Audit the Pentagon Act of 2017
This bill requires a .5% reduction in Department of Defense (DOD) discretionary budget authority if DOD has not submitted a financial statement by March 2 of a fiscal year for the previous fiscal year or such financial statement has not received an unqualified or qualified audit opinion by an independent auditor. This reduction does not apply to military, reserve, and National Guard personnel accounts or the Defense Health Program account. The bill permits the President to waive any reduction in DOD budget authority if the reduction would harm national security or military personnel deployed in combat zones.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3079 Introduced in House (IH)]
<DOC>
115th CONGRESS
1st Session
H. R. 3079
To reduce by one-half of one percent the discretionary budget authority
of the Department of Defense for a fiscal year if the financial
statement of the Department of Defense for the previous fiscal year
does not receive a qualified or unqualified audit opinion by an
external independent auditor, and for other purposes.
_______________________________________________________________________
IN THE HOUSE OF REPRESENTATIVES
June 27, 2017
Ms. Lee (for herself, Mr. Burgess, Ms. Clarke of New York, Mr. Conyers,
Mr. Ellison, Mr. Evans, Mr. Grijalva, Ms. Norton, Mr. Huffman, Ms.
Jackson Lee, Ms. Jayapal, Ms. Kelly of Illinois, Mr. McGovern, Ms.
Moore, Mr. Moulton, Mr. Nolan, Mr. Pocan, Mr. Polis, Mr. Raskin, Ms.
Schakowsky, Mr. Biggs, Mr. Blumenauer, Mr. Gosar, Mr. Lance, Mr.
Labrador, Mr. Massie, Mr. Jones, Mr. Stivers, Mrs. Watson Coleman, Mr.
Welch, Mr. Cohen, Mr. Khanna, Mr. DeSaulnier, and Mr. Amash) introduced
the following bill; which was referred to the Committee on Armed
Services
_______________________________________________________________________
A BILL
To reduce by one-half of one percent the discretionary budget authority
of the Department of Defense for a fiscal year if the financial
statement of the Department of Defense for the previous fiscal year
does not receive a qualified or unqualified audit opinion by an
external independent auditor, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Audit the Pentagon Act of 2017''.
SEC. 2. PURPOSES.
The purposes of this Act are as follows:
(1) To strengthen American national security by ensuring
that--
(A) military planning, operations, weapons
development, and a long-term national security strategy
are connected to sound financial controls; and
(B) defense dollars are spent efficiently.
(2) To instill a culture of accountability at the
Department of Defense that supports the vast majority of
dedicated members of the Armed Forces and civilian employees of
the Department who want to ensure proper accounting and prevent
waste, fraud, and abuse.
SEC. 3. FINDINGS.
Congress finds the following:
(1) The 2016 Financial Report of the United States
Government found that, the Department of Defense again had a
disclaimer because it lacked any auditable reporting or
accounting available for independent review. The Department of
Defense is the only covered major agency that has always had
such disclaimers and has never had a clean audit.
(2) The financial management of the Department of Defense
has been on the ``High-Risk'' list of the Government
Accountability Office (GAO) since 1995 because it has never
achieved an unqualified audit opinion. The GAO's 2015 High-Risk
Report found that ``The Department of Defense (DOD) is
responsible for more than half of the Federal Government's
discretionary spending. Significant financial and related
business management systems and control weaknesses have
adversely affected DOD's ability to control costs; ensure basic
accountability; anticipate future costs and claims on the
budget; measure performance; maintain funds control; prevent
and detect fraud, waste, and abuse; address pressing management
issues; and prepare auditable financial statements. Without
accurate, timely, and useful financial information, DOD is
severely hampered in making sound decisions affecting the
department's operations.''.
(3) At a September 2010 hearing of the Senate, the
Government Accountability Office stated that past expenditures
by the Department of Defense of $5,800,000,000 to improve
financial information, and billions of dollars more of
anticipated expenditures on new information technology systems
for that purpose, may not suffice to achieve full audit
readiness of the financial statement of the Department.
(4) Section 9 of article I of the Constitution of the
United States requires all agencies of the Federal Government,
including the Department of Defense, to publish ``a regular
statement and account of the receipts and expenditures of all
public money''.
(5) Section 303(d) of the Chief Financial Officers Act of
1990 (Public Law 101-576) required that financial statements be
prepared and independently audited for the Department of the
Army by March 31, 1992, and for the Department of the Air Force
by March 31, 1993. Neither the Department of the Army nor the
Department of the Air Force has complied.
(6) Section 3515 of title 31, United States Code,
originally required the agencies of the Federal Government,
including the Department of Defense, to present auditable
financial statements beginning not later than March 1, 1997.
The Department of Defense has not complied with this law.
