“DoW Financial Management: Examining Progress and New Audit Approaches”

1[House Hearing, 119 Congress]2[From the U.S. Government Publishing Office]34                  DoW FINANCIAL MANAGEMENT: EXAMINING5                   PROGRESS AND NEW AUDIT APPROACHES6=======================================================================78                                HEARING910                               BEFORE THE1112                         SUBCOMMITTEE ON GOVERNMENT13                                OPERATIONS1415                                 OF THE1617                          COMMITTEE ON OVERSIGHT AND18                               GOVERNMENT REFORM1920                     U.S. HOUSE OF REPRESENTATIVES2122                    ONE HUNDRED NINETEENTH CONGRESS2324                             SECOND SESSION2526                               __________2728                              MAY 13, 20262930                               __________3132                           Serial No. 119-623334                               __________3536Printed for the use of the Committee on Oversight and Government Reform3738[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]3940    Available on: govinfo.gov, oversight.house.gov or docs.house.gov4142                               __________4344                 U.S. GOVERNMENT PUBLISHING OFFICE4563-746 PDF               WASHINGTON : 202646=======================================================================4748              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM4950                    JAMES COMER, Kentucky, Chairman5152Jim Jordan, Ohio                     Robert Garcia, California, Ranking53Mike Turner, Ohio                        Minority Member54Paul Gosar, Arizona                  Eleanor Holmes Norton, District of55Virginia Foxx, North Carolina            Columbia56Glenn Grothman, Wisconsin            Stephen F. Lynch, Massachusetts57Michael Cloud, Texas                 Raja Krishnamoorthi, Illinois58Gary Palmer, Alabama                 Ro Khanna, California59Clay Higgins, Louisiana              Kweisi Mfume, Maryland60Pete Sessions, Texas                 Shontel Brown, Ohio61Andy Biggs, Arizona                  Melanie Stansbury, New Mexico62Nancy Mace, South Carolina           Maxwell Frost, Florida63Pat Fallon, Texas                    Summer Lee, Pennsylvania64Byron Donalds, Florida               Greg Casar, Texas65Scott Perry, Pennsylvania            Jasmine Crockett, Texas66William Timmons, South Carolina      Emily Randall, Washington67Tim Burchett, Tennessee              Suhas Subramanyam, Virginia68Lauren Boebert, Colorado             Yassamin Ansari, Arizona69Anna Paulina Luna, Florida           Wesley Bell, Missouri70Nick Langworthy, New York            Lateefah Simon, California71Eric Burlison, Missouri              Dave Min, California72Elijah Crane, Arizona                Ayanna Pressley, Massachusetts73Brian Jack, Georgia                  Rashida Tlaib, Michigan74John McGuire, Virginia75Brandon Gill, Texas76Richard McCormick, Georgia7778                                 ------7980                       Mark Marin, Staff Director81                   James Rust, Deputy Staff Director82                     Ryan Giachetti, Chief Counsel83           Jennifer Kamara, Director of Strategic Initiatives84                Hannah Cathey, Professional Staff Member85                      Bill Womack, Senior Advisor86         Mallory Cogar, Director of Operations and Chief Clerk8788                      Contact Number: 202-225-50748990                Robert Edmonson, Minority Staff Director91                      Contact Number: 202-225-505192                                 ------9394                 Subcommittee on Government Operations9596                     Pete Sessions, Texas, Chairman9798Virginia Foxx, North Carolina        Kweisi Mfume, Maryland, Ranking99Gary Palmer, Alabama                     Member100Tim Burchett, Tennessee              Eleanor Holmes Norton, District of101Brian Jack, Georgia                      Columbia102Brandon Gill, Texas                  Maxwell Frost, Florida103                                     Emily Randall, Washington104105                        C  O  N  T  E  N  T  S106107                              ----------108109                           OPENING STATEMENTS110111                                                                   Page112113Hon. Pete Sessions, U.S. Representative, Chairman................     1114115Hon. Kweisi Mfume, U.S. Representative, Ranking Member...........     3116117                               WITNESSES118119Mr. Thomas Harker, Deputy Chief Financial Officer, U.S.120  Department of War121Oral Statement...................................................     7122123Mr. Ryan A. Busby, CPA, Deputy Assistant Secretary of the Army124  for Financial Operations, U.S. Army125Oral Statement...................................................     8126127Mr. Brett Mansfield, Deputy Inspector General for Audit, Office128  of Inspector General, U.S. Department of War129Oral Statement...................................................    10130131Mr. Asif Khan, Director, Financial Management and Assurance, U.S.132  Government Accountability Office133Oral Statement...................................................    12134135Written opening statements and bios are available on the U.S.136  House of Representatives Document Repository at:137  docs.house.gov.138139                           INDEX OF DOCUMENTS140141  * Article, Washington Post, ``Iran Has Hit Far More U.S.142  Military Assets Than Reported, Satellite Images Show'';143  submitted by Rep. Frost.144145The documents listed above are available at: docs.house.gov.146147                          ADDITIONAL DOCUMENTS148149  * Questions for the Record: Mr. Ryan A. Busby, CPA; submitted150  by Rep. Sessions.151152  * Questions for the Record: Mr. Thomas Harker; submitted by153  Rep. Sessions.154155  * Questions for the Record: Mr. Thomas Harker; submitted by156  Rep. Norton.157158  * Questions for the Record: Mr. Asif Khan; submitted by Rep.159  Sessions.160161  * Questions for the Record: Mr. Brett Mansfield; submitted by162  Rep. Sessions.163164These documents were submitted after the hearing, and may be165  available upon request.166167                  DoW FINANCIAL MANAGEMENT: EXAMINING168                   PROGRESS AND NEW AUDIT APPROACHES169170                              ----------171172                        WEDNESDAY, MAY 13, 2026173174                     U.S. House of Representatives175176              Committee on Oversight and Government Reform177178                 Subcommittee on Government Operations179180                                                   Washington, D.C.181182    The Subcommittee met, pursuant to notice, at 2:04 p.m., in183room 2154, Rayburn House Office Building, Hon. Pete Sessions184[Chairman of the Subcommittee] presiding.185    Present: Representatives Sessions, Foxx, Palmer, Jack,186Gill, Mfume, Norton, and Frost.187    Also present: Representative Walkinshaw.188    Mr. Sessions. The Subcommittee on Government Operations189will come to order.190    And I would like to welcome everyone.191    Without objection, the Chair may declare a recess at any192time. And I recognize myself for the purpose of making an193opening statement.194195          OPENING STATEMENT OF CHAIRMAN PETE SESSIONS196197                   REPRESENTATIVE FROM TEXAS198199    The first opening statement I would like to make is I am200sorry for the delay. Our awesome stenographers needed to be201able to hear what we are saying today, and so--we are rather202new in this room and learning how to work with the equipment.203    So, welcome to today's hearing. This is a hearing on an204update of the Department of War's progress toward achieving a205clean audit and the new audit approach, which they are going to206speak about in great specificity today.207    As you know, the Department of War is statutorily mandated208to achieve a clean audit opinion by December 31, 2028. In209September 2024, we developed a scorecard to track the210Department of War's progress toward achieving that clean audit211opinion. With each iteration of the scorecard, the results212remain the same, and that is that the Department of War was213making progress, and we are thankful for that, but not enough214to move the needle to meet the statutory goal.215    So, progress has been made, but not enough, meaning that216full financial transparency and accountability is not yet217present. Financial transparency and auditability are core218principles of good government, and as each of us will hear219today, something that the Department of War really does want.220It will help them achieve their mission, not just meet the221merits of the law.222    The Department of War is responsible for nearly half the223Federal Government's discretionary spending, so it is224especially important that they demonstrate financial225transparency, accountability, and to meet the standards of this226Subcommittee, the Committee, and the law.227    With that said, the audit is not just a financial exercise.228There are real positive operational impacts that can be229realized once sound financial management practices are in230place. And yesterday, in extensive meetings that I held with231each of our witnesses today, I was told that an audit that we232understand and knowing where we have and where we get it is233directly in front of them, and they are showing measurable234progress to achieve that.235    Last year, we heard that the Marine Corps--from the Marine236Corps about how they achieved their success. As a matter of237fact, the Marine Corps did pass the audit.238    Achieving a clean audit opinion for a third time239demonstrates that at least--and we commend them--but achieving240this for a third time means that they have learned valuable241lessons, they have learned, not only how to do that, but they242have given their colleagues in the Department of War the243operational excellence that they should be achieving across the244board. So, kudos to the United States Marine Corps.245    But I think the Department of War has caught on, including246our young Secretary of War, Pete Hegseth, who is very excited247about demonstrating to his management team, the leadership of248the departments, as well as the men and women that serve in the249Department of War, our military, an excitement that he holds250very dear to that achievement.251    In March 2026, the Department of War unveiled a new refined252audit approach aimed at achieving a clean opinion by December2532028. So, just two months ago. As a result of, not re-254scrapping, but re-looking at the ability to get there and how255they would do that has been defined, and today, Mr. Harker will256talk about that in specifics, because he annunciated his desire257and belief that we will achieve this.258    The approach will use similar hands-on strategy that259provided success for the Marine Corps. I was pleased to see the260leadership commitment of the Department of War, from the very261top all the way down to the men and women who serve, understand262why a clean audit is important and the advantages that will263serve them.264    I think this shows that the Department has taken seriously265what Mr. Mfume and I, for a number of years, have talked about266through hearings, through opportunities of discussions, and I267am pleased to see that today will be a public announcement of268how important this progress is. And I am encouraged, I am269encouraged to not only know that we are going to get there, but270that the men and women of the Department feel like it is in271their best interest.272    The goal should not be just to achieve a clean audit by2732028. It should be to implement strong financial management,274the understanding of the needs of not just the Department of275War, but where material is, where assets are, and how they can276be counted on to help the Joint Chiefs in their effort, and277particularly at this time of conflict.278    So, I am looking forward to hearing today a public279discussion. I appreciate each of our four witnesses for being280here. And I will tell you what I told them, and that is I want281them to come and gladly offer their feedback, their support to282help this Subcommittee. Both Mr. Mfume and I want this to283happen, but more than want it to happen, we believe that you284see firsthand the advantages that will be accrued to the285Department of War and the Secretary of War.286    So, with that said, I would like to yield to the287distinguished gentleman from Maryland, my dear friend, Mr.288Mfume, and the gentleman is recognized.289290        OPENING STATEMENT OF RANKING MEMBER KWEISI MFUME291292                  REPRESENTATIVE FROM MARYLAND293294    Mr. Mfume. Thank you very much, Chairman Sessions. Thank295you for your continued leadership on this. We tried to do this296in a very bipartisan way, deliberately, and thank you for your297patience. In fact, you may be more patient than I am, but I298will try to let some of that roll off on me.299    Good afternoon, everyone. The guests who are here, the300witnesses, we appreciate your time, your effort, your energy. I301think you may have gleaned from the Chairman's statement that302we have been at this for some time and that many people across303this Nation cannot really put their arms around it because of,304not the enormity, but the inability to come up with a audit. I305am going to talk a little bit at some point about the history306of all this, and then I will yield back.307    Mr. Busby, we are looking