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GAO-24-107478 1 (2024-07-11)

handle is hein.gao/gaoqjp0001 and id is 1 raw text is: The Big Picture What GAO's Work Shows In fiscal year (FY) 2023, the Department of Defense (DOD) continued making progress toward its goal to achieve an unmodified (or clean) audit opinion, which is when auditors conclude that financial statements are presented fairly in accordance with generally accepted accounting principles. For example, the Marine Corps received a clean audit opinion on its FY 2023 financial statements, reflecting significant progress for DOD. However, DOD's Office of Inspector General issued a disclaimer of opinion on DOD's department-wide financial statements, meaning it was unable to obtain sufficient, appropriate evidence on which to base an opinion. In May 2023, we reported that the financial statement audit process has been valuable-providing tangible short- and long-term benefits. DOD noted: > Audits have helped identify assets it did not know existed. For example, in FY 2020, the Navy identified and added nearly $2.4 billion of unrecorded inventory, operating materials and supplies, and general equipment to its records. > Audits have improved DOD's oversight and efficiency in processing financial transactions. For example, in FY 2022, the Air Force identified and corrected approximately $5.2 billion worth of discrepancies in its accounts. > Audits have led to better management of funding obligations. For example, DOD identified $43 million in contract deobligations in 2022, allowing it to reprogram the funds for more immediate needs. For FY 2023, along with DOD's department-wide disclaimer of opinion, DOD's auditors reported that 18 of 29 components received disclaimers-including the Army, Navy, and Air Force-while 10 of DOD's components-including the Marine Corps-received clean audit opinions (see table 1). Table 1: Results for DOD Components Undergoing Stand- alone Audits, Fiscal Years (FY) 2023 and 2022 Audit opinion Unmodified or cleana Qualifiedb Disclaimerc Totald 18 29 1 16 26 Source: GAO, DOD. I GAO-24-107478 Notes: GAO analysis of data from the FY 2023 and 2022 agency financial reports (AFR) of Department of Defense (DOD), Defense Information Systems Agency's Working Capital Fund, and the DOD Inspector General; the Marine Corps' FY 2023 AFR; and GAO-23-105784. 'An unmodified (or clean) opinion is when the auditor concludes that financial statements are presented fairly in accordance with U.S. generally accepted accounting principles. bA qualified opinion is when the auditor can express an opinion on the financial statements except for specific areas where material misstatements exist but are not pervasive or where auditors were unable to obtain sufficient, appropriate evidence, but the possible effects are not pervasive. cA disclaimer of opinion is when auditors were unable to obtain sufficient, appropriate evidence to provide an opinion on the financial statements. dThe Marine Corps General Fund was not audited in FY 2022. Also, the number of DOD components undergoing stand-alone audits increased from FY 2022. Auditors also report on identified material weaknesses in internal controls. For FY 2023, DOD's department-wide auditor reported that DOD had 28 material weaknesses, which increased since 2019 (see fig. 1). A material weakness is a deficiency in GAO-24-107478 FY 2023 DOD Financial Audit Update FY 2023 10 FY 2022 9

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