GAO flags new Treasury control gaps in FY2025 financial statements

GAO's audit of the fiscal year 2025 consolidated financial statements identified three new control deficiencies in the Department of the Treasury's preparation processes, adding to material weaknesses that impede determination of whether the statements fairly present the government's finances.

The deficiencies involve (1) failure to properly report legal contingencies in the draft CFS note disclosure, (2) inconsistent preparation of accurate and complete note disclosures in the draft CFS, and (3) inadequate reports used to annually recertify access to Planning Analytics, the system used to prepare the CFS.

Treasury has resolved three prior recommendations, but nine recommendations were open from prior reports as of the completion of GAO's fiscal year 2024 audit. Six remain from prior reports after the fiscal year 2025 audit, and GAO will monitor corrective actions as part of the fiscal year 2026 CFS audit.

GAO issued three new recommendations for executive action: the Fiscal Assistant Secretary of the Treasury should improve and implement procedures to properly report legal contingencies in the CFS in accordance with U.S. GAAP; improve and implement procedures to reasonably assure that CFS note disclosures are accurate and complete; and improve and implement procedures to provide managers with the specific roles granted to users for use in annually recertifying access to Planning Analytics. Treasury concurred with all three recommendations, which are listed as open.

The unresolved deficiencies increase the risk that material amounts and disclosures may not be presented in the CFS in accordance with U.S. GAAP, limiting GAO's ability to express an opinion on the federal government's accrual-based consolidated financial statements.