The domain of what money is or should be in the case of my proposal is a relatively highly structured problem entailing a great degree of accuracy and accountability.
What money buys invests goods and services with a financial value based on its purchase price plus or minus changes in value from that purchase price for various reasons over time. That is more in the realm of inventory or resource asset accounting. That problem domain, as compared to the the problem domain of money itself is a more nebulous problem entailing a much greater accountability problem.
Inventory management was the problem domain of my navy career. Starting with offloading cargo ships in Vietnam and ending in Washington D.C. with accounting for the existence and application of vasts amounts of material in inventory and on records accounting for (or failing to account for the physical inventory on hand and its application reasons for being there.
This blog entry is a diversion from monetary system design and operation into the management of inventory system design and operation. Both are Object Oriented Children of the same parent: Accounting Control. They both share similar attributes. They have additional attributes that make them children inheriting the attributes of their Accounting Domain Parent. A principal attribute being that at the granular level each discrete unit of money or inventory object has a unique identity.
Consequently, there is much carryover from my physical inventory accounting and management thinking to money as an inventory of objects in an Accounting Control problem domain.
This is a revisit to the things that I worked with in Inventory Accounting Control. Going back to that problem domain I hope will give me some thinking about something I know as a framework for application to monetary system design.
Waste, Fraud and Abuse in the Military Accounting System.
End of preface. The following addresses the title of this blog entry:
Just plain old dumbness on a big scale should be added to the subject line. I speak from experience.
This link at Crooks and Liars (Posted with permission from Alternative-News.tk reports: Report Reveals $8.5 Trillion Missing From Pentagon Budget.
Shocking, absolutely shocking! A report that is likely to be considered true by most people simply on belief of military incompetence before the report is even read! Dog bites man is not news but this must have been a slow news day for the Crooks and Liars repost made by Crooks and Liars that was made in Nov. 2013 by the Daily Ticker:
Want to Cut Government Waste? Find the $8.5 Trillion the Pentagon Can’t Account For
The genesis of both reports is this Reuters investigative report link from Nov. 2014: Behind the Pentagon’s doctored ledgers, a running tally of epic waste.
It is the second in a series of three reports that are all under the title of: Unaccountable; The High Cost of the Pentagon's Bad Bookeeping.
The first in the series is:
How the Pentagon’s payroll quagmire traps America’s soldiers
The second is the one I am focusing on in this link.
The third in the series is:
Why the Pentagon’s many campaigns to clean up its accounts are failing
I wanted to write something about it then, maybe I did.
There are broad and often complex financial accountability problems in military accounting systems. The report at the link states a problem but then presents an ambiguous analysis that contributes little to its understanding. Fundamentally it conflates the accounting for money which the accounting for the financial value of material. The conflation starts with the title that gets attention:$8.5 Trillion Missing From Pentagon Budget. Wow! Big bucks!
Missing from the "Budget"? The Budget is money. That money is spent for stuff. There may be some actual money unaccounted for in the money ledgers where there is no substantiation as to whom money in the budget was payed to. That is more in the realm of bank accounting for money it holds. More like our own balancing of the personal checkbook. Accounting purely for money is rather tightly contolled. The stuff it buys and reconciliation to the money spent for it and its actual existence and relationship is not well controlled. That is where the problem is, the follow on problem is that little or nothing is done over time to solve this accountability problem.
I would like to address the last point. Little is done because "We are too busy fighting alligators to drain the swamp". In wartime under war conditions vast amounts of material are expended. Vast amounts of material are thrown at the problem. Much never hits its target. It simply stays in inventory based on the cost of not having it available if needed. For lack a nail to shoe the horse the battle was lost. Better to have too much than too little. In war there is no time to spend on accounting for stuff, who gets it or how it is used. A justification as well as an excuse.
The current environment is war all the time. The old wartime approach to material is still applied. To that extent we always fight the last war again. On payday in Vietnam I had additional duties as a paymaster. I took custody of hundreds of thousands of dollars in MPC. Counted every dollar when I got it. Counted every dollar in exchange for a pay slip checked by the DK. At the end of the day I had to have a total of remaining dollars plus the total of pay chits equal to the total dollars I was given. If not I was accountable for the difference.
The next day I went back to my regular job of offloading cargo ships in the harbor. Each item handled had a Cargo Delivery Receipt. I guess they were reconciled to delivery somewhere back at the White Elephant. For a long time prior to that we just put stuff in landing craft and on barges for delivery ashore with no documentation. The object was to empty the ship. There were many ships waiting to be emptied. We were short of sailors to do the work. 12 on, 12 off. Both day and night shifts. One month days. One month nights. Relieve on station 7 days a week.
Accounting was not a major priority. Moving cargo to support the war was. Accounting became a priority when I could not account for a couple pallets of medical supplies to were to go to an NGO doctor working in the mountains somewhere and one of my men wrote the last document CDR to be associated with it. It was a PR problem. Sometimes accounting does matter. Otherwise....on with the war.
Both links conflate accounting for money with accounting for the financial value of things that money is spent on, often held in inventory or on some record of material accountability with associated money value.
Crooks and Liars title says: $8.5 Trillion Missing From Pentagon Budget.
Daily Ticker title says: $8.5 Trillion the Pentagon Can’t Account For
The first implies real money missing (unaccounted for in terms of balancing a budget amount to the expenditure of dollars from that budget to pay for goods and services) from a money account budget.
The second reports on the the balancing of mainly inventory financial value with the actual presence and legitimate expenditure of stuff, not money, from inventory. It goes on to report that even stuff held in inventory and accounted for is a waste because it is in excess to needs (or otherwise not needed at all because it has no known application).
Really two distinct but inter-related things one is money accounting the other is accounting for material accounting for what money buys. Inter-related but also independent stand alone problems.
A subset of accounting for material is this: Once the amount of material in inventory on a line item basis and its extended value matches what the inventory record states to be on hand then the basic question is: Is the item needed? What is its purpose or application? Is there too much on hand? should more be ordered and why? That is an inventory management problem. It is a big time serious problem if material that the record says is on hand cannot be found in inventory or the flip of that being material found to be on hand in inventory but not on inventory records. In this case the records do not match. Red Flag!
If the material on hand matches the inventory record but the record does not match a justification for the material to be on hand, such as a specific application to something or substantiated future need for things defined as "needed" based on past demand then that is a horse of a different problem.
The Reuters report contains this about material on hand excess to need:
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