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Audit Shows Poor Army Accounting

July 19, 2000

WASHINGTON (AP) _ The Army’s record-keeping is so poor that it cannot confirm the receipt of hundreds of millions of dollars worth of spare parts and other materials, including some classified items, congressional auditors found.

The Army could not account for $883 million in shipped inventory in the 1998 budget year, in addition to confirmed shipment losses of $297,000 that year, the General Accounting Office said in a report released Wednesday.

``The Army does not know the exact extent to which shipped inventory is lost or stolen because of weaknesses in inventory controls and financial management practices,″ the report said. It said the Army failed to follow up on late shipments and to maintain records of shipment losses.

The $883 million of unconfirmed inventory was not all lost, the report said. It said the inventory had been shipped from warehouses, suppliers and other sources but was not acknowledged as received.

``Some of these shipments that had not been acknowledged as received may represent additional lost or stolen items,″ the report said, adding that the Army’s ``underlying records are not sufficiently reliable to determine the extent of losses actually incurred.″

In a written response to a draft of the report, the Defense Department agreed that changes are needed and said the Army will increase oversight of shipped inventory. The Army also is in the process of changing its automation systems so that they retain records of unconfirmed warehoused material shipments, it said.

The review of Army procedures for tracking and controlling spare parts and other inventory items was requested by Sens. Thomas Harkin of Iowa and Dick Durbin of Illinois and Reps. Peter DeFazio of Oregon and Carolyn Maloney of New York, all Democrats. The auditors mainly examined records at the Army’s Aviation and Missile Command, which is responsible for the largest portion of Army shipped inventory.

``It’s outrageous that the Army lost track of almost $900 million worth of equipment _ some classified or sensitive _ and never bothered to investigate it,″ Harkin said in a written statement.

The classified items among the unaccounted for supplies included guided missile control systems.

The General Accounting Office report is one in a series it has produced on the vulnerability of defense inventories to fraud, waste and abuse.

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