A 2022 audit of the Department of Defense found the agency had $292.2 million in questioned costs, with an additional $26.6 million in funds that could have been put to better use.
The DoD was audited by the DoD Office of Inspector General, in partnership with RMA Associates, an independent accounting firm. The report found that while the DoD did present its financials fairly and accurately, there were numerous questioned costs.
Questioned costs are those that are in violation or possible violation of funding regulations, may not have adequate documentation, or may appear to be unreasonable.
Funds that could have been put to better use are exactly what they sound like: funds that could have been allocated toward paying military members, purchasing equipment, or other necessary expenses.
These questioned costs are likely a result of inadequate internal controls, according to the audit.
Auditors emphasized that the DoD lacked a uniform financial policy, calling the current process “fragmented and decentralized.” They also found that additional progress is needed to implement controls, and that a lack of availability and cooperation from agency officials caused delays in the auditing process.
The report found that the agency also didn’t have policies in place to document the process for mitigating control deficiencies, nor did it have compliant technical, editorial, or consistency reviews.
The DoD is one of the largest federal agencies, making up 12.6% of the federal budget, with $1 trillion in budgetary resources in FY 2023. It is concerning that an agency of this size is struggling with basic accounting controls.
The DOD received a 4% increase in its budget for 2023. Hopefully, the agency can get its act together and implement basic accounting controls to prevent hundreds of millions in future questioned costs.
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