forward to hearing your plans on308how the Army can finally achieve a complete and clean audit.309    Mr. Harker, we are happy that the Department of Defense was310willing to send someone to testify for this checkpoint in our311ongoing work, and it has been ongoing for a while.312    Last April, we held a third in a series of hearings to313address financial accountability in the Department of Defense,314and we are back today to continue that conversation,315particularly in light of the Department's continued inability--316I want to stress that word again--inability to pass a317Department-wide audit. I think it is past time that we really318saw some progress toward accountability and transparency that319is demonstrable and measurable--demonstrable and measurable--320because what we have gotten up to this point has really been,321quite frankly, a lot of promises about good attempts to do just322that, and we have not really gotten very far.323    I will give an example. For years, the Department of324Defense has tried and failed to complete a clean Department-325wide audit. Now, that is a standard that every other large326agency meets and that they meet regularly. Congress327historically should know it first mandated this basic328requirement in 1993. I was a very, very young man at that time,329sitting here trying to understand and get my hand around what330the problem was. 1993. But the Department, as some of you may331know, could not even attempt to perform an audit until 2018,332which I find to be absolutely amazing.333    And so, from 1993 to 2018 to 2026, for me, it is being334right where I started at in 1993 as a young Member of a335Congress trying to figure out, and how to ask myself, how do we336get our arms around this massive, massive agency.337    I want to make sure everyone also knows that we really do338mean it when we talk about a financial audit. This is not just339a two-word phrase that gets thrown out. And my real fear here340is that, eventually, members of the American public are going341to start asking, if not demanding, that there be an explanation342for them as to why this particular agency, this department,343cannot do that after all these many, many, many years.344    I mention the years because, if this were any other agency,345I think the Congress in a very bipartisan manner would be ready346to bring about real change. I think because it is DoD and347because we understand and know that our Nation's strength348depends on the Pentagon and how we assist the Pentagon and all349of the branches of military service, that there has been a350reluctance just to jump into this head on and to start making351real demands or passing legislation that would bring demands352with it.353    So, a clean audit does not mean, and should not be354interpreted to mean, that we are judging the merits of DoD's355spending. We are not doing that. We simply want to know what356DoD currently owns and where is it and what is the current357value. And, more importantly, we want to know that DoD knows358that its time has come to defend this Nation and its interests,359as it often does come around in cycles based on what is360happening in the World, that it is important to have361accountability for those assets. And the DoD, again--I hate to362be deliberately redundant, but I have to say it--has again363failed to clear even a simple bar like that, telling us what364you own, where it is, what is the current value.365    And I do not want to imply in any way whatsoever that this366is an easy task. I mean, it is clearly not something that is so367demonstrable you can go out tomorrow and get it done. This is a368huge, huge task because DoD has a balance sheet of over $4369trillion in assets spread across the entire globe. The370Department of Defense is one of the world's largest and most371complex organizations.372    The Pentagon has continued with enormous scale, antiquated373systems, and dangerous environments, all while at the same time374maintaining operational security. It is not an excuse to be375careless with taxpayers' dollars. It is a recognition that376there is so much going on that there has got to be a defining377starting point and some real demonstrable, again, effort to378show that step A, B, and C is taking place.379    Now, we have sat through so many of these hearings and we380have heard so much about what is in practice and what is being381done, but what we never hear are endpoints. You know, members382of the agencies will say, Congressman, we are doing this; we383are doing that; we just implemented this; we are trying that;384we know this works, so we are going to do that; we are going to385make sure we are cross-talking with other agencies. Yes. But in386the three, four years or so that we have been at this, I have387not seen an endpoint that has been talked about yet where388something has been achieved that moves the needle.389    Couple of other quick things. I thought the Biden-Harris390Administration committed to working toward the legal mandate to391produce a clean Department audit. Former Secretary Lloyd392Austin, before this Committee and other committees, focused on393sustainable resolutions to achieve the goal and to ensure the394accountability that we all want well into the future. The395initiative helped the Marine Corps adopt a two year audit396approach, which was, as you heard from the Chairman, very397successful.398    And I have said over and over again, what makes the Marine399Corps so different from the other branches in being able to get400an audit done? And I have surmised on my own repeatedly that401from on high there was a clear directive: A, to get this done;402B, to do it the right way; and to, C, get it behind us.403    And so I imagine, even though I do not know this, that the404Commandant of the Marine Corps said, look, this is what I want405to have done, this is what we have to do for our Nation, this406is what Congress has mandated since 1993, find a way to get it407done. And they did. They did. And they are the only branch that408has done that to this point.409    So, I am proud of the work that this Committee has done in410trying to put guidelines, guardrails, and flashlights up so411that we can all see in the dark, but this is really not moving,412not moving the ball forward. I even suspect that many of us may413not even be around years later when, in fact, we are all called414home or somewhere else, and that many of our successors will be415sitting here asking the same questions like we are doing with416many of those that came before us.417    The President has already proposed an eye-popping increase418in the overall budget for the upcoming fiscal year, so a lot, a419lot of money. And that will bring the already well-funded420agency to an eye-popping $1.5 trillion in defense spending for421Fiscal Year 2027. In all good consciousness, I cannot vote for422that knowing we have gone seven straight years without an423audit. And in good conscious, we owe the men and women in424uniform a better system than what we have now. We ought to just425admit that. We owe them. And it is not because any of you426sitting here failed to do your job. I am just saying that this427has gone on and on and on.428    So, if you hear the frustration and the angst in my voice,429it is only because none of us are getting any younger, and this430problem should not haunt the strongest, the wealthiest, the431most powerful, the most influential Nation on the face of the432Earth, the United States, the way it does haunt us. We can do433it if we really believe we can do it.434    And, Mr. Chairman, I yield back.435    Mr. Sessions. I want to thank the gentleman for his436comments. It is my hope that today we will offer, both you and437I, some refreshing outlook of the work that is taking place of438the challenge that the Department of War has accepted and439leadership changes that have brought forth top-to-bottom440inclusion of accepting the effort.441    I would add to the gentleman's comments that he very442graciously spoke of, it is also the law. And this is the443guiding point, that it is not a congressional mandate, it is444not something that just these guys in Congress want; it is the445law, and they recognize how important this will be to them, the446efficiency. But now, at the time where we are, it also means447that the Joint Chiefs have at their fingertips factual data,448information that will allow them to move forward.449    Without objection, I would like to advise, Congressman450Walkinshaw of Virginia is to be waived on to the Subcommittee451for the purposes of questioning witnesses at today's hearing.452    Today, I am pleased to acknowledge that we will have four453witnesses before us. These four witnesses:454    Mr. Thomas Harker serves as the Deputy Chief Financial455Officer for the Department of War. In his role, he is456responsible for improving and sustaining the Department of457War's financial policy systems, audit, and reporting. And I458must admit, he believes this is an important undertaking for459him as a result of his commitment as an American citizen and460working for the Department, which was very important for me to461hear. Thank you.462    Mr. Ryan Busby serves as Deputy Assistant Secretary of the463Army for Financial Operations. In his role, he is responsible464for oversight and integration of the Army's financial465operations.466    Mr. Brett Mansfield is the Deputy Inspector General for467Audit. Prior to his role he served as the Senior Advisor to the468Inspector General advising him on matters affecting the mission469and operations of the Department of the Office of Inspector470General.471    Mr. Asif Khan is the Director in the Financial Management472and Assurance team at the Government Accounting Office [sic]473since 2009. He has focused his work on financial management and474audit readiness at the Department of Defense, and he is a475regular visitor, as a result of this important role that he476plays, to this Subcommittee.477    I want to thank each of you four. Thank you very much.478    Pursuant to Committee Rule 9(g), I would ask that the479witnesses now rise and raise their right hand to accept the480oath of witnesses.481    Do you solemnly swear or affirm that the testimony you are482about to give is the truth, the whole truth, and nothing but483the truth, so help you God?484    [Chorus of ayes.]485    Mr. Sessions. Let the record reflect the witnesses each486answered in the affirmative.487    Thank you very much. You may now take a seat.488    Gentlemen, I covered with you yesterday, not just the rules489of engagement here today, but the need to make sure that each490of you as professionals providing testimony before this491Subcommittee complete not only your sentence, but your492thoughts; that I want to make sure that we understand clearly493from you without any way that we have to guess of the things494you are trying to tell us, the information we need, because as495you have heard from the distinguished Ranking Member, we need496to have the confidence that you get it and that we understand497that.498    So, I would just remind the witnesses that they have,499generally speaking, a clock in front of them that will give500them some operating guidelines.501    And would now ask that we recognize Mr. Harker for his502time. The gentleman is now recognized.503504                   STATEMENT OF THOMAS HARKER505506                 DEPUTY CHIEF FINANCIAL OFFICER507508                     U.S. DEPARTMENT OF WAR509510    Mr. Harker. Chairman Sessions, Ranking Member Mfume, and511distinguished Members, I appreciate the opportunity to testify512about the Department of War plan to get a clean opinion on the513Fiscal Year 2028 agencywide financial statement audit. Thank514you for the opportunity to appear before you today.515    I have been in this job for six months and have been fixing516Federal financial audit problems for more than 20 years,517starting at the Department of Homeland Security (DHS) when I518was on Active Duty in the Coast Guard and DHS underwent their519first ten audits before getting a clean opinion. I have also520audited financial statements while working at a large public521accounting firm and have led efforts that resolved audit issues522at multiple Cabinet agencies.523    Getting a clean opinion for the Department of War is not524just my job; it is something I am passionate about, so much so525that I came out of a comfortable quasi-retirement to take this526job.527    The leadership tone at the top of the Department is528unprecedented, with the Secretary and Deputy Secretary both529making it clear that passing an audit is a condition of530employment for departmental leaders. They have both issued531written guidance on the audit, and if you have not seen the532Secretary's recent video, I highly recommend it.533    We are finally being honest with ourselves. The534Department's financial reporting has lagged behind every other535major Federal agency. We are fixing that using the authority536provided in Secretary Hegseth's recent memo standing up Joint537Task Force Audit. JTF Audit is a unified team of538servicemembers, civilians, and private sector experts led by539the Under Secretary of War comptroller.540    The mission is clear: Work with the services and defense541agencies to execute the corrective actions required to get a542clean opinion on the Fiscal Year 2028 financial statements,543elevating bureaucratic barriers to senior leadership for544immediate action.545    The JTF will provide a common operating picture to SecWar546and other senior leaders that will provide them with