[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 3902 Introduced in Senate (IS)]
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119th CONGRESS
2d Session
S. 3902
To provide for auditable financial statements for the Department of
Defense, and for other purposes.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
February 24, 2026
Ms. Ernst introduced the following bill; which was read twice and
referred to the Committee on Armed Services
_______________________________________________________________________
A BILL
To provide for auditable financial statements for the Department of
Defense, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Reviewing Every Check and Each
Invoice Purchasing Troops' Supplies Act'' or the ``RECEIPTS Act''.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Section 9 of Article I of the Constitution of the
United States requires all agencies of the Federal Government,
including the Department of Defense, to publish ``a regular
Statement and Account of the Receipts and Expenditures of all
public Money''.
(2) Section 3515(a) of title 31, United States Code,
requires the agencies of the Federal Government, including the
Department of Defense, to present auditable financial
statements beginning not later than March 1, 2003. The
Department has not complied with this law.
(3) The Federal Financial Management Improvement Act of
1996 (title VIII of division A of Public Law 104-208; 31 U.S.C.
3512 note) requires financial systems acquired by the Federal
Government, including the Department of Defense, to be able to
provide information to leaders to manage and control the cost
of Government. The Department has not complied with this law.
(4) The financial management of the Department of Defense
has been on the ``High-Risk'' list of the Government
Accountability Office, which means that the Department is not
consistently able to ``control costs; ensure basic
accountability; anticipate future costs and claims on the
budget; measure performance; maintain funds control; [and]
prevent and detect fraud, waste, and abuse''.
(5) In 2005, the Department of Defense created a Financial
Improvement and Audit Readiness (FIAR) Plan, overseen by a
directorate within the office of the Under Secretary of Defense
(Comptroller), to improve Department business processes with
the goal of producing timely, reliable, and accurate financial
information that could generate an audit-ready annual financial
statement. In December 2005, that directorate, known as the
FIAR Directorate, issued the first of a series of semiannual
reports on the status of the Financial Improvement and Audit
Readiness Plan.
(6) Section 1003 of the National Defense Authorization Act
for Fiscal Year 2010 (Public Law 111-84; 123 Stat. 2439)
required regular status reports on the Financial Improvement
and Audit Readiness Plan described in paragraph (5), and
codified as a statutory requirement the goal of the Plan in
ensuring that Department of Defense financial statements were
validated as ready for audit not later than September 30, 2017.
In addition, section 1005 of the National Defense Authorization
Act for Fiscal Year 2013 (Public Law 112-239) required that the
statement of budgetary resources of the Department of Defense
be validated as ready for audit by not later than September 30,
2014. The Department of Defense did not meet these deadlines.
(7) At a June 2025 hearing in the Committee on Armed
Services of the Senate, the Department's Acting Comptroller
committed to audit-ready budget statements for the Department
of War by 2028 by stating, ``Within the next three years, under
the secretary's guidance, the remainder of the department will
achieve the clean audit opinion.''.
SEC. 3. ENHANCED REPROGRAMMING AUTHORITY FOLLOWING ACHIEVEMENT BY
DEPARTMENT OF DEFENSE AND MILITARY DEPARTMENTS OF AUDIT
WITH UNQUALIFIED OPINION OF ITS FINANCIAL STATEMENTS FOR
FISCAL YEARS AFTER FISCAL YEAR 2028.
(a) Department of Defense Generally.--If the Department of Defense
obtains an audit with an unqualified opinion on financial statements
for any fiscal year after fiscal year 2028, the limitation on the total
amount of authorizations that the Secretary of Defense may transfer
pursuant to general transfer authority available to the Secretary in
the national interest in the succeeding fiscal year shall be the
greater of $10,000,000,000 or 1 percent of the total budget authority
available to the Department of Defense for that succeeding fiscal year.
