A Reuters investigation looks deep inside one of the biggest and most complex works of military fiction of all time: the Pentagon's books. Defense Department sources say it is routine to use phony numbers—"plugs"—to make the numbers of defense agencies match those from the Treasury in the face of missing and incorrect numbers. Reuters found that accountants with the Defense Finance and Accounting Service, the Pentagon's main accounting agency, would try to go back and correct their entries; they only succeeded sometimes, and the fraudulent accounting has helped conceal untold billions of dollars worth of waste. And yet "because of its persistent inability to tally its accounts," the Pentagon has yet to undergo a single audit since 1996, though federal agencies are required to have them yearly. The lack of an audit means $8.5 trillion—almost $27,000 for every man, woman, and child in America—has gone unaccounted for.
The terrible bookkeeping—which involves thousands of different, largely obsolete systems from as far back as the 1970s—has resulted in waste including the $5.8 billion worth of supplies the Army lost track of between 2003 and 2011, when troops in Afghanistan and Iraq were struggling with shortages. Efforts to update and fix the military's accounting systems have swallowed even more money, with tens of billions of dollars believed to have been blown on projects that were later abandoned. The payroll system is just as flawed as the rest of the Pentagon's accounting, Reuters finds, causing huge hardship for soldiers who have to fight to get their own pay. "We're not out to screw our own people," said Defense Department Comptroller Robert Hale says. "The military pay system is just very complex." (Read more US military stories.)