Pentagon Auditor Can’t Account For $800 Million In Spending

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Originally appeared at Zero Hedge

The Pentagon’s Defense Logistics Agency (DLA) has reportedly “lost track” of hundreds of millions of dollars it spent,  said Ernst & Young, the accounting firm conducting the first-ever Pentagon audit, according to Politico.

E&Y discovered that DLA “failed to properly document more than $800 million in construction projects,” said Politico, which also reported this is just one of the many instances where millions of dollars went missing as the accountability system inside the Pentagon is broken. Worse, according to Politico, the first-ever audit, covering the fiscal year that ended Sept. 30, 2016, signals complete incompetence about how the Pentagon handles its $700 billion annual budget.

While these comments from Ernst & Young are mindnumbing, the Trump administration is set to ask Congress for $716 billion for defense spending for fiscal 2019, a 7% increase over the 2018 Budget. Budget analysts have sounded warnings this would be a significant surge in spending for the Pentagon at a time when the organization can barely keep track of its current expenditures.

If you can’t follow the money, you aren’t going to be able to do an audit,” Sen. Chuck Grassley, an Iowa Republican and senior member of the Budget and Finance committees, who has suggested to past administrations that hemorrhaging of wasteful spending at the Pentagon must stop.

Pentagon Auditor Can't Account For $800 Million In Spending

Army Lt. Gen. Darrell Williams, the agency’s director, wrote in response to Ernst & Young’s bombshell findings that the audit has “provided us with a valuable independent view of our current financial operations.”

“We are committed to resolving the material weaknesses and strengthening internal controls around DLA’s operations,” he said, according to Politico.

The DLA is a $40 billion-a-year logistics agency within the Pentagon with some 25,000 employees and processes about 100,000 orders a day, said Politico.

Ernst & Young’s auditors found significant accounting errors in DLA’s process of tracking expenditures. There are minimal accounting records of where the money is going said the report. This does not bode well for accountability at the Pentagon, which has combined assets of $2.2 trillion.The Politico describes one section of the audit where Ernst & Young’s auditors found misstatements for some $465 million in construction projects. Another section described that there was very little documentation for another $384 million worth of spending.

In one part of the audit, completed in mid-December, Ernst & Young found that misstatements in the agency’s books totaled at least $465 million for construction projects it financed for the Army Corps of Engineers and other agencies. For construction projects designated as still “in progress,” meanwhile, it didn’t have sufficient documentation — or any documentation at all — for another $384 million worth of spending. The agency also couldn’t produce supporting evidence for many items that are documented in some form — including records for $100 million worth of assets in the computer systems that conduct the agency’s day-to-day business. “The documentation, such as the evidence demonstrating that the asset was tested and accepted, is not retained or available,” it said.

The auditor also said that around $100 million worth of assets in computer systems had very little documentation.

The report, which covers the fiscal year that ended Sept. 30, 2016, also found that $46 million in computer assets were “inappropriately recorded” as belonging to the Defense Logistics Agency. It also warned that the agency cannot reconcile balances from its general ledger with the Treasury Department.

“The initial audit has provided us with a valuable independent view of our current financial operations,” Army Lt. Gen. Darrell Williams, the agency’s director, wrote in response to Ernst & Young’s findings. “We are committed to resolving the material weaknesses and strengthening internal controls around DLA’s operations.”

In a statement to Politico, the DLA said it is the “first of its size and complexity in the Department of Defense to undergo an audit so we did not anticipate achieving a ‘clean’ audit opinion in the initial cycles.”

“The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits. That’s what we’re doing now,” the statement said.

Back in January, the team of 1,200 auditors found some $830 million in “missing” helicopters as the audit kicked off into 2018.

And in a preview of what is to come, Norquist told the House Armed Services Committee that an initial Army audit found 39 UH-60 Black Hawk helicopter ($830,700,000) were not adequately recorded in the property system. “The Air Force identified 478 structures and buildings at 12 installations that were not in its real property system,” he added. In other words these helicopters were simply “missing” on the books.

As the army of auditors penetrates deep inside the Pentagon’s financial records, we wonder what the 1,200 will find next as they descend further down the rabbit hole of decades of failed proxy wars, regime changes and dictator slush funds?

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  • Barba_Papa

    The US defense budget serves as a giant feeding trough for US defense companies and politicians to pilfer from. And it doesn’t look like Trump wants to reform the system because he wants to throw more money at it, and he put the criminals (his generals) in charge.

    Methinks the only way to reform the system is to cut the budget by at least a third, appoint some real mavericks who left the service in disgust and who have never risen to the rank of general in charge, and do what Putin did with that oligarch who got too uppity. Sick the full weight of the US security apparatus on one of the offenders *cough* Lockheed Martin *cough* and stick its entire leadership in jail. And not one of those cushy jails, no, stick them with real murderers and drug dealers and make them their bitch. Once the others realize they run the risk of permanent rectal bleeding they will get the message and keep their corruption to more acceptible levels.

    But that’s about as likely to happen as that pigs might start flying. There’s no incentive to fix the system from within, and the public seems easily appeased by pretty speeches to throw more money at the problem. Preferably with a backdrop of as many American flags as you can cram into a screenshot and flanked by sturdy looking generals.

    • FlorianGeyer

      Part of the problem Barba is that the US Military has in recent years been elevated to the status of a deity and False Gods have always been a money spinner for the High Priests. :)

      As you rightly say, the owners of the Military Industrial Complex need to be bought to account.

      Perhaps the US will need to implode first though :)

      • Barba_Papa

        So very true. We’re fast approaching the way that the US state only exists to maintain its bloated armed forces. Which perversely is yet another analogy with Rome, late Roman Empire, as the sole purpose of the Roman state after the reforms of Diocletian was to maintain its army. Too bad there are no barbarians at gate, clamoring to get in, to keep that military occupied. Unless you count the Mexicans. Or ambitious generals who think they can do a better job then the POTUS.

        • FlorianGeyer

          It is likely that the fall of the US Empire will be faster that the decline of the Roman Empire , in fact as time moves on the Empires have mostly fallen faster and faster.

          The root cause is always the same though, Greed, Hubris and a Detachment from reality.

  • leon mc pilibin

    The jewish FED private bank,prints money out of nothing,,and their gangster brothers in government steal it,to add to the mountain of debt,caused by wars for israhell.Nice work ,if you can get it.

    • RichardD
      • RichardD
        • goingbrokes

          Sooo, what’s this?

          • RichardD

            I don’t understand your question.

          • goingbrokes

            What are the figures next to the countries/world. I don’t know what I’m looking at.

          • RichardD

            They’re population figures.

          • goingbrokes

            I don’t think so. Russia surely has more than 186,000 people. And Israel seems to have the most people on the planet! Oh I see, this is how many recorded jews there are in different countries.
            It was not clear what it all is. That’s all. I get it now.

    • RichardD

      Vampire Jews are enemies of the state and humanity. Their evil cult should be outlawed to dejudify the planet.

      • Kara

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  • javier

    please. 800 million is peanuts, it’s a smokescreen. The real number is more like close to a trillion

  • RichardD

    Aid to Israel should be cancelled and Israel delisted from the UN and replaced with Palestine as part of dejudifying the planet.

    https://wikispooks.com/w/images/3/3d/Israeldidit.jpg

  • matt

    What the news here???

  • Antikapitalista

    This “hemorrhaging” is a symptom of a contagious disease called “warmongering” that has been rapidly spreading from the U.S.A. and has infected most of the remaining NATO cuntries.