November 18, 2019
By Terri Moon Cronk
Audit for 2019 Shows DOD's Progress
The 2019 departmentwide audit of the Defense Department did what DOD needed, the department's comptroller said.
It tested all fixes that were made from the previous year and shows the department is making progress, Elaine McCusker said.
"Our first-ever consolidated financial statement audit in 2018 resulted in a disclaimer," which means it failed, she said. The 2019 audit shows the same, though, the comptroller noted, that result was expected.
"To set the stage for 2019, DOD has 3 million employees in 160 countries, in more than 4,500 defense sites and close to 30 million acres of land," McCusker said. "We manage a $292 billion inventory and 573,000 building structures. The 2019 consolidated audit covered the department's more than $2.9 trillion in total assets, and $2.8 trillion in liabilities."
During this years' audit, she said, 1,400 auditors visited 600 sites around the world and requested more than 100,000 samples. Auditors finished 24 stand-alone audits, in addition to the consolidated audit. They looked at buildings and property, military equipment, munitions and payment reports.
"We made progress in our priority areas while focusing on the importance of sustainable solutions," McCusker said.
"But as expected, we will receive an overall disclaimer again this year," she said.
"We are measuring progress by development and implementation of corrective action plans that are successful, closure of [notices of findings and recommendations], increased fidelity on root causes and interdependencies behind our material weaknesses, movement of individual organizations up the chain of opinions, but ultimately better performance and responsiveness to war-fighter requirements in support of the [National Defense Strategy]," she said.
DOD closed more than 23% of the more than 2,300 NFRs issued during its 2018 audit. "This is solid progress for our first year. We expect to increase the number of entities with unmodified opinions from six to seven. Two of the seven organizations with clean opinions maintained a sustainable history," McCusker said.
The military retirement fund will get its 24th consecutive unmodified opinion. And with close to $900 billion in assets, it represents about a third of DOD's total assets, she added. "The Defense Finance and Accounting Service Working Capital Fund is expected to get its 20th consecutive clean audit opinion," she said.
"DOD made progress in demonstrating our ability to support more in-depth auditing, supporting more extensive testing that will give us faster insights and allow us to identify more sustainable solutions," McCusker said.
"We have been driving positive cultural change for joint enterprise solutions. We have improved cybersecurity by tightening access controls and documentation. We have supported improved readiness through inventory visibility. And we have increased buying power through expanded use of accurate data and advanced analytics," she said.
DOD also sustained what it did well last year, McCusker said, adding there were no reported material weaknesses in civilian or military pay. "Auditors found no evidence of fraud. And we have existence and completeness of major military equipment," she said.
"But much work remains to be done as we continue to pursue an agencywide clean audit," McCusker said.
DOD will get a lot of new NFRs this year as auditors go deeper into systems and processes, she noted. "This is a good thing. We need continued focus on property accountability, inventory and property in the hands of contractors and our systems."
She added it was essentially balancing the checkbook with the Treasury Department.
"We will continue to strengthen our target system capability aggressively and work to retire old systems and support those organizations closest to positive opinions," McCusker said.
"This is an annual regimen where we expect continuous progress in terms of material weaknesses, emerging audit opinions and continuing to find and attack findings," she said.
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