Only Audit the Military Has Passed in 20 Years Was Exposed As Fraudulent

In 2013, the Marine Corps celebrated the first time that any sector of the military had passed a legally mandated financial audit. The audits have been required by law for twenty years. Reuters revealed this week, however, that the lone success — declared in February of 2014 — was a fraud perpetrated by the Department of Defense Inspector General’s office, a private contractor, and the Marine Corps.

According to Reuters, the military has never passed an audit due to a toxic mix of outdated accounting methods, bureaucracy, and excessive waste. Perhaps that is why the company hired the auditing firm, Grant Thornton, to investigate their finances: the partner overseeing the Marine Corps audit, Tracey Greene, had worked with Daniel Blair—the DoD’s Deputy Inspector General—at the Government Accountability Office throughout the 1990s (Grant Thornton had already been suspected of sub-par quality audits with the Navy before receiving the Marine Corps commission).

According to a DoD Inspector General spokeswoman, the Inspector General’s Office of Professional Responsibility looked into this possible conflict of interest in 2013. It found there was none and the contract between the DoD, and Grant Thornton was actually extended. The audit was declared clean, only to be retracted in March of this year.

The degree of negligence in the 2013 audit was so severe that Grant Thornton cleared expenses and transactions without so much as requesting the pertinent receipts or documentation. When Cecilia Ball, who worked at the Inspector General’s office, was hired to review Grant Thornton’s work, she raised concerns about the integrity of the audit. At the end of December 2013, she presented her skepticism of the report to her superior, Edward Blair (no relation to Daniel Blair). Nevertheless, Daniel Blair urged acceptance of the Grant Thornton audit, claiming:

The level of documentation in GT’s work papers could be better. Some may even interpret this as a violation of audit standards.

In spite of this admission, he argued that the amount of documentation needed was not fixed but rather, “a matter of professional judgment.”

Edward Blair pushed back, arguing that

The bottom line is GT did not adequately document or support their conclusion (about the Marine Corps).

Ball pushed Daniel Blair’s office for more evidence to support Grant Thornton’s conclusion. She never received it, so when she heard that the audit was officially cleared in December of 2013, she asked to be reassigned. By October of 2014, the Inspector General’s quality control chief, Ashton Coleman Jr., raised doubts about the accuracy of the report in an analysis commissioned by Jon Rymer, the DoD’s chief inspector general. As Reuters summarized,

Without naming names, Coleman found that “senior management” at the inspector general’s office had improperly shared confidential audit-related documents with Grant Thornton.

Reuters further detailed that

The Coleman report said Grant Thornton used the work papers to improperly pressure the inspector general’s team to alter the audit documents to reflect the firm’s conclusions. Coleman said in the report that this could ‘be perceived as exerting undue influence on the audit team,’ which ‘could lead a third party to conclude that there is an impairment of independence.’

Though Rymer declined to be interviewed for the article, he said in an email statement that

With nearly 100 auditors from the OIG and Grant Thornton participating, it is not surprising there were disagreements.

He said he saw nothing that “convinced [him] that there was an improper or inappropriate impairment of independence by those involved.” The statement came in spite of the fact that the Inspector General’s office declared in March that it retracted its seal of approval on the Grant Thornton report — “because of new information that cast doubt on the reliability of the audit.”

In spite of state claims that no misconduct occurred in the audit, past behavior of the military shows there is a strong tendency of the government to waste and misallocate resources. It has lost hundreds of millions of dollars worth of equipment, had it destroyed, used astronomical sums of money on Viagra, spent taxpayer dollars on gambling and escorts, and just this month went $370 million over budget for a single aircraft carrier.

It is no surprise that the military is unable to prove its accountability to taxpayers. Unfortunately, the revelations about Grant Thornton and the Marine Corps are yet another example of government shirking responsibility by relying on questionable conflicts of interest and deception.

Carey Wedler writes for TheAntiMedia.org, where this first appeared. Tune in! The Anti-Media radio show airs Monday through Friday @ 11pm Eastern/8pm Pacific.