Shocking Government Report Finds $6.5 Trillion In Taxpayer Funds "Unaccounted For"

Tyler Durden's picture

Last week, we first touched on a topic which, in any non-banana republic, would be a far greater scandal than what Ryan Lochte may or may not have been doing in a Rio bathroom: namely, government corruption, falsification and potential fraud and embezzlement, which has resulted in the Pentagon being unable to account for up to $8.5 trillion in taxpayer funding.

Today, Reuters follows up on this disturbing issue, and reveals that the Army’s finances are so jumbled it had to make trillions of dollars of improper accounting adjustments to create an illusion that its books are balanced. The Defense Department’s Inspector General, in a June report, said 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.

As a result, the Army’s financial statements for 2015 were “materially misstated,” the report concluded. The “forced” adjustments rendered the statements useless because “DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions.”

For those wondering, this is what $1 trillion in $100 bills looks like.

Now multiply by 6.

This is not the first time the DoD has fudged its books: disclosure of the Army’s manipulation of numbers is the latest example of the severe accounting problems plaguing the Defense Department for decades. The report affirms a 2013 Reuters series revealing how the Defense Department falsified accounting on a large scale as it scrambled to close its books. As a result, there has been no way to know how the Defense Department – far and away the biggest chunk of Congress’ annual budget – spends the public’s money.... The Army lost or didn’t keep required data, and much of the data it had was inaccurate, the IG said.

In other words, it is effectively impossible to account how the US government has spent trillions in taxpayer funds over the years. It also means that since the money can not be accounted for, a substantial part of it may have been embezzled.

“Where is the money going? Nobody knows,” said Franklin Spinney, a retired military analyst for the Pentagon and critic of Defense Department planning, cited by Reuters.

The significance of the accounting problem goes beyond mere concern for balancing books, Spinney said. Both presidential candidates have called for increasing defense spending amid current global tension; the only issue is that more spending may not be necessary - all that is needed is less government corruption and theft.

An accurate accounting could reveal deeper problems in how the Defense Department spends its money. Its 2016 budget is $573 billion, more than half of the annual budget appropriated by Congress. The Army account’s errors will likely carry consequences for the entire Defense Department. Congress set a September 30, 2017 deadline for the department to be prepared to undergo an audit.

What's worse is that the "fudging" of the numbers is well known to everyone in the government apparatus. For years, the Inspector General – the Defense Department’s official auditor – has inserted a disclaimer on all military annual reports. The accounting is so unreliable that “the basic financial statements may have undetected misstatements that are both material and pervasive.

Not surprisingly, trying to figure out where the adjustments are has proven to be impossible.

Jack Armstrong, a former Defense Inspector General official in charge of auditing the Army General Fund, said the same type of unjustified changes to Army financial statements already were being made when he retired in 2010.

 

The Army issues two types of reports – a budget report and a financial one. The budget one was completed first. Armstrong said he believes fudged numbers were inserted into the financial report to make the numbers match.

 

“They don’t know what the heck the balances should be,” Armstrong said.

Meanwhile, for government employees, such as those at the Defense Finance and Accounting Services (DFAS), which handles a wide range of Defense Department accounting services, the whole issue is one big joke, and they refer to preparation of the Army’s year-end statements as “the grand plug,” Armstrong said. “Plug”, of course, being another name for made-up numbers.

Finally, how on earth can one possibly "not account" for trillions? As Reuters adds, at first glance adjustments totaling trillions may seem impossible. The amounts dwarf the Defense Department’s entire budget. However, when making changes to one account also require making changes to multiple levels of sub-accounts. That creates a domino effect where falsifications kept falling down the line. In many instances this daisy-chain was repeated multiple times for the same accounting item.

The IG report also blamed DFAS, saying it too made unjustified changes to numbers. For example, two DFAS computer systems showed different values of supplies for missiles and ammunition, the report noted – but rather than solving the disparity, DFAS personnel inserted a false “correction” to make the numbers match.

 

DFAS also could not make accurate year-end Army financial statements because more than 16,000 financial data files had vanished from its computer system. Faulty computer programming and employees’ inability to detect the flaw were at fault, the IG said.

DFAS is studying the report “and has no comment at this time,” a spokesman said. We doubt anyone else will inquire into where potentially trillions in taxpayer funds have disappeared to; meanwhile the two presidential candidates battle it out on the topic of tax rates when the real problem facing America is not how much money it draws in - after all the Fed can and will simply monetize the deficit - but how it spends it. Sadly, we may never know.

