The Department of Homeland Security (DHS) said Thursday it has received its first clean audit opinion on its finances from an independent auditor KPMG.DHS Logo DHS

“Simply put, the clean audit is in line with our ultimate goal to increase transparency and accountability for the taxpayer resources entrusted to the Department,” Acting Deputy Secretary Rafael Borras said in a statement.

The Fiscal Year 2013 milestone marks the first time in its 10-year history that the agency has been able to account for the entirety of its assets and liabilities. The department is now in compliance with the DHS Audit Requirement Target (DART) Act. Signed into law in December 2012, the DART Act mandates an unqualified opinion on DHS audits. DHS received a qualified audit in FY12.

The accounting difficulty stems from the department’s formation in 2002 when 22 agencies were combined under the same leadership. These agencies brought along 100 financial management systems, which DHS has since been working to consolidate.

Thursday’s announcement means that the only federal agency unable to achieve a clean audit is the Department of Defense.

In November, DHS officials testified to the House Homeland Security Subcommittee on Oversight and Management Efficiency that they expected a clean audit. At the time, Acting DHS Chief Financial Officer Charles Fulghum said DHS was able to account for 90 percent of its $82.7 billion in assets and liabilities in FY12–an increase from only 63 percent in FY09.

A Government Accountability Office report (GAO-13-561) from September had criticized DHS for lacking an adequate picture of the end state it hoped to achieve with its Financial Systems Modernization initiative.

DHS defends the progress it has made on the initiative in its report released this week, “Major Management and Performance Challenges Facing the Department of Homeland Security.” The department said improving outdated systems will enable it to: 1) manage its resources better, 2) provide enterprise-level information more quickly to support critical decision making, 3) reduce costs by eliminating redundant or nonconforming systems, and 4) promote good business practices through standardization of processes and data where possible.

The report also identified four remaining material weaknesses that it plans to eliminate by FY16: 1) financial reporting, 2) IT controls and financial systems functionality, 3) property, plant, and equipment, and 4) budgetary accounting.

The DHS Inspector General’s official report on the audit can be found here.