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March 08, 2024

Schweikert Introduces Legislation to Reform Defense Department Audit Process

WASHINGTON, D.C. — Today, U.S. Representative David Schweikert (AZ-01) introduced the Algorithms Utilized to Detect Institutional Transactions (AUDIT) Act, legislation ensuring the audit of the Department of Defense’s financial statements is conducted using artificial intelligence to help streamline the internal review process and usher in a new era of audit. It also mandates that the technology be developed by both the Secretary of Defense and Inspector General of the Department of Defense. 

The Pentagon employs 2.9 million people and has over half a million assets worth $3.8 trillion, while its liabilities total $4 trillion. This means personnel must count every single piece of inventory — from military equipment, to supplies, and even property. In 2019, DOD’s audit cost was $428 million. Correcting the errors after the audit was conducted added another $472 million to the total cost.

The Defense Department has failed to achieve a clean financial audit for six consecutive years since it first started auditing itself in 2018. The 2023 audit required 1,600 auditors and 700 site visits to complete, costing $187 billion and earning a “disclaimer of opinion” rating, meaning DOD couldn’t provide enough financial information to auditors so they could form an opinion.

“Since 2018, the federal government has spent nearly $1 billion annually trying to audit the Department of Defense, and it costs substantially more to correct the mistakes after its completion,” said Rep. Schweikert“This legislation helps accelerate the adoption of innovative auditing tools to reduce costs and foster creative solutions that will increase government accountability. I look forward to working with my colleagues to help modernize how Congress conducts such oversight to protect hardworking taxpayers.”Background on the AUDIT Act:  

  • The legislation would direct the Secretary of Defense to adopt innovative technologies, such as artificial intelligence, to facilitate an audit of the Defense Department. 
  • The bill requires the Secretary to retire outdated financial management systems that have led to the Pentagon failing six consecutive audits. 

The full text of the bill can be found here.

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