EXPLORING THE VALUE OF Financial Statement Audits

The Chief Financial Officers (CFO) Act of 1990 mandated a pilot program for the preparation of audited financial statements in the federal government. The Government Management Reform Act of 1994 extended the requirement for financial statements to all the major departments and agencies of the feder...

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Bibliographic Details
Published in:The journal of government financial management 2011-04, Vol.60 (1), p.38
Main Author: Brook, Douglas A
Format: Article
Language:English
Subjects:
Accountability
Accounting
Accounting records
Accounts payable
Assurance services
Audited financial statements
Auditing
Auditors opinions
Audits
Chief financial officers
Compliance
Consolidated financial statements
Cost control
Defense contracts
Fair presentation
Federal government
Financial management
Financial statements
Government agencies
Government mandates
Management decisions
Performance evaluation
Polls & surveys
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Summary:The Chief Financial Officers (CFO) Act of 1990 mandated a pilot program for the preparation of audited financial statements in the federal government. The Government Management Reform Act of 1994 extended the requirement for financial statements to all the major departments and agencies of the federal government. The law required audits of these statements, and it mandated a consolidated financial statement for the entire federal government. Today, just after the 20th anniversary of the original CFO Act, 20 of the 24 major agencies have achieved unqualified audit opinions, and four are reporting disclaimers. Previous research has examined the benefits and issues associated with producing financial statements. This article examines the benefits and issues associated with financial statement audits. Surveys of government financial managers report reputational benefits from achieving clean audit opinions. Within the financial management domain, there are potential positive cost-benefit ratios based on savings generated from improved efficiencies and better financial operations.
ISSN:1533-1385