visibility547not previously seen in the audit space and enable them to take548action when things stall.549    One of my favorite bosses, Admiral Thad Allen, said550transparency breeds self-correcting behavior, and the knowledge551that their performance is being seen and judged by the552Secretary will motivate military and civilian leaders to ensure553that they have full accountability for their assets.554    In addition to stand-up of JTF Audit, we are partnering555with the Office of the Inspector General (OIG) as they hire an556independent public accounting firm to perform the consolidated557audit. We are also ending the inefficient process of dozens of558disjointed standalone audits and focusing our remediation559efforts on getting a clean opinion on the agency-wide financial560statements, just like every other Chief Financial Officer (CFO)561Act agency.562    We are using a hybrid strategy where we rely on internal563controls where they exist, maximize the use of artificial564intelligence and automation wherever we can, and have the565auditors perform substantive testing where they must. Much work566has been done in putting internal controls in place across the567Department's processes over many years, but the proliferation568of legacy system and the decentralized nature of funds569execution means that it would take too much time for us to be570able to rely solely on controls.571    Fortunately, the advent of AI and automation, and the funds572we received in the reconciliation bill, allow us to use those573tools to compensate for our antiquated and disconnected574systems. Where we cannot use AI or automation, we will have to575rely on a great deal of substantive testing, similar to what576the Marine Corps did, so that the auditors can get577statistically valid information that would allow us to adjust578our financial statements and get a clean opinion.579    In addition, we are focusing our efforts on the line items580and processes that have a major impact on our ability to get a581clean opinion. Accountability for our assets, accurate582accounting for our liabilities, revenues, and expenses, and583working to clear the material weaknesses and Notices of584Findings and Recommendations (NFRs) that matter. The entire585Department of War will be under audit, and we will present our586financial statements at the consolidated agency-wide level as587required by law.588    In addition, the Marine Corps, Navy, and Air Force will589continue standalone audits, as they either have clean opinions590or are close to attaining them, and the best path forward for591the Department is to continue their efforts.592    I want to recognize the leaders and teams who have already593set the standard for excellence. The Marine Corps became the594first military service to achieve a clean audit opinion and has595sustained one for three consecutive years. Many other defense596agencies have also achieved clean opinions, starting with the597Army Corps of Engineers, over 20 years ago. These teams are the598vanguard, and we expect every branch to match their urgency and599commitment to financial discipline.600    Our next milestones are clear: A clean opinion on the601Fiscal Year 2026 Navy Working Capital Fund, that is this year;602a clean opinion on the entire Fiscal Year 2027 Defense Working603Capital Fund; and a clean opinion on the Fiscal Year 2028604agencywide audit.605    These are ambitious targets, but we are determined to606provide the American taxpayer with the highest standard of607fiscal accountability and to ensure the Department's financial608foundation is strong.609    Achieving a clean audit opinion will enable us to use the610information gained in the process to improve the efficiency and611effectiveness of our operations, eliminate additional legacy612financial systems, and improve the quality of information613available to operational leaders in the Department.614    Thank you, and I look forward to your questions.615    Mr. Sessions. Mr. Harker, thank you very much.616    Mr. Busby, you are now recognized.617618                STATEMENT OF RYAN A. BUSBY, CPA619620             DEPUTY ASSISTANT SECRETARY OF THE ARMY621622              FOR FINANCIAL OPERATIONS, U.S. ARMY623624    Mr. Busby. Chairman Sessions, Ranking Member Mfume, and625distinguished Members, thank you for the opportunity to speak626today on the Army's role in planning to support the627Department's consolidated financial statement audit. The Army628remains committed to strengthening accountability,629transparency, and stewardship of taxpayer resources while630advancing auditability and improving financial accountability631across the Department.632    Army leadership is fully aligned with the Department's633enterprise audit strategy and continues to prioritize634remediation efforts focused on improving financial data635reliability, strengthening internal controls, and supporting636operational readiness. Through this integrated approach, the637Army will help drive measurable progress and help achieve and638sustain a clean audit-wide opinion.639    To support the Department-wide audit, Army has identified640the highest risk process areas and balances material to the641consolidated financial statements and developed remediation642plans focused on improving the financial accuracy and internal643controls for these areas. The Army utilizes both internal644testing and independent validation to assess the accuracy and645completeness of financial information and identify areas646requiring additional information.647    To strengthen accountability, Army leadership identified648metrics and governance processes to track progress across major649remediation areas. The outcomes of these metrics and governance650processes will be shared regularly with the Office of the651Secretary of War comptroller and the JTF Audit to support652enterprise-wide oversight and consistency in audit remediation653efforts. These actions improve visibility into the enterprise654risk and ensure that Army is held accountable to achieving the655Department's goals.656    While financial statement audits prioritize areas based on657materiality and enterprise risk at a point in time, the Army's658oversight and internal control activities extend across the659entire Army each and every day. Remediation efforts are focused660on balances material to the Department-wide consolidated661financial statement audit while the Army continues to maintain662a comprehensive list of internal controls, Army-wide monitoring663activities, and independent oversight across the Army. These664activities include supply discipline programs, risk management665and internal control programs, a continuous monitoring program,666command-directed reviews, and independent oversight conducted667by the United States Army Audit Agency and the Department of668War Office of the Inspector General.669    These efforts drive process improvements across the Army670and strengthen the Army's ability to identify risks, reduce671improper payments, and improve accountability. These672improvements directly support the Army and the Joint Chiefs'673priorities, operational readiness, and effectiveness.674    Our audit remediation efforts are tested every day as we675support global operations. Years of focused remediation efforts676resulted in Army ammunition inventories passing audit testing677this past year at a rate exceeding 99 percent. While work678remains, these results demonstrate progress and reinforce the679value of disciplined, enterprise-wide remediation efforts.680    For nearly a decade, the Army underwent a standalone681financial statement audit that provided actionable findings,682helped us strengthen our internal controls, and focused683remediation efforts on the Department's highest risk areas.684    As the Department's audit effort has matured, the Army and685the Office of the Secretary of War identified opportunities to686further align component audit activities within a consolidated687framework.688    The Department's financial operations and business689processes are highly interconnected, making a more integrated690approach critical to improving consistency in the application691of audit standards, reducing duplicative efforts, and better692aligning remediation activities to balances and process693material to the consolidated Department-wide financial694statements.695    This transition does not reduce oversight or accountability696but, instead, improves Department-wide alignment and697prioritization for the Department of War's highest risk areas.698The most material items remain the most material items, and699this consolidated approach allows the Army, in coordination700with the Department of War, to focus our efforts on addressing701the items that matter most and deliver results for the American702taxpayer.703    Since undergoing our first full financial statement audit704in Fiscal Year 2018, the Army has made measurable progress in705strengthening financial accountability and auditability. The706Army has remediated more than ten material weaknesses. This707includes closing the material weakness related to Fund Balance708with Treasury, or the Army's checkbook. These improvements709demonstrate increased accountability and visibility into the710single largest item on the Army general fund balance sheet,711representing 50 percent of the balance.712    In addition to Fund Balance with Treasury, the Army Working713Capital Fund also closed material weaknesses related to714property, demonstrating improved ability to accurately account715for Army assets and maintain visibility to where they are716located.717    We are confident in our ability to do the work necessary to718achieve a Working Capitol Fund clean audit opinion in 2027 and719a consolidated general fund clean opinion in 2028, and are720excited to support the Department-wide approach.721    As I have highlighted today, the Army remains committed to722transparency, accountability, and continuous improvement as we723work with Congress, the Office of the Secretary of War, and our724independent auditors to support continued progress toward the725Department-wide clean audit opinions.726    Thank you for the opportunity to share the Army's727perspective today.728    Mr. Sessions. Mr. Busby, thank you very much.729    Mr. Mansfield, we are delighted that you are with us. The730gentleman is recognized.731732                  STATEMENT OF BRETT MANSFIELD733734         DEPUTY INSPECTOR GENERAL FOR AUDIT, OFFICE OF735736           INSPECTOR GENERAL, U.S. DEPARTMENT OF WAR737738    Mr. Mansfield. Chairman Sessions, Ranking Member Mfume, and739Members of the Subcommittee, thank you for the opportunity to740discuss the Department's Fiscal Year 2025 audit results and key741changes planned for future audits. Your oversight is essential742to strengthening Federal financial management and ensuring743accountability of taxpayer resources.744    In December 2025, the Office of Inspector General issued a745disclaimer of opinion on the Department's Fiscal Year 2025746agencywide financial statements. As in prior years, we issued a747disclaimer because the Department could not provide sufficient748reliable evidence to show its statements were fairly presented.749    While the opinion was the same as prior years, the750Department made measurable progress in 2025. Material751weaknesses decreased from 28 to 26, and auditors issued 427752fewer notices of findings and recommendations across the753Department than they have in prior years.754    Remediation efforts are taking hold. The Department closed755a longstanding material weakness related to security assistance756accounts, expanded its use of automation tools to detect and757correct errors, and modernized controls across more than 30758systems.759    These positive outcomes are important, but the Department760continues to face three major obstacles: management761responsibility for and accountability of more than $4.7762trillion in assets; information technology weaknesses,763including hundreds of aging and noncompliant systems; and764accounting weaknesses, such as unsupported adjustments, over765$850 billion in the last two quarters of Fiscal Year 2025.766    I want to emphasize at this time an important distinction767that is often misunderstood. Department of War management, not768the Office of Inspector General, is responsible for complete,769accurate, and reliable financial statements. The Office of770Inspector General, as the independent auditor, evaluates771whether the information presented by the Department meets772accounting standards and is supported by sufficient evidence.773    This separation of duties reflects a cornerstone of Federal774audit practice. Management owns the data, the auditors evaluate775the data. When information is missing or unreliable, auditors776cannot fix it. We can, however, report it and make777recommendations to management on how to address those issues.778    The Department's Fiscal Year 2026 audit is currently779underway, and it reflects a shift to a substantive testing780approach. Instead of relying on internal controls, many of781which remain ineffective, as highlighted by Mr. Harker,782auditors are directly testing transactions, balances, and783supporting documentation. This requires more site visits, more784document production on the part of the Department, and more785coordination between auditors across the Department. But it786also provides a path to validating account balances while787material internal control weaknesses persist.788    The Department also established a Joint Task Force Audit to789direct corrective actions and focus remediation