Budget Deficit

GAO Says It's Unable to Audit the Government's Consolidated Financial Statements. Again.


Every year, the the federal watchdogs at the Government Accountability Office attempts to audit the U.S. government's consolidated financial statements. I say "attempts" because for the last couple years, GAO's report has essentially said: Sorry, no can do.  

Just like last year, the GAO reports that it is unable to provide a judgment on the government's 2012 consolidated financial statements "because of widespread material internal control weaknesses, significant uncertainties, and other limitations."

The major problems that prevented an effective audit last year continued in 2012. Those problems include "serious financement management problems at the Department of Defense" making the agency's finances "unauditable," the inability of the federal government to "adequately account for and reconcile intragovernmental activity and balances between federal agencies" and its "ineffective process for preparing the consolidated financial statements."

Still, the report does manage to a few opinions on the state of the U.S. government's big-picture fiscal outlook. The GAO notes that its report is designed to help both policymakers and the public get a sense of both the trajectory of the fiscal situation and the urgency of any potential problems. On the question of trajectory, the report is quite clear: "The projections in this report indicate that current policy is not sustainable." No surprise there: That's the same word that the Congressional Budget Office uses to describe the country's fiscal outlook.

And the big problem, of course, is debt. Here's the GAO's 75 year outlook on our debt build up:

Ouch, right? And, sadly, also not a surprise to those who've followed previous projections of debt-driven doom. But this is not just the same terrible trajectory we saw last year. It's worse. As the report also notes, in last year's report, public debt was only expected to equal 287 percent of the economy by 2086. This year, they're projecting that without changes it will rise to 388 percent of the economy.

As for the urgency of bending the debt curve, the GAO makes it pretty clear that sooner is better. The longer the delay, the bigger the surpluses necessary to stabilize — not eliminate, but stabilize — the nation's debt. A fiscal reform starting next year would need to produce an immediate primary surplus equal to 2.7 percent of GDP, and keep it there for the foreseeable future. A budgetary overhaul that doesn't kick in for a decade would need to generate a 3.2 percent surplus.

And that's if you're looking on the bright side. The report further warns that its estimates probably understate the cost of delay "because they assume interest rates will not rise as the debt-to-GDP ratio grows." That's the real worry, and where the GAO's fiscal prognostications get seriously grim. If interest rates suddenly go up, the report says, that may result in a higher debt ratio, "potentially leading to the point where there may be no feasible level of taxes and spending that would reduce the debt-to-GDP ratio to its 2012 level." That's a problem much worse than books too messy to audit.

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  1. Fuck you. Cut spending.

    1. This.

      Start by axing anyone involved in the
      “ineffective process for preparing the consolidated financial statements.”

      1. Axe, how about a law that states any governmental department heads are personally respnsible for ensuring that theu are able to provide accurate auditable consolidated financial statements, failure to do so is a Felony punishable by $50,000,000 in fines and 50 years in Jail.

  2. BOOOOOOSSSHHH! /derp trolls

  3. “Those problems include “serious financement management problems at the Department of Defense” making the agency’s finances “unauditable,” the inability of the federal government to “adequately account for and reconcile intragovernmental activity and balances between federal agencies” and its “ineffective process for preparing the consolidated financial statements.”

    It’s a good thing the government isn’t a publicly traded company becasue if it were, Barack Obama would go to jail over this.

    1. Then why is Jon Corzine still walking around as a free man?

      1. Was Corzine unable to account for Goldman’s finances?

          1. If you’re under the discretion of the Obama Administration, then I guess it pays to have been a Democratic politician!

            Seems like his sin was using customer funds improperly. He may claim not being aware of what the state of those finances were at the time–in retrospect. That’s the Reagan defense! But he presumably signed whatever was submitted to the SEC as well as their tax returns.

            He didn’t say, “Oh, well, we decided we can’t really make any submissions this quarter–becasue the finances in this department are so horribly mismanaged, it’s basically unauditable”.

            1. Using customer funds improperly is the worst thing you can do.

        1. A little beyond “unable to account for finances,” really. He basically made billions of dollars simply vanish from customers’ accounts at MF Global. No explanation. No tricky accounting. The money was simply taken. Gone. Disappeared. He is an unrepentant, first-class corporate criminal scumbag on the order of Bernie Madoff and will apparently never face any prosecution for it. Because he’s a top Obama fundraiser.

          1. The funny thing is that MF Global’s fraud was probably legal, depending on how you interpret the language within their agreements with their investors, and how it deals with hypothecation.

