Financial Management

First Financial Audits of IRS and Customs Revealed Serious Problems Gao ID: T-AIMD-93-3 August 4, 1993

Pilot programs established by the Chief Financial Officers Act of 1990 require selected federal agencies to prepare audited financial statements. The Comptroller General hopes that these audited financial statements, some of which pinpoint serious financial management problems, will ultimately be required of all major government agencies. In the first-ever financial audit of the Internal Revenue Service (IRS) and the Customs Service, GAO was unable to express an opinion on the reliability of the financial statements because critical supporting information for billions of dollars was either unavailable or unreliable. In addition, internal controls did not effectively safeguard assets, provide a reasonable basis for determining compliance with laws and regulations, or ensure that no material misstatements appeared in the financial statements. IRS and Customs have started to rebuild their financial management processes and systems. Although it will be a tough job, continued strong implementation of the Chief Financial Officers Act by these agencies can result in a tremendous payoff through improved ability to safeguard assets, manage operations, and collect revenues.



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