The federal government’s general fund can’t pass an audit
The federal government has an audit problem. Not that it doesn’t audit its own operations – it does, frequently. But it has a difficult time passing such audits, as was the case recently with a Government Accountability Office examination of the federal government’s General Fund.
According to the GAO, the General Fund:
…reports activity and balances, and includes components like cash inflows (deposits) and outflows (withdrawals). They also include other important financial metrics, such as the U.S. budget deficit.
The great pandemic year of 2020 resulted in a huge amount of cash going in and out of the General Fund. But mostly out:
The General Fund inflows and outflows that affect the deficit resulted in a $3.1 trillion budget deficit—the largest recorded federal deficit in history.
As it does every year, the GAO audited the General Fund. The result:
…we were unable to provide an opinion (referred to by auditors and other professionals as a “disclaimer of opinion”). This means that the schedules were not auditable and the amounts reported may not be reliable.
What’s the big issue with Uncle Sam’s books?
One limitation, among several we identified, relates to the fact that transactions are not easily tracked in enough detail as they are processed through the various General Fund information technology (IT) systems. This means that as auditors, we are unable to determine if they were properly recorded in the Schedules of the General Fund. This is mainly because many transactions are summarized and recorded as a group total instead of individually and detail transactions cannot readily be traced to the General Fund schedules.
All the money is there, the GAO says. It’s not lost or stolen. The problem is there’s not enough detail – and that prevents the watchdog from accurately assessing the fed’s books.
And having accurate books that show exactly where the money is going is for government accountability.