Why The Pentagon Can’t Count: It’s Time to Reinvent the Audit
This post is by steve blank from Steve Blank
This article previously appeared in War on the Rocks.
In the past, headlines about the Pentagon failing its financial audit again would never have caught my attention. But having been in the middle of this conversation when I served on one of the Defense Department’s advisory boards, I understand why the Pentagon can’t count. The experience taught me a valuable lesson about innovation and imagination in large organizations, and the difference visionary leadership – or the lack of it – can make.
With audit costs approaching a billion dollars a year the Pentagon had an opportunity to lead in modernizing auditing. Instead it opted for more of the same.
Auditing the Department of Defense
By law, the Department of Defense has to provide Congress and the public with an assessment of where it spends its money and to provide transparency of its operations. A financial audit counts what the Department of Defense has, where it has it, and if they know where its money is being spent.
Auditing the Department of Defense is a massive undertaking. For one thing, it is the country’s largest employer, with 2.9 million people (1.3 million on active duty, 800,000 in the reserve components, and 770,000 civilians.) The audit has to count the location and condition of every piece of military equipment, property, inventory, and supplies. And there are a lot of them. The department has 643,900 assets, from buildings, to pipelines, roads, and fences located on over 4,860 sites, as well (Read more...)