DOD Financial Management

Since the first financial statement audit of a major DOD component was attempted almost 20 years ago, GAO has reported that weaknesses in DOD business operations not only adversely affect the reliability of reported financial data, but also the economy, efficiency, and effectiveness of these operations.

• DOD's continued financial and related business management and system deficiencies hinder its ability to control costs, ensure basic accountability, anticipate future costs and claims on the budget, measure performance, and maintain funds control. Such problems led us in 1995 to put DOD financial management on our list of high-risk areas in the federal government a designation that continues today.

  Highlights of GAO-08-1063 (PDF), Highlights of GAO-08-462T (PDF), Highlights of GAO-09-271 (PDF)

• None of the military services have received favorable audit opinions on their financial statements, and the department has acknowledged that long-standing pervasive weaknesses in its business systems, processes, and controls have prevented auditors from determining the reliability of reported financial statement information.

  Highlights of GAO-08-1063 (PDF), Highlights of GAO-08-926T (PDF), Highlights of GAO-07-607T (PDF)

• Transforming DOD's financial management operations to provide reliable, accurate, and useful information for management operations, including financial reporting, analysis, and decision making, is a significant challenge.

  Highlights of GAO-08-132T (PDF)

^ Back to topWhat Needs to Be Done

Over the years, DOD has initiated numerous efforts to improve its capabilities to efficiently and effectively support management decision making and reporting, with little success. Key to successful transformation will be DOD's ability to

• implement a multifaceted, cross-organizational approach for transforming the department's business operations that addresses the contribution and alignment of key elements, including strategic plans, people, processes, and technology;

  Highlights of GAO-08-866 (PDF), Highlights of GAO-08-132T (PDF)

• develop and implement a comprehensive and integrated financial management transformation strategy, within an overall business transformation strategy, to guide financial management improvement efforts; prioritize initiatives and resources; and monitor progress through the establishment and utilization of performance goals, objectives, and metrics;

  Highlights of GAO-07-860 (PDF), Highlights of GAO-08-866 (PDF), Highlights of GAO-08-462T (PDF), Highlights of GAO-08-132T (PDF)

• improve business system investment governance and oversight processes and controls to support portfolio-based management of selected business systems that are intended to provide a specific capability, such as asset visibility, using indicators such as costs, schedule, performance, and risks;

  Highlights of GAO-07-860 (PDF), Highlights of GAO-08-132T (PDF)

• develop and implement business systems that individually or collectively achieve financial management transformation objectives and provide DOD with accurate, timely, reliable, and useful financial management information on the results of its operations that can be used for management analysis, decision making, reporting, and congressional oversight; and

  Highlights of GAO-07-860 (PDF), Highlights of GAO-08-132T (PDF)

• implement best practices to achieve efficiencies and improve the effectiveness of the department's business processes.

  Highlights of GAO-07-860 (PDF), Highlights of GAO-08-866 (PDF), Highlights of GAO-08-132T (PDF)

^ Back to topKey Reports

DOD Financial Management

DOD Business Transformation

Fiscal Year 2007 U.S. Government Financial Statements

DOD Business Transformation