By Laurence Kotlikoff. On July 26, 2016, the Office of the Inspector General (OIG) issued a report “Army General Fund Adjustments Not Adequately Documented or Supported”. The report indicates that for fiscal year 2015 the Army failed to provide adequate support for $6.5 trillion in journal voucher adjustments. According to the GAO’s Comptroller General, “Journal vouchers are summary-level accounting adjustments made when balances between systems cannot be reconciled. Often these journal vouchers are unsupported, meaning they lack supporting documentation to justify the adjustment or are not tied to specific accounting transactions…. For an auditor, journal vouchers are a red flag for transactions not being captured, reported, or summarized correctly” . . .
Given that the entire Army budget in fiscal year 2015 was $120 billion, unsupported adjustments were 54 times the level of spending authorized by Congress. The July 2016 report indicates that unsupported adjustments are the result of the Defense Department’s “failure to correct system deficiencies.” The result, according to the report, is that data used to prepare the year-end financial statements were unreliable and lacked an adequate audit trail. The report indicates that just 170 transactions accounted for $2.1 trillion in year—end unsupported adjustments. No information is given about these 170 transactions. In addition many thousands of transactions with unsubstantiated adjustments were, according to the report, removed by the Army. There is no explanation concerning why they were removed nor their magnitude. . .
The July 2016 report is not the only such report of unsubstantiated adjustments. Mark Skidmore and Catherine Austin Fitts, former Assistant Secretary of Housing and Urban Development, conducted a search of government websites and found similar reports dating back to 1998. While the documents are incomplete, original government sources indicate $21 trillion in unsupported adjustments have been reported for the Department of Defense and the Department of Housing and Urban Development for the years 1998-2015. (Read more from “Federal Government Cannot Account for $21 Trillion in Expenditures. Massive Black Projects, Incompetency, or Graft?” HERE)
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After Trillions Mysteriously Go “Missing,” DoD Getting Audited for First Time in History
By Matt Agorist. “The Defense Department is starting the first agency-wide financial audit in its history,” the Pentagon’s news service said this week, announcing that they are finally going to follow through with something they promised to do for years.
Beginning in 1996 all federal agencies were mandated by law to conduct regular financial audits. However, the Pentagon has NEVER complied with that federal law. In 20 years, it has never accounted for the trillions of dollars in taxpayer funds it has spent, in part because “fudging” the numbers has become standard operating procedure at the Department of Defense, as revealed in a 2013 Reuters investigation by Scot Paltrow, which detailed the illicit tasks of 15-year employee, “Linda Woodford [who] 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,” Scot J. Paltrow wrote for Reuters, “she says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio, office of the Defense Finance and Accounting Service, the Pentagon’s main accounting agency. Using the data they received, Woodford and her fellow DFAS accountants there set about preparing monthly reports to square the Navy’s books with the U.S. Treasury’s – a balancing-the-checkbook maneuver required of all the military services and other Pentagon agencies.
“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. ‘A lot of times there were issues of numbers being inaccurate,’ Woodford says. ‘We didn’t have the detail … for a lot of it.’”
“Over the last 20 years, the Pentagon has broken every promise to Congress about when an audit would be completed,” Rafael DeGennaro, director of Audit the Pentagon, told the Guardian earlier this year. “Meanwhile, Congress has more than doubled the Pentagon’s budget.”
In what will likely be an immense and highly politicized dog any pony show, the Pentagon is now claiming this will start immediately.
“It demonstrates our commitment to fiscal responsibility and maximizing the value of every taxpayer dollar that is entrusted to us,” chief Pentagon spokesperson Dana W. White said.
“Beginning in 2018, our audits will occur annually, with reports issued Nov. 15,” the Defense Department’s comptroller, David L. Norquist, said, noting the audits will now be an annual task.
As NPR reports, as for how the audit would work, Jim Garamone of the official DoD News agency reports that the department’s Office of the Inspector General has “hired independent public accounting firms to conduct audits of individual components — the Army, Navy, Air Force, agencies, activities and more — as well as a department-wide consolidated audit to summarize all results and conclusions.”
Exactly what will come of this enormous feat of counting the money spent on spreading the American empire remains a mystery. However, what is not a mystery is the trillions that have “gone missing” as a result of the Pentagon’s refusal to comply with 20 years of audits.
As TFTP reported at the time, a Department of Defense Inspector General’s report, released in 2016, left Americans stunned at the jaw-dropping lack of accountability and oversight. The glaring report revealed the Pentagon couldn’t account for $6.5 trillion dollars worth of Army general fund transactions and data, according to a report by the Fiscal Times.
According to the report by the Fiscal Times:
An increasingly impatient Congress has demanded that the Army achieve “audit readiness” for the first time by Sept. 30, 2017, so that lawmakers can get a better handle on military spending. But Pentagon watchdogs think that may be mission impossible, and for good reason…
The Defense Finance and Accounting Service (DFAS), the behemoth Indianapolis-based agency that provides finance and accounting services for the Pentagon’s civilian and military members, could not provide adequate documentation for $6.5 trillion worth of year-end adjustments to Army general fund transactions and data.
The DFAS has the sole responsibility for paying all DOD military and personnel, retirees and annuitants, along with Pentagon contractors and vendors. The agency is also in charge of electronic government initiatives, including within the Executive Office of the President, the Department of Energy and the Departing of Veterans Affairs.
While there is nothing in the IG’s report specifying that the money has been stolen, the mere fact that the Pentagon can’t account for how it spent the money reveals a potentially far greater problem than simple theft alone. Also, other reports put the toll of missing money upwards of $10 trillion.
The accounting errors and manipulated numbers, though obviously problems in their own right, highlight a far greater problem for the Defense Department than only bad recording keeping and wasteful spending habits. In reality, they are a representation of the poor decision-making, and lack of oversight and accountability that plague our nation’s government as a whole and this audit, however promising on the surface, will likely prove to be more of the same. (For more from the author of “After Trillions Mysteriously Go “Missing,” DoD Getting Audited for First Time in History” please click HERE)
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