“Follow the money.” It’s almost a cliché. But for auditors here at GAO, following the money is our bread and butter. In fact, GAO got its start with the goal of following the money.  We do this in many ways. But an important effort is our annual audits of federal financial statements. At its core, the goal of these audits is to increase accountability and transparency over federal spending. But our audits have added benefits. They have led to substantial savings, as well as operational efficiencies and more reliable financial information. Today’s WatchBlog post looks at how your GAO follows the money through annual federal financial statement audits—and why it’s so important that we do.
What is the value of auditing federal financial statements?  Last fiscal year, the U.S. federal government spent about $7 trillion. With this level of investment, it’s essential to ensure accountability, transparency, and effective oversight of taxpayer dollars. Financial statement audits are one of the most powerful tools for doing this. They provide Congress and taxpayers with a timely, independent assessment of key information about the government’s financial performance and use of funds.  Financial statement audits offer a disciplined approach to strengthening financial management and building public trust. They often result in recommendations on how to improve the quality of day-to-day financial information. This quality is important because it allows managers to make better informed decisions and deal with the range of issues they face in overseeing taxpayer dollars. Federal financial statement audits:  Assess whether financial statement information is reliable and in accordance with generally accepted accounting principles. Identify weaknesses in controls that could lead to fraud, mismanagement, or payment errors (also known as improper payments). Identify instances where laws are not being followed, such as those that limit agency spending. Determine whether government property and equipment are accounted for and safeguarded. Verify whether the government properly accounted for taxpayer dollars. What are federal agencies required to report? Each year, federal agencies are required to prepare financial statements and have them audited. These financial statements include what the government owns and owes, as well as how taxpayer dollars were used.  Federal agencies typically get their financial statement audits done by mid-November (about 45 days after the end of the government’s fiscal year). This timing is important. It provides Congress with up-to-date information that can inform budget and appropriation decisions, as well as assess agencies’ performance.  Financial audits are a big bang for your buck! The cost of these audits is relatively nominal. On average, to audit their fiscal year 2024 financial statements, agencies spent less than $50 for every million dollars of agency cost. In return, audits help agencies strengthen their financial management, i