Finally, to test this instruction sheet for accuracy and to prove my claims herein, lets randomly select a few other CAFR’s from governments around the country…
I just sat for a moment and thought of what should be the only City in America that may be an exception to this rule, a government that actually may be in dyer financial trouble. And the name Detroit came to mind…
Here is a link to the City Of Detroit municipal corporation (incorporated 1806) CAFR for fiscal year 2011 on the Detroit City Government website:
Detroit lists its Statement of Net Assets on page 37 of this CAFR. And this City lists the following Net Assets:
Total Assets (and Deferred Outflows): $10,030,113,247
Total Liabilities: $10,059,121,604
Total Net Assets (Deficit): ($29,008,357)
So here the City of Detroit is reporting that after all CURRENT ASSETS and LIABILITIES are considered, the City is running a deficit of over $29 million dollars.
But what happens when we look closer at the liabilities section line items and apply the “creative accounting” lesson we just learned?
Amazing things, folks. Amazing things happen…
Listed as “LONG-TERM OBLIGATIONS” here, Detroit lists the following under its “TOTAL LIABILITIES” section:
Due Within One Year: $313,944,768
Due In More Than One Year: $8,366,493,713
It also lists certain liabilities in the form of toxic debt instruments as:
Derivative Instruments – Swap Liability: $612,067,105
Now, though we wont include this in our total, the fact that your government is even in the investment schemes of derivatives trading, including toxic mortgage backed securities, should be enough to storm the gates and handcuff your political leaders. But we’ll save that discussion for another time, even as your governments collectively invest in this type of securities crap!
So again, if we simply consider that the future liabilities (due in more than one year) of the City OF Detroit will be paid with future assets collected by City Of Detroit from its taxpayers and customers (totals include “Governmental” and “Business-Type Activities”), then the City government of Detroit actually has CURRENT assets which should be listed like this:
Total Current Assets (and Deferred Outflows): $10,030,113,247
Total Current Liabilities: $1,692,627,891
Total Current Net Assets: $8,337,485,356
So the City Of Detroit is covering up more than $8 billion dollars in CURRENT assets by its creative accounting of future assets due more than a year away that will be paid for by future assets that are creatively not reported in its own audited CAFR. If I was a resident of Detroit, I’d say it was time to hold certain lying councilmen and the mayor accountable to the people. And in gangland Detroit, the word accountable would and should be a very frightening thought to those crooked political figures in power over the trust of the people!
The lies know no end in government accounting standards and practices…
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