U.S. Army fudged its accounts by Trillions of dollars Inspector General reports
“The United States Army’s finances are so jumbled it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced.
The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.
As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”
Disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades.
The report affirms a 2013 Reuters series revealing how the Defense Department falsified accounting on a large scale as it scrambled to close its books. As a result, there has been no way to know how the Defense Department – far and away the biggest chunk of Congress’ annual budget – spends the public’s money.
The new report focused on the Army’s General Fund, the bigger of its two main accounts, with assets of $282.6 billion in 2015. The Army lost or didn’t keep required data, and much of the data it had was inaccurate, the IG said.
“Where is the money going? Nobody knows,” said Franklin Spinney, a retired military analyst for the Pentagon and critic of Defense Department planning.
The significance of the accounting problem goes beyond mere concern for balancing books, Spinney said. Both presidential candidates have called for increasing defense spending amid current global tension.
An accurate accounting could reveal deeper problems in how the Defense Department spends its money. Its 2016 budget is $573 billion, more than half of the annual budget appropriated by Congress.”
….Continue reading @ Reuters.com
Want to Cut Government Waste? Find the $8.5 Trillion the Pentagon Can’t Account For
– Yahoo Finance
“If you thought the botched rollout of Obamacare, the government shutdown, or the sequester represented Washington dysfunction at its worst, wait until you hear about the taxpayer waste at the Defense Department.
Special Enterprise Reporter Scot Paltrow unearthed the “high cost of the Pentagon’s bad bookkeeping” in a Reuters investigation. It amounts to $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996 that has never been accounted for. (The year 1996 was the first that the Pentagon should have been audited under a law requiring audits of all government departments. Oh, and by the way, the Pentagon is the only federal agency that has not complied with this law.)
We talk to Paltrow in the accompanying video about his findings.
Here are some some highlights he found among the billions of dollars of waste and dysfunctional accounting at the Pentagon:
- The DOD has amassed a backlog of more than $500 billion in unaudited contracts with outside vendors. How much of that money paid for actual goods and services delivered isn’t known.
- Over the past 10 years the DOD has signed contracts for provisions of more than $3 trillion in goods and services. How much of that money is wasted in overpayments to contractors, or was never spent and never remitted to the Treasury is a mystery.
- The Pentagon uses a standard operating procedure to enter false numbers, or “plugs,” to cover lost or missing information in their accounting in order to submit a balanced budget to the Treasury. In 2012, the Pentagon reported $9.22 billion in these reconciling amounts. That was up from $7.41 billion the year before.
- The accounting dysfunction leads the DOD to buy too much stuff. One example: the “vehicular control arm” to supply Humvees. In 2008, the DOD had 15,000 parts — a 14-year supply (anything more than three years is considered excess supply). Yet from 2010 to 2012, it bought 7,437 more of these parts and at higher prices than they paid for the ones they already had.
The Defense Department’s 2012 budget was $565.8 billion. Paltrow points out that’s more than the annual defense budgets of the next 10 biggest military spenders combined. He tells us the Pentagon “almost certainly is” the biggest source of waste in the government based on his reporting.
Looking forward, defense spending in the fiscal 2014 budget is set to be cut $20 billion from 2013 levels due to the sequester. In response, military officials, including Defense Secretary Chuck Hagel, have raised an alarm over the impact of these cuts. Hagel told a conference the cuts are “too steep, too deep, and too abrupt.”
The Wall Street Journal reports Marine Corps Commandant Gen. James F. Amos told a House panel in September the “abruptness and inflexibility of sequestration…could erode our readiness to dangerous levels.”
Does Paltrow think that’s true?
“So much of that could be cut, that the impact of the sequester would be much less than [what] Pentagon officials are claiming.” He adds that officials are basing their budget requests on their own priorities, rather than firm knowledge of what’s needed because leaders don’t know what money is slushing around.
The good news is that because of arguments over the deficit and the budget, Paltrow sees signs that members of Congress are getting serious about waste at the Pentagon.”
….Continue reading @ Yahoo Finance