According to a report released by the Government Accountability Office (GAO) this month, measures to make the Department of Defense (DOD) audit-ready are not going smoothly. Government Executive reported that many hoped 2017 would remain “the target year for achieving clean internal books”, but according to this report the Pentagon won’t soon have auditable books because their having trouble even building and maintain the information in their books.
This report released by GAO reviewed reports by three independent public accountants on budget activity for fiscal year 2015 at the DOD. All three of these accountant agencies were “unable to express an opinion because of a lack of sufficient evidence to support the amounts presented.” The report takes a deep dive into what each branch is missing as far as evidence and processes, but the bottom line is this – there isn’t sufficient evidence from any branch to substantiate each of their transactions. Without all the relevant information, accountants can’t give a proper assessment or opinion of audit readiness. Judging by the more than 700 findings and recommendations to ensure that all the necessary information and documentation was in place, it’s safe to say that the DOD is not nearly ready to be audited.
Here is just a snapshot of what is missing from each branch of the military:
- Army – “did not consistently perform effective daily operating system backup procedures or maintain evidence of operating system and database backups when performed for certain financial systems.”
- Air Force – “did not have a comprehensive process in place to identify and track all financial management-related findings and recommendations.”
- Navy – “had no assurance that transactions were completely and accurately recorded in its four general ledger systems because it has not designed and implemented sustainable and recurring manual and automated reconciliations with its more than 100 feeder systems.”
It’s clear that procedures aren’t being completely followed or don’t fully exist. DOD Financial Management remains on the GAO’s high-risk watch list, and there is clearly much work to be done to get off that list and get audit-ready. Above all, this is readiness is important to the DOD’s overall mission, keeping the United States safe. GAO concluded in their findings that deficiencies within DOD affect its “ability to make sound mission and operational decisions.” An audit is necessary to begin effectively using taxpayer money at the DOD, and in order for that audit to take place, DOD has many recommendations to consider to be ready for one.