Back in 1996, Congress passed a law that says all government agencies must conduct an annual audit. According to a new Office of Inspector General report – IGs are supposed to be the people who provide unbiased oversight of government agencies – the Department of Defence, i.e., The Pentagon, has not so far complied. As a result, the DoD has no idea where $6.5 trillion went. From Armstrong Economics:
Once again, the office of Inspector General has come up with a huge hole in the Department of Defense with a missing $6.5 trillion. The day before 911, Rumsfeld admitted there was back then $2.3 trillion missing from the Defense Department budget. That has now grown to $6.5 trillion and counting. They have reported that the “Office of the Assistant Secretary of the Army (Financial Management & Comptroller) (OASA[FM&C]) and the Defense Finance and Accounting Service Indianapolis (DFAS Indianapolis) did not adequately support $2.8 trillion in third quarter journal voucher (JV) adjustments and $6.5 trillion in yearend JV adjustments1 made to AGF data during FY 2015 financial statement compilation.2 The unsupported JV adjustments occurred because OASA(FM&C) and DFAS Indianapolis did not prioritize correcting the system deficiencies that caused errors resulting in JV adjustments, and did not provide sufficient guidance for supporting system‑generated adjustments.”
At this point, thanks to Armstrong, and the Financial Times, that the deficiencies in bean counting at the Pentagon have been known for at least fifteen years. Then DoD Secretary Donald Rumsfeld admitted it. However, in the succeeding years, nothing seems to have changed. In fact, the Pentagon actually had a person who just put numbers into the budget without being able to back them up for the Navy. According to a Reuters investigation:
“For two decades, the U.S. military has been unable to submit to an audit, flouting federal law and concealing waste and fraud totaling billions of dollars.
Linda Woodford spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense’s accounts.
Every month until she retired in 2011, she says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio DFAS…. Using the data they received, Woodford and her fellow accountants there set about preparing monthly reports to square the Navy’s books with the U.S. Treasury’s…. And every month, they encountered the same problem. Numbers were missing. Numbers were clearly wrong. Numbers came with no explanation of how the money had been spent or which congressional appropriation it came from.”
In the real world, this lack of systemic competence in accounting would be grounds for firing. But then, in the real world, no one deals with trillions of dollars outside of big banks. The issue is not that the money was stolen or disappeared, but the spending was not documented properly. Congress has issued a directive to the Pentagon to have their finances in shape to be audited at the end of the 2017 fiscal year. We’ll see if the warriors know how to keep receipts.
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