Procurement: March 10, 2000


Pentagon inspectors have reported that the Defense Department's accountants have made $7 trillion in adjusting entries in their books, creating such a mess that the books cannot even be audited. The problem is that the military has literally hundreds of non-integrated computer systems keeping track of inventory, unit funds, training funds, payroll, health care, and other expenditures. Because these systems are separate and not integrated, the numbers from one system often do not add up to the same amount as corresponding numbers in other systems. The result is a flood of "adjustments" in an effort to make the various systems balance and to include data which was earlier lost or simply not entered. The records are so confused that there are no receipts for $2.3 trillion in adjustments and, apparently, half-a-trillion dollars in adjustments were made to reverse adjustments in the previous year after records caught up and it turned out that the original adjustments were not needed. The military has $119 billion in property on its books (including everything up to aircraft carriers and nuclear missiles) but cannot verify this due to the confused records and lack of supporting documentation. [The military is hardly unique; 13 of the 24 largest agencies could not produce reliable financial statements for last year.]--Stephen V Cole


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