(b) Military Departments, Defense Agencies, and Defense Field
Activities.--If a military department, Defense Agency, or Department of
Defense Field Activity obtains an audit with an unqualified opinion on
its financial statements for any fiscal year after fiscal year 2028,
the thresholds for reprogramming of funds of such military department,
Defense Agency, or Department of Defense Field Activity, as the case
may be, without prior notice to Congress for the succeeding fiscal year
shall be deemed to be the thresholds as follows:
(1) In the case of an increase or decrease to the program
base amount for a procurement program, $60,000,000.
(2) In the case of an increase or decrease to the program
base amount for a research program, $30,000,000.
(3) In the case of an increase or decrease to the amount
for a budget activity for operation and maintenance,
$45,000,000.
(4) In the case of an increase or decrease to the amount
for a budget activity for military personnel, $30,000,000.
(c) Rule of Construction.--Nothing in this section shall be
construed to alter or revise any requirement (other than a threshold
amount) for notice to Congress on transfers covered by subsection (a)
or reprogrammings covered by subsection (b) under any other provision
of law.
(d) Definitions.--In this section, the terms ``program base
amount'', ``procurement program'', ``research program'', and ``budget
activity'' have the meanings given such terms in chapter 6 of volume 3
of the Financial Management Regulation of the Department of Defense
(DoD 7000.14R), dated March 2011, or any successor regulation.
SEC. 4. CESSATION OF APPLICABILITY OF REPORTING REQUIREMENTS REGARDING
THE FINANCIAL STATEMENTS OF THE DEPARTMENT OF DEFENSE
AFTER OBTAINING A CLEAN AUDIT OPINION.
(a) Cessation of Applicability.--
(1) Military departments.--The financial statements of a
military department shall cease to be covered by the reporting
requirements specified in subsection (b) upon the issuance of
an unqualified audit opinion on such financial statements.
(2) Department of defense.--The reporting requirements
specified in subsection (b) shall cease to be effective when an
unqualified audit opinion is issued on the financial statements
of the Department of Defense, including each of the military
departments and the other reporting entities defined by the
Office of Management and Budget.
(b) Reporting Requirements.--The reporting requirements specified
in this subsection are the following:
(1) The requirement for annual reports in section 892(b) of
the Ike Skelton National Defense Authorization Act for Fiscal
Year 2011 (Public Law 111-383; 124 Stat. 4311).
(2) The requirement for semi-annual reports in section
1003(b) of the National Defense Authorization Act for Fiscal
Year 2010 (Public Law 111-84; 123 Stat. 2440).
(3) The requirement for annual reports in section 817(d) of
the Bob Stump National Defense Authorization Act for Fiscal
Year 2003 (Public Law 107-314; 116 Stat. 2610).
(4) The requirement for periodic reports in section 908(b)
of the Defense Acquisition Improvement Act of 1986 (Public Law
99-500; 100 Stat. 1783-140; 10 U.S.C. 2326 note) and duplicate
requirements as provided for in section 6 of the Defense
Technical Corrections Act of 1987 (Public Law 100-26; 101 Stat.
274; 10 U.S.C. 2302 note).
SEC. 5. ADDITIONAL DUTIES AND QUALIFICATIONS FOR FAILURE TO OBTAIN
AUDITS WITH UNQUALIFIED OPINION OF FISCAL YEAR 2028
FINANCIAL STATEMENTS OF THE DEPARTMENT OF DEFENSE.
(a) In General.--If the Department of Defense fails to obtain an
audit with an unqualified opinion on its financial statements for
fiscal year 2028 by December 31, 2028, the following shall take effect
on January 1, 2029:
(1) Additional qualifications and duties of usd
(comptroller).--
(A) Qualifications.--Any individual nominated for
appointment to the position of Under Secretary of
Defense (Comptroller) under section 135 of title 10,
United States Code, shall be an individual who is a
Certified Public Accountant (CPA) and has served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Duties and powers.--The duties and powers of
the individual serving as Under Secretary of Defense
(Comptroller) shall include, in addition to the duties
and powers specified in section 135(c) of title 10,
United States Code, such duties and powers with respect
to the financial management of the Department of
Defense as the Deputy Secretary of Defense (acting in
the capacity of Chief Management Officer of the
Department of Defense) or a successor official in the
Department of Defense (acting in such capacity) may
prescribe.
