II 

111TH CONGRESS 

1ST SESSION S. 1287 

To provide for the audit of financial statements of the Department of Defense 

for fiscal year 2017 and fiscal years thereafter, and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

JUNE 18, 2009 

Mr. MCCAIN (for himself, Mr. COBURN, and Mr. GRASSLEY) introduced the 

following bill; which was read twice and referred to the Committee on 

Armed Services 

A BILL 

To provide for the audit of financial statements of the Department of Defense for fiscal year 2017 and fiscal years 

thereafter, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Department of Defense 

5 Financial Accountability Act of 2009’’. 

6 SEC. 2. AUDIT OF FINANCIAL STATEMENTS OF THE DE7 PARTMENT OF DEFENSE. 

8 (a) FINANCIAL STATEMENTS OF DEPARTMENT OF

9 DEFENSE.— 


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1 (1) VALIDATION AS READY FOR AUDIT.—The 

2 financial statements of the Department of Defense 

3 for a fiscal year shall be validated as ready for audit 

4 by not later than September 30, 2017. 

5 (2) AUDIT.—The financial statements of the 

6 Department of Defense for a fiscal year shall be au7 dited, and an opinion shall be rendered pursuant to 

8 such audit, for the first fiscal year for which the fi9 nancial statements are ready for audit, but not later 

10 than fiscal year 2017, and for each fiscal year there11 after. 

12 (3) DEADLINE FOR AUDIT.—The audit of the 

13 financial statements of the Department of Defense 

14 shall be completed as follows: 

15 (A) In the event the financial statements 

16 for a fiscal year before fiscal year 2017 are 

17 ready for audit, by not later than two years 

18 after the last day of such fiscal year. 

19 (B) In the case of the financial statement 

20 fiscal year 2017, by not later than September 

21 30, 2019. 

22 (C) In the case of the financial statement 

23 for any fiscal year after fiscal year 2017, by not 

24 later than one year after the last day of such 

25 fiscal year. 


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1 (b) FINANCIAL STATEMENTS OF THE MILITARY DE2 PARTMENTS AND DLA.—In furtherance of compliance 

3 with the requirements in subsection (a), the following re4 quirements shall apply: 

5 (1) DEPARTMENT OF THE ARMY.— 

6 (A) VALIDATION AS READY FOR AUDIT.— 

7 The financial statements of the Department of 

8 the Army for a fiscal year shall be validated as 

9 ready for audit by not later than March 31, 

10 2017. 

11 (B) AUDIT.—The financial statements of 

12 the Department of the Army for a fiscal year 

13 shall be audited, and an opinion shall be ren14 dered pursuant to such audit, for the first fiscal 

15 year for which the financial statements are 

16 ready for audit, but not later than fiscal year 

17 2017, and for each fiscal year thereafter. 

18 (C) DEADLINE FOR AUDIT.—The audit of 

19 the financial statements of the Department of 

20 Army shall be completed as follows: 

21 (i) In the event the financial state22 ments for a fiscal year before fiscal year 

23 2017 are ready for audit, by not later than 

24 two years after the last day of such fiscal 

25 year. 


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1 (ii) In the case of the financial state2 ment fiscal year 2017, by not later than 

3 September 30, 2019. 

4 (iii) In the case of the financial state5 ment for any fiscal year after fiscal year 

6 2017, by not later than one year after the 

7 last day of such fiscal year. 

8 (2) DEPARTMENT OF THE NAVY.— 

9 (A) VALIDATION AS READY FOR AUDIT.— 

10 The financial statements of the Department of 

11 the Navy for a fiscal year shall be validated as 

12 ready for audit by not later than March 31, 

13 2016. 

14 (B) AUDIT.—The financial statements of 

15 the Department of the Navy for a fiscal year 

16 shall be audited, and an opinion shall be ren17 dered pursuant to such audit, for the first fiscal 

18 year for which the financial statements are 

19 ready for audit, but not later than fiscal year 

20 2016, and for each fiscal year thereafter. 

