White House Statement on Reform of the Federal Financial Accounting System

The President today approved and sent to Congress requests for fiscal year 1991 budget amendments that reallocate funds to reform the Federal financial accounting system. This reform is part of an effort to improve financial control and to bring greater attention to claims on future Federal financial resources.

Because reform of Federal financial management systems and operations is a key component of the President's commitment to improving management in the Government, the Office of Management and Budget has initiated improvements in several areas of financial management. One of these is a policy that calls for developing and auditing agency financial statements. The current accounting system lacks an adequate balance sheet, satisfactory controls or audits, and the capability to provide an accurate picture of the Government's assets, liabilities, or financial risks.

Audits of these agency financial statements are especially important because they would help to ensure the accuracy of agency financial reports. At present, the Federal Government and most of its component agencies are not capable of producing annual general-purpose financial statements that can be audited. This initiative calls for the 14 Cabinet Departments, the Environmental Protection Agency, and the National Aeronautics and Space Administration to have agency financial statements developed and audits conducted by fiscal year 1994.

Preparation and audit of financial statements for all or part of 10 of the 16 targeted agencies would be conducted in fiscal year 1991. Five of the agencies will proceed without further congressional action. These amendments would permit 5 of the 10 agencies to reallocate funds to provide for audits.