Defense Comptroller Tina W. Jonas on Wednesday defended her department's progress in improving financial management, despite the fact the Defense Department and military services have never been able to produce the kind of financial reporting statements required by law.
"We know where our money is. We track our money. We send accounting reports to Congress and we tell them by appropriation and line item where the money went and what it went for," Jonas said at a breakfast in Washington sponsored by the Association of Government Accountants.
The ability to produce annual consolidated financial statements, as required by the 1990 Chief Financial Officers Act, has been the holy grail for federal finance and accounting staff, and agencies have in some cases gone to extraordinary lengths to garner clean audit opinions from independent accounting firms. But the Homeland Security and Defense departments have yet to be able to produce the statements.
In the case of Homeland Security, the four-year-old department is still struggling to merge multiple entities with separate finance and accounting systems and procedures.
For Defense, which accounts for more than half of discretionary spending, the problems are far more complex. Every year, Defense disburses $424 billion, processes 145 million pay transactions, 14 million commercial invoices and 57 million general ledger transactions.
Reconciling those activities into a single financial statement has proved impossible, and Jonas, unlike her predecessors, won't predict when that will happen.
Achieving a clean audit is important, Jonas said, but resolving other issues, such as material weaknesses, is even more important. She said that in 2001, auditors identified 71 material weaknesses; today there are 19, which the department expects to eliminate in 2008.
While a clean audit means that an agency has solid internal controls, which are necessary to prevent fraud, a clean opinion is important. But a clean opinion, however, does not mean department managers have the tools or information they need to make better financial decisions.
-Kathrine McIntire Peters, GovExec.com