Pursuant to the Chief Financial Officers Act of 1990, as amended by the Federal Financial Management Act of 1994 (a title of the Government Management Reform Act of 1994), the Inspector General of each covered federal agency is required to audit and publish the financial statements of their agency.
The largest agency, the Department of Defense, has failed to comply with the requirement for audited financial statements since the requirement went into effect in the mid-1990’s and has reported significant unsupported adjustments to balance its books. In fiscal 1999, DOD reported $2.3 trillion of undocumentable adjustments to balance its books. In fiscal 2000, DOD reported $1.1 trillion of undocumentable adjustments to balance its books. For fiscal 2001, DOD declined to report the amount of undocumentable adjustments used to balance its books.
The source of the $1.1 trillion undocumentable adjustments to balance DOD’s books in FY 2000 used for the $1.1 Trillion Missing Money calculator is from the Department of Defense Agency-Wide Financial Statements Audit Opinion – A Memorandum for Under Secretary of Defense (Comptroller), dated February 26, 2002 Re: Independent Auditor’s Report on the Department of Defense Fiscal Year 2001 Agency-Wide Financial Statements (Report No. D-2002-055) signed by David K. Steensma, Acting Assistant Inspector General for Auditing.
D-2002-055 Independent Auditor's Report on the Department of Defense Fiscal Year 2001 Agency-Wide Financial Statements (02/26/02) (Project D2001FI=0172.000) -- In Four Parts at: http://www.dodig.osd.mil/Audit/reports/02report.htm Reference Part four, Page 6 of 12, paragraph 2, at: http://www.dodig.osd.mil/Audit/reports/fy02/02-055.pdf
Another agency which has experienced difficulties in the financial area is the Department of Housing & Urban Development. HUD runs the mortgage insurance operations of the Federal Housing Administration as well as the securities operations of Ginnie Mae used to issue hundreds of billions of mortgage securities using the full faith and credit of the US government. HUD also has significant regulatory responsibilities for the oversight of the US mortgage markets, including for the government sponsored enterprises, Freddie Mac and Fannie Mae.
In FY 1999, HUD refused to publish audited financial statements, reporting $17 billion of undocumentable adjustments in the FY 1998 ending balance and $59 billion of undocumentable adjustments for FY 1999. HUD declined to report their undocumentable adjustments in FY 2000.
The source of the FY 1999 figure of $59 billion is testimony by the HUD Inspector General, Susan Gaffney before the House Subcommitte on Government Management, Information and Technology, House Committee on Government Reform, March 22, 2000.
Testimony of the HUD Inspector General re: $59 Billion Undocumentable Adjustments in FY 1999 at: http://www.solari.com/learn/59billion.htm
The cost of a child in Head Start comes from the Head Start Program Fact Sheet issued by the US Department of Health and Human Services. The average cost per child for 2002 of $6,934 was raised by 2% to adjust for inflation to $7,073.
The figure of $2,333 per child insured under Medicare is from the National Priorities Project's analysis of the trade-offs of military spending. The average cost of Medicaid per child is based on the most recent figures available (1998) and then adjusted for inflation by 10% a year (to compensate for the faster rate of inflation in health care).
The US Department of Labor's 2000 National Occupational Employment and Wage Estimates gives the average wage for elementary and secondary teachers as $42,000. In line with the analysis of the work of the National Priorities Project , we have increased this number by $25% to reflect the cost of benefits for a total of $52,500.
The College Board report Trends in College Pricing estimated that the cost of attending a four year public college or university in 2002 was $9,963, or $38,652 for four years. To this figure was added 2% to adjust for inflation, or $39,425.
The US Department of Energy states that the cost of converting an automobile to Compressed Natural Gas (CNG ) ranges from $2,500 to $4.000. The $1.1 Trillion Missing Money calculator uses the $4,000 figure to calculate the cost of conversions.
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The Internal Revenue Service 2001 IRS Data Book, Publication 55B gives the amount of US$ of federal taxes paid by each state . The $1.1 Trillion Missing Money calculator calculates the pro-rata state share of "undocumentable adjustments" by using the amount of Federal taxes paid by each state in 2001 as a percentage of all IRS tax payments paid by all US States for 2001.
Investment Banker, President, Solari , Inc., Former Assistant Secretary of Housing - Federal Housing Commissioner - HUD
Social Entrepreneur, Director,
Special thanks to Niko Matsakis and Elias Vlanton
for their prior work: Cost of War , upon which this site is based.
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