Reading Time: 5 minutes

A costly and lengthy effort by the Pentagon to bring its financial ledgers up to modern standards continues to encounter serious problems, according to a new General Accountability Office report that spotlights shortcomings in accounting software now being tested by the Army and the Air Force.

The software, developed at a pricetag of $2.665 billion since 2003, was meant to streamline archaic, hand-written ledger accounting practices and enable the services to meet a 2017 legal deadline for producing their first, auditable financial statements. But the GAO’s report, released on March 29, cites a series of weaknesses that have produced inaccurate data, “an inability to generate auditable financial reports, and the need for manual workarounds.”

The GAO based its assessment on its own research as well as internal Army and Air Force reviews that it said had confirmed problems existed in “data quality, data conversion, system interfaces, and training.” The troubles were evident in trials that so far involve only a fraction of the estimated 529,000 Army and Air Force employees that are slated to use the software while monitoring $471 billion worth of spending or inventory every year.

The aim of upgrading to modern software was partly to save money, since the Pentagon’s legacy accounting systems are numerous — there are 2,258 of them — and frequently incompatible. By all accounts, they cannot produce a clear picture of where and how all that money is being spent.

But the dream of increased efficiencies is looking like just that, as two-thirds of the Army’s financial data still needs to be entered manually into the software, according to the GAO, and specialists have been forced to cut and paste data into spreadsheets and other software so they can create needed reports.

In the Air Force, where just one-thirtieth of the intended employees are working with the software now, “substantial manual intervention is required on a daily basis” to keep it humming and “required reports were not being produced or were inaccurate or incomplete.” As a result, the Air Force told the GAO, it is “now engaged in a strategic reassessment” of one of its two main software programs, developed at a cost so far of $876 million.

The Air Force has company in its misery. In October, the Center reported that the Pentagon’s books are in such disarray that getting them ready for an audit in 2017 will cost additional billions of dollars. In December, the Center reported that even after trying for 23 years to meet federal accounting standards, the Navy may not be ready for their own 2017 audit.

The Defense Department’s overall response was that it had actions planned or already under way to fix the problems. But for the most part it set no fixed timetable, prompting the GAO to warn that the problem needs to be given a higher priority.

“Ensuring that the Department of Defense has the resources and tools to properly manage its finances is a top priority, particularly as we grapple with a record federal debt and deficit,” said Sen. Tom Carper (D-Del.), chairman of the federal financial management subcommittee of the Homeland Security and Governmental Affairs Committee. “The Pentagon must be able to keep track of the millions of transactions made each year, and ensure that hundreds of billions of dollars in expenditures are properly accounted for. Unfortunately, as this report shows, the Department of Defense’s financial management systems are nowhere near where they need to be.”

Brickbats flew from other Democrats, as well as Sen. Tom Coburn (R-Okla.). Sen. Claire McCaskill (D-Mo.), in a statement released May 29, said that “as a former auditor, when I hear reports like this, it’s like fingernails on a chalkboard.” Sen. Scott Brown (R-Mass.) commented that “it is simply unacceptable that Department leadership cannot get these programs on track and I will continue to hold them responsible for further setbacks.”

Help support this work

Public Integrity doesn’t have paywalls and doesn’t accept advertising so that our investigative reporting can have the widest possible impact on addressing inequality in the U.S. Our work is possible thanks to support from people like you. 

R. Jeffrey Smith worked for 25 years in a series of key reporting and editorial roles at The Washington...