Pentagon Fails Audit for Eighth Straight Year
The U.S. Department of Defense has failed its financial audit for the eighth consecutive year, underscoring persistent challenges in accounting oversight within the nation’s largest federal agency. As reported by Military Times in the article “Pentagon fails financial audit for 8th year in a row,” published on December 19, 2025, the conclusion of the department’s fiscal year 2025 audit reveals ongoing difficulties in tracking and verifying trillions of dollars in assets and transactions.
The audit, which encompassed $3.8 trillion in assets and $4 trillion in liabilities, was conducted by independent public accounting firms under the supervision of the Department of Defense’s Office of the Inspector General. Of the 29 individual sub-audits that comprise the full review, only seven received a clean opinion—largely unchanged from previous years. The remainder were marked by disclaimers of opinion, indicating that auditors were unable to obtain adequate evidence to substantiate financial statements.
Despite the negative outcome, defense officials stressed the audit process’s value in highlighting areas for improvement. Pentagon Comptroller Michael McCord characterized the annual audit as “a tool for progress” rather than a pass-fail metric, asserting that the process is helping the department advance toward greater transparency and efficiency. McCord acknowledged, however, that a comprehensive clean audit remains a long-term goal and not an immediate expectation.
Auditors focused a significant portion of their attention on issues such as inventory management, internal data controls, and the integration of legacy accounting systems. Particularly acute are problems with tracking military equipment and property, especially among the service branches. The Army, Navy, and Air Force all failed to receive clean opinions, citing difficulties in asset verification and data reconciliation.
Critics in Congress have seized upon the audit shortfall as a sign of mismanagement in defense spending. Sen. Chuck Grassley (R-Iowa), a long-time advocate for government accountability, has renewed calls for greater legislative oversight, citing the department’s substantial budget and the recurring inability to track expenditures accurately. Some lawmakers have suggested that without significant reform, the Pentagon should face constraints on new appropriations until it demonstrates measurable improvements in its audit outcomes.
The Department of Defense, which controls roughly half of the federal government’s discretionary spending, has been under increasing pressure to modernize its financial systems. Officials contend that the scale and complexity of the department’s operations—including over two million service members and civilian employees, sprawling global operations, and a massive procurement apparatus—make a successful audit uniquely difficult. Nonetheless, they maintain that efforts to integrate modern accounting tools and clean up old records are underway.
While the failed audit did not reveal instances of fraud or intentional mismanagement, it has heightened concerns regarding the Pentagon’s ability to manage and oversee its vast financial resources effectively. As geopolitical tensions rise and defense spending grows, expectations for better financial stewardship are likely to intensify in policy circles and among the public.
The Department of Defense has pledged to continue annual audits with the aim of achieving an eventual clean opinion. However, given the historical trajectory and ongoing systemic challenges, observers caution that full financial clarity remains years away.
