[House Hearing, 119 Congress]
[From the U.S. Government Publishing Office]
DoW FINANCIAL MANAGEMENT: EXAMINING
PROGRESS AND NEW AUDIT APPROACHES
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HEARING
BEFORE THE
SUBCOMMITTEE ON GOVERNMENT
OPERATIONS
OF THE
COMMITTEE ON OVERSIGHT AND
GOVERNMENT REFORM
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED NINETEENTH CONGRESS
SECOND SESSION
__________
MAY 13, 2026
__________
Serial No. 119-62
__________
Printed for the use of the Committee on Oversight and Government Reform
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available on: govinfo.gov, oversight.house.gov or docs.house.gov
__________
U.S. GOVERNMENT PUBLISHING OFFICE
63-746 PDF WASHINGTON : 2026
=======================================================================
COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JAMES COMER, Kentucky, Chairman
Jim Jordan, Ohio Robert Garcia, California, Ranking
Mike Turner, Ohio Minority Member
Paul Gosar, Arizona Eleanor Holmes Norton, District of
Virginia Foxx, North Carolina Columbia
Glenn Grothman, Wisconsin Stephen F. Lynch, Massachusetts
Michael Cloud, Texas Raja Krishnamoorthi, Illinois
Gary Palmer, Alabama Ro Khanna, California
Clay Higgins, Louisiana Kweisi Mfume, Maryland
Pete Sessions, Texas Shontel Brown, Ohio
Andy Biggs, Arizona Melanie Stansbury, New Mexico
Nancy Mace, South Carolina Maxwell Frost, Florida
Pat Fallon, Texas Summer Lee, Pennsylvania
Byron Donalds, Florida Greg Casar, Texas
Scott Perry, Pennsylvania Jasmine Crockett, Texas
William Timmons, South Carolina Emily Randall, Washington
Tim Burchett, Tennessee Suhas Subramanyam, Virginia
Lauren Boebert, Colorado Yassamin Ansari, Arizona
Anna Paulina Luna, Florida Wesley Bell, Missouri
Nick Langworthy, New York Lateefah Simon, California
Eric Burlison, Missouri Dave Min, California
Elijah Crane, Arizona Ayanna Pressley, Massachusetts
Brian Jack, Georgia Rashida Tlaib, Michigan
John McGuire, Virginia
Brandon Gill, Texas
Richard McCormick, Georgia
------
Mark Marin, Staff Director
James Rust, Deputy Staff Director
Ryan Giachetti, Chief Counsel
Jennifer Kamara, Director of Strategic Initiatives
Hannah Cathey, Professional Staff Member
Bill Womack, Senior Advisor
Mallory Cogar, Director of Operations and Chief Clerk
Contact Number: 202-225-5074
Robert Edmonson, Minority Staff Director
Contact Number: 202-225-5051
------
Subcommittee on Government Operations
Pete Sessions, Texas, Chairman
Virginia Foxx, North Carolina Kweisi Mfume, Maryland, Ranking
Gary Palmer, Alabama Member
Tim Burchett, Tennessee Eleanor Holmes Norton, District of
Brian Jack, Georgia Columbia
Brandon Gill, Texas Maxwell Frost, Florida
Emily Randall, Washington
C O N T E N T S
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OPENING STATEMENTS
Page
Hon. Pete Sessions, U.S. Representative, Chairman................ 1
Hon. Kweisi Mfume, U.S. Representative, Ranking Member........... 3
WITNESSES
Mr. Thomas Harker, Deputy Chief Financial Officer, U.S.
Department of War
Oral Statement................................................... 7
Mr. Ryan A. Busby, CPA, Deputy Assistant Secretary of the Army
for Financial Operations, U.S. Army
Oral Statement................................................... 8
Mr. Brett Mansfield, Deputy Inspector General for Audit, Office
of Inspector General, U.S. Department of War
Oral Statement................................................... 10
Mr. Asif Khan, Director, Financial Management and Assurance, U.S.
Government Accountability Office
Oral Statement................................................... 12
Written opening statements and bios are available on the U.S.
House of Representatives Document Repository at:
docs.house.gov.
INDEX OF DOCUMENTS
* Article, Washington Post, ``Iran Has Hit Far More U.S.
Military Assets Than Reported, Satellite Images Show'';
submitted by Rep. Frost.
The documents listed above are available at: docs.house.gov.
ADDITIONAL DOCUMENTS
* Questions for the Record: Mr. Ryan A. Busby, CPA; submitted
by Rep. Sessions.
* Questions for the Record: Mr. Thomas Harker; submitted by
Rep. Sessions.
* Questions for the Record: Mr. Thomas Harker; submitted by
Rep. Norton.
* Questions for the Record: Mr. Asif Khan; submitted by Rep.
Sessions.
* Questions for the Record: Mr. Brett Mansfield; submitted by
Rep. Sessions.
These documents were submitted after the hearing, and may be
available upon request.
DoW FINANCIAL MANAGEMENT: EXAMINING
PROGRESS AND NEW AUDIT APPROACHES
----------
WEDNESDAY, MAY 13, 2026
U.S. House of Representatives
Committee on Oversight and Government Reform
Subcommittee on Government Operations
Washington, D.C.
The Subcommittee met, pursuant to notice, at 2:04 p.m., in
room 2154, Rayburn House Office Building, Hon. Pete Sessions
[Chairman of the Subcommittee] presiding.
Present: Representatives Sessions, Foxx, Palmer, Jack,
Gill, Mfume, Norton, and Frost.
Also present: Representative Walkinshaw.
Mr. Sessions. The Subcommittee on Government Operations
will come to order.
And I would like to welcome everyone.
Without objection, the Chair may declare a recess at any
time. And I recognize myself for the purpose of making an
opening statement.
OPENING STATEMENT OF CHAIRMAN PETE SESSIONS
REPRESENTATIVE FROM TEXAS
The first opening statement I would like to make is I am
sorry for the delay. Our awesome stenographers needed to be
able to hear what we are saying today, and so--we are rather
new in this room and learning how to work with the equipment.
So, welcome to today's hearing. This is a hearing on an
update of the Department of War's progress toward achieving a
clean audit and the new audit approach, which they are going to
speak about in great specificity today.
As you know, the Department of War is statutorily mandated
to achieve a clean audit opinion by December 31, 2028. In
September 2024, we developed a scorecard to track the
Department of War's progress toward achieving that clean audit
opinion. With each iteration of the scorecard, the results
remain the same, and that is that the Department of War was
making progress, and we are thankful for that, but not enough
to move the needle to meet the statutory goal.
So, progress has been made, but not enough, meaning that
full financial transparency and accountability is not yet
present. Financial transparency and auditability are core
principles of good government, and as each of us will hear
today, something that the Department of War really does want.
It will help them achieve their mission, not just meet the
merits of the law.
The Department of War is responsible for nearly half the
Federal Government's discretionary spending, so it is
especially important that they demonstrate financial
transparency, accountability, and to meet the standards of this
Subcommittee, the Committee, and the law.
With that said, the audit is not just a financial exercise.
There are real positive operational impacts that can be
realized once sound financial management practices are in
place. And yesterday, in extensive meetings that I held with
each of our witnesses today, I was told that an audit that we
understand and knowing where we have and where we get it is
directly in front of them, and they are showing measurable
progress to achieve that.
Last year, we heard that the Marine Corps--from the Marine
Corps about how they achieved their success. As a matter of
fact, the Marine Corps did pass the audit.
Achieving a clean audit opinion for a third time
demonstrates that at least--and we commend them--but achieving
this for a third time means that they have learned valuable
lessons, they have learned, not only how to do that, but they
have given their colleagues in the Department of War the
operational excellence that they should be achieving across the
board. So, kudos to the United States Marine Corps.
But I think the Department of War has caught on, including
our young Secretary of War, Pete Hegseth, who is very excited
about demonstrating to his management team, the leadership of
the departments, as well as the men and women that serve in the
Department of War, our military, an excitement that he holds
very dear to that achievement.
In March 2026, the Department of War unveiled a new refined
audit approach aimed at achieving a clean opinion by December
2028. So, just two months ago. As a result of, not re-
scrapping, but re-looking at the ability to get there and how
they would do that has been defined, and today, Mr. Harker will
talk about that in specifics, because he annunciated his desire
and belief that we will achieve this.
The approach will use similar hands-on strategy that
provided success for the Marine Corps. I was pleased to see the
leadership commitment of the Department of War, from the very
top all the way down to the men and women who serve, understand
why a clean audit is important and the advantages that will
serve them.
I think this shows that the Department has taken seriously
what Mr. Mfume and I, for a number of years, have talked about
through hearings, through opportunities of discussions, and I
am pleased to see that today will be a public announcement of
how important this progress is. And I am encouraged, I am
encouraged to not only know that we are going to get there, but
that the men and women of the Department feel like it is in
their best interest.
The goal should not be just to achieve a clean audit by
2028. It should be to implement strong financial management,
the understanding of the needs of not just the Department of
War, but where material is, where assets are, and how they can
be counted on to help the Joint Chiefs in their effort, and
particularly at this time of conflict.
So, I am looking forward to hearing today a public
discussion. I appreciate each of our four witnesses for being
here. And I will tell you what I told them, and that is I want
them to come and gladly offer their feedback, their support to
help this Subcommittee. Both Mr. Mfume and I want this to
happen, but more than want it to happen, we believe that you
see firsthand the advantages that will be accrued to the
Department of War and the Secretary of War.
So, with that said, I would like to yield to the
distinguished gentleman from Maryland, my dear friend, Mr.
Mfume, and the gentleman is recognized.
OPENING STATEMENT OF RANKING MEMBER KWEISI MFUME
REPRESENTATIVE FROM MARYLAND
Mr. Mfume. Thank you very much, Chairman Sessions. Thank
you for your continued leadership on this. We tried to do this
in a very bipartisan way, deliberately, and thank you for your
patience. In fact, you may be more patient than I am, but I
will try to let some of that roll off on me.
Good afternoon, everyone. The guests who are here, the
witnesses, we appreciate your time, your effort, your energy. I
think you may have gleaned from the Chairman's statement that
we have been at this for some time and that many people across
this Nation cannot really put their arms around it because of,
not the enormity, but the inability to come up with a audit. I
am going to talk a little bit at some point about the history
of all this, and then I will yield back.
