First, let’s kill the accountants

First, let’s kill the accountants
: New York’s Metropolitan Transportation Authority is just Enron with a government pension.

Yesterday, a judge rolled back a 25 33 [duh] percent fare increase on New York’s subways and busses because the MTA used accounting tricks to hide a $500 million surplus while holding public hearings to beg for the fare increase.

They fudged the numbers.

They used accountants to fudge the numbers.

So now they’re hiding surpluses. A few years ago, government officials everywhere were spending surpluses they knew could not last — from the White House to Congress to every state down to my little town with its tax-and-spend oligarchy (Republican, since you ask) spending on unnecessary projects (let’s widen that road… it has been wide enough for 40 years but let’s make it wider) because, apparently, spending’s fun and because power corrupts and there’s no one to question the practice until it’s too late.

That’s not a bit different from Enron or Worldcom.

And what ties all these together is accounting tricks.

We thought the accountants and their rulebooks were there to keep everyone honest. Quite the contrary.

There is an accounting crisis in this country and it’s going to cause incalculable damage. If we can’t trust company’s earnings reports, we can’t trust its stock price, and if the stock price suffers, the economy suffers, and if the economy suffers, we suffer. If we can’t trust a government budget, we can’t trust the people who created it, we run them out of office and we don’t end up doing the things a government should be doing.

I’ve talked with some smart, educated, experienced people lately who express shock at the fact that numbers lie, that financial books are works of creativity even when they’re not tissues of lies. I got over that shock many years ago when I started working for a large, public company and a friend, an MBA, told me how the boss was calling him trying to get another $10 million on the bottom line for the quarter. How, I asked, you didn’t sell the ads. He launched into a frightening explanation of deferred expenses and EBITDA and such. My business education had begun.

We know that this has been going on in some big companies and we know how the accountants (that means you, Anderson) didn’t stop it.

But the case of the MTA is a sobering and clear example of the same problem of playing the numbers to suit your purpose in the public sector.

It all points to a lack of rules and standards in accounting.