The Pentagon?s ?First-Ever? Audit?

by Bill Bergman: In early December, the Department of Defense gave us a Christmas present. "The Defense Department is starting the first agency-wide financial audit in its history," a DoD press release announced.

The "first-ever" language found its way into headlines and first paragraphs all over the place. Even NPR joined the military-industrial complex. "Pentagon announces first-ever audit of the Department of Defense," read their headline. So did Russia Today! "Pentagon announces first-ever audit," they said. "Pentagon starting first-ever financial audit," The Hill told us.

Trouble is, this isn't the first one ever. And how can you audit yourself?

The Department of Defense is included in the annual Financial Report of the U.S. Government. It isn't "off the balance sheet." The components of the DoD are part of the consolidated financial statements of Uncle Sam.

Under current law, those statements have been audited every year since the late 1990s by the Government Accountability Office. The GAO (Congress's audit agency) has issued a disclaimer of opinion every year since the late 1990s, citing material weaknesses in Defense Department accounting as one of the principal reasons for what is essentially an F grade for Uncle Sam.

Is this 'first-ever' audit just an expensive show?

Tom Spoehr at the Heritage Foundation offered some valuable cautionary notes in a late-December article titled "The unaffordable Pentagon audit." "… an $847 million annual audit—accompanied by, at best, modest expectations for improvement—is a mistake the Pentagon can ill afford. … Congress and the DOD should work to arrive at a solution that delivers confidence that DOD is wisely using its money, but at a much lower cost. The starting point should be figuring out what essential elements of an audit must be accomplished, and how to save money in the effort."
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Bill Bergman is Director of Research at Truth in Accounting. He is responsible for identifying, collecting and managing State Data Lab's database. This database provides healthy context for understanding state and local government financial conditions. Bergman has over twenty years of financial market experience, including thirteen years as an economist and policy analyst at the Federal Reserve Bank of Chicago.

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