February 04, 2015

Manchin Introduces Bipartisan Legislation to Hold Pentagon Accountable for Financial Audit

Washington, D.C. –U.S. Senators Joe Manchin (D-W.Va.) and Ron Wyden (D-OR), along with Senators Ted Cruz (R-TX) and Rand Paul (R-KY), introduced the Audit the Pentagon Act of 2015, which would establish strict penalties should the Department of Defense (DoD) not meet its legal obligation to be audit-ready by 2017. The Defense Department is the only federal agency that has never fully complied with financial management laws and currently remains on the Government Accountability’s Office (GAO) “High Risk” list for waste, fraud and abuse. The legislation would also enable the DoD certain financial leniencies should the agency meet its 2017 audit schedule.

“The United States of America has – and will continue to have – the greatest military in the world. However, at a time when our federal government’s finances are out of control, we need to make sure that we are cutting the fat and not the muscle from our Defense Department so that we will continue to maintain our great military strength,” Manchin said. “We must ensure that we’re using our limited resources most efficiently to support the men and women in uniform. One of best ways to find the most accurate information about our military’s spending and priorities is to shed light on the Department of Defense budget without jeopardizing our national security secrets. It is simply unacceptable that the Department of Defense is the only major federal agency that has not completed a financial audit. Our bill will help to solve that problem.”

“At a time when half the federal discretionary budget goes to military programs, taxpayers can’t afford to give the Pentagon a blank check,” Wyden said. “The Defense Department must be held to at least the same standard as any other federal agency – Americans need to know where their hard-earned money went, and what they got for it. This bill means more transparency and more accountability for taxpayer dollars.”

“Congress has an obligation to supply our men and women in uniform with the resources they need to protect our nation, and I strongly believe providing a strong defense is the top priority of the federal government,” Cruz said. “However, no government agency is exempt from spending accountability. President Obama is involuntarily separating combat veterans and reducing our military to pre-WWII levels, while the Defense Department can’t account for billions of dollars in equipment inventory and acquisition costs.  For years, the Department of Defense has committed to a comprehensive audit, and Congress should hold them to that with this bill.”

Key Findings in the Department of Defense’s failure to complete a clean audit opinion:

• The Department of Defense did not publish an auditable spending statement before March 1, 1997.

• Every year since 1995, the Government Accountability Office has labeled the Department of Defense “High Risk” for waste, fraud, abuse and mismanagement due to the agency’s inability to adequately manage its funds.

• In September 2010, it was determined that the nearly $6 billion spent to improve financial information was not successful and the Government Accountability Office could not predict when the DoD would be able to provide these financial statements.

Key Provisions of the Audit the Pentagon Act of 2015:

• Should DoD complete an unqualified audit, which analyzes both the internal systems of control and the details in the agency’s financial records, for any fiscal year after 2015, then the Secretary of Defense gains additional transfer authority for use the following fiscal year.

• However, every year that passes in which the DoD fails to obtain an unqualified audit, increased penalties will apply, including increased oversight and eventually the termination of reprograming and transfer authority of funds.