Report | May 18, 2022

Understanding the Results of the Audit of the FY 2021 DoD Financial Statements

Audit

Publicly Released: May 19, 2022

The DoD prepares the annual DoD Agency Financial Report and the Component-level financial statements to provide an overview of the DoD’s and its Components’ financial information as well as summary-level information on DoD operations performance results. In FY 2021, the DoD Office of Inspector General (OIG) performed an audit of the DoD Agency-Wide financial statements and oversaw independent public accountants (IPAs) as they performed audits of the DoD Components’ financial statements. The purpose of the audits was to determine whether the DoD and its Components presented their financial statements in accordance with U.S. Generally Accepted Accounting Principles, which establishes accounting concepts and principles, as well as industry-specific rules, that ensure an organization’s financial statements are complete, consistent, and comparable.

On November 15, 2021, the DoD OIG issued a disclaimer of opinion on the FY 2021 Agency-Wide Financial Statements, meaning the DoD was unable to provide sufficient evidence for the auditors to support an opinion. The DoD OIG identified 28 material weaknesses and 4 significant deficiencies in FY 2021. Of the material weaknesses and significant deficiencies identified 25 material weaknesses and 2 significant deficiencies were repeated from FY 2020, 2 significant deficiencies from FY 2020 were upgraded to material weaknesses, 1 new material weakness and 1 new significant deficiency were reported, and 1 material weakness from FY 2020 was downgraded to a significant deficiency.

The DoD’s journey to achieving a clean audit opinion began more than 30 years ago. Based on the results for FY 2021, the DoD is still a long way from a clean opinion. The DoD estimates that it will not obtain a clean opinion for at least another 7 years.