Government Contracts Monitor

Our Unsustainable Fiscal Path – DoD Makes the High Risk List

May 29, 2014

By: Lindsay Simmons

Each year the Secretary of the Treasury, in coordination with the Director of OMB, is required to submit an audited financial statement for the U.S. government to the President and Congress.  GAO is required to audit these statements.  The Financial Report of the U.S. Government for FY 2013, issued by the Comptroller General, provides a comprehensive overview of the government's current financial position, as well as important insights into this country’s long-term fiscal outlook. 

What does the FY 2013 Report show? 

It shows that the government faces an “unsustainable long-term fiscal path “and that, in order to address the government’s fiscal challenges, “Congress, the administration, and federal managers must have more reliable financial and performance information.”  The 2013 Report also underscores the work necessary to improve federal financial management, and that these improvements are urgently needed. Heading the list of offenders is the Department of Defense (DoD).

Every 2 years, GAO provides Congress with a High-Risk Series, a list that highlights federal entities and programs that are “high risk due to their vulnerabilities to fraud, waste, abuse, and mismanagement or are most in need of broad reform.”  This year DoD is once again on the list.  Indeed, GAO has consistently been unable to provide DoD with an audit opinion on its financial statements due to “serious financial management problems at DoD.”

It will come as no surprise that the long-standing weaknesses in DoD’s financial management “adversely affect the economy, efficiency, and effectiveness of its operations.”  Examples of the impact of DoD's financial weaknesses include its inability to properly account for its assets—about 33 percent of the federal government's total assets; the inability to accurately estimate its improper payments; unreliable reports to the Congress on weapon system costs; and Antideficiency Act violations.

DOD has numerous efforts under way to address its long-standing financial management weaknesses, urged on by Congressional mandates in various National Defense Authorization Acts.  But, according to the FY 2013 Report, key challenges remain for DoD.

The continuing spotlight on DoD financial mismanagement likely signals a continuing ramp up in enforcement actions regarding fraud, waste and abuse. 

 

Lindsay Simmons is the attorney responsible for the content of this article.

© Jackson Kelly PLLC 2014