on issues that790drive the agency-wide opinion, such as accounting assets and791intragovernmental transactions. The OIG will be providing an792advisory role to the task force.793    Looking ahead to Fiscal Year 2027, the Department will794implement one of the most significant changes in its financial795reporting structure since the full audits began. In 2027, the796number of reporting entities will drop from 22 to seven,797focusing the Department's efforts on the big rocks.798    Also in Fiscal Year 2027, the Office of Inspector General799plans to transition their group auditor role to an independent800public accounting firm. This change mirrors other large Federal801audits and will capitalize on industry best practices from802across the private sector.803    Under this model, the independence of the audit function804remains intact. The OIG remains responsible for ensuring the805Department undergoes an audit and retains responsibility for806overseeing the audit by monitoring the Independent Public807Accountant (IPA)'s work.808    These changes do not impact the fundamental requirement.809The Department must produce reliable supportable financial810information. Substantive testing can validate balances, but it811cannot replace strong internal controls which remain essential812for long-term auditability and reliable information which is813needed for operational decisions.814    The Department's financial management weaknesses are815significant. However, Fiscal Year 2025 showed progress, and the816changes underway now, focusing remediation on big rocks and817consolidating reporting entities, are meaningful.818    The OIG remains fully committed to providing independent819oversight and ensuring that the Department, Congress, and,820ultimately, the American public receive reliable information on821which to base decisions affecting national defense and the822stewardship of taxpayer funds.823    Thank you for the opportunity to appear before you today. I824look forward to your questions.825    Mr. Sessions. Mr. Mansfield, thank you very much.826    Mr. Khan, you are now recognized.827828                STATEMENT OF ASIF KHAN, DIRECTOR829830               FINANCIAL MANAGEMENT AND ASSURANCE831832             U.S. GOVERNMENT ACCOUNTABILITY OFFICE833834    Mr. Khan. Chairman Sessions, Ranking Member Mfume, and835Members of the Subcommittee, thank you for the opportunity to836discuss the Department of Defense's financial management837auditability and its new approach to achieving a clean opinion.838    DoD is the only major Federal agency that has never been839able to receive a clean audit opinion on its financial840statements. A clean audit opinion is when auditors find that841the statements are presented fairly and consistent with842accounting principles.843    Over the next couple of years, DoD plans to take a top-down844approach focused on validating accounting balances. This is a845significant departure from its current decentralized bottom-up846approach from the component level it used since 2018. This new847approach will not be focused on improving internal controls848and, instead, will focus more on bookkeeping. This will mean849less emphasis on making the kind of improvements that we expect850to see from a more typical financial audit.851    Even if under the new approach DoD achieves a clean audit852opinion by the end of 2028, the Department's financial853management would likely still be on the GAO's high-risk list,854and the Department will still need to turn its attention back855toward improving systems, internal controls, and business856processes and operations throughout the Department after 2028.857    DoD has not reported any estimates of how this approach,858when it is fully outlined, will affect the level of resources859needed.860    Based on what we know so far, this new audit approach has861many opportunity costs and risks. It prioritizes account862balances over addressing internal controls which provide them a863foundation for future audits. This might postpone DoD's ability864to achieve improvements to operations and enhancements to865operational readiness. It likely will be labor and resource866intensive, which could affect sustainability. And it may result867in limited progress for addressing fraud risk, which is868particularly important given Fiscal Year 2027 budget request.869    There may also be benefits under this new approach. The870clean opinion would be a major milestone that can give the871Department an important starting point for future audit872efforts. It would also be a major victory for the Department's873financial management workforce which has been seeking to874achieve this goal for many years.875    A clean opinion would provide greater level of876accountability over the Department's use of its resources, even877if it is a point-in-time opinion that reflects a booking878approach to the audit over improvements to internal controls.879    Finally, DoD's new approach could benefit the Department by880establishing lessons learned that otherwise might not have been881available under the current approach.882    We do not have enough information about the Department's883new approach to say if the Department will be able to achieve a884clean opinion by the end of 2028. However, it will require885significant efforts and resources. In addition, that opinion886will only be a first step, although a very important one.887    After that time, the Department will need to refocus on888addressing material weaknesses so it can sustain this opinion889and continue to improve its financial management and890operations.891    We also have not assessed DoD's new approach to determine892if it is more or less likely to be successful than its prior893approach. But given DoD's slow pace in addressing its key894material weaknesses, I can say that the prior approach did not895seem likely to meet the 2028 goal.896    I will be happy to answer any questions that you may have.897Thank you.898    Mr. Sessions. Mr. Khan, thank you very much.899    The distinguished gentleman, the Ranking Member, Mr. Mfume,900was required to go to have votes in another committee, and, so,901I know that he will return. We would now like to move--instead902of my opening questions, we will move to Ms. Norton. The903gentlewoman is recognized for 5 minutes.904    Ms. Norton. Thank you.905    Since last August, National Guard troops from the District906of Columbia and states have been deployed in D.C. Mr. Harker,907to date, how much has this deployment cost the Federal908Government?909    Mr. Harker. Ma'am, I do not work in the budget area for the910Department. I do the accounting and financial systems piece, so911I would hesitate to give you numbers that might be inaccurate.912But I will take that for the record, and we will get you a913response to that question within the end of--before the end of914this week, if that is okay915    Ms. Norton. Thank you. Mr. Harker, what is the average916daily cost this year of this deployment?917    Mr. Harker. Ma'am, again, I will have to take that one for918the record, but I will talk to our budget people and make sure919we get you an answer before the end of this week.920    Ms. Norton. Thank you. The President's militarization of921the streets of D.C. violates D.C.'s right to self-government,922is based on a lie that is un-American, authoritarian,923ineffective, unlawful, unnecessary, wasteful, and unfair to the924members of the National Guard and their families.925    Congress should pass my D.C. National Guard Home Rule Act,926which would give the D.C. Mayor control over the D.C. National927Guard in the same manner that Governors of the states and928territories control their National Guards.929    In addition, Congress should pass a bill to prohibit a930Governor from deploying the National Guard to another state or931territory or D.C. without consent of the chief executive of932that jurisdiction.933    For over two decades, the Government Accountability Office934has maintained a high-risk list to identify critical government935programs most vulnerable to waste, fraud, and abuse. The936Government Accountability Office added Department of Defense937financial management to that list in 1995, and it has remained938there ever since. Yet, the Trump Administration has proposed a93942 percent increase in defense spending and 1-1/2 trillion--940that is trillion--dollars.941    Mr. Mansfield, as an Inspector General, do you think the942answer to reducing the risk of waste, fraud, and abuse to943increase the Department of Defense's budget by 42 percent?944    Mr. Mansfield. As an Inspector General, a member of the945inspector general community, what I would say is any time there946is an influx of cash or funds into any organization, the947likelihood of increased risk of fraud, waste, and abuse948coincides with that. So, it is a one-for-one or, I am not sure949if it is one-for-one, but there is definitely a positive950relationship between an influx of funds and the increased951risks.952    Ms. Norton. Thank you. The Pentagon has not proven that it953can pass an audit, nor has it managed to address its decades-954long risk of waste, fraud, and abuse. The Department of955Defense's high-risk challenges are complicated. The Department956needs skilled, seasoned, focused, and committed public servants957to address them, not a deficit-spiking injection of taxpayer958dollars, especially as many Americans struggle to make ends959meet.960    And I yield back.961    Mr. Sessions. The gentlewoman yields back her time.962    I would now recognize the distinguished gentleman from963Alabama, Chairman Palmer. The gentleman is recognized.964    Mr. Palmer. Thank you, Mr. Chairman.965    Mr. Harker, the Pentagon failed its eighth annual audit966announced in December of last year for the Fiscal Year 2025,967confirming that it remains the only major Federal agency never968to pass one. This is not a marginal error or a one-off failure.969They are a consistent structural problem.970    When asked to account for Fiscal Year 2023 share of nearly971$4 trillion in assets, 18 of 29 Pentagon components could not972do so.973    So, what drastic changes have the services integrated to974ensure that by 2027 the Department of War has both the975capabilities and the political will to successfully track its976expenditures and assets in a satisfactory and measurable way977for both the executive and legislative branches? Mr. Harker?978    Mr. Harker. So, the Department is focused on getting a979clean opinion, and we anticipate getting one on the Fiscal Year9802028 statements.981    Mr. Palmer. How long have you been focused on getting a982clean audit?983    Mr. Harker. Pardon me, sir?984    Mr. Palmer. How long have you been focused on getting a985clean audit?986    Mr. Harker. A lot of the groundwork has been laid over the987last 10, 15, 20 years.988    Mr. Palmer. I asked a specific question. How many years989have you been focused on getting a clean audit?990    Mr. Harker. The CFO Act of 1990 is the one that required us991to----992    Mr. Palmer. And you have never had one?993    Mr. Harker. The entire Department has not, no, sir, but we994are working toward it.995    Mr. Palmer. Yes. But that is what you have been doing for99626 years. Or 36. If it is 1990, it is 36 years, and you have997not had one.998    Mr. Harker. We have increased the number of components that999have clean opinions. We had the Marine Corps get a clean1000opinion three years ago. The Navy is going to get a clean1001opinion on their working capital fund this year. And we1002anticipate getting a clean one on the entire working capital1003fund in 2027, and the Department-wide on 2028.1004    Mr. Palmer. Mr. Khan, the Department of War financial1005management has remained on the Government Accountability1006Office's high-risk list for 28 years. In your view, what are1007the root causes in why this has remained a perpetual pain point1008for the Department, and how can Congress step in to help clear1009those bottlenecks? Because, obviously, after 36 years of1010working for a clean audit, we still do not have one from the1011Department of War, from the Pentagon. So?1012    Mr. Khan. Well, thank you for that question. I think, in1013part, one can recognize the size and complexity of the1014Department, and along with that, they have large and complex1015systems as well. Many of them were set up for logistics as1016opposed to financial management. The Department has been1017intermediating them, but somewhat slowly. The new systems that1018they have implemented are not compliant either. So, that is one1019of the major impediment to reaching auditability and also1020remaining on the high-risk list.1021    Mr. Palmer. Yes. One of the things that concerns me about1022the ability to manage the finances of the Pentagon, the1023Department of War overall, is the concern that it often has1024been expressed to me that whenever Congress appropriates money1025for a defense platform or systems, whatever, they are so1026concerned that the next Congress might not follow through, that1027they generally start projects before they are ready, before the1028design is right.1029    Mr. Mansfield, David Schweikert had legislation directing1030the Secretary of War to use artificial intelligence technology1031to audit the Pentagon's financial statements. Legislation was1032ultimately included in the 2025 Defense Appropriation1033Authorization Act. Have any of those provisions aimed at1034modernizing auditing capabilities and improving asset tracking1035proven to be helpful to the Department of War?1036    Mr. Mansfield. The