increase between 1997 and 2013.
Page 20 GAO-13-752T 

conduct these reviews) reported that actionable opportunities for 

performance improvement are identified through the reviews at least half 

the time.42

Building the capacity to use performance information is also critical to 

helping ensure that information is used in a meaningful fashion, and 

inadequate staff expertise, among other factors, can hinder agencies’

use. Only about a third (36 percent) of federal managers reported in our 

2013 survey that they agreed to a great or very great extent that their 

agencies have sufficient analytical tools for managers at their levels to 

collect, analyze, and use performance information. The act lays out 

specific requirements for the Office of Personnel Management (OPM) to 

identify skills and competencies for performance management functions, 

among other actions. OPM has identified competencies and relevant 

position classifications and taken steps to work with agencies to 

incorporate the key competencies into agency training. However, we 

reported in April 2013 that these efforts have been broad-based and not 

informed by specific assessments of agency training needs.

In addition, most officials we interviewed at the Department of 

Energy, the Department of the Treasury, and the Small Business 

Administration attributed improvements in performance and decision 

making to their performance reviews.

43

Our 2013 government-wide survey found that most managers also lack 

recent program evaluation studies—a particular form of performance 

information—that can identify ways to improve program efficiency and 

effectiveness.

We 

recommended that the Director of OPM work with the Performance 

Improvement Council to identify competency gaps for agency 

performance management staff and use this information to identify and 

share relevant agency training. OPM agreed with these 

recommendations.

44

 42

Only 37 percent of managers reported that an evaluation 

had been completed in the past 5 years of any program or operation they 

GAO-13-356 and GAO-13-228.

43GAO-13-356.

44GAO, Program Evaluation: Strategies to Facilitate Agencies’ Use of Evaluation in 

Program Management and Policy Making, GAO-13-570 (Washington, D.C.: June 26, 

2013). Program evaluations are systematic studies that use research methods to assess 

the achievement of a program’s objectives in context, to explore the reasons for observed 

results and isolate program effects from other influences. 
Page 21 GAO-13-752T 

were involved in. Yet, 81 percent of the managers who had evaluations 

reported that evaluations contributed to a moderate or greater extent to 

implementing changes to improve program management or performance.

As you know, we have issued three reports outlining numerous areas of 

potential fragmentation, overlap and duplication in federal programs.45

Comprehensive program evaluations that examine the coverage and 

effectiveness of a cluster of federal programs and policies aimed at 

achieving similar outcomes could be key in coordinating and streamlining 

programs so as to reduce duplication and overlap. In case study 

interviews, agency evaluators emphasized three basic strategies to 

facilitate evaluation influence on program management and policy 

making: (1) demonstrate leadership support by promoting the use of 

evidence and funding evaluation offices to promote and support the use 

of evidence; (2) build a strong body of evidence by attending to rigor in 

whatever methods are used; and (3) engage stakeholders throughout the 

evaluation process—gaining their input to planning; providing assistance, 

training, and incentives; and disseminating usable messages.

Agencies have established performance management systems to align 

individual performance with agency results. However, agencies continue 

to face long-standing issues with measuring performance, such as 

obtaining complete, timely, and accurate performance information, across 

various programs and activities. Given the Performance Improvement 

Council’s responsibilities for addressing crosscutting performance issues 

and sharing performance improvement practices, our June 2013 report 

noted that it could do more to examine and address the difficulties 

agencies face to measuring performance across various program types, 

 45GAO, 2013 Annual Report: Actions Needed to Reduce Fragmentation, Overlap, and 

Duplication and Achieve Other Financial Benefits, GAO-13-279SP (Washington, D.C.: 

Apr. 9, 2013); 2012 Annual Report: Opportunities to Reduce Duplication, Overlap and 

Fragmentation, Achieve Savings, and Enhance Revenue, GAO-12-342SP (Washington 

D.C.: Feb. 28, 2012); and Opportunities to Reduce Potential Duplication in Government 

Programs, Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.: 

Mar. 1, 2011). 

