Exclusive: The Pentagon's Massive Accounting Fraud Exposed

[G_j]

https://www.thenation.com/article/pentagon-audit-budget-fraud/?fbclid=IwAR1UesmycawJq9jfOT55ZvQtYZLmyxM2zruyVBxgLEfFEEJglyAp-lhYLac


How US military spending keeps rising even as the Pentagon flunks its audit.

On November 15, Ernst & Young and other private firms that were hired to audit the Pentagon announced that they could not complete the job. Congress had ordered an independent audit of the Department of Defense, the government’s largest discretionary cost center—the Pentagon receives 54 cents out of every dollar in federal appropriations—after the Pentagon failed for decades to audit itself. The firms concluded, however, that the DoD’s financial records were riddled with so many bookkeeping deficiencies, irregularities, and errors that a reliable audit was simply impossible.

Deputy Secretary of Defense Patrick Shanahan tried to put the best face on things, telling reporters, “We failed the audit, but we never expected to pass it.” Shanahan suggested that the DoD should get credit for attempting an audit, saying, “It was an audit on a $2.7 trillion organization, so the fact that we did the audit is substantial.” The truth, though, is that the DoD was dragged kicking and screaming to this audit by bipartisan frustration in Congress, and the result, had this been a major corporation, likely would have been a crashed stock.

As Republican Senator Charles Grassley of Iowa, a frequent critic of the DoD’s financial practices, said on the Senate floor in September 2017, the Pentagon’s long-standing failure to conduct a proper audit reflects “twenty-six years of hard-core foot-dragging” on the part of the DoD, where “internal resistance to auditing the books runs deep.” In 1990, Congress passed the Chief Financial Officers Act, which required all departments and agencies of the federal government to develop auditable accounting systems and submit to annual audits. Since then, every department and agency has come into compliance—except the Pentagon.

Now, a Nation investigation has uncovered an explanation for the Pentagon’s foot-dragging: For decades, the DoD’s leaders and accountants have been perpetrating a gigantic, unconstitutional accounting fraud, deliberately cooking the books to mislead the Congress and drive the DoD’s budgets ever higher, regardless of military necessity. DoD has literally been making up numbers in its annual financial reports to Congress—representing trillions of dollars’ worth of seemingly nonexistent transactions—knowing that Congress would rely on those misleading reports when deciding how much money to give the DoD the following year, according to government records and interviews with current and former DoD officials, congressional sources, and independent experts.

..more..

[gratuitous]

1. "We failed the audit, but we never expected to pass it"

Well, that's certainly comforting. Their expectations in one teeny tiny sliver of this mess were realistic. But they would like all the credits, please, for attempting an audit. A participation trophy, I guess, like what you see in a soccer league for five-year-olds. And here I've been told all my life that our military is super duper serious and not to be questioned or joked about because they keep us safe, safe, safe.

[COL Mustard]

2. He's Right...

We never expected to pass the audit. (I work in DoD procurement.) The enterprise is too large to undergo a comprehensive audit; what’s needed is audits of installations and procuring activities.

[zipplewrath]

3. In their "defense"

Excuse the obvious pun. Much of what your seeing originates in the fact that much of the spending isn't so much hidden from congress as it is hidden from us. There is so much classified spending going on that has to be covered up that they "hide" it in "regular" programs and activities. Any detailed audit would tend to detect this activity. And it isn't just DoD. Much of this spending can be for NSA and CIA activities and assets but it gets hidden in DoD budgets. During the ''60s, much of the spy satellite costs got buried in the NASA manned mission budgets.

The problem of course is what the Nation then uncovers. One can do more with such practices than just hiding classified expenditures. One can easily "cook the books" to achieve other goals such as excess spending on assets that otherwise might not get approved. So what happens is that the congress just assumes that the excess spending on "real" programs is actually associated with classified programs. And without an audit, they are free to continue those assumptions.

[TygrBright]

4. For about the dozenth time...

This is from 1985:

Lyrics:

"Sold a hammer to the Pentagon
To the Bing Bang to the Pentagon
And I’m living in Florida for they made me a millionaire
They gave me 700 for every silly little hammer
For I sold them to the Pentagon and they made me a millionaire
So you sell them nails
To the Bing Bang to the Pentagon
Yes you sell them nails and they’ll make you a millionaire

Sold a coffee pot to the Pentagon
To the Hee Haw to the Pentagon
And I’m living on the golf course for they made me a millionaire
They gave me 5,000 for every silly little coffee pot
For I sold them to the Pentagon and they made me a millionaire
So you sell our coffee
To the Hee Haw to the Pentagon
Yes you sell them coffee and they’ll make you a millionaire

Sold a toilet seat to the Pentagon
To the Yahoo, to the Pentagon
And I’m living in a condo for they made me a millionaire
They gave me 600 for every folding little toilet seat
For I sold them to the Pentagon and they made me a millionaire
So you know what you can sell
To the Yahoo, to the Pentagon
Yes you know what you can sell and they’ll make you a millionaire"

Plus ça change, plus c'est la même chose...

deja-vunally,
Bright