            OTOH, at least Bush the Lesser didn’t get in the way of throwing Ken Lay’s ass in jail, and without Lay, no way Bush gets into the White House.

            1. “Without Lay, Bush doesn’t get into the White House?” Really? Why? What don’t I know about the 2000 election.

              1. He was one of the heads of W’s fundraising, if not the main guy. Lay helped W raise ~100 million for the 2000 primaries, which, back then was still quite a bit of money. He was head, nose, tail and asshole ahead of Gore, and IIRC, every other GOP primary candidate too. This article from 2004 in the Post goes into it a bit more.

                Why else do you think W came from out of nowhere (TX Governor, but still not a big light on the national scene) to dominate in the 1999-2000 primary season?

    2. We hold the government, with all of its power, to a far, far, far lower standard than we do a kid selling lemonade out of a cardboard stand in his front yard.

      1. That’s what I was trying to say.

        Thank you.

  4. We’re screwed. Better tell my kids to start drinking now ’cause the booze is running out by the time they hit 21.

  5. widespread material internal control weaknesses, significant uncertainties, and other limitations.

    Sounds like a press release announcing a SEC “enforcement action”.

  6. But I have been assured that there is no room to cut any spending. Well, maybe defense, but certainly not in any Congressional District of anyone important. Otherwise, we are already slicing bone when it comes to entitlements – I mean, same as CA!!!!

  7. So, based on that projection graph, what year are you anticipating that the country has an economic collapse?

    I want to know when I need to start stocking up on canned goods & ammo.

    1. Start yesterday.

    2. I predict 2008

  8. Another unprecedented first for the BO administration.

    Oh yeah…ROMNEY WOULD HAVE DONE IT TOO!!!!!!!!!

    1. Where would he have actually cut Tulpa?

    2. Tulpa,

      What does the LAOL-PA stand for?

      1. Law and order libertarian. Tulpa has never met a cop whose dick he wouldn’t suck.

        1. sarcasmic’s never met a lie he wouldn’t tell.

      2. Law And Order Libertarian – Pennsylvania.

        We support few laws ruthlessly enforced.

        Stability, prosperity, liberty.

    3. You obviously didn’t RTFA:

      I say “attempts” because for the last couple years, GAO’s report has essentially said: Sorry, no can do.

      Right there, in the first paragraph.

      Of course, I don’t know why I’m typing this, because you’ll inevitably be unable to either read or comprehend.

      1. The last couple of years was also during the BO administration.

        1. And this report would still be under Obama. THAT’S WHAT HE’S DRIVING AT.

          (To clarify, it wouldn’t matter if Romney had won because this report would still be about Obama’s last year in office, not Romney’s first year. Now please get over your butt hurt.)

          1. I don’t think that’s the part of my comment he’s responding to.

            He’s saying it’s not a first because it happened last year too.

            1. Hmmm, perhaps you’re right.

              My point is still valid as a counterpoint to your second sentence though.

            2. Its not a first because its happened AT LEAST 13 times since the mid 90s. And probably every single year.

    4. Actually, this was the case back during the Bush and Clinton administrations, IIRC.

      1. YDRC. You Don’t Recall Correctly.

        FY2008, FY2007. I’m only allowed two links but they’re there for 2005 and 2006 as well. Apparently the earlier ones are not online.

        1. Im pretty sure I saw this exact same story about 1999 or so.

          1. That’s going to be hard to check since it’s still awfully vague. Also Bush wasn’t prez until 2001, so why did you involve the Bush administration in it?

            1. Simple. If Im right and it wasnt auditable in 1999 and 2012, it probably wasnt for the years in between either. The earlier story I remember was about DoD being unaccountable, no reason to think that didnt continue across administrations.

              1. Except I just provided the links to the audits for 2007 and 2008, and the 2005 and 2006 have analogous URLs.

            2. Not that hard to check, here is a story from April 1, 1999.


              This one doesnt specifically mention DoD, but Im pretty sure they were one of the 24 agencies. I know I saw that in a story back then.

              1. And here is a story from Dec 17, 2007, during the Bush years.


                First sentence:

                For the 11th straight year, the federal government failed its financial audit, GAO announced Monday, in a widely anticipated finding that Comptroller General David Walker used to underscore the government’s troubled fiscal health.

                That covers 5 or 6 years of Bush, I think.

                Dont tell me YDRC when Im actually recalling correctly, you fuckstick.

