Key Issues > DOD Financial Management
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DOD Financial Management

The nation’s economic and fiscal difficulties have added urgency to the need to improve DOD’s financial management.

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DOD’s financial management is on GAO’s High Risk List since 1995 because of pervasive deficiencies in its financial and related business management systems, processes, and controls. DOD’s deficiencies have impaired DOD’s ability to

  • sustain a full audit of its financial statements to ensure basic accountability and
  • establish effective financial management that can
    • provide managers with timely, accurate, reliable, and useful information and
    • prevent or timely detect fraud, abuse, and waste.


DOD has taken important steps in establishing sustained top-level support and in improving its strategic planning in this area. Importantly, it refined its strategic plan to focus on two important departmental priority areas: (1) budgetary information and (2) accountability for its mission-critical assets.

The Secretary of Defense issued a directive in October 2011 that sets a compressed timeline for achieving audit readiness for the department’s Statement of Budgetary Resources by 2014. Congress has mandated full DOD auditability for all DOD’s financial statements by 2017. To prepare for a full financial audit by 2017, it will be critical that all DOD component agencies develop complete and detailed supporting implementation plans. To help DOD address impediments to progress, GAO is assessing DOD’s process for identifying, assessing, and mitigating risks associated with its ability to develop audit-ready financial statements by 2017 and achieve interim milestones, including audit readiness of the Statement of Budgetary Resources.

While achieving financial statement auditability is important, it is also important that DOD not lose focus on the long-term objective of establishing effective financial management. The compressed timeline to 2014 could increase pressure for quick fixes that could delay progress toward sustainable, long-term financial management reform across DOD. Further, automated business systems are essential for effective financial management and reporting department-wide. However, DOD’s major systems acquisition and development efforts continue to experience impediments to deploying such systems on schedule and with the intended capabilities.

Looking for our recommendations? Click on any report to find each associated recommendation and its current implementation status.

DOD Financial Management:

Ineffective Risk Management Could Impair Progress toward Audit-Ready Financial Statements
Published: Aug 2, 2013. Publicly Released: Sep 3, 2013.

Army Industrial Operations:

Budgeting and Management of Carryover Could Be Improved
Published: Jun 27, 2013. Publicly Released: Jun 27, 2013.

DOD Financial Management:

Significant Improvements Needed in Efforts to Address Improper Payment Requirements
Published: May 13, 2013. Publicly Released: Jun 6, 2013.

Financial Audit:

U.S. Government's Fiscal Years 2012 and 2011 Consolidated Financial Statements
Published: Jan 17, 2013. Publicly Released: Jan 17, 2013.

DOD Financial Management:

Actions Needed to Address Deficiencies in Controls over Army Active Duty Military Payroll
Published: Dec 12, 2012. Publicly Released: Dec 12, 2012.

More Reports

DOD Financial Management:

Improvements Needed in Prompt Payment Monitoring and Reporting
Published: Jun 26, 2012. Publicly Released: Jun 26, 2012.

DOD Financial Management:

Challenges in Attaining Audit Readiness and Improving Business Processes and Systems
Published: Apr 18, 2012. Publicly Released: Apr 18, 2012.

DOD Financial Management:

Reported Status of Department of Defense's Enterprise Resource Planning Systems
Published: Mar 30, 2012. Publicly Released: Mar 30, 2012.

DOD Financial Management:

The Army Faces Significant Challenges in Achieving Audit Readiness for Its Military Pay
Published: Mar 22, 2012. Publicly Released: Mar 22, 2012.

DOD Financial Management:

The Army Faces Significant Challenges in Achieving Audit Readiness for Its Military Pay
Published: Mar 22, 2012. Publicly Released: Mar 22, 2012.

Fiscal Year 2011 U.S. Government Financial Statements:

The Federal Government Faces Continuing Financial Management and Long-Term Fiscal Challenges
Published: Mar 1, 2012. Publicly Released: Mar 1, 2012.

DOD Financial Management:

Implementation Weaknesses in Army and Air Force Business Systems Could Jeopardize DOD's Auditability Goals
Published: Feb 28, 2012. Publicly Released: Mar 29, 2012.

DOD Financial Management:

Ongoing Challenges with Reconciling Navy and Marine Corps Fund Balance with Treasury
Published: Dec 20, 2011. Publicly Released: Dec 20, 2011.

DOD Financial Management:

Challenges in the Implementation of Business Systems Could Impact Audit Readiness Efforts
Published: Oct 27, 2011. Publicly Released: Oct 27, 2011.

DOD Financial Management:

Improved Controls, Processes, and Systems Are Needed for Accurate and Reliable Financial Information
Published: Sep 23, 2011. Publicly Released: Sep 23, 2011.


DOD Improper PaymentsThursday, June 6, 2013
  • portrait of Asif Khan
    • Asif Khan
    • Director, Financial Management and Assurance
    • 202-512-9859