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In reply to the discussion: Pentagon can't account for 8.5trillion in the last decade and a half.... [View all]bhikkhu
(10,715 posts)the standard of evidence is pretty high for the audit they are unable to pass. Again, one way to think about is to try keeping a general journal for all of your own financial transactions, then balance it all out in a set of general ledger accounts. Even for a household, that involves a great deal of work and self-discipline.
But - even if its all thorough and balances perfectly, you still fail an audit. Unless you have built into your accounting system a method of proving every transaction with a paper trail, which usually requires verifiable signatures and cross-verification with other auditable accounting systems, you fail. And unless you have built into it a system of financial controls limiting access to funds and requiring multiple authorizations before an expense, you also fail. In a household it can't be done, in a large hierarchical structure it is possible, but to do it perfectly its a ground-up effort. They will get it done, but the level of effort should at least be respected. There are cross-purposes involved, as the military was developed to be efficient and absolutely reliable at one thing, and it wasn't accounting.