Pentagon can’t account for $21 Trillion


 In terms of a 2016 audit report, documented at forbes.com, the Pentagon failed to provide adequate support for $6.5 Trillion in journal voucher entries.

Similar findings, over the years, add up to a staggering $21 trillion plus of journal entries that cannot be supported by any paper trai in the 20 years since 1998 alone.  Given that the total budget of the US army is only in the $100 billions, the article concludes that the DoD is spending more than 50 times what is authorised by congress.

Scandalous!

 

Accounting complexities create data quality issues

In fact, a bit of additional research turned up this piece – Debunked: Missing $21 Trillion / $6.5 Trillion / $2.3 Trillion – Journal Vouchers

This article is well worth reading as it discusses in detail how poor data lineage, poor data quality and poor governance result in an accounting paper trail that is, at best unreliable.

Responding to a question from Congress, Defense Department Controller, David L. Norquist explains this as follows:

One of the issues you’re talking about related to journal vouchers, which occurs after the money is spent. So when you see in the article it says trillions of dollars and you realize we only receive about $600 billion in a year, there’s a mismatch in the story. What this refers to is: we have systems that do not automatically pass data from one to the other. The army [and others] goes in at the end of their financial statements, finds the number from their property book and writes it into their general ledger. That is called a journal voucher entry. Depending on the property it could be hundreds of billions of dollars. Because they don’t have adequate support for that journal voucher, the whole entry is considered unsupported. Now from a management point of view this is bad. It’s not the same as not being able to account for money that the Congress has given you to spend, but it’s still a problem that needs to be fixed. Part of that relates to systems that were built as “stove-pipes”, and in private sector they don’t talk to each other, you wouldn’t let them field a system that wouldn’t automatically pass up its data. So we are addressing exactly that type of challenge and one of my concerns is — only by eliminating the types of ones that are just an entry issue can you find underlying issues that are hidden among inaccurate data

Norquist continues by pointing out that, while the Pentagon is not spending trillions that are not accounted for, the accounting problems and inconsistencies are real and are likely to be masking other, genuine financial issues.

As a South African we have recently been  exposed to another example of complex accounting being used to hide financial irregularities – in this case at Steinhoff.

Each of these cases illustrates the importance of data governance in the deliver of financial governance, and in turn for sound corporate governance.

Does data governance form part of your corporate governance framework?

 

 

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