A month ago, the federal government put out the real news about its financial condition as of September 30, 2010, the most recently ended fiscal year. Predictably, it was barely noticed — partially because the establishment press is disinterested in such things, and partially because of the report’s exquisitely timed release the week before Christmas.

For 14 years, a law with a poorly predictive name — the Federal Financial Management Improvement Act of 1996 — has required that Uncle Sam publish consolidated financial statements using generally accepted accounting principles (GAAP), and that the Government Accountability Office (GAO) report on those statements. For the fourteenth consecutive year, the GAO was unable to render an opinion on them, because “weaknesses in federal financial management” prevented it from doing so.

Specifically, the main obstacles to a GAO opinion were: (1) serious financial management problems at the Department of Defense 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.

http://pajamasmedia.com/blog/uncle-sams-dangerous-deterioration/