DoD’s audit avalanche

AFRet05 September 16th, 2011 at 9:36 am

That’s because the systems (all pretty much “home grown”) implement a flawed and broken process that dates back decades. Instead of fixing things, they’ve applied (over the years) multiple “band aids” in attempt to “fix” the symptoms, not the real problems.

Thinking_ExUSAF September 16th, 2011 at 12:46 pm

Perhaps someone could at least consider the reporting requirements already levied by law or regulation. If you spend all of your time writing/presenting the reports instead of developing the info to go into the reports.… . .GIGO!

Perhaps the answer is replace multiple tiers of “oversight” with simple accountability! :-) (And if you dont know the difference… Hmmmmmm!) Accounting for expenditures feels like one of those “real good things to do” and pretty darned simple, but I can help thinking that if we tried to “legislate” falling off of a log, we would find a way to screw it up.

Old loggie September 17th, 2011 at 11:53 am

When the objective is to provide “national security” (as opposed to “make money”), measuring the use of assets is indeed a recurring problem that does need to be addressed. That’s why more than 30 years ago, the DOD began supporting (mainly in its FFRDCs) the development of measures and models that would allow DOD planners to show the relationship between budget requests and expected levels of material readiness (e.g., weapon-system mission-capable rates) and sustainability (e.g., days of combat before resupply would be necessary).

After the passage of the CFO Act of 1990, however, and the accompanying rise in the use of revolving-fund financing mechanisms for supply and maintenance activities, financial measures tied to financial statements (e.g., Net Operating Results) began to supplant measures of readiness and sustainability measures as the preferred measures of performance — leading to the sad situation we have today that U.S. Senators and Representatives now spend more time grilling DOD leaders about passing financial audits than they do asking questions about the Department’s ability to meet current security threats.

Old loggie September 18th, 2011 at 11:57 pm

You’re right, taxpayer — a clean audit will not add value. So why should Mr. Hale “lay down the law” that it must be achieved “in one year” ? (or, for that matter, ever?)
Based on past experience, DOD will piss away another $1.0 billion in fiscal 2012 continuing its non-value-adding pursuit of auditable private-sector-style balance sheets and income statements That money could be much better used elsewhere — or even saved (perish the thought).

Old loggie September 22nd, 2011 at 2:53 pm

Contrary to your assertion, there are a number of very good reasons why the DOD should have distinct budgetary-accounting systems for each Service. The Army, Navy, and Air Force are separate Military Departments that perform radically different kinds of missions requiring radically different kinds of support. That ‘s why they submit separate budget requests each year. To be sure, those requests are rolled up into the single President’s budget for DOD submitted to Congress each year, but the Secretary of Defense chops on those budget requests separately before they go to the White House, and the Congress then makes its final authorization and appropriation decisions separately as well.

Re your GM comment , there’s some relevant history worth keeping in mind:
In 1988, former GM Executive VP Donald Atwood became the Deputy Secretary of Defense. Laboring under the same kind of misguided “insight” you have offered, Mr. Atwood personally launched a DOD-wide program called “Corporate Information Management.” CIM was specifically aimed at establishing a single, “corporate” IT system for the entire Dept viewing as a whole After 10 years of good-faith effort under both Republican and Democratic DOD administrations to implement Mr. Atwood’s “vision,” the CIM effort was finally abandoned after having having accomplished literally nothing except the expenditure of more than $10 billion dollars.

That pathetic history is now being repeated today, again at a cost of about a billion dollars a year, in the form of the DOD’s current “Business Transformation” effort aimed at replacing all of the Dept’s support IT systems with single, commercial-style “Enterprise Resource Planning” systems that will “seamlessly” be able to produce consolidated, private-sector-style financial statements for the Dept each year, as if the Dept were a single corporate entity like GM, GE, or Microsoft.

In absolute contradiction to what you’re calling for, what the DOD actually needs are MULTIPLE MANAGEMENT COST ACCOUNTING systems, tailored to the needs of managers in each of the Dept’s many varied activities — not a one-size-fits-all, private-sector-style system that produces balance sheets and income statements as if the DOD were a “business.”

Old loggie November 15th, 2011 at 2:21 pm

Yes — the DOD needs to be able to show the Congress (and, by extension, the taxpayers represented by Congress) that it has executed its appropriated budget each year in accordance with the Congress’ wishes as expressed in authorization and appropriation legislation. That is why the DOD Comptroller has now focused the Dept’ s accounting resources on producing a “Statement of Budgetary Resources” (i.e., a financial statement showing what was appropriated, what was obligated, and what’s left ) able to win an unqualified opinion from independent auditors That is the only kind of “accountability” (as opposed to balance-sheet and income-statement accountability) that makes sense for the DOD — and if the DOD weren’t being distracted by the fools errand of producing balance sheets and income statements, it woudl have produced clean Statement of Budgetary Resources years ago..

One other important note: To BUDGET properly, DOD managers need to know what it COSTS to do the things they have to do to meet mission requirements. THAT requires good management cost accounting, which the DOD does not have. Why doesn’t it ? Because, for the same reason budgetary accounting has languished, so has cost accounting, becasue the Dept has been forced by Congress wia the CFO Act to expend all its accounting time, talent, and money for the last 20 years trying to produce private-sector-style balance sheets and income statements. For the DOD at least , the CFO Act of 1990 is one of the most ill-advised pieces of legislation the Congress has ever passed –and the only way the DOD is ever going to be able to sensibly describe hwo it uses the funds the Congress gives it is to be given relief from the private-sector-style financial reporting requirements embedded in the CFO Act.