Page 1 GAO-25-107427 DOD Financial Management
The Department of Defense (DOD) is responsible for about half of the federal
government’s discretionary spending and about 82 percent of the reported total
physical assets. As of fiscal year 2024, DOD remains the only major federal
agency that has never achieved an unmodified (“clean”) audit opinion on its
financial statements. In response to the statutory mandate requiring a clean audit
opinion by December 31, 2028, DOD reported taking actions to improve audit
readiness and to support the timely achievement of a clean audit opinion by the
mandated deadline.
Having reliable, useful, and timely financial information is important for day-to-
day management and decision-making and for demonstrating accountability over
DOD’s extensive resources. Financial statement audits have value far beyond
the audit opinion: they identify vulnerabilities, improve operations, increase
transparency and visibility of financial management issues, and provide a
positive return on investment.
We performed this audit in connection with the statutory requirement for GAO to
audit the U.S. government’s consolidated financial statements, which cover all
accounts and associated activities of executive branch agencies, including DOD.
This report provides information on audit approaches the independent public
accountants (IPA) took, the results of DOD’s and the military services’ fiscal year
2024 financial statement audits, as well as DOD’s planned timelines for
addressing key audit findings.
• Better financial management is critical to DOD’s mission readiness, and it is
important to demonstrating that DOD’s financial statements and underlying
financial information are reliable for decision-making.
• DOD has realized many benefits from its financial statement audits. For
example, the DOD Office of Inspector General (OIG) reported that DOD’s
fiscal year 2024 remediation plans included the retirement of 89 outdated
information systems and that this would help DOD progress toward
compliance and will result in savings of at least $760 million annually through
fiscal year 2029.
• DOD still needs to make substantial progress in remediating its pervasive
deficiencies, which auditors call material weaknesses, reported for fiscal year
2024. DOD OIG reported that some of these material weaknesses, if not
resolved, could continue to impede DOD’s and its component reporting
entities’ ability to achieve a clean audit opinion.
U.S. Government Accountability Office
DOD Financial Management:
Status of
Efforts to Meet Audit Mandate
-25-107427
Report to Congressional Committees
