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US Department of Defense Fails Financial Audit for Second Consecutive Year

The Pentagon recently announced that, “as expected,” its agency-wide financial report for Fiscal Year 2019 concerning the stewardship of US taxpayer dollars did not come back clean and also revealed a number of “material weaknesses” within the department.

For the second year in a row, the DoD has received an “overall disclaimer” - meaning inspectors couldn’t be sure of the adequacy of financial records - in relation to its agency-wide financial audit, which is a collection of 24 individual surveys.

The audit, formally released on Friday, tracked the spending of over $2.9 trillion in assets owned and managed by the Pentagon and an estimated $2.8 trillion in liabilities. According to BloombergQuint, the survey itself cost approximately $1 billion and an estimated 1,400 auditors were on the job.

A total of 25 “material weaknesses,” defined by the Public Company Accounting Oversight Board as a “deficiency, or a combination of deficiencies, in internal control over financial reporting,” were identified in the financial statement’s summary, including the F-35 Joint Strike Fighter Program, “legal contingencies,” “operating materials and supplies” and “real property.”

Principal Deputy Under Secretary of Defense comptroller Elaine McCusker claimed to reporters attending the DoD’s audit release in Washington, DC, on Thursday, that while the DoD is aware of “where” taxpayers' dollars are being spent, “sometimes our documentation” is “just not where it needs to be,” reported BloombergQuint.

Secretary of Defense Mark Esper stressed in his “Statement of Assurance” section of the report that of the material weaknesses identified, the department’s “areas of acquisition, contract administration, resource management and cyber security” will be the primary focus in the years to come.

Despite only seven of the 24 total audits within the report coming back clean, McCusker told reporters that the public should concentrate on the Pentagon’s “ability to really demonstrate solid progress.”

“I think the department has been pretty open with the fact that it’s got material weaknesses, it’s got things that need [to be] fixed,” she also stated on November 15, as reported by Defense News.

She also noted that the results of the audit were “as expected,” echoing the Pentagon’s claims concerning its inaugural audit in 2018.

"We never thought we were going to pass an audit, right? Everyone was betting against us that we wouldn't even do the audit," then-Deputy Defense Secretary Patrick Shanahan said last year. The FY 2018 audit came about due to public criticism and pressure from Congress and the Government Accountability Office.

Even though there was a clear lack of appropriate documentation, no evidence of fraud in the Pentagon was reported in FY 2018 or FY 2019.

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