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Friday, September 29, 2006

OMB should test agency financial management compliance

"The Office of Management and Budget and the Government Accountability Office continue to disagree over how much assurance is necessary to determine compliance with federal financial management regulations.

GAO reaffirmed prior recommendations that OMB require agencies to provide positive assurance through comprehensive testing that they comply with the Federal Financial Management Improvement Act. OMB also should clarify the meaning of substantial compliance. [GAO-06-970]

As in the past, OMB disagreed with GAO’s view on auditors providing positive assurance but said it would consider defining substantial compliance in future policy and guidance updates.

Although 19 of 24 major agencies received unqualified opinions on their fiscal 2005 financial statements, the number of agencies that did not substantially comply with federal financial management requirements has remained fairly constant, GAO said.

Agencies have made improvements, but many agencies’ financial management systems are still not able to routinely produce reliable, useful and timely financial information.

“We continue to be concerned that the full nature and scope of the problems have not yet been identified, because most auditors have only provided negative assurance in their FFMIA report,” said comptroller general David Walker in the report released today.

GAO views the continuing lack of compliance with FFMIA and the associated problems with agency financial systems to be significant challenges to improving the management of the federal government

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