Navy Over-Spent on Ukraine, Lacks Proper Accounting Controls
These violations occurred because of substandard and ineffective internal accounting controls, according to a new Department of Defense (DoD) Inspector General (IG) press release.
In its report, the IG provided a list of recommendations aimed at avoiding further violations. In a memorandum dated March 26, the IG’s office demanded that the Navy provide a plan of action within 30 days to answer these recommendations.
Violations from 2022
The investigation determined that the Navy over-executed its Ukraine assistance funds three times during the 2022 fiscal year. The government’s fiscal year begins on October 1.
Over-executing funds means the Navy spent money on Ukraine assistance that was not appropriated, which is illegal under the Antideficiency Act. Violators of the Antideficiency Act face a range of civil and criminal penalties.
The Navy was able to realign its funds before being hit with formal Antideficiency Act violations, but the investigation’s results noted that the lack of internal controls leaves the Navy open to future Antideficiency Act violations where such budgetary realignment might not be possible.
The total amount of the excess expenditures was $398.9 million.
Lack of Automated Controls
After interviewing Navy personnel, the IG attributed the over-execution of Ukraine assistance funds to the lack of an effective system for tracking expenses as they occur, said the IG’s report.
The Navy does plan to roll out a more effective accounting system that will prevent such over-execution of funds, but that system will not be available until 2026.
The IG says the Navy needs to identify a better system of manual controls in the meanwhile.
Five Years Since Problems Formally Identified
The Navy’s over-payments weren’t novel occurrences. A 2018 financial report noted issues with the accounting system that allowed for the over-payments as well as issues with the way the Navy records and processes other financial data.
In the six years since the release of the report, the Navy has worked on improving its financial accounting but still falls short, according to the latest report.
Accounting is the “Backbone” of Accountability
The Navy was able to realign funds, and Congress eventually appropriated the money to cover the excess expenditure, but the DoD says the Navy must do a better job in the future.
“Internal controls are essential as they serve as the backbone for ensuring accountability, integrity, and efficiency,”
said DoD IG Robert Storch in his press release.
“Without robust internal controls, the DoD is vulnerable to inefficiencies that jeopardize its ability to achieve its mission and fulfill its financial responsibilities.”
Buckets of Cash
Financial accounting is also important because the Ukraine Assistance Program represents billions of dollars of taxpayers’ money.
According to the Council on Foreign Relations, the U.S. has spent a total of $46.3 billion on Ukraine assistance as of January of this year. Military assistance provided to Ukraine includes air defense systems, unmanned aerial vehicles, laser-guided rocket systems, radar equipment, artillery systems, and tanks, according to a March 12 fact sheet from the State Department.
The Navy was given $1.667 billion to spend on Ukraine assistance funds in 2022 when the over-executions occurred. It is not known what, if any, over-executions occurred in 2023.
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