Agencies Have Taken 

Steps to Align Daily 

Operations with Agency 

Results but Continue to 

Face Difficulties 

Measuring Performance
Page 22 GAO-13-752T 

such as grants and contracts.

46,47 We recommended that OMB work with 

the Performance Improvement Council to develop a detailed approach for 

addressing these long-standing performance measurement issues. OMB 

staff agreed with this recommendation.

Federal managers and potential users of Performance.gov reported 

concerns about the accessibility, availability, understandability, and 

relevance of performance information to the public. Potential users 

include Members and committees of Congress and the public. In our June 

2013 report reviewing Performance.gov, we noted that the website has 

the potential to increase the accessibility of performance information for 

users both inside and outside the federal government.48 However, further 

outreach to key stakeholders could help improve how this information is 

communicated. We recommended in June 2013 that OMB work with the 

Performance Improvement Council and the General Services 

Administration, which are involved in the development of the website, to 

(1) clarify the specific ways that intended audiences could use the 

information on Performance.gov and (2) systematically collect information 

on the needs of intended audiences and collect recommended 

performance metrics that help identify improvements to the website. OMB 

staff agreed with these recommendations.

Our work has found that the performance information that agencies 

provided to the Congress was not always useful for congressional 

decision making because the information was not clear, directly relevant, 

or sufficiently detailed. Consultations with Congress are intended, in part, 

to ensure that performance information is useful for congressional 

decision making. OMB and agencies are to consult with relevant 

committees, including this committee, about proposed goals at least once 

every 2 years. Specifically, OMB is to consult about the cross-agency 

 46GAO-13-518. 

47We also recommended in April 2013 that the Director of OMB work with the 

Performance Improvement Council to gather regular feedback from its members on its 

performance and update its strategic plan, as appropriate. OMB staff agreed with these 

recommendations; see GAO-13-356.

48GAO, Managing for Results: Leading Practices Should Guide the Continued 

Development of Performance.gov, GAO-13-517 (Washington, D.C.: June 6, 2013).

Communication of 

Performance Information 

Could Better Meet Users’

Needs

Agency Performance 

Information Is Not Always 

Useful for Congressional 

Decision Making
Page 23 GAO-13-752T 

priority goals and describe on Performance.gov how congressional input 

was incorporated into these goals. Similarly, agencies are to consult 

about their strategic plans, including agency priority goals, and describe 

in these plans or on Performance.gov, respectively, how that input was 

incorporated. However, in April 2013 we found little evidence that 

meaningful consultations occurred related to agency strategic plans and 

agency priority goals.49

In February 2014, OMB and agencies will publish a new set of crossagency priority goals, agency priority goals, and updated agency strategic 

plans. According to OMB guidance, agency consultations with Congress, 

including this committee, on updated strategic plans and agency priority 

goals should take place this summer. Similarly, OMB has stated plans to 

consult with this committee and other committees with broad jurisdiction 

on the next set of cross-agency priority goals prior to their publication. At 

the request of Congress, we developed a guide in June 2012 to assist 

Members of Congress and their staffs in ensuring that the consultations 

required under the act are useful for assessing agency performance.

We recommended that the Director of OMB 

ensure that agencies provide a description of how input from 

congressional consultations was incorporated into each priority goal. 

OMB staff concurred with our recommendation.

50

The guide outlines general approaches for successful consultations and 

key questions that Members of Congress and congressional staffs can 

ask as part of the consultation process.

In closing, while progress has been made, much work remains given the 

federal government’s long-term fiscal, financial management, and 

performance management challenges. Congress, the administration, and 

federal managers need to have more reliable, useful, and timely financial 

and performance information to effectively meet these challenges, to 

make sound decisions, and to operate as efficiently and effectively as 

possible. Agencies must continue to strive toward routinely producing 

such information to help guide decision makers on a day-to-day basis. 

Federal entities’ improvement of financial management systems will be 

 49GAO-13-174.

50GAO, Managing for Results: A Guide for Using the GPRA Modernization Act to Help 

Inform Congressional Decision Making, GAO-12-621SP (Washington, D.C.: June 15, 

2012).

