Center wins first Pulitzer!

Black lung investigation honored

Get more award-winning investigations:

Pentagon’s annual financial report still unreliable, inconsistent

By

 Updated:

The Pentagon issued $1.5 billion in payments every business day in fiscal 2010 with an error rate of less than one-tenth of one percent, according to the Department of Defense’s annual financial report.

That’s the good news.

The bad news: the Pentagon continues to have longstanding material weaknesses with its nearly $700 billion budget due to old information systems unable to record contracts in a reliable way, said the report, which was prepared by Deputy Defense Secretary William Lynn. And the DoD’s accounts payable and accounts receivable use accounting that does not comply with standard GAAP rules, it said.

“These pervasive material weaknesses may affect the reliability of certain information” in the annual financial report, the DoD ispector general said in a statement included in the report. “inconsistencies continue to exist” with disbursements and unreconciled differences between U.S. Treasury records and Pentagon accounting records, the inspector general said.

The annual financial statement may also be misleading because the Pentagon has not clearly identified its potential legal liabilities, the watchdog said. For example, the general counsel of the department was unable to express an opinion on the likely outcome of 32 of the 40 pending legal actions totaling $2.3 trillion.

“DoD is working toward implementing solutions to improve Department-wide financial processes, controls, and systems,” Pentagon management said in the report. “The Department is committed to improving the reliability and accuracy of financial information with the highest priority placed on information most useful for decision-making.”

The Pentagon is required to clean up its financial statements and have them ready for audit by Sept. 30, 2017, under the latest annual defense spending law. The Government Accountability Office in 1995 designated DoD’s financial management operations and controls as a “high-risk area.”

FAST FACT: In fiscal 2010, the Pentagon curtailed or canceled nearly 20 troubled or excess programs that would have cost more than $300 billion to complete.

Following are other new watchdog reports released by the Government Accountability Office (GAO), various federal Offices of Inspector General (OIG), and other government entities.

FINANCE

* HUD’s Office of Public and Indian Housing lacks accurate and complete information to monitor Section 8 voucher housing programs, and did not ensure new projects follow operating requirements. (OIG)

* No political influence or violations of law were found in an audit of how HUD selected management and marketing contractors for single-family properties. However, the audit did find HUD’s chief procurement officer for single family assets lacked controls to award contracts in a timely and efficient way, resulting in delays and extra costs. (OIG)

HEALTH

* Five of six pharmacy networks reviewed did not always pass on Part D prescription discounts to Medicare patients and the government. (OIG)