Richard Sylvester, Defense Department deputy director of property and equipment policy, said in a step toward reaching that goal the Pentagon had for the first time established the cost of each piece of military equipment in its massive arsenal.
The change is part of an administration drive to instill accepted financial standards at a Defense Department long criticized for questionable accounting practices.
But the Pentagon, for which Bush has proposed a $440 billion budget in fiscal 2007, will have to overcome several more hurdles before it can produce financial statements that meet accepted accounting standards.
"I would say we're several years away from having a certifiable audit," Sylvester told reporters.
Asked if such a milestone could be expected after Bush leaves office in early 2009, Sylvester replied: "Most likely, most likely.
The Pentagon has already frustrated hopes that it could pass a clean audit by 2007. A clean audit is an independent financial review that finds no material problems.
Bush administration officials have long pledged to tackle the Pentagon's infamous finances, which some critics say have allowed hundreds of billions of dollars to go unaccounted.
Defense Secretary Donald Rumsfeld first promised Congress he would try to balance the books in early 2001.
Sylvester said his staff had established a gross book value of $600 billion for military equipment in 600 Pentagon programs, after a review that covered 1,101 programs in total.
Equipment cost figures will now appear in quarterly Defense Department financial statements and allow Pentagon officials to capitalize and depreciate military equipment over its useful life.
Up to now, the Pentagon has had no method for estimating the value of its military equipment.
Before achieving a clean audit, Sylvester said the Pentagon would need to meet several more challenges such as revising contract language, creating systems to match expenditures with assets and establishing a registry system to identify each piece of equipment.
"We don't have those capabilities now, although we're working on them," he said.
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