All Governments must use GAAP (Accrual) Accounting!
Jul 14, 2015
As posted on www.usaponzi.com
All governments must be required to use GAAP Accounting, i.e. Accrual Accounting, if they are making future financial commitments. By not applying the proper accounting standards for the planning, budgeting, tax assessing, and reporting; governments will often times make pension or social benefit commitments that can not be supported by the government's income stream. As Warren Buffett stated in his letter to the Washington Post in 1975, general management typically does not understand or appreciate the arithmetic of pension accounting (see Buffett on Pensions). Accrual Accounting is required for any entity that is making or receiving future financial commitments.
The U.S. Government passed the Sarbanes-Oxley Act to address corporate and accounting scandals in publicly reporting corporations. Governments should be held to similar accounting standards to avoid the kind of financial crises that Enron caused, that Greece is now having, and that the United States of America is facing but has not yet recognized.
I contend that the USAPonzi fiscal fraud is 2,000X larger than the Enron accounting fraud (see Enron on Steriods!)
I contend that the U.S. Financial Crisis is already 9X as serious as that of Greece!
Some international "policy making" organization, like the United Nations or the IMF, must establish rules for accounting standards that must be adhered to by all national governments if they are to be a trusted business partner in global commerce. We have set these rules for corporations (Sarbanes-Oxley) and we have set these rules for state and local governments (GASB) and now we must do the same thing for national governments.
I have sent 8 "Whistleblower Letters" to the Securities and Exchange Commission (indexed on the www.usaponzi.com home page) thinking that they should be motivated to at least expose the corrupt and fraudulent accounting practice of the U.S. Government but they are not inclined to fix the problem. Everyone in the United States seems to be getting near term benefit from USAPonzi so no one is motivated to fix the problem. The path of least resistance is to let the fraud continue so we can enjoy it while we can. But the U.S. is headed toward the same crunch time as is Greece but the U.S. financial catastrophe cannot possibly be shrugged off like the planet is shrugging off the Greece crisis. We are Living on borrowed money and borrowed time!
I understand that Australia, New Zealand, and many other countries have already adopted Accrual Accounting. It is really a no-brainer to do this but it does put some handcuffs on the politicians when making fiscal policy decisions. But I contend that this is required to force the U.S. ruling class to consider something other than just what it takes to get re-elected when making fiscal policy decisions.
But it is not just adopting GAAP Accounting, we must also require that national governments maintain a nominally balanced GAAP basis budget.
The absence of these rules for the U.S. Government has allowed the U.S Government to create counterfeit money. $97.1 Trillion of counterfeit money as of July 14, 2015.