'Truth" and "accounting" should not be concepts that are terribly hard to reconcile - unless you're also trying to bring "government" into the formula.Uniting those three ideas has been Sheila Weinberg's goal ever since she had a baby. Not that the baby had anything to do with it, but motherhood gave her some time off from her career as a CPA.
It did not, however, dampen her belief that governmental accounting could come a lot closer to truthfulness if state governments did more to ensure that their statements reflected their budgets, and if the federal government succeeded in producing, for once, an auditable financial statement.
"We've found that governmental entities hide their financial information, and part of the reason the public is disconnected from the political process is that they don't have enough information to be involved in the process," Weinberg said. "We're trying to get the public more educated on federal and state financial positions, so that they can get engaged."
Disturbed by what she saw happening in governments across the nation, including the federal government, Weinberg decided that the titles "mother" and "watchdog" were not necessarily mutually exclusive. In 2002 she founded the Institute for Truth in Accounting, a 501(c)3 organization, and began applying her accounting skills to advocating for more openness in governmental finance.
She believes that financial information is literally hidden, especially in the budget process, where accounting standards don't apply. Consequently, Weinberg says, we see budgets that appear to be balanced, while financial statements indicate nine-digit deficits. She calls it "political math."
"The politicians report only the numbers that look good, so they get the policies they want," Weinberg says. "Most states report balanced budgets, yet they report structural deficits. They purposefully leave things out of the balanced-budget calculations so they can have less taxes and more programs without getting the public's permission to spend more or raise taxes."
DEFICIT? WHAT DEFICIT?
Weinberg's concern for greater transparency was stirred during the 2000 presidential campaign.
As candidates spoke of how they'd spend a projected surplus, the Congressional Budget Office was projecting a huge general fund deficit. The surpluses were a mirage created by tallying trust fund borrowings as income, and the annual cost of government social insurance programs was simply omitted from projections.
Since then, the institute has testified before the Federal Accounting Standards Advisory Board, the Government Accountability Office, the Governmental Accounting Standards Board, and various state legislatures and other organizations, and the truth has always been heard - if not heeded.
U.S. Comptroller General David Walker knows Weinberg well, and said that the GAO and the institute agree on almost, but not quite, everything. "They have pushed very hard for recognizing a liability for portions of social insurance obligations that we do not believe meet the standard of a liability," he said, "But we're in agreement that there needs to be more transparency with regard to fiscal sustainability and intergenerational equity, as well as in the overall financial reporting and budgetary processes."
Though the problems vary from government to government, inadequacies in accounting and in reporting policies leave voters, legislators and others basing decisions on bad information. Weinberg says that if accounting standards are written to ensure good information for the making of decisions, they should be applied to budgets, since they are part of the decision-making process.
GASB, which sets standards for state and local governments, doesn't agree. "GASB has repeatedly said that they don't want to get involved in the politics of the process, Weinberg said. "They won't even consider setting standards for the budget. But I wonder what value they are providing if the big part of the decision-making process is the budget process."
Edward Mazur, whose term as a member of GASB ended in June of this year, has a high regard for Weinberg and her message. "I think Sheila is part of what I can only hope is a growing chorus of responsible citizens, officials, and ultimately standards-setters and others who are trying to get people to pay attention to this issue," he said.
Growing that chorus is exactly what the institute is after.
Believing that all governments should be under the watchful and knowing scrutiny of professional accountants, the institute has put out a call for CPAs to contribute to a national effort to make governments more truthful in their accounting.
The organization's Web site is at www.truthinaccounting.org.
