WASHINGTON — The US administration is taking a hard look at problems in the Defense Department's accounting, after a report called its books unauditable, the Treasury said Wednesday.

Treasury assistant secretary Richard Gregg told a Congressional panel there were "serious financial reporting issues" at the Pentagon, which in the current proposed budget before the Congress receives $553 billion, or some 15% of all US annual spending.

The remarks came after the US government watchdog the General Accounting Office (GAO) named problematic defense accounting standards as the primary reason it could not produce a full assessment of government spending in fiscal 2010.

The GAO cited "serious financial management problems at the Department of Defense (DoD) that have prevented DoD's financial statements from being auditable."

Gregg said that Treasury, Defense, the GAO and the White House budget office have agreed a strategy to resolve some of DoD's "more significant accounting and audit weaknesses."

The GAO report on fiscal 2010, released in December, said the auditor had no way of being sure if the defense department had the assets it recorded and whether they were in the condition claimed.

"As in past years, DoD did not maintain adequate systems or have sufficient records to provide reliable information on these assets," it said.

"Deficiencies in internal control over such assets could affect the federal government's ability to fully know the assets it owns, including their location and condition."