Governments guilty of deficient accounting practices

Ian Ball Financial Times Letter to the Editor (appeared on FT.com 09/29/2011)

From Mr Ian Ball.

Sir, One aspect of your commentary – as well as the policy debate – on the sovereign debt crisis is frankly astonishing. There is virtually no acknowledgement that this crisis is a result of deficient accounting, auditing and financial management practices by governments. The consequences would be amusing were they not so serious. We read of the need for banks to hold more capital; in fact the problem is that governments do not have enough capital. But it is worse than that – most governments do not even know what their capital is, because their archaic budgetary and accounting practices do not record and report assets and liabilities other than cash. Hard though it may be to believe, they do not actually know what their balance sheets look like.

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