                1. From the link above:

                  Complete Financial Report
                  The FY 2007 Financial Report of the United States Government (Financial Report) published by the Department of the Treasury includes GAO’s report on the accompanying U.S. government consolidated financial statements for the fiscal years ended September 30, 2007 and 2006, and the associated reports on internal control and compliance with significant laws and regulations.

                  Complete FY 2007 Financial Report (PDF, 186 pages)

                  By Chapter:

                  Table of Contents (PDF, 4 pages)
                  A Message from the Secretary of the Treasury (PDF, 2 pages)
                  The Nation by the Numbers (PDF, 10 pages)
                  Management’s Discussion and Analysis (PDF, 18 pages)
                  Statement of the Comptroller General of the United States (PDF, 4 pages)
                  Financial Statements (PDF, 14 pages)
                  Notes to the Financial Statements (PDF, 62 pages)
                  Supplemental Information (PDF, 40 pages)
                  Stewardship Information (PDF, 4 pages)
                  Appendix (PDF, 4 pages)
                  GAO Auditor’s Report (PDF, 24 pages)

                  1. What does that have to do with anything?

                    They have published a report every year, The audit’s failed every year, that is what hasnt changed from administration to administration.

                2. Also, the reason it was only 11 straight years is that, IIRC (which Im pretty sure I do), the audit wasnt happening and it was one of the things the House GOP pushed thru when they took over in 1995.

                3. And failing an audit is not the same as being unauditable.

                  1. And failing an audit is not the same as being unauditable.

                    Except this is exactly what they have been saying for parts of 3 decades now, the DoD and certain other departments are unauditable because they dont keep proper records.

                    1. Another quote from above:

                      GAO issued a statement saying it could not express an opinion on the government’s fiscal 2007 consolidated financial statements, mostly due to the Defense Department’s financial management problems

                      This is exactly what was said in the story about this year.

                    2. You need to admit you were wrong Tulpa. I absolutely remembered correctly and you apparently havent been following this story for fifteen years like I have been (I have referenced this to friends in arguments multiple times since the Clinton era) apparently, so thought this was something new.

                      Just type it, its easy: “I was wrong — Tulpa”.

                    3. Just type it, its easy: “I was wrong — Tulpa”.

                      Haaaaaaaaaaaaaaaaa ha ha ha ha ha!

                      Like that will ever happen.

                    4. You need to admit you were wrong Tulpa.

                      Forget who said this first, but, “What is it about getting a PhD that takes away the ability from the recipient of saying, “I was wrong” or “I don’t know?”

  9. Where would he have actually cut Tulpa?

    What you’ve got to do is cut the hamstring on the back of his leg right at the bottom. He’ll never play golf again, because his weight displacement goes back, all his weight is on his right foot, and he’ll push everything off to the right. He’ll never come through on anything. He’ll quit the game.


    Thrown money at every problem, real or imagined? That’s a safe bet.

    1. BO could get on TV and jerk off to a picture of Karl Marx while signing executive orders nationalizing every industry in the US, and you guys would say “Romney would have done it too.”

      1. *golf clap*

        That’s an excellent use of hyperbole. Completely retarded, but excellent use.

        1. Are you sure? So far I’ve seen claims Romney would have raised taxes and banned guns. Either of which is totally unbelievable.

          In Reasonland, Romney was an unprincipled weather vane during the campaign but would have instantly transmogrified into a devout leftist upon being elected.

          1. Straw men are made of straw.

          2. Wasn’t he for an AWB in MA?

            I don’t know if he would have raised taxes but I guarantee he wasn’t going to cut anything.

  11. I’ve seen claims Romney would have raised taxes and banned guns. Either of which is totally unbelievable.

    That’s funny.

    Romney had “No Labels” written all over him. Given the identical circumstances of the school shooting in Connecticut, nobody but an idiot would bother pretending Romney would not have gone rushing to meet with the usual suspects for a serious discussion about sensible gun law reform.

    As for the taxes thing, it’s preposterous to believe Romney would have resisted the Needz Moar Revenues! baying of the enlightened mob. He might have looked for it in different places, but it’s silly to pretend he would have gone to the mattresses to prevent tax increases.

    1. Romney is the kind of guy willing to jump out in front of any parade, no matter its direction. That’s his version of “leadership.”

      I don’t think there’s any way to know what he would have done in specific circumstances, other than to guess he would have done whatever polled best. I doubt it would have been that much different than what Obama is doing, to be honest.

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