Report: Pentagon's accounting is a hot mess

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With a staff of millions and an annual budget of around $670 billion, it should come as no surprise that the U.S. Department of Defense has engaged in some wasteful spending. A new report by the Center for Public Integrity, however, claims the Pentagon's financial ledgers are worse than imagined.

Essentially, the DOD does not have and has never really had reliable mechanisms for showing proof of where the billions in taxpayers' dollars are going exactly, and efforts to create those mechanisms are turning out to be more time-consuming, complicated and expensive than imagined.

The DOD has already promised to clean up its accounting practices for public scrutiny by 2017, and has pledged an estimated $300 million annually to do just that. They will likely need an additional $1 billion to meet that goal, CPI reports, and Defense Secretary Leon Panetta is allegedly poised to announce a speeding-up of the auditing process, which might raise the cost of reigning in spending even more.

The CPI report states: "Experts say the Pentagon's accounting has never been reliable. A lengthy effort by the military services to implement new financial systems at a cost so far of more than $6 billion has itself been plagued by overruns and delays, senior defense officials say."

Just last month, the Government Accountability Office said in a report that although the services can now fully track incoming appropriations, they still cannot demonstrate their funds are being spent as they should.

The effort to clean up its financial ledgers comes at a critical time for the Pentagon, which is facing budget cuts as America tries to address its debt crisis. The agreement between President Obama and Congress over lowering the nation's debt ceiling includes at least $350 billion in defense budget cuts.

CPI reports that, as it stands now, the Pentagon's accounting practices make it nearly impossible to accurately point out duplications and unnecessary spending while they adjust to their new financial reality.

There is also an even more urgent need for this cleanup than pleasing the accountants and politicians. The aforementioned GAO report stated last month: "DOD financial management has been on GAO's high-risk list since 1995 and, despite several reform initiatives, remains on the list today. Pervasive deficiencies in financial management processes, systems, and controls, and the resulting lack of data reliability, continue to impair management's ability to assess the resources needed for DOD operations."

  • Joshua Norman

    Joshua Norman is a Senior Editor at CBSNews.com.