Pentagon seeks record budget despite failing every audit

By Brett Rowland
The Center Square

President Donald Trump is asking Congress to approve the largest military budget in American history for an agency that has never passed a financial audit.

The Department of Defense, rebranded the Department of War by the Trump administration, says it has a new plan to finally clear that hurdle, but a congressional watchdog warns the effort may prioritize balancing the books over fixing the underlying problems.

The department is seeking $1.5 trillion for fiscal year 2027, a 44% increase from current spending levels, despite failing eight consecutive audits and remaining the only major federal agency never to pass one, unable to fully account for about $4.7 trillion in assets.

In March, the Pentagon unveiled a revised audit strategy that shifts away from repairing the internal controls needed to produce reliable financial data and instead emphasizes validating account balances through a combination of artificial intelligence, automation and hands-on verification.

“We rely on internal controls where they exist, maximize the use of artificial intelligence and automation wherever we can, and have the auditors perform substantive testing where they must,” Deputy Chief Financial Officer Thomas Harker told lawmakers.

Subcommittee Chairman Pete Sessions, R-Texas, welcomed the new approach but said questions remained.

“I’m encouraged by this approach, but still have questions about how sustainable this approach is for the entire department and how the department will prioritize high-risk areas that need attention,” he said.

The Pentagon’s size and complexity make the challenge immense. The Marine Corps is the only military branch to receive a clean audit opinion, a process that required more than 70 site visits and physical inventories of roughly 26 million assets, even though the Marines account for just over 1% of the department’s total assets.

The Government Accountability Office, Congress’s investigative watchdog, warned that the Pentagon’s new approach appears “more focused on bookkeeping” than correcting the systemic weaknesses that caused the audit failures in the first place.

“Even if under the new approach DOD achieves a clean audit opinion by the end of 2028, the department’s financial management will likely still be on the high-risk list,” said Asif Khan, the GAO’s director of financial management and assurance. “The department will still need to turn its attention back toward improving systems, internal controls, business processes and operations throughout the department.”

Khan also warned that weak internal controls, combined with a proposed $441 billion increase in military spending, could increase the risk of waste, fraud and abuse. He compared the vulnerability to the fraud that plagued several federal relief programs during the COVID-19 pandemic.

“The money may not be going to the right places,” Khan told lawmakers.

The department expects to spend $1.7 billion on audit-related work in fiscal year 2027 alone, according to GAO, about the cost of a dozen F-22 Raptor fighter jets.

Pentagon officials have pushed back on the characterization that the department’s audit problems reflect poor financial management. Acting comptroller Jules Hurst told reporters in April that the difficulty lies less in wasteful spending than in tracking and valuing decades-old military assets.

“We buy a nuclear missile in the 1970s and then we have to account for the present-day value, which includes every single repair or modification we made of that missile over 50-plus years,” Hurst said. “That’s the kind of stuff that makes it hard for the department to get an audit.”

The explanation did little to satisfy lawmakers at Wednesday’s hearing.

“In all good conscience, I can’t vote for that, knowing we’ve gone seven straight years without an audit,” Rep. Kweisi Mfume, the committee’s ranking Democrat, said.

The department has, in fact, undergone eight consecutive audits since 2018, but has failed each one.