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The Pentagon still can’t manage to produce its first audit in 20 years

Dec 2, 2014 12:04:04 AM / by Shanmugavel Sankaran posted in fixnix, FixNix GRC, USA, audit, audit management, Blog, pentagon


After decades of failing to produce clear financial statements, the Pentagon is once again set to fail to meet its audit deadline two years from now.

The Pentagon accounts for nearly half of all discretionary spending approved by Congress, has an inventory that makes up 33 percent of the federal government, a budget of over $500 billion, and owns $1.3 trillion in property. Not once has it managed to scrape together a financial statement, which the federal government has theoretically required since the 1990s.

 Former Defense Sec. Leon Panetta gave the Pentagon until September 2017 to finally produce such a statement, but since then they’ve gradually pushed the deadline back and decided to “narrow the scope” of their accounting.

“To be able to do a financial statement audit by that date, it’s going to be very difficult because of the sheer scale and resources required,” Asif Khan, the director of financial management and assurance at the Government Accountability Office, told The Hill. “I think there are significant challenges in meeting the 2017 date.”

“We still have a lot of work left to do to be ready to audit all of our financial statements,” an anonymous defense official said. “It is an ambitious goal but we are committed to meeting it.”

The GAO has severely criticized the Pentagon’s sloppy accounting for years, rating them “high risk” since 1995 for being “one of the few federal entities that cannot accurately account for its spending or assets.”

Among the things this leaves the Department of Defense unable to do, according to the GAO: “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; address pressing management issues; and prepare auditable financial statements.”

The DOD claims it can’t manage to get its records together because of old technology and a lack of uniform accounting practices.

Republicans and Democrats have both called for auditing the Pentagon, but the bipartisan “Audit the Pentagon Act” has failed to move forward in the House.

“Any leader of a private business, corporation, church or association that couldn’t pass a financial audit could find himself in prison,” Sen Tom Coburn (R-Okla.) wrote earlier this year. “Year after year, the Pentagon recycles the same excuses it has used since the 1950s, but now promises it is finally making progress toward meeting its statutory deadlines. Year after year, Congress appropriates hundreds of billions of dollars without requiring the Pentagon to comply with the law and the Constitution.”

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