The Defence Department's internal auditor has reprimanded the agency for wasting public money after it racked up $20,000 in interest charges on late payments in one quarter last year.
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Defence received the scolding in a report that also showed the agency was left out of pocket paying for a quarter of staff traffic infringements.
The agency's late payment bill includes interest charges for 130 delayed payments to contractors, vendors and suppliers between July and September last year.
"This is not considered efficient, effective or economical use of public funds and Defence's resources," the agency's Directorate of Financial Assurance and Compliance said.
Defence's acquisition arm purchasing military equipment was the culprit for more than half the bill, owing $14,000 in interest charges for 73 delayed payments.
In its review aiming to reduce wastage and poor business practices, the auditor described the finding as "concerning" and told staff to pay bills before the 30-day limit for contracts valued up to $1 million.
Less than three-quarters of the auditor's requests for evidence relating to late payments received a response from staff.
A Defence spokesperson said it paid 99.5 per cent of supplier invoices on time the previous year.
The auditor found the agency paid more than a quarter of $18,000 in traffic fines issued to Defence staff between July and September.
Although the agency is not liable to pay for staff's personal traffic infringements, personnel did not reimburse it for some fines "due to cultural attitude [sic] towards identification of the offending driver", the directorate said.
In some cases, hire car companies charged fines and administration costs back to Defence, which was out of pocket $4850 for staff infringements.
Most fines paid by Defence this financial year related to 115 infringements by Army Joint Operations Command members in the United Arab Emirates, including 42 in September.
Joint Operations Command requested reimbursement directly from the drivers identified by the unit, because it could not identify drivers directly to the UAE Dubai Police General headquarters, the directorate said.
A Defence spokesperson said it maintained driver log books, a policy reinforced by the Defence Force chief through a directive issued in January 2016.
"When followed, the log book policy enables the department to identify the driver when an infringement is incurred."
The directorate's report comes as a Senate inquiry investigates Defence's use of credit and other expense cards following damning findings from the national auditor.
Defence told the Senate inquiry in January the agency had 20 instances of fraud last year involving 89 transactions, amounting to $26,000.
The Australian National Auditor's Office report last year revealed staff billed taxpayers more than $3.3 million for events at private golf courses, sports memberships and entertainment over three years.
It found Defence workers used more than $35,000 of taxpayer money to pay for traffic fines in the audited period.
The department has turned to a contractor to bring order to its fuel card use since the ANAO audit, and has tightened controls for Cabcharge payments.
After $585,000 in fuel fraud was detected in 2013-14, it contracted fleet management company SG Fleet to report unusual card use and vet staff member explanations.
The agency told the Senate committee its forensic team was monitoring credit card transactions focusing on consecutive spends, cash advances and withdrawals, taxi fares, infringements and "high risk" types of spending.
