The Pentagon’s comptroller said Tuesday that senior leadership is making steady progress in getting the Defense Department’s financial house in order, even as most military agencies and services once again failed to receive a clean bill of health in their annual audit
The Department of Defense this week announced the results of the full-scope audit, performed by the department’s independent Office of Inspector General and public accounting firms that have no connection to the military. The Pentagon has yet to pass the wide-ranging financial examination.
About 1,200 auditors conducted nearly 300 in-person site visits and more than 1,000 virtual examinations to review the Defense Department’s more than $3.2 trillion in assets and $3 trillion in liabilities, Pentagon officials said.
“Findings from the audits catalyze change by spotlighting areas that need improvement and giving department leaders the information they need to prioritize modernization efforts and effect meaningful, long-term change,” said Undersecretary of Defense Michael McCord, the Pentagon’s chief financial officer.
The Pentagon employs almost 3 million people, both civilian and military, manages one of the federal government’s largest real estate property portfolios located in all 50 states and more than 40 countries, and is responsible for more than $320 billion in inventory, more than six times the size of Walmart.
The results of the full Defense Department audit were mixed. About 47% of its entities are expected to be under a favorable opinion, such as the Military Retirement Fund, which represents more than 30% of the Pentagon’s total assets, the U.S. Army Corps of Engineers - Civil Works, and the Medicare-eligible Retiree Health Care Fund.
The audit uncovered some financial weaknesses within the Department of Defense, including in compiling financial statements and gauging contingent legal liabilities.
Secretary of Defense Lloyd Austin said he was glad that areas critical to supporting the troops, such as military and civilian pay and the Pentagon’s retirement fund passed their audits. But there is still work to be done, he said in a statement.
“Make no mistake, none of us at the department are content with the overall results of this audit. But we are committed to learning from it and doing better,” Mr. Austin said. “We must work harder to institute stronger internal controls and prove in every way that we are being good stewards of taxpayer dollars.
The Chief Financial Officers Act of 1990 established the requirement for the annual audit of financial statements of 24 federal agencies, including the Defense Department.