Review of Federal Government’s Financial Statements

Review of Federal Government’s Financial Statements
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Review of Federal Government’s Financial Statements
A constitutional requirement mandates that the federal government must publish its accounts from time to time to guarantee accountability and transparency. Notably, the federal government faces unique challenges that make it challenging to issue financial statements in comparison with other government entities. This paper examines the financial reporting of the United States Government with a focus on its uniqueness, content, and reporting practices.
Three unique aspects of the Federal government create the need for special accounting and reporting approaches. First, the federal government is a vast and complex entity that is made up of multiple programs, entities, and departments. For the federal statements to report on the financial performance of each facet, special accounting and reporting practices are instrumental to the effective consolidation of the financial information (Brook, 2010). An example of a special accounting practice influenced by the vast and complex nature of the government is the inclusion of the statement of changes in social insurance amounts. Notably, the statement is necessitated by the need for the federal government to account for the progress of social insurance. Second, the federal government interacts with state governments, local governments, and tribal entities. Consequently, the financial statements prepared by the federal government must account for aspects such as cooperative agreements, grants, and transfers with the governmental entities it interacts with. Special accounting and reporting practices are necessary to facilitate the measurement of transactions among government entities. For example, the government is required to provide details on the grants awarded to various intergovernmental entities for various purposes (Bracco et al., 2015). Third, the federal government is required to provide budgetary accounting in its financial statements. The budgetary accounting framework within which the federal government operates requires the government to track appropriations, apportionments, and allotments. For example, the statement of long-term fiscal projection requires the government to identify the fiscal gap with the Budgetary Resources Statement providing information on the status of its budgetary resources including elements such as obligations, unobligated balances, and outlays.
A review of the recent audit conducted on the most recent federal government financial statements was accomplished by the Government Accountability Office (GAO). The type of audit performed is a financial statement audit, which examines the fairness of the financial data included by an entity in its financial statements. GAO provided a disclaimer report following its audit. To this end, the organization noted that the federal statements provided by the federal government had material weakness due to failure in the existing internal control as well as other limitation that made it challenging for the organization to offer an opinion on the financial statements (Cordery & Hay, 2019). In addition, the report noted that there were signi...