Mr. Busby, we are looking forward to hearing your plans on
how the Army can finally achieve a complete and clean audit.
Mr. Harker, we are happy that the Department of Defense was
willing to send someone to testify for this checkpoint in our
ongoing work, and it has been ongoing for a while.
Last April, we held a third in a series of hearings to
address financial accountability in the Department of Defense,
and we are back today to continue that conversation,
particularly in light of the Department's continued inability--
I want to stress that word again--inability to pass a
Department-wide audit. I think it is past time that we really
saw some progress toward accountability and transparency that
is demonstrable and measurable--demonstrable and measurable--
because what we have gotten up to this point has really been,
quite frankly, a lot of promises about good attempts to do just
that, and we have not really gotten very far.
I will give an example. For years, the Department of
Defense has tried and failed to complete a clean Department-
wide audit. Now, that is a standard that every other large
agency meets and that they meet regularly. Congress
historically should know it first mandated this basic
requirement in 1993. I was a very, very young man at that time,
sitting here trying to understand and get my hand around what
the problem was. 1993. But the Department, as some of you may
know, could not even attempt to perform an audit until 2018,
which I find to be absolutely amazing.
And so, from 1993 to 2018 to 2026, for me, it is being
right where I started at in 1993 as a young Member of a
Congress trying to figure out, and how to ask myself, how do we
get our arms around this massive, massive agency.
I want to make sure everyone also knows that we really do
mean it when we talk about a financial audit. This is not just
a two-word phrase that gets thrown out. And my real fear here
is that, eventually, members of the American public are going
to start asking, if not demanding, that there be an explanation
for them as to why this particular agency, this department,
cannot do that after all these many, many, many years.
I mention the years because, if this were any other agency,
I think the Congress in a very bipartisan manner would be ready
to bring about real change. I think because it is DoD and
because we understand and know that our Nation's strength
depends on the Pentagon and how we assist the Pentagon and all
of the branches of military service, that there has been a
reluctance just to jump into this head on and to start making
real demands or passing legislation that would bring demands
with it.
So, a clean audit does not mean, and should not be
interpreted to mean, that we are judging the merits of DoD's
spending. We are not doing that. We simply want to know what
DoD currently owns and where is it and what is the current
value. And, more importantly, we want to know that DoD knows
that its time has come to defend this Nation and its interests,
as it often does come around in cycles based on what is
happening in the World, that it is important to have
accountability for those assets. And the DoD, again--I hate to
be deliberately redundant, but I have to say it--has again
failed to clear even a simple bar like that, telling us what
you own, where it is, what is the current value.
And I do not want to imply in any way whatsoever that this
is an easy task. I mean, it is clearly not something that is so
demonstrable you can go out tomorrow and get it done. This is a
huge, huge task because DoD has a balance sheet of over $4
trillion in assets spread across the entire globe. The
Department of Defense is one of the world's largest and most
complex organizations.
The Pentagon has continued with enormous scale, antiquated
systems, and dangerous environments, all while at the same time
maintaining operational security. It is not an excuse to be
careless with taxpayers' dollars. It is a recognition that
there is so much going on that there has got to be a defining
starting point and some real demonstrable, again, effort to
show that step A, B, and C is taking place.
Now, we have sat through so many of these hearings and we
have heard so much about what is in practice and what is being
done, but what we never hear are endpoints. You know, members
of the agencies will say, Congressman, we are doing this; we
are doing that; we just implemented this; we are trying that;
we know this works, so we are going to do that; we are going to
make sure we are cross-talking with other agencies. Yes. But in
the three, four years or so that we have been at this, I have
not seen an endpoint that has been talked about yet where
something has been achieved that moves the needle.
Couple of other quick things. I thought the Biden-Harris
Administration committed to working toward the legal mandate to
produce a clean Department audit. Former Secretary Lloyd
Austin, before this Committee and other committees, focused on
sustainable resolutions to achieve the goal and to ensure the
accountability that we all want well into the future. The
initiative helped the Marine Corps adopt a two year audit
approach, which was, as you heard from the Chairman, very
successful.
And I have said over and over again, what makes the Marine
Corps so different from the other branches in being able to get
an audit done? And I have surmised on my own repeatedly that
from on high there was a clear directive: A, to get this done;
B, to do it the right way; and to, C, get it behind us.
And so I imagine, even though I do not know this, that the
Commandant of the Marine Corps said, look, this is what I want
to have done, this is what we have to do for our Nation, this
is what Congress has mandated since 1993, find a way to get it
done. And they did. They did. And they are the only branch that
has done that to this point.
So, I am proud of the work that this Committee has done in
trying to put guidelines, guardrails, and flashlights up so
that we can all see in the dark, but this is really not moving,
not moving the ball forward. I even suspect that many of us may
not even be around years later when, in fact, we are all called
home or somewhere else, and that many of our successors will be
sitting here asking the same questions like we are doing with
many of those that came before us.
The President has already proposed an eye-popping increase
in the overall budget for the upcoming fiscal year, so a lot, a
lot of money. And that will bring the already well-funded
agency to an eye-popping $1.5 trillion in defense spending for
Fiscal Year 2027. In all good consciousness, I cannot vote for
that knowing we have gone seven straight years without an
audit. And in good conscious, we owe the men and women in
uniform a better system than what we have now. We ought to just
admit that. We owe them. And it is not because any of you
sitting here failed to do your job. I am just saying that this
has gone on and on and on.
So, if you hear the frustration and the angst in my voice,
it is only because none of us are getting any younger, and this
problem should not haunt the strongest, the wealthiest, the
most powerful, the most influential Nation on the face of the
Earth, the United States, the way it does haunt us. We can do
it if we really believe we can do it.
And, Mr. Chairman, I yield back.
Mr. Sessions. I want to thank the gentleman for his
comments. It is my hope that today we will offer, both you and
I, some refreshing outlook of the work that is taking place of
the challenge that the Department of War has accepted and
leadership changes that have brought forth top-to-bottom
inclusion of accepting the effort.
I would add to the gentleman's comments that he very
graciously spoke of, it is also the law. And this is the
guiding point, that it is not a congressional mandate, it is
not something that just these guys in Congress want; it is the
law, and they recognize how important this will be to them, the
efficiency. But now, at the time where we are, it also means
that the Joint Chiefs have at their fingertips factual data,
information that will allow them to move forward.
Without objection, I would like to advise, Congressman
Walkinshaw of Virginia is to be waived on to the Subcommittee
for the purposes of questioning witnesses at today's hearing.
Today, I am pleased to acknowledge that we will have four
witnesses before us. These four witnesses:
Mr. Thomas Harker serves as the Deputy Chief Financial
Officer for the Department of War. In his role, he is
responsible for improving and sustaining the Department of
War's financial policy systems, audit, and reporting. And I
must admit, he believes this is an important undertaking for
him as a result of his commitment as an American citizen and
working for the Department, which was very important for me to
hear. Thank you.
Mr. Ryan Busby serves as Deputy Assistant Secretary of the
Army for Financial Operations. In his role, he is responsible
for oversight and integration of the Army's financial
operations.
Mr. Brett Mansfield is the Deputy Inspector General for
Audit. Prior to his role he served as the Senior Advisor to the
Inspector General advising him on matters affecting the mission
and operations of the Department of the Office of Inspector
General.
Mr. Asif Khan is the Director in the Financial Management
and Assurance team at the Government Accounting Office [sic]
since 2009. He has focused his work on financial management and
audit readiness at the Department of Defense, and he is a
regular visitor, as a result of this important role that he
plays, to this Subcommittee.
I want to thank each of you four. Thank you very much.
Pursuant to Committee Rule 9(g), I would ask that the
witnesses now rise and raise their right hand to accept the
oath of witnesses.
Do you solemnly swear or affirm that the testimony you are
about to give is the truth, the whole truth, and nothing but
the truth, so help you God?
[Chorus of ayes.]
Mr. Sessions. Let the record reflect the witnesses each
answered in the affirmative.
Thank you very much. You may now take a seat.
Gentlemen, I covered with you yesterday, not just the rules
of engagement here today, but the need to make sure that each
of you as professionals providing testimony before this
Subcommittee complete not only your sentence, but your
thoughts; that I want to make sure that we understand clearly
from you without any way that we have to guess of the things
you are trying to tell us, the information we need, because as
you have heard from the distinguished Ranking Member, we need
to have the confidence that you get it and that we understand
that.
So, I would just remind the witnesses that they have,
generally speaking, a clock in front of them that will give
them some operating guidelines.
And would now ask that we recognize Mr. Harker for his
time. The gentleman is now recognized.
STATEMENT OF THOMAS HARKER
DEPUTY CHIEF FINANCIAL OFFICER
U.S. DEPARTMENT OF WAR
Mr. Harker. Chairman Sessions, Ranking Member Mfume, and
distinguished Members, I appreciate the opportunity to testify
about the Department of War plan to get a clean opinion on the
Fiscal Year 2028 agencywide financial statement audit. Thank
you for the opportunity to appear before you today.
I have been in this job for six months and have been fixing
Federal financial audit problems for more than 20 years,
starting at the Department of Homeland Security (DHS) when I
was on Active Duty in the Coast Guard and DHS underwent their
first ten audits before getting a clean opinion. I have also
audited financial statements while working at a large public
accounting firm and have led efforts that resolved audit issues
at multiple Cabinet agencies.
Getting a clean opinion for the Department of War is not
just my job; it is something I am passionate about, so much so
that I came out of a comfortable quasi-retirement to take this
job.
The leadership tone at the top of the Department is
unprecedented, with the Secretary and Deputy Secretary both
making it clear that passing an audit is a condition of
employment for departmental leaders. They have both issued
written guidance on the audit, and if you have not seen the
Secretary's recent video, I highly recommend it.
We are finally being honest with ourselves. The
Department's financial reporting has lagged behind every other
major Federal agency. We are fixing that using the authority
provided in Secretary Hegseth's recent memo standing up Joint
Task Force Audit. JTF Audit is a unified team of
servicemembers, civilians, and private sector experts led by
the Under Secretary of War comptroller.
The mission is clear: Work with the services and defense
agencies to execute the corrective actions required to get a
clean opinion on the Fiscal Year 2028 financial statements,
elevating bureaucratic barriers to senior leadership for
immediate action.
The JTF will provide a common operating picture to SecWar
and other senior leaders that will provide them with visibility
not previously seen in the audit space and enable them to take
action when things stall.
