Audit finds Pentagon agency mishandled hundreds of millions of dollars

(Photo: AP Images)

WASHINGTON (CNN)– The Pentagon‘s Defense Logistics Agency failed to properly document hundreds of millions of dollars’ worth of funding for construction projects, according to an internal audit performed by the auditor Ernst & Young.

It is the first year that the audit has been performed.

The publicly available audit of agency’s general fund said the agency “lacks policies and procedures to review” construction projects and properly document the projects in its financial statements, leading to errors in reporting valued at approximately $465 million.

The auditors also said that the Defense Logistics Agency was unable to provide supporting documentation to substantiate in progress construction projects, saying that such supporting documentation was missing or “insufficient to substantiate approximately $384 million” in construction assets.

The Defense Logistics Agency acknowledged the shortfalls while saying they were working to remedy the issues identified.

“DLA concurs with Ernst and Young’s assessment of our failure to properly account for and track funding to specific construction projects. While there were shortcomings in documentation, there was no loss of accountability of real property or associated funding,” a spokesman for the Defense Logistics Agency told CNN in a statement.

“As part of DLA’s responsibility to achieve audit compliance, DLA has already taken steps to correct this shortcoming. As stewards of the American taxpayer’s dollars, our goal is to make significant progress towards compliance during the FY 2018 audit cycle,” the statement added.

The story was first reported by Politico.

“The key is to use auditor feedback to focus our remediation efforts and corrective action plans and maximize the value from the audits. That’s what we’re doing now. Each audit report will help DLA build a better financial reporting foundation and provide a stepping stone towards a clean audit opinion of our financial statements,” the agency said.

The Defense Logistics Agency manages the US military’s global supply chain, including the majority of its food, fuel and spare parts, and provides more than $35 billion in goods and services annually, according to statistics provided by the agency. Defense Logistics Agency also employs about 25,000 civilian and military personnel.

The audit’s findings come as the entire Defense Department begins its first department-wide audit — a move long advocated by many on Capitol Hill.

Unlike many government agencies, the Defense Department has historically not been subjected to audits, however the first such audit of the Pentagon was launched in December.

Chief Pentagon spokeswoman Dana White told reporters in December that the audit “demonstrates our commitment to fiscal responsibility and maximizing the value of every taxpayer dollar that is entrusted to us.”

“These annual audits are fundamental to achieving one of the secretary’s three main priorities,” the Pentagon’s comptroller, Undersecretary of Defense David Norquist said while appearing along with White.

“With more than $2.4 trillion in assets, this financial statement audit is one of the largest ever undertaken in history,” he added.

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