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“No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.” ~ Article I, Section 9, Clause 7, The US Constitution On July 26, 2016, the Office of the Inspector General (OIG) issued a report “Army General Fund Adjustments Not Adequately Documented or Supported”.  The report indicates that for fiscal year 2015 the Army failed to provide adequate support for $6.5 trillion in journal voucher adjustments.  According to the GAO's Comptroller General, "Journal vouchers are summary-level accounting adjustments made when balances between systems cannot be reconciled. Often these journal vouchers are unsupported, meaning they lack supporting documentation to justify the adjustment or are not tied to specific accounting transactions…. For an auditor, journal vouchers are a red flag for transactions not being captured, reported, or summarized correctly."

Given that the entire Army budget in fiscal year 2015 was $120 billion, unsupported adjustments were 54 times the level of spending authorized by Congress.  The July 2016 report indicates that unsupported adjustments are the result of the Defense Department's "failure to correct system deficiencies." The result, according to the report, is that data used to prepare the year-­end financial statements were unreliable and lacked an adequate audit trail. The report indicates that just 170 transactions accounted for $2.1 trillion in year—end unsupported adjustments.  No information is given about these 170 transactions.  In addition many thousands of transactions with unsubstantiated adjustments  were, according to the report, removed by the Army. There is no explanation concerning why they were removed nor their magnitude. The July 2016 report states, "In addition, DFAS (Defense Finance and Accounting Service) Indianapolis personnel did not document or support why DDRS (The Defense Department Reporting System) removed at least 16,513 of 1.3 million feeder file records during the Third Quarter." An appendix to the July 2016 report shows $2 trillion in changes to the Army General Fund balance sheet due to unsupported adjustments. On the asset side, there is $794 billion increase in the Army's Fund Balance with the U.S. Treasury.  There is also an increase of $929 billion in the Army's Accounts Payable. This information raises additional major questions. First, what is the source of the additional $794 billion in the Army's Fund Balance? This adjustment represents more than six times appropriated spending.  Second, do these transfers represent a flow of funds to the Army beyond those authorized by Congress? Third, were these funds authorized and if so when and by whom? Fourth, what is the source of these funds? Finally, the $929 billion in Accounts Payable appears to represent an amount owed for items or services purchased on credit. What entities have received or will receive payment?

Last year, a Reuters article brought renewed scrutiny to the budgeting practices of the U.S. Department of Defense (DOD), specifically the U.S. Army, after it was revealed that the department  had “lost” $6.5 trillion in 2015 due to “wrongful budget adjustments.” Nearly half of that massive sum, $2.8 trillion, was lost in just one quarter. Reuters noted that the Army “lacked the receipts and invoices to support those numbers [the adjustments] or simply made them up” in order to “create an illusion that its books are balanced.” Officially, the DOD has acknowledged that its financial statements for 2015 were “materially misstated.” However, this was hardly the first time the department had been caught falsifying its accounting or the first time the department had mishandled massive sums of taxpayer money.

The report, which examined in great detail the budgets of both the DOD and the Department of Housing and Urban Development (HUD), found that between 1998 and 2015 these two departments alone lost over $21 trillion in taxpayer funds. The funds lost were a direct result of “unsupported journal voucher adjustments” made to the departments’ budgets. According to the Office of the Comptroller, “unsupported journal voucher adjustments” are defined as “summary-level accounting adjustments made when balances between systems cannot be reconciled. Often these journal vouchers are unsupported, meaning they lack supporting documentation to justify the adjustment [receipts, etc.] or are not tied to specific accounting transactions.” The report notes that, in both the private and public sectors, the presence of such adjustments is considered “a red flag” for potential fraud. The amount of money lost is truly staggering. As co-author Fitts noted in an interview with USA Watchdog, the amount unaccounted for over this 17 year period amounts to “$65,000 for every man, woman and child resident in America.” By comparison, the cost per taxpayer of all U.S. wars waged since 9/11 has been $7,500 per taxpayer. The sum is also enough to cover the entire U.S. national debt, which broke $20 trillion less than a month ago, and still have funds left over. What’s more, the actual amount of funds lost — measured at $21 trillion – is likely to be much higher, as the researchers were unable to recover data for every year over the period, meaning the assessment is incomplete.

Subsequent to the publication of Dr. Skidmore’s report, the Office of the Inspector General at the Department of Defense (DOD) and the Department of Housing and Urban Development (HUD) took reports off line, consequently our primary links in the table below are to the same documents posted on our website. We have preserved the original DOD and HUD links in the footnotes – if they result in a 404 error or not found message, this indicates they were taken down or moved subsequent to publication. On October 5, 2017 we discovered that the link to the report “Army General Fund Adjustments Not Adequately Documented or Supported” had been disabled. Within a several days, the links to other OIG documents we identified in our search were also disabled. The sequential non-random nature of this disabling process suggests a purposeful decision on the part of OIG to make key documents unavailable to the public via the website, as opposed to website reorganization, etc. We also revisited the website intermittently to see whether the documents had been reposted under different URLs—until very recently they had not been reposted. On December 11, 2017, we learned that key documents had been reposted on the OIG website, but with different URLs. Documents now appear to be reposted on new URLs. As we find the new URLs we are adding them in the footnotes entitled “new link” next to the original link.