Press Release

For Immediate ReleaseContact:  Jim Campi
April 1, 1998  

           (202) 467-5300


Washington, D.C. – Citizens Against Government Waste (CAGW) today expressed considerable concern over the results of an unprecedented audit of 24 executive branch agencies and departments.  The audit report, entitled Consolidated Financial Statements of the United States Government, gives the public an unique glimpse into the financial practices of the federal government.

“The audit reveals in unmistakable terms the chaotic nature of the federal bureaucracy,” remarked CAGW President Thomas A. Schatz.  “As most Americans have long suspected, no one is minding the government store.”

The 66-page audit report, mandated by the 1994 Government Management Reform Act, is the result of two years of intensive study by federal agencies and the General Accounting Office.  The report discloses that few agencies can stand the scrutiny universally required of private sector businesses.  In fact, of the 24 agencies whose books were examined, only 7 received passing marks.

“Although several agencies have made remarkable progress toward financial accountability, most of them don’t seem to take their obligations to taxpayers seriously,” commented Schatz.  “There is no excuse for the ineptitude and carelessness displayed by the Departments of Justice, Housing and Urban Development, Commerce, and other cabinet-level departments and agencies.”

Perhaps the most startling revelation gleaned from the report was the negligence displayed by Department of Defense (DOD).  According to the report, “The Army could not substantiate $132 billion of reported property, plant, and equipment.”  The Navy was nearly as culpable, underestimating the value of its property and equipment by almost $10.8 billion.  Among the items DOD could not account for were 2 harbor tugs worth $875,000 each, 15 aircraft engines, including 2 priced at $4 million apiece, and a surface-to-air missile launcher valued at $1 million.

“Every defense dollar wasted adversely affects our national security,” said Schatz.  “At a time when some military personnel live in substandard housing and rely on food stamps, it’s an outrage that DOD has not spent more time filling their financial officers in on the location of valuable materiel.”

In addition, the audit report failed to list several key government assets – among them our national parks.  It also neglected the mother of all liabilities – future Social Security benefits.  In fact, the report suggested that the federal government could simply eliminate its Social Security liability by cutting future benefit payments.

“The suggestion that it is politically feasible to cut Social Security benefits is absurd,” Schatz stated.  “The report is a frank acknowledgment that the government remains unprepared for the impending bankruptcy of the Social Security trust fund in 2029.”

Despite his concerns over the audit results, Schatz noted that there is some reason for optimism.  “If the Internal Revenue Service can pass muster under GAO’s stringent requirements, then there may be hope for other departments and agencies,” Schatz remarked.  “In the end, producing credible financial reports will lead to performance indicators that are also credible.  Only then will taxpayers be able to determine how well – or poorly – their money is being spent.”


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