Sarah Johnson's article about the IRS's faulty internal controls is hardly the first time we've seen such a report. Indeed, it wasn't long ago that the GAO criticized the SEC itself for needing to do more to improve its internal controls. Our most recent article on that was in April, but the GAO was also complaining about the SEC's internal controls in November,
July, and May of last year.
Were the SEC and IRS public companies, they might be delisted by now.
Back in 2002, I reported that Government Accountability Office Comptroller David Walker — who had been unable to express an opinion on the federal government's annual report for four years running — was optimistic about support from President Bush, the first U.S. president with an MBA. "[He] has made it very clear that he wants to improve how government does business," Walker told CFO. (See "Federal Offenses".)
So much for that. Not to pile on Bush, who hasn't had a very good month, but with another four years gone by, many agencies are still spending millions simply to cobble together passable statements. That, Walker told us in 2002, means they ignore underlying accounting problems that cost billions and undermine the public trust. The president's own 2002 Management Agenda noted that 13 Federal programs alone were responsible for $20.7 billion in erroneous benefit and assistance payments.
In the past two weeks, Corporate America has seen somewhat surprising hints that Senator Charles Schumer (D-NY), who sits on the Senate Finance Committee, and Congressman Barney Frank (D-MA), who will likely chair the House Financial Services Committe, both appear open — even actively interested — in legislative fixes to Sarbox section 404.
If they do reopen that legislation, perhaps they should add a clause that says the original version applies in full to government agencies.
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