The idea within the Pentagon that good bookkeeping is ancillary, "something extra," is likely to come under increasing scrutiny from outside the military. Last month, at President Bush's economic summit in Texas, an accountant from South Carolina raised just such a concern. "Some of the reports we hear of agencies who lose track of equipment and agencies who can't balance their books are not much better than the corporations who do the same thing," she said. According to the New York Times, the president quipped that government bookkeeping is not something he could explain. "I've been there for nearly 18 months trying to figure it out," Bush said.

However, in cases of outright fraud -- such as the ones that prompted Waxman and Schakowsky to write their letter -- one explanation seems simple enough: not being able to figure out the military's books is precisely the problem. The Pentagon's garbled accounting system has evolved into a petri dish for scams, particularly with government-issued credit and charge cards. In the military, such cards, which are mostly used for official travel, constitute a tremendous volume of purchases; last year, the 1.7 million Defense Department cards were used to pay for $9 billion worth of transactions. The cards have also been repeatedly exploited by military servicemen, who use them on personal spending sprees.

In a typical case, last month Sen. Charles Grassley (R-Iowa) announced that roughly 200 Army personnel abused their travel cards at strip clubs near bases to pay for $38,000 in "lap dancing and other forms of entertainment." And according to the General Accounting Office, there is "little evidence that Army travel program managers or supervisors were even aware that Army personnel were using their travel cards for personal use."

Another consequence of the Pentagon's mangled accounting structure is improper payments on contracts; last year, the GAO reported, the Defense Department mistakenly paid half a billion dollars it did not owe to contractors. Then there is related trouble posed by "closed-account adjustments," an arcane bookkeeping technique whereby millions of tax dollars are shifted among government accounts, sometimes illegally. As a result, money designated by lawmakers for one purpose can be used for another -- an idea that goes against the grain of the Constitution, which gives Congress the power of the purse -- and, thus, gives voters some control over the military.

One could argue that closed-account adjustments symbolize the biggest offense posed by Pentagon financial mismanagement: an overwhelming disregard for the way American government is supposed to operate. Ironically, they also demonstrate that the Defense Department's accounting problem may be fixable. Last year, the GAO inspected $2.9 billion in Pentagon closed-account transactions and found that $615 million were either illegal or improper; in a follow-up report this July, the GAO said the number of illegal or improper account transactions for the first half of this year dropped by roughly 80 percent because the military enacted controls to prevent them.

This hasn't triggered a rush toward unbridled optimism among longtime Pentagon observers. Kutz, who was involved in drafting the July GAO report, was skeptical that the results reflected long-lasting reform. "Things over time tend to revert to the way they were, unless there is significant management and focus," he said, referring to the usual pattern of change within the Pentagon. Perhaps even less reassuring is the language in the GAO study. It says that the fact that the Defense Department in 2002 "had to adjust its accounting records at all to correct previous errors indicates [its] longstanding problem with accurately accounting for and reporting on disbursements."

Fixing just one of these accounts could take as many as 21,000 hours, or 10 staff years, and highlights the scale of the job ahead. "When you consider the Defense Department's worldwide locations, and the amount of missing or incorrect information, getting it cleaned up it is an enormous task," said another member of the GAO involved in the report. "It's not as easy as going down to Circuit City, buying a Dell computer and putting it on someone's desk." But the willingness to undertake such a change with closed-account adjustments -- and the capability to do so -- show that transforming the military's overall business practices into a clean and efficient operation isn't entirely out of reach, so long as those who wield the pencils over Pentagon ledgers begin treating financial reform as a worthy and serious objective.

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