October 2018 — The Most Important Federal Accounting Change Almost Nobody Reads
SFFAS 56 (Statement of Federal Financial Accounting Standards 56) — Classified Activities. Issued by the Federal Accounting Standards Advisory Board, October 2018.
Permits federal entities to MODIFY unclassified financial reports to prevent disclosure of classified national-security information.
Specifically permits agencies to: (1) OMIT required disclosures, (2) MOVE line-item amounts without explanation, (3) CONSOLIDATE component entities into different reporting structures, (4) explicitly ALTER net results of operations AND net position.
Forbids agencies from disclosing whether SFFAS 56 has been applied to their specific reports.
Net effect: legal authority for two sets of books — classified true ledger + sanitized public ledger — where the public ledger may be arbitrarily modified AND it is forbidden to disclose that it has been modified.
Engine Read: the single most important piece of 21st-century federal-financial-architecture legal change.