Whenever the Pentagon runs out of money designated by Congress as aid to Ukraine it starts to use creative accounting to free up some additional money from its general budget. The ‘accounting errors’ used therein are always in favor of more weapons to Ukraine.
Exclusive: Pentagon accounting error overvalued Ukraine weapons aid by $3 billion – May 19 2023, Reuters
The Pentagon overestimated the value of the ammunition, missiles and other equipment it sent to Ukraine by around $3 billion, a Senate aide and a defense official said on Thursday, an error that may lead the way for more weapons being sent to Kyiv for its defense against Russian forces.
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The Pentagon said Tuesday that it overestimated the value of the weapons it has sent to Ukraine by $6.2 billion over the past two years — about double early estimates — resulting in a surplus that will be used for future security packages.
Pentagon spokeswoman Sabrina Singh said a detailed review of the accounting error found that the military services used replacement costs rather than the book value of equipment that was pulled from Pentagon stocks and sent to Ukraine. She said final calculations show there was an error of $3.6 billion in the current fiscal year and $2.6 billion in the 2022 fiscal year, which ended last Sept. 30.
As a result, the department now has additional money in its coffers to use to support Ukraine as it pursues its counteroffensive against Russia. And it come as the fiscal year is wrapping up and congressional funding was beginning to dwindle.
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The Pentagon has found $2 billion worth of additional errors in its calculations for ammunition, missiles and other equipment sent to Ukraine, increasing the improperly valued material to a total of $8.2 billion, a U.S. government report revealed on Thursday.
In accounting an entity can generally use one of several methods to account for stock material. Using (ever increasing) replacement costs or (ever decreasing) book value are two arguably valid methods. What is a no-no though is to change horses during race. One either uses one or the other. One never-ever changes the applied accounting method during the accounting period.
Any commercial company doing what the Pentagon is doing here would be asking for serious trouble.
One wonder if and when Congress will wake up to this.
Reprinted with permission from Moon of Alabama.