21 (C) DEADLINE FOR AUDIT.—The audit of 

22 the financial statements of the Department of 

23 Navy shall be completed as follows: 

24 (i) In the event the financial state25 ments for a fiscal year before fiscal year 


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1 2016 are ready for audit, by not later than 

2 two years after the last day of such fiscal 

3 year. 

4 (ii) In the case of the financial state5 ment fiscal year 2016, by not later than 

6 September 30, 2018. 

7 (iii) In the case of the financial state8 ment for any fiscal year after fiscal year 

9 2016, by not later than one year after the 

10 last day of such fiscal year. 

11 (3) DEPARTMENT OF THE AIR FORCE.— 

12 (A) VALIDATION AS READY FOR AUDIT.— 

13 The financial statements of the Department of 

14 the Air Force for a fiscal year shall be validated 

15 as ready for audit by not later than September 

16 30, 2016. 

17 (B) AUDIT.—The financial statements of 

18 the Department of the Air Force for a fiscal 

19 year shall be audited, and an opinion shall be 

20 rendered pursuant to such audit, for the first 

21 fiscal year for which the financial statements 

22 are ready for audit, but not later than fiscal 

23 year 2016, and for each fiscal year thereafter. 


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1 (C) DEADLINE FOR AUDIT.—The audit of 

2 the financial statements of the Department of 

3 the Air Force shall be completed as follows: 

4 (i) In the event the financial state5 ments for a fiscal year before fiscal year 

6 2016 are ready for audit, by not later than 

7 two years after the last day of such fiscal 

8 year. 

9 (ii) In the case of the financial state10 ment fiscal year 2016, by not later than 

11 September 30, 2018. 

12 (iii) In the case of the financial state13 ment for any fiscal year after fiscal year 

14 2016, by not later than one year after the 

15 last day of such fiscal year. 

16 (4) DEFENSE LOGISTICS AGENCY.— 

17 (A) VALIDATION AS READY FOR AUDIT.— 

18 The financial statements of the Defense Logis19 tics Agency for a fiscal year shall be validated 

20 as ready for audit by not later than September 

21 30, 2017. 

22 (B) AUDIT.—The financial statements of 

23 the Defense Logistics Agency for a fiscal year 

24 shall be audited, and an opinion shall be ren25 dered pursuant to such audit, for the first fiscal 


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1 year for which the financial statements are 

2 ready for audit, but not later than fiscal year 

3 2017, and for each fiscal year thereafter. 

4 (C) DEADLINE FOR AUDIT.—The audit of 

5 the financial statements of the Defense Logis6 tics Agency shall be completed as follows: 

7 (i) In the event the financial state8 ments for a fiscal year before fiscal year 

9 2017 are ready for audit, by not later than 

10 two years after the last day of such fiscal 

11 year. 

12 (ii) In the case of the financial state13 ment fiscal year 2017, by not later than 

14 September 30, 2019. 

15 (iii) In the case of the financial state16 ment for any fiscal year after fiscal year 

17 2017, by not later than one year after the 

18 last day of such fiscal year. 

19 (c) VALIDATION AS READY FOR AUDIT OF FINAN20 CIAL STATEMENTS REGARDING PARTICULAR MATTERS.— 

21 In furtherance of compliance with the requirements in 

22 subsections (a) and (b), the following requirements shall 

23 apply: 

24 (1) MILITARY EQUIPMENT.— 


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1 (A) DEPARTMENT OF THE ARMY.—The fi2 nancial statements of the Department of the 

3 Army with respect to military equipment shall 

4 be validated as ready for audit by not later 

5 than December 31, 2013. 

6 (B) DEPARTMENT OF THE NAVY.—The fi7 nancial statements of the Department of the 

8 Navy with respect to military equipment shall 

9 be validated as ready for audit by not later 

10 than September 30, 2014. 

11 (C) DEPARTMENT OF THE AIR FORCE.— 

12 The financial statements of the Department of 

13 the Air Force with respect to military equip14 ment shall be validated as ready for audit by 

15 not later than March 31, 2016. 

