December 09, 2019

Wyden, Sanders Demand More Accountability Following Pentagon’s Second Financial Audit

Pentagon performs second annual audit after years of Congressional pressure for fiscal accountability

Washington, D.C. – U.S. Senators Ron Wyden, D-Ore., and Bernie Sanders, I-Vt., today released the following statement regarding the completion of the Pentagon’s second financial audit:

“The Pentagon has just completed its second full financial audit and the results look a lot like a Sergio Leone western: there’s some good, some bad, and some ugly. 

“The good news is that the Pentagon was able to complete an audit for the second year in a row. We give David Norquist credit for putting the Department of Defense (DOD) under audit as comptroller and for sustaining that effort after his promotion to deputy secretary. We also appreciate that the scope of this audit was broader and deeper than last year, meaning auditors are delving deeper into DOD’s books. 

“The bad news is that auditors identified 1,300 new Notices, Findings, and Recommendations (NFRs), or issues for the Department to address through corrective action plans. And if 1,300 sounds like a big number, that’s in addition to the roughly 1,900 outstanding NFRs from the previous audit. About half of these NFRs relate to outdated financial IT and management systems, some from the 1960s and 70s. 

“Which brings us to the ugly: the number of material weaknesses, or significant problems—what we sometimes call ‘show-stoppers’—rose from 20 last year to 25. These material weakness have names like ‘real property’ and ‘universe of transactions,’ which are fancy ways to saying that the Pentagon doesn’t know all the buildings it owns or where they’re located and still can’t tell the American people everything it buys with their money. 

“We never expected the DOD to go from unauditable to clean audits in two years; it took the smaller Department of Homeland Security a decade. But that doesn’t mean the Pentagon shouldn’t be doing more. For starters, DOD isn’t moving quickly enough in our estimation to consolidate and update legacy systems, which is a big drag on the overall audit effort. If DOD has a strategy for this, it’s surely one of the best kept secrets in Washington. We also want to see the Department focus less on the low-hanging fruit and more on reducing the number of material weaknesses, which would have a greater impact on DOD’s overall financial management.” 

Wyden and Sanders have been urging the Pentagon to conduct audits for years, including cosponsoring the Audit the Pentagon Act of 2015. In 2017, the Pentagon announced the agency would begin to conduct yearly agency-wide financial audits beginning in 2018.