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Results of DOD Financial Statement Audit Supports Focus on People

By C. Todd Lopez

WASHINGTON (Nov. 16, 2021) -- The Defense Department has completed the fourth annual department-wide financial statement audit, and the results were released Monday evening.

The audit, conducted by the DOD inspector general and multiple independent public accounting firms, covered DOD's more than $3.2 trillion in assets and $3.0 trillion in liabilities.

The Defense Department completed its fourth, departmentwide audit, Nov. 15, 2021.

Efforts to begin doing departmentwide audits began in 2010, said Michael McCord, undersecretary of defense (comptroller) and chief financial officer, during a briefing Monday afternoon.

"We've expanded greatly since we started on this path about 10 years ago," McCord said. "Although we do not yet have a clean opinion and we have a long way to go, I will note that over this past decade we have done what we have told the Congress we would do when we said we would do it. So when we said we would start something, we started it, and we said we would go into audit in 2017, [and] we did go into audit in 2017."

The results of this year's audit, McCord said, show support for one of the priorities of Secretary of Defense Lloyd J. Austin III -- taking care of people.

When it comes to how the DOD pays its people -- both military and civilian -- McCord said processes used by the Defense Finance and Accounting Service passed muster through the audit.

"Those are separate processes that are validated -- the military pay process is separate from the civilian pay process," he said. "Each got an unmodified opinion or passed its test. I highlight this because -- when you combine the fact that our military and civilian pay processes pass muster, along with the clean opinion on the Military Retirement Fund, and a qualified opinion on the Medicare-Eligible Retiree Health Care Fund -- I think it shows that we are strongest on the audit where it matters most: and that is meeting Secretary Austin's imperative of taking care of our people."

As of Monday afternoon, it was expected that a total of eight reporting entities would sustain unmodified audit opinions, McCord said, including the Military Retirement Fund; the U.S. Army Corps of Engineers -- Civil Works; the Defense Health Agency -- Contract Resource Management; the Defense Commissary Agency; the Defense Finance and Accounting Service Working Capital Fund; the Defense Contract Audit Agency; the DISA Working Capital Fund; and the DOD OIG.

"We remain committed to sustaining progress made to date and increasing our unmodified opinion counts in the coming years," McCord said.

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