Restore Accountability. Open the Books!

Primary Plank: The U.S. Federal Government MUST Submit to 3rd Party Independent Audit Every Year

“OPEN THE BOOKS!”

“The federal government requires every publicly traded company in America, every nonprofit that receives federal grants, and every state and local government that touches federal dollars to submit to an independent external audit. It demands this because it knows — correctly — that self-audit is no audit at all. I am simply asking the federal government to live by its own rule.”

— Michael R. Stoddard C.P.A., C.F.P.

The Problem

The United States federal government is the largest financial entity on earth. In fiscal year 2025, its net costs exceeded $7.3 trillion. It holds assets and liabilities measured in the tens of trillions. It administers programs touching every American citizen. And it has never — not once in its history — received a clean audit opinion on its consolidated financial statements.

The Government Accountability Office (GAO), the federal government’s own auditor, has issued a disclaimer of opinion on the consolidated financial statements for twenty-eight consecutive years, beginning with the first statements prepared under the Government Management Reform Act of 1994. A disclaimer of opinion is the worst possible outcome in professional auditing. It means the auditor cannot obtain sufficient appropriate evidence to form any opinion at all on whether the financial statements are fairly presented.

In the private sector, a single disclaimer of opinion triggers regulatory scrutiny, potential stock delisting, and intense shareholder concern. Twenty-eight consecutive disclaimers would be unthinkable — no company could survive such a record. Yet the federal government has normalized this failure to the point that its annual disclaimer barely registers as news.

Three persistent impediments have prevented GAO from rendering an opinion for the entire duration of this record: (1) serious financial management problems at the Department of Defense; (2) the inability to adequately account for intragovernmental activity and balances between federal entities; and (3) weaknesses in the process for preparing the consolidated financial statements. These are not new discoveries. They are the same three problems, restated year after year, for nearly three decades.

The Independence Problem

The GAO performs valuable work. It issues hundreds of reports annually, identifies billions in potential savings, and provides Congress with nonpartisan analysis. But the GAO is not, and cannot be, an independent external auditor of the federal government. It is, by definition, an internal audit function.

The GAO is a legislative branch agency. Its budget is appropriated by Congress. Its Comptroller General is appointed by the President from a congressional shortlist. The entity being audited controls the funding, appointment, and institutional framework of the entity performing the audit. In professional auditing standards, this relationship triggers multiple independence impairments:

Self-Review Threat

The federal government writes the rules, spends the money, and then reviews its own work. The same sovereign entity occupies all three roles.

Advocacy Threat

The GAO’s continued existence, staffing, and institutional authority depend on appropriations from the very Congress whose agencies it audits. Institutional survival is tied to the goodwill of the audited party.

Familiarity Threat

GAO staff spend entire careers auditing the same federal agencies. Professional relationships develop. Institutional courtesies accumulate. The profession calls this “auditor capture” when it occurs in the private sector and sanctions practitioners for it.

Any one of these would constitute a disqualifying impairment under AICPA independence standards (ET Section 1.200) and International Ethics Standards Board for Accountants (IESBA) requirements. The federal government manages to present all three simultaneously.

The analogy is precise. When a Fortune 500 company tells the SEC, “We have a world-class internal audit department,” the SEC does not excuse the company from an independent external audit. Internal audit supplements but never replaces external audit. Under AU-C Section 610, external auditors may use the work of internal auditors after evaluating their competence and objectivity — but the external auditor’s opinion is never replaced by the internal function. The same standard should apply to the federal government.

The Hidden Balance Sheet

The problem is compounded by the federal government’s accounting framework. Federal financial statements are prepared under standards issued by the Federal Accounting Standards Advisory Board (FASAB). FASAB is a federal advisory committee whose members are appointed by the Secretary of the Treasury, the Director of the Office of Management and Budget, and the Comptroller General. The entity being reported on controls the body that sets the rules for how it is reported on.

Under FASAB standards, Social Security and Medicare obligations are disclosed in supplementary schedules rather than recognized as liabilities on the face of the balance sheet. The government reports a national debt of approximately $37.6 trillion. But the present value of the gap between projected Social Security and Medicare expenditures and projected revenues over 75 years exceeds $73 trillion — with some broader analyses projecting total fiscal imbalances as high as $140–$162 trillion.

