Earlier this year, top officials of the United States' Department of Defense gave awards to the agency's top auditor for supposedly fully accounting for all the money spent by the Marine Corps in 2012. The Pentagon thought it was on track to meet the deadline set by Congress for it to audit all its funds by 2017.

Just a few months after the recognition, Pentagon officials woke up to an embarrassing truth: that the Marine Corps had not accounted for some $800 million of its funds, based on an independent report from the Government Accountability Office (GAO).

Worse than having millions in unaccounted funds is the fact that some Pentagon officials seemed to have turned a blind eye on and even covered up the improper accounting of the money it has been receiving and spending.

A team of auditors from the Pentagon's Office of Inspector General already noticed some accounting errors in the agency's books, but the office's management was said to have exerted pressure on the team to approve the erroneous audit anyway.

The GAO report further pointed out that the Defense Department's accounting woes—including undocumented transactions, unbalanced accounts, and unreliable methods of financial record-keeping—were already widespread, dimming hopes that the agency will be able to meet the 2017 deadline imposed by Congress.

Republican Senator Charles Grassley, meanwhile, questioned how Grant Thornton, the independent accounting firm commissioned by Pentagon to go through its books for $32 million, missed out on such widespread problems and even supported the initial certification that the Marine Corps properly accounted for its funds.

"Defense dishes out over $500 billion a year yet still can't tell the people where all the money is going," Grassley said.

Grant Thornton spokesperson Michele Mazur, however, said the accounting firm stands by its findings on Pentagon's funds

"We are confident that our work complied with all professional standards," Mazur said.