Pentagon Celebrates 6th Audit Failure in a Row

The Pentagon failed its sixth audit in a row, and they are the only ones celebrating, leaving a larger wake of frustration for everyone else.

December 4, 2023

By: Bobby Casey, Managing Director GWP

Pentagon The amount of cover the political spin doctors are putting on the Pentagon’s repeated audit failures is dizzying to say the least.

Their first audit, after much punting, deferring, and kicking and screaming, was in 2018.

It’s important to understand why this agency, more than any other agency in the government, protested so strongly against the audit.

To get you up to speed, here are the cliff notes:

Roughly 25 years ago, every federal agency was ordered to modernize their accounting practices; to which EVERY federal agency complied… except the Pentagon.

In 2010, a laws was passed that gave the Pentagon another seven years to get its stuff in order. They missed the 2017 deadline as well.

In 2018, the Pentagon agreed to BEGIN the auditing process.

Naturally, they failed that audit. The official reason they gave for why goes like this: “The size, diverse functional scope of business operations and frequently non-standard, decentralized execution of support operations makes this an extremely challenging endeavor.”

  • Here’s what that translates into in real terms and numbers:
  • They have too much stuff ($2.2 Trillion in assets, in case you’re wondering)
  • They have too much money, and can’t keep track of it ($590 – $700 billion annually)
  • They spend too much money in too many different places ($2.4 trillion in liabilities, actually)
  • There isn’t enough information technology to handle what we do
  • And lastly, they’ve been dumping a lot of toxic waste and have no idea its scope.

What they are glossing over are:

  • The OCO or “Overseas Contingency Operations” amounting to $80 billion. That’s the Pentagon’s slush fund for miscellaneous or extracurricular war stuff. Not the usual jingoistic nonsense… but other war-ish stuff.
  • The Pentagon lost $6.5 Trillion. You can basically do an internet search of: “Pentagon Loses Millions/Billions/Trillions” and various stories will pop up. Technically, they didn’t “lose” it in the sense that it disappeared. They lost it in that they just can’t seem to account for it.
  • The Pentagon buried a report in 2015 which exposed $125 BILLION in bureaucratic waste. Ironically, this study was done at the behest of the Pentagon in hopes of finding SAVINGS that could be redirected to combat related activity and resources.

That’s not including the $21 Trillion in discrepancies by economic professors at MSU between HUD and the DoD.

Since then, we’ve been graced with that lovely Pentagon “accounting error” which overstated the cost of U.S. weapons sent to Ukraine by over $6 Billion, as well as the issue of contractors losing millions in spare parts for the F-35 program.

Here we are SIX audits later and all we get are these bromides alluding to “progress” and “improvement” from years before:

“We’ve heard the same platitudes about audit progress for years,” said Julia Gledhill, an analyst at the Project on Government Oversight’s Center for Defense Information. “They’re meaningless, especially since the Pentagon can’t even commit to a timeline for achieving a clean audit.”

Former Pentagon comptroller Thomas Harker, now the secretary of the Navy, had publicly set a deadline of 2027 for a clean audit, but officials have since distanced the military from that timeframe. “Former comptroller Harker signaled 2027 back in 2020, but the department has completely rolled that back,” Gledhill said. “There’s no incentive to improve.”

All the spokesmen for the Pentagon are speaking of “growth” and how the Pentagon remains a “trusted institution”. Is that trust earned? Because I can’t recall a single event or piece of trace evidence that would’ve curried this sort of favor. As long as they wax positively, pointing to thousand dollar improvements, we’re all meant to just clap and pet them on the head?

Here’s what “progress, growth, and improvement” look like by Pentagon standards:

According to the Pentagon’s announcement, seven of 29 audit components received unmodified opinions, indicating they passed. One received a qualified opinion, denoting its financial statements contained errors or omissions, while three are still pending. The remaining 18 components received disclaimers of opinion, implying that auditors either lacked access to necessary information, found the provided information unclear or unreliable, detected material misstatements, or deemed financial records too complex to decipher. In other words, they failed.

My question is, why is it so difficult to get them to pass an audit much less agree to one? Why has every administration struggled to get this particular department in line? The argument is that they are the most complex of the federal agencies… but WHY are they so complex to begin with? Why did congress allow them to become complicated, and enable it with MORE funding? And what is it about this agency that intimidates every politician?

Hard to say whether those questions are rhetorical or not. I think people have their suspicions. What else do we have though? Without any proper transparency, you only get suspicion which then turns to distrust which ultimately becomes one of those “conspiracy theories”. And yet, every other theory tends to be far more believable than the official reporting because each time, we find out their official reports are a load of crap.

No one is serious about getting the Pentagon’s finances in order. Not one soul. I can only imagine how futile it must feel to be one of the private auditors seeing all this. And as you witness failure after failure, discrepancy after discrepancy, to then hear about Biden’s call for a $886 Billion budget with an additional $80 Billion call from the Republicans for the Pentagon’s budget this coming fiscal year, must be confounding, to say the least.

You hear Republicans decrying excessive government spending, threatening shut-downs. Then they turn around and demand outrageous amounts of funding for an agency that has proven for DECADES it cannot track that money.

As William Hartung, a senior research fellow at the Quincy Institute for Responsible Statecraft observed, “…[T]hey have been legally required to pass an audit for decades and have clearly not made it a priority. As long as the money keeps flowing and there are no consequences for failure. We can expect the Pentagon to fail audits year after year with no end in sight.”

It’s not the tinkering around the edges at food stamps that is going to prevent the collapse of the US economy. While I oppose all welfare, from corporate to individual, I know what’s breaking the bank, and it ain’t food stamps and offshore accounts. It’s the war machine and the foreign aid.

The only one’s giving each other high-fives is the Pentagon itself. The only perceivable value that department gives is the memes it generates.

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