December 16, 2005

Announcing the “We’re Out of Control, and Sarbanes Oxley Should Apply to Us” Winner for 2005

Other “SarBox Should Apply to Us” Candidates:

  • The Internal Revenue Service.
  • Freddie Mac and Fannie Mae (they’re supposed to be under SarBox already), but they can’t seem to be able to comply).
  • The European Union, which for the eleventh year in a row could not get a statement of financial assurance from its auditors (winner of the SarBox Candidate of the Week Award on November 18).


Before this year’s award winner is revealed, let me just say that our three other entrants made gallant attempts to earn the coveted top spot for this year.

But for sheer chutzpah, combined with impressive longevity, along with seemingly purposeful disinterest on the part of the WORMs (Worn-Out Reactionary Media, known to most as The Mainstream Media) and even The Wall Street Journal, all of whom should be screaming at the top of their lungs about this, the 2005 “SarBox Should Apply to Us” Award goes to (HT S.O.B. Alliance Member Porkopolis)



The Entire Freaking

United States


From DowJones Business Online (published in the UK):

GAO Faults U.S. Financial Reporting

WASHINGTON (Dow Jones) – The U.S. government didn’t maintain effective controls over financial reporting in the latest fiscal year, potentially skewering the accuracy of federal financial statements, a congressional investigative group found.

In a letter to President Bush and Congress, Comptroller General of the United States David Walker said government accountants found “material deficiencies” in the federal government’s financial statements for 2005 and 2004.

“The federal government did not maintain effective internal control over financial reporting…and compliance with significant laws and regulations as of September 30, 2005,” wrote Walker, who heads the Government Accountability Office (GAO).

Walker said there were three major obstacles to evaluating the latest financial statements. First, he said, there were “serious financial management problems” at the Department of Defense. Second, the federal government could not adequately account for balances between federal agencies.

Lastly he criticized the government’s “ineffective process” for preparing its consolidated financial statements.

Walker’s letter was contained in the Financial Report of the United States Government for 2005.

….. Walker also sounded a much more critical note about the country’s long-term fiscal outlook than did Treasury Secretary John Snow in his own letter.

Walker also warned that the government must engineer “significant changes” in both spending and revenue to keep long-term deficits from impairing federal resources.

It might be helpful to have a handle on what’s actually going on before we make decisions about how we should spend future tax dollars. (ya think?)

The above story, and the few others that bothered to cover Mr. Walker’s report, breezed passed the very first phrase in the very first sentence of the GAO’s media release (2-page PDF; bold and large letters are mine):

For the ninth straight year, the U.S. Government Accountability Office (GAO) is unable to provide an opinion as to whether the consolidated financial statements of the U.S. government are presented fairly, in all material respects, in conformity with generally accepted accounting principles.

The lack of interest in the opening phrase may have something to do with the year the inability to report started (assuming that prior reports were able to be issued. or were even attempted–Anyone with info on that, please e-mail me), and who was in charge at the time.

Porkopolis summed up the essence of the GAO report:

Translation: “You simply can not count on the numbers presented in the report because we don’t know WTF is going on in some of these agencies.”

A public company with a similar statement from the auditors would probably be delisted from the stock exchange sooner than you can say ‘no confidence’. (closer to “definitely,” and the punishment from the market if the stock continued to trade would be, and has been, fast and furious.–Ed.)

The fact that this situation has not been fixed during the first 4-plus years of the Bush Administration is completely, totally, and utterly inexcusable. If it’s the bureaucracy that refuses to put in the mechanisms and oversight needed for accountability and accurate reporting, fire those involved, now. If it’s administration officials that aren’t pushing hard enough, get new ones.

I say “no taxes to Uncle Sam until the government’s financial statements are auditable, audited, and fully compliant with Sarbanes Oxley.” Starting with the year ending September 30, 2006, make Don Rumsfeld, Elaine Chao, Condi Rice, and all the rest sign off on the effectiveness of the control systems and the financial statements of the departments they are in charge of, just like the CEOs of publicly-traded companies have to.

Senators and Congressmen should not appropriate ANY money for fiscal 2007 until the government’s accounting house is in order.

UPDATE: Yet another candidate, though not as deserving as Uncle Sam–the scientific community’s “peer review” process.

Dec. 17: Wizbang Weekend Carnival participant.


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