What’s the real value of the US Defense Department audit?

As Congress examines the details of the president’s fiscal 2024 defense budget, members are also rightly focused on making the most of every dollar for military capability, and reimagining a defense budget structure that is more responsive, agile and transparent.

As we overlay these priorities with news last fall that the Pentagon has yet to achieve a clean opinion on its financial statements , it is useful to assess the real value of the audit, which comes from lasting improvements being made to business systems, cybersecurity, inventory and personnel management, and data analytics.

While a full financial statement audit is required by law, and obtaining a clean opinion would be useful and good, that eventual passing grade is actually secondary to the kind of progress driven by the audit.

To understand the audit , it is useful to consider the two types of accounting in play:

Managerial, which has an internal focus for management and decision-making.

Financial, which is compliance-oriented and intended for an external audience.

From a personal perspective, the managerial part is similar to your home budget. Paying your rent or mortgage, making decisions on what shopping you need to do and how much you should pay for each item to get the most out of your budget, and what entertainment you can afford — that’s management.

Balancing your checkbook, doing your tax return based on a specific set of rules, and keeping all your receipts to match what you bought or what you did — that’s financial.

Both are important to help you master your finances, but you don’t need to balance your checkbook to the penny or pass an IRS audit with all your detailed documentation in order to effectively run your life or your household, or to have a clear picture of where your money is going and what you are getting for it.

At a much larger level — in size, scope and complexity — the Defense Department is good, and getting better, at managerial accounting. It is also pretty good at financial accounting and reporting within small components where 46% of defense assets already have a favorable audit opinion. What the Pentagon needs, as the audit findings reflect, is to become better at enterprise-level financial accounting.

In a new report , we delve into the details of the audit value and the five key progress measures to consider in understanding why the audit journey matters, regardless of when an overall passing grade is achieved.

The first is culture. The audit drives the entire department — not just the financial management community — to assimilate accuracy, accountability and recordkeeping into their daily missions, jobs and performance measures. Integrity of financial reporting is the business of every uniformed and civilian leader and employee. The growing amount of data, which is historically closely held, collected into a single system shows that responsibility is being taken seriously.

The second is progress in harnessing the power of data. If the digital battlefield is the center of capability and advantage in future warfare, then accurate, timely, reliable data from all defense systems is critical to our defense.

The need for a financial, single source of truth drove the department to create the advancing analytics, or ADVANA, capability, which now includes cyber, readiness, logistics, contracting, personnel and budget execution data, and provides user-friendly tools to answer management and oversight questions on performance across all systems.

Readiness of the force and cybersecurity are the third and fourth measures. Audit findings in the areas of inventory and information technology have prompted situational awareness efforts in relation to cybersecurity, parts and supplies in order to improve readiness and save money. Annual audits provide reassurance from both of these critical operational areas.

For example, the ADVANA Munitions Readiness Initiative collects data on current worldwide inventories. This reveals how readiness is impacted by proposed project deliveries. The initiative displays the health of stockpiles to determine if there are opportunities to either repair or test suspended lots for potential missile shelf-life extensions. It connects current inventory with procurements, expenditures and the industrial base to forecast future inventory and compare it to requirements. This enables the projection of potential impacts on readiness in the future and allows stakeholders to assess procurement increases against “what-if” scenarios.

With 36% of audit findings related to IT and cybersecurity, the cyber and business operations and management capability — created to address audit findings — routinely reviews and reconciles permissions and access agreements across procurement, acquisition and contract-sensitive data while making sure only appropriate and cleared personnel have access.

While this won’t stop criminal disclosure of classified information by those who have been trusted with access, it will help catch vulnerabilities in the system related to controlling that access.

Finally, the audit provides general support for stewardship and cost effectiveness. The efforts above contribute to better stewardship. They produce cost savings as the department reduces orders of parts it already has and better protects its systems, data and programs from cyber vulnerabilities. For example, using new tools developed for the audit, the department was able to identify $15 billion in potential improper payments, and stop those payments before they were made.

There are numerous other examples like those noted above. While passing a full financial audit is the ultimate goal, the real value is happening now. Rather than focusing exclusively on doing whatever is necessary — including fast, temporary fixes — to get that passing grade from auditors, the department’s pursuit of meaningful and lasting improvements make it a smarter customer and a better steward with a more lethal force.

Elaine McCusker is a senior fellow at the American Enterprise Institute think tank. She previously served as acting undersecretary of defense (comptroller) for the U.S. Defense Department, where Mark Easton had served as deputy chief financial officer.

