DOD still falters on auditabilty, Congressional panel says

The Defense Department has moved in the right direction by instituting better oversight of its financial management systems, but senior officials still need to work on accountability and auditability, according to the House Armed Services Committee.

A Jan. 24 hearing on defense financial management and auditability reform found that as one of the largest organizations in the world, DOD has experienced several challenges with its financial management processes and related business operations and systems. The panel released its findings in a report.

Although DOD “has a reasonable strategy and methodology” for improving its financial management and producing auditable financial statements by Sept. 30, 2017, the department has yet to detail how to achieve audit readiness on all financial statements before the deadline, the panel said.

Defense Secretary Leon Panetta was lauded for his ”unprecedented” leadership in prioritizing DOD’s Financial Improvement and Audit Readiness goals, but the panel pointed out that the department must keep working to achieve full auditability.

One way to measure the department’s success in meeting audit readiness objectives is to look at how many short-term goals it met. According to the May 2011 and November 2011 FIAR Plan Status Reports, DOD missed some of its milestones, but that doesn't necessarily jeopardize the overall auditability goals, the panel pointed out. But the department needs to remediate the missed milestones and take steps to prevent future failures, the panel said.

The panel has recommended DOD work on sustaining leadership, commitment and effective oversight as one of the approaches to improve financial management and to achieve auditability. Leadership, in particular, needs to be more involved in financial improvement and audit readiness efforts.