In 5 myths debunked about the Federal Reserve, Bankrate’s Mark Hamrick points out that the Fed is audited by Deloitte Touche Tohmatsu Ltd., using generally accepted accounting principles. Therefore, the Fed is audited. Not so fast.
While DTT may audit the Fed, it does not delve into the Fed’s gold holdings. DTT does not randomly pull gold bars and have them assayed so as to determine purity and weight. It does not send statements to the counties that have gold stored with the Fed certifying that the all the gold is there. I doubt that DDT auditors visit the Fed’s vaults.
When Fed critics say that the Fed is not audited, they mean that the Fed is not audited by the General Accountability Office, which has the authority to audit all government agencies. It can even declare certain expenditures illegal. However, the GAO cannot audit the Fed.
In Hamrick’s Myth #2 rebuttal, he asserts that the Fed is part of the federal government. If the Fed were an agency of the federal government, the GAO could audit at any time.
For decades, Fed critics have called for an audit to verify gold holdings. The DTT audits do not address this issue. Until the GAO audits the Fed, critics are right that the Fed is not audited.