After researching the accounting assumptions made in the Congressional Budget Office when the Affordable Care Act (ObamaCare) was under debate, ( and after my eyes uncrossed) I came to the conclusion we need a law that requires ALL government accounting reports and forecasts use generally accepted accounting principles when establishing budgets for legislation under discussion or ANY public financial statement. In other words, if the IRS would not pass it in an audit, it should not be allowed. If the IRS expects the item to be included in a financial statement, it needs to be there. There have been so many changes to assumptions and estimates for ObamaCare in order to hide the real expense to the public, it would be considered massive fraud punishable by prision sentences if it were done by a private corporation. Again, these changes are so tedious and numerous, the documentation of them will be left to two references for you to read at your leisure. (washingtonpost.com) (thefederalist.com).
This issue is not only a problem for the Congressional Budget Office, however. This seems to be spilling over into the area of Corporate accounting in their published financials used by investors to determine the fiscal health of a potential investment as Warren Buffet warns.
“Buffett was less sanguine on other practices used by public companies, saying “too many” are deviating from generally accepted accounting principles (GAAP) to present better earnings numbers. Buffett said it “makes us nervous” that companies regularly leave out what they call “restructuring costs” and “stock-based compensation” from their expenses, boosting profits by deviating from standard accounting practices.” (in.reuters.com).
When John Q Public reviews financial statements from the companies he considers for investment, he believes the accounting is according to the generally accepted accounting principles. Mislabeled costs are not allowed in an IRS audit and need we have to say this, should not be mislabeled in any form, let alone an investment publication or government documents. Do we learn nothing from experience? It would be wonderful if our government could be proactive for a change and prevent a problem before another Enron destroys people’s lives. When our government uses a deceitful financial statement to tell us, the voters, the impact of the legislation they pass as done with ObamaCare, that too is fraud. We ought not to stand for it. Ask your representatives to require generally accepted accounting principles in all public AND government estimates, valuations and financial statements please.
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