Featured Story: Top Audit Performers

More agencies are receiving clean audit opinions, providing the public with an independent auditors impartial assessment as to whether the agency’s financial information is presented fairly. This year, 23 of the 24 major “CFO Act” agencies received an opinion on their financial statements.

Decision-makers must have confidence in the financial information provided by agencies in order to make good decisions about managing government programs and implementing policy, and the public must know that they can rely on financial statements to understand agency operations and costs. The results of the annual independent audit indicate whether the financial information is fairly presented, whether there are deficiencies in internal control over financial reporting, and whether there has been compliance with certain provisions of laws, regulations, contracts, and grant agreements.

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The Chief Financial Officers Act: A Mandate for Federal Financial Management Reform
The Nation’s Fiscal Sustainability

The Department of the Treasury recently began publishing, ‘A Citizen’s Guide’ to accompany its annual Financial Report of the United States. In addition to presenting the Nation’s financial position and condition of the U.S. Government, the Guide discusses key financial topics including economic recovery efforts and the effect on the nation’s long term fiscal sustainability. While the government’s immediate priority is to continue to foster economic recovery, there are longer term fiscal challenges that must ultimately be addressed. Persistent growth of health care costs combined with the aging of the population due to the retirement of the “baby boom” generation and increasing longevity will make it increasingly difficult to fund critical social programs, including notably Medicare, Medicaid, and Social Security. The growing gap between receipts and total spending indicates that, as currently structured, the government's fiscal path cannot be sustained.

Citizen's Guide

United States Government (USG) Consolidated Financial Statements

The Department of the Treasury produces an annual consolidated financial statement using the financial statement information from individual Federal agencies, which the Government Accountability Office (GAO) is required to audit. To date, the annual consolidated financial statement has received a disclaimer of opinion each year, in part because of longstanding material weaknesses at some Federal agencies.

2012 Financial Report of the United States Government

Audit Opinions

An audit opinion provides the public with an independent, third-party assessment as to whether the agency’s financial information is presented fairly.  There are four types of audit opinions: Unqualified (clean), Qualified, Disclaimer, and Adverse.  An unqualified audit opinion means that the auditor believes the financial information presented by the agency is fairly presented – which is our goal for all agencies.  Qualified, Disclaimer or Adverse opinions indicate that financial reporting issues have been identified or the auditor could not render an opinion.  The metric here shows the historical breakdown of audit opinions received by the large agencies subject to the CFO Act.

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Financial Material Weaknesses Identified in Audit Reports

In addition to rendering an overall opinion, auditors can cite major problems, or material weaknesses, in their reports that accompany the audited statements. Although material weaknesses vary, the more material weaknesses an agency has, the more likely the agency could have a significant misstatement in their financial information. We are working to eliminate all material weaknesses in an effort to improve financial management in the Federal government. The metric here shows the average number of material weaknesses in the last five fiscal years for each of the large agencies subject to the Chief Financial Officers Act.

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Management Assessment of Internal Controls
Internal Control -- organization, policies, and procedures – are tools to help program and financial managers achieve results and safeguard the integrity of their programs. The importance of internal control is addressed in many statutes and executive documents, with the Federal Managers' Financial Integrity Act (FMFIA) of 1982 establishing overall requirements with regard to internal control. The FMFIA directs agencies to establish controls that reasonably ensure that: (i) obligations and costs are in compliance with applicable law; (ii) funds, property, and other assets are safeguarded against waste, loss, unauthorized use or misappropriation; and (iii) revenues and expenditures applicable to agency operations are properly recorded and accounted for to permit the preparation of accounts and reliable financial and statistical reports and to maintain accountability over the assets. In addition, agencies must evaluate and report on the controls and financial systems that protect the integrity of Federal programs (Section 2 and Section 4 of FMFIA respectively). The three objectives of internal controls are to ensure the effectiveness and efficiency of operations, reliability of financial reporting, and compliance with applicable laws and regulations. The metric here shows the average number of material weaknesses or Nonconformances in internal controls as determined by the agency head in the last five fiscal years for each of the large agencies subject to the Chief Financial Officers Act.
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Success Stories

For the second year in a row, 23 of the 24 CFO Act agencies received an audit opinion─ the highest number of opinions the Federal Government has achieved since the passage of the CFO Act. Helping to achieve this was the return to a clean opinion for the Department of State and a move from a disclaimed opinion to a qualified opinion for the Department of Homeland Security.

The one agency receiving a disclaimer of opinion in 2012—Department of Defense —continues executing ambitious remediation action activities. The Department of Defense plans to achieve audit-ability by 2017.

Agency Breakdown
DepartmentAudit Opinion FY 2012Number of Material Weakness in FY 2012AFR/PAR
Department of AgricultureClean2Department of Agriculture (USDA)
Department of CommerceClean1Department of Commerce (DOC)
Department of the InteriorClean0Department of the Interior (DOI)
Department of JusticeClean0Department of Justice (DOJ)
Department of LaborClean0Department of Labor (DOL)
Department of StateClean1Department of State (STATE)
Department of The TreasuryClean1Department of The Treasury (TREAS)
Office of Personnel ManagementClean0Office of Personnel Management (OPM)
Social Security AdministrationClean1Social Security Administration (SSA)
Nuclear Regulatory CommissionClean0Nuclear Regulatory Commission (NRC)
Department of Veterans AffairsClean1Department of Veterans Affairs (VA)
General Services AdministrationClean0General Services Administration (GSA)
National Science FoundationClean0National Science Foundation (NSF)
Environmental Protection AgencyClean1Environmental Protection Agency (EPA)
Department of TransportationClean1Department of Transportation (DOT)
Department of Homeland SecurityQualified5Department of Homeland Security (DHS)
U.S. Agency for International DevelopmentQualified2U.S. Agency for International Development (USAID)
Small Business AdministrationClean0Small Business Administration (SBA)
Department of Health and Human ServicesClean1Department of Health and Human Services (HHS)
National Aeronautics and Space AdministrationClean0National Aeronautics and Space Administration (NASA)
Department of Housing and Urban DevelopmentClean1Department of Housing and Urban Development (HUD)
Department of EnergyClean0Department of Energy (ENERGY)
Department of EducationClean1Department of Education (ED)
Department of DefenseDisclaimer13Department of Defense (DOD)
Number Increased From Previous YearNumber Decreased From Previous Year


Click here to see audit results for other agencies.

Nuclear Regulatory Commission (NRC) does not currently have an agency page on Performance.gov. For more information about NRC, please click here.