These obligations are real. Benefits have been promised. Citizens have paid in. Actuarial estimates exist to the dollar. Under International Accounting Standard 37 (Provisions, Contingent Liabilities and Contingent Assets) or standard U.S. GAAP applied to any non-governmental entity, an obligation arising from past events, where an outflow of resources is probable and a reliable estimate can be made, must be recognized as a liability. Social Security and Medicare satisfy all three criteria.

An independent external audit conducted under international standards would not be bound by FASAB’s self-serving recognition criteria. It would apply the same liability recognition tests used for every other entity on earth, and the balance sheet would reflect something closer to the government’s real financial position.

The Proposal

I propose legislation requiring the United States federal government to submit to an annual independent external audit conducted by international public accounting firms, with the following structure:

A. Group Audit Structure

The engagement would follow standard group audit methodology under ISA 600 (Special Considerations — Audits of Group Financial Statements). A Lead Firm, selected through competitive RFP, would assume overall engagement responsibility, coordinate the consolidated opinion, and directly audit the largest federal agencies (Department of Defense, Department of Health and Human Services, Department of the Treasury). Two Assisting Firms, selected through subsequent RFPs, would serve as component auditors, dividing the remaining CFO Act agencies between them. The Lead Firm would review the component auditors’ work and take responsibility for the consolidated opinion.

This is not a novel structure. It is the standard methodology used to audit multinational corporations with operations in scores of countries. The scale of the federal government, while formidable, does not exceed the profession’s demonstrated capacity.

B. Mandatory Firm Rotation

The lead engagement firm would be subject to mandatory rotation on a five-year cycle, consistent with the approach adopted by the European Union for public-interest entities under Regulation (EU) No 537/2014. Rotation eliminates the familiarity threat that develops over extended engagements and ensures that no single firm becomes institutionally captured by the relationship.

C. Presidential Annual Certification

The President of the United States would be required to personally certify the federal financial statements annually, following the model established by Sarbanes-Oxley Section 302 for corporate chief executives. The certification would attest that the President has reviewed the financial report, that it does not contain material misstatements or omissions, that the financial statements fairly present the financial condition and results of operations of the federal government, and that the President is responsible for establishing and maintaining internal controls and has evaluated their effectiveness.

Every CEO in the Fortune 500 is required to make this certification under penalty of law. The individual who presides over the largest financial operation on earth should bear no less responsibility.

Anticipated Objections

Sovereignty

“The United States should not submit its financial sovereignty to foreign entities.” An audit opinion is not a governance mechanism. It confers transparency, not authority. The United States already participates in IMF Article IV consultations and World Bank assessments. An independent audit opinion carries no power over spending, taxation, or policy. It simply tells the truth about the books.

Scale

“The federal government is too large and complex for any single firm.” Correct — which is precisely why the proposal calls for a three-firm group audit structure. Consolidated audits of multinational entities with operations across every continent are routine in the profession. The methodology exists. What is missing is the will.

Cost

“The engagement would be prohibitively expensive.” GAO’s own work yielded $62.7 billion in financial benefits in fiscal year 2025 alone. Cumulative identified improper payments since fiscal year 2003 total approximately $2.8 trillion. An independent audit that recovered or prevented even a fraction of annual improper payments — estimated at $162–$186 billion per year — would pay for itself thousands of times over.

Redundancy

“We already have auditors — the GAO.” Every corporation that maintains an internal audit function is still required to submit to an independent external audit. Internal audit and external audit serve different purposes and are not interchangeable. The GAO’s work would continue and would be utilized by the external auditors under established professional standards. The proposal supplements existing oversight; it does not replace it.

Conclusion

This is not a radical proposal. It is the most conservative position imaginable: holding the federal government to the same standard it already imposes on every publicly traded corporation, every nonprofit receiving federal grants, and every state and local government that touches federal dollars.

The radical position is the status quo — a $7.3 trillion annual operation that has never once received a clean opinion from its own in-house team and sees no need to invite outside scrutiny.

I am a Certified Public Accountant. I have spent my professional life examining financial statements, evaluating internal controls, and holding institutions accountable for the accuracy of their books. I am asking for one thing: an honest set of books for the American people. Every business in America is required to produce them. Your government refuses to.

Open the books!