16 (2) REAL PROPERTY.— 

17 (A) DEPARTMENT OF THE ARMY.—The fi18 nancial statements of the Department of the 

19 Army with respect to real property shall be vali20 dated as ready for audit by not later than De21 cember 31, 2013. 

22 (B) DEPARTMENT OF THE NAVY.—The fi23 nancial statements of the Department of the 

24 Navy with respect to real property shall be valiVerDate Nov 24 2008 00:41 Jun 19, 2009 Jkt 079200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1287.IS S1287

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1 dated as ready for audit by not later than 

2 March 31, 2014. 

3 (C) DEPARTMENT OF THE AIR FORCE.— 

4 The financial statements of the Department of 

5 the Air Force with respect to real property shall 

6 be validated as ready for audit by not later 

7 than September 30, 2014. 

8 (D) DEFENSE LOGISTICS AGENCY.—The 

9 financial statements of the Defense Logistics 

10 Agency with respect to real property shall be 

11 validated as ready for audit by not later than 

12 March 31, 2015. 

13 (3) INVENTORY.— 

14 (A) DEPARTMENT OF THE ARMY.—The fi15 nancial statements of the Department of the 

16 Army with respect to inventory shall be vali17 dated as ready for audit by not later than 

18 March 31, 2017. 

19 (B) DEPARTMENT OF THE NAVY.—The fi20 nancial statements of the Department of the 

21 Navy with respect to inventory shall be vali22 dated as ready for audit by not later than De23 cember 31, 2013. 

24 (C) DEPARTMENT OF THE AIR FORCE.— 

25 The financial statements of the Department of 


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1 the Air Force with respect to inventory shall be 

2 validated as ready for audit by not later than 

3 September 30, 2016. 

4 (D) DEFENSE LOGISTICS AGENCY.—The 

5 financial statements of the Defense Logistics 

6 Agency with respect to inventory shall be vali7 dated as ready for audit by not later than Sep8 tember 30, 2015. 

9 (4) OPERATING MATERIAL AND SUPPLIES.— 

10 (A) DEPARTMENT OF THE ARMY.—The fi11 nancial statements of the Department of the 

12 Army with respect to operating material and 

13 supplies shall be validated as ready for audit by 

14 not later than March 31, 2017. 

15 (B) DEPARTMENT OF THE NAVY.—The fi16 nancial statements of the Department of the 

17 Navy with respect to operating material and 

18 supplies shall be validated as ready for audit by 

19 not later than March 31, 2016. 

20 (C) DEPARTMENT OF THE AIR FORCE.— 

21 The financial statements of the Department of 

22 the Air Force with respect to operating mate23 rials and supplies shall be validated as ready for 

24 audit by not later than September 30, 2016. 

25 (5) ENVIRONMENTAL LIABILITIES.— 


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1 (A) DEPARTMENT OF THE ARMY.—The fi2 nancial statements of the Department of the 

3 Army with respect to environmental liabilities 

4 shall be validated as ready for audit by not 

5 later than December 31, 2013. 

6 (B) DEPARTMENT OF THE NAVY.—The fi7 nancial statements of the Department of the 

8 Navy with respect to environmental liabilities 

9 shall be validated as ready for audit by not 

10 later than March 31, 2010. 

11 (C) DEPARTMENT OF THE AIR FORCE.— 

12 The financial statements of the Department of 

13 the Air Force with respect to environmental li14 abilities shall be validated as ready for audit by 

15 not later than December 31, 2011. 

16 (D) DEFENSE LOGISTICS AGENCY.—The 

17 financial statements of the Defense Logistics 

18 Agency with respect to environmental liabilities 

19 shall be validated as ready for audit by not 

20 later than September 30, 2017. 

21 (6) FUND BALANCE WITH THE TREASURY.— 

22 (A) DEPARTMENT OF THE ARMY.—The fi23 nancial statements of the Department of the 

24 Army with respect to the fund balance with the 


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1 Treasury shall be validated as ready for audit 

2 by not later than September 30, 2010. 

