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USA Missing Money


Missing Money

Missing Money

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The editors at Masters in Accounting Degrees decided to research and thankfully share the topic of

Missing Money

With a national debt approaching $17 trillion, Uncle Sam is tightening his belt and looking under the cushions for extra change. But a closer look at his pocket book reveals just how little he knows about where your money is going. Below are a few examples that will make you think twice about Uncle Sam’s accounting skills.

There’s No Business Like D.O.D. Business (2000)

2000 (From a Government Accounting Office Report): Several major departments are not yet able to produce auditable financial statements on a consistent basis. The most significan … is the Department of Defense (DOD), which represents a large percentage of the government’s assets, liabilities, and net costs, followed by the Forest Service, the FAA, and the IRS. While DOD has made progress and is working hard to correct its financial management systems and internal control weaknesses, it is not yet able to comply with generally accepted accounting principles and pass the test of an independent financial audit. For fiscal year 1999 GAO auditors reported that 21 of 24 major agencies’ financial systems did not comply substantially with federal accounting standards or financial systems and other requirements.

Unsupported Adjustments

By law, each federal agency and department is required as a minimum to balance its books at the close of each fiscal year and to submit audited financial statements. However, both Congress and the White House have continued to appropriate and pay government officials, bureaucrats, and government contractors who plug in dollar amount under the category “unsupported adjustment.” An “unsupported adjustment” is a plug figure for cash and assets that are unaccounted for and/or disbursed with no supporting records or audit trail.

Black budget

A black budget is a budget that is secretly collected from the overall income of a nation; the budget is kept secret for national security reasons. Bottom line: we may never know exactly how much is spent or how much is missing from a black budget.

Dude, Where’s my $2.3 Trillion (1999)

$2.3 trillion of balances, transactions and adjustments are inadequately documented, according to a 1999 Defense audit. Military money managers made almost $7 trillion in adjustments to their financial ledgers in an attempt to make things add up. Alas, the Pentagon could not show receipts for $2.3 trillion of those changes.

“According to some estimates, we cannot track $2.3 trillion in transactions. We cannot share information from floor to floor in this building because it’s stored on dozens of technological systems that are inaccessible or incompatible.”

- Secretary of Defense Donald H. Rumsfeld 9/10/2001

Tanks, Planes, and Javelin Missile Command Launch Units (2003)

Though Defense has long been notorious for waste, government reports suggest the Pentagon’s money management woes have reached astronomical proportions in 2003. A study by the Defense Department’s inspector general found that the Pentagon couldn’t properly account for more than a trillion dollars in monies spent. A 2003 GAO report found Defense inventory systems so lax that the U.S. Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units.

Cash on a Plane (2004)

Back in 2003, Pentagon officials determined that one giant C-130 Hercules cargo plane could carry $2.4 billion in shrink-wrapped bricks of $100 bills. They sent an initial full planeload of cash, followed by 20 other flights to Iraq. By May 2004 they had sent $12-billion and eventually $20 billion. Despite years of audits and investigations, U.S. Defense officials still cannot say what happened to $6.6 billion of that cash. The missing $6.6 billion may be “the largest theft of funds in national history.”

Contractors Gone Wild (2002-2011)

As much as $60 billion in U.S. funds has been lost to waste and fraud in Iraq and Afghanistan over the past decade through lax oversight of contractors, poor planning and payoffs to warlords and insurgents, an independent panel investigating U.S. wartime spending (Commission on Wartime Contracting ) estimates. At least $31 billion has been lost and the total could be as high as $60 billion. The commission called the estimate “conservative.”

Crude Awakening (2004-2007)

The U.S. Defense Department is unable to properly account for over 95 percent of $9.1 billion in Iraqi oil money tapped by the U.S. for rebuilding the war ravaged nation, according to an audit released Tuesday. The audit found that shoddy record keeping by the Defense Department left the Pentagon unable to fully account for $8.7 billion it withdrew between 2004 and 2007 from a special fund set up by the U.N. Security Council. Of that amount, Pentagon “could not provide documentation to substantiate how it spent $2.6 billion.” The funds are separate from the $53 billion allocated by Congress for rebuilding Iraq.

The Money Tip (2003-2012)

An audit report released in March 2013, two weeks before the tenth anniversary of the U.S. invasion of Iraq, the soon-to-be-defunct Office of the Special Inspector General for Iraq Reconstruction (SIGIR) found that incomplete data and inconsistent cost reporting have made it impossible to track a large portion of the $53 billion the U.S. spent to rebuild Iraq from 2003 through September 30, 2012 – “Nonetheless, based on the 390 audits and inspections and over 600 investigations conducted by SIGIR’s audit, inspection, and investigative staff since 2004, our judgement is that waste would range up to at least 15% of Iraq relief and reconstruction spending or at least $8 billion.”

The Hunt for Fed’s 9 Trillion

From 2008-2009, the Fed had placed $9 trillion onto their off-balance sheet. During a congressional hearing, the Federal Reserve Inspector General could not account for the money.

TOTAL
– D.O.D. – 3.4 trillion
– Fed – 9 trillion
– Total – 12.4 trillion

These are estimates based on what is known about the unknown; nevertheless, 12.4 trillion is 73% of America’s entire national debt. That’s a whole lot of missing money. Maybe that’s why the Founding fathers said this:

“No money shall be drawn from the Treasury, but in consequence of appropriations made by law; and a regular statement and account of receipts and expenditures of all public money shall be published from time to time.”

- US Constitution, Article I, Section 9

Sources

- http://www.usgovernmentdebt.us/spending_chart_1999_2013USb_14s2li111mcn_H0fG0f
http://www.usdebtclock.org
http://www.nytimes.com/2013/05/15/business/cbo-cuts-2013-deficit-estimate-by-24-percent.html?pagewanted=all&_r=0
http://www.gao.gov/pas/2001/d01241.pdf
http://www.fas.org/sgp/crs/natsec/IB87201.pdf
http://www.whereisthemoney.org/FAQ-detail.htm
http://www.defense.gov/news/newsarticle.aspx?id=44199
http://www.defense.gov/speeches/speech.aspx?speechid=430
http://www.sfgate.com/news/article/Military-waste-under-fire-1-trillion-missing-2616120.php
http://www.rawstory.com/rs/2010/07/27/pentagon-account-87-billion-iraqi-funds/
http://www.rawstory.com/rs/2011/06/19/missing-iraq-money-may-be-as-much-as-18-billion/
http://cybercemetery.unt.edu/archive/cwc/20110929213820/http://www.wartimecontracting.gov/docs/CWC_FinalReport-lowres.pdf
http://www.sigir.mil/embargo/files/audits/13-006.pdf

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Comments on: "USA Missing Money" (1)

  1. James Smith said:

    WASHINGTON (AP) — The military’s money managers last year made almost $7 trillion in adjustments to their financial ledgers in an attempt to make them add up, the Pentagon’s inspector general said in a report released Friday.

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