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Transparency
and the Lack of It

By Leita Hart-Fanta, CPA

March 5, 2010

The first line of the July 2007 Yellow Book says “The principles of transparency and accountability for the use of public resources are key to our nation’s governing processes.”  Hear, hear!

That is why the following report from the GAO about the federal government’s financial statements made me absolutely sick to my stomach:

U.S. GOVERNMENT’S 2009 FINANCIAL REPORT SHOWS  SIGNIFICANT FISCAL CHALLENGES

Weaknesses Evident in Financial Management as Nation Confronts Long-Term Fiscal Problems & Financial Regulatory Weaknesses

WASHINGTON (February 26, 2010) - The U.S. Government Accountability Office (GAO) could not render an opinion on the consolidated financial statements of the federal government (other than the Statement of Social

Insurance) because of widespread material internal control weaknesses and other limitations.

“While financial management has improved significantly since the government began preparing consolidated financial statements, for the 13th year in a row now shortcomings in three areas again prevented us from expressing an opinion,” said Gene L. Dodaro, Acting Comptroller General of the United States.  “I’m referring to serious financial management problems at the Department of Defense (DOD), the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between agencies, and the ineffective process the federal government uses to prepare the consolidated financial statements.”

Dodaro also cited material weaknesses involving improper payments estimated to be at least $98 billion, information security across government, and tax collection activities.  He noted that four major agencies-DOD, the Department of Homeland Security, the Department of State, and NASA-did not get clean opinions.

The material weaknesses discussed in GAO’s audit report hinder the government’s ability to (1) reliably report on many of its assets, liabilities, and costs; (2) accurately measure the full cost as well as the financial and non-financial performance of certain programs and activities; (3) adequately safeguard significant assets and properly record various transactions; and (4) have reliable information to operate efficiently and effectively.

“Long term, the federal government faces huge structural deficits driven by rising health care costs and demographics. Focused attention from Congress and the administration is needed to address these problems and put the government on a more sustainable path,” Dodaro said.

Beginning this year, new financial reporting standards will require a clearer and more comprehensive assessment of the federal government’s financial condition over the long term. “Sound data on federal operations will be essential to the nation’s efforts to return the country to a sustainable fiscal path,” Dodaro said.

He also singled out meaningful financial regulatory reform as especially urgent.  “Problems in the nation’s financial sector have exposed major weaknesses in the current U.S. financial regulatory system.  If those weaknesses are not adequately addressed, we could see similar or even worse crises in the future,” Dodaro cautioned. 

Dodaro commended the commitment and professionalism of the Inspectors General across government who are responsible for auditing the annual financial statements of individual federal entities each year.

The fiscal year 2009 Financial Report of the United States Government, which includes financial information from the 24 major federal departments and agencies along with GAO’s audit report, was released on March 1 by the Treasury Department. The report is also available on GAO’s website at http://www.gao.gov/financial/fy2009financialreport.html.

But there are rays of hope.  Due to the ridiculous, scandalous handling of the bank bailouts—the executive branch has created a super-transparent website in connection with the recovery stimulus.  Please see www.recovery.gov 

And state and local governments are making great strides.  Not to brag or anything, but I am in Texas—and nearly every transaction the State of Texas makes is available for public viewing on http://www.window.state.tx.us/comptrol/expendlist/cashdrill.php 

My understanding, is that soon the state will disclose salary information for all state employees.  Until then, look to the Texas Tribune for this information.  http://www.texastribune.org/library/data/government-employee-salaries And although I get a little quesy when I see that Mack Brown, the UT football coach, makes over 5 million a year, I do feel better that it’s not a secret that the state tries to hide from me.

Who owns the government?  The citizens.  We have a right to know—it’s our money!

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Leita Hart-Fanta, CPA, CGFM
Resides in Austin, Texas and can be reached at www.auditskills.com.

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