It'd be easy to scrap Punxsutawney Phil's day in the sun for what's become a surer sign of spring's arrival -- Comptroller General David Walker making the rounds, testifying about the Government Accountability Office's now annual refusal to vouch for the accuracy and completeness of the government's financials.
Replace the words "federal government" with "super big public company" and it'd be easy to imagine Walker's report receiving the attention that got paid to the Public Company Accounting Oversight Board's series of reports carrying harsh words for seemingly every audit under the sun.
As Walker said in testimony before a congressional committee March 1:
"As I have testified before, the current financial reporting model does not clearly, comprehensively, and transparently show the wide range of responsibilities, program and activities that may either obligate the federal government to future spending or create an expectation for such spending."
And this year, of all the points in the long laundry list he cites in backing up that statement, the fact that future costs from Hurricane Katrina or the conflicts in Iraq and Afghanistan actually doesn't come in until about No. 12.
The GAO said the trio of major problems preventing an opinion are:
- Serious financial management problems at the Department of Defense;
- The federal government's inability to adequately account for and reconcile intra-governmental activity and balances between federal agencies; and,
- The federal government's ineffective process for preparing the consolidated financial statements.
While the GAO said the government's budget deficit for the 2005 fiscal year was lower than that of 2004, it was still very high, particularly given the impending retirement of the "baby boom" generation and rising health care costs. The basic costs to operate the government increased to $760 billion in fiscal year 2005 from $616 billion in fiscal year 2004 -- a 23-percent rise. As of September end, the federal government's gross debt was about $8 trillion.A staple of any public comment from Walker has been a doomsday snapshot of the nation's worsening financial condition and long-range fiscal outlook. He says worrisome deficits that could affect the country's economic livelihood seem to be converging as the federal budget deficit, the balance-of-payments deficit, and personal savings deficits all continue to grow.
Since the GAO's report was released last December, there's been little noise over what's now become the routine -- the delivery of a big "F" for the government's adherence to generally accepted accounting principles. It's impossible to imagine the shareholders, or any self-respecting chief executive of a major company doing major international business, operating in the same manner.
Walker's not crying wolf, and while there's little likelihood of the government receiving a glowing review from the GAO in the next decade, I don't think it's too much to ask to hold the government to the same standards as everyone else. The starting places for serious discussion of the numbers is to be able to understand where the numbers are coming from, and trust that they are reliable. Until then, Walker seems destined to continue on being a gloomy guest at seemingly every public appearance he makes. It's time he was able to enjoy the December holidays and start talking about different numbers come springtime rituals.
GAAP shouldn't be too much to ask in the age of Sarbanes-Oxley. And the GAO and Walker aren't asking for the impossible in wanting to just be able to give the public an opinion on the government's finances.
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