Successful Failure: Pentagon Claims It’s Fine That It Failed To Pass Financial Audit

A soldiers uses the new M17 Modular Handgun System during weapons qualification, at Fort Hood, Texas, January 19, 2018. US Army/Staff Sgt. Taresha Hill

The Pentagon failed its first ever audit. However, according to Deputy Secretary of Defense Patrick Shanahan that is unsurprising and passing it was not expected to begin with.

“We never thought we were going to pass an audit, right?” Shanahan told reporters on November 15^th. He made sure to emphasize the exceedingly low expectations surrounding any possibility of the Pentagon passing its first fiduciary introspection ever. “Everyone was betting against us that we wouldn’t even do the audit.”

“What we’ve been doing since early on in the audit is we’ve been getting preliminary findings and the real work we’ve been doing is: Let’s not count the findings we need to develop the plans to address the findings and actually put corrective actions in place,” Shanahan said.

The inspection was conducted by some 1,200 auditors and examined financial accounting on a wide range of spending including on weapons systems, military personnel and property.

Great gaggle with the Pentagon Press Corps today; talking #SpaceForce, Defense Budget, and Defense Audit. I look forward to doing more of these! pic.twitter.com/0uUPzrX7nc

— Dep Sec of Defense Pat Shanahan (@DepSecDef) November 15, 2018

The US government established requirements in 1990 for each federal agency to asses its financial situation, unsurprisingly the Department of Defense undertook no action. However, in December 2017 it was finally announced that it would undergo an inspection.

The U.S. defense budget for the 2018 fiscal year that ended on Sept. 30 was about $700 billion. The Fiscal Year 2019 budget for the Pentagon was to be $716 billion, after which it was reduced by 5%. The Pentagon is a huge agency with multiple branches of the military, costly weapons systems, large personnel needs, numerous military bases of various sizes at home and abroad and troops deployed in far-flung locales. Essentially, it is a massive money pit, especially judging by its projects the F-35 fighter jet and the USS Gerard R. Ford among others.

Shanahan said areas the Pentagon must improve upon based on the audit results include compliance with cybersecurity policies and improving inventory accuracy. He did not provide a figure of how much money was unaccounted for in the audit.

It was unclear what consequences there would be after the audit, but Shanahan said the focus would be on fixing the issues.

“We need to develop our plans to address the findings and actually put corrective actions in place,” Shanahan said.

“Some of the compliance issues are irritating to me. … The point of the audit is to drive better discipline in our compliance with our management systems and procedures,” Shanahan added.

Reuters cited defense officials and outside experts who speculate that it would possibly takes years for the Pentagon to “fix” its accounting gaps and errors and actually pass an audit.

“To clarify, the audit is not a ‘pass-fail’ process. We did not receive an ‘adverse’ finding – the lowest possible category – in any area,” U.S. Army Lieutenant Colonel Joseph Buccino, a Pentagon spokesman, said. “We did receive findings of ‘disclaimer’ in multiple areas. Clearly more work lies ahead of us,” he added.

Shanahan downplayed the failure, claiming that simply undergoing an audit is “substantial.”

“Here’s what’s amazing: It was an audit on a $2.7 trillion organization. So the fact that we did the audit is substantial.”

“If I’m a taxpayer, what I want to see is: That’s great, you did the audit; you have all these findings,” he added. “How long is it going to take for you to fix those and then show me next year that it takes less to audit and you have fewer findings.”

Thus, the Pentagon is a department that constantly asks for more funding to fuel its money pit projects. However, there are undisclosed sums that are simply gone, they are unaccounted for. There’s really no clarity as to what has happened to these missing sums, they may have been used in projects, they may have just mysteriously disappeared. It wouldn’t be surprising if the Pentagon actually manages to fund all of its projects without constant, significant increases in its financing if it gets its books in order.

Furthermore, a report by the Department of Defense Office of Inspector General released in March 2018 exposed fraud, waste and corruption in the US war in Afghanistan. This latest report reveals that more than $3.1 billion of U.S. taxpayer funds provided to the Afghan Armed Forces from 2014 through 2017 was grossly mismanaged.

Thus, “mismanaged” funds in the wars the US leads and the Pentagon’s projects also obviously makes it easier to embezzle.