As we noted in this space a few weeks ago, there’s more than ample reason to worry about whether the Defense Department will make its statutorily mandated goal of being ready for a financial audit by the end of this fiscal year. Perhaps more worrisome: DoD isn’t doing the greatest job of keeping tabs on exactly what needs fixing in order to meet that goal, according to a new analysis by the Government Accountability Office.

In addition to detailing its usual concerns about the high number of significant problems independent auditors have already found with DoD’s financial management procedures (more than 700), GAO said the Pentagon isn’t adequately monitoring and reporting on its own corrective action plans to close the already-identified gaps.

GAO found significant problems in the military’s ability to track its own weaknesses both at the level of the individual military services and at the level of the Pentagon’s comptroller.

As to the military services, based on DoD’s own financial improvement guidance and OMB directions, they’re each supposed to have processes in place to track all of their previous negative audit findings,  prioritize the ones that are “cost beneficial” to correct, draw up specific corrective action plans (CAPs) to fix each one and then monitor each CAP’s progress, closing them out only when they’re resolved.

But GAO said only the Navy had implemented policies that addressed those four criteria, and even they had only done so for three out of the four.

“The Army’s and Air Force’s policies and procedures did not sufficiently address any of the four elements,” government auditors wrote.

At the DoD level, the comptroller’s office is in charge of monitoring each service’s audit progress, updating the list of “critical capabilities” the department still needs to achieve in order to make itself auditable and reporting to Congress and GAO on how DoD as a whole is doing.

But in recent years, oversight by the comptroller’s office has been reduced from rigorous reviews of the military services’ assertions about individual elements of their audit readiness to high-level summaries and PowerPoint slides the services provide to show their own estimations their own progress toward audit, GAO said.

The office said the comptroller doesn’t have nearly enough information to properly oversee DoD’s massive financial management enterprise, and should be getting regular, detailed data on the status of every one of the corrective action plans the military services say they’re pursuing.

“Although the DoD comptroller’s office has established several elements of a department-wide audit readiness remediation process, it is not able to fully assess the military services’ progress. … As a consequence, the office is unable to provide and prepare department-wide, comprehensive information on the status of all CAPs related to critical capabilities that are necessary to achieve auditability,” according to GAO. “Having comprehensive DoD-wide information on the CAPs related to critical capabilities will take on additional importance as the department moves forward with audits that have broader scopes beyond its budgetary statements, potentially leading to other findings being identified.”

The reference to “broader scopes” is a nod to the fact that the department only subjected a some of its financial statements to independent auditors’ scrutiny thus far.

As an interim step, Congress ordered DoD to get its statement of budgetary resources ready for audit by the end of 2014. Realizing that even that task would be too tall an order, the department settled on a scaled-back version of the same request: statements of budgetary activity, which only reflect one fiscal year’s cash flow and spending.

Independent auditors said they could not vouch for any of the statements the Army, Navy or Air Force submitted in 2015 and issued more than 700 findings and recommendations. In order to comply with current law, the department will have to resolve those problems to auditors’ satisfaction, plus any others that come up in a broader audit of its full financial statement in 2018.

Defense officials on the move

Finally, in this week’s edition of the DoD Reporter’s Notebook, we note the departure of several longtime senior Defense civil servants:

• The Pentagon is scheduled to host a retirement ceremony for Terry Halvorsen, DoD’s chief information officer, on Friday (his official retirement date is Feb. 28). Halvorsen will host his final roundtable with members of the media later this week; our own Jason Miller will attend and report on his parting thoughts.

• DoD IT veteran Dave Mihelcic, currently the Defense Information Systems Agency’s chief technology officer will retire next week. Mihelcic has worked in engineering and technology leadership positions at DISA since 1999, and previously served 14 years as a Navy information assurance engineer.

• Tom Sasala is now the Army’s chief data officer and director of the Army Enterprise Integration Center, a post he assumed earlier this month. Sasala was previously the chief technology officer for the Joint Service Provider, the new Pentagon office in charge of consolidating and streamlining the management of shared DoD IT services in the Washington, D.C. region.

• Richard Ledgett, the deputy director of the National Security Agency will retire this spring after 40 years of government service. He has been with NSA since 1988, most recently as the head of task forces that examined the agency’s leaks to the media, his official bio notes. His departure was first reported by Reuters.

Return to the DoD Reporter’s Notebook

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