- Washington complains about deceptive corporate accounting.
But the government last year misplaced an incredible $17.3 billion because
of shoddy bookkeeping, or worse. Let me put that into numbers so you can
fully appreciate the amount. It's $17,300,000,000 - the price of a few
dozen urban renewal projects, a nice size fleet of warships or about half
the tax cut that everyone made such a fuss about last summer.
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- Disappeared. Gone. Nowhere to be found.
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- In fact, the government's accounting was so atrocious
that the General Accounting Office - another Washington agency - refused
to give an opinion about the honesty of the government's books.
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- Did someone steal all that money? The government doesn't
know. Was it simply misplaced? Dunno. Misspent? Your guess is as good as
anyone's.
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- There's a certain bit of irony, of course, that Congress
is raking companies like Enron, Arthur Andersen and others over the hot
coals for falsified books when D.C.'s own records are pathetically inadequate.
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- As I mentioned in this column a couple weeks ago, the
government made an incredible admission a little while back in something
called the 2001 Financial Report of the United States Government.
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- In that report, Treasury Secretary Paul O'Neill revealed
that when the government uses the same accounting method that corporations
are required to use, the federal deficit in 2001 was $515 billion. Last
fall the government said the budget actually had a surplus of $127 billion.
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- Ah, yes, the good old days!
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- The huge deficit is mainly, the government says, the
result of health benefits to military retirees. That's a cost the government
conveniently forgot to include in its old accounting method, which had
more to do with winning votes than providing a true financial picture of
the country.
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- And that $515 billion deficit doesn't include all costs,
especially Social Security. But we'll leave that alone because I don't
want to depress anyone - especially myself.
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- I also said in that earlier column that the information
on the deficit wasn't easy to find. O'Neill's letter was buried on the
Treasury Department's Web site and the press release put out by the agency
didn't mention the $515 billion until paragraph 5.
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- (Treasury says all the press in Washington got a copy
of the report and that it was adequately disclosed. It also said an undersecretary
of Treasury had reported the numbers to a congressional subcommittee.)
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- Well, I sent my scavengers back into that Financial Report
of the U.S. for another look and that's when we discovered the unaccounted
for $17.4 billion.
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- Follow me on this and I'll lead you to the still missing
treasure.
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- Go to www.USTreas.gov, click on Treasury Bureau on the
left, then click on "financial management services."
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- If you've made it this far click on "Financial Report
of the U.S. Government" for 2001 and download it.
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- Now find page 49. Look at the line that says "Unreconciled
transactions affecting the change in net position." The figure in
the 2001 column next to that is $17.3 billion.
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- What that means is that when the accountants tried to
balanced the government's books they came up $17.4 billion short. Note
16 on Page 110 sort of explains.
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- That footnote says that the accountants had to pencil
in $17.4 billion that didn't exist (or was missing) in order to achieve
a balanced government ledger.
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- The footnote adds that the mistake could simply be bad
government record keeping or "improper recording of intragovernmental
transactions by agencies."
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- Poor record keeping! Isn't that a gem.
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- I spoke with some of the folks at the General Accounting
Office who audited the government's report. They were puzzled by the discrepancy
and wouldn't sign off on the government's accounting because of that and
other things.
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- "The left and the right side didn't equate,"
said one GAO auditor. When such a thing happens in the private sector,
people go to jail. And a company's stock would fall by about 99 percent
if its auditor didn't trust the books - just ask the felons-to-be down
at Enron.
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- It is good that Washington must now adopt a corporate-like
method of accounting for where it spends taxpayers' money.
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- But it would be even better if there were some recourse
to the sort of sloppiness, arrogance or criminality that allows the government
to come up $17.4 billion short of balancing its books.
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- At the very least, maybe some corporate exec - as he's
being hauled off to jail for accounting fraud - will hold aloft page 49
of the government's financial statement and footnote 16 and demand equal
treatment.
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- http://www.nypost.com/business/48846.htm
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