(LibertySociety.com) – The Pentagon failed its annual audit for the seventh consecutive year on Friday, unable to fully account for its $824 billion budget. The audit, conducted across the Department of Defense’s (DoD) sprawling financial systems, resulted in a disclaimer of opinion, signifying that auditors were not provided with enough accurate information to form a complete assessment of the department’s accounts.
The audit reviewed 28 reporting entities within the Pentagon. Of these, nine received unmodified opinions—indicating their financial statements were in order—while one received a qualified opinion. However, 15 entities were issued disclaimers of opinion, and three opinions remain pending.
Despite the shortcomings, Pentagon officials framed the results as part of an ongoing effort to improve financial accountability. Michael McCord, the DoD’s Under Secretary of Defense and Chief Financial Officer, stated that the department has made progress toward achieving a clean audit by 2028, a target established under the National Defense Authorization Act.
“Momentum is on our side, and throughout the Department there is strong commitment—and belief in our ability—to achieve an unmodified audit opinion,” McCord said.
Addressing reporters, McCord resisted labeling the outcome as a failure. “If someone had a report card that is half good and half not good, I don’t know that you call the student or the report card a failure,” he remarked, emphasizing that progress has been made even if significant gaps remain.
The audit process, which involved independent public accountants and the DoD’s Office of Inspector General, identified issues across the Pentagon’s vast and complex financial landscape. The department has faced long-standing challenges in tracking assets and reconciling expenditures due to outdated systems and the scale of its operations.
McCord emphasized the value of the audit process in identifying areas for improvement and driving financial reforms. “Significant work remains and challenges lie ahead, but our annual audit continues to be a catalyst for Department-wide financial management reform, resulting in greater financial integrity, transparency, and better-supported warfighters,” he said.
While the Pentagon has faced criticism for its inability to achieve a clean audit opinion, officials maintain that the process itself is vital for improving accountability and efficiency in the long term. However, with billions of dollars unaccounted for, questions remain about how the department will meet its goal of full compliance within the next five years.
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