Oversight Subcommittee Chaired by Platts Examines U.S. Government's Financial Reports

Report shows total deficit in Fiscal Year 2010 to be nearly twice as large as advertised

WASHINGTON, D.C. – When using private sector accounting methods, our nation’s deficit for Fiscal Year 2010 was an estimated $2.08 trillion rather than $1.294 trillion, it was learned Wednesday at a hearing of the Subcommittee on Government Organization, Efficiency and Financial Management, chaired by U.S. Congressman Todd Platts (PA-19). The Subcommittee examined the Fiscal Year 2010 Consolidated Financial Statements of the U.S. Government as part of its continuing effort to strengthen financial management and overall efficiency of federal departments and agencies.

The Consolidated Financial Statements are prepared annually by the U.S. Department of the Treasury and are audited by the Government Accountability Office (GAO). 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 of current actions such as ongoing pension obligations.

This hearing sets the stage for the Subcommittee’s oversight of Executive Branch financial management and accountability issues throughout the 112th Congress.  Future hearings will include examining improper payments made by the federal government, which are currently estimated to be $125 billion annually, and further analysis of a GAO study released last week which identified dozens of instances where unnecessary duplication exists in federal programs, costing taxpayers billions of dollars annually and fostering an inefficient delivery of government services.