The Pentagon has failed its financial audit for the third year in a row, while highlighting areas of incremental improvements as it anticipates reaching a “clean” financial audit across the department by 2027.

The results of this year’s effort to review nearly $3 trillion in assets did include finding $700 million in savings, as well as expecting DISA to receive a clean audit for its working capital fund after failing to do so last year.

Aerial of the Pentagon, the Department of Defense headquarters in Arlington, Virginia, near Washington D.C., with I-395 freeway on the left, and the Air Force Memorial up middle.

 Thomas Harker, who is performing the duties of the DoD comptroller, told reporters this year’s result was expected as the department continues to work toward a full clean statement of the entire organization, noting that all seven agencies that received a clean opinion last time around did so this year as well. 

“It still takes a lot of work to maintain a clean opinion, and these agencies kept that in spite of the size and complexity of their agency and the challenges we faced this year with COVID,” Harker said.

David Norquist, the under secretary of defense, told lawmakers last year he would expect to see one or two more of the Pentagon’s 24 agencies receive a clean opinion year over year as the department tackles the complex process, with a majority of the department’s agencies expected to receive a clean audit within the next five years (Defense Daily, Nov. 20, 2019). 

The Pentagon was able to clear 530 financial discrepancies from last year’s audit, according to Harker.

The $700 million in savings discovered through the audit included consolidating redundant systems from across the department and finding where to get rid of legacy, obsolete software. 

“[The audit] has helped us identify that we have too many systems. We’re spending a lot of effort to go in and consolidate those systems and eliminate the legacy ones. That improves our cyber security by eliminating old legacy [software] systems and it also saves us a lot of money,” Harker said. “And you’re seeing this across all of the defense agencies as well as the military services.”

Harker pointed to DISA’s progress as a sign for optimism in the audit process, noting the agency was able to achieve a clean opinion for its working capital fund this time around with improvements in decreasing the time from contract award to delivery and enhancing data reliability processes. 

“DISA’s worked real hard this year to prove that its businesses processes and controls have resulted in several operational improvements, such as decreasing the time to deliver property to their customer, improving the accuracy of their property records and improving the accuracy of their financial  statements,” Harker said. 

The agencies that received another clean audit this year included the U.S. Army Corps of Engineers – Civil Works; Military Retirement Fund (MRF); Defense Health Agency – Contract Resource Management; Defense Contract Audit Agency; Defense Finance and Accounting Service (DFAS) working capital fund; and Defense Commissary Agency.