Congress Weighs in on Department of Defense Audit Results

In November 2018, the Department of Defense (DoD) completed its first full financial audit. While several components received a passing grade, including the U.S. Army Corps of Engineers, Civil Works; the Military Retirement Fund; the Defense Health Agency — Contract Resources Management; the Defense Contract Audit Agency; and the Defense Finance and Accounting Service, the DoD as a whole did not receive a clean audit opinion for its 2018 fiscal year financial statements.

The auditors identified 20 “material weaknesses” or deficiencies in DoD’s internal controls. These weaknesses did not reveal particular instances of fraud or mismanagement. Rather, the auditors found many cases where DoD is simply not tracking payments filtering in and out of its myriad agencies, leading auditors to question whether its financial statements are accurate.

Congressional watchdogs were not surprised by DoD’s compliance issues, noting that any organization’s first full evaluation should be expected to return some irregularities. Representatives see the audit as a clear indication that better systems are necessary to ensure that taxpayer’s money is spent effectively and efficiently and an opportunity to level-set expectations to achieve favorable audit opinions. “If we want to reduce defense waste, have greater transparency over defense dollars, and eliminate mismanagement, it is essential that we get the Defense Department to a position where Congress, taxpayers, and DoD itself can track and account for the money that is being used,” said Rep. Adam Smith (D-WA), the likely incoming chairman of the House Armed Services Committee.

In an interview with Federal News Radio, Congressman Mark Desaulnier (D-CA) noted lack of transparency within the DoD and the need for reforms to ensure that DoD spending without accountability comes to an end. Speaking of the audit results, he said that he “[w]ill press DoD to make necessary reforms and will work with relevant committees when we are in the Majority in January to hold DoD accountable.” Rep. Desaulnier also mentioned DoD’s need for good financial management practices, and the likelihood that the new incoming House leadership will bring further oversight to DoD audits in 2019.

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