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CBS News barely scratched the surface.

The actual Pentagon audit [.pdf]  reveals a lot more waste of taxpayer money than the news outlets bothered to report.  (Where is that “liberal media” again?  Under aWol’s desk?  Behind the curtains?  Or maybe it was smuggled into Syria?)

On May 13, 2005 PL 109-13 “Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Tsunami Relief, 2005,” became law, and set aside $5.7 Billion for the Iraq Security Forces Fund.  The Commander, Multi-National Security Transition Command-Iraq received $5.2 billion to provide equipment, services, training, supplies, and construction of and repairs to facilities and infrastructure.

On June 15, 2006 PL 109-234, “Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006” became law.  That piece of legislation mandated a series of three audits of the Iraq Security Forces Fund.

The third audit is now complete, and the Multi-National Security Transition Command – Iraq (MNSTC-I)  has been unable to account for over a billion dollars in materiel, services, weapons and cash.  As a result, the MNSTC-I was not able to provide reasonable assurances that the Iraqi Security Forces Fund had achieved or was achieving the results the money was supposed to buy, or even that the funds were used in the manner intended when the American taxpayers were handed the tab.  The MNSTC-I was not able to offer assurances that there were even safeguards in place to prevent waste, fraud and mismanagement.  Because of these shortcomings, several of the auditable transactions revealed that $1.8 million of funds could have been “put to better use.”

The internal Pentagon auditors recommend that the MNSTC-I develop and implement internal controls and protocols for forward-deployed personnel to observe and follow to maintain records to facilitate oversight of the funds and establish “accountable property records for expenditure of wartime funding.”  In addition, the audit recommended that the MNSTC-I develop procedures for the processing, management and oversight of Military Interdepartmental Purchase Requests (MIPRs) and identify personnel requirements for proper sourcing in the Joint Manning Document that is submitted through CENTCOM and the Multi National Forces – Iraq, the Joint Chiefs and the Department of Defense.  The goal of the recommendations is to ensure compliance with DoD financial regulations.

Now, before we dig in to the findings, it would be appropriate to remind ourselves that the Pentagon uses accounting methods that would make your average Hollywood studio accountant turn beet-red with shame.  When they admit that a billion went missing, apply exponents as multipliers until your mind is boggled and you pass out – then double it, and you might be half way there.  Maybe.  If they’ve been generous in your assessments of the waste, fraud and abuse.

Let’s look at the areas the audit examined, shall we?

Service Contracts  The Department of Defense’s own protocols require triannual reviews be conducted on service contracts.  This was not done.

Service MIPRs   Because MNSTC-I lacked internal safeguards and protocols, there is no way to even tell if the funds allocated to the State Department were ever disbursed.

Equipment Contracts  Lack of procedure and protocol at MNSTC-I led not only  to a lack of oversight, but to the lack of an audit trail as well.  Instead, MNSTC-I relies  heavily on other DoD Components in the field to self-report.  This way of doing business makes audits virtually impossible.

Equipment MIPRs  Receipts for equipment and materiel passed off to the ISF did not record traceable data.  In plain English – lots and lots of guns went out the door, without so much as having the serial numbers recorded.

Construction  MNSTC-I did not have policies and procedures in place to assure that construction projects were being completed on time or to spec.  Instead, they simply relied on contractors and subcontractors to self-police and properly report.  The Pentagon only reviewed six incomplete construction contracts, leaving 84 unexamined, because MNSTC-I claimed that the task of providing documentation would prove too onerous.

So to recap…

The MNSTC-I was not able to provide any reasonable assurances that the ISFF has achieved any of the intended results, or that resources were appropriately distributed.  Without auditable records, the audit determined that at least $1 Billion in equipment was unaccounted for.  Not only is the equip missing, the scenario under which it went missing was so disjointed and chaotic that the Pentagon auditors determined that trying to track it down would be an exercise in futility.  Instead, they have opted to simply write it all off, with a promise to do better in the future.

Auditors simply throwing their hands in the air and writing off at least a Billion bucks just perfectly illustrates fiscal responsibility by the Bush administration and makes those vetoes and veto threats totally understandable.