Deep Dive: Why Can’t the Pentagon Pass an Audit
The Pentagon is the only government agency to have never passed an audit. Back in 2000, we wrote about why the Pentagon couldn’t pass an audit even if it tried, which it never had at that point. While the Pentagon has now been trying to pass an audit since 2018, it has still never succeeded, failing its seventh consecutive audit in as many years in 2024.
The Pentagon manages roughly $4.1 trillion in assets, so its inability to fully account for those assets is troubling to say the least. As a practical matter, it means the Pentagon literally is not able to keep track of all of the resources, property, and equipment at its disposal, which means budget requests for these needs may include items the Pentagon already has and just doesn’t know about. That’s both a national security problem, and a fiscal one.
In the Fiscal Year (FY) 2024 National Defense Authorization Act, Congress imposed a goal on the Pentagon of achieving a clean audit across its components by 2028. However, it did not include any accountability mechanisms or consequences should the Pentagon fail to meet that goal.
Since then, the Pentagon has shown very modest signs of progress towards achieving a clean audit opinion. When it failed its sixth audit in 2023, only seven of its then 29 components received unmodified opinions, indicating they passed. In 2024, of its 28 components (one component was consolidated into another), nine received unmodified opinions.
A proposed bill called the Audit the Pentagon Act aims to impose consequences on the Pentagon for each year that it continues to fail an audit by requiring each failed component to forfeit a small percentage (between 0.5 to 1 percent) of its budget to the Treasury Department for deficit reduction, though it exempts military personnel accounts and the Defense Health Account.