Summary

The Comptroller General testified on the Pentagon's efforts to improve accountability and controls over operations. Recently, GAO has seen encouraging signs from the Defense Department's (DOD) new leadership, including frank admissions of financial management problems and a heightened interest in bringing about their resolution. The Comptroller General focused on the status of DOD's progress in addressing problems in the following five areas: contractor overpayments, military payroll, unmatched disbursements, "M" accounts, and the Defense Business Operations Fund. The severe shortcomings in DOD's financial operations spelled out in this testimony underscore the need to expand the requirements of the Chief Financial Officers Act. Specifically, expanding and making permanent the requirement for audited financial statements in DOD, as well as for all government agencies, is critical to ensuring basic accountability and to making available the facts needed to run the government more efficiently.