Several senators are pressing Defense Department leaders to end the practice known as “plugging.”

Several senators are pressing Defense Department leaders to end the practice known as “plugging.”  “Plugging” is the use of false numbers in financial ledgers that forces balances and effectively masks accounting errors and control deficiencies.

Senators Chuck Grassley, Tom Coburn, Tom Carper and Ron Johnson wrote Defense Department Comptroller Robert Hale and Inspector General Jon Rymer urging the Defense officials to take “strong corrective action to end the long-standing, wide-spread use of ‘plug’ figures, which continue to reflect a major shortcoming in DoD financial management.”

“Of great concern to us is the fact that the use of ‘plugs’ appears to be growing. For example, the fiscal year 2008 value of DoD ‘plugs’ used in the fund balance with Treasury was $5.3 billion, but in the short space of five years, it rose to $9.6 billion in 2013. That is an increase of $4.3 billion or 80%.  However, these are just net ‘plug’ figures used to balance the statements and may be just the tip of the iceberg.  When gross amounts – positive and negative ‘plugs’ -- are tallied up, it is estimated that the dollar value of all DoD “plugs” would be much higher,” the senators wrote.

The members concluded, “The DoD ‘plugging’ problem is long-standing and deep-seated in the Defense Department’s accounting culture. Such dependence on ‘plugging’ is indicative of a dysfunctional finance and accounting system. It is symptomatic of the root causes that leave the Department’s accounting books in an un-auditable condition and lead to well-deserved criticism that the Department is not a good steward of the taxpayers’ money. ‘Plugging’ should never be granted a safe haven in the DoD OIG’s own financial statements.”

Here is the text of the letter.  A signed copy of the letter can be seen by clicking here.