Adam's blog pointed me to this description of the switcherooo in US government accounting. In brief, the USG has been using cash accounting, which means they count up the cash coming in, and going out, and that's their profit & loss. Yet, the SEC mandates accrual accounting for all companies of any note. The difference is pretty substantial. In accrual accounting, you also include all your *future* income and liabilities. This of course means that on paper at least you can't play games with this year's numbers at the cost of next year's numbers.
Now, it seems that some rebels in Congress got the US treasury to at least present some rough accrual numbers this year. So we can see the difference. Well, it ain't good. Actually, it's unbelievable. So sit down, and prepare to expire.
On a cash basis the USG has incurred an extra debt of about $412 bullion, for the fiscal year of 2004. But, on an accruals basis, the number is $11.087 trillion dollars.
That's twenty seven times bigger than the popular, published number, if these numbers are to be believed. Can you say Enron on a global economic scale?
See the post, and the UST's hopefully authoritive report for the details. I can't cope, but luckily I don't need to. All you American Accountants out there.... It's over to you: Tell Mr Scrivener he's wrong! You owe it to your country.Posted by iang at December 30, 2004 12:21 PM | TrackBack