The Marine Corps did not properly account for nearly $1 billion in transactions, even though the secretary of Defense and his aides gave speeches and awards celebrating the Marine Corps for successfully accounting for all the money it received and spent in 2012, according to a report made public by the Government Accountability Office on Monday.
When auditors in the Pentagon’s Office of Inspector General noticed accounting problems, the office’s management pressured team leaders to approve the audit, according to the GAO report and internal emails reviewed by the Center for Public Integrity.
Defense’s deputy inspector general, Daniel Blair, reportedly told his colleagues “to do what it takes” to ensure the desired results.
The Marine Corps’ problematic accounting totals roughly $800 million in improperly documented or misstated transactions. It shares these problems with the Department of Defense, the Center for Public Integrity reports.
This may cripple the Pentagon’s ability to meet the congressionally imposed deadline of being fully auditable by 2017. The Pentagon was originally supposed to have its accounting squared away by 1997, but the deadline has been pushed back numerous times.
The Marine Corps’ Fiscal Director Ann-Cecile McDermott took issue with the GAO report, writing in the report that while “much work remains to fully mitigate” the weaknesses of the Marine Corps’ internal controls, they do not “agree with [the GAO] assertion that significant, uncorrected control weaknesses continue to impair the Marine Corps’ ability to produce consistent, reliable, and sustainable financial information for day-to-day decision making on its missions and operations.”
“Defense dishes out over $500 billion a year yet still can’t tell the people where all the money is going,” said Sen. Charles Grassley, R-Iowa, to the Center for Public Integrity after reading the GAO report.
“We can’t effectively identify areas to reduce spending if we don’t know how much, and where, we’re spending that money in the first place,” Sen. Tom Carper, D-Del., senior Democrat on the Homeland Security and Governmental Affairs Committee, told the Center. “This is more than just a disagreement among accountants; it raises questions about the Department’s basic financial practices.”
From the Center for Public Integrity:
Grant Thornton … collected $32 million from 2010 until 2014 to audit the Marine Corps’s report of how it had spent its budget each year and determine whether it had correctly recorded its financial intakes and expenditures, according to Grassley. The firm’s favorable verdict, seconded by the inspector general, was the basis for the public celebration.
Michele Mazur, a spokesperson for Grant Thornton, when asked if the firm would return its fee since its initial endorsement was in the end rejected by the Pentagon, stated by email that “We are confident that our work complied with all professional standards.”
The failure of the Marine Corps’ audit is the latest in a series of cases where the Pentagon has been unable to account for billions of taxpayer dollars – and given the delay in a congressional audit, it is impossible to know precisely where the funds have been misspent.
The GAO report was first released in July and made public on Monday.
UPDATE: Navy Cmdr. William Urban, a Defense Department spokesman, emailed the following statement: “The department appreciates the work done by the GAO and is actively incorporating their recommendations into audits currently being conducted by the department with independent public accountants. It is our understanding that the GAO report on the Marine Corps audit included a number of differences of opinion over federal auditing standards between the GAO and the DoD IG. For more information on the nature of the report, I would refer you to the GAO and the DoD IG.”
