U.S. Financial Reports Faulted

By Stephen Barr Washington Post Staff Writer Saturday, April 1, 2000; Page A02

The government released its third, comprehensive financial statement yesterday, but a significant chunk of the data were far less current than the trustee reports on Social Security and Medicare issued the day before.

If the government keeps publishing inconsistent data in such reports, it could undermine public confidence in federal programs, warned Comptroller General David M. Walker, the head of the General Accounting Office (GAO).

"Frankly, I think it makes the government look foolish," Walker said at a House hearing. "We ought to have consistent information so we are not confusing the public."

The trustee reports, for example, showed Social Security would remain solvent through 2037, while the government's fiscal 1999 financial statement said 2034. The trustees said Medicare's trust fund would hold up until 2023, eight years longer than the government's financial statement predicted.

The Social Security and Medicare trustees, who face an annual deadline of April 1 for producing their reports, used data compiled as of Jan. 1, 2000. The administration, which has a congressionally set deadline of March 31 for the government's consolidated financial statement, used Jan. 1, 1999 data for Social Security and Sept. 30, 1999 data on Medicare to describe program contributions and expenditures.

Walker said the GAO, the Treasury Department and the Office of Management and Budget (OMB) are talking about how to get the government statement in harmony with the trustee reports.

As in past years, the GAO said widespread accounting discrepancies denied the government a "clean opinion" on its comprehensive financial statement. Walker said the majority of the government's financial systems cannot provide reliable data for managing day-to-day operations.

"Problems with fundamental record keeping and financial reporting, incomplete documentation and weak internal control, including computer controls, continue to prevent the government from accurately reporting a significant portion of its assets, liabilities and costs," Walker said.

Rep. Stephen Horn (R-Calif.), chairman of the House Government Reform subcommittee on government management issues, said he was "disheartened, but not surprised," by Walker's findings.

Horn noted that auditors examining the 1999 ledgers at the Internal Revenue Service found an instance in which the IRS issued a $15,000 tax refund to a person who owed nearly $350,000 in back taxes.

Congress required the government to start producing an audited, consolidated statement in 1994, something that most private-sector companies have been doing for decades. Walker, Horn and OMB comptroller Joshua Gotbaum agreed the government has made progress.

Thirteen of the top 24 federal agencies won "clean opinions" on their financial statements this year, one more than the previous year, Gotbaum said. More agencies are meeting their statutory deadline to publish statements and the quality of the financial statements has improved, he said

http://www.washingtonpost.com/wp-dyn/articles/A55862-2000Mar31.html

-- Martin Thompson (mthom1927@aol.com), April 01, 2000