The Defense Department’s revised plan to obtain a clean financial audit by the end of 2028 may sharpen attention on material account balances, but it leaves unresolved questions about internal controls, technology, fraud risk and workforce capacity, GAO testified.
DOD has never received an unmodified opinion on its department-wide financial statements. The inspector general issued a disclaimer for fiscal 2025 because auditors could not obtain enough evidence to form an opinion.
The new approach centralizes coordination, focuses on material line items and relies more on manual testing of large samples, with artificial-intelligence tools used as needed. The earlier approach emphasized decentralized remediation of control deficiencies.
GAO called the renewed focus encouraging but warned that DOD would not prioritize some key internal-control deficiencies for at least two years. Reliable controls matter beyond the audit because they support timely information for spending and operational decisions.
The department has undergone full-scope audits for eight years, and auditors have issued thousands of findings and recommendations over three decades. The Marine Corps first received a clean opinion for fiscal 2023 and has maintained one since.
Questions remain about transparent tracking of remediation, major information-technology weaknesses, fraud risks, trained financial-management staff and whether the new process will remain sustainable after 2028.
The scale makes the accounting problem consequential. GAO said DOD spends more than $1 trillion annually, represents almost half of federal discretionary spending and controls about 82% of federal physical assets.
Financial audits have already produced benefits including cost savings and avoidance, better systems and improved visibility into assets and inventory. Those gains do not amount to a clean department-wide opinion.
The 2028 date is a department goal, not an audit result. Success will depend on evidence tested by independent auditors and on whether DOD can address material balances without allowing the underlying control environment to deteriorate.