the politics of neoliberal accounting

[Eubulides <paraconsistent@xxxxxxxxxxx>]

http://www.gao.gov/cghome/gwscpa20041214/ [full reports]



http://www.washingtonpost.com/wp-dyn/articles/A14775-2004Dec20.html
GAO Again Finds Fault With the Federal Books
Auditors Say That Government's Records Are So Inadequate They Cannot Be
Evaluated, but Bush Official Cites Progress

By Christopher Lee
Washington Post Staff Writer
Tuesday, December 21, 2004; Page A23

The U.S. government's financial record-keeping is so inadequate that
congressional auditors said last week that they could not determine
whether the federal books meet generally accepted accounting principles.

It was the eighth fiscal year in a row that the Government Accountability
Office, the investigative arm of Congress, was unable to provide a
definitive opinion on the quality of the federal government's consolidated
financial statements.

"Proper accounting and financial reporting practices are essential in the
public sector," Comptroller General David M. Walker wrote in a Dec. 14
cover letter to his agency's audit report on consolidated financial
statements for fiscal 2003 and 2004. "The U.S. government is the largest,
most diverse, most complex, and arguably the most important entity on
earth today. . . . Sound decisions on the current results and future
direction of vital federal programs and policies are made more difficult
without timely, reliable and useful financial and performance
information."

Linda M. Springer, head of the Office of Federal Financial Management
within the Office of Management and Budget, acknowledged the shortcomings
in the financial statements but stressed that the Bush administration is
making progress. She said President Bush has made improving financial
performance and record-keeping one of his top management priorities.

"We believe . . . that we owe the taxpayers no less than a private company
would to its investors in being able to account for their money," Springer
said in an interview Friday. "We believe that's a sign that we're managing
their money properly, if we can account for it and do that in a timely
way."

Walker wrote that the need for timely, accurate and reliable financial
information is "greater than ever" as the government grapples with
long-term budget problems related to Social Security and Medicare and new
spending on homeland security.

As of September, the government's debt was $7.4 trillion -- or about
$25,000 for every adult and child in the country, Walker noted. If one
factors in other unfunded commitments that are not included in that
number -- such as promised Social Security and Medicare benefits and
veterans' health care -- the debt burden works out to about $145,000 per
person, or $350,000 per full-time worker.

In their review, GAO auditors found that incomplete documentation and
"weaknesses" in financial systems, record-keeping and financial reporting
hurt the government's ability to provide reliable information on assets,
liabilities and costs. The greatest challenges are continuing "serious
financial management problems" at the Defense Department, auditors
reported. The government could not show that property and equipment
inventory reports at Defense were correct, nor could it fully account for
transactions between agencies.

Also, at least 10 of 23 major agencies and departments restated their
fiscal 2003 financial statements this year to correct errors. Only four
did so last year. "Frequent restatements to correct errors can undermine
public trust and confidence in both the entity and all responsible
parties," the GAO report said.

However, Springer, the OMB official, said the increasing number of
restatements is an indication that departmental auditors "are being more
careful than ever before."

Springer also said financial statements have been completed in a more
timely fashion. The 2004 consolidated report was released on Dec. 15, less
than three months after the close of the fiscal year on Sept. 30. The 2003
report, in contrast, did not come out until the following February, and
the 2002 report was not released until March.

"It's a huge step forward," she said. "We believe that forcing the
timeliness is key to having the agencies . . . deal with these issues."

Springer said 18 major departments and agencies received "clean" outside
audits of their financial statements this year, the same number as in
2003.

Other problems continue to prevent the government from receiving a
favorable opinion from the GAO, she said, but they are being addressed.
Such issues include ongoing financial management problems at Defense,
problems with the way individual agencies' statements are consolidated by
the Treasury Department and difficulty in reconciling transactions between
agencies, she said.

"They are long-standing issues that still need work, frankly," Springer
said. " . . . It's like anything else, you keep moving forward and
eventually you get to the point where you have all of the problems
solved."