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Results of Our Audit of the U.S. Government’s Consolidated Financial Statements for Fiscal Years 2010 and 2009

Both the consolidated financial statements and our related audit report are included in the fiscal year 2010 Financial Report of the United States Government (Financial Report). 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 agencies. The Financial Report was issued by the Department of the Treasury (Treasury) on December 21, 2010.3 This report is available through GAO’s Internet site, at http://www.gao.gov/financial/fy2010financialreport.html and Treasury’s Internet site, at http://www.fms.treas.gov/fr/index.html.

Since the enactment of key financial management reforms in the 1990s, the federal government has made significant progress in improving financial management activities and practices. For fiscal year 2010, 20 of 24 Chief Financial Officers (CFO) Act agencies were able to attain unqualified audit opinions4 on their accrual-based financial statements within an accelerated reporting timeframe, up from 6 CFO Act agencies for fiscal year 1996. Also, accounting and financial reporting standards have continued to evolve to provide greater transparency and accountability over the federal government’s operations, financial condition, and fiscal outlook. Further, the preparation and audit of financial statements has identified numerous deficiencies, leading to actions to strengthen controls and systems. It is important for the individual federal departments and agencies to remain committed to maintain the progress that has been achieved in obtaining positive audit results and to build upon that progress to make needed improvements.

Although this progress is commendable, the federal government was unable to demonstrate the reliability of significant portions of the U.S. government’s accrual-based consolidated financial statements for fiscal years 2010 and 2009, principally resulting from limitations related to certain material weaknesses in internal control over financial reporting and other limitations on the scope of our work. As a result, we were unable to provide an opinion on such statements. Further, significant

3Also, see GAO, Understanding the Primary Components of the Annual Financial Report of the United States Government, GAO-05-958SP (Washington, D.C.: September 2005). In September 2009, we issued an update to this guide to reflect recent changes to the federal accounting standards and resulting changes to the Financial Report; see GAO-09-946SP (Washington, D.C.: September 2009).

4See appendix I for the fiscal year 2010 audit results for the 24 CFO Act agencies.

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