short answer is, yes, sir. What I would1037say is there is a combination of efforts ongoing, both from an1038audit perspective using the tools the Department has, and in1039terms of using AI and other large language models to do data1040matching between, say, like transactions, receipt information,1041to identify where there are areas where you can match that1042data--you do not have to do as much testing. And then when you1043find where there are things that do not match, that is where1044you can focus the audit efforts. So, it allows a more targeted1045approach from an audit perspective and it enables the1046Department to have more confidence in its information in1047responding to inquiries from auditors.1048    Mr. Palmer. So, do you think utilization of AI will get us1049to a clean audit?1050    Mr. Mansfield. By itself, no, sir. It is a tool that will1051be very useful, and it is useful, but it is not the solution or1052end-all to the conundrum in front of us.1053    Mr. Palmer. Mr. Harker, when can we anticipate a clean1054audit?1055    Mr. Harker. Sir, we will get a clean audit opinion on the1056Fiscal Year 2028 agency-wide financial statements.1057    Mr. Palmer. And if you do not, what do we do then?1058    Mr. Harker. Pardon me, sir? If we do not?1059    Mr. Palmer. If you do not--I mean, we have been hearing1060this for 36 years, so--I want you to be able to get the1061resources you need. I want you to be able to get a clean audit.1062But I really think this Committee ought to be tired of holding1063hearings about the fact that the Pentagon, Department of War,1064cannot produce a clean audit.1065    I mean, do we need to bring in some other accountants? I1066mean, what--tell us what we need to do, and I think we would be1067willing to do it.1068    Mr. Chairman, I yield back.1069    Mr. Sessions. The gentleman yields back his time.1070    The witnesses, I am asking, to please stay. We will be1071moving to the Capitol for votes. There are five votes that are1072necessary. And I would anticipate that the total time would be1073about 45 more minutes until we will return.1074    But the answer for Members is ten minutes after the last1075vote we will form back up here in the Committee and I will open1076it back up.1077    So, until that time, the Committee is now in recess.1078    [Recess.]1079    Mr. Gill. [Presiding.] The Committee will come to order. We1080are back.1081    I would like to recognize Mr. Frost for 5 minutes.1082    Mr. Frost. Thank you so much, Mr. Chairman. Thanks to1083everyone for being here.1084    Look, I mean, this is a hearing we have every year,1085sometimes multiple times a year. Congress requires that major1086agencies pass an audit. The Department of Defense is the only1087major agency to have never achieved a clean audit. In fact, the1088Department of Defense has failed its audit, all eight attempts.1089I, to be honest, do not have faith that the ninth is going to1090be the one. I hope it is, but I do not really have much faith1091in it.1092    We are here again because the current process is fatally1093flawed and undermining Congress' ability to conduct proper1094oversight and, ultimately, determining the Department of1095Defense's own mission to protect the American people.1096    Mr. Khan, what can we as Members of the Oversight Committee1097do to ensure the Department of Defense complies with the law?1098    Mr. Khan. Oversight hearings such as this are a very1099important mechanism for continuing to have an oversight to send1100the message to the Department that this is an important area,1101that you are focused on how their progress is folding. So, I1102think this is a very important mechanism.1103    Mr. Frost. I mean it is important, but like I said, we have1104a ton of these, right. We will hear from you all, get important1105information, doing the oversight. But the point of us to doing1106the oversight is to get information and then do something with1107it.1108    I mean, I do not know, do you have any thoughts,1109recommendations on things we should do? Should we be1110incorporating penalties? Should we be segmenting parts off of1111the DoD--like, what do you think needs to happen, or if you1112have any thoughts on this?1113    Mr. Khan. I mean, one of the oversight tools that we have1114developed for the--your Committee is the scorecard. We have1115done that for three years. It shows you what the progress has1116been, where there has been some sort of regression. So, I think1117that is an important element to keep in front of you, just to1118see where the progress is, and then to ask questions of why1119progress is not more quicker than what the case has been, and1120if there is any regression, what can be done to improve those1121things.1122    Mr. Frost. Yes. Thank you. I appreciate it. And I think,1123you know, the things you are describing are important to give1124us the information that we need to answer the questions that we1125have. But then the next question for us as legislators is, what1126do we do about it? Do we keep hoping and praying it gets better1127this time next year when we have the same exact hearing and we1128are probably in the same exact place? You know, we do not know1129where the Department of Defense is sending our taxpayer1130dollars.1131    And I think this illegal war going on in Iran, I want to1132use that as an example real quick. Two weeks ago, when asked1133about the current cost of the war, the illegal war in Iran, the1134acting DoD Comptroller told House Armed Services Committee that1135the cost had reached $25 billion. Then, yesterday, the Pentagon1136Comptroller said $29 billion. And then we have news reports1137that have found that internal DoD estimates were even higher1138than that.1139    Mr. Harker, is the DoD unable or unwilling to provide1140Congress with actual truthful information?1141    Mr. Harker. Good afternoon, sir. I do not work in the1142budget area; however, my understanding is that the information1143provided by Mr. Hurst of $25 billion was the accurate1144information at that time. I have not heard anything or seen1145anything that indicates the cost has gone up in the subsequent1146time since then, but there are daily costs, as you would1147imagine. So, I do not know anything more than--on the budget1148side, what he said, the $25 billion was accurate at that point1149in time, sir.1150    Mr. Frost. Okay. Well, yes, we have gotten different1151numbers from different people, and I think we ought to have a1152hearing on this maybe with the appropriate people who can talk1153to us about the spending going on as it relates to this illegal1154war going on in Iran.1155    A recent Washington Post report found that Iranian1156retaliation had damaged more military assets in the region than1157either President Trump or Secretary Hegseth had reported.1158Currently, there are no engineers on the ground that can assess1159the damage at this point.1160    I ask unanimous consent to enter into the record a May 7,11612026, Washington Post article entitled, ``Iran has hit far more1162U.S. military assets than reported, satellite images show.''1163    Mr. Gill. Without objection.1164    Mr. Frost. Mr. Khan, without a proper clean audit, can the1165DoD even be fully sure about the total cost of the parts or1166inventory that might be lying around the rubble of those1167destroyed assets?1168    Mr. Khan. If the Defense Department has functioning1169internal controls and the underlying processes on systems are1170working, then they should be able to produce numbers to be able1171to tell what the cost of operations are.1172    Mr. Frost. Yes. A lot of ifs for an agency that has not1173been able to pass a clean audit.1174    And now, Secretary Hegseth has the audacity to ask us for1175$200 billion more dollars. And then the President is asking us1176this year to give the Department of Defense $1.5 trillion.1177    I have a crazy idea: No more blank checks for an agency1178that is not able to pass a clean audit. After years of failed1179audits, waste, and reckless spending, no more blank checks for1180the Department of Defense. We should hold them to the same1181standard that we hold everybody else.1182    We say we want more resources for housing and healthcare;1183the President says, no, we are going to cut housing and1184healthcare to give tax cuts to the billionaires and mega1185corporations. And then he turns around and says, oh, and also,1186I want $1.5 trillion to give to an agency that is not able to1187pass an audit.1188    The real question for us as Congress is, are we going to do1189something about it or are we going to continue to give the1190agency a blank check, which I think gives it an incentive to1191continue this reckless behavior.1192    Thank you. I yield back.1193    Mr. Gill. Thank you.1194    And now I would like to yield 5 minutes to Ms. Foxx.1195    Ms. Foxx. Thank you, Mr. Chairman.1196    And I thank our witnesses for being here. And I apologize1197that I had to be away, but I appreciate you all coming.1198    I have a quick question for--well, it is not a quick1199question, but I would like a quick answer--for each one of you.1200The Fiscal Year 2025 National Defense Authorization Act (NDAA),1201as enacted, contains provisions requiring the Secretaries of1202each of the services to, quote, ``encourage to the greatest1203extent practicable the use of technology that uses artificial1204intelligence or machine learning for the purpose of1205facilitating audits of the financial statements of the1206Department of Defense,'' end quote.1207    To what extent--and please keep your comments very short--1208have each of the services complied with this provision? Start1209with Mr. Harker and go down the line.1210    Mr. Harker. Yes, ma'am. We have currently received $3501211million in the reconciliation bill for that. We have obligated121248 percent of it. We plan on obligating the remaining funds1213this year for, not just defense, but also all of the services1214under one umbrella so we can get value--best value for those1215funds.1216    Ms. Foxx. Thank you.1217    Mr. Busby?1218    Mr. Busby. Yes. So, I would say we have pretty robustly1219incorporated, you know, technology and AI into enhancing and1220accelerating the audit. You know, we have tools that do data1221anomaly detection so that it will help us prioritize what items1222we need to look at, and we have built a number of fraud1223detection tools that are monitoring certain classes of payments1224throughout their process to see----1225    Ms. Foxx. Okay.1226    Mr. Busby [continuing]. What is at risk.1227    Ms. Foxx. Mr. Mansfield?1228    Mr. Mansfield. Yes, ma'am. I would say that, similar to the1229Army, the Navy and the Air Force have taken similar steps to1230implement large language models in AI for processes to link1231together transactions with source documentation, which enables1232the auditors, which is the role that we play as the OIG, to1233target our oversight efforts on those areas where there are1234mismatches to make sure we are getting to the best use of our1235resources.1236    Ms. Foxx. Mr. Khan?1237    Mr. Khan. We are aware of the Department using artificial1238intelligence and newer technology, but we have not evaluated1239that.1240    Ms. Foxx. Thank you.1241    Mr. Harker or Mr. Busby, earlier this year, the Association1242of Government Accountants recognized process mining or process1243intelligence as a new category of technology. As I understand1244it, this technology can read all transaction data directly out1245of an agency's financial contracting and logistics systems and1246can show how a process actually ran as well as where it1247deviated from the standard process. While most auditors rely on1248statistical sampling due to the sheer amount of data available,1249process mining could help automate this task and allow every1250transaction to be analyzed.1251    Is the Department familiar with this kind of process1252intelligence, and is it being applied anywhere inside the audit1253remediation effort today? Mr. Harker.1254    Mr. Harker. Yes, ma'am. We are equipped with technology1255from a number of different sources that allow us to do that.1256Our main one is Advana. It is advancing analytics. It is a1257system where we pull all of the data from every financial1258management system, logistics system, and H.R. system, and we1259are able to apply analytics, AI, process mining to the entire1260population. That has given us great insight that has been very1261helpful as we move forward with the audit, and it is going to1262be one of the key things that gets us across the finish line on1263the Fiscal Year 2028 audit getting us a clean opinion.1264    Ms. Foxx. Thank you.1265    Mr. Busby?1266    Mr. Busby. Same. Same. We use Advana as well.1267    Ms. Foxx. Okay. A follow-up. It is also my understanding1268that process intelligence can be applied to accounting journal1269entries so that all entries can be reviewed and suspicious ones1270can be flagged for auditors to review. Is the Department doing1271this already, and if not, why not?1272    Mr. Harker. Yes, ma'am. We have a significant effort going1273around this so that we can go in and trace the problems that1274cause the journal vouchers back to their original system of1275origin. And so that uses our Advana technology, our process1276mining, our business intelligence to go in and identify, is the1277initial error in an Army system, a Navy system, an Air Force1278system? If so, which system, and what can we do to clean up the1279errors in those systems so that we have better access to data1280for