1. The Missing $25 Billion
Buried in the Department of the Treasury’s 2003 Financial Report of the United States Government is a short section titled “Unreconciled Transactions Affecting the Change in Net Position,” which explains that these unreconciled transactions totaled $24.5 billion in 2003.
The unreconciled transactions are funds for which auditors cannot account: The government knows that $25 billion was spent by someone, somewhere, on something, but auditors do not know who spent it, where it was spent, or on what it was spent. Blaming these unreconciled transactions on the failure of federal agencies to report their expenditures adequately, the Treasury report concludes that locating the money is “a priority.”
The unreconciled $25 billion could have funded the entire Department of Justice for an entire year.
By the way, the  in that quote leads to this footnote:
See U.S. Department of the Treasury, 2003 Financial Report of the United States Government, pp. 126, at fms.treas.gov/fr/ 03frusg.html (March 28, 2005). Unreconciled transactions totaled $3.4 billion in 2004.
I couldn't find the 2003 report, but did find it for 2007. It's 186 pages and can be downloaded here. If you've never read a treasury or GAO report, you're in for a treat.
A quick search of this report turned up reference to a "$6.7 billion adjustment for unreconciled transactions." It also turned up this disconcerting, if not surprising, paragraph:
With respect to disbursements, DOD and certain other federal agencies reported continued weaknesses in reconciling disbursement activity. For fiscal years 2007 and 2006, there was unreconciled disbursement activity, including unreconciled differences between federal agencies’ and Treasury’s records of disbursements and unsupported federal agency adjustments, totaling billions of dollars, which could also affect the balance sheet.
Although progress has been made, serious and widespread information security control weaknesses continue to place federal assets at risk of inadvertent or deliberate misuse, financial information at risk of unauthorized modification or destruction, sensitive information at risk of inappropriate disclosure, and critical operations at risk of disruption. GAO has reported information security as a high-risk area across government since February 1997.
For fiscal year 2007, federal agencies’ estimates of improper payments, based on available information, totaled about $55 billion. The increase from the prior year estimate of $41 billion was primarily attributable to a component of the Medicaid program reporting improper payments for the first time totaling about $13 billion for fiscal year 2007, which we view as a positive step to improve transparency over the full magnitude of improper payments.