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Are you a Citizen Intermediary? Then read the USA CAFR 2011 & what the GAO Audit thinks of it. (Then relay the message, because MSM won’t!)

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This post is a little rough.  I’ll revisit it in a day or so, wanted to get the links up. It’s pretty much self-serve although I have a few paragraphs of what it’s about.


I actually found where the government admits that it doesn’t REALLY intend its financial statements of cumulative net worth ,etc.** for everyone, just internal control, analysts and citizen intermediaries like the news media.

Then in the next breath it also says, it wants every American citizen to know, which must be why they are sinking their (not properly reconciled and monitored) funds into things like federal clearinghouses on marriage, fatherhood, domestic violence, to promote abstinence and expand welfare participation through the child support system, etc. . . . . and not into distributing and publicizing the fact that these (embarrassing, to the USA) reports exist.

And why this a condition of graduating from high school isn’t being able to get on a computer and find the CFR of one’s own high school district (probably a “Unified” school district), and a diagram of local government which is usually in the front of every CAFR.

(**which the GAO disclaims uttering any opinion on anyhow, because there are too many problems with the underlying reports from, oh, ca. 35 federal agencies…)


Get used to words like “billions,” “trillions” and “material weaknesses” etc.

USA CAFR 2011, and why the GAO disclaims to Issue an Opinion on it…

Here’s the website for some answers:

http://www.fms.treas.gov/fr/index.html  The CAFR can be seen there, but read the guide first.

Financial Report of the United States Logo  (they mean CAFR here….)

2011 Financial Report of the United States Government

HTML Format, by SectionNew
In order to make this Financial Report of the United States Government more useful and transparent to our readers, we have included HTML versions of each section, which allow readers to navigate through the Report much more quickly and easily, view the source data for the Report’s charts and graphs, and access other related sites and information.

Guide to Understanding the Annual Financial Report of the United States Government Exit FMS Web site

(the first thing the guide tells the reader is that it’s been pre-empted by another guide….  However, it does CLEARLY tell us who the USA feels it’s important to publicize the CAFR to — and only certain “Citizen Intermediaries” are really on the hit list.
This also confirms that media IS provided with copies of this.  They just aren’t talking about it much!
As it starts out:


The U.S. government is the largest, most diverse, most complex, and arguably the most important entity on earth today. Useful, timely, and reliable financial and performance information is needed to make sound decisions on the current results and future direction of vital federal programs and polices.

The Department of the Treasury, in coordination with the Office of Management and Budget, annually prepares the Financial Report of the United States Government, hereafter referred to as the Consolidated Financial Report (CFR). {{I have been calling them, and states usually do, “CAFRs”}}

The CFR is a general-purpose report of accountability intended internally for members of Congress, federal executives and federal program managers, and externally primarily for citizens and citizen intermediaries who are interested in and have a reasonable understanding of federal government activities and are willing to study the information with reasonable diligence. Citizen intermediaries include members of the news media, analysts, and others who analyze and interpret for the general public the more complex and detailed information in the CFR.

“study the information with reasonable diligence” is fair enough.  Publicizing it first to the News Media — and letting them and others “analyze and interpret” without saying, aloud, in print, and regularly “CFR” or providing the links to it so others willing to exert “reasonable diligence” (like they probably do at their own jobs) — is less than helpful, and no accident.  However, now the word is getting out.

The goal of the CFR, and the subject of this guide, is to make available to every American a comprehensive overview of the federal government’s finances.

I am sure that’s why it’s never mentioned during grades 9-12 (or earlier) by school districts throughout the country that CFRs exist and every school district has one.  But I guess they’re strapped with teaching kids basic math and reading , and convincing them there’s a reason to learn it..

I finally saw Catherine Austin Fitts refer to this in one of her writings; apparently people are so used to dealing with it in government they figure Citizens just automatically know about it!  And yet every CAFR (CFR) normally gives a beautiful flowchart and diagram of government units.  It’s a wonderful source of learning….

As described in the CFR, significant issues regarding the reliability and presentation of the federal government’s financial information still need to be addressed. For example, the Department of Defense’s current financial management problems present a significant impediment to our being able to express any opinion on the federal government’s consolidated financial statements. Also, additional transparency is needed in connection with intragovernmental debt, on-budget deficits, and the large and growing per capita and intergenerational burden associated with the federal government’s growing liabilities and unfunded commitments. At the same time, in its current form, the CFR offers certain valuable insights into the overall financial operations, condition, and financial outlook of the federal government. This information is becoming increasingly more useful as the nation’s accounting and reporting issues are resolved.

Government Accountability Office Report

GAO’s report tells readers whether or not, or to what extent, they can rely on the information provided in the CFS. GAO conducts its audit of the CFS in accordance with U.S. generally accepted government auditing standards, obtains and evaluates evidence, and provides a formal written conclusion on whether the financial statements taken as a whole are presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles. The MD&A, stewardship, and supplemental information in the CFR are not required to be audited.

