The horizon of financial management for the Department of Defense

Abstract

The Department of Defense (DOD) has been unable to complete a financial audit since the enactment of the Accounting and Auditing Act of 1950, requiring periodic audits of all federal agencies. With corporate accounting scandals such as Enron, WorldCom and Xerox fresh in America's mind, Congress has given high priority to examining DOD's financial management situation, their plans for improvement, and ensuring taxpayer money can be accounted for throughout the department. This thesis will examine the root causes behind DOD's perceived wasteful culture, failed attempts to remedy the situation, the top 10 obstacles impeding proper financial management, and the outlook for attaining and passing an audit based on current strategy. In addition, this thesis will analyze the complexity of DOD budget execution and why budgets are rarely executed as written. With a slowing economy and other federal departments forced to do more with less, a more efficient financial structure could free billions of dollars.