Today, the U.S. Department of Defense will release the results of what has been called the “first-ever department-wide financial audit.”
The Defense Department’s financial statements are actually audited every year. And the failure of the DOD to secure clean, “unmodified” audit opinions have been the principal reason why the Government Accountability Office has delivered a disclaimer of opinion on the overall financial statements of the U.S. Government – every year since the late 1990s.
The new DOD audit initiative does represent a first, however, in how comprehensive it was. The audit will likely provide some valuable new insights and opportunities in improving the trustworthiness of DOD financials.
There will likely be massive media coverage of the release of the report. Looking ahead, here are some questions to consider:
- Which individuals stood out for their leadership and results in improving accounting controls and processes before the audit got underway?
- Who stands out for their performance during the audit, and in applying lessons learned for the future?
- Were any members of Congress helpful in providing feedback and/or valuable oversight during the audit initiative?
- Who have been some of the better reporters covering the issues involved? Either in the mainstream or alternative media? Have any of their insights been especially valuable in the overall effort?
- Which of the independent public accounting firms associated with the audit provided the most valuable service? Did any of them fail to measure up?
- How should the public try to gauge the cost-effectiveness of the money spent on this audit?
- Recent financial market history may provide some valuable perspective. Have you seen the movie “The Big Short?” Have you read the book “The Smartest Guys in the Room?” Have you reflected on the costs and benefits of paying ‘independent’ auditors for their opinions?
- Can or should we measure the success of the audit initiative on the basis of how many scandals were uncovered?
- Can blockchain technology help to address identified weaknesses? What progress is DoD making in this area? Do you see any shortfalls or risks in new accounting technologies for the integrity of the financial reporting process?
- What do these results imply about the cost-effectiveness of the quality of ‘national defense?’ Is there a way to identify what % of current spending levels could achieve equivalent ‘defense,’ holding foreign policy (and the international footprint of ‘national defense’) constant?
- If DoD financial accounts may be ‘modified’ to guard secret classified programs, will DoD ever receive anything but a disclaimer of opinion on its financial statements?
- After reflecting on the audit process, what are some of the strengths and weaknesses of federal government accounting standards? Where could they be improved?