One of my favorite bosses, Admiral Thad Allen, said
transparency breeds self-correcting behavior, and the knowledge
that their performance is being seen and judged by the
Secretary will motivate military and civilian leaders to ensure
that they have full accountability for their assets.
In addition to stand-up of JTF Audit, we are partnering
with the Office of the Inspector General (OIG) as they hire an
independent public accounting firm to perform the consolidated
audit. We are also ending the inefficient process of dozens of
disjointed standalone audits and focusing our remediation
efforts on getting a clean opinion on the agency-wide financial
statements, just like every other Chief Financial Officer (CFO)
Act agency.
We are using a hybrid strategy where 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. Much work
has been done in putting internal controls in place across the
Department's processes over many years, but the proliferation
of legacy system and the decentralized nature of funds
execution means that it would take too much time for us to be
able to rely solely on controls.
Fortunately, the advent of AI and automation, and the funds
we received in the reconciliation bill, allow us to use those
tools to compensate for our antiquated and disconnected
systems. Where we cannot use AI or automation, we will have to
rely on a great deal of substantive testing, similar to what
the Marine Corps did, so that the auditors can get
statistically valid information that would allow us to adjust
our financial statements and get a clean opinion.
In addition, we are focusing our efforts on the line items
and processes that have a major impact on our ability to get a
clean opinion. Accountability for our assets, accurate
accounting for our liabilities, revenues, and expenses, and
working to clear the material weaknesses and Notices of
Findings and Recommendations (NFRs) that matter. The entire
Department of War will be under audit, and we will present our
financial statements at the consolidated agency-wide level as
required by law.
In addition, the Marine Corps, Navy, and Air Force will
continue standalone audits, as they either have clean opinions
or are close to attaining them, and the best path forward for
the Department is to continue their efforts.
I want to recognize the leaders and teams who have already
set the standard for excellence. The Marine Corps became the
first military service to achieve a clean audit opinion and has
sustained one for three consecutive years. Many other defense
agencies have also achieved clean opinions, starting with the
Army Corps of Engineers, over 20 years ago. These teams are the
vanguard, and we expect every branch to match their urgency and
commitment to financial discipline.
Our next milestones are clear: A clean opinion on the
Fiscal Year 2026 Navy Working Capital Fund, that is this year;
a clean opinion on the entire Fiscal Year 2027 Defense Working
Capital Fund; and a clean opinion on the Fiscal Year 2028
agencywide audit.
These are ambitious targets, but we are determined to
provide the American taxpayer with the highest standard of
fiscal accountability and to ensure the Department's financial
foundation is strong.
Achieving a clean audit opinion will enable us to use the
information gained in the process to improve the efficiency and
effectiveness of our operations, eliminate additional legacy
financial systems, and improve the quality of information
available to operational leaders in the Department.
Thank you, and I look forward to your questions.
Mr. Sessions. Mr. Harker, thank you very much.
Mr. Busby, you are now recognized.
STATEMENT OF RYAN A. BUSBY, CPA
DEPUTY ASSISTANT SECRETARY OF THE ARMY
FOR FINANCIAL OPERATIONS, U.S. ARMY
Mr. Busby. Chairman Sessions, Ranking Member Mfume, and
distinguished Members, thank you for the opportunity to speak
today on the Army's role in planning to support the
Department's consolidated financial statement audit. The Army
remains committed to strengthening accountability,
transparency, and stewardship of taxpayer resources while
advancing auditability and improving financial accountability
across the Department.
Army leadership is fully aligned with the Department's
enterprise audit strategy and continues to prioritize
remediation efforts focused on improving financial data
reliability, strengthening internal controls, and supporting
operational readiness. Through this integrated approach, the
Army will help drive measurable progress and help achieve and
sustain a clean audit-wide opinion.
To support the Department-wide audit, Army has identified
the highest risk process areas and balances material to the
consolidated financial statements and developed remediation
plans focused on improving the financial accuracy and internal
controls for these areas. The Army utilizes both internal
testing and independent validation to assess the accuracy and
completeness of financial information and identify areas
requiring additional information.
To strengthen accountability, Army leadership identified
metrics and governance processes to track progress across major
remediation areas. The outcomes of these metrics and governance
processes will be shared regularly with the Office of the
Secretary of War comptroller and the JTF Audit to support
enterprise-wide oversight and consistency in audit remediation
efforts. These actions improve visibility into the enterprise
risk and ensure that Army is held accountable to achieving the
Department's goals.
While financial statement audits prioritize areas based on
materiality and enterprise risk at a point in time, the Army's
oversight and internal control activities extend across the
entire Army each and every day. Remediation efforts are focused
on balances material to the Department-wide consolidated
financial statement audit while the Army continues to maintain
a comprehensive list of internal controls, Army-wide monitoring
activities, and independent oversight across the Army. These
activities include supply discipline programs, risk management
and internal control programs, a continuous monitoring program,
command-directed reviews, and independent oversight conducted
by the United States Army Audit Agency and the Department of
War Office of the Inspector General.
These efforts drive process improvements across the Army
and strengthen the Army's ability to identify risks, reduce
improper payments, and improve accountability. These
improvements directly support the Army and the Joint Chiefs'
priorities, operational readiness, and effectiveness.
Our audit remediation efforts are tested every day as we
support global operations. Years of focused remediation efforts
resulted in Army ammunition inventories passing audit testing
this past year at a rate exceeding 99 percent. While work
remains, these results demonstrate progress and reinforce the
value of disciplined, enterprise-wide remediation efforts.
For nearly a decade, the Army underwent a standalone
financial statement audit that provided actionable findings,
helped us strengthen our internal controls, and focused
remediation efforts on the Department's highest risk areas.
As the Department's audit effort has matured, the Army and
the Office of the Secretary of War identified opportunities to
further align component audit activities within a consolidated
framework.
The Department's financial operations and business
processes are highly interconnected, making a more integrated
approach critical to improving consistency in the application
of audit standards, reducing duplicative efforts, and better
aligning remediation activities to balances and process
material to the consolidated Department-wide financial
statements.
This transition does not reduce oversight or accountability
but, instead, improves Department-wide alignment and
prioritization for the Department of War's highest risk areas.
The most material items remain the most material items, and
this consolidated approach allows the Army, in coordination
with the Department of War, to focus our efforts on addressing
the items that matter most and deliver results for the American
taxpayer.
Since undergoing our first full financial statement audit
in Fiscal Year 2018, the Army has made measurable progress in
strengthening financial accountability and auditability. The
Army has remediated more than ten material weaknesses. This
includes closing the material weakness related to Fund Balance
with Treasury, or the Army's checkbook. These improvements
demonstrate increased accountability and visibility into the
single largest item on the Army general fund balance sheet,
representing 50 percent of the balance.
In addition to Fund Balance with Treasury, the Army Working
Capital Fund also closed material weaknesses related to
property, demonstrating improved ability to accurately account
for Army assets and maintain visibility to where they are
located.
We are confident in our ability to do the work necessary to
achieve a Working Capitol Fund clean audit opinion in 2027 and
a consolidated general fund clean opinion in 2028, and are
excited to support the Department-wide approach.
As I have highlighted today, the Army remains committed to
transparency, accountability, and continuous improvement as we
work with Congress, the Office of the Secretary of War, and our
independent auditors to support continued progress toward the
Department-wide clean audit opinions.
Thank you for the opportunity to share the Army's
perspective today.
Mr. Sessions. Mr. Busby, thank you very much.
Mr. Mansfield, we are delighted that you are with us. The
gentleman is recognized.
STATEMENT OF BRETT MANSFIELD
DEPUTY INSPECTOR GENERAL FOR AUDIT, OFFICE OF
INSPECTOR GENERAL, U.S. DEPARTMENT OF WAR
Mr. Mansfield. Chairman Sessions, Ranking Member Mfume, and
Members of the Subcommittee, thank you for the opportunity to
discuss the Department's Fiscal Year 2025 audit results and key
changes planned for future audits. Your oversight is essential
to strengthening Federal financial management and ensuring
accountability of taxpayer resources.
In December 2025, the Office of Inspector General issued a
disclaimer of opinion on the Department's Fiscal Year 2025
agencywide financial statements. As in prior years, we issued a
disclaimer because the Department could not provide sufficient
reliable evidence to show its statements were fairly presented.
While the opinion was the same as prior years, the
Department made measurable progress in 2025. Material
weaknesses decreased from 28 to 26, and auditors issued 427
fewer notices of findings and recommendations across the
Department than they have in prior years.
Remediation efforts are taking hold. The Department closed
a longstanding material weakness related to security assistance
accounts, expanded its use of automation tools to detect and
correct errors, and modernized controls across more than 30
systems.
These positive outcomes are important, but the Department
continues to face three major obstacles: management
responsibility for and accountability of more than $4.7
trillion in assets; information technology weaknesses,
including hundreds of aging and noncompliant systems; and
accounting weaknesses, such as unsupported adjustments, over
$850 billion in the last two quarters of Fiscal Year 2025.
I want to emphasize at this time an important distinction
that is often misunderstood. Department of War management, not
the Office of Inspector General, is responsible for complete,
accurate, and reliable financial statements. The Office of
Inspector General, as the independent auditor, evaluates
whether the information presented by the Department meets
accounting standards and is supported by sufficient evidence.
This separation of duties reflects a cornerstone of Federal
audit practice. Management owns the data, the auditors evaluate
the data. When information is missing or unreliable, auditors
cannot fix it. We can, however, report it and make
recommendations to management on how to address those issues.
The Department's Fiscal Year 2026 audit is currently
underway, and it reflects a shift to a substantive testing
approach. Instead of relying on internal controls, many of
which remain ineffective, as highlighted by Mr. Harker,
auditors are directly testing transactions, balances, and
supporting documentation. This requires more site visits, more
document production on the part of the Department, and more
coordination between auditors across the Department. But it
also provides a path to validating account balances while
material internal control weaknesses persist.
The Department also established a Joint Task Force Audit to
direct corrective actions and focus remediation on issues that
drive the agency-wide opinion, such as accounting assets and
intragovernmental transactions. The OIG will be providing an
advisory role to the task force.
Looking ahead to Fiscal Year 2027, the Department will
implement one of the most significant changes in its financial
reporting structure since the full audits began. In 2027, the
number of reporting entities will drop from 22 to seven,
focusing the Department's efforts on the big rocks.
