Rumsfield didn't break a story concerning $2.3 trillion , he was repeating a question raised in April 2001 by the,, DOD;
More than ten years ago, the U.S. Congress passed the Chief Financial Officers (CFO)
Act, mandating that the Federal agencies prepare annually a set of auditable financial
statements detailing assets and liabilities and the results of their annual operations.
Selected agencies, including parts of DoD, were included as pilots for this program. In
1994, Congress passed the Government Management and Results Act, mandating that the
CFO Act applies to all agencies. For FY 2000, DoD, once again, was unable to meet the
requirements of the CFO Act. Even more troublesome is the awareness that compliance
with the CFO Act remains out of reach, far over the horizon.
In the current environment, DoD has a serious credibility problem in financial
management. On January 11, 2001, in the confirmation hearing of the Secretary of
Defense (SECDEF), Senator Byrd questioned the Defense Department's inability "to
receive a clean audit opinion in its financial statements". He went on to say, "I seriously
question an increase in the Pentagon's budget in the face of the department's recent
(inspector general) report. How can we seriously consider a $50 billion increase in the
Defense Department's budget when the (Department of Defense's) own auditors--when
DoD's own auditors--say the department cannot account for $2.3 trillion in
transactions..."
In subsequent Senate testimony of February 13, 2001, Senator Grassley referenced these
questions and continued, "...these reports show that DoD has lost control of the money at
the transaction level. With no control at the transaction level, it is physically impossible
to roll up the numbers into a top-line financial statement that can stand up to scrutiny and,
most importantly, audit."
While DoD may debate some of the criticisms of its financial statements and the size and
components of the $2.3 trillion issue, we think that corrective action requires radical
financial management transformation.
For the FY 1999 financial statements, the auditors
concluded that $2.3 trillion transactions of the $7.6 trillion entries to the financial
statements were "unsupported". DoD notes that many of these entries included end-of-
period estimates for such items as military pension actuarial liabilities and contingent
liabilities, and manual entries for such items as contract accounts payable and property
and equipment values. DoD would further note that the "unsupported" entries are "not
necessarily improper" and that documentation does exist in many cases, albeit, not
adequate for the auditing standards imposed.
http://www.defense.gov/news/Jul2001/d20 ... inmngt.pdf