(2) Additional qualifications and responsibilities of asa
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Army for Financial Management under section 7016 of
title 10, United States Code, shall be an individual
who is a Certified Public Accountant (CPA) and who has
served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Army
for Financial Management shall include, in addition to
the responsibilities specified in section 7016(b)(4) of
title 10, United States Code, such responsibilities as
the Deputy Secretary of Defense (acting in the capacity
of Chief Management Officer of the Department of
Defense) or a successor official in the Department of
Defense (acting in such capacity) may prescribe.
(3) Additional qualifications and responsibilities of asn
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Navy for Financial Management under section 8016 of
title 10, United States Code, shall be an individual
who is a Certified Public Accountant (CPA) and who has
served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Navy
for Financial Management shall include, in addition to
the responsibilities specified in section 8016(b)(4) of
title 10, United States Code, such responsibilities as
the Deputy Secretary of Defense (acting in the capacity
of Chief Management Officer of the Department of
Defense) or a successor official in the Department of
Defense (acting in such capacity) may prescribe.
(4) Additional qualifications and responsibilities of asaf
for financial management.--
(A) Qualifications.--Any individual nominated for
appointment to the position of Assistant Secretary of
the Air Force for Financial Management under section
9016 of title 10, United States Code, shall be an
individual who is a Certified Public Accountant (CPA)
and who has served--
(i) as the chief financial officer or
equivalent position of a Federal or State
agency that has received an audit with an
unqualified opinion on such agency's financial
statements during the time of such individual's
service; or
(ii) as the chief financial officer or
equivalent position of a public company that
has received an audit with an unqualified
opinion on such company's financial statements
during the time of such individual's service.
(B) Responsibilities.--The responsibilities of the
individual serving as Assistant Secretary of the Air
Force for Financial Management shall include, in
addition to the responsibilities specified in section
9016(b)(4) of title 10, United States Code, such
responsibilities as the Deputy Secretary of Defense
(acting in the capacity of Chief Management Officer of
the Department of Defense) or a successor official in
the Department of Defense (acting in such capacity) may
prescribe.
(b) Public Company Defined.--In this section, the term ``public
company'' has the meaning given the term ``issuer'' in section 2(a)(7)
of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(7)).
SEC. 6. REQUIRING THE SECRETARY OF DEFENSE TO TRANSFER NON-DEFENSE
OPERATIONS OF THE DEFENSE FINANCE AND ACCOUNTING SERVICE
(DFAS) AFTER FAILURE TO OBTAIN AUDITS WITH UNQUALIFIED
OPINION OF FISCAL YEAR 2028 FINANCIAL STATEMENTS OF THE
DEPARTMENT OF DEFENSE.
(a) In General.--If the Department of Defense fails to obtain an
audit with an unqualified opinion on its financial statements for
fiscal year 2028 by December 31, 2028, the Secretary of Defense shall,
in coordination with the Secretary of the Treasury and the Director of
the Office of Management and Budget (OMB), transfer the non-defense
payroll and finance services performed by Defense Finance and
Accounting Service (DFAS) to another payroll and finance service in the
United States Government.
(b) Definition.--The term ``non-defense payroll and finance
services''--
(1) refers to services DFAS provides for other Federal
agencies other than the Department of Defense, including the
Department of Health and Human Services; and
(2) does not refer to any payroll and finance services
provided for military retirees, the Department of Veterans
Affairs, or the Executive Office of the President.
SEC. 7. CHANGE IN MISSION STATEMENT FOR DFAS.
