Government agencies are being given permission to “modify” information in their budgets and public financial statements to conceal spending on some programs, reports Joseph Farah’s G2 Bulletin.

The new permissions were announced by the Federal Accounting Standards Advisory Board, which said the objective is to balance “the need for financial reports to be publicly available with the need to prevent the disclosure of classified national security information.”

However, the Federation of American Scientists bluntly stated the accounting board is approving of “deceptive budget practices.”

“Government agencies may remove or omit budget information from their public financial statements and may present expenditures that are associated with one budget line item as if they were associated with another line item in order to protect classified information.”

FAS pointed out that the new standard lets agencies “modify information required by other [accounting] standards” when they release information to the public.

Or they can simply not include information that otherwise would be required.

Or they can “misrepresent the actual spending amounts associated with specific line items so that classified information will not be disclosed,” FAS said.

“Allowing unacknowledged modifications to public financial statements ‘jeopardizes the financial statements’ usefulness and provides financial managers with an arbitrary method of reporting accounting information,’ according to comments provided to the board by the Department of Defense Office of Inspector General,” said FAS.

“Properly classified information should be redacted, not misrepresented, said the accounting firm Kearney & Company.”

The accountants stated: “Generally Accepted Accounting Principles (GAAP) should not be modified to limit reporting of classified activities. Rather, GAAP reporting should remain the same as other federal entities and redacted for public release or remain classified.”

FAS said the new policy, which “extends deceptive budgeting practices that have long been employed in intelligence budgets, means that public budget documents must be viewed critically and with a new degree of skepticism.”

For the rest of this report, and more, please go to Joseph Farah’s G2 Bulletin.

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