A bill proposed by four Senators would impose penalties on the Department of Defense if the department does not meet its goal of being audit ready by the end of 2017.
The Audit the Pentagon Act of 2015 (S. 327) was introduced by Sen. Joe Manchin (D-WVA), Sen. Ron Wyden (D-OR), Sen. Ted Cruz (R-TX) and Sen. Rand Paul (R-KY) last week.
In a press release, Sen. Manchin said “it is simply unacceptable that the Department of Defense is the only major federal agency that has not completed a financial audit. Our bill will help to solve that problem.” Noting that DoD has consistently expressed its commitment to achieving a full audit, Manchin said “Congress should hold them to that.” A similar press release was issued by Sen. Wyden.
Both Manchin and Wyden expressed frustration that the Government Accountability Office (GAO) continues to label “the Department of Defense “High Risk” for waste, fraud abuse and mismanagement due to the agency’s inability to adequately manage its funds.”
Under the proposed bill, if DoD does not meet its audit goal in 2017, congress will increase its oversight every year thereafter leading to the termination of reprogramming a transfer authority of funds. However, If DoD achieves an unqualified audit “which analyzes both the internal systems of control and the details in the agency’s financial records,” the department will get additional transfer authority to use in the following year.
The bill would also require that any individual nominated to serve as DoD Comptroller or as a military department Assistant Secretary for Financial Management must have served as the chief financial officer, or the equivalent, of a federal or state agency or a public company that has received an unqualified audit opinion.
In addition, if DoD does not achieve an unqualified audit by December 31, 2018, the bill would require the Defense Accounting and Finance Service (DFAS) to be transferred from the Department of Defense to the Department of the Treasury on April 1, 2019.
DoD leaders have stressed that the department is on track to meet the 2017 goal. The FY2016 DoD budget overview emphasizes that “DoD Leadership is committed to achieving audit ready financial statements by the end of FY 2017.” The overview provides a detailed description of the various programs in place to ensure the department meets that goal. A press release on the FY21016 budget stated that “during 2015, 90 percent of Defense resources have budget statements under audit.”
The bill was referred to the Senate Armed Services Committee (SASC) where it will be considered in conjunction with the FY2016 Defense Authorization bill.