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Published: Sunday, 5/21/2006

Indefensible accounting

When George W. Bush ran for the presidency, he touted his Harvard MBA and suggested he would run the federal government like a business. If that was actually his intent, the business has failed, especially at the Pentagon.

A new report by a group of real-life business executives documents what is a long-standing problem: the horrendously lax accounting practices of one of the government's biggest spenders, the Department of Defense.

Even with an annual budget approaching a half-trillion dollars - not including $120 billion or so for military operations in Iraq and Afghanistan - the Defense Department fails to follow financial management practices that are routine in the business world and for other government agencies.

"DoD does not know what it owns, where its inventory is located, and how its annual budget is being spent," the nonpartisan group, Business Leaders for Sensible Priorities, reported. "The department is not accountable to Congress or the American taxpayer."

What is incredible, embarrassing, and downright stupid, even for a hidebound government bureaucracy, is that the problem is being allowed to linger, with no solution in sight.

The fallback excuse for failing to install effective financial controls has always been that the Pentagon is so busy defending the nation that accounting concerns have to come second.

But, in an era when defense spending is soaking up an ever-increasing proportion of the federal budget dollar, there is an increasing realization that fiscal security is intertwined with national security.

The business group correctly points out that when fiscal sloth pervades a business enterprise, be it public or private, inefficiency and waste follow closely, along with the likelihood of fraud.

Continuing disclosures of favoritism and laxity in war contracts involving the likes of Halliburton, Vice President Cheney's former employer, indicate how far out of control these problems already are.

The burgeoning scandal lies not only in the record amounts of public money being swallowed up by the Pentagon but the fact that no one, least of all the CEO at 1600 Pennsylvania Avenue, knows where American tax dollars are going, or even seems to care.

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