Rocks And Greenhouses
posted in General |ROCKS AND GREENHOUSES
Jonathan Karl is a reporter for CNN. Can't say that I have read much of what he writes, but he authored a good column in the WSJ the other day, “Cooking the books is an old recipe for Uncle Sam”.
There is a veritable frenzy in Washington to severly punish the Corporate giants who are guilty of fraud, theft. embezzlement, shoddy accounting, misrepresentation, and destroying the lives of many shareholders and investors. Our Congressmen and Senators are highly indignant and vow vengeance on Corporate America for all of these misdeeds. And in an election year they are riding the wave of anti-business sentiment. Mr Karl points out that our duly elected leaders in Congress are hardly strangers to creative, imaginative accounting when it suits their purpose. And the public never knows the difference. He offers several examples. I'll only cite a few.
1. Last year Congress spent $15 Billion to bail out the railroad workers retirement fund, but not a cent showed up on the books. Using a trick called “directed scoring”, they simply voted to keep it off the books. By comparison, WorldCom's $3.8 Billion overstatement of profits looks like chickenfeed.
2. A census is taken every 10 years. Last year, Congress changed the designation of “census” to “emergency” and detoured $4.5 Billion out of the operating budget into an emergency bill. Just change the label – but of course that's not shady accounting —right?
3. Consider the Medicare and Social Security Trust Funds. Congress sets up these funds and then borrows heavily from them with no re-payment. The liabilities run into the trillions. But you will never find the trillion dollar liabilities on the books. The GAO Director says, “How can the federal Government pretend that a trillion dollar liability doesn't exist. Easy – just use off-the-books accounting. Sound familiar Enron??
4. Looking at the Executive branch, for the past 5 years, the GAO has refused to certify that Federal agencies are following generally accepted accounting principles. Due to slipshod accounting, GAO was unable to provide assurance that the financial statements were fairly presented. Doesn't that make you feel good??
5. As far back as 1985, Budget Director David Stockman said, “We have increasingly resorted to squaring the circle with accounting gimmicks, evasions, half-truths and downright dishonesty in our budget numbers”. Doesn't look like much has changed inside the beltway in 15-17 years.
To our Congressional leaders we say, “You are right to act in behalf of thousands of shareholders and investors who have been victimized by flim-flam accounting”.
But how about the millions of just plain citizens, Senators?? By what accounting standards do you judge the accused?? Whose greenhouse should be under the rock assault??