Bad controls at US Army
Image from military.com
According to a report on Fortune, the US Army accounts certainly do not eek of military efficiency. The report notes “the Army made $2.8 trillion in wrongful adjustments to accounting entries in one quarter alone in 2015, and $6.5 trillion for the year”. That’s trillion, with 12 zeros, yes!
The military is of course the biggest spender of government funds in the US. The budget for 2017 is nearly $600 billion (that’s 9 zeros), but the errors noted above seem to have been accumulating over time. The Fortune article notes:
- The Army lost or didn’t keep required data, and much of the data it had was inaccurate
- there has been no way to know how the Defense Department – far and away the biggest chunk of Congress’ annual budget – spends the public’s money
- DoD and Army managers could not rely on the data in their accounting systems when making management and resource decisions
- the Army lacked receipts and invoices to support those numbers or simply made them up.
If this were any normal business, I would have to say it seems to be lacking in minimal and even simple accounting and management controls. But there again, one can imagine how difficult it may be to “control” spending in war zones, or even trace assets or expenses. I can’t imagine an auditor for example going to Iraq or Syria to verify a tank or similar asset has actually been lost
Size matters…
Okay, the title is a cliche…but in business size (or scale) can mean a lot. Take aircraft for example. An article in the Irish Times reveals how smaller planes like the Boeing 737 Max and the Airbus 320neo are now more fuel efficient and capable of crossing the Atlantic. These smaller planes are not only more fuel efficient, but have less crew and other lower running costs. They can thus offer lower fares than the same or similar flights on larger and more expensive aircraft. According to the article, many airlines from the more western parts of Europe are purchasing such aircraft, with an eye to serving smaller US airports, which are also cheaper to land at.
So, even with these smaller aircraft, it seems airlines will be able to offer cost efficient routes, for both passengers and their bottom line.
Martin's accounting blog 