The Pentagon Up And Lost A Whopping $6.5 Billion

While everyone was semi-distracted by the Olympics and Michael Phelps proving that he actually is Aquaman, the Pentagon up and lost a whopping $6.5 billion.

Maybe Phelps has it...

Maybe Phelps has it…

According to the Department of Defense Inspector General’s report released in late July, the Pentagon revealed that they can’t account for $6.5 trillion worth of Army general fund transactions and data. The mind-blowing lack of accountability and oversight is a massive facepalm moment for the Pentagon, who have never complied with a law enacted in 1996 that requires all federal agencies to conduct regular financial audits.

Had they completed a single audit in the last two decades, we might just have some idea as to how the agency actually spent the funds that were allocated to them by Congress for wars, equipment, personnel, housing and healthcare. We can only assume that trillions of taxpayer dollars have gone towards keeping Keanu Reeves and Johnny Depp looking eternally young, while the Department of Defense fudged their numbers; something that has become pretty standard according to multiple 2013 Reuters investigations by Scot Paltrow and Kelly Carr.

According to the report by the Fiscal Times:

“An increasingly impatient Congress has demanded that the Army achieve “audit readiness” for the first time by Sept. 30, 2017, so that lawmakers can get a better handle on military spending. But Pentagon watchdogs think that may be mission impossible, and for good reason…

The Defense Finance and Accounting Service (DFAS), the behemoth Indianapolis-based agency that provides finance and accounting services for the Pentagon’s civilian and military members, could not provide adequate documentation for $6.5 trillion worth of year-end adjustments to Army general fund transactions and data.

The DFAS has the sole responsibility for paying all DOD military and personnel, retirees and annuitants, along with Pentagon contractors and vendors. The agency is also in charge of electronic government initiatives, including within the Executive Office of the President, the Department of Energy and the Departing of Veterans Affairs.”

Nothing in the report suggests that the money has been stolen, and we doubt they’d ever admit to something like that, but the simple fact that the Pentagon can’t account for how the money was spent is a great cause for concern.

Every transaction made by the department is supposed to come with a “journal voucher,” which provides serial numbers, transaction dates and the cost for the transition. Unfortunately, the agency “removed at least 16,513 of 1.3 million records during third quarter FY 2015,” and that’s just what we know about. What’s more, employees of the DFAS were repeatedly told by their superiors to take “unsubstantiated change actions” such as “plugging” the numbers. These so-called “plugs” amounted to cooking the books and were used to make it seem like the military’s financial data matched that of the U.S. Treasury Department’s recorded numbers when discrepancies arose.

One of Paltrow’s investigations, published November 18, 2013, claims that:

“For two decades, the U.S. military has been unable to submit to an audit, flouting federal law and concealing waste and fraud totaling billions of dollars.

Linda Woodford spent the last 15 years of her career inserting phony numbers in the U.S. Department of Defense’s accounts.

Every month until she retired in 2011, she says, the day came when the Navy would start dumping numbers on the Cleveland, Ohio DFAS…. Using the data they received, Woodford and her fellow accountants there set about preparing monthly reports to square the Navy’s books with the U.S. Treasury’s…. And every month, they encountered the same problem. Numbers were missing. Numbers were clearly wrong. Numbers came with no explanation of how the money had been spent or which congressional appropriation it came from.”

It seems that a great deal of the issues boiled down to bookkeeping errors rather than actual financial losses, but the IG report state that the DFAS failed to provide necessary tracking information required to perform an accurate audit.

“Army and Defense Finance and Accounting Service Indianapolis personnel did not adequately support $2.8 trillion in third quarter adjustments and $6.5 trillion in year-end adjustments made to Army General Fund data during FY 2015 financial statement compilation,” wrote Lorin T. Venable, the assistant inspector general for financial management and reporting. “We conducted this audit in accordance with generally accepted government auditing standards.”

This harkens back to the some 16,000 removed documents we referenced earlier, making for unreliable data and an inadequate audit trail. It’s gross negligence at its finest, and when you consider that just a few years ago there were 47 million people (15% of the U.S. population) living in poverty, yet the Pentagon doesn’t know what happened with $6.5 trillion (nearly half the U.S. debt) it really makes you scratch your head.

[Mint Press News]

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