Closing Comments
 

Page 24 GAO-13-752T 

essential to achieve this goal for their agency and the government as a 

whole.

Meaningful improvement in financial and performance management will 

not occur without sustained commitment by executive branch leaders and 

managers and continued oversight by Congress. The single most 

important element of successful financial and performance management 

improvement efforts is the demonstrated commitment of top leaders. This 

commitment is most prominently shown through the personal involvement 

of leaders, especially with agency data-driven performance reviews. 

Demonstrating leadership support for accountability and improvement by 

promoting capacity building and the use of evidence is also essential in 

helping facilitate program evaluation use in agency program management 

and policy making. Similarly, Congress can play a decisive role in 

fostering results-oriented cultures in the federal government by using 

information on agency goals and asking for and using financial and 

performance information as it carries out its various responsibilities.

Chairman Issa, Ranking Member Cummings, and Members of the 

Committee, this concludes my prepared statement. I would be pleased to 

respond to any questions that you may have at this time.

For further information regarding this testimony, please contact Robert F. 

Dacey, Chief Accountant, at (202) 512-3406 or daceyr@gao.gov; Gary T. 

Engel, Director, Financial Management and Assurance, at (202) 512-

3406 or engelg@gao.gov; or J. Christopher Mihm, Managing Director, 

Strategic Issues, at (202) 512-6806 or mihmj@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this statement.

GAO Contacts
Appendix I: Chief Financial Officers (CFO) Act 

Agencies: Fiscal Year 2012 Audit Results and 

Principal Auditors

Page 25 GAO-13-752T 

CFO Act agencies

Opinion expressed 

by agency auditor

Agency auditor-reported 

material weaknesses or 

noncompliance Principal auditor a

Agency for International Development √ b Office of Inspector General (OIG)

Agriculture Unqualified √ OIG

Commerce Unqualified √ KPMG LLP

Defense Disclaimer √ OIG

Education Unqualified √ Ernst & Young LLP

Energy Unqualified KPMG LLP

Environmental Protection Agency Unqualified √ OIG

General Services Administration Unqualified √ KPMG LLP

Health and Human Services √ c Ernst & Young LLP

Homeland Security √ d KPMG LLP

Housing and Urban Development Unqualified √ OIG

Interior Unqualified √ KPMG LLP

Justice Unqualified KPMG LLP

Labor Unqualified KPMG LLP

National Aeronautics and Space 

Administration

Unqualified PricewaterhouseCoopers LLP

National Science Foundation Unqualified CliftonLarsonAllen LLP

Nuclear Regulatory Commission Unqualified CliftonLarsonAllen LLP

Office of Personnel Management Unqualified KPMG LLP

Small Business Administration Unqualified √ KPMG LLP

Social Security Administration Unqualified √ Grant Thornton LLP

State Unqualified √ Kearney & Company

Transportation Unqualified √ KPMG LLP

Treasury Unqualified √ KPMG LLP

Veterans Affairs Unqualified √ CliftonLarsonAllen LLP

Source: GAO.

a

Reported noncompliance with applicable laws and regulations and/or substantial noncompliance with 

one or more of the Federal Financial Management Improvement Act requirements.

b

The auditors of the U.S. Agency for International Development’s (AID) fiscal year 2012 financial 

statements issued a qualified opinion because of the effects of a number of unsupported adjustments 

on AID’s financial statements.

c

The auditors expressed an unqualified opinion on the Department of Health and Human Services’

fiscal year 2012 accrual-based financial statements, but were unable to express opinions on the 

department’s 2012 Statement of Social Insurance and 2012 Statement of Changes in Social 

Insurance Amounts.

d

Appendix I: Chief Financial Officers (CFO) 

Act Agencies: Fiscal Year 2012 Audit Results 

and Principal Auditors

The auditors of the Department of Homeland Security’s (DHS) fiscal year 2012 financial statements 

issued a qualified opinion because of DHS’s inability to provide sufficient evidence to support certain 

components of property, plant, and equipment and heritage and stewardship assets presented in the 

financial statements and notes.

(198729)
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