(7) The Federal Financial Management Improvement Act of
1996 (31 U.S.C. 3512 note) requires financial systems acquired
by the Federal Government, including the Department of Defense,
to be able to provide information to leaders to manage and
control the cost of Government. The Department has not complied
with this law.
(8) In 2005, the Department of Defense created a Financial
Improvement and Audit Readiness (FIAR) Plan, overseen by a
directorate within the office of the Under Secretary of Defense
(Comptroller), to improve Department business processes with
the goal of producing timely, reliable, and accurate financial
information that could generate an audit-ready annual financial
statement.
(9) Then Secretary of Defense Ashton Carter said in a
statement to the Defense Subcommittee of the Committee on
Appropriations of the House of Representatives on February 25,
2016, ``I cannot ask for more taxpayer dollars for defense
without being candid about the fact that not every defense
dollar is spent as wisely or responsibly as it could be, and
also being determined to change that and make our department
more accountable.''.
(10) Then Secretary of Defense Robert M. Gates said in a
speech on May 24, 2011: ``The current apparatus for managing
people and money across the DoD enterprise is woefully
inadequate. The agencies, field activities, joint headquarters,
and support staff functions of the department operate as a
semi-feudal system--an amalgam of fiefdoms without centralized
mechanisms to allocate resources, track expenditures, and
measure results relative to the department's overall
priorities.''.
(11) The accounting problems of the Department of Defense
result in widespread errors in pay that can be difficult to
correct. Such payroll errors can impose hardship on members of
the Armed Forces and their families.
SEC. 4. DEPARTMENT OF DEFENSE SPENDING REDUCTIONS IN ABSENCE OF
SUBMITTED FINANCIAL STATEMENTS OR FAILURE TO ACHIEVE
UNQUALIFIED OR QUALIFIED INDEPENDENT AUDIT OPINION.
(a) Definitions.--In this section:
(1) The terms ``financial statement'' and ``external
independent auditor'' have the meanings given those terms in
section 3521(e) of title 31, United States Code.
(2) The term ``qualified'', with respect to the audit
status of a financial statement, includes the characterization
modified.
(3) The term ``unqualified'', with respect to the audit
status of a financial statement, includes the characterizations
clean and unmodified.
(b) Reduction To Encourage Financial Accountability.--If, by March
2 of a fiscal year, the Department of Defense has not submitted a
financial statement for the previous fiscal year, or if, by such date,
such financial statement has been submitted but has not received either
an unqualified or a qualified audit opinion by an independent external
auditor, the discretionary budget authority available for the
Department of Defense shall be reduced by .5 percent.
(c) Application of Reduction.--Consistent with applicable laws, the
Secretary of Defense shall apply any reduction under subsection (b)--
(1) proportionately to each Department of Defense account
(other than an account listed in subsection (e) or an account
for which a waiver is made under subsection (f)); and
(2) in a manner that minimizes any adverse effect on
national security.
(d) Deficit Reduction.--An amount equal to the total amount of any
reduction under subsection (b) shall be retained in the general fund of
the Treasury for the purposes of deficit reduction.
(e) Accounts Excluded.--The following accounts are excluded from
any reductions under subsection (b):
(1) Military personnel, reserve personnel, and National
Guard personnel accounts of the Department of Defense.
(2) The Defense Health Program account of the Department of
Defense.
(f) Waiver.--The President may waive subsection (b) with respect to
an account if the President certifies that applying the subsection to
that account would harm national security or members of the Armed
Forces who are deployed in combat zones.
(g) Report.--Not later than 60 days after a reduction takes effect
under subsection (c), the Director of the Office of Management and
Budget shall submit to Congress a report specifying each Department of
Defense subject to reduction and the amount of the reduction.
SEC. 5. REPORT ON DEPARTMENT OF DEFENSE REPORTING REQUIREMENTS.
Not later than 180 days after the date of the enactment of this
Act, the Under Secretary of Defense (Comptroller) shall submit to
Congress a report setting forth a list of each report of the Department
of Defense required by law to be submitted to Congress which, in the
opinion of the Under Secretary, interferes with the capacity of the
Department to achieve an audit of the financial statements of the
Department with an unqualified opinion.
SEC. 6. SENSE OF CONGRESS.
It is the sense of Congress that--
(1) as the overall defense budget is cut, congressional
defense committees and the Department of Defense should not
endanger the Armed Forces by reducing wounded warrior accounts
or vital protection (such as body armor) for members of the
Armed Forces serving in harm's way;
(2) the valuation of legacy assets by the Department of
Defense should be simplified without compromising essential
controls or generally accepted government auditing standards;
and
(3) nothing in this Act should be construed to require or
permit the declassification of accounting details about
classified defense programs, and, as required by law, the
Department of Defense should ensure financial accountability in
such programs using proven practices, including using auditors
with security clearances.
<all>
Introduced in House
Introduced in House
Referred to the House Committee on Armed Services.
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