Defense, Homeland Security can’t pass audits

Ten years after Congress ordered federal agencies to have outside auditors review their books, neither the Defense Department nor the newer Department of Homeland Security has met even basic accounting requirements, leaving them vulnerable to waste, fraud and abuse.

An Associated Press review shows that the two departments’ financial records are so disorganized and inconsistent that they have repeatedly earned “disclaimer” opinions, meaning that they simply cannot be fully audited.

“It means we really can’t put any faith in the numbers they use,” said Ross Rubenstein, who teaches public administration at Syracuse University’s Maxwell School. ...The entire Homeland Security Department, with a $35 billion budget this fiscal year, passed its first audit in 2003 with strong stipulations but has failed every one since.

And the Defense Department, with a $460 billion budget this fiscal year, has never even come close to passing. Because that department makes up at least 20 percent of all federal spending, the entire federal government also has failed its audits since the congressional mandate took effect. ...

“The consequence to the public is the federal budget is conceivably larger than it needs to be. And there’s no way of knowing, if it can’t even be audited,” said Ronald W. Johnson, a senior vice president at RTI International, a nonprofit research institute in Research Triangle Park, N.C. “Even if there are no financial consequences, there are political consequences.” ...

“The inability of Defense and Homeland Security to pass financial audits is costing taxpayers dearly. There is no accountability for billions in wasteful spending,” said Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee. “Private contractors are getting rich, military equipment can’t be tracked, and fraud is growing. The departments seem incapable of providing even the most basic level of accountability by balancing their financial books.”

Chris in Paris, AmericaBlog.com: It's amazing that we have managed to discover the numerous cases of corruption and over-billing considering the chaotic state of these federal agencies though the trend during this administration is blatantly obvious. The positive angle here is that it makes it easier to understand how so much of our taxpayer money has gone missing in Iraq and why Petraeus skipped over that little issue when suggesting Iraq was good for the US arms business, even though so much of those funds disappeared. Ignorance is bliss... not to mention SOP at the Defense Department.