NCPA - National Center for Policy Analysis

Defense Accounting Not Even Up To "Mom And Pop Store" Standards

November 15, 1995

Top Defense Department officials have conceded that, on a scale of 1 to 10, their accounting for the funds Congress gives it rates only a 3.

The director of the Defense Finance Accounting Service told a House subcommittee that "we are far short" of being able to produce clean, auditable financial statements.

The subcommittee chairman described the state of Pentagon bookkeeping as something not even up to the standards of "every Mom and Pop store in America."

  • The accumulated amount of payments that cannot be traced with certainty was $20.5 billion as of September.
  • Even without proper bookkeeping, the Pentagon will apparently pay any bill up to $1 million -- although the threshold used to be $5 million.
  • The Department's Inspector General said financial data for the vast majority of the Department's funds remains essentially "not in condition to audit."

The IG's office is deploying 700 auditors to tackle the problem, but admits no significant turnaround is in prospect until the year 2000.

Source: Dana Priest, "Defense Gives its Accounting System a '3', " Washington Post, November 15, 1995.


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