According to the GAO the major accounting problems included:
1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.
I was not particularly surprised that the DOD was the worst offender considering their new slogan "What some call fraud, others call good business." The military-industrial complex has been stealing trillions through illegal bid rigging, kickbacks, and procurement fraud for years. The GAO goes on to say that an estimated $125.4 billion in improper payments, information security across government, and tax collection activities were detected. This is generally accounting-speak for massive fraud with nobody really knowing where the money really went.
Another interesting tidbit from the report, which should not come as a surprise to anyone, was that the GAO was not able to sign off on the 2010 statement on Social Security. The obvious reason is that Social Security is nothing more than a bookkeeping entry with no trust fund. Not even Enron's auditor Aurthur Anderson would have the balls to attest to the accuracy of the mythical Social Security trust fund. But I love it how politicians herd the sheep to the financial slaughterhouse by insisting Social Security is solvent and a promise to future generations. The only promise, of course, is that you will likely starve to death relying on Social Security to provide you with any retirement.
The only question left to ask is how long will it take for US bond holders to see that that they have lent money to a fraudulent reporting entity, engaged in a massive shell game of debt and money printing? That is probably a question for the Chinese to be asking themselves right now. Got gold?
Black Swan Insights