High rolling adjustments in US Army finances under scrutiny

Discussion in 'Politics, Religion, Social Issues' started by LizKat, Aug 20, 2016.

  1. LizKat macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #1
    This is interesting considering that both major candidates speak of increasing Defense budgets. Your average publicly traded US corporation could not, of course, get away with fudging its books by billions of bucks, never mind doing it by making trillions of bucks' worth of dubious or just "plugged" adjustments.



    Excerpt:

    The United States Army’s finances are so jumbled it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced.

    The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.

    As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”


    Apparently it's not even certain an audit deadline (about a year from now) can even be met. But the Army was eager to note for the record that even though 6.5 trillion bucks' worth of adjustments were jammed into the accounts to make stuff balance out, the net adjustment was "only" 60 billion or so dollars:


    Congress set a September 30, 2017 deadline for the department to be prepared to undergo an audit. The Army accounting problems raise doubts about whether it can meet the deadline – a black mark for Defense, as every other federal agency undergoes an audit annually.

    For years, the Inspector General – the Defense Department’s official auditor – has inserted a disclaimer on all military annual reports. The accounting is so unreliable that “the basic financial statements may have undetected misstatements that are both material and pervasive.”

    In an e-mailed statement, a spokesman said the Army “remains committed to asserting audit readiness” by the deadline and is taking steps to root out the problems.

    The spokesman downplayed the significance of the improper changes, which he said net out to $62.4 billion. “Though there is a high number of adjustments, we believe the financial statement information is more accurate than implied in this report,” he said.

     
  2. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

    Joined:
    Feb 11, 2010
    #2
    Accounting for inflation, Everett Dirksen was still off by a couple of zeroes. It should have been a trillion here, a trillion there
     
  3. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #4
    I like the part about the $43 million gas station built in Afghanistan that should have run $500k instead.

    They must have put really nice ski slopes with 2/47 snowmaking in there or something.

    See this is why the guy on food stamps lost that $4 for two boxes of Cheerios. I'm pretty sure...
     
  4. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

    Joined:
    Feb 11, 2010
    #5
    With roughly $62 Billion of DoD spending difficult to account for, I wonder if Congress is spending the money necessary to do better accounting? I don't see much in these articles about whether DoD has the money to do proper accounting, and, isn't able to deliver, or, whether they have been denied enough money for accounting, and then, people are complaining when they don't do a good job of it.
     
  5. samcraig macrumors P6

    Joined:
    Jun 22, 2009
    #6
    I wonder, leveraging average "citizen" pricing the military's budget would really need to be if they weren't paying exorbitant rates for labor, tools, etc. Why do we as tax payers allow it to happen - and how can this gross negligence of tax dollars continue to occur?

    Using LizKat's stat above, that gas station was 86x what it should have cost. Can you imagine what the REAL budget of the entire military budget SHOULD be?
     
  6. aaronvan Suspended

    aaronvan

    Joined:
    Dec 21, 2011
    Location:
    República Cascadia
    #7
    The President could order a Pentagon audit tomorrow. So could Congress. Every President and every Congress refuses. The military-industrial complex will not tolerate it.
     
  7. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #8
    wail hail let's git our pitchforks and go down there. where they be at?
    --- Post Merged, Aug 22, 2016 ---
    I doubt that a lot of their back office sort of computer systems talk to the rest of their computer systems, for openers. Just to make a spec to cause that happen could cost more than a hundred million bucks, so probably they need to start over with front end data collection and a warehouse for auth-order-invoice-ship-pay and start stubbing out from there, go back and retrofit old data in there later as archives. Standardize the process and leave flexible on the data since surely ordering pencils and toilet paper is different from ordering another aircraft carrier. If the processed data is in one warehouse then someone's accountable when something's not there. And put the virtual warehouse in one real warehouse someplace.

    Sounds like a great building for any state to clamor to have, eh? Groan.

    Systems talking to systems seems to be a major stumbling block and source of extra work even for agencies whose books are in better shape. I am trying to recall where I read some long piece about this. I will have to look around tomorrow, it was interesting in a kind of jaw dropping way.

