Report | Jan. 8, 2019

Understanding the Results of the Audit of the DoD FY 2018 Financial Statements

To comply with the National Defense Authorization Act of 2014, the DoD OIG ensured that the DoD’s financial statements underwent a full audit in FY 2018. The DoD OIG, and five independent public accounting firms overseen by the DoD OIG, performed 21 audits consisting of audit procedures on balances listed on the DoD‘s and DoD Components’ financial statements to determine if the financial statements were accurately presented. In addition, the DoD OIG audited the consolidated DoD AgencyWide Basic Financial Statements, which is the combination of the DoD Components’ financial statements.

These audits resulted in audit opinions, which determined whether the financial statements were fairly presented in accordance with Generally Accepted Accounting Principles. Audit opinions, by their nature and by the requirements of generally accepted auditing standards, are technical, follow a prescribed format, and may not be easy to understand without a background in accounting. The objective of this report is to explain the financial report and the financial statement audits in a way that is understandable and meaningful to a non-auditor.

This report describes the importance of financial statement audits and the roles and responsibilities of DoD management and the auditors that reviewed the financial statements. It also summarizes the FY 2018 DoD Component and AgencyWide audit results, discusses significant material weaknesses, and provides the DoD OIGs perspective on what the DoD should do to progress towards clean opinions and stronger financial management.