Financial Management: Overview of Federal Payment Process
Fast Facts
We testified about federal payment processes and systems related to the General Fund, and our knowledge of audit activities over these systems. This testimony is based on our recurring audits of the General Fund.
Treasury's Fiscal Service manages the General Fund systems that are critical to the government's financial infrastructure. For example, these systems disburse payments to American people and businesses; collect taxes and other revenue; and borrow the funds necessary to run the federal government.
In FY 2022, $23.2 trillion flowed into the General Fund and $22.8 trillion flowed out.
Highlights
What GAO Found
The U.S. government disburses cash payments for various reasons. The majority of federal entities, such as individual departments and agencies, process their payments through Fiscal Service's Treasury Disbursing Offices. These federal entities internally review and approve payments to be made and submit certified payment schedules to Fiscal Service using Fiscal Service systems. Federal entities are responsible for maintaining the detailed information supporting their payment transactions and are responsible for related internal controls, such as controls designed to prevent improper payments, including fraud.
Fiscal Service then processes the payment schedules via several system applications and submits payment files to the Federal Reserve to make the payments, which are primarily electronic fund transfers. Fiscal Service's processes include certain edit and format checks, which can include checking scheduled payments against information in the Do Not Pay portal. After payments are made, various Fiscal Service systems capture payment information for accounting and reporting purposes.
Since its initial audit of the Schedules of the General Fund for fiscal year 2018, GAO has conducted limited audit procedures over information system controls. These included procedures related to access controls, configuration management, and security management for the information systems relevant to the General Fund. During the course of its audits, GAO also considered the results of relevant information system control tests performed as part of the annual audit of Treasury's consolidated financial statements.
Why GAO Did This Study
GAO audited the fiscal year 2022 Schedules of the General Fund because of their significance to the consolidated financial statements of the U.S. government. The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, is required to annually submit audited financial statements for the executive branch of the U.S. government to the President and Congress. GAO is required to audit these statements.
GAO's audit procedures included obtaining an understanding of the federal payment process and related internal controls over financial reporting relevant to its audits.
GAO continued to encounter limitations that prevented us from expressing an opinion on the fiscal year 2022 Schedules of the General Fund or on Fiscal Service's internal control over financial reporting relevant to the Schedules of the General Fund as of September 30, 2022. GAO provided recommendations to Fiscal Service to address these limitations resulting from deficiencies in their financial reporting processes. Treasury agreed with the recommendations, and GAO will provide an update on their status in its fiscal year 2024 report.
For more information, contact Kristen Kociolek at 202-512-2989 or KociolekK@gao.gov.