Report | July 7, 2015

Summary of DoD Office of the Inspector General Audits of DoD Financial Management Challenges

DODIG-2015-144

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.