The auditor may express an unqualified opinion, a qualified opinion, or an adverse opinion, or disclaim an opinion on the fairness of the financial statements taken as a whole. In an unqualified opinion, the auditor states that the information in the financial statements and accompanying notes is presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles. A qualified opinion discloses exceptions to an unqualified opinion, such as inadequate disclosures or selected nonconformities with U.S. generally accepted accounting principles. However, in a qualified opinion, the exceptions are not considered material enough to affect the fairness of the statements taken as a whole. Exceptions considered too serious or pervasive to justify a qualified opinion result in an adverse opinion, which states that the financial statements taken as a whole are not presented fairly, in all material respects, in conformity with U.S. generally accepted accounting principles. The circumstances related to such exceptions are also disclosed in the auditor’s report.

A disclaimer of opinion may result when the auditor is unable to obtain sufficient information upon which to base an opinion. The circumstances related to a disclaimer are described in the auditor’s report. For example, GAO disclaimed an opinion on the fiscal year 2004 CFS because of the effects of persistent material weaknesses in the federal government’s internal control and certain accounting and reporting practices that limited the scope of work that could be performed, a major element of which relates to the Department of Defense’s continued inability to undergo an audit of its financial statements.


GAO’s report also includes an opinion on whether the federal government had effective internal control over financial reporting and over compliance with laws and regulations. It also reports on any identified significant matters of noncompliance with selected provisions of applicable laws and regulations.

Now that you have a briefer (and the website to find out more about USA itself), I’m re-posting the link to the GAO report for year-end 2011, in which there is a whole lotta “disclaiming of an opinion” going on.
I had, indeed, excerpted paragraphs from this GAO report (chiefly the eyeopening ones) with a view to teaching about the issues in general.  However (mea culpa), that information was lost in refreshed screens, changing where I was accessing the internet, versions — whatever.  Obviously someone would have to issue a disclaimer of opinion on my blogging.
The Part III post (the last one) got off into posting segments from U.S.C. Title 31 (Money and Finance) and Section 331 (reports), which listed 91 different types of trust funds held under a certain section (referenced in the report below — in a footnote, I think it was).
However –here’s the link again, and I really do encourage you to review this here; there is certainly no harm in exposing onesself to the sentences inside.  It’s not that long, just dense.
Pay attention to the Appendixes and bulleted points if too much prose in a row is troublesome.
Veterans’ Day is now over (my time zone) — and if nothing else, for the sake of those in all the wars, and for God’s sake, let’s get a grip on what’s being done by the government we do commerce with.  Remember the example of City of Industry, California from last post — a government inplace is going to vote more authorities and entitites to raise more funds, and sell off the debt.
The words “trillion” and “billion” show put a lot below.  You will see, overall, they are saying, we don’t know, and we don’t know what we don’t know — for these reasons.   Whose future is this?
MOST of all, it’s an answer to the continual raise more revenues, cut more services.  I believe that when we see what’s really out there (and this is ONLY the Federal Government’s statement — not all the kazillion entities under neath, which are themselves also able to invest and earn some ROI on their various projects, which is what FUNDS tend to do) we will be less amenable to extortion.  I hope.

~ ~ C.~ ~

United States Government Accountability Office’s statements about the Executive Branch of the United States Government (including 35 federal entities)

 I want us to see what an auditor’s report has to say on the highest unit of government in the USA, as of 2011, I guess:

United States Government Accountability Office Washington, DC 20548
The President (i.e., President Obama…, i.e., of the United States of America)
The President of the Senate
The Speaker of the House of Representatives

The Secretary of the Treasury, in coordination with the Director of the Office of Management and Budget, is required to annually submit financial statements for the U.S. government to the President and the Congress.  GAO is required to audit these statements.1 **

…….An audit of financial statements and a corporation (or government) is one thing; the financial statements themselves, another.  Just for the record, this is the AUDIT.

The Office of Management and Budget (OMB) and the Department of the Treasury (Treasury) have identified 35 federal entities23 that are significant to the U.S. government’s consolidated financial statements, consisting of the 24 CFO Act agencies, several other federal executive branch agencies, and some government corporations (35 significant entities). Our work was performed in coordination and cooperation with the inspectors general and independent public accountants for these 35 significant entities to achieve our respective audit objectives. Our audit approach regarding the accrual- based consolidated financial statements focused on determining the current status of the material weaknesses that contributed to our disclaimer of opinion on the accrual-based consolidated financial statements and the other material weaknesses affecting internal control that we had reported in our report on the consolidated financial statements for fiscal year 2010.24

We also separately audited the financial statements of certain federal entities and federal agency components including the following:

• We audited and expressed an unqualified opinion on the Internal Revenue Service’s (IRS) fiscal years 2011 and 2010 financial statements.25 In fiscal years 2011 and 2010, IRS collected about $2.4 trillion and $2.3 trillion, respectively, in tax payments and paid about $416 billion and $467 billion, respectively, in refunds to taxpayers. For fiscal year 2011, we continued to report material weaknesses that resulted in ineffective internal control over financial reporting. In addition, we continued to find a significant deficiency in IRS’s internal control over tax refund disbursements, which resulted in the payment of erroneous tax refunds to taxpayers. Our tests of IRS’s compliance in fiscal year 2011 with selected provisions of laws and regulations disclosed one area of noncompliance. We also found that IRS’s financial management systems did not substantially comply with the requirements of FFMIA.

