Robert F. Hale Under Secretary of Defense (Comptroller) Department of Defense, testifies at a 2012 House Armed Services Committee on DOD plans for sequestration. (Gannett Government Media Corp)
The Defense Department has retreated from plans to be capable of conducting a full budget audit by the end of next September.
Under a timetable announced in October 2011 by then-Defense Secretary Leon Panetta, the Pentagon intended to produce a fully auditable “Statement of Budgetary Resources” in fiscal 2014. Now, it has scaled back that goal to cover a more limited “Schedule of Budgetary Activity,” a spokesman, Navy Cmdr. William Urban, said Tuesday. While the Schedule of Budgetary Activity covers about 77 percent of funds, it does not include appropriations from previous years, he said.
Pursuing the narrower goal is “a “sensible, cost-effective” approach that has been discussed with outside auditors and the Government Accountability Office “to make sure that everyone agrees that is the best way forward,” Urban said. The Pentagon remains “absolutely committed” to meeting a broader goal of having all of its books in “audit-ready” condition by September 2017, he said.
The Defense Department is one of the few federal agencies unable to pass an audit. Frustrated lawmakers mandated the 2017 deadline four years ago as part of a defense authorization act. That goal is imperiled on several fronts, ranging from the impact of sequester-related budget cuts to problems with the costly “enterprise resource planning” systems that are critical to meeting the auditability deadlines. In April, Joseph Quinn, who had headed the DoD-wide effort--officially known as the Financial Improvement and Audit Readiness program--left to take a job with Ernst and Young; a perrmanent replacement will be named soon, Urban said.
Although DoD officials have taken some steps to remove possible stumbling blocks, the Government Accountability Office found little evidence that they sought to assess the magnitude of specific risks or developed “adequate plans” for addressing them, according to a report released Tuesday by the congressional watchdog office. Without a comprehensive strategy, DoD is “at increased risk” of failing to meet the 2017 deadline, the report said.
The GAO, noting, that the Navy and Defense Logistics Agency have stronger risk management policies in place, said they could serve as a starting point for improvements throughout the department.
In a prepared response, DoD Comptroller Robert Hale acknowledged the lack of a written risk management policy, but added that top management has used standard practices to identify, track and remedy potential pitfalls. Hale agreed, however, to underscore the importance of risk management activities throughout the department and to do a better job of documentation.