Letter to Secretary of Defense Chuck Hagel - DOD Audit

Letter

U.S. Representative K. Michael Conaway (R-Texas) led a bipartisan letter sent today to Defense Secretary Chuck Hagel, asking for his leadership in helping the Defense Department achieve auditability by 2017.

The letter was also signed by Reps. Rob Andrews (D-N.J.), Randy Forbes (R-Va.), Joe Courtney (D-Conn.), Tim Griffin (R-Ark.), Steve Palazzo (R-Miss.) and Scott Rigell (R-Va.). All except for Rep. Griffin are members of the House Armed Services Committee.

In the letter, the House members asked Secretary Hagel to "make financial management a priority within the department now and in the future." They also requested that Secretary Hagel respond by March 22 with his views on how the DoD will achieve auditability.

"As secretary of Defense, your leadership will be pivotal in maintaining the existing momentum and moving auditability forward. Your efforts will help ensure the department meets the Statement of Budgetary Resources deadline by 2014 and the overall DoD auditable financial statements deadline by 2017. In a time of financial uncertainty, our men and women in uniform and the taxpayers deserve to know how DoD spends its funds," the members wrote.

The same House members sent a letter in January to the chairman and ranking member of the Senate Armed Services Committee, urging them to question then-nominee Hagel on continuing financial management reforms if confirmed. Please click here to read that letter.

Reps. Conaway, Andrews, Courtney, Palazzo and Rigell were members of the House Panel on Defense Financial Management and Auditability Reform, which concluded in January 2012 that DoD officials had taken positive steps toward completing an audit but more details were needed to complete a full audit by 2017. Rep. Conaway chaired the panel.

The full text of today's letter is below.

March 7, 2013

The Honorable Chuck Hagel
Secretary
U.S. Department of Defense
1300 Defense Pentagon
Washington, D.C. 20301-1300

Dear Mr. Secretary:

We would like to congratulate you on your recent appointment as secretary of Defense and thank you for your continued service to our nation. As the first enlisted veteran to serve as secretary of Defense, you have accomplished something special. We were encouraged by your recent comments about working "closely with Congress to ensure that we maintain the strongest military in the world and continue to protect our great nation."

Efforts by the Department of Defense to reform its financial management and achieve auditability have come to a pivotal intersection. Given the current fiscal constraints, eliminating waste and promoting prudent spending is imperative to using the Department's finite resources wisely.

The Chief Financial Officers Act of 1990 requires all federal agencies to produce auditable financial statements. However, the Department of Defense is one of only two federal agencies that has not complied with this and subsequent laws, and continually fails to produce annual auditable financial statements. In 1995, the Government Accountability Office listed the Department on its "high risk" list for waste, fraud, abuse, and mismanagement, and it has remained on that list ever since.

In 2011, the House Armed Services Committee formed the Panel on Defense Financial Management and Auditability Reform. The panel held eight hearings and met with dozens of witnesses during its six month review, examining the progress and impediments to reaching the goal of auditable financial statements by 2017. In the report, the panel's findings noted that while positive steps have been taken, the department had missed milestones and had yet to effectively implement its strategy and methodology in order to reach the congressional mandates.

While the department is still reliant on cumbersome, antiquated financial management systems, it is moving in a positive direction. One key component in its recent success, as identified by the most recent semiannual Financial Improvement and Audit Readiness Plan Status Report and the GAO High-Risk Series report, was leadership within the Department.

Secretary Panetta placed greater emphasis on the audit effort, helping to change the culture within the department. For instance, then-Secretary Panetta moved up the deadline for the Statement of Budgetary Resources from 2017 to 2014, stressing the importance of the effort and declaring financial reform a "department-wide priority." His guidance has helped the department make progress toward achieving auditability, and we appreciate his recognition of the importance of such an audit.

As secretary of Defense, your leadership will be pivotal in maintaining the existing momentum and moving auditability forward. Your efforts will help ensure the department meets the Statement of Budgetary Resources deadline by 2014 and the overall DoD auditable financial statements deadline by 2017. In a time of financial uncertainty, our men and women in uniform and the taxpayers deserve to know how DoD spends its funds.

We urge you to make financial management a priority within the department now and in the future. We request your views on how the DoD will achieve auditability under your leadership by March 22, 2013.

Again, congratulations, and we look forward to your response by March 22, 2013.

Sincerely,

K. Michael Conaway
Member of Congress

Robert Andrews
Member of Congress

Randy Forbes
Member of Congress

Joe Courtney
Member of Congress

Tim Griffin
Member of Congress

Steve Palazzo
Member of Congress

Scott Rigell
Member of Congress

cc:
Hon. Howard "Buck" McKeon, Chairman House Armed Services Committee
Hon. Adam Smith, Ranking Member House Armed Services Committee

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