Imagine you are a CEO of a major corporation. You hire an external consulting group to draft a report for you about the overall health of your organization. Confident in the future of your organization, you begin reading the report, which includes the following phrases:

  1. “Long-term fiscal path remains unsustainable.”
  2. “Ineffective process for preparing the consolidated financial statements.”
  3. “Widespread material internal control weaknesses, significant uncertainties, and other limitations.”

You stop reading because your corporation appears to be in shambles and it’s obvious that drastic changes need to be made.

Sadly, this hypothetical situation isn’t very farfetched. Recently, the Government Accountability Office issued a report on the past two years of federal government spending that included those same phrases—word for word. Gene L. Dodaro, comptroller general of the United States and head of the GAO, stated that “our federal government’s long-term fiscal path remains unsustainable without further policy changes.”

In fact, the GAO found that some agencies couldn’t even be audited because of “widespread material internal control weaknesses, significant uncertainties, and other limitations.”  In essence, the Department of Defense and the Department of Homeland Security, agencies that collectively represent nearly one quarter of all federal budget spending, could not be fully audited due to “serious financial management problems.”

GAO also cited difficulty in accounting for “intragovernmental activity and balances between federal agencies” along with the “federal government’s ineffective process for preparing the consolidated financial statements”—jargon for massive failures in tracking and reporting spending.

Sadly, the fact that the federal government isn’t effectively tracking its own spending is no surprise to us. Last year, one of our investigations found government agencies giving employees GPS systems, Nook readers, and iPods. That same investigation revealed agencies that spent large amounts of money on flash drives shaped like police cars, and hamburger yo-yos. All of these lavish expenses were paid for with taxpayer dollars with seemingly little (or no) oversight.

During his first inaugural address, President Obama said that “those of us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.” We just want to know exactly how the president is planning on accomplishing that accountability since a large portion of federal spending remains unchecked.

For now, we only hope that the President will respond to this GAO report in much the same way any responsible CEO would: with major changes.