Financial Accounting Blog

Thursday, June 24, 2004

Federal Government's Financial Condition The Journal of Accountancy provides the text of an address delivered by Comptroller General of the United States David Walker, before the National Press Club in Washington, September 2003. Walker describes the issue of transparency and how the American people are given an incomplete and inaccurate picture of the government's current financial condition. Walker outlines several specific "calls to action," including the restructuring of certain entitlement programs and the streamlining of the government's organizational structure to improve efficiency and accountability.
More important, although we know that we are in a financial hole, we don't really have a very good picture of how deep it is. Several very significant items are not currently included as liabilities in the federal government's financial statements. These items include several trillion dollars in nonmarketable government securities in the so-called "trust funds." In the case of the Social Security and Medicare trust funds, the federal government took in taxpayer money, spent it on other items and replaced it with an IOU.
The bottom line is that, in my view, the federal government's current financial statements and annual reports do not give policy makers and the American people an adequate picture of our government's overall performance and true financial condition.
The article also contains an interesting epilogue that describes a recent interview with Walker since he gave the address.