On February 28, 2025, the DoD Office of Inspector General (OIG) issued Part 1 of the Understanding the Results of the Audit of the FY 2024 DoD Financial Statements. That report discussed the composition, construction, importance, and usefulness of the DoD financial statements, defined roles and responsibilities of the preparers and auditors, and summarized the DoD’s audit results over time. This report provides an overview of the DoD’s Agency-Wide material weaknesses that are caused by DoD management’s inability to design and implement proper internal controls. These material weaknesses can hinder DoD operational effectiveness and prevent the DoD from achieving an unmodified (clean) audit opinion.
Given the DoD’s vital mission and the significant resources required to execute that mission, these material weaknesses are of substantial public importance. Our explanation of the major categories of material weaknesses identifies the key obstacles that the DoD must overcome. We also discuss the importance of collaboration across DoD and non-DoD stakeholders to obtain a clean audit opinion by FY 2028.