Pentagon fails annual audit
US defense officials could not provide auditors with the required information to even fill out their evaluation
FILE PHOTO © Getty Images / Celal Gunes
The US Defense Department has flunked its sixth annual independent audit, having failed to even provide auditors with enough financial data to complete their evaluation, a report released on Wednesday revealed.
The overall results of the audit – the sixth that the Pentagon has failed since it was required to begin auditing itself in 2018 – were a “disclaimer of opinion,” the worst of three possible grades and the same rating the department received last year. The result took into account 29 component audits, of which 18 were also flunked with disclaimers of opinion. Just seven components received “unqualified opinions,” the most desirable rating, while another one received a “qualified opinion.”
Pentagon Chief Financial Officer Michael McCord attempted to frame the audit results positively, stating in a press release accompanying the report that his department was “making progress toward the goal of a clean audit.”
McCord acknowledged in a call with reporters on Wednesday that the Pentagon had not expected to pass the audit, but insisted it was moving toward resolving its balance of funds with the Treasury Department. He also touted the use of automated programs for rote tasks, stating that “bots” had saved 600,000 hours of work between the Navy and Air Force alone, and claimed the Pentagon had done a detailed inventory of its stockpiles in the course of supplying billions of dollars in military aid to Ukraine.
However, the Pentagon remains the only cabinet-level department never to have received a clean financial bill of health. With $3.8 trillion in assets, $4 trillion in liabilities, and little meaningful oversight, the potential for waste and fraud is immense, according to the Government Accountability Office, which has included the department’s business systems modernization and financial management initiatives on its “High Risk List” – a list of federal programs most susceptible to fraud, abuse, mismanagement, and waste – for nearly 30 years.
The Pentagon consumes more than half of the US discretionary budget, with most in Washington wary of cutting military spending lest they run afoul of the defense industry, a source of hefty donations to both sides of the political aisle, according to OpenSecrets.org, which tracks political contributions. Defense Department staff have admitted to “misplacing” trillions of dollars in transactions in accounting discrepancies that have never been resolved.
Efforts to rein in profligate defense spending in Congress have repeatedly failed. The Audit the Pentagon Act, which would penalize any department of the military that fails its annual audit by forcing it to forfeit 1% of its budget, was introduced again in the Senate last year after the Defense Department was unable to account for more than half of its assets. However, it never made it to the floor for a vote.