Challenges in Attaining Audit Readiness and Improving Business Processes and Systems
April 18, 2012
GAO's recent work highlights the types of challenges facing the Department of Defense (DOD) as it strives to attain audit readiness and reengineer its business processes and systems. The urgency in addressing these challenges has been increased by the goals of an auditable DOD Statement of Budgetary Resources (SBR) by the end of fiscal year 2014 and a complete set of auditable financial statements by the end of fiscal year 2017. For example, GAO's 2011 reporting highlights difficulties the DOD components experienced in attempting to achieve an auditable SBR. These include:
- the Navy's and the Air Force's premature assertions of audit readiness and missed interim milestones;
- the Army's inability to locate and provide supporting documentation for its military pay;
- the Navy's and Marine Corps' inability to reconcile their Fund Balance with Treasury (FBWT) accounts; and
- the Marine Corps' inability to receive an opinion on both its fiscal years 2010 and 2011 SBRs because it could not provide supporting documentation in a timely manner, and support for transactions was missing or incomplete.
In a February 2012 briefing on its updated plans, DOD accelerated milestones for its components —in some cases, significantly—to accomplish the 2014 SBR goal. For example, the Air Force had planned to validate its audit readiness for many SBR-related items in fiscal year 2016; however, the department's February 2012 accelerated plans show that most of the Air Force's SBR line items will be audit-ready in fiscal years 2013 or 2014. Also, in its February 2012 update DOD shows that 7 of 24 material general fund Defense Agencies and Other Defense Organizations have either already had SBR audits or are ready to have their SBRs audited, which represent important positive steps.