    In the meantime for amusement or horror, there's this...

    http://www.washingtonpost.com/sf/national/2014/03/22/sinkhole-of-bureaucracy/

    Anyway I can see Congress a bit reluctant to say to the Army, here take $80 million and get some guys in here to upgrade your software... when they're $62 bililon on the dark side of the moon already. Also Congress could be a little wary having learned that just grabbing up some guys and paying them to tweak some more or less packaged processes for say the ACA enrollment thing, may not work out too well on the first go-around. :eek:
     
  8. Mousse macrumors 68000

    Mousse

    Joined:
    Apr 7, 2008
    Location:
    Flea Bottom, King's Landing
    #9
    If they spent a few millions to hire better accountants, then they could have cooked the books so well the auditors would never find any errors. The best accountants I know keep 3 sets of books: one to show the IRS, one to show the Boss, and one with the real numbers (makes embezzling easier:p).

    Those $100 hammers and $600 toilet seats hides the money spent on black ops. Those can't be placed in the books because it's classified and bean counters don't have necessary clearance.:D
     
  9. bent christian Suspended

    bent christian

    Joined:
    Nov 5, 2015
    #10
    Case: Closed?
     
  10. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #11
    Yeah, exactly. Still, a $43 million gas station that cost $500k, so we got $42m worth of black ops out of A'stan? We could have bought every warlord, takfiri taliban wannabe Caliph and dope farmer in there and that's after paying for figuring out who's on first and explaining away some disappearances.

    OK maybe it would not cover all the expenses of managing assorted spoofs, and transactions w/ arms dealers. Hope someone got a good deal on the hardware. Are we reselling it in Yemen or just hanging onto it in case it comes in handy on our way out? I like to see maybe just one or two of the veils lifted.

    I'm almost to the point of becoming a fan of a zero-based classification justification process. Something past "well we don't usually reveal that." Why is that? Because the peasants would go berserk?

    If some American company is making a buck and a half a nanosecond over there then I say let's call that Field Services Slush ($80 lettuce with your fries back in the Green Zone when Iraqis grew it on their windowsills). And let's forget about calling black ops toilet seats and hammers, let's call that Special Slush.

    Let the Russians and Chinese shiver with wonder at how much we can decide to spend lookin' at them lookin' at us copying their lunch menus, and let's also see the profit margins on the contracted services, contract by contract, overruns and all. Maybe could have bought the Iraqi windowsill lettuce for those Green Zone salad bars...

    On no account do I mean to derogate our field officers in intelligence. I presume the bosses have upped their own game since being called to account by a number of ex-intel officers in print since 2001. And if that's not the case, then I respect the field guys for showing up anyway, since I sure God don't want to do their job. I just think we're all grownups now and everybody knows there's no free lunch.

    So how much are we paying for that gas station in Afghanistan, and how much is the spook service and the salad bar?

    I agree about the accountants. We don't know for sure there aren't a lot of sets of books on supply chain dealings. I don't hold the NCOs in the field to account on that stuff though. They do what they gotta do to try to get our guys fed, watered, transported and sheltered. I hold the DC end to account for not making it easier for us to understand where our damn tax dollars actually go. Support the troops is one thing. Supposed to be the main thing. The right gear in the right vehicle in the right place at the right time with a way out and enough food and water to get there. That could be $43 million or a trillion, I just like to know we're not shorting the troops because... capitalism and corruption.
     
  11. samcraig macrumors P6

    Joined:
    Jun 22, 2009
    #12
    Tongue in cheek or not - that's speculative. Accountability still needs to take place.
     
  12. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #13
    Sir: Stick to your Genny Light and never you mind how much top shelf hooch gets shipped where in the military supply chains of necessity now and then. Need to know basis FAIL, sir.
     
  13. samcraig macrumors P6

    Joined:
    Jun 22, 2009
    #14
    [​IMG]
     
  14. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #15
    I put up with Tom Cruise twice a year just so I can see Nicholson get down to that truth! Sir!
     
  15. aaronvan Suspended

    aaronvan

    Joined:
    Dec 21, 2011
    Location:
    República Cascadia
    #16
  16. thermodynamic Suspended

    thermodynamic

    Joined:
    May 3, 2009
    Location:
    USA
    #17
    No worries, Enron and other companies already got away with it. In one form or another. Until it became unsustainable. Parallels should be obvious given the number of years or even decades MSM has covered them.

    Also, another meme - in pretty picture pages form:

    [​IMG]

    [​IMG]

    The other countries might be smart enough to find novel and cheaper ways to make war, I suppose...
     
