Department Of Defense Fails To Pass Another Audit

A news story that should surprise no one: for the sixth year in a row, the Department of Defense has failed to pass an audit.

But this time, the DoD mandarins are spinning this latest failure as a sign of progress:

“Auditing the Department’s $3.8 trillion in assets and $4.0 trillion in liabilities is a massive undertaking,” said Michael McCord, the DoD Under Secretary of Defense and Chief Financial Officer, “but the improvements and changes we are making every day as a result of these audits positively affect every soldier, sailor, airman, marine, guardian, and DoD civilian.”  

That’s…interesting. The DoD awards itself a participation medal even though it failed, again, to achieve its legally mandated goal of providing audited financial statements. Think of it this way: if a publicly traded corporation failed to provide audited financial statements to the SEC for six years running, there would be legal issues a-plenty.

But this is the Pentagon, and they don’t have to live by petty little things like the law. Consider that for many years, the Defense Department refused to file financial statements at all:

The Chief Financial Officers Act of 1990—I repeat: 1990—required federal agencies to prepare financial reports annually. For years, the DOD simply did not. Congress put a provision in the 2010 National Defense Authorization Act requiring the DOD to be prepared for an audit—in seven years. As Sen. Chuck Grassley (R–Iowa) put it, “The Pentagon was given an extra seven years to clean up the books and get ready.”

When the DOD did finally complete its first audit, it failed, with only five out of 21 components passing inspection. Of those results, Deputy Defense Secretary Patrick Shanahan shrugged, “We never thought we were going to pass an audit, right? Everyone was betting against us, that we wouldn’t even do the audit.”

Slightly more circumspect, acting Inspector General Glenn Fine said “the most important thing” was not that the department failed, “but that the department takes the audit seriously and seeks to fix the identified deficiencies, which the department is doing.”

And six years later, it still can’t produce financial statements that would pass an audit. This is another way of saying the DoD has little real understanding of where its budget gets spent and isn’t confident anyone else could figure it out, either.

Whenever a defense-happy member of Congress demands more money to be spent on the Pentagon, the first and only response should be: How do they spend what they get now? The DoD and its finance team don’t seem to know until they can produce those reports, then giving the Pentagon even more money borders on budgetary malpractice.

The opinions expressed in this article are those of the author and do not necessarily reflect the positions of American Liberty News.