The Defense Department recently released the results of its fiscal year 2024 financial audit, marking the seventh audit conducted since 2018. Despite not achieving a clean audit, the department has made significant improvements each year. Mike McCord, the department’s chief financial officer, expressed confidence in the department’s ability to achieve an unmodified audit opinion, noting the strong commitment and belief in their capabilities throughout the department.
The FY2024 audit involved 28 different reporting entities, with nine entities achieving unmodified audit opinions. Additionally, the Defense Threat Reduction Agency achieved an unmodified audit opinion for the first time. One entity received a qualified opinion, and 15 others received disclaimers. McCord highlighted the department’s efforts in addressing material weaknesses identified in audits, particularly focusing on closing or downgrading weaknesses related to the fund balance with the Treasury.
Eight DOD reporting entities closed or downgraded their fund balance with Treasury material weakness in the FY2024 audit, including the Department of the Navy Working Capital Fund and the Department of the Air Force Working Capital Fund. Congress has set a goal for the department to achieve an unmodified audit by fiscal year 2028, and McCord emphasized the progress made each year since the inception of the audit. While acknowledging the need for acceleration in improvement to meet the 2028 goal, he expressed confidence in the department’s trajectory to meet the demands of Congress.
McCord stressed the critical nature of the next few years as the department works towards the 2028 mandate, emphasizing the importance of continued progress and speed in improvement. He highlighted the learning curve involved in such a complex process, comparing it to the learning curves in building airplanes. While substantial work remains, McCord believes the department is on the right path to meeting the expectations set by Congress. Overall, the department has shown significant improvement in its financial audits over the years and remains committed to achieving an unmodified audit opinion in the future.
