The Department of Defense (DOD) has failed its annual audit for the seventh consecutive year, unable to fully account for its $824 billion budget and $4.1 trillion in assets. The audit, released on Friday, examined 28 entities within the Pentagon, nine of which received clean results. Fifteen entities failed outright, and three audits are still pending.
The audit, conducted by the DOD Inspector General and independent accountants, resulted in a “disclaimer of opinion,” meaning there wasn’t enough information to determine the accuracy of the finances. The review, which cost $178 million and involved 1,700 auditors, identified major problems with accounting for physical assets, such as equipment and infrastructure.
Michael McCord, Under Secretary of Defense and Chief Financial Officer, acknowledged the failure but said progress is being made. “Momentum is on our side,” McCord stated, emphasizing that internal improvements, like resolving discrepancies in Treasury fund balances, show the Pentagon is moving in the right direction.
McCord highlighted outdated financial systems and the difficulty of accounting for physical assets as key obstacles. He also explained that without clean audits for the Army, Navy, and Air Force, it will be “mathematically impossible” for the Pentagon to pass.
The National Defense Authorization Act requires the Pentagon to achieve a clean audit by 2028.
This year, nine entities received clean audits, up from eight last year. Newly audited entities with clean results include the Defense Threat Reduction Agency and the Defense Health Agency.
