First Pentagon Audit Shows $800 Million Unaccounted For

The Pentagon is often used as a term to refer to the United States Department of Defense. The sprawling, five-sided building across the Potomac River from Washington, D.C. is symbolic of America’s massive, critical investment in the military, but the first-ever audit of the Pentagon shows that even the Defense Department is not above the kind of fiscal waste that government has become synonymous with.

Considering how much money is invested in the Department of Defense annually, the Pentagon likely represents the Department with the worst case of financial mismanagement, or malfeasance, depending on your view. That’s saying quite a lot considering the competition.

To spend money on comedically ludicrous causes, like a sponsorship of the play Doggie Hamlet, is one thing. It’s blatant burning of taxpayer money for the sake of ensuring that the next year’s budget sees the increases it needs. But in the case of the Pentagon, accounting firm Ernst & Young has turned up an even more concerning reality: apparently, the Department of Defense can’t even account for a whopping $800 million. Either they genuinely have no clue where the money was funneled, or they aren’t willing to provide documentation to verify where it was spent.

You can decide which potential scenario is worse.

According to a Politico exclusive, an audit of the Pentagon has been long overdue, as evidenced by the gaping holes in their accounting. In light of a proposed short-term spending bill that would increase defense spending by $52 billion, revelations that hundreds of millions of dollars of that budget, and likely far more, could vanish without a trace seem mildly relevant.

The specific Pentagon department responsible for the missing $800 million is the Defense Logistics Agency. This agency describes itself as responsible for providing ‘logistical, acquisition, and technical support for the Army, Navy, Air Force, Marine Corps and other federal agencies and allies.’

Apparently, that includes the handling of $800 million worth of ‘construction projects’ for which they chose not to keep the receipts, meaning there was no verifiable paper trail for Ernst & Young auditors to view. According to Politico, the department’s lack of proof for these construction projects is only one example of a systematic breakdown in its internal accounting practices.

‘Across the board, its financial management is so weak that its leaders and oversight bodies have no reliable way to track the huge sums it's responsible for, the firm warned in its initial audit of the massive Pentagon purchasing agent.’ (Politico)

The microcosm of Pentagon accounting practices that is the DLA’s books has led some to conclude that the entire Pentagon may be incapable of undergoing the audit which it never has been subjected to, despite it being mandated.

“If you can’t follow the money, you aren’t going to be able to do an audit,” said Sen. Chuck Grassley, an Iowa Republican and senior member of the Budget and Finance committees.

Grassley has been at the forefront calling for an audit of prodigious DoD spending, and now he, Ernst & Young, and the American public can see why the Pentagon has been resistant to turning over its books, and why few have been eager to undertake such a daunting, if impossible, task.

After all, the DLA is responsible for only $40 billion per year of the Pentagon’s approximate $700 billion budget. If they have nearly $1 billion in unaccounted funds, how much money has been ‘lost’ by the Pentagon on whole?

Are these lost funds really something that a Republican Senator from the heartland of America like Chuck Grassley wants to come to light?

Even parts of the DLA’s records that were documented correctly could not be supported by evidence of their validity.

‘The agency also couldn't produce supporting evidence for many items that are documented in some form — including records for $100 million worth of assets in the computer systems that conduct the agency’s day-to-day business.

“The documentation, such as the evidence demonstrating that the asset was tested and accepted, is not retained or available," it said.

The report, which covers the fiscal year that ended Sept. 30, 2016, also found that $46 million in computer assets were “inappropriately recorded” as belonging to the Defense Logistics Agency. It also warned that the agency cannot reconcile balances from its general ledger with the Treasury Department.’ (Politico)

These accounting errors mean that we don’t really know how much in assets or debt the Pentagon has, or if money is being spent where they say that it is. For a government department, the DoD, that most associate with discipline, detail, and verification in all that it does, this audit certainly brings up questions about whether any government agency can remain above the bureaucratic swamp.

DLA and Pentagon officials have stated that this outside view of their internal financial records and practices has been eye-opening, vowing to reform their practices because of the findings. But with so much money and such a vast web of bureaucrats employed who thus far have proven incapable of doing even an adequate job, we’ll believe it when we see it.

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