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Why Has the Pentagon Never Passed a Financial Audit?

A financial audit is an objective examination and evaluation of a company’s financial statements to ensure they are a fair and accurate representation of the transactions they claim to represent. However, did you know that a government section in the United States consistently fails its financial audits?

The Pentagon serves as the U.S. Department of Defense headquarters, including all three military services (Army, Navy, and Air Force). Unfortunately, the Pentagon has never passed a financial audit.

Why are Senators Attempting to Resolve the Financial Audit Issue?

When the Pentagon started its first-ever independent financial audit in 2017, proponents of government accountability hailed it as a significant step forward for a department with a history of financial mismanagement.

However, the Defense Department failed that audit, as well as the following two. Now, senators are introducing a bipartisan bill that would impose a penalty on any government section that fails to pass a clean audit, including the military.

Senator Bernie Sanders co-sponsored the bill with Sen. Chuck Grassley, along with Sens. Ron Wyden and Mike Lee,

The Pentagon and the military-industrial complex have been plagued by a massive amount of waste, fraud, and financial mismanagement for decades. That is absolutely unacceptable.

Bernie Sanders, US Senator

Despite owning trillions of dollars in assets and receiving hundreds of billions in federal funds each year, the agency has never disclosed its annual assets and liabilities.

The Defense Department’s audit has resulted in a Disclaimer of Opinion for the past three financial years, indicating that the auditor did not receive adequate accounting documents to form an assessment.

The Pentagon Act of 2021

The Audit the Pentagon Act of 2021 would mandate that each component of the Defense Department that fails to pass a clean audit forfeit 1% of its budget to the Treasury, which would be applied to the federal deficit. The law will be introduced on Wednesday.

The Pentagon’s inability to complete a successful independent audit, according to MPs, is a primary reason why the Pentagon has been linked to financial mistakes and abuses for years. They point out that the Pentagon is set to collect $740 billion in the current fiscal year, but it hasn’t been able to account for all of it.

The Pentagon attributes some of the delays to its enormous size: its auditing procedure entails 24 separate audits covering all DoD reporting units and a consolidated audit. Independent public accounting companies and the Department of Defense Inspector General conduct the audits.

However, detractors point out that since the early 1990s, all federal agencies, including the Pentagon, have been required to undergo an independent financial audit. Since the Department of Homeland Security’s first clean audit in fiscal 2013, every other federal department has met audit standards.

We’ve seen example after example of excessive and inefficient spending by the Pentagon, and every dollar squandered is a dollar not being used to support our men and women in uniform. After 30 years to get ready, this bill pushes the Defense Department to finally achieve a clean annual audit – a requirement that every other federal agency is held to.

Chuck Grassley, US Senator

(Source: NPR )

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