“For years, the Pentagon has failed audit after audit while Congress continues to write blank checks. That’s unacceptable,” Rep. Andy Biggs (R-Ariz.) stated.
The Protection Division has by no means handed a full audit since launching its first unbiased monetary evaluate in 2017. Now a brand new invoice seeks to impose penalties if the Pentagon fails to realize a clear full audit inside the subsequent three years — and grant better funds flexibility if it succeeds.
The brand new laws, the Reviewing Each Examine and Every Bill Buying Troops’ Provides Act,’ or the ‘‘RECEIPTS Act,” introduced by Sen. Joni Ernst (R-Iowa), would require the Defense Department to transfer the Defense Finance and Accounting Service’s non-defense payroll and finance features to a different monetary supplier if the Pentagon fails to realize a clear audit by December 2028. Whereas DFAS primarily helps DoD, it additionally offers monetary providers to different federal companies, together with the Division of Well being and Human Companies.
The invoice would additionally require DoD monetary leaders to fulfill further {qualifications} — future Pentagon and service-level comptroller nominees would all must be licensed public accountants (CPAs) with prior expertise serving as chief monetary officers of federal or state companies that already handed a clear audit or of public firms that achieved a clear audit throughout their tenure.
Passing a clear audit by 2028 would give the division extra freedom to shift funds between packages — the protection secretary would be capable of switch as much as $10 billion or 1% of DoD’s whole funds within the following 12 months. The navy service and protection companies would additionally get greater reprogramming limits.
The invoice would additionally eradicate a number of longstanding audit-related reporting necessities if the Pentagon achieves a clear monetary audit.
It’s unclear what technique the Iowa senator plans to pursue to push the invoice throughout the end line — standalone payments usually face political hurdles, and lawmakers regularly attempt to connect such proposals to bigger legislative packages just like the annual Nationwide Protection Authorization Act to extend their possibilities. Ernst’s workplace instructed Federal Information Community that she is open to any path that might cross the invoice into legislation.
A number of bipartisan payments have been launched in Congress to penalize the Protection Division for failing to cross an audit, however none have turn into legislation. Sen. Bernie Sanders (I-Vt.) and Sen. Chuck Grassley (R-Iowa), for example, have repeatedly launched the Audit the Pentagon Act, which might require DoD to return 1% of its funds to the Treasury if it fails to cross an audit.
Now Home lawmakers are renewing that push. Rep. Mark Pocan (D-Wisc.) and Rep. Andy Biggs (R-Ariz.) on Thursday launched the Audit the Pentagon Act of 2026 — lawmakers need the Pentagon to return 0.5% of its funds after its first failed audit and forfeit 1% in subsequent years. The proposal exempts personnel and healthcare funding from these computerized cuts.
“For years, the Pentagon has failed audit after audit while Congress continues to write blank checks. That’s unacceptable,” Biggs stated in an announcement.
The Protection Division oversees $4.7 trillion in property and one other $4.7 trillion in liabilities and receives lots of of billions in federal funding yearly, but it stays the one federal company that has by no means totally accounted for its property and liabilities in a given 12 months. The Pentagon is predicted to obtain its first $1 trillion funds on this present fiscal 12 months, and President Donald Trump introduced final month he would search a $1.5 trillion protection funds for the subsequent fiscal 12 months.
In fiscal 2025, auditors discovered 26 materials weaknesses and two vital deficiencies associated to the DoD’s inside controls over monetary reporting. A big deficiency is much less extreme than a fabric weak spot, which signifies a management failure that might end in a significant misstatement in monetary studies. The Authorities Accountability Workplace has issued dozens of suggestions through the years on how DoD can repair its materials weaknesses, however a lot of these suggestions stay open or not totally applied.
The Protection Division inspector basic discovered that IT-related materials weaknesses proceed to hinder the Pentagon’s audit progress, noting the dearth of efficient inside controls over monetary administration techniques undermine the auditor’s means to depend on the info produced by these techniques and used to assist the DoD agencywide monetary statements.
As of this 12 months, the Marine Corps stays the one service department to realize a clear audit opinion. The audit carried out by an unbiased public accounting agency concluded that the service’s monetary information are all materially correct, full and in compliance with federal rules.
The service’s transition to the Protection Businesses Initiative (DAI) monetary system in fiscal 2022 is likely one of the predominant causes it was capable of cross a clear audit for the third consecutive 12 months.
“As we improve in that system and all the other systems that feed information to it for audit, one of our endeavors is to make it easier for Marines to be able to produce financial statements and to be able to have samples that are auditable, because there’s still a lot of manual effort involved. And ultimately, we want to be able to make that more reliable and more automated. With all the advances in artificial intelligence and additional system improvements, we continue to make strides there,” Edward Gardiner, assistant deputy commandant for packages and assets, instructed reporters this week.
Lt. Gen. James Adams, deputy commandant for packages and assets, stated the service is testing industrial AI instruments that may mechanically evaluate monetary information and catch errors between disconnected techniques.
Ernst stated the Protection Division ought to use AI and automation — relatively than extra contractors — to lastly obtain a clear audit by 2028. If handed, the invoice would authorize $150 million for automation and AI to hurry up audits and one other $150 million to switch outdated enterprise techniques and enhance accuracy.
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