We considered the Department of Defense’s (DOD) assertion in the DOD Agency Financial Report for Fiscal Year 2011 regarding its noncompliant financial systems and lack of reasonable assurance that internal controls over financial reporting were effective. In addition, in the DOD Inspector General’s fiscal year 2011 report on internal control over financial reporting, the Inspector General cited material weaknesses in several areas including (1) property, plant, and equipment; (2) inventory and operating material and supplies; (3) environmental liabilities; (4) intragovernmental eliminations; and (5) material amounts of unsupported accounting entries needed to prepare DOD’s annual consolidated financial statements.

“At $275 Billion, Medicaid was by far the largest part of federal grants to states.  however, even when Medicaid is removed, HHS is still the largest disburser of grants to states” (well, HHS also handles welfare, duh!……)


What GAO Found

Federal outlays for grants to state and local governments totaled more than $606 billion in fiscal year 2011. Over the last three decades, these grants have consistently been a significant component of federal spending, but the focus of this spending has changed over time. For example, during this period the proportion of federal outlays to state and local governments dedicated to Medicaid grants more than tripled, rising from 2.4 percent of total federal government outlays in 1980 to 7.6 percent in 2011. The increase in federal outlays for Medicaid and other health-related grant programs was offset by an approximately equivalent decrease in grants to state and local governments targeted for other areas such as transportation, education, and regional development.

GAO’s prior work and the work of others have also shown that the number of federal grant programs directed to state and local governments has generally increased over the last three decades. However, definitively determining the number of such grant programs presents difficulties. The lack of consensus on a methodology for how to define and count grant programs and data limitations in the Catalog of Federal Domestic Assistance further complicates this effort.

GAO and federal inspectors general (IG) have previously reported on a variety of management challenges involving federal grants to state and local governments, many of which can be grouped into the following five topic areas:

  • Challenges related to effectively measuring grant performance: A lack of appropriate performance measures and accurate data can limit agencies’ ability to effectively measure grant program performance. This can affect the ability of federal agencies to ensure that grant funds are effectively spent.
  • Uncoordinated grant program creation: Numerous federal grant programs have been created over time without coordinated purposes or scope. This can result in grants management challenges such as unnecessary duplication across grant programs and unnecessary overlap in funding.
  • Need for better collaboration: A lack of collaboration among grant program participants can impede effective grant implementation in areas such as knowledge sharing and defining clear leadership roles.
  • Internal control weaknesses: When internal controls in grants management and oversight are weak, federal grant-making agencies face challenges in achieving program goals and assuring the proper and effective use of federal funds. Effective controls can help to avoid improper grant payments.
  • Lack of agency or recipient capacity: Capacity reflects the organizational, financial, and human capital resources available for the implementation of grant programs. A lack of capacity can adversely impact an agency’s or recipient’s ability to manage and implement grant programs.

Why GAO Did This Study

Grants are a form of federal assistance consisting of payments in cash or in kind for a specified purpose and they represent an important tool for achieving national objectives. They vary greatly, including in the types of programs they fund, the methods they use to allocate funds to recipients, and the amount of discretion they give to the grant recipient on how the funds are spent. The Office of Management and Budget (OMB) has previously estimated that grants to state and local governments represent roughly 80 percent of all federal grant funding, with the balance going to recipients such as nonprofit organizations, research institutions, or individuals. In a time of fiscal constraint, continuing to support the current scope and breadth of federal grants to state and local governments will be a challenge.

In response to a request, this report (1) provides information regarding the amount of grant funding to state and local governments for fiscal year 2011, how such funding has changed over the last three decades, and difficulties related to identifying the exact number of such grant programs; and (2) identifies selected grants management challenges that have been identified in previous work by GAO and federal IGs over the last several years. Towards this end, GAO analyzed data from OMB and the Catalog of Federal Domestic Assistance and conducted a review of previous reports from GAO and federal IGs.

What GAO Recommends

GAO is not making any recommendations in this report.

For more information, contact Stanley J. Czerwinski at (202) 512-6806 orczerwinskis@gao.gov or Beryl H. Davis at (202) 512-2623 or davisbh@gao.gov.

Written by Let's Get Honest|She Looks It Up

November 12, 2012 at 9:58 pm

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  1. […] Are you a Citizen Intermediary? Then read the USA CAFR 2011 & what the GAO Audit thinks of it. (… [*MainStreamMedia] […]

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