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Department of Defense comes up short on audit

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Brett Rowland

(The Center Square) – The U.S. Department of Defense has been unable to get a clean audit for decades, which limits the effectiveness of the U.S. military, according to a government report.

That means the most complex federal agency also remains the only one that has been unable to fairly present its financial statements using generally accepted accounting principles.

"Although DOD’s spending makes up about half of the federal government’s discretionary spending, and its physical assets represent more than 70 percent of the federal government’s physical assets, it remains the only major agency that has never been able to accurately account for and report on its spending or physical assets," according to a new report from the U.S. Government Accountability Office.

"DOD’s financial management issues extend beyond financial reporting as long-standing control deficiencies adversely affect the economy, efficiency, and effectiveness of its operations," according to the report.

The Department of Defense is the largest U.S. government department. The department employs 2.1 military service members and about 780,000 civilian employees. The President’s budget submission for fiscal year 2023 requested $773 billion for the department, according to the Department of the Defense

In November 2022, Michael McCord, the undersecretary of defense (comptroller)/chief financial officer, said in a department news source that he did not have a timeline for when the department would be able to get a clean audit.

"I would prefer to see more progress, of course, but we are peeling off the layers," McCord said at the time.

"For over 30 years, the Department of Defense has initiated a variety of efforts and undergone several changes in organizational responsibility to help modernize its business and financial systems," according to the GAO report. "However, these efforts and changes have not been fully successful to date. ... Its business and financial systems are a key impediment to this effort."