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Pentagon makes $35 trillion in accounting adjustments in one year; double & triple counted funds

US pentagon building aerial view at sunset (Dreamstime/TNS)
January 23, 2020

The U.S. Department of Defense announced $35 trillion in accounting changes in 2019 – a figure up from $30.7 trillion in 2018 and $29 trillion in 2017.

The spending adjustments follow the Pentagon’s first failed audit in 2018 and another failed audit in 2018, according to Bloomberg. Though the audits have found no evidence of fraud, there were several instances of funds being double-counted, which have highlighted the difficulties in balancing the military’s massive budget.

The Pentagon’s budget for 2020 was only $738 billion.

“Within that $30 trillion is a lot of double, triple, and quadruple counting of the same money as it got moved between accounts,” Todd Harrison, a Pentagon budget expert with the Center for Strategic and International Studies, told Bloomberg.

A report by the Government Accountability Office (GAO), published on Wednesday, determined the Department of Defense and the Defense Finance and Accounting Service (DFAS) had maintained an “inadequate and inconsistently followed” method for recording accounting adjustments.

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In one sample of audited Pentagon adjustments, 96 percent of 181,947 automatic adjustments made in the final quarter of fiscal year 2018 were made without “adequate supporting documentation.”

Rep. Jackie Speier, D-CA, who requested the GAO investigation of the Pentagon’s accounting methods, said, “combined errors, shorthand, and sloppy record-keeping by DoD accountants do add up to a number nearly 1.5 times the size of the U.S. economy.”

She said the Pentagon “employs accounting adjustments like a contractor paints over mold. Their priority is making the situation look manageable, not solving the underlying problem.”

Pentagon spokesman Christopher Sherwood defended the Pentagon’s efforts in part, saying “annually, DoD has hundreds of billions of dollars of financial activity, and accounting adjustments are sometimes used to record activity in our financial reporting systems due to a lack of system capabilities or interfaces.”

Sherwood said part of the issue can be attributed to outdated accounting methods “designed without consideration for current financial accounting standards.”

Dwrena Allen, a spokeswoman for the Pentagon’s inspector general, said that even though the Pentagon could not “adequately support all accounting adjustments, that does not mean they were inaccurate or erroneous.”

Mark Easton, the Defense Department’s deputy chief financial officer said the Pentagon “is actively developing strategies” to resolve its high number of accounting adjustments.