If the Pentagon were audited by the IRS, it would fail miserably. That is the conclusion of a recent inspector general report that blasted the Defense Department for its incoherent accounting and financial systems.
The Pentagon’s financial management systems were not designed for modern accounting, the report said. Statements about budgets, expenses, outlays and other critical transactions cannot be backed up with trustworthy data, the IG said. “These deficiencies prevent the Defense Department from collecting and reporting financial and performance information that is accurate, reliable and timely.”
The result is an untold number of “un-reconciled differences” between U.S. Treasury and Defense Department accounting records.”
The Pentagon’s outdated systems do not maintain needed historical cost data, the report said. The cost and depreciation of department property and equipment are not clearly reported. The Pentagon also has failed to integrate property and logistics systems with acquisition and financial systems.
Despite “limited progress” toward auditable statements, the Defense Department’s financial data is unreliable, the IG said. Until these weaknesses are resolved, the department “will not be able to meet its goal of an unqualified, clean, audit opinion.”