U.S. Military Commits $6.5 Trillion Accounting Error, Now What?
(Original Publication: 8/30/16)
Wasteful spending of the U.S. military, often the butt of jokes (from million dollar toilets to thousand dollar nails), lost trillions in 2015. No longer a laughing matter, the accounting error could cost every man, woman and child in the United States more than $12,000.
For anyone who has made a simple mistake on their taxes that turned into a multi-year ordeal with the Internal Revenue Service, learning that the United States Military made a $6.5 trillion (not billion, not million, but, yes, trillion dollar) accounting error in 2015, is a real slap to the face.
According to the U.S. Defense Department’s Inspector General 75-page report, the U.S. military made trillions of dollars of adjustments that were not adequately documented or supported.
“I recently got a “bill” from the IRS for some miscalculation I made on my 2015 tax returns. The 2015 tax return included some really complex forms dealing with our use of ObamaCare. The bill was for $87. I paid it begrudgingly, since it took me about 2 hours to fill out the new forms, and to have gotten them right to start with, I would have needed to hire a tax accountant for about $200/hour,” writes one Facebook user. “So then I see this article. $6.5 TRILLION error?!! It’s “lost”? Seriously folks? And you’re pestering a fixed-income old-guy for $87??”
In a recent audit, the Office of the Assistant Secretary of the Army (OASA) and the Defense Finance and Accounting Service (DFAS) Indianapolis, mishandled $2.8 trillion in third quarter journal voucher adjustments and $6.5 trillion in year-end JV adjustments made to the Army general fund (AGF) data.
What does this mean?
The improper adjustments most likely were created to give the illusion that its books are balanced.
Apparently despite lacking receipts and invoices, the Army made $2.8 trillion in wrongful adjustments alone in one quarter of 2015 with “forced” adjustments.
Rendering the statements useless, the DoD and Army managers can now inadequately make management and resource decisions.
According to a 2013 series in Reuters, “Disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades.”
The U.S. Military, by far, takes up the biggest chunk of tax payer revenue, some 54% of federal taxes totaling more than $598 billion in discretionary spending in 2015.
For years, several federal budget watchdogs, including the Project on Government Oversight and National Priorities have called for a audit of the military, stating there has been no way for the American public to know how the military spends the public’s money.
“Most of us in the United States don’t know where or how our federal tax dollars are spent. Many factors have distanced us from the personal and societal impacts of federal spending, and barriers have prevented us from having influence over the creation and oversight of our national budget,” states the National Priorities Project on their website.
“The federal budgeting process should be open and participatory, with elected officials fully accountable to their constituents. Making this a reality is crucial for a healthy and robust democracy.”
According to a retired armed service member [named redacted], “we’d need a receipt so they’d send me down to the local Lowe’s to buy a pallet of two by fours, or whatever, to help balance the books — this happened a lot.”
However, the accounting error does not necessarily mean all the money is “missing” per say.
So how does the accounting error for one quarter total more than the entire year’s discretionary budget?
Answer: A domino effect from years of no audits. Each year, every other governmental agency is required to do a complete audit of their books, but for some reason this is not required of the Defense Department.
In many instances, a simple accounting error of one item, can become a snowball repeating multiple times on down the line until it becomes an avalanche of mismanaged funds.
Bad accounting practices and computer errors, most likely are to blame for a significant chunk of the discrepancy; arising from the improper coding of journal vouchers, a common accounting tool to note where cash is being moved.
Also blamed in the IG report, was the DFAS computer system. According to the report, accurate year-end financial reports were impossible because of more than 16,000 missing financial data files that had vanished from the computer system.
“$6.5 trillion would pay for a lot of college educations ya all,” scoffs a Facebook user. “I’m not sure why any of us pay taxes anymore. Our elected leaders repeatedly refuse to listen to the voice of the people, yet we are expected to continue kicking in our hard earned dollars into their unwanted insanity.”
Congress has given the military until Sept. 30, 2017 to get their books in order before a full audit begins at the Pentagon. Many doubt the defense department will successfully meet the deadline.