our lead decisionmakers?1281    Ms. Foxx. Thank you.1282    Mr. Busby, anything different?1283    Mr. Busby. No. We follow the same process.1284    Ms. Foxx. Okay. Mr. Khan, what indicators will we have to1285suggest that the Department of War is on the right path to1286receiving a clean audit opinion?1287    Mr. Khan. Thank you for that question, Congresswoman. The1288Department has set out some goals over the next few years, and1289the first of these goals is that the Department of the Navy1290Working Capital Fund to reach an opinion by the end of this1291fiscal year, so that will be an early indication of successes.1292The next goal is that the Department-wide working capital fund1293reaches an opinion by the end of Fiscal Year 2027. So, those1294are two major indicators which will tell us how this approach1295is progressing.1296    Ms. Foxx. Thank you, Mr. Chairman. I yield back.1297    Mr. Gill. Thank you, Dr. Foxx.1298    And I now yield 5 minutes to the gentleman from Maryland,1299Mr. Mfume.1300    Mr. Mfume. Thank you very much, Mr. Acting Ranking Member1301[sic]. I appreciate it.1302    My thanks to all of you who had to sort of endure our1303absence for a vote series.1304    I want to, if I might, go back to you, Mr. Harker. I1305listened intently to your opening comments. And I heard1306something that I have heard quite often about existing hurdles,1307and that is the legacy systems and the inheritance of those1308systems and how that has traditionally, or at least certainly1309recently, slowed down the process of evolution, getting us to1310where we want to be.1311    How do we get rid of them? I mean, I have been hearing1312about legacy systems for five or six years, and it would seem1313to me, after a while, you throw something out and replace it1314with something. Am I correct about that?1315    Mr. Harker. Yes, sir. One of the biggest challenges we have1316with a lot of our legacy systems is that they are all1317interconnected in ways to where it is almost impossible to just1318pull one out. It is like pulling one piece of cooked spaghetti1319out; they stick to each other and it causes problems. We are1320using AI and automation to go in and identify exactly where1321those problems are and how we can pull those things out so that1322we can modernize our systems. The Director of the Defense1323Finance and Accounting Service (DFAS) and I spent a good bit of1324time yesterday focusing on this. His staff, my staff, we are1325all looking at how can we get rid of those legacy systems.1326    Mr. Mfume. And how many of those systems do you estimate1327might be operational right now?1328    Mr. Harker. Right now, we have got 86 financial systems1329that are part of our key core financial business systems that1330are tied to the audit. Our goal is to get that down to less1331than ten so that we actually have one general ledger, one1332entitlement system, one system for each major process. That is1333going to take time. We have to be able to make sure we do not1334do any harm by getting rid of those systems, but it is strongly1335important for all of us to get out of the legacy systems, sir.1336    Mr. Mfume. So, this is a surgical approach, I take it?1337    Mr. Harker. Yes, sir.1338    Mr. Mfume. Working with the AI?1339    It seems to me that artificial intelligence should be able1340to let you know, if you are working in one particular area, how1341it interacts with another one and whether that is negative and1342should be shut down or whether it is positive and should be1343amplified. Is that the way you are approaching this?1344    Mr. Harker. Yes, sir. Our approach is to use AI to piece1345together the information that's missing from the various1346systems, fill the holes in our data, and give us insight into1347how we can pull those other systems out without causing any1348harm to the overall financial corpus.1349    Mr. Mfume. And did I also hear, and was it a part of your1350testimony, that you expect the completion of the audit, agency-1351wide audit, by 2028? Did I mishear on that?1352    Mr. Harker. Yes, sir. We anticipate getting a clean opinion1353on the Navy Working Capital Fund this year, the overall working1354capital fund next year, and then a clean opinion on the agency-1355wide statements in Fiscal Year 2028.1356    Mr. Mfume. And when will you know between now and then if1357your goal, your target, is not going to be met in 2028?1358    Mr. Harker. I think the first indication you should be1359looking for is our Fiscal Year 2026 Navy Working Capital Fund.1360They are on track to get a clean opinion this year. That1361opinion will be out by February of next year. If they miss1362that, then we are in danger of making the 2028 date. But that1363is the next big cycle where you will have independent1364verification that the things we are doing are on track, sir.1365    Mr. Mfume. Okay. And, Mr. Mansfield and Mr. Khan, it is1366good to see both of you. I did not have much to say early on1367because I was trying to rush through and get out of here, but1368you have been before this Committee, both of you now, several1369times, so you know the kind of angst that we always demonstrate1370when we realize we are not where we are supposed to be with1371respect to these audits.1372    Mr. Khan, I want to go back to you, because there is a1373three year report card that was established that measures.1374That, I am assuming, that report card will also indicate if, as1375Mr. Harker is moving toward this goal of 2028 agencywide, that1376you would get some indication from that, there would be1377something that would go off and say that you are not going to1378make it or you are going to make it, and if so, can you tell us1379how that works?1380    Mr. Khan. Thank you for that question, Congressman. The1381scorecard is looking at some different measures than what the1382current approach is going to be undertaking. The measures we1383have on the scorecard is more granular. It is looking at the1384processes and internal controls and fixing the material1385weaknesses and the individual findings, whereas the current1386approach is, like I said in my opening statement, is more top-1387down. So, those results would not necessarily be captured in1388this--in this particular format of the scorecard.1389    Mr. Mfume. So, do both of those approaches at the end of1390the day complement one another or are they negatively affecting1391one another?1392    Mr. Khan. They complement one other, but it is important to1393recognize that the financial statements should be reflecting1394what the underlying records are. And one of the concern is that1395the current approach may not really reflect what is in the1396underlying financial system, because if the adjustments are1397made to the financial statement itself, just the numbers, the1398bookkeeping of it, then it may not be necessarily reflective of1399what the underlying records are.1400    Mr. Mfume. Okay. My time has expired, but I just want to1401call your attention to the fact that, after I huddle with the1402Chairman, we probably will be doing this dance again in about1403six months just to be able to figure out where we are on the1404continuum and whether or not something new or different should1405be implemented.1406    I yield back.1407    Mr. Gill. Thank you, Mr. Mfume.1408    And I will now yield 5 minutes to myself to ask you guys a1409few questions. Thank you all for being here and for taking the1410time to talk with us. It is always really helpful.1411    Mr. Khan, I will start with you. Can you explain just in1412layman's terms what exactly it means when an agency is not able1413to pass an audit?1414    Mr. Khan. That its underlying systems, the internal1415controls are not functioning as intended and, therefore, the1416numbers, the information it is producing, it is not reliable.1417Consequently, the financial statements, which are produced1418through those numbers, they are going to be unauditable, and1419the auditor is going to give a disclaimer of opinion.1420    Mr. Gill. Got it. And, in your opinion, what are the major1421reasons the Department of War cannot pass an audit?1422    Mr. Khan. There are three major buckets which are causing--1423one of them really goes down to the processing system. If the1424processes and systems are not operating, then it is going to be1425very difficult to pull those numbers together to aggregate them1426to a financial statement. The other one is just pure1427accounting. To get your hands around accounting, some of this1428is rather complex to get that done. And then, finally, there is1429the element of getting enough trained people to pull all this1430information together so that you can have this done on an1431annual basis.1432    Mr. Gill. Is there a role in the fact that the Department1433of War cannot account for all of its properties? Is that part1434of this issue as well?1435    Mr. Khan. Yes. That is part of the issue, the existing1436completeness and valuation of the property.1437    Mr. Gill. Could you help explain that?1438    Mr. Khan. Because, I mean, property is part of the DoD's1439assets. The financial statement required those assets to be1440reported on the financial statements, and if the assets--the1441valuation is unknown, then that will be detrimental to what can1442be reported in financial statements. If your methodology does1443not ensure that you have a complete count of those assets,1444then, again, that will be a deficiency in the numbers that are1445reported in the financial statements.1446    Mr. Gill. And what do you think Congress could do to help1447alleviate some of those challenges?1448    Mr. Khan. Like I had said earlier on, I think the most1449meaningful way is to continue to have these oversight hearings1450so that you can--it sends a message that you all are interested1451in the results of the financial statement audits. It is very1452important for the defense of this country. So, I think that1453sends a very strong message to the people in the Defense1454Department to make sure that they are taking this seriously,1455which they are, and they have progressed a lot over the prior1456several years. And if you continue to have these oversight1457hearings, it will continue to show positive results.1458    Mr. Gill. Is there anything we could do outside of showing1459interest that might expedite this process to the point where we1460can pass an audit in the near future, in your opinion?1461    Mr. Khan. I mean, you can pass legislation to encourage1462them to go in that direction, and Congress has done that1463before. So, that is another avenue for the Committee to follow.1464    Mr. Gill. Okay. Got it. And, in your opinion, what are some1465of the potential risks posed by giving the Department of War1466such a large budgetary increase in the wake of their inability1467to pass an audit?1468    Mr. Khan. The lack of internal controls is of concern. I1469mean, some examples that come before us is, when the COVID1470funding went out, it went out through conduits which did not1471have adequate controls. Consequently, we saw the results of1472that. The money was going to places where it was not intended1473for. If, like we know, the internal controls of the Department1474are very weak, if it is flush of money, then it is of concern1475that the money may not be going to the right places.1476    Along with that, fraud risk management was added to the1477high-risk list. Because of weak internal controls, there is a1478heightened risk that there is going to be--there is a greater1479likelihood of fraud happening. So that, in conjunction between1480the lack of internal controls and the heightened risk of fraud1481risk management, I think is something to be watched carefully1482and managed when additional money is being given to the1483Department.1484    Mr. Gill. Got it. Thank you, Mr. Khan.1485    And with that, I will yield back the remainder of my time.1486    And we will move on to the gentleman from Virginia, Mr.1487Walkinshaw, for 5 minutes.1488    Mr. Walkinshaw. Thank you, Mr. Chairman. And thank you all1489for being here.1490    Mr. Khan, you referred, and we have had some conversation1491around the scorecard, which I think is on page 28 of your1492testimony. And I understand that the Comptroller, the1493Department, assert that the scorecard reflects legacy processes1494and not the current priorities. I think I can understand why1495the Department would not want folks to pay attention to the1496scorecard because it ain't great. There are eight categories,1497four branches. It looks like there are increases in the scores1498from Fiscal Year 2024 to 2025, and one, two, three, four, five1499scores went up. The other 27 were stagnant or maybe declined, I1500am not sure.1501    Some significant ones, NFR closure, so notice of findings1502and recommendations from OIG: Army, F; Navy, F; Air Force, F;1503Marine Corps, F. Systems compliance with financial management1504requirements, that is just whether you are in compliance, if I1505am understanding correctly, with the existing requirements,1506statutory, regulatory, policy: Army, F; Navy, F; Air Force, F;1507Marine Corps, F.1508    And then when I, in reading your testimony and your1509discussion of the DoD's revised approach, the lack of1510sufficiently detailed road maps limits transparency and1511accountability. The revised approach will result in the1512preparation and audit of fewer stand-alone financial1513statements, potentially risk limiting accountability and1514transparency.1515    I am trying to understand GAO's concern. Is it that this1516revised approach