Saturday, March 09, 2013

The auditing challenges for Sec. Hagel

Chuck Hagel, former US senator and current Secretary of Defense, faces daunting challenges within the first weeks of starting his post. Since he gained confirmation, Congress failed to pass a deal that would have avoided automatic spending cuts, and the tasks of winding down the military presence in Afghanistan and maneuvering the 'Asian Pivot' are daunting, to say the least. In addition to these challenges, the DoD continues to struggle with auditing its budget.

The Defense Department is presently not able to be audited in its entirety. As shocking as this information may be, it actually gets worse. The DoD is required by law to provide annual financial statements since 1990. It has yet to comply. At first, it planned to be ready for audit by 1996, then by 2007. Now, the projected year is 2017. This history of failure has been particularly disappointing for members of Congress, who fear that the Pentagon's complex budget conceals corruption, waste, and bloat. With pressure mounting on the DoD to slim down, a budget ready for audit will make it more likely that cuts will prudently be made and less likely that well-run programs will be cut while wasteful departments prosper.

As of right now, Hagel can begin the process with a public promise that he'll hand a complete audit of the DoD to the chairman of the Armed Services Committee before the next president takes the oath of office in Janurary 2017. He can push for more of the Pentagon to be ready for audit before that date.

To call out those who resist his philosophies, Hagel can then use his public presence to promote his efforts, and a new hard-charging comptroller will be key to finalizing a proper audit. I also recommend that Hagel should also warn subordinates that if they cannot deliver budgets for audit on his timeline, he'll find people who can.

If Sec. Hagel successfully pulls this off, he will win the support and respect of the Armed Services Committee. He'll also get support beyond the Beltway. That will give him room to operate, room that he currently doesn't have.

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