Episode 9 was on the subject of accountants and the military. It started with the Light Brigade. Yet for many that died, it wasn't guns that killed so many of them, it was accountancy. Warwick Funnell described the neglect and exposure so many suffered. They simply weren't prepared for war. This was a consequence of the prevailing wisdom at the start of the 19th century that professional standing armies were inefficient and dangerous. Post-Cromwell, Parliament had introduced a load of extra controls, including putting their budget under the Treasury.

What this meant was a lot of the cost control stuff that industry was perfecting at the time never made its way into the military. What mattered to the Commissariat, the military leaders making the decision, was that they could account to the Treasury for all money spent. This meant they didn't give soldiers the things they needed, e.g. coats, even though there were plenty in stores.

The Crimean war was a massive disaster. But many of the errors made in that war were then repeated in the Boer war, 50 years later. It was only much later that Richard Haldane, Secretary of State for War, tried to bring some of the industrial methods into the military. Introduced a new course for officers at the London School of Economics, which ran until the 1930s.

Michele Chwastiak from the University of New Mexico provides another angle. In the Vietnam era, Robert McNamara used accounting to shift control away from generals and towards civilians via a programme called Planning, Programming and Budgeting (PPB). This stopped generals from expressing needs in terms of warfare, and forced them to express their needs in economic terms. This meant war was explained in terms of inputs (e.g. money) and outputs (e.g. enemy deaths). This had the effect of making deaths the main yardstick of progress in the Vietnam war... a bad idea. Unfortunately, the statistics were inflated, meaningless. In any case, the Vietcong not that interested in deaths, just wanted to win. Soldiers eventually began to realise that they were being used as 'cannon fodder', which led to combat refusals and soldiers threatening to kill their commanding officers. There was a fundamental mismatch between the soldiers' reality and the commanders' management of the war. The army was falling to bits, and ultimately the war was unsustainable.

The U.S. Department of Defense has shown itself to be equally inept in financial matters. The Coalition Provisional Authority, established to run Iraq post-Saddam is a prime example, according to Christine Cooper (University of Strathclyde). The UN wanted their accounts audited. But they initially appointed a consulting firm, not a firm of auditors. When eventually KPMG was appointed to replace them, they found a complete shambles. There was no double entry book-keeping, incomplete records and oil revenues, which formed a significant part of the budget, was not reconciled to metered data, so there was no way of knowing how much was stolen. Basic controls simply weren't there.

A big advantage of double entry book-keeping is that it makes fraud more difficult. But the CPA seemed to not have heard of the concept. They expressed a complete disregard for proper administration. It is now estimated that up to $20bn of Iraq's oil revenue was never accounted for properly.

Jolyon Jenkins concludes that what happened in Iraq is a warning of what happens when you try to do without accountants.

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Filed under: Entertainment with tags a brief history of double entry book-keeping, bbc, boer war, christine cooper, crimean war, iraq, jolyon jenkins, michele chwastiak, richard haldane, robert mcnamara, vietnam, warwick funnell