Inspector General Robert P. Storch announced today the Department of Defense Office of Inspector General’s oversight of the Independent Public Accounting (IPA) firm, Ernst & Young LLP (EY), responsible for auditing the United States Marine Corps (USMC) FY 2023 Financial Statements.
The DoD OIG oversaw the audit, as required by the Chief Financial Officers Act of 1990. On February 22, 2024, EY issued an unmodified opinion, meaning the auditors obtained sufficient, appropriate audit evidence to determine that the financial statements present fairly the financial position and results of operations as of and for the year ended September 30, 2023 in all material respects in accordance with accounting principles accepted in the United States of America. In other words, the USMC FY 2023 financial statements present a true and fair reflection of the United States Marine Corps’ financial information.
EY’s audit opinion is the culmination of a two-year effort to audit the USMC’s beginning balances and current-year financial transactions. To perform the audit, EY’s work began in FY 2022 to test material balances and financial activity related to opening balances. Testing and audit procedures continued in FY 2023 in order for EY to obtain reasonable assurance on the financial statement balances and the related assertions. Under the supervision of the DoD OIG, EY completed more than 70 site visits, assessed more than 25 million sample items, and reviewed more than 3,000 documents. This audit work supported USMC total assets of $46.3 Billion.
While the EY audit resulted in an unmodified opinion, it identified seven material weaknesses related to internal controls over financial reporting within the USMC. The auditors considered the material weaknesses in determining the type and extent of audit procedures performed. The auditors used a substantive-based testing approach throughout FY 2022 and FY 2023. A substantive-based approach means that the auditors had to increase the amount of testing necessary because they were unable to rely solely on USMC’s internal control over financial transactions. This included the auditors examining specific transactions, account balances, and other adjustments made while preparing financial statements, as well as physically counting military equipment, ammunition, and other property – all designed to result in adequate audit evidence.
Inspector General Storch noted, “The two-year audit cycle of the U.S. Marine Corps was unprecedented for the Department of Defense. The U.S. Marine Corps staff, EY, and DoD OIG auditors performed a tremendous amount of work to complete the audit. I encourage the U.S. Marine Corps to continue the momentum of this unmodified (clean) opinion and focus on improving its internal controls to remediate the identified material weaknesses. These efforts will be important for the U.S. Marine Corps to improve audit efficiency and establish sustained financial reporting and operational readiness.”
The DoD OIG transmitted three reports by EY, including the Report on Audit of the Financial Statements, the Report of Independent Auditors on Internal Control over Financial Reporting, and the Report of Independent Auditors Compliance and Other Matters. These reports are available on the USMC Agency Financial Report website at https://www.pandr.marines.mil/.
For more information about the DoD OIG, please visit www.dodig.mil. For media inquiries please e-mail DoD_IG_Public_Affairs@dodig.mil.