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the grateful unemployed's picture

the last time the DOD (don rumsfeld) made a similar claim it was days before the market broke, badly.

max2205's picture

All of it is probably at some underground bunker next to Fema camps 

BTFDemocracy's picture

The above graphic of $1 Trillion comes from an article at Demonocracy.info, displaying US Debt in physical $100 Bills:

http://demonocracy.info/infographics/usa/us_debt/us_debt.html

Enjoy.

Never One Roach's picture

House prices in the DC area will never drop. Fat military contractors pocketed Billions. Well, at least they kept our soldiers safe, right?

... oh, wait a sec ...

Whistleblowers Exposed Contractors Who Sold Defective Helmets to Pentagon

 

http://www.govexec.com/contracting/2016/08/whistleblowers-exposed-contra...

 

BullyDog's picture

$2.3 mission trillion = twin towers with is gold vaporised.

 

What we looking at here.   Fort knox nuked?  Or 33 Liberty street.  (it's empty of gold, however a nice sized hole radiated for a couple decades would put the criminal cartel in the clear.

BullyBearish's picture

In the last days of Vietnam, they locked a couple of grunts in a room for 2 days with only one task: burn the millions of dollars of cash kept in that room to bribe the locals...want to know where your future hard-earned tax dollars have gone now?

-Bribing the locals around the world

-Greasing and expanding the Military & Intelligence Industrial Complex globally to maim, kill, surveil, terrorize, control,, etc.

-Tribute to our owners

I remind you that NONE of these activities done with your money was up for a vote and they all are done to our disadvantage

 

 

847328_3527's picture

Retired State Dept employees live very, very well. I always wondered how.

Now I know.

Stainless Steel Rat's picture

Probably a technology that requires tons of research, is simple to implement so can't be made public, and allows for zero seconds warning.

We are probably not going to let the cat out of the bag until all the "bad actors" are dealt with.

I consider the US a "bad actor" as well, but I'd rather Kim didn't get his hands on it.

Shemp 4 Victory's picture

Let's just cut all defense spending to zero for 15 years or so. That should even up everything.

remain calm's picture

Don't worry crooked Hilary will just have the accounting firm for the Clinton Foundation fix it.

J S Bach's picture

The thing that astonishes me more than anything about this is that the media and American sheeple care much more about 4 debauched swimmers than 6.5 trillion dollars in stolen loot.  Absolutely surreal times we live in.

Rabbi Chaim Cohen's picture

Ok call me thick, but how could the military even have $6.5 Trillion to misplace when they have a total annual budget of $560 Billion? That would need to include every cent that they have been allocated for approx. 13 years! How does that work?

leanux's picture

It doesn't. It hides the real thieves, the Fed.

gargoylian's picture

Correct. The Fed stole $30 Trillion in 2008 alone.

https://goo.gl/2SIIh0

WordSmith2013's picture

Makes no diffeernce since the "New U.S. Currency Already in Our Money Supply"

 

http://themillenniumreport.com/2016/07/new-u-s-currency-already-in-our-m...

Manthong's picture

Heck.. a trillion here, a trillion there sooner or later you will be talking about real money….

…like the 8 trillion that the pentagram secretly lost after the 3 trillion that Rumsfeld misplaced or maybe the 10 trillion in never-to-be repaid magic negro budget money after the 5 trillion Bush- f’n wacking…

.. but, at least the Clintons are rich.  

.snd Silverschwsien was made whole not once, but twice.

and bin Ladens probably have a couple acres in Crawford.

 

Falling Down's picture

If you'd read the entire transcript of Rumsfeld's speech, you would understand what he was driving at.

I'm not a Rumdfeld fan, but he made a valid point about DoD accounting. At thw time, and I'm sure it stilk holds to a certain degree, there was a myriad of accounting systems within the DoD. He was merely pointing that out, and how the DoD needed to go to one accounting system.

 

Hopeless for Change's picture

The simple math (I know, an antiquated notion) says that this "missing" amount is equal to about TWENTY THOUSAND DOLLARS PER PERSON in the United States. That's every man, woman, child, welfare recipient, invalid, bum, everyone. It's probably $100,000 per taxpayer.

This article should permanently pinned to the top of Zero Hedge until the Revolution finally happens.

The Saint's picture

Wouldn't there be a lot more billionaires around if this money really ever existed?

 

BeanusCountus's picture

You are absolutely correct Rabbi. Article is a tad misleading. Would walk you through an example, but no one here wants a quick tutor in "Fund Accounting 101". Simply: $1000 of missing money at a "feeder" fund that feeds 50 other funds can result in $102,000 of phony accounting entries. Or even more if any of those 50 funds are "feeders" to other funds as well.

