WASHINGTON — As the clock struck the end of business on Friday night, the Pentagon unveiled the results of its fiscal 2024 annual audit. For the seventh consecutive year, the Department of Defense (DoD) has failed to achieve a clean audit, although officials assert that there have been incremental improvements.
“This result was not a surprise, and I know that on the surface it doesn’t sound like we’re making progress. However, that is not the case,” stated Michael McCord, the Department of Defense Under Secretary of Defense and Chief Financial Officer, during a press briefing. He expressed confidence that the department is beginning to grasp the challenges it faces and is making strides to address them. “Momentum is on our side, and throughout the Department there is strong commitment — and belief in our ability — to achieve an unmodified audit opinion,” he added.
The audit, conducted by the DoD’s Office of Inspector General in conjunction with an independent public accounting firm, scrutinized a staggering $4.1 trillion in assets against $4.3 trillion in liabilities. This year’s report evaluated 28 entities, a slight reduction from last year due to the consolidation of Special Operations Command under the audit umbrella.
Of the entities reviewed, nine received an “unmodified audit opinion,” indicating that their financial statements were deemed fair and compliant with accounting principles—an improvement of one entity from the previous year. Conversely, one entity received a “qualified opinion,” suggesting the presence of misstatements that did not significantly impact the overall financial statements. However, three entities—the Marine Corps, the Defense Logistics Agency’s National Defense Stockpile Transaction Fund, and the DoD Office of Inspector General—still have pending audits, leaving uncertainty about their standings.
The remaining 15 entities were met with a failing grade, receiving “disclaimers” due to auditors’ inability to ascertain the accuracy of their financial statements. Consequently, the department was issued a “disclaimer” opinion, effectively marking another year of failure.
McCord pointed to signs of progress, noting that eight DoD entities have successfully closed or “downgraded” their fund balance with treasury material weaknesses. “We made more progress on the funding than we have on the property,” he remarked, acknowledging the ongoing challenges in accounting for tangible assets.
Looking ahead, it remains uncertain whether the DoD will meet the mandate for a clean audit by the end of 2028, as stipulated in the FY28 National Defense Authorization Act. McCord cautioned that, at the current pace, this goal seems unattainable. However, he expressed hope that the incoming Trump administration could provide the necessary continuity in the audit process, stating, “I would not fundamentally change strategy.”
He further elaborated, “I would give some deference or lean in direction of keeping telling the team … doing what they’re doing and then adjust at the margins, rather than say we’re going to do a bureau-based review and everybody stop while we think about whether we’re doing this the right way.”
Earlier in the day, the DoD Inspector General released its FY25 Oversight Plan, which identifies six key challenges: increasing military readiness; strengthening the capabilities and capacities of allies and partners; protecting defense critical infrastructure; building the future force; improving the quality of life for military families; and bolstering financial management.
On the financial front, the oversight office highlighted significant concerns, including “inadequate controls over financial data and accounting records,” outdated financial data management systems, and a shortage of skilled workers. “These challenges require collaboration between the DoD’s financial management and operational leaders to implement the policies, processes, procedures, and systems needed to strengthen the DoD’s control environment and mitigate budget and personnel needs,” the DoD Inspector General noted.
As the Pentagon grapples with these ongoing financial challenges, the commitment to reform and accountability remains a pressing priority for the future.
where is the oversight on the monies under their control? there needs to be a ground up investigation as it sure sounds like misuse of government monies and people need to be held accountable for this. that is just way too much taxpayer money to let slide under the rug.