Also in Fiscal Year 2027, the Office of Inspector General
plans to transition their group auditor role to an independent
public accounting firm. This change mirrors other large Federal
audits and will capitalize on industry best practices from
across the private sector.
Under this model, the independence of the audit function
remains intact. The OIG remains responsible for ensuring the
Department undergoes an audit and retains responsibility for
overseeing the audit by monitoring the Independent Public
Accountant (IPA)'s work.
These changes do not impact the fundamental requirement.
The Department must produce reliable supportable financial
information. Substantive testing can validate balances, but it
cannot replace strong internal controls which remain essential
for long-term auditability and reliable information which is
needed for operational decisions.
The Department's financial management weaknesses are
significant. However, Fiscal Year 2025 showed progress, and the
changes underway now, focusing remediation on big rocks and
consolidating reporting entities, are meaningful.
The OIG remains fully committed to providing independent
oversight and ensuring that the Department, Congress, and,
ultimately, the American public receive reliable information on
which to base decisions affecting national defense and the
stewardship of taxpayer funds.
Thank you for the opportunity to appear before you today. I
look forward to your questions.
Mr. Sessions. Mr. Mansfield, thank you very much.
Mr. Khan, you are now recognized.
STATEMENT OF ASIF KHAN, DIRECTOR
FINANCIAL MANAGEMENT AND ASSURANCE
U.S. GOVERNMENT ACCOUNTABILITY OFFICE
Mr. Khan. Chairman Sessions, Ranking Member Mfume, and
Members of the Subcommittee, thank you for the opportunity to
discuss the Department of Defense's financial management
auditability and its new approach to achieving a clean opinion.
DoD is the only major Federal agency that has never been
able to receive a clean audit opinion on its financial
statements. A clean audit opinion is when auditors find that
the statements are presented fairly and consistent with
accounting principles.
Over the next couple of years, DoD plans to take a top-down
approach focused on validating accounting balances. This is a
significant departure from its current decentralized bottom-up
approach from the component level it used since 2018. This new
approach will not be focused on improving internal controls
and, instead, will focus more on bookkeeping. This will mean
less emphasis on making the kind of improvements that we expect
to see from a more typical financial audit.
Even if under the new approach DoD achieves a clean audit
opinion by the end of 2028, the Department's financial
management would likely still be on the GAO's high-risk list,
and the Department will still need to turn its attention back
toward improving systems, internal controls, and business
processes and operations throughout the Department after 2028.
DoD has not reported any estimates of how this approach,
when it is fully outlined, will affect the level of resources
needed.
Based on what we know so far, this new audit approach has
many opportunity costs and risks. It prioritizes account
balances over addressing internal controls which provide them a
foundation for future audits. This might postpone DoD's ability
to achieve improvements to operations and enhancements to
operational readiness. It likely will be labor and resource
intensive, which could affect sustainability. And it may result
in limited progress for addressing fraud risk, which is
particularly important given Fiscal Year 2027 budget request.
There may also be benefits under this new approach. The
clean opinion would be a major milestone that can give the
Department an important starting point for future audit
efforts. It would also be a major victory for the Department's
financial management workforce which has been seeking to
achieve this goal for many years.
A clean opinion would provide greater level of
accountability over the Department's use of its resources, even
if it is a point-in-time opinion that reflects a booking
approach to the audit over improvements to internal controls.
Finally, DoD's new approach could benefit the Department by
establishing lessons learned that otherwise might not have been
available under the current approach.
We do not have enough information about the Department's
new approach to say if the Department will be able to achieve a
clean opinion by the end of 2028. However, it will require
significant efforts and resources. In addition, that opinion
will only be a first step, although a very important one.
After that time, the Department will need to refocus on
addressing material weaknesses so it can sustain this opinion
and continue to improve its financial management and
operations.
We also have not assessed DoD's new approach to determine
if it is more or less likely to be successful than its prior
approach. But given DoD's slow pace in addressing its key
material weaknesses, I can say that the prior approach did not
seem likely to meet the 2028 goal.
I will be happy to answer any questions that you may have.
Thank you.
Mr. Sessions. Mr. Khan, thank you very much.
The distinguished gentleman, the Ranking Member, Mr. Mfume,
was required to go to have votes in another committee, and, so,
I know that he will return. We would now like to move--instead
of my opening questions, we will move to Ms. Norton. The
gentlewoman is recognized for 5 minutes.
Ms. Norton. Thank you.
Since last August, National Guard troops from the District
of Columbia and states have been deployed in D.C. Mr. Harker,
to date, how much has this deployment cost the Federal
Government?
Mr. Harker. Ma'am, I do not work in the budget area for the
Department. I do the accounting and financial systems piece, so
I would hesitate to give you numbers that might be inaccurate.
But I will take that for the record, and we will get you a
response to that question within the end of--before the end of
this week, if that is okay
Ms. Norton. Thank you. Mr. Harker, what is the average
daily cost this year of this deployment?
Mr. Harker. Ma'am, again, I will have to take that one for
the record, but I will talk to our budget people and make sure
we get you an answer before the end of this week.
Ms. Norton. Thank you. The President's militarization of
the streets of D.C. violates D.C.'s right to self-government,
is based on a lie that is un-American, authoritarian,
ineffective, unlawful, unnecessary, wasteful, and unfair to the
members of the National Guard and their families.
Congress should pass my D.C. National Guard Home Rule Act,
which would give the D.C. Mayor control over the D.C. National
Guard in the same manner that Governors of the states and
territories control their National Guards.
In addition, Congress should pass a bill to prohibit a
Governor from deploying the National Guard to another state or
territory or D.C. without consent of the chief executive of
that jurisdiction.
For over two decades, the Government Accountability Office
has maintained a high-risk list to identify critical government
programs most vulnerable to waste, fraud, and abuse. The
Government Accountability Office added Department of Defense
financial management to that list in 1995, and it has remained
there ever since. Yet, the Trump Administration has proposed a
42 percent increase in defense spending and 1-1/2 trillion--
that is trillion--dollars.
Mr. Mansfield, as an Inspector General, do you think the
answer to reducing the risk of waste, fraud, and abuse to
increase the Department of Defense's budget by 42 percent?
Mr. Mansfield. As an Inspector General, a member of the
inspector general community, what I would say is any time there
is an influx of cash or funds into any organization, the
likelihood of increased risk of fraud, waste, and abuse
coincides with that. So, it is a one-for-one or, I am not sure
if it is one-for-one, but there is definitely a positive
relationship between an influx of funds and the increased
risks.
Ms. Norton. Thank you. The Pentagon has not proven that it
can pass an audit, nor has it managed to address its decades-
long risk of waste, fraud, and abuse. The Department of
Defense's high-risk challenges are complicated. The Department
needs skilled, seasoned, focused, and committed public servants
to address them, not a deficit-spiking injection of taxpayer
dollars, especially as many Americans struggle to make ends
meet.
And I yield back.
Mr. Sessions. The gentlewoman yields back her time.
I would now recognize the distinguished gentleman from
Alabama, Chairman Palmer. The gentleman is recognized.
Mr. Palmer. Thank you, Mr. Chairman.
Mr. Harker, the Pentagon failed its eighth annual audit
announced in December of last year for the Fiscal Year 2025,
confirming that it remains the only major Federal agency never
to pass one. This is not a marginal error or a one-off failure.
They are a consistent structural problem.
When asked to account for Fiscal Year 2023 share of nearly
$4 trillion in assets, 18 of 29 Pentagon components could not
do so.
So, what drastic changes have the services integrated to
ensure that by 2027 the Department of War has both the
capabilities and the political will to successfully track its
expenditures and assets in a satisfactory and measurable way
for both the executive and legislative branches? Mr. Harker?
Mr. Harker. So, the Department is focused on getting a
clean opinion, and we anticipate getting one on the Fiscal Year
2028 statements.
Mr. Palmer. How long have you been focused on getting a
clean audit?
Mr. Harker. Pardon me, sir?
Mr. Palmer. How long have you been focused on getting a
clean audit?
Mr. Harker. A lot of the groundwork has been laid over the
last 10, 15, 20 years.
Mr. Palmer. I asked a specific question. How many years
have you been focused on getting a clean audit?
Mr. Harker. The CFO Act of 1990 is the one that required us
to----
Mr. Palmer. And you have never had one?
Mr. Harker. The entire Department has not, no, sir, but we
are working toward it.
Mr. Palmer. Yes. But that is what you have been doing for
26 years. Or 36. If it is 1990, it is 36 years, and you have
not had one.
Mr. Harker. We have increased the number of components that
have clean opinions. We had the Marine Corps get a clean
opinion three years ago. The Navy is going to get a clean
opinion on their working capital fund this year. And we
anticipate getting a clean one on the entire working capital
fund in 2027, and the Department-wide on 2028.
Mr. Palmer. Mr. Khan, the Department of War financial
management has remained on the Government Accountability
Office's high-risk list for 28 years. In your view, what are
the root causes in why this has remained a perpetual pain point
for the Department, and how can Congress step in to help clear
those bottlenecks? Because, obviously, after 36 years of
working for a clean audit, we still do not have one from the
Department of War, from the Pentagon. So?
Mr. Khan. Well, thank you for that question. I think, in
part, one can recognize the size and complexity of the
Department, and along with that, they have large and complex
systems as well. Many of them were set up for logistics as
opposed to financial management. The Department has been
intermediating them, but somewhat slowly. The new systems that
they have implemented are not compliant either. So, that is one
of the major impediment to reaching auditability and also
remaining on the high-risk list.
Mr. Palmer. Yes. One of the things that concerns me about
the ability to manage the finances of the Pentagon, the
Department of War overall, is the concern that it often has
been expressed to me that whenever Congress appropriates money
for a defense platform or systems, whatever, they are so
concerned that the next Congress might not follow through, that
they generally start projects before they are ready, before the
design is right.
Mr. Mansfield, David Schweikert had legislation directing
the Secretary of War to use artificial intelligence technology
to audit the Pentagon's financial statements. Legislation was
ultimately included in the 2025 Defense Appropriation
Authorization Act. Have any of those provisions aimed at
modernizing auditing capabilities and improving asset tracking
proven to be helpful to the Department of War?
