“No money shall be drawn from the treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.” ~ Article I, Section 9, Clause 7, U.S. Constitution


September 2017 Report

Solari Report: Interview with Dr. Mark Skidmore, Thursday, September 28, 2017

Summary Report on “Unsupported Journal Voucher Adjustments” in the Financial Statements of the Office of the Inspector General for the Department of Defense and the Department of Housing and Urban Development.

Dr. Mark Skidmore
Mark is professor of economics and agricultural, food and resource economics at Michigan State University, where he holds the Morris Chair in State and Local Government Finance and Policy. He received his doctorate in economics from the University of Colorado in 1994, and his bachelor’s degree in economics from the University of Washington in 1987. Mark is Co-editor of the Journal of Urban Affairs.

Catherine Austin Fitts
Catherine is the president of Solari, Inc., publisher of the Solari Report, and managing member of Solari Investment Advisory Services, LLC. She served as managing director and member of the board of directors of the Wall Street investment bank Dillon, Read & Co. Inc., as Assistant Secretary of Housing and Federal Housing Commissioner at the US Department of Housing and Urban Development in the first Bush Administration, and was the president of Hamilton Securities Group, Inc. Her experience on Wall Street and Washington is described in her book Dillon Read & Co. & the Aristocracy of Stock Profits. Catherine graduated from the University of Pennsylvania (BA), the Wharton School (MBA).

Update – October 5, 2017

On October 5, 2017 we discovered that the link to the report “Army General Fund Adjustments Not Adequately Documented or Supported” had been disabled. Within a several days, the links to other OIG documents we identified in our search were also disabled. The sequential non-random nature of this disabling process suggests a purposeful decision on the part of OIG to make key documents unavailable to the public via the website, as opposed to website reorganization, etc. We also revisited the website intermittently to see whether the documents had been reposted under different URLs—until very recently they had not been reposted.

Update – December 11, 2017

On December 11, 2017, we learned that key documents had been reposted on the OIG website, but with different URLs. Documents now appear to be reposted on new URLs. As we find the new URLs we are adding them in the footnotes entitled “new link” next to the original link.

Update – December 12, 2017

Subsequent to the publication of Dr. Skidmore’s report, the Office of the Inspector General at the Department of Defense (DOD) and the Department of Housing and Urban Development (HUD) took reports off line, consequently our primary links in the table below are to the same documents posted on our website. We have preserved the original DOD and HUD links in the footnotes – if they result in a 404 error or not found message, this indicates they were taken down or moved subsequent to publication.

Update – June 6, 2018

Update on the $21 Trillion in Unsupported Adjustments at the Department of Housing and Urban Development and the Department of Defense

Update – September 18, 2018

Early this year the Pentagon announced that it was conducting its first ever independent audit. However, several months after beginning the audit, the government accepted the recommendations of the Federal Accounting Standards Board: https://fas.org/sgp/news/2018/07/fasab-review.pdf (see page 3 for a summary). The statement allows government officials to misstate and move funds around to hide expenditures if it is deemed necessary for national security purposes, and the rule applies to all agencies, not just the black budget. Here is an excerpt from the report:

This Statement permits modifications that do not affect net results of operations or net position. In addition, this Statement allows a component reporting entity to be excluded from one reporting entity and consolidated into another reporting entity, and the effect of the modification may change the net results of operations and/or net position.

From this statement, it seems that only a few people with high level security clearances have the authority to determine what is a national security issue and these same people will now be allowed to restate budgets to hide activity. No one but those few people would ever know that expenditures on activity A are hidden in completely different area of government. What good is an independent audit if authorities are allowed to move expenditures around with no transparency? How can one conduct evaluation of the any portion of the federal budget under such an arrangement? How is this policy in compliance with financial reporting laws or Constitutional requirements for reporting on government spending to the citizens of the United States?

Update – December 12, 2018

On October 4, 2018 federal government officials accepted the recommendation of the Federal Accounting Standards Advisory Board (FASAB) that the government be allowed to misstate and move funds in order to hide expenditures if it is deemed necessary for national security purposes. The new guidelines are to apply to all agencies, not just the black budget. See page 3 of the July 2018 FASAB report for a summary of the proposed recommendations and see here for more detail. See here for the final statement – Statement of Federal Financial Accounting Standards 56.

