The Pentagon failed its seventh consecutive audit on Friday as the agency was unable to fully account for its massive $824 billion budget, though officials were confident the Department of Defense “has turned a corner” in understanding its budgetary challenges going forward.
The audits resulted in a disclaimer of opinion, which means auditors were provided with insufficient information to form an accurate opinion of the accounts.
Of the Department of Defense’s (DoD) 28 reporting entities that had standalone audits, 9 received an unmodified audit opinion, 1 received a qualified opinion, 15 received disclaimers, and 3 opinions remain pending, the Pentagon said.
But with the goal of achieving a clean audit by 2028, Michael McCord, Under Secretary of Defense (Comptroller) and Chief Financial Officer, said the agency “has turned a corner in its understanding of the depth and breadth of its challenges.”
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“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 said in a statement.
The objective of earning an unmodified audit opinion is mandated by the National Defense Authorization Act.
McCord told reporters at a briefing on Friday that he would not say that the agency “failed” as it had “about half clean opinions.”
“So if someone had a report card that is half good and half not good, I don’t know that you call the student or the report card a failure,” he said.
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Independent public accountants and the DoD Office of Inspector General closely examined the financial statements for the audit.
McCord emphasized in a statement that the path to a clean audit is clear.
“Significant work remains and challenges lie ahead, but our annual audit continues to be a catalyst for Department-wide financial management reform, resulting in greater financial integrity, transparency, and better-supported warfighters,” he said.