Mr. Mansfield. The short answer is, yes, sir. What I would
say is there is a combination of efforts ongoing, both from an
audit perspective using the tools the Department has, and in
terms of using AI and other large language models to do data
matching between, say, like transactions, receipt information,
to identify where there are areas where you can match that
data--you do not have to do as much testing. And then when you
find where there are things that do not match, that is where
you can focus the audit efforts. So, it allows a more targeted
approach from an audit perspective and it enables the
Department to have more confidence in its information in
responding to inquiries from auditors.
Mr. Palmer. So, do you think utilization of AI will get us
to a clean audit?
Mr. Mansfield. By itself, no, sir. It is a tool that will
be very useful, and it is useful, but it is not the solution or
end-all to the conundrum in front of us.
Mr. Palmer. Mr. Harker, when can we anticipate a clean
audit?
Mr. Harker. Sir, we will get a clean audit opinion on the
Fiscal Year 2028 agency-wide financial statements.
Mr. Palmer. And if you do not, what do we do then?
Mr. Harker. Pardon me, sir? If we do not?
Mr. Palmer. If you do not--I mean, we have been hearing
this for 36 years, so--I want you to be able to get the
resources you need. I want you to be able to get a clean audit.
But I really think this Committee ought to be tired of holding
hearings about the fact that the Pentagon, Department of War,
cannot produce a clean audit.
I mean, do we need to bring in some other accountants? I
mean, what--tell us what we need to do, and I think we would be
willing to do it.
Mr. Chairman, I yield back.
Mr. Sessions. The gentleman yields back his time.
The witnesses, I am asking, to please stay. We will be
moving to the Capitol for votes. There are five votes that are
necessary. And I would anticipate that the total time would be
about 45 more minutes until we will return.
But the answer for Members is ten minutes after the last
vote we will form back up here in the Committee and I will open
it back up.
So, until that time, the Committee is now in recess.
[Recess.]
Mr. Gill. [Presiding.] The Committee will come to order. We
are back.
I would like to recognize Mr. Frost for 5 minutes.
Mr. Frost. Thank you so much, Mr. Chairman. Thanks to
everyone for being here.
Look, I mean, this is a hearing we have every year,
sometimes multiple times a year. Congress requires that major
agencies pass an audit. The Department of Defense is the only
major agency to have never achieved a clean audit. In fact, the
Department of Defense has failed its audit, all eight attempts.
I, to be honest, do not have faith that the ninth is going to
be the one. I hope it is, but I do not really have much faith
in it.
We are here again because the current process is fatally
flawed and undermining Congress' ability to conduct proper
oversight and, ultimately, determining the Department of
Defense's own mission to protect the American people.
Mr. Khan, what can we as Members of the Oversight Committee
do to ensure the Department of Defense complies with the law?
Mr. Khan. Oversight hearings such as this are a very
important mechanism for continuing to have an oversight to send
the message to the Department that this is an important area,
that you are focused on how their progress is folding. So, I
think this is a very important mechanism.
Mr. Frost. I mean it is important, but like I said, we have
a ton of these, right. We will hear from you all, get important
information, doing the oversight. But the point of us to doing
the oversight is to get information and then do something with
it.
I mean, I do not know, do you have any thoughts,
recommendations on things we should do? Should we be
incorporating penalties? Should we be segmenting parts off of
the DoD--like, what do you think needs to happen, or if you
have any thoughts on this?
Mr. Khan. I mean, one of the oversight tools that we have
developed for the--your Committee is the scorecard. We have
done that for three years. It shows you what the progress has
been, where there has been some sort of regression. So, I think
that is an important element to keep in front of you, just to
see where the progress is, and then to ask questions of why
progress is not more quicker than what the case has been, and
if there is any regression, what can be done to improve those
things.
Mr. Frost. Yes. Thank you. I appreciate it. And I think,
you know, the things you are describing are important to give
us the information that we need to answer the questions that we
have. But then the next question for us as legislators is, what
do we do about it? Do we keep hoping and praying it gets better
this time next year when we have the same exact hearing and we
are probably in the same exact place? You know, we do not know
where the Department of Defense is sending our taxpayer
dollars.
And I think this illegal war going on in Iran, I want to
use that as an example real quick. Two weeks ago, when asked
about the current cost of the war, the illegal war in Iran, the
acting DoD Comptroller told House Armed Services Committee that
the cost had reached $25 billion. Then, yesterday, the Pentagon
Comptroller said $29 billion. And then we have news reports
that have found that internal DoD estimates were even higher
than that.
Mr. Harker, is the DoD unable or unwilling to provide
Congress with actual truthful information?
Mr. Harker. Good afternoon, sir. I do not work in the
budget area; however, my understanding is that the information
provided by Mr. Hurst of $25 billion was the accurate
information at that time. I have not heard anything or seen
anything that indicates the cost has gone up in the subsequent
time since then, but there are daily costs, as you would
imagine. So, I do not know anything more than--on the budget
side, what he said, the $25 billion was accurate at that point
in time, sir.
Mr. Frost. Okay. Well, yes, we have gotten different
numbers from different people, and I think we ought to have a
hearing on this maybe with the appropriate people who can talk
to us about the spending going on as it relates to this illegal
war going on in Iran.
A recent Washington Post report found that Iranian
retaliation had damaged more military assets in the region than
either President Trump or Secretary Hegseth had reported.
Currently, there are no engineers on the ground that can assess
the damage at this point.
I ask unanimous consent to enter into the record a May 7,
2026, Washington Post article entitled, ``Iran has hit far more
U.S. military assets than reported, satellite images show.''
Mr. Gill. Without objection.
Mr. Frost. Mr. Khan, without a proper clean audit, can the
DoD even be fully sure about the total cost of the parts or
inventory that might be lying around the rubble of those
destroyed assets?
Mr. Khan. If the Defense Department has functioning
internal controls and the underlying processes on systems are
working, then they should be able to produce numbers to be able
to tell what the cost of operations are.
Mr. Frost. Yes. A lot of ifs for an agency that has not
been able to pass a clean audit.
And now, Secretary Hegseth has the audacity to ask us for
$200 billion more dollars. And then the President is asking us
this year to give the Department of Defense $1.5 trillion.
I have a crazy idea: No more blank checks for an agency
that is not able to pass a clean audit. After years of failed
audits, waste, and reckless spending, no more blank checks for
the Department of Defense. We should hold them to the same
standard that we hold everybody else.
We say we want more resources for housing and healthcare;
the President says, no, we are going to cut housing and
healthcare to give tax cuts to the billionaires and mega
corporations. And then he turns around and says, oh, and also,
I want $1.5 trillion to give to an agency that is not able to
pass an audit.
The real question for us as Congress is, are we going to do
something about it or are we going to continue to give the
agency a blank check, which I think gives it an incentive to
continue this reckless behavior.
Thank you. I yield back.
Mr. Gill. Thank you.
And now I would like to yield 5 minutes to Ms. Foxx.
Ms. Foxx. Thank you, Mr. Chairman.
And I thank our witnesses for being here. And I apologize
that I had to be away, but I appreciate you all coming.
I have a quick question for--well, it is not a quick
question, but I would like a quick answer--for each one of you.
The Fiscal Year 2025 National Defense Authorization Act (NDAA),
as enacted, contains provisions requiring the Secretaries of
each of the services to, quote, ``encourage to the greatest
extent practicable the use of technology that uses artificial
intelligence or machine learning for the purpose of
facilitating audits of the financial statements of the
Department of Defense,'' end quote.
To what extent--and please keep your comments very short--
have each of the services complied with this provision? Start
with Mr. Harker and go down the line.
Mr. Harker. Yes, ma'am. We have currently received $350
million in the reconciliation bill for that. We have obligated
48 percent of it. We plan on obligating the remaining funds
this year for, not just defense, but also all of the services
under one umbrella so we can get value--best value for those
funds.
Ms. Foxx. Thank you.
Mr. Busby?
Mr. Busby. Yes. So, I would say we have pretty robustly
incorporated, you know, technology and AI into enhancing and
accelerating the audit. You know, we have tools that do data
anomaly detection so that it will help us prioritize what items
we need to look at, and we have built a number of fraud
detection tools that are monitoring certain classes of payments
throughout their process to see----
Ms. Foxx. Okay.
Mr. Busby [continuing]. What is at risk.
Ms. Foxx. Mr. Mansfield?
Mr. Mansfield. Yes, ma'am. I would say that, similar to the
Army, the Navy and the Air Force have taken similar steps to
implement large language models in AI for processes to link
together transactions with source documentation, which enables
the auditors, which is the role that we play as the OIG, to
target our oversight efforts on those areas where there are
mismatches to make sure we are getting to the best use of our
resources.
Ms. Foxx. Mr. Khan?
Mr. Khan. We are aware of the Department using artificial
intelligence and newer technology, but we have not evaluated
that.
Ms. Foxx. Thank you.
Mr. Harker or Mr. Busby, earlier this year, the Association
of Government Accountants recognized process mining or process
intelligence as a new category of technology. As I understand
it, this technology can read all transaction data directly out
of an agency's financial contracting and logistics systems and
can show how a process actually ran as well as where it
deviated from the standard process. While most auditors rely on
statistical sampling due to the sheer amount of data available,
process mining could help automate this task and allow every
transaction to be analyzed.
Is the Department familiar with this kind of process
intelligence, and is it being applied anywhere inside the audit
remediation effort today? Mr. Harker.
Mr. Harker. Yes, ma'am. We are equipped with technology
from a number of different sources that allow us to do that.
Our main one is Advana. It is advancing analytics. It is a
system where we pull all of the data from every financial
management system, logistics system, and H.R. system, and we
are able to apply analytics, AI, process mining to the entire
population. That has given us great insight that has been very
helpful as we move forward with the audit, and it is going to
be one of the key things that gets us across the finish line on
the Fiscal Year 2028 audit getting us a clean opinion.
Ms. Foxx. Thank you.
Mr. Busby?
Mr. Busby. Same. Same. We use Advana as well.
Ms. Foxx. Okay. A follow-up. It is also my understanding
that process intelligence can be applied to accounting journal
entries so that all entries can be reviewed and suspicious ones
can be flagged for auditors to review. Is the Department doing
this already, and if not, why not?
Mr. Harker. Yes, ma'am. We have a significant effort going
around this so that we can go in and trace the problems that
cause the journal vouchers back to their original system of
origin. And so that uses our Advana technology, our process
mining, our business intelligence to go in and identify, is the
initial error in an Army system, a Navy system, an Air Force
system? If so, which system, and what can we do to clean up the
errors in those systems so that we have better access to data
for our lead decisionmakers?
