COOKING THE BOOKS AT TAXPAYER EXPENSE The recent corporate accounting scandals at Enron, WorldCom, and Xerox have brought on a national outrage. These big company executives rip off investors and employees for their own personal benefit and they should be held accountable. This growing concern about financial accountability needs to also turn its focus to the billions of dollars in financial mistakes made by the federal government every year.
Corruption Scandals Aplenty in Government Too
Here is a news update from Taxpayers for Common Sense. TCS is the best organization that monitors excessive government spending, corruption and corporate welfare.
President Bush and members of Congress may have spoken a few words against corporations that mislead the public with creative accounting methods, but their silence on the same type of misbehavior going on at government agencies is deafening.
The inability of federal agencies to pass routine annual audits goes beyond mere human incompetence or error. These habitual failures at the largest government bureaus, including the Department of Defense (DoD), Department of Agriculture, and the Justice Department, are the results of fundamental deficiencies in the agencies' accounting methods and—even worse—intentional cooking of the books.
The DoD, universally regarded as the worst when it comes to accounting, hasn 't come close to receiving a clean audit from the General Accounting Office since it began creating annual statements. Part of the problem is due to the sheer logistics of organizing all of the DoD's finances, including a payroll with over three million civilian and military employees and thousands of transactions with outside defense contractors.
What is alarming, however, is that top government officials are guilty of some of the same intentional fudging of the numbers as private business leaders and auditors. In 2000, the Army Corps of Engineers faced severe criticism that they worked backwards on a supposedly objective study on the Mississippi and Illinois Rivers, which predictably justified their recommendation to Congress to begin work on expanding seven locks. Whistleblower Donald Sweeney, supported by investigators for the Army inspector general, condemned the bias among Corps members to automatically approve expensive projects that tainted the $57 million study from the very beginning.
In its June 2001 report, "Government at the Brink," the Senate Committee on Governmental Affairs methodically evaluated the unsettling extent of financial mismanagement at 18 agencies. At the Dept. of Education, they identified a disturbing lack of internal accounting control that contributed to many errors such as the outright disappearance of $56 million from three appropriation accounts. They compared the estimated loss of $450 million over three years to the opportunity cost of 194,721 Pell grants for financial aid to college students.
Furthermore, whistleblower John Gard claimed that millions of dollars could have been embezzled out of the department without a trace because of a security flaw in the Grants Administration and Payment System (GAPS). On another occasion, Gard reported that he had found unsecured checks in his office that could have potentially been used for personal gain by an employee. Instead of investigating these matters, senior officials promoted an atmosphere of silence, rewarding those employees who kept quiet and helped cover up misdeeds.
While it is understandably difficult to manage agencies that are as large as some of the world's biggest corporations, there is no excuse for flagrant disregard for the facts in preparation of financial reports. Just as shareholders of large corporations have a legal right to review financial data, taxpayers deserve to know how their money is being spent.
The DoD and other financially irresponsible agencies assert that they are taking steps to fiscal accountability but it has taken them over five years just to get started, while other agencies have already received clean opinions several years running from the GAO. The Social Security Administration (SSA) passed its last audit with flying colors, as it has done every year, properly accounting for about one trillion dollars in SSA trust funds and an additional congressionally allocated budget of more than $400 billion. If the SSA can manage over a trillion dollars properly, then the other agencies should be able to get their balance sheets in order.
Much has been made of Bush's recent challenge to require corporate chief executives to take personal responsibility for their companies' financial statements. In that same spirit, maybe President Bush, the first president with an MBA, and members of Congress should also take personal responsibility for the financial statements of government agencies that ultimately answer to them.
For more information, contact Keith Ashdown at (202)-546-8500 ext. 110
or by email at firstname.lastname@example.org
TCS is at www.taxpayer.net
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