3 (B) DEPARTMENT OF THE NAVY.—The fi4 nancial statements of the Department of the 

5 Navy with respect to the fund balance with the 

6 Treasury shall be validated as ready for audit 

7 by not later than December 31, 2010. 

8 (C) DEPARTMENT OF THE AIR FORCE.— 

9 The financial statements of the Department of 

10 the Air Force with respect to the fund balance 

11 with the Treasury shall be validated as ready 

12 for audit by not later than December 31, 2011. 

13 (D) DEFENSE LOGISTICS AGENCY.—The 

14 financial statements of the Defense Logistics 

15 Agency with respect to the fund balance with 

16 the Treasury shall be validated as ready for 

17 audit by not later than September 30, 2011. 

18 (d) PERFORMANCE OF AUDITS AND VALIDATIONS.— 

19 Any audit or validation as ready for audit of a financial 

20 statement required under subsections (a) through (c) may 

21 be performed by an independent auditor qualified for the 

22 performance of such audit or validation, as the case may 

23 be. 

24 (e) ACTION IF COMPLIANCE NOT ACHIEVED.— 


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1 (1) IN GENERAL.—In the event the Department 

2 of Defense or a component of the Department of 

3 Defense is unable to achieve compliance with a re4 quirement in subsection (a), (b), or (c) by the com5 pletion date for such requirement otherwise specified 

6 in the applicable provision of such subsection, the 

7 Secretary of Defense or the head of the component, 

8 as applicable, shall submit to the appropriate com9 mittees of Congress, not later than 30 days after the 

10 completion date otherwise so specified, a report set11 ting forth the following: 

12 (A) A statement of the reasons why com13 pliance with the requirement was not achieved 

14 by the completion date for the requirement. 

15 (B) A description of the actions to be 

16 taken to achieve compliance with the require17 ment. 

18 (C) A proposed completion date for 

19 achievement of compliance with the require20 ment. 

21 (2) CONSTRUCTION.—Nothing in this sub22 section shall be construed to waive any deadline for 

23 the completion of a requirement under subsections 

24 (a) through (c). 


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1 (f) SEMIANNUAL REPORTS ON FINANCIAL IMPROVE2 MENT AUDIT READINESS PLAN.— 

3 (1) IN GENERAL.—Not later than May 15 and 

4 November 15 each year, the Under Secretary of De5 fense (Comptroller) shall submit to the appropriate 

6 committees of Congress a report on progress under 

7 the financial improvement audit readiness (FIAR) 

8 plan during two calendar year quarters ending 

9 March 31 and September 30, respectively, of such 

10 year. 

11 (2) ELEMENTS.—Each report under paragraph 

12 (1) shall include, for the two calendar year quarters 

13 covered by such report, the following with respect to 

14 the portion of such report relating to priority seg15 ments: 

16 (A) A detailed description of any defi17 ciencies identified during discovery. 

18 (B) A description of the actions to be 

19 taken to remedy any deficiency so identified. 

20 (C) A deadline for the completion of any 

21 actions set forth under subparagraph (B). 

22 (g) DEFINITIONS.—In this section: 

23 (1) APPROPRIATE COMMITTEES OF CON24 GRESS.—The term ‘‘appropriate committees of Con25 gress’’ means— 


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1 (A) the Committee on Armed Services and 

2 the Committee on Homeland Security and Gov3 ernmental Affairs of the Senate; and 

4 (B) the Committee on Armed Services and 

5 the Committee on Oversight and Government 

6 Reform of the House of Representatives. 

7 (2) VALIDATION.—The term ‘‘validation’’, with 

8 respect to the auditability of financial statements, 

9 means a determination following an examination en10 gagement that the financial statements comply with 

11 generally accepted accounting principles and applica12 ble laws and regulations and reflect reliable internal 

13 controls. 

Æ 


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