Military

Defense Department Aims for ‘Clean Audits’ by 2008

The contracts will help the military track money, real estate and property, and give taxpayers confidence that the U.S. military is a good steward of taxpayers’ dollars, officials said.

Getting a clean audit on the Defense Department will be difficult, said David F. Vincent, program manager for the inspector general’s Defense Financial Auditing Service. “Over the years, there were more than 2,000 (information technology) systems that in part feed the accounting information across the department,” Vincent said. “This makes it extraordinarily difficult” to deliver an “unqualified opinion.” An unqualified opinion is the same as a clean audit – meaning that the books meet normal accounting standards.

The contract allows the DoD IG to hire auditors to check the books of 63 auditable entities in DoD. The IG may contract for as many as 1,500 auditors. The move puts DoD on the road for a 2008 unqualified opinion for the entire department, Vincent said.

DoD entities have been working toward this for years. The Chief Financial Officers Act of 1990 first called for a clean audit. Six defense agencies have finished a clean audit. They are The Defense Finance and Accounting Service, the Defense Contract Audit Agency, the Defense Commissary Agency, the DoD Office of the Inspector General, the Military Retirement Fund and the Defense Threat Reduction Agency.

The very size of the department has made compliance difficult, Vincent said. The next closest private firm to the size of DoD is Wal-Mart, and that has only a third of the employees of the department.

If the Defense Commissary Agency stood alone, it would be the fifth or sixth largest supermarket chain in the United States, “and that’s just a small portion of the DoD,” Vincent said.

DoD has millions of financial transactions each month. “Think of an accounting transaction in these terms,” he said. “We have about 3.5 million employees. All these people are paid twice a month. Every time someone is paid that creates an accounting transaction. In this case it’s 26 times a years times 3.5 million people. It gives you some idea – just through the volume – how complicated this can become.”

The Defense Information Systems Agency is going through the process for a clean audit now.

Vincent said he expects other DoD agencies to request an audit in the future. But even then, agencies that believe they are ready for an audit must submit packages to an executive steering committee. The committee determines whether the audit will proceed, he said.