DoD Fails To Obtain A Clean Audit Yet Again

Explain to most anyone how the Department of Defense (DoD) has failed for the last 33 years to pass a financial audit, and their reaction is likely to be: “You mean they don’t know where the money went?” It is, indeed, reminiscent of when Robert Palmer once sang, “She’s so fine, there’s no tellin’ where the money went.” But in truth, Palmer probably knew where some of the money went, and so too does the Department of Defense.

And the pressure to show exactly where it went is only growing stronger.

With assets that are approximated at $3.8 trillion probably maybe (the auditors issued a disclaimer for fiscal year end Sept. 30, 2023) the DoD is surpassed by only JPMorgan/Chase and its $4.2 trillion as the largest U.S. entity when ranked by assets. (A disclaimer of opinion is when auditors are unable to obtain sufficient, appropriate evidence to provide an opinion on the financial statements. For example, when material weakness of internal controls exists that make the financial information produced unreliable. One such weakness is lack of segregation of duties. One such system weakness is when the same person writing checks also prepares the bank reconciliation. This weakness can be easily exploited.)

According to a General Accountability Office (GAO) report last year, “DOD financial management has been on our High-Risk List since 1995. DOD’s spending makes up about half of the federal government’s discretionary spending. Its physical assets comprise almost 68 percent of the federal government’s physical assets. DOD has not yet received an audit opinion on its annual department-wide financial statements. It has been unable to accurately account for and report on its spending or physical assets.”