Government Corporations

Congress passed the Chief Financial Officers Act of 1990 to improve the federal government's financial management practices, systems, and reporting. Although most of its provisions target executive agencies, the act also broadens audit and management reporting for government corporations. The act strengthens existing audit requirements for government corporations and requires each to issue an annual management report to Congress that includes financial statements, management's statement on internal controls, and the auditor's report resulting from the audit of the financial statement. In addition, the act provides for the inclusion of a reconciliation to the corporation's budget report and other information needed to inform Congress about the corporation's operations and financial condition. This report discusses whether the required financial audits for 1992 were done and whether the corporations issued the management reports. GAO identified the approaches management used to assess internal controls. GAO also determined whether government corporations had enough guidance to effectively implement the act's audit and management reporting requirements.

GAO found that: (1) the financial statements for 31 of the 34 government corporations were fairly presented in accordance with generally accepted accounting principles; (2) two of the corporations' auditors experienced accounting problems that prevented them from issuing opinions on selected financial statements and one auditor qualified its opinion on the financial statement of one corporation; (3) 31 of the 34 government corporations issued required management reports for 1992; (4) two corporations were not aware that they were required to issue management reports and one corporation did not allocate the resources necessary to issue a management report; (5) 27 corporation management reports provided reasonable assurances that internal controls were being achieved; (6) corporate audits varied significantly due to the absence of authoritative guidance and the different approaches used to prepare the management reports; (7) the corporations' management reports could have been more useful if consistent criteria and guidance were applied; and (8) the value and usefulness of annual financial statement audits can be enhanced by obtaining assurances from corporation auditors on the effectiveness of internal accounting controls.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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