Pentagon Agency Can't Account for Over $800 Million in Expenses

The Pentagon
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February 5, 2018

A major Department of Defense agency cannot account for over $800 million worth of projects after a recent audit.

The internal audit, conducted by Ernst & Young, revealed that the Defense Logistics Agency did not properly document hundreds of millions spent on construction projects and other expenses, Politico reports.

The agency is responsible for processing roughly 100,000 orders a day on behalf of the Army, Navy, Air Force, Marine Corps and a number of other federal agencies. It handles approximately $40 billion each year and has around 25,000 employees.

One of the main problems the audit unveiled is a lack of a paper trail for projects and property.

Misstatements in the agency’s records totaled $465 million for construction projects completed by the Army Corps of Engineers and other agencies. Another $384 million worth of projects listed as "in progress" either didn't have proper documentation or any at all.

In another instance, the DLA could not find records for $100 million worth of agency computer assets.

There is Congressional demand that a full audit of the Department of Defense be conducted, but the audit's findings raise additional concerns about the Department of Defense responsibly managing its $700 billion annual budget.

"If you can’t follow the money, you aren’t going to be able to do an audit," said Sen. Chuck Grassley (R., Iowa), a senior member of the Budget and Finance committees.

The agency told Politico the audit was intended to be a starting place and it was not surprised by the results.

"DLA is the first of its size and complexity in the Department of Defense to undergo an audit so we did not anticipate achieving a 'clean' audit opinion in the initial cycles," it explained. "The key is to use auditor feedback to focus our remediation efforts and corrective action plans, and maximize the value from the audits. That’s what we’re doing now."

The agency's director, Lt. Gen. Darrell Williams, echoed that sentiment. He said the audit was important for the DLA, despite the poor results.

"The initial audit has provided us with a valuable independent view of our current financial operations," Williams responded. "We are committed to resolving the material weaknesses and strengthening internal controls around DLA's operations."