DOD's 'lousy' computers create financial mess

Defense Department officials told Congress today that installing new computer systems is key to improving the department's balance sheet, which has been kept so sloppily that auditors cannot render an accounting opinion on its accuracy.

"We have lousy systems," DOD assistant inspector general Robert Lieberman told the House Government Management, Information and Technology Subcommittee. "New ones are in the works.... The data we have in our systems is not particularly reliable."

Nelson Toye, deputy chief financial officer for the department, said part of the problem stems from DOD's use of disparate computer systems for tracking DOD resources, including logistics systems, medical information systems and personnel management systems. Many of the systems do not capture the financial data that the department needs to generate accurate financial reports, Toye said.

DOD has been at the center of a financial management storm for the past year, since the General Accounting Office found in the first consolidated financial statement that the government's books are riddled with financial discrepancies, missing equipment records and overpayments. The federal government spends roughly $1.9 trillion a year, and DOD is the largest spender.

Weaknesses in financial management leave the department open to fraud, waste and abuse, according to observers.

GAO assistant comptroller general Gene Dodaro told the subcommittee that the lack of a clean balance sheet prevents DOD from making sure its money is spent appropriately. "They have no ability to compare and reconcile the information," he testified.

Dodaro recommended that DOD leaders focus on improving information systems as a way to improve financial management. "The data in the existing systems the department is using needs to be better," he said.

DOD's systems are about "two-thirds" of the way toward being able to generate a consolidated financial statement on which auditors will be able to render a clean opinion, said DOD comptroller William J. Lynn. He acknowledged that improving information systems is a top priority. "The biggest thing we need to do is we need to improve the systems," he said.

Subcommittee chairman Rep. Steve Horn (R-Calif.), who failed DOD on its financial management as part of an overall financial management report card issued in March, said he remains concerned with DOD's ability to generate an accurate financial statement. But he said he is pleased with the department's focus on cleaning up its books. "I think they're making progress, and I think they've got their act together," he said.

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