The Defense Department on Friday failed to pass the seventh consecutive audit of its finances, but said it is making progress in having a clean audit by 2028.
The Pentagon has never successfully passed the audit of its $824 billion budget since it was required in 2018, but the Marine Corps passed its own audit in February. A total of 1,700 auditors worked on the 2024 audit, which cost about $178 million.
A breakdown of the audit found that 15 of the 28 standalone financial audits received a failing grade, while nine of them passed. One received a "qualified" opinion, while the other three remain pending. The department as a whole received an "disclaimer of opinion," which means it did not provide enough financial information to form an opinion.
"Despite the disclaimer of opinion, which was expected, the Department has turned a corner in its understanding of the depth and breadth of its challenges," Pentagon Comptroller Michael McCord said in a statement. "Momentum is on our side, and throughout the Department there is strong commitment—and belief in our ability—to achieve an unmodified audit opinion.
"The path forward is clear," he continued. "Significant work remains and challenges lie ahead, but our annual audit continues to be a catalyst for Department-wide financial management reform, resulting in greater financial integrity, transparency, and better-supported warfighters."
McCord also noted that significant progress was made in five crucial areas, including addressing material weaknesses, improvements in system controls, “moving the needle” on physical assets, leadership engagement and use of data analytics, according to Stars and Stripes.
“This means that the Army, the Navy, the Marine Corps, the Air Force and [the Defense Information Systems Agency] have gotten their house in order on all their funding, or cash, as some people might think of it,” McCord said. “For context, the department has improved from less than 7% to over 82% of its funding being free of material weaknesses since I returned to this job (in June 2021).”
The comptroller added that he believes the 2028 goal of passing the audit is still achievable, but that the department would need to improve faster and stronger.
The Defense Department is the only Cabinet-level department to have consistently failed its annual audit.