Ms. Foxx. Thank you.
Mr. Busby, anything different?
Mr. Busby. No. We follow the same process.
Ms. Foxx. Okay. Mr. Khan, what indicators will we have to
suggest that the Department of War is on the right path to
receiving a clean audit opinion?
Mr. Khan. Thank you for that question, Congresswoman. The
Department has set out some goals over the next few years, and
the first of these goals is that the Department of the Navy
Working Capital Fund to reach an opinion by the end of this
fiscal year, so that will be an early indication of successes.
The next goal is that the Department-wide working capital fund
reaches an opinion by the end of Fiscal Year 2027. So, those
are two major indicators which will tell us how this approach
is progressing.
Ms. Foxx. Thank you, Mr. Chairman. I yield back.
Mr. Gill. Thank you, Dr. Foxx.
And I now yield 5 minutes to the gentleman from Maryland,
Mr. Mfume.
Mr. Mfume. Thank you very much, Mr. Acting Ranking Member
[sic]. I appreciate it.
My thanks to all of you who had to sort of endure our
absence for a vote series.
I want to, if I might, go back to you, Mr. Harker. I
listened intently to your opening comments. And I heard
something that I have heard quite often about existing hurdles,
and that is the legacy systems and the inheritance of those
systems and how that has traditionally, or at least certainly
recently, slowed down the process of evolution, getting us to
where we want to be.
How do we get rid of them? I mean, I have been hearing
about legacy systems for five or six years, and it would seem
to me, after a while, you throw something out and replace it
with something. Am I correct about that?
Mr. Harker. Yes, sir. One of the biggest challenges we have
with a lot of our legacy systems is that they are all
interconnected in ways to where it is almost impossible to just
pull one out. It is like pulling one piece of cooked spaghetti
out; they stick to each other and it causes problems. We are
using AI and automation to go in and identify exactly where
those problems are and how we can pull those things out so that
we can modernize our systems. The Director of the Defense
Finance and Accounting Service (DFAS) and I spent a good bit of
time yesterday focusing on this. His staff, my staff, we are
all looking at how can we get rid of those legacy systems.
Mr. Mfume. And how many of those systems do you estimate
might be operational right now?
Mr. Harker. Right now, we have got 86 financial systems
that are part of our key core financial business systems that
are tied to the audit. Our goal is to get that down to less
than ten so that we actually have one general ledger, one
entitlement system, one system for each major process. That is
going to take time. We have to be able to make sure we do not
do any harm by getting rid of those systems, but it is strongly
important for all of us to get out of the legacy systems, sir.
Mr. Mfume. So, this is a surgical approach, I take it?
Mr. Harker. Yes, sir.
Mr. Mfume. Working with the AI?
It seems to me that artificial intelligence should be able
to let you know, if you are working in one particular area, how
it interacts with another one and whether that is negative and
should be shut down or whether it is positive and should be
amplified. Is that the way you are approaching this?
Mr. Harker. Yes, sir. Our approach is to use AI to piece
together the information that's missing from the various
systems, fill the holes in our data, and give us insight into
how we can pull those other systems out without causing any
harm to the overall financial corpus.
Mr. Mfume. And did I also hear, and was it a part of your
testimony, that you expect the completion of the audit, agency-
wide audit, by 2028? Did I mishear on that?
Mr. Harker. Yes, sir. We anticipate getting a clean opinion
on the Navy Working Capital Fund this year, the overall working
capital fund next year, and then a clean opinion on the agency-
wide statements in Fiscal Year 2028.
Mr. Mfume. And when will you know between now and then if
your goal, your target, is not going to be met in 2028?
Mr. Harker. I think the first indication you should be
looking for is our Fiscal Year 2026 Navy Working Capital Fund.
They are on track to get a clean opinion this year. That
opinion will be out by February of next year. If they miss
that, then we are in danger of making the 2028 date. But that
is the next big cycle where you will have independent
verification that the things we are doing are on track, sir.
Mr. Mfume. Okay. And, Mr. Mansfield and Mr. Khan, it is
good to see both of you. I did not have much to say early on
because I was trying to rush through and get out of here, but
you have been before this Committee, both of you now, several
times, so you know the kind of angst that we always demonstrate
when we realize we are not where we are supposed to be with
respect to these audits.
Mr. Khan, I want to go back to you, because there is a
three year report card that was established that measures.
That, I am assuming, that report card will also indicate if, as
Mr. Harker is moving toward this goal of 2028 agencywide, that
you would get some indication from that, there would be
something that would go off and say that you are not going to
make it or you are going to make it, and if so, can you tell us
how that works?
Mr. Khan. Thank you for that question, Congressman. The
scorecard is looking at some different measures than what the
current approach is going to be undertaking. The measures we
have on the scorecard is more granular. It is looking at the
processes and internal controls and fixing the material
weaknesses and the individual findings, whereas the current
approach is, like I said in my opening statement, is more top-
down. So, those results would not necessarily be captured in
this--in this particular format of the scorecard.
Mr. Mfume. So, do both of those approaches at the end of
the day complement one another or are they negatively affecting
one another?
Mr. Khan. They complement one other, but it is important to
recognize that the financial statements should be reflecting
what the underlying records are. And one of the concern is that
the current approach may not really reflect what is in the
underlying financial system, because if the adjustments are
made to the financial statement itself, just the numbers, the
bookkeeping of it, then it may not be necessarily reflective of
what the underlying records are.
Mr. Mfume. Okay. My time has expired, but I just want to
call your attention to the fact that, after I huddle with the
Chairman, we probably will be doing this dance again in about
six months just to be able to figure out where we are on the
continuum and whether or not something new or different should
be implemented.
I yield back.
Mr. Gill. Thank you, Mr. Mfume.
And I will now yield 5 minutes to myself to ask you guys a
few questions. Thank you all for being here and for taking the
time to talk with us. It is always really helpful.
Mr. Khan, I will start with you. Can you explain just in
layman's terms what exactly it means when an agency is not able
to pass an audit?
Mr. Khan. That its underlying systems, the internal
controls are not functioning as intended and, therefore, the
numbers, the information it is producing, it is not reliable.
Consequently, the financial statements, which are produced
through those numbers, they are going to be unauditable, and
the auditor is going to give a disclaimer of opinion.
Mr. Gill. Got it. And, in your opinion, what are the major
reasons the Department of War cannot pass an audit?
Mr. Khan. There are three major buckets which are causing--
one of them really goes down to the processing system. If the
processes and systems are not operating, then it is going to be
very difficult to pull those numbers together to aggregate them
to a financial statement. The other one is just pure
accounting. To get your hands around accounting, some of this
is rather complex to get that done. And then, finally, there is
the element of getting enough trained people to pull all this
information together so that you can have this done on an
annual basis.
Mr. Gill. Is there a role in the fact that the Department
of War cannot account for all of its properties? Is that part
of this issue as well?
Mr. Khan. Yes. That is part of the issue, the existing
completeness and valuation of the property.
Mr. Gill. Could you help explain that?
Mr. Khan. Because, I mean, property is part of the DoD's
assets. The financial statement required those assets to be
reported on the financial statements, and if the assets--the
valuation is unknown, then that will be detrimental to what can
be reported in financial statements. If your methodology does
not ensure that you have a complete count of those assets,
then, again, that will be a deficiency in the numbers that are
reported in the financial statements.
Mr. Gill. And what do you think Congress could do to help
alleviate some of those challenges?
Mr. Khan. Like I had said earlier on, I think the most
meaningful way is to continue to have these oversight hearings
so that you can--it sends a message that you all are interested
in the results of the financial statement audits. It is very
important for the defense of this country. So, I think that
sends a very strong message to the people in the Defense
Department to make sure that they are taking this seriously,
which they are, and they have progressed a lot over the prior
several years. And if you continue to have these oversight
hearings, it will continue to show positive results.
Mr. Gill. Is there anything we could do outside of showing
interest that might expedite this process to the point where we
can pass an audit in the near future, in your opinion?
Mr. Khan. I mean, you can pass legislation to encourage
them to go in that direction, and Congress has done that
before. So, that is another avenue for the Committee to follow.
Mr. Gill. Okay. Got it. And, in your opinion, what are some
of the potential risks posed by giving the Department of War
such a large budgetary increase in the wake of their inability
to pass an audit?
Mr. Khan. The lack of internal controls is of concern. I
mean, some examples that come before us is, when the COVID
funding went out, it went out through conduits which did not
have adequate controls. Consequently, we saw the results of
that. The money was going to places where it was not intended
for. If, like we know, the internal controls of the Department
are very weak, if it is flush of money, then it is of concern
that the money may not be going to the right places.
Along with that, fraud risk management was added to the
high-risk list. Because of weak internal controls, there is a
heightened risk that there is going to be--there is a greater
likelihood of fraud happening. So that, in conjunction between
the lack of internal controls and the heightened risk of fraud
risk management, I think is something to be watched carefully
and managed when additional money is being given to the
Department.
Mr. Gill. Got it. Thank you, Mr. Khan.
And with that, I will yield back the remainder of my time.
And we will move on to the gentleman from Virginia, Mr.
Walkinshaw, for 5 minutes.
Mr. Walkinshaw. Thank you, Mr. Chairman. And thank you all
for being here.
Mr. Khan, you referred, and we have had some conversation
around the scorecard, which I think is on page 28 of your
testimony. And I understand that the Comptroller, the
Department, assert that the scorecard reflects legacy processes
and not the current priorities. I think I can understand why
the Department would not want folks to pay attention to the
scorecard because it ain't great. There are eight categories,
four branches. It looks like there are increases in the scores
from Fiscal Year 2024 to 2025, and one, two, three, four, five
scores went up. The other 27 were stagnant or maybe declined, I
am not sure.
Some significant ones, NFR closure, so notice of findings
and recommendations from OIG: Army, F; Navy, F; Air Force, F;
Marine Corps, F. Systems compliance with financial management
requirements, that is just whether you are in compliance, if I
am understanding correctly, with the existing requirements,
statutory, regulatory, policy: Army, F; Navy, F; Air Force, F;
Marine Corps, F.
And then when I, in reading your testimony and your
discussion of the DoD's revised approach, the lack of
sufficiently detailed road maps limits transparency and
accountability. The revised approach will result in the
preparation and audit of fewer stand-alone financial
statements, potentially risk limiting accountability and
transparency.