  17. vrDrew, Aug 25, 2016
    Last edited: Aug 25, 2016

    vrDrew macrumors 65816

    Joined:
    Jan 31, 2010
    Location:
    Midlife, Midwest
    #18
    The issue of DoD financial adjustments is one that periodically gets people worked up. And maybe they should be.

    But the reality is a little more complicated: It's not that the Pentagon "lost" $8 trillion. They couldn't, for the very simple reason that amount is several times the entire budget for DoD for an entire year.

    The problem is that the Pentagon doesn't have in place the necessary accounting systems to tie all of its expenditures; purchase orders; and equipment receipts together. Part of this is a hangover of history. At one time the Navy was an entire Cabinet Department of its own. Computer and accounting systems were introduced haphazardly over the years. And part of the problem there is that in many ways the DoD was a pioneer in computerized accounting systems. And they ended up with so much infrastructure tied up in punch-card and vacuum-tube technology, that it became increasingly difficult to untangle that mess as newer MIS systems came online. Meaning the job was done on an ad hoc basis, with each service bringing systems online at different times, and sourced from different vendors. Complicating the issue is that a fair chunk of Pentagon expenditures are classified to a greater or lesser extent. Add in the massive "off-budget" funding for the GWOT, and you have what we have today.

    The money isn't missing. The Pentagon knows where the money was spent. They simply don't have records with sufficient level of detail to satisfy the requirements of an audit.

    There is little doubt that this is a situation that needs to be improved upon. But let's not kid ourselves that an audit is going to find trillions of dollars of waste we can easily trim from the budget. A few billion? Absolutely. But not game-changing, at least in terms of the overall scale of the Federal budget.
     
  18. LizKat thread starter macrumors 68040

    LizKat

    Joined:
    Aug 5, 2004
    Location:
    Catskill Mountains
    #19
    LOL yah I should have said "small businesses" couldn't get away with it. Enron really had brass ones from the get go. Loved your post. National priorities: don't leave home without a general or two in tow.


    First of all I have never said I expect an Army audit to find trillions of dollars of waste.

    I do think it's okay to get worked up over a $43 million gas station that should have gone up for $500 grand.

    It's certainly okay to get worked up over net adjustments of $62 billion to make Army accounts settle out. The Pentagon knows where the money was spent? Great. Here's what I know. The whole food stamps budget is $74 billion and Congress wants to cut it even more because.... waste, fraud, layabouts sucking taxpayer money down the piehole.

    Whose pieholes got the $62 billion net adjustments to Army accounts?

    The point is that other departments have audits and the Army does not. Not having good enough systems is not really a good enough excuse imo. The only excuse is the real excuse, which @aaronvan pointed out will never be offered, and that's because the private sector companies involved cannot tolerate an audit, and that doesn't really sound very good, does it.

    I'm never going to quit hassling the government and by extension the whole military industrial complex over carelessness with “trivial” sums like a million here or there on defense budget items.

    Those tax monies come in part from people who skip lunch to buy their train fare to the job.

    We pay for all the stuff the Pentagon buys, whether it's toilet paper or missile launchers or graft to make a gas station appear on time at an Afghan crossroads. Or spooks to find out what's going on in the 'hood. That’s okay. Just show us the money flow. You can hide the spooks in flower pots, just call the budget item FlowerPots so we know. I hope we pay the FlowerPots crew enough. What I want to see are the line items for graft. Are we calling those “other grocery items” or what?

    So do the damn audits and let the audited departments write "insufficient detail here to satisfy audit requirement" wherever that's the God's truth. That should fly if they cannot bring themselves to lie and write up $2301.86 as "other grocery items." I will use my imagination on what 2300 bucks might go for on a Friday night.

    Maybe the next time some SNAP client wants the supermarket cashier to let him skate on purchase of an ineligible item, he can tell her to ring up the $4.99 ineligible plastic laundry basket as "other grocery item". I'm sure that will fly too. Some GOP Congressman will be ranting about it on the floor of the House next year, using that honest enough little lie as justification to cut another $5 billion off the SNAP budget.

    So tired of the really big lies. Pentagon should consider the Spoon song Lafitte Don't Fail Me Now:

    "C'mon tell me now: are you ever honest with anyone?"​
     

Share This Page