will make it less likely that the Department1517can achieve a clean audit or that perhaps it accelerates1518accomplishing a clean audit on paper, but there will be1519transparency and potential improvements and savings to the1520taxpayers perhaps lost in the process that otherwise could have1521been achieved?1522    Mr. Khan. It is that the opinion may be achieved without1523having a really robust look at the underlying processes which1524are important for operational efficiencies to make sure that1525the Department's financial management is functioning the way it1526should function, rather than just looking at what the financial1527statement numbers are. So, that is the major concern, that the1528internal controls which are put into an environment like the1529Defense Department, the check and balances, that they will not1530necessarily be looked at and neglect over the time period.1531    Mr. Walkinshaw. Okay. I just want to state for the record I1532have serious concerns about that. I am not interested in a1533clean audit for the sake of a clean audit. The point here is to1534get a clean audit so we know the taxpayers are getting the best1535value for their money, and I am certainly going to be watching1536that closely.1537    Mr. Mansfield, I read your all's report, the Financial1538Statement Audit Explained report, and I have got to say, I1539enjoyed it. Given the title, not the kind of report you would1540typically enjoy, but I think you all did a good job of making1541it easy to understand and read. But you did outline, as1542Obstacle No. 2, information technology. And you noted the1543outdated, redundant, not compliant Federal accounting systems,1544outdated IT systems, not compliant with the Federal Financial1545Management Improvement Act of 1996--1996--297 major financial1546management systems.1547    And I guess, I am just a little bit concerned that we have1548not had a lot of conversation, Mr. Harker, Mr. Busby, from you1549all, on that fundamental challenge, that we have financial1550management systems that are way out of date, out of compliance.1551And if we have a--I do not see how you can have a clean audit1552that is truly a clean audit without addressing that issue.1553Either of you want to speak to that?1554    Mr. Harker. Yes. I agree 100 percent that we need to get1555rid of a lot of these legacy financial systems, and we are1556working to do so. Using the AI and automation to help fill in1557the gaps in data is helping us move forward with identifying1558what systems can be eliminated and how quickly. But in1559addition, there are efforts going on.1560    When I was the CFO of the Navy a while back, we1561consolidated our general ledger systems. We went from nine1562general ledger systems down to one. That took about eight1563years, but it was a systemic elimination of legacy systems,1564moving all the data into the one general ledger that the Navy1565operates today.1566    The Navy is in the process of modernizing that system. In1567doing so, they are pulling in requirements from other legacy1568systems so that all of it will be done in that one general1569ledger system. You will have payments, you will have1570disbursements, you will have approvement of funds, you will1571have all of the accounting stuff for payments, receivables,1572Fund Balance with Treasury reconciliations in one system. At1573that point, the Navy will no longer need to touch all of those1574other systems, and that is the only way we are going to be able1575to eliminate all of them.1576    So, that effort there is huge, and I encourage you to take1577a look at what the Navy's doing, because that answers a lot of1578your questions, sir.1579    Mr. Walkinshaw. Thank you, Mr. Chairman. I yield back.1580    Mr. Sessions. [Presiding.] The gentleman yields back his1581time. Thank you very much.1582    The gentleman is recognized for 5 minutes. Mr. Jack, it is1583good to see you.1584    Mr. Jack. Thank you very much.1585    Mr. Sessions. Thank you for taking the time to be us with1586today.1587    Mr. Jack. Thank you very much, Mr. Chairman.1588    My question to Mr. Harker, I understand that the new audit1589approach will not focus on addressing material weaknesses or1590auditor recommendations. As such, what do you expect to be the1591Department's biggest hurdle to achieve a clean opinion by 2028?1592    Mr. Harker. So, every Notice of Finding and Recommendation,1593every material weakness has multiple conditions, some of which1594are more important to fix than others. Our goal is to clean the1595ones that are the biggest barriers to getting that clean1596opinion and focus all of our efforts on getting the clean1597opinion.1598    Mr. Jack. And I understand, correct me if I am wrong, the1599Marine Corps was the first and only service to achieve a clean,1600unmodified audit opinion. Is that correct?1601    Mr. Harker. Yes, sir, that is correct. They have had three1602in a row.1603    Mr. Jack. And could you, given that success, walk us1604through why the Marines are so well positioned with respect to1605that initiative and what lessons we can learn and perhaps other1606branches can learn from their success?1607    Mr. Harker. Yes, sir. The key factor for the Marine Corps1608was the Commandant of the Marine Corps issued a two-page letter1609directing all the Marines to do what it took to get a clean1610opinion. Once that was issued, it went from where I was working1611with the Marines and they were saying, ``Yes, this is nice, but1612it is not important to the Commandant,'' to, now, ``The1613Commandant says do this.'' I was CFO of the Navy at the time,1614the Department of the Navy, so Navy and Marine Corps, and it1615was amazing how quickly they got in line. They put in the1616effort to go out, count things, provide the right accounting1617for them, modernize systems where they could, do substantive1618test work where they could not.1619    That model has been moved to where now the Navy is doing1620that. Their Vice Chief of Naval Operations issued similar1621guidance to the Navy. They are moving forward. They are going1622to get a clean opinion on their working capital fund audit this1623year. And you see the same thing happening in the Air Force,1624where they are both hoping to get clean opinions in 2027. So,1625there has been a lot of progress inside the Department based on1626the lessons learned by the United States Marine Corps.1627    Mr. Jack. There is a follow-up to my next question, but1628imagining if the model were scaled across the entire Department1629of War, do you believe it would remain viable across each1630branch, and could you walk me through some of the nuances1631within each branch as it relates to that model?1632    Mr. Harker. Yes, sir. Absolutely. I think the guidance from1633Secretary Hegseth, standing up Joint Task Force Audit, is the--1634taking the guidance that the Commandant gave and moving it to a1635higher level. He has dedicated a general officer, plus 20-plus1636other military personnel, to work alongside the accountants on1637my staff and the support contractors we get who have technical1638expertise that we may not have to go out and solve all these1639problems.1640    We are deploying those teams out to the Army, the Air1641Force, the Navy, the defense agencies, to go after the specific1642problems that are causing us audit challenges. We are including1643a data analytics corps from the others on my staff on that. We1644are including folks who have specializations in configuring1645systems and in looking at how to replace systems, and so it is1646an effort that is the entire Department.1647    The task force is reporting their results every two weeks,1648and that gets out to all the senior leaders. It goes up through1649the Comptroller, gets to the Secretary, gets to the Chairman,1650provides the way ahead and identifies the barriers where we1651need help removing them. If there are things that I cannot1652resolve, I go to my boss, he engages with all the other four-1653stars, where they are in uniform or in civilian, you know,1654political appointees, and we go after that and we knock those1655barriers down so that we can move forward as quickly as1656possible to get this clean opinion.1657    Mr. Jack. And how are you utilizing new technology, new1658emerging technology to help expedite these audits, make sure1659they are perfect? Welcome thoughts over the last few years how1660it has evolved and how it has approached what you do.1661    Mr. Harker. Yes, sir. We appreciate the funds that were1662given to us in the One Big Beautiful Bill Act. It is $3501663million: $150-to eliminate legacy systems, $200-toward the1664advent of AI and automation. We have obligated a significant1665portion of that. We are putting in place tools using AI that1666are helping to fill data gaps. We are putting in automation1667that allows us to use robotic tools inside the computer systems1668to go pull data that supports the audit testing. And we are1669using the funding on legacy system decommissionings to go after1670specific problems that are in current systems, either to make1671an improvement to that system so it works better or to take1672that system offline and have other things that can replace it.1673    Mr. Jack. And to affirm, that funding came through the One1674Big Beautiful Bill Act?1675    Mr. Harker. Yes, sir.1676    Mr. Jack. And I just--I will close, Mr. Chairman, by just1677noting, that is just another example, of which there are many,1678where the One Big Beautiful Bill Act is really helping move the1679country forward. It is something the American people wanted1680when they voted for Donald Trump and House Republicans being1681the majority in 2024. And I think that funding is illustrative1682of the overall approach to ensure that we spend money more1683efficiently and, likewise, govern in a way that is befitting of1684what the American people wanted back in 2024.1685    So, with that, Mr. Chairman, I applaud you for convening1686this hearing, and I yield back the balance of my time.1687    Mr. Sessions. The gentleman yields back his time. Thank you1688very much.1689    I believe everyone on this side has had an opportunity to1690engage our witnesses. I apologize for being late. I had another1691committee where we had work that had to be accomplished.1692    Thank you for being here today. This has brought about a1693great deal of information that you have received about the1694reality of where people perceive we actually are on this issue.1695I could call it pessimism. I could call it a reminder to you of1696past performances you are still getting credit for.1697    I want to turn for just a minute and ask two questions. Mr.1698Harker, you alluded to and talked about doing away with legacy1699systems and replacing them, some $350 million that was given1700under One Big Beautiful Bill, that would allow you to get1701closer to this effort of complying with the law. Tell me about1702those. Are they systems that will take five months to fix, ten1703months to fix, two years to fix? They are going to come online,1704they are going to help be your saving grace to help you in this1705year and next year and to comply with the law. Tell me about1706those--that timeframe and the availability of these new systems1707to aid that effort.1708    Mr. Harker. Yes, sir. So, getting from nine general ledgers1709to one for the Navy, it took just under eight years and it took1710a good deal of money, but they are now operating at a savings1711because they no longer have to support the other eight legacy1712systems. The Defense Financial Accounting Service, DFAS, has1713done a similar effort where they have tried to reduce the1714number of different systems that perform the same function. For1715example, they will have systems that will be dispersing1716systems, they will have systems that will do entitlements, that1717will do payment management, that type of thing.1718    And so they have systemically been reducing the number of1719systems by migrating people from one to another and getting all1720of the work down to, for disbursing, they only have two, one1721that is unclassified, one that is classified; for payment1722management, they have got it down to four; for Fund Balance1723with Treasury reconciliation, they are down to two.1724    So, this is significant improvements when you consider they1725had six, seven, eight, nine systems, all of which were written1726in COBOL or FORTRAN or legacy accounting systems that were1727highly challenging to maintain because we just do not have1728folks who code in those languages. I learned FORTRAN when I was1729a freshman in college many, many years ago, but there are not a1730lot of people out there learning it today.1731    So, for us it is a systemic effort. The services are each1732doing their bit. DFAS is looking at what they can do. The1733biggest challenge for DFAS right now is getting ahold of their1734data so that they do not lose the data, getting it into one1735repository, so they are looking at can they put that data into1736our Advana system, and then if so, that would expedite their1737movement toward elimination of legacy systems.1738    Mr. Sessions. Okay. Does that mean history of data or1739current data?1740    Mr. Harker. Both, sir.1741    Mr. Sessions. Both.1742    Mr. Harker. There is a history of data that is required.1743For example, when they pay servicemembers, we need to keep that1744data so that we can refer back and say, no, servicemember, you1745are complaining about this; you did get that payment on1746November 17. But for other--a lot of them it is the current1747year