Yesterday Senators John McCain (R- AZ), Tom Carper (D-Del.), and Tom Coburn (R-OK) received the Department of Defense's submission of a Financial Improvement and Audit Readiness (FIAR) Plan status report. The FIAR Plan outlines the necessary steps for all areas of the Department of Defense to conduct an audit, effectively manage financial resources, and produce quality financial information that allows for informed business decisions and accountability.
To date, the Department of Defense has never been able to conduct an audit despite the clear requirement to do so by the Chief Financial Officers Act of 1990. In fact, the Department of Defense has never produced financial statements reliable enough to for an audit to take place. In 2004, the Department set the goal of being audit ready by 2007. That 2007 deadline was not met and was pushed back to 2017. The Department of Defense's failure to meet this deadline is troubling, given that the Government Accountability Office has consistently identified the Department of Defense's financial operation as "high risk" for fraud, waste, abuse, and mismanagement, and criticized the Pentagon's efforts to fix these problems as insufficient and lacking specificity.
Yesterday's report by the Department of Defense's Comptroller shows that while a few agencies within the Department of Defense have reached the required audit level, the vast majority of the Department had not. Further, while the report shows some progress, the Department of Defense has yet to determine a complete road-map of how the Army, Navy, Air Force and other defense agencies will each reach the auditability requirement by 2017.
"Congress has repeatedly required the Department of Defense to do what every business does: conduct an audit of its books," said Senator Tom Carper (D-Del.) Chair of the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security. "I am pleased to see the Department of Defense is finally getting serious about adhering to basic financial management principles. Developing and implementing this audit plan will go a long way toward ensuring that billions of taxpayer dollars are spent wisely and responsibly. It will also make sure that transactions paying for the needs of our military personnel are kept secure. The Pentagon hasn't yet met this critical goal of being able to audit its books, but at least we finally have a plan to help them navigate the path ahead."
"I applaud the Department of Defense for finally taking an important first step forward to achieve financial accountability by developing a coherent plan to clean up its books so that American taxpayer dollars aren't being wasted," said Senator John McCain. "However, the onus remains on the Department to develop the business systems necessary to move the Department towards being audit-ready."
"I look forward to a thorough examination of the Defense Department's latest strategic plan on financial improvement and how it will finally achieve a clean financial audit. I am committed to pressing for the necessary resources to achieve this goal and I will conduct aggressive oversight to ensure the Pentagon follows its own roadmap. Unfortunately, past pronouncements and plans have not resulted in the change in culture needed at the Defense Department to ensure financial accountability for taxpayer dollars. I hope this time, things are truly different," said Senator Tom Coburn.