On (not) auditing the Pentagon

[nancylebov]

The Pentagon hasn't had an outside audit for 20 years.

"By 2017, they have a goal of being auditable. The Pentagon brass has such chutzpah that they came to a hearing last fall and said, 'If you want us to be auditable by 2017, we're going to need more money, to construct the system so we can be auditable,'" [Oregon Representative] Defazio said.

Much as I hate to disagree with someone who's trying to do something about fraud, waste, and abuse, the Pentagon may have a point about wanting yet more money to become auditable.

I'm related to CPAs, and a large amount of work goes into keeping financial track even for ordinary-sized organizations who haven't neglected their records for 20 years. I shudder to think of what a job setting up the Pentagon to be audited and then auditing it would be, but I'm sure existing accountants (they have some, I hope) aren't going to be doing it in their spare time.

IIRC, there were pallets full of American currency that went missing early in the Iraq war. It would be elegant to use that money to pay for the audit, but the money would probably have to be imported from an alternate universe. Some of it might be in a warehouse next to the Ark of the Covenant, but that isn't going to be much easier to find.

I seem to be heading off into whimsy because of lack of practice at moral outrage, but I would be grateful if someone who's good at moral outrage would pick up this story and let me know what you do with it. By the way, note that 20 years. We have something that isn't GWB's fault.

In vaguely related editorializing, has anyone seen a moral argument for not defaulting on the national debt? After all, the money was lent to the US in good faith, and making the payment wouldn't be a short-term disaster.

Comments

[twistedchick]

How about "because it's unconstitutional"? See my latest post for details.

[madfilkentist]

I keep overdrawing on my supply of moral outrage.

While I'm neither a lawyer nor an accountant, I'd think it would be implicit in any government agency's standard practices to use an appropriate part of its budget to ensure it meets its obligations to Congress, such as being financially accountable. It shouldn't need extra money to do that.

[nancylebov.livejournal.com]

Part of the problem with moral outrage is that it's easier to do about individual injuries rather than system failures.

[fengi.livejournal.com]

That news story appears to be incorrect. The issue appears to be that (http://insidedefense.com/201006032367063/Inside-Defense-General/Public-Articles/dod-first-audit-of-military-service-to-wrap-up-this-calendar-year/menu-id-99.html) congress requested a law requiring an audit 20 years ago and after two decades the Pentagon will have only completed 14% a few departments and one military service: The Marines.

20 years of prep and only 14% is audit ready - this is what Defazio is complaining about.

Excerpt from the article:

Winslow Wheeler, the director of the Straus Military Reform Project at the Center for Defense Information and a former staffer on the Senate Budget Committee, said the Pentagon -- unlike a major company like Wal-Mart -- does not know what it is doing with its money.

...Wheeler cited an inspector's general's report that came out in October 2009, that summarized financial management related audit reports from FY-04 through FY-08. The report noted the Government Accountability Office has "identified DOD financial management as an area of high-risk for fraud, waste, abuse and mismanagement."

"According to GAO, DOD's pervasive financial and related business management and system deficiencies continue to adversely affect its ability to control costs; ensure basic accountability; anticipate future costs and claims on the budget; measure performance; maintain funds control; prevent and detect fraud, waste and abuse; and address pressing management issues," the report states.

Some central problems laid out in the report include DOD's inability to record, report and collect accounts receivable and inventory property.

The Pentagon source acknowledged that it was a "reasonable concern" that the Pentagon is currently unauditable. But the source noted the department is working hard to change that.

"In previous attempts, I don't know that we had a good understanding. We did not have a clear focus and path forward," the official said. "That's what changed, and that's why this time will be different."

They've had two decades to do this and they're just now saying "this time will be different". Does the outrage make sense?

[nancylebov.livejournal.com]

Thanks for the details, but I'm not sure of what you're disagreeing with.

[avram]

The problem might be "For the past twenty years, the Defense Department has not undergone any external auditing process", which implies that there was an audit 20 years ago. If Fengi's right, there wasn't an audit then, either. That just marks when Congress started to think maybe they ought to have one, at some point, eventually, one of these days, when the Pentagon feels like getting around to it, if it's not too much trouble.

And here I was, all set to follow up your remark about it not being GWB's fault by pointing out that GHWB was president in 1991.

[metahacker.livejournal.com]

They can find the money to pay the accountants from their existing budget, reallocating it away from other programs if necessary, or from reducing their outflow due to waste. Any accountant worth his salt ought to be able to find a gold mine in that much morass.

"Give us more money and we'll shape up" is really kind of lame. It's not like they're hurting for funding.

[madfilkentist]

When they finally do get audited, they'll just stamp "national security" on any information that's inconvenient anyway.