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$6.5 Trillion In Army Funds Unaccounted: Pentagon Has Never Completed An Audit Despite 20-Year-Old Federal Mandate

By Tara West
Published on: 09:17 PST, Sep 2, 2016

Despite a 20-year-old federal mandate requiring all federal agencies to conduct regular financial audits, the Pentagon has never been in compliance with this law. However, that hasn’t stopped trillions of dollars from funneling into the Pentagon’s Army general fund with taxpayers footing the bill. With Congress growing impatient over the lack of accountability, the Army was given until September 30, 2017, to achieve audit readiness. This preparation for audit led to the discovery that $6.5 trillion of the Army general funds are completely unaccounted for in transactions or data.

The Fiscal Times reports that an astonishing $6.5 trillion is are not accounted for in accounting books for the Pentagon’s Army general fund. The missing trillions means that the Army would be unable to pass an audit, and many of the organization’s bookkeepers say that the findings are not surprising.

In an investigative report by Reuters, a former accountant at the Defense Finance and Accounting Service, which provides accounting services to the Pentagon, notes that the problem doesn’t exist just in the Army. In fact, the former employee says that she spent much of her career with the DFAS fudging numbers for the Navy to ensure their books matched that of the Treasury.

“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.”

In the audit report submitted by the Office of the Inspector General, it was noted that there is no indication that the funds were used inappropriately — only that the funds were not properly accounted for in the Army’s bookkeeping. However, the excessive amount of the unaccounted transactions means that the Pentagon will likely not meet Congress’ deadline of September 2017 to achieve “audit readiness.”

“The Office of the Assistant Secretary of the Army (Financial Management & Comptroller) (OASA[FM&C]) and the Defense Finance and Accounting Service Indianapolis (DFAS Indianapolis) did not adequately support $2.8 trillion in third quarter journal voucher (JV) adjustments and $6.5 trillion in yearend JV adjustments made to AGF data during FY 2015 financial statement compilation.”

Therefore, it was determined that corrective action and milestones should be put into place for the accounting so that the issue does not continue into 2017. Another issue surrounding the audit preparedness measures is the removal of 16,513 records during the third quarter of 2015. The audit found that the documents were seemingly removed for no reason making financial statements unreliable and inadequate. No one at the DFAS could explain why the documents were destroyed, leading to further criticism that the Army has essentially been taking trillions of dollars worth of taxpayer money with little to no accountability for expenditures.

Meanwhile, the National Coalition for Homeless Veterans notes that 11 percent of the homeless population is comprised of military veterans with 1.4 million additional veterans at risk for homelessness due to poverty, lack of support systems, and poor living conditions.

What do you think about the Army’s $6.5 trillion in unaccounted for funds? If the Pentagon is not “audit ready” by the Congress deadline, what actions do you think should be taken?

[Image by Alex Brandon/AP Photo]

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