On November 15, 2023, the DoD published the DoD FY 2023 Agency Financial Report, including the FY 2023 and FY 2022 Agency-Wide Financial Statements audited by the DoD Office of Inspector General (OIG). The DoD OIG issued a disclaimer of opinion —meaning that the auditors could not obtain sufficient, appropriate audit evidence to support an opinion on the financial statements. The DoD Components received 7 unmodified (clean) opinions, 1 qualified opinion, and 18 disclaimers of opinion, while 3 audits are on-going.
Through the audit, we identified 28 material weaknesses, 3 significant deficiencies, and 7 instances of noncompliance with laws, regulations, contracts, and grant agreements. Material weaknesses are weaknesses that are so significant that they could prevent management from detecting and correcting a material misstatement in the financial statements in a timely manner. Significant deficiencies are less severe than material weaknesses, yet important enough to merit attention.
The DoD OIG assessed that, overall, the DoD and its Components need to develop strong, sustainable DoD-wide business processes. In doing so, the DoD will not only work its way toward a clean audit opinion, but also will become more efficient and improve its operations. This will result in increased public trust in the DoD’s financial processes and lower audit costs.
The DoD OIG plans to issue a product in the Spring of 2024 that summarizes the purpose, findings, and potential benefits of the DoD’s financial statement audits in terms that are understandable to non‑auditors. This report will also discuss the status of the Secretary of Defense’s three audit priority areas and provide the DoD OIG’s perspective on what the DoD should do to continue its progress towards stronger financial management and more efficient business operations.
“While we acknowledged enhancements in the DoD's financial management procedures, significant challenges persist in generating thorough and precise financial statements,” said Inspector General Robert P. Storch. “The DoD OIG remains committed to conducting a thorough, unbiased audit of the financial statements, aiming to provide the DoD with impactful recommendations to rectify identified shortcomings.”
The DoD OIG issued three reports as part of its Agency-Wide audit: 1) Report on the Financial Statements, 2) Report on Internal Control over Financial Reporting, and 3) Report on Compliance with Applicable Laws, Regulations, Contracts, and Grant Agreements—which are included in the DoD Agency Financial Report at https://comptroller.defense.gov/odcfo/afr/