The Secretary shall direct DFAS to amend its mission statement and
vision to incorporate the following principles:
(1) DFAS is a critical part of the United States military's
financial management and accounting team and is not solely
providing a pay and finance service to the military services.
(2) DFAS is jointly responsible with the military services
for--
(A) accounting for military spending by accurately
and timely recording, analyzing, summarizing, and
classifying military service financial transactions;
(B) ensuring military service financial
transactions are recorded in the military services'
financial statements; and
(C) achieving an unqualified audit opinion for the
Department of Defense's financial statements.
SEC. 8. AUTHORIZATION FOR ARTIFICIAL INTELLIGENCE, INCLUDING AGENTIC
ARTIFICIAL INTELLIGENCE, TO OBTAIN AUDITS WITH
UNQUALIFIED OPINION OF FISCAL YEAR 2028 FINANCIAL
STATEMENTS OF THE DEPARTMENT OF DEFENSE.
(a) Sense of Congress.--It is the sense of Congress that the
Department of Defense should, to the maximum extent practicable,
utilize technology and software to automate its efforts to prepare and
audit its financial statements and minimize the use of additional
contractor personnel for this function.
(b) Authorization of Appropriations.--In addition to amounts
otherwise available, there is authorized to be appropriated for the
Department of Defense the following sums:
(1) $150,000,000 for the deployment of automation and
artificial intelligence to accelerate the audits of the
financial statement of the Department.
(2) $150,000,000 for business systems replacements to
accelerate and improve the accuracy of the financial statements
of the Department of Defense pursuant to chapter 9A and section
2222 of title 10, United States Code.
(c) Offset Required.--The Secretary of Defense shall terminate for
convenience existing contracts for contractor support for consulting
services regarding the audit and preparation of financial statements in
amounts equal to amounts appropriated pursuant to subsection (b).
SEC. 9. ESTABLISHMENT OF DEPARTMENT OF DEFENSE AUDIT COMMITTEE AND
AMENDMENT OF DEPARTMENT OF DEFENSE INSPECTOR GENERAL ROLE
IN AUDIT OF FINANCIAL STATEMENTS.
(a) Establishment.--The Secretary of Defense shall establish a
committee to be known as the Audit Committee to select and oversee the
audit of the financial statements of the Department as performed by an
independent external auditor.
(b) Membership.--The Audit Committee shall be composed of the
following members:
(1) The Deputy Secretary of Defense, who shall serve as the
Chairman of the Audit Committee.
(2) The Chief Information Officer of the Department of
Defense.
(3) The Deputy Inspector General (Audit) of the Department
of Defense.
(4) An individual appointed by the Chairman of the
Committee on Armed Services of the Senate.
(5) An individual appointed by the Ranking Member of the
Committee on Armed Services of the Senate.
(6) An individual appointed by the Chairman of the
Committee on Armed Services of the House of Representatives.
(7) An individual appointed by the Ranking Member of the
Committee on Armed Services of the House of Representatives.
(8) An individual appointed by the Secretary of Defense
from the Defense Business Board.
(c) Excluded Individuals.--The Audit Committee shall not include
the following individuals currently serving in the following roles:
(1) The Under Secretary of Defense (Comptroller)/Chief
Financial Officer.
(2) The Deputy Under Secretary of Defense (Comptroller).
(3) The Director, Defense Finance and Accounting Service
(DFAS).
(d) Qualification.--Members of the Audit Committee appointed by the
Chairman of the Committee on Armed Services of the Senate and the
Chairman of the Committee on Armed Services of the House of
Representatives shall be appointed to the Commission from among
individuals who are Certified Public Accountants (CPAs) and who have
demonstrated knowledge and experience in the audit of Federal agency
financial statements.
(e) Audits by Agencies.--Section 3521(a) of title 31, United States
Code, is amended--
(1) by inserting ``(1)'' after ``(a)''; and
(2) by adding at the end the following paragraph:
``(2) The audit required under paragraph (1) for the Department of
Defense shall be performed by an independent external auditor.''.
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