Gaping Hole: Pentagon Fails Another Financial Audit 7 Years in a Row, $824 Billion Unaccounted For

For the seventh year in a row, the Pentagon has failed yet another annual financial audit, after failing to explain the whereabouts of $824 billion in taxpayers’ money.

“Of the 28 reporting entities undergoing standalone financial statement audits, 9 received an unmodified audit opinion, 1 received a qualified opinion, 15 received disclaimers, and 3 opinions remain pending.”

The overall audit exercise resulted in a “disclaimer of opinion,” meaning the auditors received insufficient information to accurately assess the accounts. Nonetheless, the department says the outcome does not suggest failure but “half clean opinions,” which it was working tirelessly to eliminate.

However, it admitted that the audit report did not inspire public confidence. Run by bureaucrats in Washington D.C., some with deep connections with defense contractors and politicians, any deficit would certainly raise eyebrows. 

“So if someone had a report card that is half good and half not good, I don’t know that you call the student or the report card a failure,” said Under Secretary of Defense (Comptroller) and Chief Financial Officer Michael McCord.

Nonetheless, the National Defense Authorization Act mandates that the department report an unmodified audit opinion, indicating the accuracy and completeness of the financial accounts. 

Since 2020, only two reporting entities, the Defense Threat Reduction Agency (DTRA) and the U.S. Marine Corps received a new unmodified audit opinion.

Nonetheless, the Department of Defense aims to achieve a clean audit by 2028. According to McCord, the department was on the right track.

“Momentum is on our side, and throughout the Department there is strong commitment—and belief in our ability—to achieve an unmodified audit opinion.” 

The Pentagon says it has taken steps towards achieving this goal, including improving its financial management practices and increased transparency by “closing the DoD-wide Contingent Legal Liabilities material weakness. Additionally, the number of favorable opinions increased from 81% in 2021 to 93% in 2024.

Despite the disappointing report, hope remains that more reporting entities could achieve unmodified audit opinion before the deadline. In 2023, the U.S. Marine Corps received an unmodified audit opinion for the first time in a decade after a rigorous two-year review. Nonetheless, the number of reporting entities receiving disclaimers makes the task arduous.

“Significant work remains and challenges lie ahead, but our annual audit continues to be a catalyst for Department-wide financial management reform, resulting in greater financial integrity, transparency, and better-supported warfighters,” he said.

If confirmed, President Trump’s Secretary of Defense nominee Pete Hegseth has promised sweeping changes at the Pentagon which could accelerate the journey towards financial transparency. 

Additionally, the Department of Government Efficiency (DOGE) under Elon Musk and Vivek Ramaswamy could rid the DoD of some wasteful programs that also complicate the auditing process. Ramaswamy has already warned that “DODGE is coming.”

Meanwhile, the DOD says it needs senior leadership commitment, and support from Congress and federal regulators to achieve a clean audit report. The Trump administration seems to be very prepared for this task.