A GAO report noted that 18 recommendations targeting improvements to the the DOD financial management systems remain unimplemented. Kiyoshi Tanno / GETTY IMAGES
DOD lag on enacting business system recommendations may slow clean audit, GAO says
The Defense Department has still yet to fully implement 18 recommendations that the watchdog said could facilitate the decades-long pursuit of completing an enterprisewide audit.
The Government Accountability Office sent another reminder to the Defense Department Tuesday that if it wants to achieve its 30-year quest of completing a clean audit, officials should tackle the nearly 20 recommendations offered towards improving its financial management systems.
The DOD has been trying since the enactment of the Government Management Reform Act of 1994 to successfully complete a departmentwide audit of its financial statements and, to date, is the only Chief Financial Officer Act agency unable to do so.
A GAO report released Tuesday noted that part of the difficulty related to the audit impasse is weaknesses in the Pentagon’s financial management and business systems, which include modernization efforts that have been on the watchdog’s high-risk list since 1995.
In Tuesday’s report, GAO officials pointed to 18 recommendations dating back to 2020 that remain open or partially addressed as of August.
Among the recommendations were six from a September 2020 report, calling for improvements like performance measures and a detailed enterprise road map for the department’s financial management systems strategy, as well as migration plans for key accounting systems and a complete list of financial management systems and related budget data.
Of those recommendations, only the performance goals to monitor the status of efforts to address IT-related audit findings has been fully implemented, while three other are partially implemented and two remain open with plans to complete all in 2023.
A March 2023 report on business and financial management systems oversight noted that DOD guidance didn’t completely address how to document system compliance or how officials can substantiate that systems comply with department requirements, leaving the door open for further investments in systems unable to produce auditable statements.
Of the nine recommendations offered, only one — that the Navy update guidance for initial approval and annual certification of covered business and financial systems — has been partially implemented, though DOD officials anticipate they issue updated guidance in 2024.
A February 2022 report examining the Air Force’s financial management systems modernization efforts found that the service had no strategy to migrate its financial operations from a legacy system to a modernized one it deployed in 2005 and planned to use both systems for the next decade.
Four recommendations designed to speed up that transition remain open, though Air Forces officials concurred with them and estimated completion dates between Sept. 30 and March 31, 2024.
“The lack of effective planning and oversight of its business and financial management systems are critical challenges as DOD seeks to achieve a clean audit opinion,” the report said. “Further, by implementing GAO’s recommendations, the department has the opportunity to identify financial benefits and improve efficiencies in its operations.”