With the change in accounting guidelines, which is a full departure from Generally Accepted Accounting Principles (GAAP), only a few people with high level security clearances have the authority to determine what is deemed a national security issue and these same people will now be allowed to restate budgets in order to conceal actual expenditures without any disclosure. No one but those few people would know that such modifications were made, thus making evaluation of government financial statements impossible. From this point forward, the federal government will keep two sets of books, one modified book for the public and one true book that is hidden.

The FASAB recommendation effectively institutionalizes non-transparency in federal financial reporting. While many aspects of federal finances are non-transparent now because government has failed to comply with existing financial reporting laws, at least citizens had the laws working in their favor. Now citizens have no recourse; non-transparency is going to proceed as a matter of executive branch authority and policy.

Accounting rules are often thought of as boring and of secondary importance. However, this particular change has enormous implications and yet few citizens are aware. People should know about these changes so they have an opportunity to voice their concerns and reverse the decision.

Supporting DOD and HUD Documentation

 

Year DOD Government Source Document
2018 Unspecified See Here
2017 Unspecified See All Pages (#’s 100% Redacted)
2016 Unspecified See Page #78[39]
2015 Unspecified See Page #83[37], See Page #59, 78[38]
2014 Unspecified See Page #59, 79[2]
2013 Unspecified See Page #81, #101[3]
2012 Unspecified See Page #84, #104[4]
2011 Unspecified See Page #73[5]
2010 Unspecified See Page #8, #9[6]
2009 Unspecified See Page #28[7]
2008 Unspecified See Page #49[8]
2007 Unspecified See Page #46[9]
2006 Unspecified See Page #178[10]
2005 Unspecified See Page #18, #50, #296[11]
2004 Unspecified See Page #19[12]
2003 Unspecified See Page #2[13]
2002 Unspecified See Page #2[14]
2001 Unspecified See Page #2[15]
2000 $1.1 trillion
(includes $320.8 billion from
Air Force)
See Page #1[16] See Page #147[36]
1999 $2.3 trillion See Page #9[17]
1998 $1.7 trillion See Page #5[18]
Year DOD Army Government Source Document
2015 $6.5 trillion See Page #1[24]
2014
2013
2012 $110.9 billion See Page #91[25]
2011 $14.6 billion See Page #100[26]
2010 $874.8 billion See Page #4[40]
2009 $311.3 billion See Page #88[28]
2008 $595.8 billion See Page #91[29]
2007 $1.1 trillion See Page #5[41]
2006 $270.1 billion See Page #107[30]
2005 $248.5 billion See Page #140, #141[11]
2004 $258.1 billion See Page #125[32]
2003 $268.3 billion See Page #191[33]
2002 $500.1 billion See Page #232[34]
2001
2000 $361.5 billion See Page #168[35]
1999
1998
Year DOD Navy Government Source Document
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000 $161.6 billion See Page #4[42]
1999
1998 $880 billion See Page #1[43]
Year DOD Air Force Government Source Document
2015 $90.2 billion See Page #8[44]
2014
2013
2012 $1.6 trillion See Page #4[44]
2011
2010
2009 $1.4 trillion See Page #8[45]
2008
2007
2006
2005
2004
2003 Unspecified See Page #41[46]
2002 Unspecified See Page #150[47]
2001 Unspecified See Page #70[48]
2000 $320 billion See Page #147[36]
1999
1998
Year HUD Government Source Document
2015 $278.5 billion See Page #4[19]
2014 $1.9 billion See Page #5[20]
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999 $59.6 billion See Page #4[22]
1998 $17.6 billion See Page #4[22]

 

Related Reading:

FOIA Request

FOIA Request

Response to FOIA Request

Original Sources:

Note: On December 11, 2017 we learned that the key documents had been reposted on the OIG website, but with different URLs. On October 5, 2017 we discovered that the link to the report “Army General Fund Adjustments Not Adequately Documented or Supported” had been disabled. Within a several days, the links to other OIG documents we identified in our search were also disabled. The sequential non-random nature of this disabling process suggests a purposeful decision on the part of OIG to make key documents unavailable to the public via the website, as opposed to website reorganization, etc. We also revisited the website intermittently to see whether the documents had been reposted under different URLs—until very recently they had not been reposted. Documents now appear to be reposted on new URLS. As we find the new URLS we are adding them in the footnotes below.