I am trying to understand GAO's concern. Is it that this
revised approach will make it less likely that the Department
can achieve a clean audit or that perhaps it accelerates
accomplishing a clean audit on paper, but there will be
transparency and potential improvements and savings to the
taxpayers perhaps lost in the process that otherwise could have
been achieved?
Mr. Khan. It is that the opinion may be achieved without
having a really robust look at the underlying processes which
are important for operational efficiencies to make sure that
the Department's financial management is functioning the way it
should function, rather than just looking at what the financial
statement numbers are. So, that is the major concern, that the
internal controls which are put into an environment like the
Defense Department, the check and balances, that they will not
necessarily be looked at and neglect over the time period.
Mr. Walkinshaw. Okay. I just want to state for the record I
have serious concerns about that. I am not interested in a
clean audit for the sake of a clean audit. The point here is to
get a clean audit so we know the taxpayers are getting the best
value for their money, and I am certainly going to be watching
that closely.
Mr. Mansfield, I read your all's report, the Financial
Statement Audit Explained report, and I have got to say, I
enjoyed it. Given the title, not the kind of report you would
typically enjoy, but I think you all did a good job of making
it easy to understand and read. But you did outline, as
Obstacle No. 2, information technology. And you noted the
outdated, redundant, not compliant Federal accounting systems,
outdated IT systems, not compliant with the Federal Financial
Management Improvement Act of 1996--1996--297 major financial
management systems.
And I guess, I am just a little bit concerned that we have
not had a lot of conversation, Mr. Harker, Mr. Busby, from you
all, on that fundamental challenge, that we have financial
management systems that are way out of date, out of compliance.
And if we have a--I do not see how you can have a clean audit
that is truly a clean audit without addressing that issue.
Either of you want to speak to that?
Mr. Harker. Yes. I agree 100 percent that we need to get
rid of a lot of these legacy financial systems, and we are
working to do so. Using the AI and automation to help fill in
the gaps in data is helping us move forward with identifying
what systems can be eliminated and how quickly. But in
addition, there are efforts going on.
When I was the CFO of the Navy a while back, we
consolidated our general ledger systems. We went from nine
general ledger systems down to one. That took about eight
years, but it was a systemic elimination of legacy systems,
moving all the data into the one general ledger that the Navy
operates today.
The Navy is in the process of modernizing that system. In
doing so, they are pulling in requirements from other legacy
systems so that all of it will be done in that one general
ledger system. You will have payments, you will have
disbursements, you will have approvement of funds, you will
have all of the accounting stuff for payments, receivables,
Fund Balance with Treasury reconciliations in one system. At
that point, the Navy will no longer need to touch all of those
other systems, and that is the only way we are going to be able
to eliminate all of them.
So, that effort there is huge, and I encourage you to take
a look at what the Navy's doing, because that answers a lot of
your questions, sir.
Mr. Walkinshaw. Thank you, Mr. Chairman. I yield back.
Mr. Sessions. [Presiding.] The gentleman yields back his
time. Thank you very much.
The gentleman is recognized for 5 minutes. Mr. Jack, it is
good to see you.
Mr. Jack. Thank you very much.
Mr. Sessions. Thank you for taking the time to be us with
today.
Mr. Jack. Thank you very much, Mr. Chairman.
My question to Mr. Harker, I understand that the new audit
approach will not focus on addressing material weaknesses or
auditor recommendations. As such, what do you expect to be the
Department's biggest hurdle to achieve a clean opinion by 2028?
Mr. Harker. So, every Notice of Finding and Recommendation,
every material weakness has multiple conditions, some of which
are more important to fix than others. Our goal is to clean the
ones that are the biggest barriers to getting that clean
opinion and focus all of our efforts on getting the clean
opinion.
Mr. Jack. And I understand, correct me if I am wrong, the
Marine Corps was the first and only service to achieve a clean,
unmodified audit opinion. Is that correct?
Mr. Harker. Yes, sir, that is correct. They have had three
in a row.
Mr. Jack. And could you, given that success, walk us
through why the Marines are so well positioned with respect to
that initiative and what lessons we can learn and perhaps other
branches can learn from their success?
Mr. Harker. Yes, sir. The key factor for the Marine Corps
was the Commandant of the Marine Corps issued a two-page letter
directing all the Marines to do what it took to get a clean
opinion. Once that was issued, it went from where I was working
with the Marines and they were saying, ``Yes, this is nice, but
it is not important to the Commandant,'' to, now, ``The
Commandant says do this.'' I was CFO of the Navy at the time,
the Department of the Navy, so Navy and Marine Corps, and it
was amazing how quickly they got in line. They put in the
effort to go out, count things, provide the right accounting
for them, modernize systems where they could, do substantive
test work where they could not.
That model has been moved to where now the Navy is doing
that. Their Vice Chief of Naval Operations issued similar
guidance to the Navy. They are moving forward. They are going
to get a clean opinion on their working capital fund audit this
year. And you see the same thing happening in the Air Force,
where they are both hoping to get clean opinions in 2027. So,
there has been a lot of progress inside the Department based on
the lessons learned by the United States Marine Corps.
Mr. Jack. There is a follow-up to my next question, but
imagining if the model were scaled across the entire Department
of War, do you believe it would remain viable across each
branch, and could you walk me through some of the nuances
within each branch as it relates to that model?
Mr. Harker. Yes, sir. Absolutely. I think the guidance from
Secretary Hegseth, standing up Joint Task Force Audit, is the--
taking the guidance that the Commandant gave and moving it to a
higher level. He has dedicated a general officer, plus 20-plus
other military personnel, to work alongside the accountants on
my staff and the support contractors we get who have technical
expertise that we may not have to go out and solve all these
problems.
We are deploying those teams out to the Army, the Air
Force, the Navy, the defense agencies, to go after the specific
problems that are causing us audit challenges. We are including
a data analytics corps from the others on my staff on that. We
are including folks who have specializations in configuring
systems and in looking at how to replace systems, and so it is
an effort that is the entire Department.
The task force is reporting their results every two weeks,
and that gets out to all the senior leaders. It goes up through
the Comptroller, gets to the Secretary, gets to the Chairman,
provides the way ahead and identifies the barriers where we
need help removing them. If there are things that I cannot
resolve, I go to my boss, he engages with all the other four-
stars, where they are in uniform or in civilian, you know,
political appointees, and we go after that and we knock those
barriers down so that we can move forward as quickly as
possible to get this clean opinion.
Mr. Jack. And how are you utilizing new technology, new
emerging technology to help expedite these audits, make sure
they are perfect? Welcome thoughts over the last few years how
it has evolved and how it has approached what you do.
Mr. Harker. Yes, sir. We appreciate the funds that were
given to us in the One Big Beautiful Bill Act. It is $350
million: $150-to eliminate legacy systems, $200-toward the
advent of AI and automation. We have obligated a significant
portion of that. We are putting in place tools using AI that
are helping to fill data gaps. We are putting in automation
that allows us to use robotic tools inside the computer systems
to go pull data that supports the audit testing. And we are
using the funding on legacy system decommissionings to go after
specific problems that are in current systems, either to make
an improvement to that system so it works better or to take
that system offline and have other things that can replace it.
Mr. Jack. And to affirm, that funding came through the One
Big Beautiful Bill Act?
Mr. Harker. Yes, sir.
Mr. Jack. And I just--I will close, Mr. Chairman, by just
noting, that is just another example, of which there are many,
where the One Big Beautiful Bill Act is really helping move the
country forward. It is something the American people wanted
when they voted for Donald Trump and House Republicans being
the majority in 2024. And I think that funding is illustrative
of the overall approach to ensure that we spend money more
efficiently and, likewise, govern in a way that is befitting of
what the American people wanted back in 2024.
So, with that, Mr. Chairman, I applaud you for convening
this hearing, and I yield back the balance of my time.
Mr. Sessions. The gentleman yields back his time. Thank you
very much.
I believe everyone on this side has had an opportunity to
engage our witnesses. I apologize for being late. I had another
committee where we had work that had to be accomplished.
Thank you for being here today. This has brought about a
great deal of information that you have received about the
reality of where people perceive we actually are on this issue.
I could call it pessimism. I could call it a reminder to you of
past performances you are still getting credit for.
I want to turn for just a minute and ask two questions. Mr.
Harker, you alluded to and talked about doing away with legacy
systems and replacing them, some $350 million that was given
under One Big Beautiful Bill, that would allow you to get
closer to this effort of complying with the law. Tell me about
those. Are they systems that will take five months to fix, ten
months to fix, two years to fix? They are going to come online,
they are going to help be your saving grace to help you in this
year and next year and to comply with the law. Tell me about
those--that timeframe and the availability of these new systems
to aid that effort.
Mr. Harker. Yes, sir. So, getting from nine general ledgers
to one for the Navy, it took just under eight years and it took
a good deal of money, but they are now operating at a savings
because they no longer have to support the other eight legacy
systems. The Defense Financial Accounting Service, DFAS, has
done a similar effort where they have tried to reduce the
number of different systems that perform the same function. For
example, they will have systems that will be dispersing
systems, they will have systems that will do entitlements, that
will do payment management, that type of thing.
And so they have systemically been reducing the number of
systems by migrating people from one to another and getting all
of the work down to, for disbursing, they only have two, one
that is unclassified, one that is classified; for payment
management, they have got it down to four; for Fund Balance
with Treasury reconciliation, they are down to two.
So, this is significant improvements when you consider they
had six, seven, eight, nine systems, all of which were written
in COBOL or FORTRAN or legacy accounting systems that were
highly challenging to maintain because we just do not have
folks who code in those languages. I learned FORTRAN when I was
a freshman in college many, many years ago, but there are not a
lot of people out there learning it today.
So, for us it is a systemic effort. The services are each
doing their bit. DFAS is looking at what they can do. The
biggest challenge for DFAS right now is getting ahold of their
data so that they do not lose the data, getting it into one
repository, so they are looking at can they put that data into
our Advana system, and then if so, that would expedite their
movement toward elimination of legacy systems.
Mr. Sessions. Okay. Does that mean history of data or
current data?
Mr. Harker. Both, sir.
Mr. Sessions. Both.
Mr. Harker. There is a history of data that is required.
