The Pentagon has failed its sixth consecutive audit, highlighting incremental progress while noting the department received “disclaimers,” or failing opinions, for roughly the same number of components as last year.
Mike McCord, the Pentagon’s comptroller and chief financial officer, specifically noted that of the 29 individual audits conducted for 2023 that seven received “clean” or passing opinions, one received a qualified opinion, three are still waiting to be concluded and the remaining 18 did not pass an opinion.
“Auditing the department’s $3.8 trillion in assets and $4.0 trillion in liabilities is a massive undertaking,” McCord said in a statement. “But the improvements and changes we are making every day as a result of these audits positively affect every soldier, sailor, airman, marine, guardian, and DoD civilian.”
The Pentagon conducted its first in 2017 and has yet to pass its effort to assess its trillions of dollars in assets, with DoD officials in 2020 pointing to 2027 as a potential target date to reach a department-wide clean financial opinion (Defense Daily, Nov. 17 2020).
The latest audit did not result in the reporting of any new department-wide material weaknesses, according to the Pentagon, adding that DoD “took a major step” over the last year toward resolving its fund balance with the Treasury Department.
Specifically, DoD said the Air Force became the first service to close its fund balance with the Treasury, while the Army Working Capital Fund and Navy General Fund both downgraded their remaining fund balance discrepancies.
“Importantly, the substantial progress made by the services shows that by naming DoD-wide priority areas, concentrating efforts and setting and monitoring metrics, we are collectively having a meaningful effect,” the Pentagon said in a statement.
DoD also highlighted several other incremental improvements in the audit over the last year, to include the Air Force deploying 65 bots that saved 429,000 labor hours to improve “the auditability of business processes,” the Army testing a new monitoring control program that found no unresolved transactions in its clearing account and the Navy’s review of its $17 billion in unliquidated obligations validating that 97 percent of the balances met audit requirements and finding $330 million available for de-obligation.
“We are working hard to address audit findings as well as recommendations from the Government Accountability Office. The components are making good progress resulting in meaningful benefits, but we must do more, and we cannot do this alone,” McCord said.
McCord added that industry can help in the Pentagon’s audit effort by “introducing innovative, time-saving enterprise solutions; bringing property in the possession of contractors into audit compliance; providing transparency into the location and condition of DoD assets; providing compliant, innovative, and affordable enterprise solutions; and supporting audit progress by complying timely with all audit requirements and requests.”