The Daily Bear (aka The Ostrich Head) has, through perusing thousands of audit reports, selected the most hideously corrupted company in the world. Here are a few extracts of the 26 page report:
Material weaknesses discussed later in our report continued to (1) hamper the [company]'s ability to reliably report a significant portion of its assets, liabilities, costs, and other related information; (2) affect the [company]'s ability to reliably measure the full cost as well as the financial and nonfinancial performance of certain programs and activities; (3) impair the [company]'s ability to adequately safeguard significant assets and properly record various transactions; and (4) hinder the [company] from having reliable financial information to operate in an efficient and effective manner.
• Certain material weaknesses in internal control over financial reporting and other limitations on the scope of our work resulted in conditions that continued to prevent us from expressing an opinion on the accompanying consolidated financial statements for the fiscal years ended September 30, 2009 and 2008.
Because of the [the company]'s inability to demonstrate the reliability of significant portions of the its accompanying consolidated financial statements for fiscal years 2009 and 2008… we are unable to, and we do not, express an opinion on such consolidated financial statements.
As a result of these limitations, readers are cautioned that amounts reported in the consolidated financial statements and related notes may not be reliable.
The material weaknesses that contributed to our disclaimer of opinion on the consolidated financial statements were the [company]'s inability to
• satisfactorily determine that property, plant, and equipment and inventories and related property were properly reported in the consolidated financial statements;
• ensure that the [company]'s consolidated financial statements were (1) consistent with the underlying audited entities’ financial statements, (2) properly balanced, and (3) in conformity with GAAP; and
• identify and either resolve or explain material differences between certain… changes in cash balance… and underlying financial information and records.
Due to the material weaknesses and other limitations on the scope of our work discussed above, there may also be additional issues that could affect the consolidated financial statements that were not identified.
To make the fiscal years 2009 and 2008 consolidated financial statements balance, [the company] recorded net increases of $17.4 billion and $29.8 billion, respectively, to net operating costs, which it labeled “Unmatched transactions and balances.” An additional net $8 billion and $11 billion of unmatched transactions were recorded in costs for fiscal years 2009 and 2008, respectively. [The company] is unable to fully identify and quantify all components of these unreconciled activities.
It goes on and on and on. I mean, this is worse than Enron right? What company, seriously, could possibly get away with this and pull the wool over both government and shareholders' eyes?
And don’t tell me you actually guessed this is the US government. I mean, this is the fair and transparent administration of Barrack Obama we're talking about.
But yes, sadly, this is from the official audit of the US government by the Government Accountability Office.
And you wonder why the SEC can't find guys like Madoff? Here's what the GAO had to say about the SEC:
As of September 30, 2009, SEC did not have effective internal control over financial reporting. We identified six significant deficiencies that collectively represented a material weakness in SEC’s internal control over financial reporting.
In other words, the regulator that's supposed to weed out poor reporting and governance can't even get its own house into order!
To clarify the accounting text in the Government Accountability Office Auditor's Report (or, rather, the non-report), the Whitehouse issued A Citizen’s Guide to the Financial Report of the United States Government.
For easy consumption, the Whitehouse managed to reduce a 26 page report into 14 pages. At least it does discuss transparency (once):
The website, Recovery.gov, is the centerpiece of the President’s commitment to transparency and accountability. Recovery.gov features information on how the Act is working, tools to help hold the government accountable, and up-to-date data on the expenditure of funds.
Oops. That's somewhere between an untruth and a straight out lie!
The Citizen's guide also had a look at the problem of the horrendous lack of controls and balances -- in the securities market! In fact, the citizen's copy totally missed out the bulk of the GAO report.
Specifically, it missed the 27 pages (of a total of 28) that stated why the GAAP reported budget deficit of just $1.4 trillion was a complete sham.
Fair enough I guess. You don't want concerned citizens finding out about this sort of thing.
Fortunately, you can't fool everyone all the time, and the guys at Shadow Stats who take government figures and compare them to reality found that the actual GAAP loss was $4.3 trillion.
The reason I bring this up is the number of tea parties held recently. For those of you who don't know the history of the Boston Tea Party, it basically marked the end of low-tax British Government Regime and the institution of the high-tax US Government Regime.
Thanks to the GAAP loss, which is in essence a deferred tax, and to the corrupt and absurd policies that created it, Americans really should be holding their tea parties the day after Christmas!!
Cheers,
Peter.
