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Is There a CPA in the House?

Joanne S. Barry

Much has been made of President Obama's Supreme Court nominee, Elena Kagan, and her lack of judicial experience. Despite an impressive resume—she was President Clinton's associate White House counsel, dean of Harvard Law School and, most recently, Obama's solicitor gen-eral—Kagan has never served as a judge. How significant that will be during her nomination hearing, slated as of press time for late June, will be up to the Senate Judiciary Committee, but it has become part of the political discourse.

And that's as it should be. The Supreme Court confirmation process is usually preceded by a robust public discussion in which a nominee's record is scrutinized— which is why it's not just puzzling but troubling, especially in this economic climate, that hardly any attention is paid to the appointment of the U.S. comptroller general, the nation's top auditor and director of the Government Accountability Office (GAO). Worse, the person appointed to this post is not required to hold a CPA license.

The GAO is the investigative arm of Congress, which uses the office to conduct audits and investigations of federal programs and agencies. More than 3,000 people are employed by the GAO, which has an annual budget exceeding $500 million. The GAO issues hundreds of reports annually, both con-gressionally mandated and self-initiated, which are often used to shape public policy. The agency also prescribes accounting principles and standards for the executive branch, advises federal agencies on fiscal policies and procedures, and issues standards for auditing and evaluating government programs.

The GAO also oversees the $700 billion Troubled Asset Relief Program (TARP) created by the Emergency Economic Stabilization Act of 2008. Every 60 days, the U.S. comptroller general is required to report on a variety of areas associated with TARP oversight.

Finding the Right Comptroller General

CPAs are uniquely qualified by their education and experience to not only oversee audits, but also to identify and recommend improvements in performance and accountability of federal programs. Public companies and governments are required to have their financial statements audited by a CPA, yet the individual charged with overseeing the audit of our entire federal government isn't required to meet the same standards.

A House bill introduced in December would change that. HR 4410 would require that a vacancy of a comptroller general be filled by a CPA. The appointee would also be required, if the bill were passed and became law, to have a postgraduate degree and hold a credential from a professional association. The AICPA, NYSSCPA, and other state societies have strongly supported this legislation, which has been picking up bipartisan support.

Unlike a Supreme Court appointment, the position of U.S. comptroller general is not a lifelong tenure. But the 15-year term provides for a continuity of leadership rare in government. The position has remained vacant since David M. Walker, who is a CPA, resigned in 2008, 10 years into his term, to take a position as president and CEO of the Peter G. Peterson Foundation. When a U.S. comptroller general resigns before the end of the term, that individual is responsible for appointing an acting comptroller general until a new appointment is confirmed by the President and Senate. Walker chose Gene L. Dodaro, a 30-year GAO employee who holds a bachelor's degree in accounting, but not a CPA license. He is now one of the comptroller general nominees proposed by a congressional selection commission to fill the vacancy.

The bipartisan commission ended up submitting two different nomination lists. Both the Democrats and Republicans on the commission nominated Dodaro, Ira Goldstein, a former GAO assistant comptroller; and Tom Platts, a Republican congressman from Pennsylvania. But the Democrats' fourth choice, Linda Bilmes, a professor of public policy, budgeting and public finance, was opposed by Republicans, who instead nominated Stuart Bowen, an attorney and special inspector general for Iraq reconstruction. Both lists have been sent to Obama for consideration. The group of nominees boasts two Harvard MBAs, but not a single CPA.

Since the office was created, only three of the seven U.S. comptrollers general have been CPAs: Walker, his predecessor Charles Bowsher, and Joseph Campbell, who served between 1954 and 1965. Campbell was also, at one time, a member of the NYSSCPA.

Auditing the Federal Government

In 1997, the first year the GAO began to undertake the annual Herculean task of auditing the federal government, it advertised in the pages of this journal for experienced professionals to “lead or participate in the largest financial audit in the world— the audit of the federal government.”

In April, more than 10 years after the federal government began to have its consolidated financial statements audited by the GAO, the office reported that it was unable to render an opinion due to “(1) serious financial management problems at the Department of Defense, (2) federal entities' inability to adequately account for and reconcile intragovernmental activity and balances, and (3) an ineffective process for preparing the consolidated financial statements.”

For the third consecutive year, the GAO rendered an unqualified opinion on the Statement of Social Insurance, encompassing programs such as Medicare and Social Security.

While the efforts of the GAO are the product of more than 3,000 people, the person who leads the office and renders the audit opinion on the federal government's financial statements should unquestionably be a CPA. I urge you to write your representative in support of HR 4410.

Joanne S. Barry. Publisher. The CPA Journal Executive Director, NYSSCPA jbarry@nysscpa.org.

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