The Department of Defense is the only federal agency unable to get a clean audit opinion. A recent Department of Defense Inspector General (DoD IG) report provides another example of the profound financial management problems at the Pentagon.
The IG found the Army “could not adequately support” $2.8 trillion in adjustments in one quarter and $6.5 trillion for the year (yes, that’s trillion with a “T”). The number is so high because the same financial accounts could be corrected, reclassified, and reconciled multiple times. Each time such an adjustment was made, it was calculated as a separate transaction, and those adjustments added up. In one example that DoD IG spokeswoman Bridget Ann Serchak provided AMI Newsire, unsupported adjustments totaled to $99.8 billion for a $.2 billion balance.
The IG’s findings echo a 2013 Reuters investigation into the Navy by Scot Paltrow, which found that Defense Finance and Accounting Service (DFAS) supervisors pressured accountants to plug in false numbers to make the Navy’s totals match the Treasury Department’s accounts. “The accountants continued to seek accurate information to correct the entries” after they met initial deadlines, Reuters reported. “In some instances, they succeeded. In others, they didn't, and the unresolved numbers stood on the books.”
Jack Armstrong, a former DoD IG official who audited the Army General Fund, told Reuters the Army numbers were likely similarly fudged in this instance. “They don’t know what the heck the balances should be,” he said.
Congress required the entire Pentagon to pass a complete financial audit by September 30, 2017, and both the Democratic and Republican platforms call for auditing the Pentagon. Mike McCord, DoD’s Comptroller, anticipated last winter that “it will take a couple more years.”
Meaningful progress on auditing the Pentagon would require budgetary consequences for this kind of behavior.
For more information on auditing the Pentagon, see "Will the Pentagon Ever Be Able to Be Audited?"