Audit of DoD Efforts to Remediate Financial Statement Material Weaknesses Related to Government Property in the Possession of Contractors (Report No. DODIG-2026-016)

What We Did:

The objective of the audit was to assess the effectiveness of DoD actions to remediate the financial statement material weakness related to reporting Government Property in the Possession of Contractors (GPIPC).

What We Found:

Although the DoD has a corrective action plan (CAP) that, if implemented, should enable the DoD to provide a complete and accurate balance of GPIPC assets, the actions to implement the CAP were ineffective.

The DoD’s actions to remediate the DoD financial statement material weakness were ineffective because the:

• Offices of the Under Secretary of Defense for Acquisition and Sustainment (OUSD[A&S]) and the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD (OUSD[C]/CFO), did not direct the use of the GFP Module;
• DoD Components have not updated their Accountable Property Systems of Record (APSRs) to directly interface with the GFP Module; and
• DoD Components have been focused on remediating their Component‑level material weaknesses related to GPIPC

The unremedied GPIPC material weaknesses within the DoD Components have a negative impact on the DoD Agency‑Wide financial statements. The DoD Components’ inability to accurately account for GPIPC will continue to impede the DoD’s ability to achieve an unmodified audit opinion by FY 2028. Accurate financial statements enable Congress and the public to assess how the DoD spends its money, help the DoD improve its operations, identify vulnerabilities in information technology and other systems, and prevent wasteful practices.

What We Recommend:

We recommend that the USD(A&S) and the USD(C)/CFO provide clarifying information to DoD Components on why the GFP Module is an essential part of the DoD‑wide solution for recording and reporting G PIPC. We also recommend that they issue DoD guidance requiring the DoD Components to use the GFP Module for inventory management of GPIPC and work with the DoD Components to implement the GFP Module and necessary interfaces. We recommend that the DoD Components align their Component‑level GPIPC material weakness remediation efforts with the OUSD(A&S) CAP and update remediation efforts to require their non‑retiring APSRs to directly interface with the GFP Module.