The Department of Defense once again failed to pass its annual audit, the eighth time in as many years since Congress mandated a full accounting of the Pentagon’s expenses.
This year’s findings, released on Friday, show the Pentagon again struggling with proper accounting of its finances, resulting in misstatements. The Fiscal Year 2025 Financial Agency Report found 26 material weaknesses and two “significant deficiencies in the department’s controls for financial reporting.” A material weakness is a case of a significant deficiency or multiple deficiencies in financial reporting that results or can result in errors in accounting and reviews.
Auditors had to go through the department’s roughly $4.7 trillion in assets, and another $4.7 trillion in liabilities. Investigators looked for both material weaknesses and improper recording. When looking at the department’s own internal controls for reporting financial weaknesses, the audit found that “the Department is unable to provide assurance over the effectiveness of internal controls in place to support reliable financial reporting with applicable laws and regulations.” That included issues with reporting on matters such as the fund balance with the Treasury, inventory and real estate, among others.
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For instance, the audit noted particular issues with the Joint Strike Fighter Program, which aims to build new strike fighter aircraft for multiple military services. Investigators found that the Pentagon did not report Global Spares Pool assets in financial statements, leading to a lack of accurate and reliable data.
There were some improvements in this year’s review. Jules Hurst, the department’s acting chief financial officer, pointed out that the Pentagon managed to close one material weakness, resolving it, and consolidated another.
Despite all of that, the Pentagon still intends to achieve an unmodified or “clean” audit in the 2028 fiscal year. However Hurst acknowledged in the report that it will take a “significant acceleration of its efforts” to make that happen.
“The Department of War is committed to resolving its critical issues and achieving an unmodified audit opinion by 2028,” Hurst wrote, using the unofficial nickname for the Department of Defense that the Trump administration has adopted.
That year goal is important, as the 2024 National Defense Authorization Act requires the Department of Defense to reach it by 2028. The Department of Defense began its audits in 2018, following a Congressional mandate.
The findings were released a day after President Donald Trump signed the massive National Defense Authorization Act into law. The defense policy bill authorizes a record $901 billion in spending for the Department of Defense.
