US Accounting Errors Free up Extra $2 Bn for Military Aid to Ukraine

A US government audit discovered $2 billion worth of additional errors in its military aid package for Ukraine.

The US Government Accountability Office (GAO) said it was prompted to conduct the audit following the Department of Defense (DOD) 2023 report that $6.3 billion worth of aid to Ukraine allocated under the Presidential Drawdown Authority (PDA) was misvalued

In its latest report, it discovered another $2 billion worth of errors, which would open up more aid to Ukraine in monetary equivalent.

Part of the errors arose from using “replacement cost” instead of “net book value” in defining the value of certain items.

The GAO provided an example: a cargo truck with a useful life of 10 years purchased in 2012 can cost $404,494. In 2024, its replacement cost – the cost of getting a new 2024 equivalent – would be $497,562, and the net book value would be depreciated fully since it already expired its 10-year useful life.

However, some US Army officials told the GAO that the US Army “does not know, at that stage of the presidential drawdown process, which specific serially managed articles it will ultimately provide,” which led to methods that do not comply with the US Financial Management Regulation (FMR) accounting policy.

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The GAO said approximately 12 percent of all defense articles under the PDA may need to be revalued due to incompliance, with 61 percent of the reported values lacking documentation to help verify their value.

The GAO also listed other instances of non-compliance within the DOD, such as using the item’s standard price or “moving average cost” for its valuation, which is not permitted under the FMR accounting policy.

The GAO called on Congress to “consider clarifying the definition of ‘value’ as it relates to defense articles provided under PDA” and provided suggestions to the DOD to address the misevaluation issue.