This report transmits GAO's report on the results of our audit of the U.S. government's fiscal years 2012 and 2011 consolidated financial statements, which is incorporated in the enclosed 2012 Financial Report of the United States Government prepared by the U.S. Department of the Treasury. During fiscal year 2012, the federal government continued to face economic and fiscal challenges in a slow-growth economy with high unemployment. To operate as effectively and efficiently as possible and to make difficult decisions to address the federal government's fiscal challenges, Congress, the administration, and federal managers must have ready access to reliable and complete financial and performance information-both for individual federal entities and for the federal government as a whole. Even though significant progress has been made since the enactment of key federal financial management reforms in the 1990s, our report on the U.S. government's consolidated financial statements illustrates that much work remains to improve federal financial management. Further improvements are urgently needed.