House lawmakers dig in on Pentagon audit failures ahead of Biden’s federal budget release

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House lawmakers are pressing Pentagon officials over their inability to fully account for its $3.5 trillion in assets, setting up a perennial dustup over the Department of Defense’s repeat audit failures as the Biden administration prepares to unveil its annual budget.

House Oversight and Accountability Committee Chairman James Comer, Kentucky Republican, is requesting a staff-level briefing with Pentagon officials after he says the DOD’s fifth straight audit failure in November has raised “serious concerns about DOD’s stewardship of taxpayer dollars, especially as DOD’s budget approaches 13 figures.”

“DOD’s inability to adequately track assets risks our military readiness and represents a flagrant disregard for taxpayer funds, even as it receives nearly a trillion dollars annually,” Mr. Comer wrote in a letter to Defense Secretary Lloyd Austin this week.

Mr. Comer was joined in sending the letter by Texas Rep. Pete Sessions, the Republican chairman of the Subcommittee on Government Operations and the Federal Workforce.

The lawmakers said they want “additional information on DOD’s failed audit, financial management practices generally, and what it is doing to implement outstanding recommendations for improvement.”

In November, the Pentagon reported that it had failed its fifth-ever audit after it was unable to account for close to 61% of the $3.5 trillion in assets on its balance sheet.

Officials said, however, that the Pentagon made “significant progress” toward its goal of producing a “clean” audit.

“I would not say that we flunked,” Pentagon Comptroller Mike McCord told reporters when the audit results were released. “The process is important for us to do, and it is making us get better. It is not making us get better as fast as we want.”

All federal agencies must submit audits under federal law established in the 1990s. The DOD, which last year soaked up more than 10% of the overall federal budget and almost half of discretionary spending, has struggled to adequately vet the sprawling list of components that make up the department.

The Pentagon completed its first annual agencywide audit in fiscal 2018, which resulted in a “disclaimer of opinion” from the department’s inspector general — meaning auditors couldn’t provide an opinion on financial statements due to insufficiently reliable financial information. Auditors noted 2,358 issues requiring corrective action that year.

Pentagon officials estimated in 2018 that it could take up to 10 years to produce a clean audit and have pushed lawmakers to approve investments in resources needed to improve the department’s financial controls.

But the repeated failures have long miffed lawmakers on both sides of the aisle.

Progressive Democrats have used the repeated audit failures as a cudgel when calling for reductions in the Pentagon’s ever-increasing budget.

Budget hawks in the Republican Party have also chided the Pentagon, highlighting its repeat failures as a prime example of wasteful government spending.

Sen. Charles E. Grassley, Iowa Republican and former chairman of the Senate Finance Committee, has been a longtime torchbearer in the GOP in calling for the Pentagon to produce a clean audit.

In 2021, Mr. Grassley joined Sens. Ron Wyden, Oregon Democrat; Mike Lee, Utah Republican; and Bernard Sanders, a progressive independent from Vermont who caucuses with Democrats, in introducing legislation that would reduce the Pentagon budget by 1% each year it fails to produce a clean audit.

Other Republicans have also grown increasingly outspoken in calling for the Pentagon to account for the billions in military aid to Ukraine as the war with Russia shows no sign of letting up.

Rep. Marjorie Taylor Greene, Georgia Republican, doubled down last month on legislation that would force the federal government to conduct a full audit of the more than $114 billion in military and humanitarian aid sent to Ukraine over the past year.

“Our country is run by stupid warmongers that are so clueless and disconnected with what the American people want that they are literally leading us into World War III,” Ms. Greene said. “That’s why I’m introducing a resolution to find out exactly where our money is going.”

Mr. Comer and Mr. Sessions were far less critical of the U.S. providing aid to Ukraine in their letter this week. Still, they said the aid disbursements add urgency to the matter.

“Since Russia invaded Ukraine a year ago, Congress has authorized $67.1 billion in defense assistance to the Ukrainian people,” the lawmakers wrote. “As the U.S. continues to provide weapons, equipment and other defense articles to Ukraine, it is imperative that DOD exercise better financial management of resources.”

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