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News | Sept. 6, 2023



Inspector General (IG) Robert P. Storch announced today that the Department of Defense Office of Inspector General (DoD OIG) will begin the “Audit of the Valuation of Assets Provided Under Presidential Drawdown Authority to Ukraine” in September.  

The audit was announced in response to the Under Secretary of Defense (Comptroller)/Deputy Chief Financial Officer March 31, 2023 Policy Memorandum, “Clarification of Presidential Drawdown Authority Valuation of Defense Articles.”  The DoD issued press statements on May 18, 2023, and June 20, 2023, explaining that in some cases ‘replacement cost’ rather than ‘net book value’ (original cost minus depreciation) was used in valuing the equipment provided to Ukraine.  This resulted in overvaluing the equipment provided to Ukraine in FY 2023 by $3.6 billion and in FY 2022 by $2.6 billion, for a total of $6.2 billion.  In accordance with the March 31, 2023 policy, the DoD was required to revalue the equipment that it provided to Ukraine.

The objective of the audit is to determine the extent and impact of the estimation change, determine whether DoD Components followed the current policy when updating the value of items provided to Ukraine through PDA, and assess whether the current PDA policy complies with Federal laws and regulations.

IG Storch stated, “The DoD OIG has concerns that the DoD’s valuation policy for equipment, munitions, and inventory provided under PDA is not being consistently applied.  The use of PDA has rapidly expanded to support Ukraine, from $100 million to $14.5 billion per fiscal year.  DoD policy must comply with Federal laws and regulations, and it is important that it be consistently applied across the DoD.  The policies for how to value equipment provided under PDA also are not unique to Ukraine assistance and could impact future use of PDA for other foreign partners.” 

The DoD OIG will perform the audit at the Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD; Defense Security Cooperation Agency; Office of the Assistant Secretary of the Army (Acquisition, Logistics, and Technology); Office of the Assistant Secretary of the Army for Financial Management and Comptroller; Assistant Secretary of the Air Force, Financial Management and Comptroller; Office of the Assistant Secretary of the Navy, Financial Management and Comptroller; and the U.S. Marine Corps Financial Operations.