Oversight Subcommittee to Probe Government’s Financial Books, Examine Real Deficit

Government’s financial statements show total deficit in Fiscal Year 2010 to be twice as large as advertised

WASHINGTON, D.C. – Oversight Subcommittee Chairman Todd Platts, R-Pa., wants to examine the real size of the deficit when taking into account private sector accounting standards, and ask the nation’s top audit and financial management officials how we can get the government a clean financial bill of health. This week the Government Organization Subcommittee will look at the Fiscal Year 2010 Consolidated Financial Statements of the U.S. Government. The report shows that when using accrual based accounting the deficit for FY 2010 was $2.08 trillion rather than $1.294 trillion. Yet again, the government was unable to get an unqualified opinion on its financial audit.

The Consolidated Financial Statements are prepared annually by Treasury and audited by the Government Accountability Office. As has been the case since the first statements were prepared in 1996, GAO was unable to render an opinion as to whether the underlying information is reliable. The primary reasons include the inability of certain components of the Department of Defense to produce auditable statements, problems with reconciling transactions among Federal agencies, difficulty accounting for government property and equipment and the lack of effective financial management systems across government.

While typical government budget reports use cash-based accounting, the numbers in the consolidated financial statements are reported on an accrual basis, which is the type of accounting used by U.S. businesses and state and local governments. Accrual accounting presents a more accurate picture of the position of an entity over time, taking into consideration the future implications for current actions. The hearing is the second in a series on federal financial management. The first featured testimony from the members of the Federal Accounting Standards Advisory Board Task Force on improving the reports.

Information for the hearing is below. The hearing will be posted online at https://oversight.house.gov later in the day.

Title: A Look at the FY2010 Consolidated Financial Statements of the U.S. Government

Date: Wednesday, March 9, 2011

Start Time: 9:30 a.m.

Location: Room 2247 Rayburn House Office Building. (NEW LOCATION)

Witnesses:

• The Honorable Gene L. Dodaro, Comptroller General of the United States, Government Accountability Office

• The Honorable Richard L. Gregg, Fiscal Assistant Secretary, Department of the Treasury

• The Honorable Daniel I. Werfel, Controller and Director of the Office of Federal Financial Management, Office of Management and Budget

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