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American Forces Press Service

Defense Department Works To Become Audit-ready

By Donna Miles
American Forces Press Service

WASHINGTON, Oct. 27, 2011 – The Defense Department is improving its resource planning systems to meet Congress’ mandate for it to be audit-ready by 2017, while also demonstrating good fiscal stewardship of taxpayer dollars, a senior defense official told the House Armed Services Committee today.

Elizabeth A. McGrath, the Pentagon’s deputy chief management officer, joined her service counterparts to report on defense financial management and auditability reforms.

DOD has made substantial progress over the past two years to improve its business processes, financial controls, workforce and defense business systems, McGrath reported.

However, “we certainly recognize there is still a significant amount of work ahead of us to achieve and sustain auditable financial statements,” she said.

Among initiatives under way, McGrath said, is the development and modernization of DOD’s business systems environment, including implementation of enterprise resource planning systems.

“Many of our systems are old and handle or exchange information in ways that do not readily support current standards or record data at the transaction level,” she said. McGrath called this capability “essential to audit success.”

Improved systems are one part of the solution, she said, but won’t eliminate weaknesses or guarantee auditable statements. That, McGrath said, requires a consistent level of process controls across organizations and functional areas.

“The department’s senior leadership understands this and is committed to achieving our audit goal,” she said.

McGrath underscored Defense Secretary Leon E. Panetta’s commitment to overhauling the way DOD does business in today’s constrained fiscal environment. As part of that, she said, the secretary accelerated initiatives under DOD’s financial improvement and readiness plan to ensure it achieves audit readiness by 2017.

Panetta has made clear that “auditability is a goal that every commander, every manager and every functional specialist must understand and embrace to improve efficiency and accountability” within the department, McGrath said.

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