
U.S. Army fudged its accounts by trillions of dollars, auditor finds - okket
http://www.reuters.com/article/us-usa-audit-army-idUSKCN10U1IG
======
randomnumber314
In my experience, this will cause anger and outrage, someone high up will be
sacrificed--but that's it.

The military is an absolute money burning machine. In my seven years of
experience the following were in-the-open examples:

* End of year spending binges on equipment no one wanted or needed to max out budgets, to justify the next budget year's sum

* Pre-inspection trashing of inventory to mitigate write ups for discrepancies between on-hand and on-book items.

* I met a team of inspectors in Iraq who were tasked with finding some number of billions worth of equipment that was paid for, but no one was able to locate.

* Getting rank often involves pushing through big expensive projects, no matter the need, in exchange for bullet points on personnel review files.

* My favorite: an enormous dining facility was built on a base in Iraq, but it was too close to the exterior fence, which presented a situation where there would potentially be slow-moving line of hundreds of military, closely grouped together, within "throwing distance" of the perimeter fence. Thus, the contractors were required to complete the building, to make-good on the contract, to force the military to pay them in full, for a facility that was unusable due to above.

~~~
analogmemory
> * End of year spending binges on equipment no one wanted or needed to max
> out budgets, to justify the next budget year's sum

This seems pretty standard in any large corporation. The best times to ask for
new "shit" is during the holiday season. Thanks corporate Santa! :/

~~~
toddmorey
I will NEVER forget working as a student in the college bookstore during EOY
spending. I watched department chairs throw anything and everything into
shopping carts, as if they were gameshow contestants trying to beat the clock.

"What is this Mathematica software? What does it do? I'll take 4 copies."

The idea of course was insanity to me: if you didn't spend your department
budget, you were in danger of having it reduced next year. So you were
punished for leaving money on the table.

~~~
kentosi
"... punished for leaving money on the table"

Are there any alternative strategies to this?

I find this concept insane whereby spending more and more is good but spending
less is bad.

~~~
vibrato
force ROI reports on all expenditures? sure you will get a lot of BS, but
there is a disincentive to recklessly spend

~~~
shostack
There's a lot of stuff you can't put an ROI on. So instead people waste time
trying to come up with a poor model.

------
josho
I'm left with two thoughts.

First, who is getting fired for this and what outsider will be brought in to
fix this to keep it from happening again.

Second, is a larger question. Why do US citizens tolerate spending a
disproportionate amount of their financial resources on their military?

~~~
DenisM
2-a. The Unites States spend 3.3% of it's GDP on the military. This is in line
with other countries. Japan and EU are spending less only because they are
under NATO (US) defense umbrella. France, for example, is at 2.1%, so 3.3% is
hardly disproportionate.

2-b. Military spending (along with other public spending) is the cornerstone
of Keynesian economy. It's the best way known to man to stave off deflationary
spiral.

2-c. Military spending is the driver of innovation. Pretty much all of US
technological dominance is rooted in military spending. Nearly all of our jobs
here on HN came form that.

2-d. Projection of power brings tangible benefits to the US economy.

So 3.3% is a real bargain, all things considered.

[EDIT] Many comments ignored the _benefits_ part of my argument. Yes, 3.3% is
larger than 2%, it was not lost on me. Now consider that in exchange for the
1.3% the US managed to snag the first place in the high-tech industry with a
huge lead over the rest of the world. Until just recently almost everyone who
is anyone in the high-tech world was based in the US. Boeing, Intel, Amazon,
Microsoft, Apple, Cisco, Hewlett Packard, Google, Yahoo, Uber, AirBnB, the
list goes on and on. It's not an accident. That 1.3% comes back many times
over. And it's just _one_ of the benefits.

Look, I dislike people-killing as much as the next guy. But you can't ignore
the economic realities, _especially_ if you want to change the status quo.

~~~
mabbo
3.3% of GDP but what percentage of tax dollars?

It just seems a shame that a country that somehow can't afford to pay for the
health care of it's citizens manages to lose track of literally trillions of
dollars.

~~~
simonsarris
Oh my. Can someone check my numbers?

