The U.S. federal government shocking lack of financial reporting credility

The Government Accountability Office (GAO) plays a similiar role for the federal government in Washington that the Office of the Auditor General plays here in Ottawa. Here, in our parliamentary system, I think it's safe to say that a minority government would almost certainly fall (and a majority government might even be deserted by some of its MPs) if the A-G ever delivered the scathing indictment that the GAO delivered today after trying to audit the 2010 consolidated financial statements of the U.S. federal government:

In its press release about its audit, there is no sugar-coating from the GAO. Indeed, its first paragraph ought to be enough to bring most governments down:

“The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.” (my emphasis)

That's just unbelievable. Even more unbelieveable: The press release I have from GAO was released at 3:10 pm today and, at 8 pm, I can find just one news story about this. Apparently that's because this is an annual event — so everyone shrugs their shoulders and carries on.  Isn't this kind of a core thing reporters report about if they cover federal politics? Attention Americans: Your auditor cannot audit trillions of dollars worth of tax collection and spending because your federal government's books are an absolute mess — again!!!

The main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government's inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government's ineffective process for preparing the consolidated financial statements.

In addition GAO was unable to render an opinion on the 2010 Statement of Social Insurance because of significant uncertainties, primarily related to the achievement of projected reductions in Medicare cost growth. The consolidated financial statements discuss these uncertainties, which relate to reductions in physician payment rates and to productivity improvements, and provide an illustrative alternative projection to illustrate the uncertainties.

[The GAO also found] material weaknesses involving an estimated $125.4 billion in improper payments, information security across government, and tax collection activities. He noted that three major agencies-DOD, the Department of Homeland Security, and the Department of Labor-did not get clean opinions. Nineteen of 24 major agencies did get clean opinions on all their statements.