Report: U.S. Army Manipulated Its Accounting Entries by Trillions of Dollars

August 19, 2016

The U.S. Army manipulated its accounting entries by trillions of dollars in an attempt to make its books appear balanced, making it impossible to uncover how the branch spends taxpayer money, according to a government audit.

Reuters reported Friday, citing a June report from the Defense Department’s Inspector General:

The Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year. Yet the Army lacked receipts and invoices to support those numbers or simply made them up.

The report concluded that the Army’s 2015 financial statements were "materially misstated" because of the "forced" adjustments, which made its financial statements useless.

"DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions," the report stated.

The inspector general focused on the Army’s General Fund, the largest of its two primary accounts, that had assets equaling $282.6 billion in 2015, according to Reuters. The report said the Army either lost or did not record required data. Much of the data that was recorded was inaccurate, the inspector general said.

"Where is the money going? Nobody knows," Franklin Spinney, a retired military analyst for the Pentagon and critic of Defense Department planning, told Reuters.

Spinney said the problem is particularly significant as both Hillary Clinton and Donald Trump have campaigned to increase defense spending. The DoD’s 2016 budget is $573 billion, accounting for more than half of the country’s annual budget appropriated by Congress.

The department will undergo a congressional audit on Sept. 30, 2017.

An Army spokesman told Reuters the branch "remains committed to asserting audit readiness" by the September deadline.

"Though there is a high number of adjustments, we believe the financial statement information is more accurate than implied in this report," he said, claiming the improper adjustments netted out to $62.4 billion.