    
    
        France revenue:   953,000 million EUR
        Military budget:   41,300 million EUR (approx)
        = 4.33% of tax revenue military spending
    

vs

    
    
        USA revenue:     4,260,000 million USD
        Military budget:   597,500 million USD
        = 14.03% of tax revenue military spending
    

Damn.

I used:

[https://en.wikipedia.org/wiki/List_of_countries_by_military_...](https://en.wikipedia.org/wiki/List_of_countries_by_military_expenditures)
(2015 numbers)

[https://www.oecd.org/tax/revenue-statistics-united-
states.pd...](https://www.oecd.org/tax/revenue-statistics-united-states.pdf)

[https://www.oecd.org/tax/revenue-statistics-
france.pdf](https://www.oecd.org/tax/revenue-statistics-france.pdf)

~~~
gaius
I believe your numbers are accurate but I also don't think that they tell the
whole story. Is France's subsidy of Airbus military spending? Because
America's subsidy of Boeing is. Is French scientific research spending
military? Because America spends its research dollars via DARPA. And so on...

------
guimarin
I'm all about gov't waste, and oh my god numbers are hard, but pretty sure
they fudged it by Billions not Trillions. In the article they mention that the
total true-up of all the problems was ~65B. So this headline is off by a
couple orders of magnitude.

~~~
kevinmgranger
I'm not seeing that number anywhere in the article, but it does say:

>the Army made $2.8 trillion in wrongful adjustments to accounting entries in
one quarter alone in 2015, and $6.5 trillion for the year

Do you have another source?

~~~
hueving
That's misleading because it makes it sound like they were off by a total of
2.8 trillion, but that actually means they made that many adjustments. There
is no way they were off that far because that's beyond their entire annual
budget.

~~~
maxerickson
It would probably be better to focus on the number of adjustments that were
made rather than the dollar tally (the number of adjustments will give some
sense of the scope of the problem without counting the same dollars over and
over again).

------
bogomipz
"The spokesman downplayed the significance of the improper changes, which he
said net out to $62.4 billion. “Though there is a high number of adjustments,
we believe the financial statement information is more accurate than implied
in this report,” he said."

Wow, the bubble that is the military-industrial complex. That's 62 Billion
dollars that could have gone to education, infrastructure, or helping the
poor.

If you were this careless with a fraction of this dollar amount on your
personal income taxes you would be thrown in prison.

~~~
catalinbraescu
How about not taxing the shit out of the taxpayers?

------
niels_olson
Scot Paltrow cover's this beat regularly

[http://www.reuters.com/journalists/scot-j-
paltrow](http://www.reuters.com/journalists/scot-j-paltrow)

[https://en.wikipedia.org/wiki/Scot_J._Paltrow](https://en.wikipedia.org/wiki/Scot_J._Paltrow)

All the services are at fault. Part of this no doubt has to do with the sheer
amount of turnover in the military: people change jobs every two or three
years, sometimes in one year. The civilians have more insight, but the active
duty officers are virtually guaranteed to make errors in cost estimates for
new programs and only shut down old programs after there are obvious overruns.

------
jayess
This appears to be the source document:
[http://www.dodig.mil/pubs/documents/DODIG-2016-113.pdf](http://www.dodig.mil/pubs/documents/DODIG-2016-113.pdf)

------
jayess
Anyone who has been in the military would be completely unsurprised by a total
inability to track spending.

~~~
ceedan
The same is true for almost any government position, unfortunately.

------
_audakel
"DFAS also could not make accurate year-end Army financial statements because
more than 16,000 financial data files had vanished from its computer system."

I am impressed. I did an internship at a financial company and helped do end
of month closing balance adjustments. We had a onsite and remote paper copy
storage of each document, an onsite server room that hosted a copy, a off site
tape copy and an offsite digital back up. Hard to think of what must have
happened to get that level of mishap.

~~~
noir_lord
Depends if it's a mishap or a 'mishap' I guess.

I used to work for a massive retail company and our variance on the total at
the end of a single day when cashing up was usually 1p, over 1 pound and
people would start looking into it, over 10 pound it had to be reported to
loss prevention.

It's a different world I guess.

------
twunde
I can't imagine how the DoD could clean up it's books. There have been long
standing complaints that the military uses non-standard accounting software.
Combine that with a lack of historical knowledge as personnel rotate in and
out within 3 years or so and frankly disincentives aligned against the effort
at every level and you have a massive project on your hands to get the right
data. I'd have to imagine it would be a 5-10 year project

------
ryanmarsh
Well considering me and my soldiers' pay were fucked up regularly requiring us
to visit S1 this doesn't surprise me.

------
O5vYtytb
> “Where is the money going? Nobody knows,” said Franklin Spinney

An ex army ranger once told me that the 'missing' money in the military budget
goes to operations like the ones he was part of, which of course he could not
tell me about. Of course there is also waste and pork, but I think the
majority of this money is for black ops.

