Objective
Our objective was to summarize DoD
financial management challenges
identified by the DoD Office of Inspector
General (DoD OIG) from FY 2012 to current.
Specifically, we reviewed and summarized
the financial management material
weaknesses and other audit concerns
found in audit reports that the DoD OIG
issued from October 1, 2011, through
December 31, 2014.
What We Found
From October 1, 2011, through
December 31, 2014, the DoD OIG issued
138 reports that discussed weaknesses
pertaining to DoD financial management.
The most prevalent areas of concern
were DoD financial management systems,
accounting entries, compliance with laws
and regulations, and audit trails.
Of the 138 issued reports, 75 contained
668 recommendations to management for
corrective action. As of March 3, 2015,
DoD took corrective action in response to
537 of the 668 recommendations. However,
131 recommendations still remained open
and required management to implement
corrective action.
The majority of the recommendations
addressed the need to improve or develop
financial management systems, and
address deficiencies in accounting entries,
compliance with laws and regulations, and
audit trails. In addition, several of the
reports summarized DoD management acknowledgments that
the basic financial statements do not substantially conform
with Generally Accepted Accounting Principles (GAAP),
and financial management and feeder systems could
not adequately support material amounts on the basic
financial statements.
The weaknesses discussed in these reports, the open
recommendations, and DoD management acknowledgments
that the basic financial statements did not substantially
conform to GAAP prevent the DoD OIG from obtaining
sufficient and appropriate audit evidence to provide a basis
for an audit opinion. The basic financial statements may also
have undetected misstatements that were both material and
pervasive. Furthermore, DoD may not achieve audit readiness
by the statutory (legal) deadline of September 30, 2017.
What We Recommend
We are not making any recommendations in this report
because the recommendations made in the respective
individual reports, if implemented, should correct the
weaknesses identified.
Management Comments
We do not require a written response to this report.