Old Link: 1. 2015 Semiannual Report to Congress, DOD Click here for (New Link)

Old Link: 2. 2014 Agency Financial Report, DOD Click here for (New Link)

Old Link: 3. 2013 Agency Financial Report, DOD Click here for (New Link)

Old Link: 4. 2012 Agency Financial Report, DOD Click here for (New Link)

Old Link: 5. 2011 Agency Financial Report, DOD Click here for (New Link)

Old Link: 6. 2010 Testimony of the Deputy Inspector General, DOD Click here for (New Link)

Old Link: 7. 2009 Agency Financial Report, DOD Click here for (New Link)

Old Link: 8. 2008 Agency Financial Report, DOD Click here for (New Link)

Old Link: 9. 2007 Agency Financial Report, DOD Click here for (New Link)

Old Link: 10. 2006 Performance and Accountability Report, DOD Click here for (New Link)

Old Link: 11. 2005 Performance and Accountability Report, DOD Click here for (New Link)

Old Link: 12. 2004 Performance and Accountability Report, DOD Click here for (New Link)

Old Link: 13. 2003 Performance and Accountability Report, DOD Click here for (New Link)

14. 2002 Testimony from the Office of the Inspector General, DOD

15. 2001 Agency Financial Report, DOD

Old Link: 16. 2000 Testimony of the Inspector General, DOD Click here for (New Link)

Old Link: 17. 1999 Testimony of the Inspector General, DOD Click here for (New Link)

Old Link: 18. 1998 Testimony of the Inspector General, DOD Click here for (New Link)

Old Link: 19. 2017 Testimony of David A. Montoya, Inspector General, HUD Click here for (New Link)

Old Link: 20. 2016 Testimony of David A. Montoya, Inspector General, HUD Click here for (New Link)

21. 2002 Statement of Kenneth M. Donohue, Inspector General, HUD

22. 1999 Statement of Susan Gaffney, Inspector General, HUD

23. http://www.gao.gov/assets/670/668739.pdf

Old Link: 24. Army General Fund Adjustments Not Adequately Documented or Supported Click here for (New Link)

25. 2012 United States Army Annual Financial Statement, DOD

26. 2011 United States Army Annual Financial Statement, DOD

27. 2010 United States Army Annual Financial Statement, DOD

28. 2009 United States Army Annual Financial Statement, DOD

29. 2008 United States Army Annual Financial Statement, DOD

30. 2006 United States Army Annual Financial Statement, DOD

31. 2005 United States Army Annual Financial Statement, DOD

32. 2004 United States Army Annual Financial Statement, DOD

33. 2003 United States Army Annual Financial Statement, DOD

34. 2002 United States Army Annual Financial Statement, DOD

35. 2000 United States Army Annual Financial Statement, DOD

36. 2000 United States Air Force Annual Financial Statements, Secretary of Defense

Old Link: 37. 2015 Semiannual Report to Congress, Office of the Inspector General, DOD Click here for (New Link)

38. 2015 Agency Financial Report, Financial Section, DOD

39. Agency Financial Report, Financial Section, DOD

Old Link: 40. Defense Departmental Reporting System-Budgetary Was Not Effectively Implemented for the Army General Fund, DOD Click here for (New Link)

Old Link: 41. Internal Controls over FY 2007 Army Adjusting Journal Vouchers, Office of Inspector General, DOD Click here for (New Link)

Old Link: 42. Navy General Fund Audit Report, Office of Inspector General, DOD Click here for (New Link)

Old Link: 43. Navy General Fund Financial Statements Click here for (New Link)

Old Link: 44. Followup Audit: Additional Actions Needed to Effectively Provide Complete Audit Trails for Air Force Journal Vouchers (New Link)

Old Link: 45. Deficiencies in Journal Vouchers That Affected the FY 2009 Air Force General Fund Statement of Budgetary Resources, Office of Inspector General, DOD Click here for (New Link)

46. FY 2003 United States Air Force Annual Financial Statements, Secretary of Defense

47. FY 2002 United States Air Force Annual Financial Statements, Secretary of Defense

48. FY 2001 United States Air Force Annual Financial Statements, Secretary of Defense