DOD's Years of Massive, Unconstitutional Fraud Exposed

May 2016
3,670
916
california
#31
My assumption is the backup documentation was never created or saved in the first place. Staff were able to just initiate budget transfers without documenting the "why" or "approved by whom" in the first place, or at least that would be my easy assumption given the quoted amount.



Sarcasm noted.

But understand this, I could turn $100,000 in approved expenditures into $1,200,000 of "unaccounted for" transactions by simply transferring $100,000 back and forth between two internal funds 3 times. Wanna know how that's possible?

Governments usually have fund accounting systems set up with a central treasury/cash fund to manage separate funds' share of cash within the central treasury. This means that a simple transfer of $100,000 from one fund to another creates $400,000 in recorded debits and credits just to execute that transfer. $100,000 of transfer out from originating fund, $100,000 of transfer in to the receiving fund, and $100,000 each in or out of the funds' cash accounts (sometimes referred to as "cash held for/by other fund"). So do that three times and you've inflated $100,000 in a budget line item approved for expenditure into an amount 12 times larger without even actually spending a nickel. They're just inter-fund budget transfers and the cash account transactions just run in the background any time money moves between funds, which is to keep track of each separate fund's share of the cash in the central treasury.

Accounts payable systems similarly result in an inflated volume of dollars transacted because of these cash account entries running in the background of the accounting system, and because accounts payable liabilities are credited when bills are entered and then immediately debited when checks are cut to pay those bills. There are also encumbrances that are created and zeroed out in accounts payable processes. So a single payment of $100,000 can look like many multiples of that amount in accounting system transactions when you a run a full transaction detail.

Total transaction volume lacking documentation the Ernst & Young auditors consider appropriate does not mean that volume of dollars was actually spent.
So what in your opinion should be done about this accounting, if anything? Because not accounting for 21 trillion would get most financial institutions in trouble and rightfully so.
 
Feb 2011
16,523
5,779
Boise, ID
#32
So what in your opinion should be done about this accounting, if anything? Because not accounting for 21 trillion would get most financial institutions in trouble and rightfully so.
Well that could best be articulated by the very well-paid partners at Ernst & Young, whose teams of CPAs were paid to perform this audit. The Department of Defense would probably have to ramp up its accounting and finance staff to implement the processes needed to document their transactions and transfers according to governmental accounting standards most/all other departments must follow, which they apparently haven't been doing.

It's not really all that shocking that there are these needs, given the Pentagon hasn't ever undertaken an agency-wide audit in its entire history.
 
May 2016
3,670
916
california
#33
Well that could best be articulated by the very well-paid partners at Ernst & Young, whose teams of CPAs were paid to perform this audit. The Department of Defense would probably have to ramp up its accounting and finance staff to implement the processes needed to document their transactions and transfers according to governmental accounting standards most/all other departments must follow, which they apparently haven't been doing.

It's not really all that shocking that there are these needs, given the Pentagon hasn't ever undertaken an agency-wide audit in its entire history.
You think that is likely to happen? I'd guess not, besides any accounting paid for by the military would probably cost us even more than we could save.