But the article is amazing to me. Accounting for cash receipts and disbursements is really quite simple, and easy to keep track of by qualified personnel. "Qualified" being the operative word. The magnitude of actual missing cash is also easily calculated. That number is nowhere to be found in the report. Stunning. And this is our Defense Department?

Lurk Skywatcher's picture

It gets harder when cash reciepts also includes the Opium proceeds from Afganistan. Try reconciling those books without letting the cat out of the bag - its easier to just lose a couple of trillion than explain where the extra trillions came from.

Manthong's picture

Beanus Countus..

all ageed to your contentions.

You are obviously a noble Roman of stature.

Are you Beanus Countus I or the II or the III?

Me, I’m just a greasy southerner whore-monger from Catania, Sicily.

Well no, actually although I have traveled up and down the soon-to-be completely busted boot

I am the worst Goth a pretty Italian could fear.

You know, heads on pikes and that sort of thing.

When I sweep back north, there will be a bunch of idiot lib-tard Germanics that will have a lot to worry about.

BeanusCountus's picture

Man Thong..

Wish the nobility thing was true, will consider adding a "II" to gain credibility among the liberal masses. Nothing like a title to amaze the easily confused. It will undoubtedly help the next time I suggest to the subdivision anti-smoking zealot, who weighs 290 and is complaining about his health care costs going up because of "smokers", that he and his wife might want to consider increasing their exercise regimen to be a "team player".

Not of Roman heritage, Irish/German actually so beer plays a big role in my life (too much so in my late-night posts). A bit of a history student though and admire Roman accomplishments early given the times. Some of 'em anyway. An ex-Catholic (who isn't these days?) just spending time trying to figure out how things have gone so wrong. No logic, no accountability, it's all so twisted. So far, my conclusion is that we have bring back the nuns to whack a few knuckles. Haha. (But the "sloth" thing sounds like a blast.)

But yea, I have all that numbers training that makes me post when I think I can contribute. Actuary, CPA, CFO, all that crap (wasted time in retrospect, but paid a lot of bills). Either everything I have learned is wrong, not just in books but in life, or this world is definately on one f'd up path. My bet is the latter.

Give 'em hell on your northern travels. Libs are ruining everything that made the world great throughout history one step at a time. All to get a few votes and steal from the masses.

Best,

Beanus Countus II

Manipulism's picture

"Defense Department"???LOL

WAR crime Department is the aprobriate name.

willwork4food's picture

Excellent question. You've got to ask yourself why this is coming out now?

beemasters's picture

It costs a lot to create terrorists/-ism, supply them with weapons and keep the media quiet so the military/government bodies that are supposed protect and defend the people will remain relevant. Of course, this would have to be "unaccounted for".

EmeraldWI's picture

Zerohedge racists care more about the 2/3's of the farm subsidy probram that feeds kids.

 

BeanusCountus's picture

Excuse me, but I take offense to you calling me a racist. It's okay, free country (in my book anyway). But you just painted everyone at zerohedge with a broad brush, which seems to be the basis of "racism" that you abhor. Could you please set us straight on what appears to be a double standard?

Edit: And... ZERO HEDGE LIVES MATTER

EmeraldWI's picture

BeanusCountus --As opposed to American racists, Zerohedge racists are more consolidated. Like low functioning distant cousins, they "find each other" in a marriage of sorts in these posts. $75 billion (of a farm subsidy program of about $105 billion) in food benefits helps feed children in America. That is the compromise "we" settle for.

That benefit (free food) may be the most newsworthy for those who use the language of expletives mixed with slurs and slandering people of color in print. Those many articles seem to bring out posters associating the fictional Ayn Rand principle of letting lazy people starve who in their opinion, mostly happen to be of color. 

"We" also settle for a military budget that is closing in on a trillion dollars. Although the pentagon is seldom praised here, the color of their skin is white, their jobs are essentially white collar welfare and an article that talks about $6-8 trillion dollars missing (vs. $70 billion in food) does not produce any condemnation of the white race. Something like that would be considered a Jewish crime here. This is the result of capitalism's success, not of its failure.

In the end, I apologize to you and everyone at Zerohedge. I can't be the judge of anyone and it was a mistake. The proof being that I was just judged. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BeanusCountus's picture

Hey, you don't have to apologize to anyone. Free country, try to remember that. As to ZH posters, bet ya none of 'em want to see kids starve. Other side has to get the message: the more they "demand", the less people will help. Pretty simple.