在国会审查总统 2024 财年国防预算的细节之际，议员们也理所当然地将注意力集中在如何最大限度地利用每一美元来提升军事能力，以及如何重新构想一个更具响应性、更灵活、更透明的国防预算结构。

鉴于去年秋天有消息称五角大楼的财务报表尚未获得无保留意见，我们有必要评估审计的真正价值，这种价值来自于对业务系统、网络安全、库存和人事管理以及数据分析的持久改进。

虽然法律要求进行全面的财务报表审计，而且获得无保留意见也很有用，但最终的合格分数实际上不如审计所带来的进步重要。

为了理解审计，有必要考虑其中涉及的两种会计类型：

管理型，侧重于内部管理和决策。

财务，以合规为导向，面向外部受众。

从个人角度来看，管理部分类似于你的家庭预算。支付房租或抵押贷款，决定你需要购买哪些商品以及每件商品应该花多少钱才能最大限度地利用预算，以及你能负担得起哪些娱乐活动——这就是管理。

平衡你的支票簿，根据一套特定的规则进行纳税申报，并保留所有收据以证明你购买或做的事情与你的消费相符——这就是财务。

两者都对帮助你掌控财务状况很重要，但你不需要精确到分地核对支票簿，也不需要提供所有详细文件来通过美国国税局的审计，就能有效地管理你的生活或家庭，或者清楚地了解你的钱都花在了哪里以及你用这些钱得到了什么。

从规模、范围和复杂性等更大层面来看，国防部在管理会计方面做得很好，而且还在不断进步。在小型部门内部，国防部的财务会计和报告也相当出色，其中46%的国防资产已经获得了有利的审计意见。正如审计结果所反映的那样，五角大楼需要提升的是企业级财务会计能力。

在一份新报告中，我们深入探讨了审计价值的细节，以及在了解审计过程为何重要（无论何时获得总体及格分数）时需要考虑的五个关键进展指标。

首先是文化。审计促使整个部门——而不仅仅是财务管理人员——将准确性、问责制和记录保存融入到日常工作、任务和绩效考核中。财务报告的诚信是每一位军警领导和员工的责任。大量以往秘而不宣的数据被整合到一个系统中，表明相关部门正在认真对待这一责任。

第二点是数据力量利用方面的进展。如果数字化战场是未来战争能力和优势的核心，那么来自所有防御系统的准确、及时、可靠的数据对我们的防御至关重要。

为了建立单一的财务真实来源，该部门创建了先进分析（ADVANA）能力，该能力现在包括网络安全、战备、后勤、合同、人员和预算执行数据，并提供用户友好的工具来回答管理和监督有关所有系统性能的问题。

部队战备和网络安全是第三和第四项措施。库存和信息技术领域的审计结果促使我们加强对网络安全、零部件和物资的态势感知，以提高战备水平并节省资金。年度审计为这两个关键作战领域提供了保障。

例如，ADVANA弹药战备计划收集全球当前库存数据。这揭示了拟议项目交付对战备状态的影响。该计划展示了库存的健康状况，以确定是否存在修复或测试已暂停批次的机会，从而延长导弹的保质期。它将当前库存与采购、支出和工业基础联系起来，以预测未来库存并将其与需求进行比较。这使得能够预测未来对战备的潜在影响，并使利益相关者能够根据“假设情景”评估采购增长。

审计结果中有 36% 与 IT 和网络安全相关，为解决审计结果而建立的网络和业务运营及管理能力，会定期审查和协调采购、收购和合同敏感数据的权限和访问协议，同时确保只有适当且经过审查的人员才能访问这些数据。

虽然这并不能阻止那些被信任可以访问机密信息的人员非法泄露机密信息，但它有助于发现与控制访问权限相关的系统中的漏洞。

最后，审计结果为管理和成本效益提供了总体支持。上述举措有助于更好地履行管理职责。由于该部门减少了现有零部件的订购，并更好地保护其系统、数据和程序免受网络漏洞的侵害，因此节省了成本。例如，利用为此次审计开发的新工具，该部门识别出了150亿美元的潜在不当付款，并在付款发生前阻止了这些付款。

类似上述例子不胜枚举。虽然通过全面的财务审计是最终目标，但真正的价值体现在当下。与其仅仅专注于采取一切必要措施——包括快速的临时补救措施——来获得审计师的及格分数，该部门更应追求有意义且持久的改进，这才能使其成为更精明的客户和更优秀的管理者，并拥有更强大的实力。

伊莱恩·麦卡斯克是美国企业研究所智库的高级研究员。她此前曾担任美国国防部代理副部长（财务主管），而马克·伊斯顿曾担任国防部副首席财务官。