Thomas C. Steffens, the senior assistant to the DOD’s comptroller, briefed lawmakers on the progress of the Defense Department in improving its financial management systems and enhancing the integrity and transparency of its financial reporting. He highlighted the department’s recent successes in this area and its goal to receive an unmodified audit opinion by 2028. This objective is a top priority for senior DOD leaders, including Secretary of Defense Lloyd J. Austin III and Deputy Defense Secretary Kathleen Hicks.
Steffens mentioned that the Marine Corps achieved the first unmodified audit opinion in fiscal year 2023, indicating that a third-party auditor found no material errors or misstatements in their financial statements. The department-wide audit, which involves numerous standalone audits of various components, is a significant undertaking for the Pentagon, given its size and complexity. DOD has assets totaling $3.8 trillion and liabilities of $4 trillion in fiscal year 2023.
Investing in key financial management technologies is crucial for achieving the timeline set for a clean audit by Congress. In fiscal year 2023, DOD allocated $991 million for audit remediation, including investments in technologies to streamline the audit process and enhance controls. Steffens emphasized the importance of addressing systemic issues that hinder success and the department’s collaboration with Congress to reform the planning, program, budgeting, and execution process.
The commission on PPBE reform released recommendations that were endorsed by Deputy Defense Secretary Kathleen Hicks for implementation across the Defense Department. Steffens emphasized the need for sustained cooperation and transparency to ensure the success of these reforms. He also highlighted the critical role of Congress in supporting the Defense Department’s financial management improvement efforts, particularly by passing full and on-time appropriations. The unpredictability of funding due to continuing resolutions has hindered the department’s ability to make critical investments needed to fulfill its mission, impacting the quality of life for service members and delaying vital capacity-building projects such as submarine and shipbuilding.
