Topline: The Department of Defense did not pass its financial audit for the seventh year in a row, violating federal law and admitting that the military has no clue what its $824 billion budget is actually spent on.
Key facts: The DOD did not “fail” its audit in the traditional sense. Independent accountants gave the agency a “disclaimer of opinion,” meaning the military’s financial records are so confusing and incomplete that there is no way to tell whether or not they are accurate.
The DOD has 28 subcomponents, including four branches of the military and departments like the Defense Threat Reduction Agency, that are audited every year. Fifteen of them received disclaimers — down from 19 last year, though three of the audits are still in progress.
A disclaimer is issued when accountants find too many “material weaknesses” in financial statements: issues so severe that they could cause dollar figures to be inaccurate.
Even one material weakness is enough to derail an audit. The DOD had 28 weaknesses this year, the same amount as last year.
The DOD’s first audit in 2018 identified 20 material weaknesses. Some have been corrected since then, but even more new ones have been uncovered.
Background: A federal law from the early 1990s makes it illegal for a federal agency to fail an audit. Yet the DOD refused to even conduct an audit until 2018 and is still the only agency to never pass one.
Legislators threaten almost every year to take away part of the Pentagon’s budget, such as in the Audit the Pentagon Act of 2023, but these bills rarely make progress.
The DOD says its goal is to pass an audit by 2028.
The Pentagon’s financial issues are partially due to its multiplying bureaucracy. Each year, the Pentagon requests more and more money for “operations & maintenance” for its day-to-day business. The military requested $338 billion for it in 2025. In 2000, operations and maintenance only cost $175 billion, adjusted for inflation.
Active forces account for only $182 billion, or 21%, of the Pentagon’s budget request for next year.
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Supporting quote: “Despite the disclaimer of opinion, which was expected, the Department has turned a corner in its understanding of the depth and breadth of its challenges,” Pentagon Comptroller Michael McCord said. “Momentum is on our side, and throughout the Department there is strong commitment — and belief in our ability — to achieve an unmodified audit opinion.”
Summary: If the U.S. is going to maintain the world’s most expensive military, its cost should be due to its might — not because of terrible bookkeeping.
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By Jeremy Portnoy, December 06, 2024
This article was originally published by RCI and made available via RealClearWire.
