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CHIPS Articles: DEPSECDEF Says DoD Audit is Fundamental to Military Readiness, National Security

DEPSECDEF Says DoD Audit is Fundamental to Military Readiness, National Security
By CHIPS Magazine - December 3, 2018
In his message to the Defense Department workforce, Deputy Secretary of Defense Patrick Shanahan said the DoD is dedicated to the relentless implementation of the National Defense Strategy: enhancing the lethality of the Joint Force, strengthening alliances and attracting new partners and reforming the department.

In particular, he noted the conclusion of the the DoD’s first full financial statement audit, a critical step in reforming the Department for greater performance, accountability and affordability.

“Unlike program audits conducted by the Inspector General and others to identify waste, fraud, abuse and other issues, this audit was conducted specifically to ensure that the Department’s record of its assets and liabilities--everything the Department owns and owes to others--is accurate. While these audits are standard practice in the private sector, the Department had never had an independent team check to ensure our records were accurate,” Shanahan wrote.

The historic audit examined a remarkable $2.7 trillion in assets and $2.6 trillion in liabilities—an effort that amounted in the largest audit ever, he wrote.

“It involved reviewing hundreds of thousands of items; over 900 site visits to 600 different locations; and the tireless efforts of many within the Department--including Jeretta Dillon (Navy N4), Mobola Kadiri (OUSDC/DCFO), Tina Pierce (Defense Health Agency) and Shanell Blackshear-Johnson (U.S. SOCOM HQ)--whose exemplary performance helped ensure our audit was a success. The auditors reviewed everything from the Department’s buildings, planes, ships, munitions, spare parts, and IT systems to personnel, invoices, purchase orders, and contracts to ensure that we have an accurate count of our assets--where they are located and what condition they are in--as well as our debts,” Shanahan reported.

While the auditors discovered issues in some areas, none in others, and no instances of fraud, Shanahan wrote that the DoD was aware that discrepancies would be found. For example, in some cases, equipment was missing from its designated warehouse--or found in a condition different than indicated by records. In others, IT security protocols had not been followed.

“For the over 2,000 problems uncovered, we have begun to implement corrective action plans to determine their causes and resolve underlying issues,” he wrote.

The following agencies received a clean opinion: U.S Army Corps of Engineers – Civil Works, Military Retirement Fund, Defense Health Agency – CRM, Defense Contract Audit Agency, and Defense Financial and Accounting Services (WCF), and Shanahan offered a note of congratulations while others have more work to do.

To those who have more work to do, Shanahan offered encouragement: “Remember that we conducted the audit for the express purpose of finding problems. Now it’s time to solve them.“

Shanahan wrote that a clean audit is critical to military readiness and national security.

“Fixing these problems--and any systemic issues underlying them--will enhance our lethality and accelerate reform. Knowing what we have, and where, is fundamental to military readiness while precise financial records are fundamental to reform. Most importantly, annual audits will enforce the extraordinary discipline we demonstrate in our military operations throughout the Department, strengthening our ability to protect our Nation,” he wrote.

“As we charge forward, leverage our annual audits--the next one starts in January--as a mechanism to identify issues and drive continuous improvement as we work towards a future in which clean audits become routine. As always, thank you for your tireless efforts in defense of our Nation. It is an honor to serve alongside you.”

Deputy Secretary of Defense Patrick Shanahan
Twitter: @DepSecDef

Deputy Secretary of Defense Patrick Shanahan
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