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In the accounting world, a clean audit is considered a “good housekeeping” stamp of approval for financial reporting and is crucial to have if you’re running any entity. What if I told you the federal government hasn’t received this stamp of approval for the past 19 years because of the Department of Defense’s accounting practices? The worst part of it is, neither the DOD nor the federal government face any repercussions for their flawed accounting practices, yet taxpayers are and will feel the effects if nothing changes.

Some have already been fighting for change. Recently, Concerned Veterans for America discussed new legislation, which provides incentives for the DOD to produce a clean audit. And Iowa Republican Sen. Chuck Grassley gave a floor speech stressing greater accountability for DOD accounting, noting that the department has been unable to produce a clean audit despite investing $10 billion in accounting systems over the past decade. So what’s the DOD’s excuse?

According to DOD’s agency financial report for fiscal 2015, the failed audits are a result of serious financial management problems, such as numerous accounting systems that lack integrity, insufficient documentation of financial transactions, and the inability to track financial activities between other agencies. But there are more contributing factors as well. The DOD has a long history of making “improper payments,” which include duplicate or overpayments, missing documentation, and miscalculations. Maybe even worse, in this day and age of computer hacking, the DOD’s auditors point out that the department struggles to identify and resolve information security problems and manage information security risks.

As a result of these bad processes, at least one-fifth of our government’s revenue and expense transactions can’t pass an audit and as much as one-third of our government’s assets are not accounted for properly. How can these statistics be true for the largest financial organization in the world? Imagine if one-third of your assets were not properly tracked — it would be very difficult for your household to function.

Additionally, how can Congress oversee defense spending if the DOD can only account for “very little” of the $600 billion spent annually, as Grassley says? How can members of Congress add more to the defense budget, support our military, and protect our country if they do not know how those funds are already spent? It’s a blind-leading-the-blind scenario.

However, it’s important to remember the Pentagon is not a crumbling government financial island by itself. The Treasury Department and Congress are also in horrible financial shape because they use creative accounting practices to hide Social Security, Medicare, pension and retiree benefits from today’s financial documents. For example, official national debt figures would lead you to believe that the country owes $19 trillion. But when you account for benefits the government has committed to paying, but keeps off the balance sheet, the real number rises to $87 trillion.

As a certified public accountant with 30 years of experience overall and 10 years of experience researching and analyzing government financials, I can tell you that financial decisions have real consequences and those consequences take hold sooner or later. The DOD failing every audit and not adequately tracking spending, the federal government hiding $68 trillion of debt from the American people and states hiding $956 billion of debt from their financial documents are all significant problems and deserve attention.

The reality is every financial decision our government makes not only affects our national health and our country’s economic growth, but also our national security and our military. There is a serious ripple effect we cannot afford to ignore any longer. With Congress back in session, it’s time for lawmakers to stop passing the baton and make it a priority for the DOD to pass an audit. If our government leaders don’t take our country’s finances seriously, who will?

Sheila Weinberg, a certified public accountant, is the founder and chief executive officer of Chicago-based Truth in Accounting, a 501(c)(3) nonprofit organization that researches government financial data and promotes transparency for a better-informed citizenry.


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