The Defense Department’s top financial officer has a good excuse for why the agency might not meet a deadline to be ready for an audit by the end of 2017. In fact, he has quite a few of them.
“Culturally, we’re an organization that’s all about getting the mission done and this has not been, and probably never will be, seen as the department’s primary mission,” Mike McCord, the Pentagon’s comptroller, said Monday, speaking about auditing the Pentagon’s books during an event at the Center for Strategic and International Studies in Washington.
“It’s not the department’s primary mission, right?” he added. “The primary mission is to defend the nation, fight and win wars. So the trick has been to get our culture to see this as a mission that needs to get done, even though it will never be the top mission of the department.”
The second major obstacle to giving the Pentagon’s financial books a clean bill of health, according to McCord, is the department’s variety of information technology systems.
“We have so many systems that were built to be something else that need to work together and produce information in a way that auditors can use and verify, which is not what they were built for,” he said, noting there are different programs for things like logistics and personnel.
“We’re too big to just sort of blow up all our systems and go buy one new, gargantuan IT system that runs the entire department,” McCord told the audience.
And last but not least is the size of the department itself.
“Our budget is the size of a pretty good-sized economy, say Belgium or the Netherlands,” McCord said, estimating the Pentagon owns 25 million acres of land and at least 500,000 buildings.
The admissions could start a new round of head shaking and hair pulling on Capitol Hill, where many lawmakers have wondered whether the department -- which accounts for over half of the federal government’s discretionary spending -- and its records can ever receive a true accounting.
Since 1997, the Government Accountability Office (GAO) has been required to audit the federal government’s consolidated financial statements, but the watchdog agency has repeatedly said its reviews of the Pentagon aren’t based on accurate data.
Skepticism among lawmakers only increased earlier this year when the GAO questioned the validity of an audit of the Marine Corps, and spiked again a few weeks ago after a report by a federal watchdog disclosed the Pentagon spent around $43 million to build a gas station in Afghanistan that should have cost closer to $500,000.
McCord said members of Congress have told to him they think the Pentagon has a good plan in place to get audit-ready and is “moving the ball down the field” but “it’s not in the end zone.”
The department’s top accountant couldn’t resist pushing back against critics who have questioned why the agency -- with a $607 billion budget for fiscal 2016 -- should get funding boosts when it can’t prove it’s not mishandling money.
McCord said such statements were “understandable but a little frustrating” and that while the department’s business practices “aren’t everything they should be,” it “does not mean that we don’t know what we do with the money.”
“It’s a misnomer to think that the resources come in and nobody knows what happens to them,” he added. “The issue with the audit is being able to demonstrate going from the order to the invoice to the expenditure, everything connected in a way that … meets auditing standards.”
“It’s not the wild west where nobody knows what’s going on,” he continued, though an audit would likely identify efficiencies and free up resources. There’s “no pretense here that we’re perfect.”
McCord also took Congress to task, saying “it’s not hard to be for passing an audit.” He urged the same kind of enthusiasm for other issues that might improve the Pentagon’s fiscal health, like allowing a new round of base closures, retiring legacy platforms and consolidating its Tricare health system.