For example, when they pay servicemembers, we need to keep that
data so that we can refer back and say, no, servicemember, you
are complaining about this; you did get that payment on
November 17. But for other--a lot of them it is the current
year data so that you will have a way of making sure that you
are not going to be missing something or pulling a system away
that is going to cause a break in the flow of data across our
various systems.
Mr. Sessions. All right. I am still wanting to get a little
bit closer, tighter on this.
Mr. Harker. Sir.
Mr. Sessions. What brought me to the question was the view
that you made about the eight years to go from one system to
another and diminishing those systems and refurbishing or
bringing the others online. My question is, you are now working
with that $350 million. Is that an eight year process, or are
you--because you have told us, your testimony before this
Subcommittee is you are going to make the clean audit.
Mr. Harker. Yes, sir.
Mr. Sessions. You do not have eight years.
Mr. Harker. No, sir. We are going to make a clean audit
opinion in the system state that we current have, plus the
decommissionings that we can accomplish over the course of the
next two years. The decommissionings are ongoing. There are
systems that were decommissioned last year. There is more that
we have planned for this year. That is work that is being done
in conjunction between the comptroller organization, the
services, and then the CIO organization both at the Department
level as well as in the services.
So, there is a defense business council that goes after
that, and they had a meeting earlier this week where the newly
confirmed CIO, the Deputy Comptroller, and a lot of the
leadership were all digging into what is it going to take for
us to turn these systems off. The information we gathered by
turning off other systems gives us more insight into what it
takes to do this so we can accelerate.
As we get to a clean opinion, we are still going to have
some legacy systems, but we will have a lot more information
that will allow us to focus resources on decommissioning
additional systems, which will make the audit cheaper, faster,
and add more value to the warfighter because we will be able to
give them better data more quickly so they can have informed
decisionmakers.
Mr. Sessions. Well, I am for it. Yesterday, I had a
conversation with all four of you that focused on a viewpoint
that I have, may be shared by others, but it is certainly one
that I am interested in, and that is that today we have the
need in the conflict that we are engaged in to make sure that
the Joint Chiefs and decisionmakers as commanders, frontline
commanders especially, but also those back at the Pentagon, who
need to have confidence in the numbers that they are looking at
of systems, of data bases, of actual--not stockpiles, but the
things that are actually available to the Joint Chiefs.
I hope that I--we have not done anything in here but,
rather, would aid in that ability for you to prioritize those
avenues that provide critical mission support so that you could
count on them in your work. Do you think that we have asked you
to do anything where we are getting in the way of mission-
critical objectives by you moving forward to this date of a
clean audit?
Mr. Harker. Yes, sir. Absolutely. I have seen it happen at
the Navy when I was CFO there.
Mr. Sessions. The question is, do you think we are getting
in your way----
Mr. Harker. Oh.
Mr. Sessions [continuing]. Or being a hindrance in you
performing the duties of providing the necessary information to
the Secretary, to the Joint Chiefs? Are we doing anything by
pushing clean audit, clean audit, clean audit, which you have
heard here today?
Mr. Harker. Yes. No, I do not believe you are getting in
our way. You are holding us accountable for compliance with the
law and compliance with standards.
An audit determines is management doing their job, and for
many years we have been making improvements in that, but we are
not there yet. We need to do better. We will do better. We will
have the opinion by 2028, and that will enable us to provide
better information to commanders.
As we have been going through this progress, the push that
you have been giving us, the emphasis has helped us to--helped
to hold us accountable to improve our data quality. We have
seen data quality improvements on the logistics side. We have
seen data quality improvements on the accountability for
munitions side. The guidance, the feedback we have gotten from
the Committee has been outstanding in helping us move forward
in making those significant improvements that impact
operations.
Mr. Sessions. Yes.
Mr. Mansfield, I am not sure if you are aware, but there
have been several discussions that have taken place between
Department of War and this staff, this Oversight staff, that
essentially went along the line of, we have still got things
that we would like to move forward in the audit and take to
zero or to decommission things or to get them off our books.
That seemingly made sense to me. I am not a CPA. But when you
have got buildings, circumstances that are more than 100 years
old, you may be using it but the value is hugely diminished.
I want you to know that, in the coming weeks, we are going
to revisit that issue. And I am interested in you and Mr. Khan
being in those discussions. I am not a CPA, but I want to make
sure that, when we get down to this, that we are fair to the
DoW. I think that they are asking reasonable questions. They
are making sure that, when we look at data, they are looking at
the same data. But I would want you to know that I think that
these are honest questions that they are seeking our opinion
on.
Have they sought your opinion on these types of matters?
Mr. Mansfield. So, first off, I welcome the opportunity to
engage in those conversations. I think that would be a great
dialog for us to continue.
Yes, we have had conversations along those lines with the
Department. I know that Mr. Harker and others have engaged also
with the Federal Accounting Standards Board, the FASB. They are
the body that sets standards and expectations for how financial
records are maintained. The rule of the OIG is to, you know,
ensure that the Department's meeting those expectations. We do
not set them, but we are happy to be a part of the
conversation.
Mr. Sessions. That is great. But you are in that
conversation----
Mr. Mansfield. Yes.
Mr. Sessions [continuing]. And aware of these discussions.
Mr. Mansfield. Yes, sir.
Mr. Sessions. Mr. Khan, do you believe that you have
offered any opinion related to these types of things where they
have come back and said, we believe we are doing this, but we
believe it might be permissible to gain acceptance, at least
from Congress, I am sure from all of us that are involved,
about taking these matters to where they would fall off the
report or diminish their value?
Mr. Khan. Right. I mean, these are ongoing conversations.
We have had discussions with the Department going back in the
2015, 2016 timeframe regarding sensitive activities and
equipment. So, the recent conversation, we are aware of what
the Department is looking for, and the right forum for that is
to have a discussion with FASB, the Federal Accounting
Standards Board. They are a consultative body. They are going
to be happy to engage with the Department to understand what
their needs are, and they can suggest different ways to
structure particular standards. And I think Mr. Harker and the
Board is going to be meeting and engaging with them in those
conversations.
But to your questions, we will be very happy to engage with
you and with whomever to have those conversations so we can
offer our perspective as well.
Mr. Sessions. Thank you very much.
Mr. Harker, do you believe that this Committee staff needs
to be a part of those decisions or do you believe that we would
look at a recommendation that would come from this group of
people? I am trying to get closer to making sure we are not
getting in your way, also, of achieving the things that we need
from the timeframe perspectives.
Mr. Harker. Yes, sir. You are not getting in our way. We
have been working with Mr. Khan, Mr. Mansfield, their staffs,
on how to integrate our efforts with the advice we get from
them, whether it is formal advice via an NFR, material
weakness, audit communication, or conversations that we have
during our monthly or more frequent meetings.
I would invite you and your staff to come look at what we
get set up with the Joint Task Force Audit, start looking at
some of those biweekly reports that are going to be going up to
the Secretary, the Deputy Secretary. We are in the process of
building that out, but by the time we come back in six months
or so, we should be able to give you a history of these are the
reports, these are the issues that were raised, here is how we
removed those barriers. And it will be something that you will
be able to assess are we managing this and monitoring it on a
regular ongoing basis, and I think that would give you good
information, and your interest would also help us with making
the changes the Department needs to make.
Mr. Sessions. Thank you very much. We will, both Mr. Mfume
and I, would choose to do that, and it is always better to be
invited. So, thank you for the kind invitation. I do not think
we will wait six months. I think we will want to come back and
provide feedback reinforcing the work that you are doing.
I want to thank all four of you for being here.
And I would now like to ask if there is a second round of
any Member that is interested in that. Mr. Walkinshaw?
Mr. Walkinshaw. No.
Mr. Sessions. Mr. Mfume?
Mr. Mfume. No.
Mr. Sessions. Okay. I am engaged in this and found your
energy, all four of you yesterday, very important. I think that
the perspective--I did not hear different answers. I did not
hear differences of opinion. I did not hear someone say they
cannot. I heard them say they can. I heard each of you say, if
we continue down this path. But the greatest thing I heard was,
we are working together. That the leadership at the Department
has the desire, and you feel like that following, I guess what
we have talked about, the Marine Corps top-to-bottom viewpoint
of making this work is something that is happening right now at
the Pentagon. So, Mr. Mfume and I would want to come over and
make sure we reinforce that.
I do not think any of your colleagues really want to come
and go through what you did today, but I think the next time it
would offer you a chance perhaps to tell stories of success,
perhaps give you opportunities for you to say how the Secretary
of the Navy felt like that his decisionmaking was enhanced with
date and information, that the Secretary of the Air Force,
perhaps the Joint Chiefs, would be able to say they felt more
confident in the questions that they asked were backed up with
reality, and that is really what the data supported what is
available to them.
So, I really want to thank you. But I would say that
probably Mr. Mfume would come over as early as June, so we will
find out. So, I want to thank you all. I want to allow the
distinguished gentleman from Maryland his opportunity to close,
but my close is going to be, and we are going to see you in
June. So, I want to thank each of you.
Mr. Mfume?
Mr. Mfume. Thank you very much, Mr. Chairman.
My thanks to all of you again. Like I said before, Mr.
Mansfield, Mr. Khan, good to see both of you again.
June might be a little premature because Chairman does not
have a campaign, I do, and an election on the 23rd of June. So,
to the extent that I can do that and be here--or be there with
you, I will.
But I want to thank you again for following up. One of the
things we have tried to do with this process is to follow up,
and follow up, and follow up. And I would hope, then, Mr. Khan,
you could juxtapose the report card against some of the
information that we get then to help us better understand where
we are on this continuum.
That is it for me, Mr. Chairman. I yield back. On behalf of
my Members who have been here and participated, we thank you
for the opportunity.
Mr. Sessions. Mr. Mfume, I apologize for not staying up
with the calendar as well as you have, and it would be--perhaps
we would entertain a July then. But I prefer not to wait six
months. I think that it would be insincere on our part to leave
it all to you when we are all trying to get it done together.
So, I want to thank the gentleman.
Mr. Walkinshaw, I want to thank you for taking time, once
again, to come and do this.
So, with that, and without objection, all Members have five
legislative days within which to submit materials and
additional written questions for our witnesses which will be
forwarded to the witnesses.
If there is no further business, without objection, the
Subcommittee stands adjourned.
[Whereupon, at 4:57 p.m., the Subcommittee was adjourned.]
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