The Government Accountability Office (GAO) is taking a fresh crack at trying to guide the Defense Department (DoD) toward fixing the agency’s business and financial systems so that it can finally produce a clean annual audit.

GAO released a new report on March 7 with a fresh set of recommendations that aims to finally address these issues successfully. DoD’s business systems modernization and financial management efforts have been on GAO’s High Risk List since 1995, and the Pentagon has spent the past 30 years – along with billions of dollars – working on the problem but not yet solving it.

“The Department of Defense (DoD) has initiated a variety of efforts and undergone several changes in organizational responsibility to help modernize its business and financial systems,” the report says. “However, these efforts and changes have not been fully successful to date. DoD is the only major Federal agency to not achieve an unmodified (clean) audit opinion – its business and financial systems are a key impediment to this effort.”

The government watchdog explained that DoD has set up a process for overseeing its business and financial management systems, yet it hasn’t fully developed guidance for these systems.

For example, the agency’s current guidance does not fully address how systems should “document compliance or how decision-makers are to substantiate that systems are complying with requirements.”

Additionally, GAO found that DoD’s data regarding business and financial system compliance with statutory requirements is limited in reliability. DoD also has experienced frequent leadership changes in the oversight of its financial systems – with GAO noting that “consistent leadership is imperative for successful business transformations.”

“In addition, DoD is not taking a strategic approach to managing the human capital needed for its financial management systems,” the report adds. “It does not, among other things, analyze the gaps in capabilities between existing staff and future workforce needs, or formulate strategies for filling expected gaps.”

GAO offered nine fresh recommendations, including that DoD and the military departments update guidance for business and financial systems to substantiate and document compliance with requirements. It also recommended that DoD ensure it collects reliable data on the extent of business and financial system compliance with statutory requirements.

Additionally, GAO recommended that DoD implement a strategic approach to workforce planning that, among other things, analyzes gaps in capabilities between existing staff and future needs.

DoD concurred with seven of the recommendations and partially concurred with the remaining two, which pertain to developing guidance and workforce planning. DoD said its chief information officer would “conduct an analysis on the potential need to develop additional guidance.”

The GAO report comes just one day after two Republican lawmakers wrote a letter to Defense Secretary Lloyd Austin asking for a briefing on DoD’s “lax” financial management.

“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,” wrote Reps. James Comer, R-Ky., chairman of the House Oversight and Accountability Committee, and Pete Sessions, R-Texas, chairman of the committee’s Government Operations and Federal Workforce Subcommittee.

“The committee requests a staff-level briefing to acquire additional information on DoD’s failed audit, financial management practices generally, and what it is doing to implement outstanding recommendations for improvement,” the March 6 letter says.

Read More About
More Topics
Grace Dille
Grace Dille
Grace Dille is MeriTalk's Assistant Managing Editor covering the intersection of government and technology.