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Roe Statement: Review of the Independent Audit of the Labor Department’s FY2010 Consolidated Financial Statements

As the notice announcing our hearing states, we will be reviewing an independent audit of the Labor Department's financial records. This is a department with a roughly $16 billion budget, 30 agencies, and more than 17,000 employees. A great deal of time and resources were invested in this audit and for good reason: addressing the country’s fiscal challenges will not be possible until every dollar spent by the federal government is accounted for.

Aside from our public responsibility to be good stewards of the taxpayers’ money, this year’s audit is significant for several additional reasons. For starters, this will be the first time separate financial and performance audits are presented to Congress. I hope this will provide a more thorough examination of the Labor Department's financial ledger, and we look forward to reviewing the performance audit early next year.

This is also our first look at the department’s new financial management system. This new system was implemented at the beginning of the year to better streamline and enhance the accountability of the department’s finances. We need to ask whether this has delivered the results taxpayers deserve.

The answer to our question may be connected to the final reason why this audit is so significant. For the first time in more than a dozen years the department failed to achieve a clean audit. KPMG, the independent firm tasked by the Inspector General’s office with performing the audit, identified four material weaknesses in the department’s finances. Just one material weakness is sufficient to trigger a failing grade.

Weaknesses cited in the audit include a lack of adequate controls over financial reporting and budgetary accounting, and a failure to properly control access to financial and support systems. Were these weaknesses the result of a failure in the new financial system? Or were they the result of a failure of the department's leadership? Regardless of the cause, the result is still the same: we do not know if the department’s financial records are accurate. This is unacceptable.

When an organization replaces a system responsible for tracking tens of billions of dollars, errors are not uncommon. However, it is the responsibility of the organization's leadership to anticipate potential problems and to put in place a plan that preserves transparency and accountability through the transition process.

That responsibility is all the more critical when dealing with taxpayer dollars. We need to learn what actions the Labor Department's management team has undertaken to fix these weaknesses and what it plans to do in the future to ensure this doesn’t happen again.

These are important questions, and that is why I am disappointed an important voice in this discussion will not be heard today, the voice of KPMG. It is regrettable that members will be unable to hear from the technical experts who spent the past year looking over the books of the Department of Labor. Not only is it regrettable, it is a missed opportunity for the committee.

As we speak, the federal government is borrowing roughly 40 cents for every dollar it spends and our national debt is quickly approaching $14 trillion. The American people have demanded we restore fiscal responsibility in the federal government. Each federal agency must demonstrate sensible, efficient, and transparent management of the resources it has been entrusted with. That is the significance of our hearing today and the responsibility we must fulfill in the weeks and months ahead.

I look forward to hearing from our witnesses and exploring these matters further.


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