The Pentagon just failed its seventh consecutive audit...try that at home

WASHINGTON, DC - If Trump Secretary of Defense nominee Pete Hegseth wins Senate confirmation, it appears he will have his work cut out for him. 

Fox News Digital reports that last Friday, the Pentagon failed its seventh consecutive audit, with the behemoth federal agency unable to fully account for its $824 billion budget, although some agency officials believe the Pentagon “has turned a corner” in managing its finances going forward. 

Fox noted that the audits resulted in a “disclaimer of opinion,” which means auditors “were provided with insufficient information to form an accurate opinion” of the agency’s accounts. 

The Pentagon said there are 28 reporting entities within the Department of Defense, nine of which received an unmodified audit opinion, one of which received a qualified opinion, fifteen of which received disclaimers, and three of which are pending. 

The agency has set a goal of 2028 to achieve a clean audit, with Under Secretary of Defense (Comptroller) and Chief Financial Officer Michael McCord saying the Pentagon “has turned a corner in its understanding of the depth and breadth of its challenges.” 

“Momentum is on our side, and throughout the Department, there is strong commitment–and belief in our ability–to achieve an unmodified audit opinion,” McCord said in a statement. 

The National Defense Authorization Act mandates that the agency earn an unmodified audit opinion. 

McCord dismissed suggestions that the agency “failed” since it had “about half clean opinions.” 

“So if someone had a report card that is half good and half not good, I don’t know that you call the student or the report card a failure,” he said. 

Fox noted that independent public accountants and the DoD Office of Inspector General looked at the financial statements for the audit. McCord believes the path to a clean audit is clear. 

“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,” he said. 

According to Stars and Stripes, the DoD said some 1,700 auditors worked on the 2024 audit, which cost about $178 million. In 2023, 1,600 auditors looked at the Pentagon’s books for $187 million. 

The United States Marine Corps became the first military branch to pass a financial audit in February. The USMC expects to do so again, however, the Marines are one of the three pending opinions. 

In FY 2024, the Defense Threat Reduction Agency, a combat support agency that works to reduce the threat of weapons of mass destruction, achieved an unqualified opinion in only its second year of participating in a standalone audit. 

McCord said progress was made across five areas in 2024: addressing material weaknesses, demonstrated improvements in system controls, “moving the needle” on physical assets, leadership engagement, and use of data analytics. 

Those accomplishments include eight Defense Department reporting entities that closed or downgraded a material weakness, Stars and Stripes noted, which means they “corrected deficiencies in internal financial controls.” That includes the Army’s general fund, the Navy’s working capital fund, and the Air Force’s general fund. 

“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).” 

“We have to keep getting better and faster to make that [2028] deadline,” he said as a new administration prepares to take office in January. “IF you are halfway and you’ve got to get the other half in three or four years, you know that tells you you’re going to have to make enormous progress.”