United States Army Trillion-Dollar Accounting Errors

The United States Army has recently come under scrutiny yet again over the management of its finances. In 2015, the Army allegedly made trillions of dollars of improper accounting adjustments to create an illusion that its books had balanced.

The Defense Department’s Inspector General, in a June report, said the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone, and $6.5 trillion for the year. The Army lacked receipts and invoices to support those numbers, and in some case simply made them up noted . The report also stated as a result, the financial statements for 2015 were “materially misstated” and “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions”.

The Defense Department’s budget is nearly $600 billion for the year but the accounting errors have run into the trillions of dollars. According to reports, the process of making changes to one account also requires making changes to multiple levels of sub-accounts, thus creating a domino effect where falsifications kept falling down the line. In many instances, this chain was repeated multiple times for the same accounting item.

The report also blamed the Defense Finance and Accounting Services (DFAS), the agency charged with providing accounting services to the DoD. The agency said that it could not make accurate year-end Army financial statements because more than 16,000 financial data files had vanished from its computer system along with faulty computer programming and employees’ inability to detect the flaw were at fault.

This revelation within the United States Army is the latest example of the severe accounting problems plaguing the Defense Department for decades.

In response, lawmakers have introduced legislation to impose penalties on the Pentagon if it fails to meet the legally mandated goal of being ready for a full audit by September 30, 2017.

Source: Reuters