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FASAB's creative accounting

April 28, 2016

Did you know that the federal government does not follow the same accounting standards that they require major corporations to follow? It follows rules set by the Federal Accounting Advisory Board (FASAB).

Did you also know that Social Security and Medicare benefits our elected officials have promised seniors are not reported as liabilities of the federal government? The government's reasoning for maintaining these tens of trillions of dollars of liabilities off its balance sheet is government officials believe that no benefits are owed beyond the checks that are currently written.

In July 2007 when FASAB was debating whether this massive debt should be reported, the posted newsletter from the meeting stated that some board members doubted whether "the best way to portray the federal obligations (for Social Security and Medicare), responsibilities, or liabilities is the traditional balance sheet."

The newsletter went on to say, "The most important thing for many members is to portray government's long-term commitments in a creative way."

It saddens me to think that instead of the federal government leading the way toward truthful and transparent financial reporting, it is leading the way toward "creative accounting."

 

 

 
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