Federal Government Does Not Follow Generally Accepted Accounting Principles

A basic tenet of Generally Accepted Accounting Principle (GAAP – the holy grail of business accounting) is that expenses are recorded when they are incurred, not necessarily when they are paid. This allows an accurate snapshot of the actual value of a business at any given time that is not inflated by deferred expenses. Many businesses keep two sets of books, not to be dishonest, but to record the available resources and the total resources concurrently, but for public disclosure, all reports must be based on the principle that expenses are recorded and considered money out of the bank when they are incurred.

The Federal Government apparently, though it requires businesses to comply with this rule or face scrutiny, litigation, and fines by the SEC, does not itself hold to these standards of accounting, as a USA Today article points out:

Bottom line: Taxpayers are now on the hook for a record $59.1 trillion in liabilities, a 2.3% increase from 2006. That amount is equal to $516,348 for every U.S. household. By comparison, U.S. households owe an average of $112,043 for mortgages, car loans, credit cards and all other debt combined.

Unfunded promises made for Medicare, Social Security and federal retirement programs account for 85% of taxpayer liabilities. State and local government retirement plans account for much of the rest.

2 thoughts on “Federal Government Does Not Follow Generally Accepted Accounting Principles”

  1. Government is destined to go bankrupt for certain. Future generations cannnot pay off this debt when it becomes due in a few short years. The only logical method means to avert this tragedy if possible is through an equitable overhaul of the tax system. JVS

  2. Another falacy of our government is letting; some would be ceo and other corrupt government officials
    OK Giant Projects; and later wash thier hands of all
    guilt and ressponsibility; by saying; oops we made a
    mistake; project is not going to work lets stop it ; only after they have spent 2 billion on the space project. Then the poor American Public; is left not only with the bag; but most inportantly wonder; what
    dog ate our strong American Economy! It’s Time we awake and stop this nonsense; before we are worse than ; our counter part third world nations. We are pretty close. What about the Nuclear Plants that was a biggie too. FOUR BILLION FOR EACH AND THEN WE
    FIND OUT IT’S TOO DANGEROUS FOR THE WHOLE PLANET; OR
    HAVE WE NOT YET LEARNED OUR LESSON AFTER THE LONG ISLAND ACCSIDENT. BECAUSE BUSH WAS AGAIN TRYING TO
    REOPEN THIS NUCLER PLANTS. HOW MANY OTHER GONE BAD PROJECTS CAN YOU FIND. ARE YOU WONDERING WHERE THE
    AMERICAN MONEY IS ALL GOING? wHO IS BEHIND IN THE
    RECIEVING END OF ALL THE CASH SPENT WITHOUT ANY GOOD ENDS TO OUR COUNTRY : WE AMERICANS HAVE TO ACT BEFORE
    THERE IS NO AMERICA LEFT TO FIGHT FOR.

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