How are they held liable for their actions?
Government financial infrastructure often lacks accountability or consequences regarding key internal control issues or audit opinion disclaimers. For example, HUD had financial control weaknesses for several years; auditors were unable to issue an audit opinion. Former Secretary Ben Carson appointed a CFO with private company experience and transformed the financial infrastructure. HUD was able to remediate all of its control weaknesses and obtain a clean audit opinion in 2020, the first time in ten years.
In the private sector, a company cannot operate with sustained material weaknesses in its financial system. Shareholders, creditors, and other stakeholders would withdraw their support and the company would collapse. Internal control weaknesses are addressed vigorously. Those responsible for the weaknesses are held accountable. In the private sector, personnel at the core of financial issues would be reprimanded, terminated, demoted, or reassigned. If the company didn’t remediate the issues in a timely manner, upper management or the board of directors would be held responsible.
