Congressional watchdog again unable to determine if U.S. financial statements are reliable

(The Center Square) – A Congressional watchdog said Friday that it was again unable to determine if the federal government’s consolidated financial statements were reliable.

The U.S. Government Accountability Office, which is Congress’s research arm, said it was hampered by “serious financial management problems at the Department of Defense,” problems in accounting for transactions between federal agencies, weaknesses in the process for preparing the statements and inadequate support for the cost of loan programs from the Small Business Administration and Department of Education.

“Congress and the Administration need reliable and complete financial information, within each agency and across the government as a whole, to govern effectively and efficiently,” U.S. Comptroller General Gene Dodaro said in a statement. “Also, the federal government continues to operate on an unsustainable fiscal path, jeopardizing the country’s long-term position to face domestic and international challenges.”

The Government Accountability Office was also unable to provide an opinion on the federal government’s fiscal year 2023 and 2022 financial statements. In fact, it’s been a long-running problem with the Pentagon being a primary culprit.

The GAO report said that the Pentagon has made progress but noted that “DOD has acknowledged that achieving a clean audit opinion will take time.”

The Department of Defense didn’t immediately respond to questions about its work.

David Walker, the former Comptroller General of the U.S., told The Center Square that it could still take “several years” for the Department of Defense to get a clean audit. But even a clean audit doesn’t mean everything is well within the federal government, said Walker, an advisory board member for Main Street Economics.

Walker said the federal government’s total financial hole – total liabilities plus unfunded social insurance promises – increased by about $6.5 trillion to a total of about $130 trillion. He said that total debt often goes unnoticed.

The U.S. debt of $34.2 trillion, which is subject to the debt ceiling, isn’t a full accounting, Walker said.

“That’s the amount of ice that you see above the water,” he said. “What you don’t see is what’s below the water.”

Main Street Economics has advocated for a fiscal commission that could help Congress put the nation on a more sustainable financial path.

The GAO report noted the debt-to-GDP ratio was about 97% at the end of fiscal year 2023.

“Under current policy and based on this report’s assumptions, it is projected to reach 531 percent by 2098,” according to the report. “The projected continuous rise of the debt-to-GDP ratio indicates that current policy is unsustainable.”

The report said that the Statement of Long-Term Fiscal Projections showed that the present value of “total noninterest spending, over the next 75 years, under current policy, is projected to exceed the [present value] of total receipts by $73.2 trillion.”