~~~
BinaryIdiot
> An ex army ranger once told me that the 'missing' money in the military
> budget goes to operations like the ones he was part of, which of course he
> could not tell me about.

Sounds like he fed you some bullshit. I see no reason why it wouldn't be
placed under a generic category with zero information regarding it possibly
even lumped into something else. This is how it worked with classified
projects when I worked in DoD contracting; not sure why this would be any
different.

~~~
O5vYtytb
Sure, he could have been lying, so could I. Are you really suggesting that
classified projects are on the same level as black ops?

~~~
BinaryIdiot
> Are you really suggesting that classified projects are on the same level as
> black ops?

They're different for sure but the required secrecy is essentially the same.
Just because something is a secret doesn't mean it won't get accounted for.
Granted the DoD accounting practices are horrific but where they exist it will
get counted.

------
jimrandomh
Some of this money is going to secret operations, but also a lot of it is
getting embezzled. If even the inspector general can't get a truthful
accounting, then there's no way the army is able to prevent that.

------
red_blobs
Is this really a surprise to anyone? Government historically has no incentive
to save money, because if they do, they will get less money the next time
around.

I worked for a nonprofit organization based on government funding for almost a
decade and this is exactly how the industry (anything based on funding from
the government) works. We were told to buy the most expensive of everything
and if we had a surplus, we had to spend (and many times waste) the rest.

This is why we need to have less government involved in our economy, not more.

------
lsiebert
Are we storing this all in cash, or are there bank records is what I want to
know.

------
mindcrime
_Both presidential candidates have called for increasing defense spending amid
current global tension._

FFS, I despite this kind of lazy reporting. Hello, there are _not_ two
candidates for President!!! So the phrase "both presidential candidates" is
meaningless. I suppose you mean Gary Johnson and Jill Stein right?

~~~
Nav_Panel
There are two major party candidates. Check out Duverger's law[0]. Basically,
a first-past-the-post/plurality voting system very often results in a two-
party system. In the US, issues like disproportionate media representation and
gerrymandering further enforce this framework.

So, colloquially, it makes sense to say "both" candidates rather than
(unnecessarily) acknowledge that there exist third-party options. This article
is not about the presidency (although it might be relevant), and the reporting
isn't lazy just because it omits Johnson and Stein from its discussion.

0:
[https://en.wikipedia.org/wiki/Duverger%27s_law](https://en.wikipedia.org/wiki/Duverger%27s_law)

~~~
mindcrime
I know all about Duverger's Law, but that isn't the point. There _are_ more
than two candidates and refusing to acknowledge that only accentuates the
problems caused by the first-past-the-post polling system. It's lazy reporting
and people should rail against it.

~~~
Nav_Panel
The article isn't about the presidential candidates or the upcoming election.
The article is about U.S. Army accounting. The only mention of the presidency
is in a single sentence in a single paragraph:

> The significance of the accounting problem goes beyond mere concern for
> balancing books, Spinney said. Both presidential candidates have called for
> increasing defense spending amid current global tension.

They could have omitted this paragraph and the article's contents would still
be relevant. The quality of the journalism would be unaffected, because _the
actual journalism in the article has nothing to do with the presidency_.

~~~
mindcrime
_because the actual journalism in the article has nothing to do with the
presidency._

If that were true, then why did the author feel the need to introduce a
mention of the candidates for President?

Anyway, all I'm saying is that it's lazy journalism, which it is. It would not
have been much harder for the author of TFA to be accurate by simply saying
"both major party candidates for President..." instead. That such a small
change could have been made, and wasn't, is why it's lazy journalism. That, or
introducing an irrelevant sidebar, if your thesis is correct.

