Pentagon remains stubbornly unable to account for its billions
Defense Department officials celebrated after their auditor certified that the Marine Corps had successfully accounted for all the money it received and spent in 2012. They said it was a key milestone in the Pentagon’s long, troubled quest to earn that certification for all its billions of dollars in annual spending.
Then-Defense Secretary Chuck Hagel and the comptroller at the time, Robert Hale, who oversaw the Corps’s work, marked the occasion at a February 2014 event in the building’s Hall of Heroes, where they presented a framed copy of the certification to the Corps’s assistant commandant. Hagel boasted that “we don’t spend a lot of time using big megaphones to tout our great accomplishments… We get the job done. This is another example of, we’re getting the job done.”
The self-congratulations turned to embarrassment this March, however, when the Pentagon’s auditor suddenly reversed itself and withdrew its endorsement, saying newly discovered facts called into question “the completeness of the information on which we based our opinion,” according to a memorandum sent by a senior auditor to the Pentagon’s Comptroller and other top Pentagon officials.
No one said so at the time, but the Corps had not properly accounted for roughly $800 million worth of transactions on its books, insiders say. That amount represents the sum of misstated and improperly documented transactions by the Corps, according to a report by the independent Government Accountability Office released on Aug. 4.
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The GAO report further said these shortcomings in the Marine Corps’s accounting are typical, not rare. The same undocumented transactions and unreliable methods of financial record-keeping plague the Defense Department’s entire accounting apparatus, and threaten its ability to meet a congressionally imposed deadline for becoming fully auditable in two years, according to the report.
If that deadline is missed, it will be the latest in a long series of unkept Pentagon promises about a requirement met years ago by every other federal agency – namely, that it should be able to track its revenues, its assets, and its spending according to standard business practices.
“Defense dishes out over $500 billion a year yet still can’t tell the people where all the money is going,” complained Sen. Charles Grassley (R-Ia.), who reviewed the GAO report before its release. "We can’t effectively identify areas to reduce spending if we don’t know how much, and where, we’re spending that money in the first place," complained Sen. Tom Carper (D-Del.), the senior Democrat on the Homeland Security and Governmental Affairs Committee. "This is more than just a disagreement among accountants; it raises questions about the Department’s basic financial practices."
Provocatively, the GAO report also said that senior managers from the Pentagon’s auditor’s office, which withdrew the certification of credibility for the Marine Corps’ accounting, had improperly certified the Corps’s financial report in the first place, over the objections of lower-ranking specialists who oversaw the work.
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The Defense Department has in fact been straining for years to reorganize its fiscal management in time to meet a legal requirement that its income and spending records adhere to modern accounting standards. The aim is relatively simple: To ensure that the department knows when its funds go astray, or can prove they were spent as intended.
A law passed in 1994 initially set the deadline for 1997, but the Pentagon’s books were in such disarray that it blew past that date. Then, in 2010, Congress told the Pentagon to comply by 2017. The next year, Defense Secretary Leon Panetta pledged that the department would by 2014 be ready for a partial account of its finances – a much less detailed accounting than requested of the military services -- but the department missed that deadline too.
Hale, who retired in 2014, said in an interview that implementing any large-scale reform at the Pentagon, such as improving the reliability of its accounting software, “is like trying to push a block across sandpaper” because coordination is required between dozens of agencies, combatant commands, field activities, and military services. Other financial concerns, such as financing wars abroad while complying with legislated spending caps, were considered more urgent tasks, he said.
But Hale said he does not question the need to reform the way the department keeps track of its spending, because electronic logs of Defense Department transactions are often old and supporting documentation is poorly organized.
Related: Broken promises promo
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Copyright 2015 The Center for Public Integrity. This story was published by The Center for Public Integrity, a nonprofit, nonpartisan investigative news organization in Washington, D.C.