Edit: And there's not a lot of Pentagon supporters at ZH.

Beowulf55's picture

The only farm subsidy I get is insurance....and that doesn't cover hail.....or price of grains below production cost....or the price of farm land 100x above production value.

 

Kickaha's picture

Feeding kids is just collateral damage.  The farm subsidy program mainly feeds ginormous agri-business.  Some corporate geeks probably lose sleep over the money that is lost on feeding kids.

One man's "racism" is another man's efforts to guide himself through life based upon the knowledge gained through difficult and costly personal experience.  It is a puzzling and difficult problem:  are there too many racists because there are too many dindus, or are there too many dindus because there are too many racists?  Inquiring chickens and eggs want to know!

assistedliving's picture

jeez i'm getting old.  dindu?  had to google that one.  its getting like every tenth iteration of something i hv to look up nowadays...let alone those damn charts

zeronetwork's picture

If "you" try to steal a slice of pizza because you are hungry and cold, you will end up in prison for six months.

miketv's picture

true, some women are in there for stealing baby food

PTR's picture

I've heard it stated that in years past, a lot of lost money went into CERN.  The cabal had a multidimensional portal deadline to meet.

Billybullshit's picture

Probably some space based ICBM  shoot down weapon, so a first strike becomes viable.

Beowulf55's picture

 

Nay..........it is the cost of the base on Mars using alien space technology.......

putaipan's picture

off handed comment in a good interview with a father of a seal team six member i listened to the other day- "all generals now have a degree or background in finance"

xavi1951's picture

Check the Clinton Foundation for Unreported Income.

ejmoosa's picture

They have lots of secrests they must keep secret.  And so to keep them on the rights side of things, they get lots of green.

LasVegasDave's picture

The Romans had an effective way to discourage misuse of public office.

 

They would take the offending Senator, cut his nose off,  throw him into a sack with a rat, and toss him into the river.

 

We will continue to have misuse of public funds until we reinstitute a similiar form of punishment.

Katos's picture

The elites are willing to kill to keep "BUSINESS AS USUAL" going strong in the US? Any questions why?

omniversling's picture

Think Counter Gravitational Aircraft, cloaking, time travel, Geo-engineering & Terraforming, AI Minority Report, cloning and immortality, transhumanism, technogulag panopticonistan, secret secret shite that we can't even imagine…

The Missing Trillions Trail - Katherine Austin Fitts estimates more like $9-9.5tn to $41tn (then add decades of narco$) http://solari.com/archive/missing_money/

“$8.5 TRILLION In Taxpayer Money Doled Out By Congress To The Pentagon Since 1996 … Has NEVER Been Accounted For”

http://www.zerohedge.com/contributed/2013-11-18/%E2%80%9C85-trillion-tax...

Joseph P Farrell suggests a 'Breakaway Civilisation':

… A TRILLION HERE, A TRILLION THERE, AND PRETTY SOON ...

http://gizadeathstar.com/2016/08/trillion-trillion-pretty-soon-youll-tal...

The Case for a Breakaway Civilization (Part 1 of 2) - A conversation with Richard Dolan https://www.youtube.com/watch?v=zoXxqdg4gl8

James Corbett answers: How many TRILLIONS did the Pentagon “lose”? – Questions For Corbett #018
Good review and shownote links: https://www.corbettreport.com/how-many-trillions-did-the-pentagon-lose-q...

Pentagon Has Lost $6.5 Trillion
http://www.paulcraigroberts.org/2016/08/16/pentagon-has-lost-6-5-trillion/

Kirk2NCC1701's picture

Your hypothesis is not outside the IQ of Libertarians, but it is outside their psychological comfort level.

They don't want to know that maybe Jesus was a Starchild, and his 'heavenly father' was the captain of a spaceship. Which, BTW, is a lot easier to digest than the stuff that the Egyptians, Hebrews and Greeks were peddling.

JRobby's picture

It is in uncountable offshore accounts of the elites (most of it) and their lackey's that help perpetrate the theft. Being white is a much bigger crime than theft these days.

The "mechanism" is illustrated in the movie "The Clearstream Affair", multiply that by 1,000 because that was just one example in France.

assistedliving's picture

nailed it BB.  when was the last time the IRS gave you a ONE YEAR HEADS UP to audit you?

Chris Dakota's picture

How about the 2+trillion missing during the Iraq war?

847328_3527's picture

Paul Bremer could not be reached for comment at his $7.6 million McMansion. The butler said he's gone yachting for the weekend.