U.S. Pentagon fails fourth audit but sees steady progress

By Mike Stone

WASHINGTON (Reuters) – The U.S. Pentagon racked up its fourth comprehensive audit failure, reflecting problems in systems and accounting as the vast bureaucracy makes “steady progress” towards a passing grade, the department’s chief financial officer said on Tuesday.

The legally required audit has helped sharpen the Pentagon’s systems and controls and has regularly helped the Department of Defense find misplaced inventory helping save money.

About 1,200 auditors tested the systems and record-keeping processes on weapons systems, military personnel and property around the world with 278 site visits and 1,069 virtual visits.

The process led to 26 standalone audits that comprised the overall exercise.

Eight units were expected to receive clean opinions from the auditors, the same as last year, said Mike McCord, the Pentagon’s CFO.

“The department continues to make steady progress toward achieving a favorable audit opinion,” McCord told reporters as he released the results of the audit of more than $3.2 trillion in assets and $3 trillion in liabilities.

The Pentagon added, “As the audits mature and testing expands, Department of Defense leaders expect findings to increase in number and complexity,” since successive sweeps could expose more profound problems.

The U.S. Department of Homeland Security took a decade to pass a comprehensive audit, and Pentagon officials have said the DoD could take just as long, making 2027 the possible date for its first clean audit.

Travel curbs over the coronavirus hampered auditing in situations that required in-person access, the Pentagon said, but virtual site visits yielded some efficiencies in the due diligence effort.

This year’s audit fees of $207 million were nearly flat with the previous year.

(Reporting by Mike Stone in Washington; Editing by Jane Wardell and Clarence Fernandez)

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