Secretary of Defense Leon Panetta told a House Committee he directed the department to accelerate efforts to achieve full audit readiness.  Testifying with Gen. Martin Dempsey, Chairman of the Joint Chiefs of Staff, before the House Armed Services Committee (HASC) last week, Panetta said DoD will stay on course to meet the congressional requirement of overall audit readiness by 2017.

Panetta, told HASC members it is “inexcusable” that DoD is one of the two federal agencies that have never achieved a clean audit opinion for its financial statements.  He said DoD has “made significant progress” towards achieving audit readiness, but must do better, “and we will.”

The Secretary issued his order to accelerate audit readiness in a memo to the Military Departments and Defense Agencies and components.  In the memo, Panetta directed the department to:  increase emphasis on accountability for assets; establish interim goals (over the next two years) in order to assess progress; provide mandatory training; establish before January 2013 a pilot program for certification of financial managers (like that for acquisition managers); and “appropriately resource these goals.”

He directed the DoD Comptroller, Robert Hale, to provide in 60 days a revised plan to cut in half the time to achieve audit readiness for the Statement of Budgetary Resources.  This would audit the reported status of what budget authority DoD received, obligated, and spent. 

Panetta also directed the department’s Chief Management Officer, Deputy Secretary Ashton Carter, to conduct periodic progress reviews.  Day-to-day oversight of the audit readiness process will remain the responsibility of the DoD Comptroller who will work closely with the Deputy Chief Management Officer (DCMO) and officials in the Military Services and Defense Agencies and components.

Secretary Panetta acknowledged the current fiscal difficulties and the need for DoD to be “accountable for how we spend their [taxpayers] dollars.”  Panetta said DoD must overhaul how it does business, especially as it endeavors to achieve savings while maintaining the finest and best military in the world.” 

He cited improving the quality of the department’s financial information and achieving auditable financial statements as important to the success of efforts to identify savings in the DoD budget.  He told the committee that DOD’s approach, which focuses on information used to manage the department, will “give financial managers the key tools they need to track spending [and] identify waste.”