The Government Accountability Office (GAO), Congress’ investigative arm, issued a report this week shining a light on the Pentagon’s latest failure to achieve a clean audit opinion on its financial statements. The Fiscal Year 2023 audit marked the sixth consecutive year the Pentagon has been unable to adequately account for its vast resources. Despite progress in some areas, the Pentagon’s inability to pass an audit remains a threat to the nation’s fiscal health and demands immediate attention and action.

The Pentagon’s financial management challenges are not just a matter of bureaucratic inefficiency; they represent a significant risk to the effective use of taxpayer dollars. For FY 2023, the DOD reported a discretionary budget authority of $851.7 billion and total assets of $3.8 trillion, constituting about half of the federal government’s discretionary budget authority. Yet, the Pentagon’s Office of Inspector General issued a disclaimer of opinion on the department-wide financial statements, citing insufficient evidence to form an opinion.

The GAO report highlights that 18 out of 29 Pentagon components received disclaimers of opinion, including major branches like the Army, Navy, and Air Force. Additionally, the number of material weaknesses in internal controls has increased to 28, up from 25 in 2019. These weaknesses indicate significant deficiencies in financial reporting.

The Pentagon’s inability to reconcile its Fund Balance with Treasury (FBWT) accounts, akin to balancing a checkbook, is a glaring example of its financial management issues. This material weakness has persisted for six consecutive years, despite some components making progress. The failure to address such fundamental issues suggests a lack of urgency and accountability within the department.

The Pentagon’s failure to pass an audit is not just a technicality; it has real-world implications. Effective financial management is crucial for ensuring that taxpayer dollars are used efficiently and for the intended purposes. The lack of a clean audit opinion undermines public trust and raises questions about the Pentagon’s ability to manage its vast resources responsibly.

The GAO has made several recommendations to address these challenges, including developing a comprehensive plan to remediate material weaknesses and improve financial management systems. However, the Pentagon has been slow to implement them, with the DOD’s remediation rate for resolving audit findings decreasing over the years.

The Pentagon’s continued failure to achieve a clean audit opinion is a significant concern that cannot be ignored. It reflects deeper issues within the department’s financial management systems and processes. As stewards of taxpayer dollars, Congress must demand greater accountability and transparency from the Pentagon. In June, we wrote a letter to lawmakers urging support for an amendment to the National Defense Authorization Act (NDAA) that would require any Pentagon department or agency that fails its portion of the next audit to forfeit 0.5 percent of its budget to the Treasury for deficit reduction. The amendment passed and is now included in the House-passed NDAA. It is imperative that lawmakers retain this provision when they conference the House NDAA with the Senate’s. The time for incremental progress has passed. The stakes are too high to let the Pentagon’s financial mismanagement go unanswered.