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Pentagon Cannot Pass a $6.5 TRILLION Audit Due to Horrible Bookkeeping

Pentagon Cannot Pass a $6.5 TRILLION Audit Due to Horrible Bookkeeping

IRS would have a cow if you or I did this….

The Department of Defense inspector general found that the Pentagon cannot maintain proper bookkeeping on expenses, which means they have not audited $6.5 TRILLION they spent on wars, equipment, etc. Lorin Venable, the assistant inspector general wrote:

Army and Defense Finance and Accounting Service Indianapolis personnel did not adequately support $2.8 trillion in third quarter adjustments and $6.5 trillion in yearend adjustments made to the Army General Fund data during FY2015 financial statement compilation. We conducted this audit in accordance with generlly accepted government auditing standards.

$6.5 TRILLION in ONE year. Could you imagine what the IRS would do to a private company if they did this? How about an average American?

Congress told the department to become “audit readiness” by September 30, 2017, but the horrible bookkeeping may make that impossible, even though the deadline is a year away.

The department relies on the Defense Finance and Accounting Service [DFAS] to handle their expenses, but they “could not adequate documentation for $6.5 trillion” to the IG.

The DFAS “did not document or support why the Defense Departmental Reporting system-Budgetary (DDRS-B), a budgetary reporting system, removed at least 16,513 of 1.3 million records during third quarter FY 2015.” The IG continued:

As a result, the data used to prepare the FY 2015 AGF third quarter and yearend financial statements were unreliable and lacked an adequate audit trail. Furthermore, DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions. Until the Army and DFAS Indianapolis correct these control deficiencies, there is considerable risk that AGF financial statements will be materially misstated and the Army will not achieve audit readiness by the congressionally mandated deadline of September 30, 2017.

The IG did not find any wrong doing or people taking large sums of money, but instead they could not find out who authorized all these transactions called “journal vouchers,” which “provide serial numbers, transaction dates and the amount of the expenditure.”

The IG has now recommended the financial company “enforce ‘the applicable guidance’ periodically issued by the Under Secretary of Defense Comptroller ‘regarding journal voucher category identification codes and metric reporting.'”

Problem is the Pentagon has done this for YEARS. Scot Paltrow did three part series at Reuters in 2013 about the waste at the Pentagon. He interviewed Linda Woodford, who worked at the Pentagon for 15 years and inserted “phony numbers in the U.S. Department of Defense’s accounts.” Every single month the financial people found numbers missing, wrong, or showing up with absolutely no explanation.

Reuters found the same problems as the IG:

In its investigation, Reuters has found that the Pentagon is largely incapable of keeping track of its vast stores of weapons, ammunition and other supplies; thus it continues to spend money on new supplies it doesn’t need and on storing others long out of date. It has amassed a backlog of more than half a trillion dollars in unaudited contracts with outside vendors; how much of that money paid for actual goods and services delivered isn’t known. And it repeatedly falls prey to fraud and theft that can go undiscovered for years, often eventually detected by external law enforcement agencies.

The consequences aren’t only financial; bad bookkeeping can affect the nation’s defense. In one example of many, the Army lost track of $5.8 billion of supplies between 2003 and 2011 as it shuffled equipment between reserve and regular units. Affected units “may experience equipment shortages that could hinder their ability to train soldiers and respond to emergencies,” the Pentagon inspector general said in a September 2012 report.


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It’s high time to bring ALL federal government back under control.

Well, let me sit behind my $43,000 desk on my $18,000 chair (purchased from the company I will work for when I retire next year) and I will explain how this could happen.

Oh…. I guess I already did.

    American Human in reply to Anchovy. | August 2, 2016 at 2:11 pm

    Anchovy, your point is well taken however there is a reason for the super-cost of seemingly mundane every day items for the military.
    A desk can’t be just ordered, it needs to be bid-out using a specification and proposals received. the specification usually includes things such as inspections and certain types of mil-std hardware and etc. Each has a bigger cost because in generally in order to be used by the military it requires inspections at several levels and ultimately final QA inspections and then certification by the purchasing official.
    These are usually costs imposed on the manufacturer who has to add them to the cost of the product.
    There are exceptions, I used your comment about the desk but things such as that can be exempted however if it is going to a hazardous area or a war zone well most are not exempted from anything.
    Still, you’d think they could account for these things.
    But “Trillions”?!?!?

American Human | August 2, 2016 at 2:04 pm

Wait…that Trillion with a “T”? In just a year? How can that be?
I recall with I was a young soldier in Germany, we got a new company commander. He had to sign for EVERYTHING in the company so the month before we all helped the outgoing commander account for everything. My Platoon SGT could not find a set of wrenches and ultimately he had to pay for them, about $75 or so (back in the mid-70s).
Anyway, it was called the TO&E (Table of Organization and Equipment) and it all was signed for and ultimately responsibility fell on the person who signed for it.
I’m thinking from Panetta through Carter need to start ponying up some $$.

    Olinser in reply to American Human. | August 3, 2016 at 7:02 pm

    It was called the CMR when I was in just a few years ago. I can’t speak for the Army but everything in the Marine Corps is accounted for at the unit level.

    But you’re not understanding the problem. This is at the Pentagon level. Where they throw money around and have no accountability for it. They throw billions of dollars at contractors for projects with no oversight, then when the contractor has cost overruns they just pay them more.

    Probably 1/3-1/2 of the civilian personnel in the Pentagon would go to jail if a legit fraud investigation were launched.

buckeyeminuteman | August 2, 2016 at 2:16 pm

Don’t fret, Hillary will fix it all. Wait, maybe she already did. Perhaps it’s all gone to the Clinton Foundation.

Since the entire Federal budget is 3.8 trillion, I suspect this is a multi-year or even decade-level audit to reach 6.5T.

The Marine Corps was about the only DOD entity to come close. This is an ongoing effort that has actually gotten much better in the last 10 years.

One forgets the true scope of the DOD budget, which is second in the world in size and complexity only to the total US budget.

@Dr P, meant to upvote

Didn’t the Department of State have an issue of a few biliion $ a couple of years back?
It would be interesting to see if there is a correlation between these “accounting” issues and Democrat administrations.
Not saying that it is a purely Democrat issue…just that they seem to think that the country was made for them to milk, like any 3rd world tinpot dictator does.

I wonder how much Lockheed Martin gets to keep the books?

There is not a single corner of the federal government Obama/Jarrett has not corrupted.

They could not have done it without the continuing help of the crying boehners.

We need to take back the GOP, or destroy it.