Tuesday, April 23, 2024
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Department of Defense Finances Remain Cluttered

The U.S. Department of Defense (DOD) can’t accurately account for or report on its physical assets or spending, according to a report that the U.S. Government Accountability Office (GAO) published this week.

“For more than 30 years DOD has tried to modernize its business and financial systems—spending billions of dollars a year on them. That’s why DOD’s business systems modernization and financial management efforts have been on our High Risk List since 1995,” GAO members said.

“DOD hasn’t fully developed guidance for overseeing these systems. Without it, DOD risks investing funds on developing and maintaining systems that don’t support financial statements that can be audited.”

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The DOD is the only major federal agency to not achieve an unmodified (clean) audit opinion—and its business and financial systems are a key impediment to this effort, the GAO report said.

Effective oversight of systems, the GAO report said, is essential to moving the DOD in the right direction. Key elements of such oversight include “establishing oversight processes, using and communicating quality information, sustaining leadership commitment, and managing risk.”

“In addition, DOD is not taking a strategic approach to managing the human capital needed for its financial management systems. It does not, among other things, analyze the gaps in capabilities between existing staff and future workforce needs, or formulate strategies for filling expected gaps,” the GAO report said.

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“As a result, as discussed in the report, challenges have emerged.”

The DOD is the largest U.S. government department and one of the most complex organizations in the world. DOD employs 2.1 million military service members and approximately 780,000 civilian employees at approximately 4,600 DOD sites throughout all 50 states, seven U.S. territories, and more than 40 foreign countries.

In January, members of the Washington, D.C.-based Citizens Against Government Waste (CAGW) published a report urging members of the 118th Congress to do better by taxpayers. Republicans control the U.S. House and Democrats control the U.S. Senate.

“The prevailing wisdom is that divided control brings gridlock, but it also brings an opportunity to show which members of Congress are serious about protecting the taxpayers’ money,” according to the CAGW report.

The acquisition side of defense spending, the CAGW report went on to say, “is also a mess,” including the F-35 Joint Strike Fighter (JSF). The JSF program “has been under continuous development since the contract was awarded in 2001 and has faced innumerable delays and cost overruns.”  Total acquisition costs now exceed $428 billion, nearly double the initial estimate of $233 billion.  The total costs for the F-35 are estimated to reach $1.727 trillion over the lifetime of the program.”

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