Inspector General Robert P. Storch announced today that the Department of Defense Office of Inspector General (DoD OIG) released its summary report, “Understanding the Results of the Audit of the DoD FY 2023 Financial Statements.” This report explains the financial statement audits in a way that is understandable to non-auditors, and describes how those audits are important to DoD operations and financial management.
“The Understanding the Results report offers a comprehensive overview of the FY 2023 financial statement audit results and their significance,” said IG Storch. “We will continue to fully and fairly audit the DoD’s financial statements, to identify deficiencies and areas for improvement, and provide actionable information to the DoD on what is necessary to fix these deficiencies and achieve necessary progress. Our commitment to enhancing the financial health of the DoD through independent oversight remains steadfast in this crucial, long-term endeavor.”
In its financial statements, the DoD reported discretionary appropriations of $851.1 billion, which comprised half the discretionary spending of the United States in FY 2023. The DoD also reported nearly $3.8 trillion in assets, which is approximately 70 percent of the government’s total assets. Because of its size, the DoD has a major impact on the federal government’s financial statements. The financial statement audits performed or overseen by the DoD OIG are critically important for maintaining the public’s trust, ensuring accountability, and improving DoD operations.
Fiscal Year 2023 marks the sixth full-scale audit of the DoD's financial statements and includes a major development with the Marine Corps reaching an unmodified opinion, based on substantial effort after completing an unconventional 2-year audit cycle. Of the 29 DoD reporting entities that underwent stand-alone audits, 10 received clean opinions, 1 received a qualified opinion, and 18 received disclaimers of opinion. The disclaimers of opinions were issued because these DoD reporting entities continued to have unresolved accounting issues and material weaknesses that prevented auditors from providing an opinion.
Achieving a clean financial statement opinion is a long-term effort for the DoD. The OIG believes that the DoD must focus on identified material weaknesses that are scope-limiting, in that they prevent the auditors from performing necessary procedures to provide an opinion on the financial statements. Addressing these areas will require sustained focus and significant coordination, as the DoD must modernize its outdated financial management systems, strengthen its financial management workforce, create sustainable audit approaches, and set clear expectations for supporting financial statement audits. By addressing scope-limiting material weaknesses and creating collaborative opportunities in financial management, the DoD and its Components can work together to develop unified, consistent, and sustainable processes to support its financial operations and enable the DoD ultimately to achieve a clean audit opinion.