data so that you will have a way of making sure that you1748are not going to be missing something or pulling a system away1749that is going to cause a break in the flow of data across our1750various systems.1751    Mr. Sessions. All right. I am still wanting to get a little1752bit closer, tighter on this.1753    Mr. Harker. Sir.1754    Mr. Sessions. What brought me to the question was the view1755that you made about the eight years to go from one system to1756another and diminishing those systems and refurbishing or1757bringing the others online. My question is, you are now working1758with that $350 million. Is that an eight year process, or are1759you--because you have told us, your testimony before this1760Subcommittee is you are going to make the clean audit.1761    Mr. Harker. Yes, sir.1762    Mr. Sessions. You do not have eight years.1763    Mr. Harker. No, sir. We are going to make a clean audit1764opinion in the system state that we current have, plus the1765decommissionings that we can accomplish over the course of the1766next two years. The decommissionings are ongoing. There are1767systems that were decommissioned last year. There is more that1768we have planned for this year. That is work that is being done1769in conjunction between the comptroller organization, the1770services, and then the CIO organization both at the Department1771level as well as in the services.1772    So, there is a defense business council that goes after1773that, and they had a meeting earlier this week where the newly1774confirmed CIO, the Deputy Comptroller, and a lot of the1775leadership were all digging into what is it going to take for1776us to turn these systems off. The information we gathered by1777turning off other systems gives us more insight into what it1778takes to do this so we can accelerate.1779    As we get to a clean opinion, we are still going to have1780some legacy systems, but we will have a lot more information1781that will allow us to focus resources on decommissioning1782additional systems, which will make the audit cheaper, faster,1783and add more value to the warfighter because we will be able to1784give them better data more quickly so they can have informed1785decisionmakers.1786    Mr. Sessions. Well, I am for it. Yesterday, I had a1787conversation with all four of you that focused on a viewpoint1788that I have, may be shared by others, but it is certainly one1789that I am interested in, and that is that today we have the1790need in the conflict that we are engaged in to make sure that1791the Joint Chiefs and decisionmakers as commanders, frontline1792commanders especially, but also those back at the Pentagon, who1793need to have confidence in the numbers that they are looking at1794of systems, of data bases, of actual--not stockpiles, but the1795things that are actually available to the Joint Chiefs.1796    I hope that I--we have not done anything in here but,1797rather, would aid in that ability for you to prioritize those1798avenues that provide critical mission support so that you could1799count on them in your work. Do you think that we have asked you1800to do anything where we are getting in the way of mission-1801critical objectives by you moving forward to this date of a1802clean audit?1803    Mr. Harker. Yes, sir. Absolutely. I have seen it happen at1804the Navy when I was CFO there.1805    Mr. Sessions. The question is, do you think we are getting1806in your way----1807    Mr. Harker. Oh.1808    Mr. Sessions [continuing]. Or being a hindrance in you1809performing the duties of providing the necessary information to1810the Secretary, to the Joint Chiefs? Are we doing anything by1811pushing clean audit, clean audit, clean audit, which you have1812heard here today?1813    Mr. Harker. Yes. No, I do not believe you are getting in1814our way. You are holding us accountable for compliance with the1815law and compliance with standards.1816    An audit determines is management doing their job, and for1817many years we have been making improvements in that, but we are1818not there yet. We need to do better. We will do better. We will1819have the opinion by 2028, and that will enable us to provide1820better information to commanders.1821    As we have been going through this progress, the push that1822you have been giving us, the emphasis has helped us to--helped1823to hold us accountable to improve our data quality. We have1824seen data quality improvements on the logistics side. We have1825seen data quality improvements on the accountability for1826munitions side. The guidance, the feedback we have gotten from1827the Committee has been outstanding in helping us move forward1828in making those significant improvements that impact1829operations.1830    Mr. Sessions. Yes.1831    Mr. Mansfield, I am not sure if you are aware, but there1832have been several discussions that have taken place between1833Department of War and this staff, this Oversight staff, that1834essentially went along the line of, we have still got things1835that we would like to move forward in the audit and take to1836zero or to decommission things or to get them off our books.1837That seemingly made sense to me. I am not a CPA. But when you1838have got buildings, circumstances that are more than 100 years1839old, you may be using it but the value is hugely diminished.1840    I want you to know that, in the coming weeks, we are going1841to revisit that issue. And I am interested in you and Mr. Khan1842being in those discussions. I am not a CPA, but I want to make1843sure that, when we get down to this, that we are fair to the1844DoW. I think that they are asking reasonable questions. They1845are making sure that, when we look at data, they are looking at1846the same data. But I would want you to know that I think that1847these are honest questions that they are seeking our opinion1848on.1849    Have they sought your opinion on these types of matters?1850    Mr. Mansfield. So, first off, I welcome the opportunity to1851engage in those conversations. I think that would be a great1852dialog for us to continue.1853    Yes, we have had conversations along those lines with the1854Department. I know that Mr. Harker and others have engaged also1855with the Federal Accounting Standards Board, the FASB. They are1856the body that sets standards and expectations for how financial1857records are maintained. The rule of the OIG is to, you know,1858ensure that the Department's meeting those expectations. We do1859not set them, but we are happy to be a part of the1860conversation.1861    Mr. Sessions. That is great. But you are in that1862conversation----1863    Mr. Mansfield. Yes.1864    Mr. Sessions [continuing]. And aware of these discussions.1865    Mr. Mansfield. Yes, sir.1866    Mr. Sessions. Mr. Khan, do you believe that you have1867offered any opinion related to these types of things where they1868have come back and said, we believe we are doing this, but we1869believe it might be permissible to gain acceptance, at least1870from Congress, I am sure from all of us that are involved,1871about taking these matters to where they would fall off the1872report or diminish their value?1873    Mr. Khan. Right. I mean, these are ongoing conversations.1874We have had discussions with the Department going back in the18752015, 2016 timeframe regarding sensitive activities and1876equipment. So, the recent conversation, we are aware of what1877the Department is looking for, and the right forum for that is1878to have a discussion with FASB, the Federal Accounting1879Standards Board. They are a consultative body. They are going1880to be happy to engage with the Department to understand what1881their needs are, and they can suggest different ways to1882structure particular standards. And I think Mr. Harker and the1883Board is going to be meeting and engaging with them in those1884conversations.1885    But to your questions, we will be very happy to engage with1886you and with whomever to have those conversations so we can1887offer our perspective as well.1888    Mr. Sessions. Thank you very much.1889    Mr. Harker, do you believe that this Committee staff needs1890to be a part of those decisions or do you believe that we would1891look at a recommendation that would come from this group of1892people? I am trying to get closer to making sure we are not1893getting in your way, also, of achieving the things that we need1894from the timeframe perspectives.1895    Mr. Harker. Yes, sir. You are not getting in our way. We1896have been working with Mr. Khan, Mr. Mansfield, their staffs,1897on how to integrate our efforts with the advice we get from1898them, whether it is formal advice via an NFR, material1899weakness, audit communication, or conversations that we have1900during our monthly or more frequent meetings.1901    I would invite you and your staff to come look at what we1902get set up with the Joint Task Force Audit, start looking at1903some of those biweekly reports that are going to be going up to1904the Secretary, the Deputy Secretary. We are in the process of1905building that out, but by the time we come back in six months1906or so, we should be able to give you a history of these are the1907reports, these are the issues that were raised, here is how we1908removed those barriers. And it will be something that you will1909be able to assess are we managing this and monitoring it on a1910regular ongoing basis, and I think that would give you good1911information, and your interest would also help us with making1912the changes the Department needs to make.1913    Mr. Sessions. Thank you very much. We will, both Mr. Mfume1914and I, would choose to do that, and it is always better to be1915invited. So, thank you for the kind invitation. I do not think1916we will wait six months. I think we will want to come back and1917provide feedback reinforcing the work that you are doing.1918    I want to thank all four of you for being here.1919    And I would now like to ask if there is a second round of1920any Member that is interested in that. Mr. Walkinshaw?1921    Mr. Walkinshaw. No.1922    Mr. Sessions. Mr. Mfume?1923    Mr. Mfume. No.1924    Mr. Sessions. Okay. I am engaged in this and found your1925energy, all four of you yesterday, very important. I think that1926the perspective--I did not hear different answers. I did not1927hear differences of opinion. I did not hear someone say they1928cannot. I heard them say they can. I heard each of you say, if1929we continue down this path. But the greatest thing I heard was,1930we are working together. That the leadership at the Department1931has the desire, and you feel like that following, I guess what1932we have talked about, the Marine Corps top-to-bottom viewpoint1933of making this work is something that is happening right now at1934the Pentagon. So, Mr. Mfume and I would want to come over and1935make sure we reinforce that.1936    I do not think any of your colleagues really want to come1937and go through what you did today, but I think the next time it1938would offer you a chance perhaps to tell stories of success,1939perhaps give you opportunities for you to say how the Secretary1940of the Navy felt like that his decisionmaking was enhanced with1941date and information, that the Secretary of the Air Force,1942perhaps the Joint Chiefs, would be able to say they felt more1943confident in the questions that they asked were backed up with1944reality, and that is really what the data supported what is1945available to them.1946    So, I really want to thank you. But I would say that1947probably Mr. Mfume would come over as early as June, so we will1948find out. So, I want to thank you all. I want to allow the1949distinguished gentleman from Maryland his opportunity to close,1950but my close is going to be, and we are going to see you in1951June. So, I want to thank each of you.1952    Mr. Mfume?1953    Mr. Mfume. Thank you very much, Mr. Chairman.1954    My thanks to all of you again. Like I said before, Mr.1955Mansfield, Mr. Khan, good to see both of you again.1956    June might be a little premature because Chairman does not1957have a campaign, I do, and an election on the 23rd of June. So,1958to the extent that I can do that and be here--or be there with1959you, I will.1960    But I want to thank you again for following up. One of the1961things we have tried to do with this process is to follow up,1962and follow up, and follow up. And I would hope, then, Mr. Khan,1963you could juxtapose the report card against some of the1964information that we get then to help us better understand where1965we are on this continuum.1966    That is it for me, Mr. Chairman. I yield back. On behalf of1967my Members who have been here and participated, we thank you1968for the opportunity.1969    Mr. Sessions. Mr. Mfume, I apologize for not staying up1970with the calendar as well as you have, and it would be--perhaps1971we would entertain a July then. But I prefer not to wait six1972months. I think that it would be insincere on our part to leave1973it all to you when we are all trying to get it done together.1974    So, I want to thank the gentleman.1975    Mr. Walkinshaw, I want to thank you for taking time, once1976again, to come and do this.1977    So, with that, and without objection, all Members have five1978legislative days within which to submit materials and1979additional written questions for our witnesses which will be1980forwarded to the witnesses.1981    If there is no further business, without objection, the1982Subcommittee stands adjourned.1983    [Whereupon, at 4:57 p.m., the Subcommittee was adjourned.]19841985                           [all]