Center for Defense Information – 2006-05-16 23:37:31

http://www.cdi.org/program/document.cfm?DocumentID=3430&from_page=../index.cfm

WASHINGTON (May 15, 2006) — The Defense Department has failed to comply with the Chief Financial Officers Act since its enactment in 1990. This means that the Pentagon has only very imperfect information about what it owns, what it has and has not paid out to contractors, how much money is being spent, and why. Today, no reliable and verifiable system exists for knowing what new equipment the troops in Iraq and Afghanistan need, who needs them, and when — or if — the supplies will be delivered.

Sadly, that is just the tip of the iceberg. We know from several decades of reports from the Government Accountability Office (GAO) and the Pentagon’s own Inspector General (the DOD IG) that it is not that the DOD flunks audits; rather, the books are so chaotic that they cannot be audited in the first place.

Literally, it would be an improvement for the Pentagon to be able to fail an audit.

A business group, Business Leaders for Sensible Priorities (BLSP), has commissioned a new study of the financial condition of the Pentagon. The report finds that no business could survive if it was managed like the Pentagon, and, certainly, the managers in responsibility would be fired.

And, yet, the Pentagon receives instead larger and larger budgets and its basic management is never brought into serious question.

Despite their highly informative reports, even the vaunted GAO and DOD IG bear some of the responsibility. Neither has specified the specific steps needed to comply with basic accounting practices and the law.

It is time for Congress to require some accountability from the un-audit-able Pentagon. The Defense Department’s CFO, the Comptroller, should be given any and all authority she requests to bring DOD into compliance with generally accepted accounting practices, and if that end is not promptly achieved, the president should replace the Comptroller.

This new report was written by Kwai C. Chan, who has recently retired from a decades long government career at the Inspector General of the Environmental Protection Agency and as an Issue Area Director of the National Security and International Affairs Division of the GAO.

• The new BLSP report is available by clicking here.