Tracking Progress: Updates to DoD’s Financial Management Scorecard
House Subcommittee on Government Operations and the Federal Workforce
2025-04-29
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Source: Congress.gov
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Transcript
Mic check, one, two, one, two. Mic check, one, two, one, two. Subcommittee on government operations will come to order. Welcome everyone and to our guests who have taken time to be here as well as the members and their staff. Thank you very much for preparation for today. Without objection, the chair may declare recess at any time and I would recognize myself for the purpose of making an opening statement. I'd like to welcome everybody to today's hearing regarding updates to the Department of Defense's progress towards achieving a clean audit opinion. I would like to thank our witnesses for testifying today on this very important topic. I would also like to thank subcommittee members on both sides for staying committed to shining a light on financial management issues that the Department of Defense faces and working towards a solution together
to that future. I've said this before, but financial transparency of the military is critical. It's critical for the military, and it's critical for the American people to know that they have the confidence that it's being well managed. So the question is, how can we remain confident in the Department of Defense's ability to protect American assets and interest if they cannot properly manage their expenses or assets, perhaps not even knowing where they are. We're here today because the Department of Defense is still unable to achieve a clean audit of their financial statements. In fiscal year 2024, the Department of Defense reported more than $909 billion, half the discretionary spending of the United States, but still holds the distinction of being the only federal agency that has never passed comprehensive audit. The Department of Defense has more than 28 components and it's fair to say that some are doing better at financial management than others. For this year's past financial audit, components that could not be audited accounted for at least 48% of DOD's total assets and at least 64% of DOD's budget. It's important to note that this is more than just a paper exercise. It is understanding where your assets are and how much taxpayer funding is left. it's important that the military gain a complete picture of military readiness as well as Congress that counts on these reports. Even though roughly half of DOD passed, the services who receive the most amount of money and the most assets account for the areas where they are struggling to track their spending and assets.
Balancing the checkbook is more than just military preparedness. I believe it goes hand in hand, both understanding where the checkbook is, where the assets are, and military preparedness. Financial security is national security. The Joint Strike Fighter program is a multi-service, multinational program that will cost more than $2 trillion over its lifetime of service, according to the GAO. For fiscal year 2024, auditors found that DOD management did not account for, manage, or report Joint Strike Fighter government property. Not fully reporting this information resulted in material misstatements across DOD assets. Because DOD could not provide reliable information to verify the existence completeness or value of the program's government properties, auditors were unable to quantify the amount of these misstatements. This means that there are monetary and operational gaps. Last September, the subcommittee, with the help of GAO, created a scorecard to track DOD's progress towards achieving a clean audit opinion. Rather than continuing to say that DOD isn't doing a good job making progress towards achieving a clean audit, we wanted something that would show that they were in fact on the road, and I think we were here today, to fixing not only those things that are internally imperative to this, but good ideas from certain elements within DOD that are taking the lead. This is especially important because DOD is mandated to achieve a clean audit by 2028.
It is and should remain the goal of this subcommittee and of Congress to hold DOD accountable. Today we plan to discuss the progress that DOD has made and the challenges they face. As this new administration is planning for the future, it will be imperative to understand where the department has been, where it needs to go, and what is standing in the way. Today, we are also unveiling a new section of the scorecard that focuses on fraud risk management. We have talked about fraud prevention for many years, so I am very excited to see a new method to track progress in preventing fraud in the areas of procurement and contracting. Strong financial management systems are an important part of fraud prevention. Seeing inside that is essential. What we've seen over the years is that DOD has struggled in maintaining and updating systems, and these systems are critical if we're going to get where we want to go with a clean audit. Last Congress, we were told that DOD had to achieve a clean audit opinion by December 2028. We made that commitment and today I think we will show where there's strong, significant progress by 2026. That's why we're here. We're having this discussion. But it also is a commitment by the gentleman, the ranking member, Mr. Nfume, and myself to make sure that we go beyond these hearings and to actually engage the Department of Defense.
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