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[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5126 Introduced in House (IH)]

113th CONGRESS
  2d Session
                                H. R. 5126

To reduce by one-half of one percent the discretionary budget authority 
 of any Federal agency for a fiscal year if the financial statement of 
the agency for the previous fiscal year does not receive a qualified or 
 unqualified audit opinion by an external independent auditor, and for 
                            other purposes.

_______________________________________________________________________

                    IN THE HOUSE OF REPRESENTATIVES

                             July 16, 2014

 Ms. Lee of California (for herself, Mr. Burgess, Ms. Schakowsky, and 
Mr. Benishek) introduced the following bill; which was referred to the 
 Committee on Oversight and Government Reform, and in addition to the 
Committee on Armed Services, for a period to be subsequently determined 
 by the Speaker, in each case for consideration of such provisions as 
        fall within the jurisdiction of the committee concerned

_______________________________________________________________________

                                 A BILL

 
To reduce by one-half of one percent the discretionary budget authority 
 of any Federal agency for a fiscal year if the financial statement of 
the agency for the previous fiscal year does not receive a qualified or 
 unqualified audit opinion by an external independent auditor, and for 
                            other purposes.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Audit the Pentagon Act of 2014''.

SEC. 2. PURPOSES.

    The purposes of this Act are as follows:
            (1) To strengthen American national security by ensuring 
        that--
                    (A) military planning, operations, weapons 
                development, and a long-term national security strategy 
                are connected to sound financial controls; and
                    (B) defense dollars are spent efficiently.
            (2) To instill a culture of accountability at the 
        Department of Defense that supports the vast majority of 
        dedicated members of the Armed Forces and civilians who want to 
        ensure proper accounting and prevent waste, fraud, and abuse.

SEC. 3. FINDINGS.

    Congress finds the following:
            (1) The 2013 Financial Report of the United States 
        Government found that, of major agencies, only the Department 
        of Defense had a ``disclaimer'' because it lacked any auditable 
        reporting or accounting available for independent review. In 
        the Financial Report, the Treasury Department summarized: 
        ``Since the passage of the CFO Act of 1990, the federal 
        financial community has made important strides in instilling 
        strong accounting and financial reporting practices. This year, 
        23 of the 24 CFO Act agencies obtained an opinion from the 
        independent auditors on their financial statements. Out of the 
        24 major `CFO Act' agencies, there were 22 clean opinions, 1 
        qualified opinion, and only one remaining disclaimer in FY 
        2013. . . . However, weaknesses in basic financial management 
        practices and other limitations continue to prevent one major 
        agency, and the Government as a whole, from achieving an audit 
        opinion.''.
            (2) The financial management of the Department of Defense 
        has been on the ``High-Risk'' list of the Government 
        Accountability Office (GAO). The GAO found that the Department 
        is not consistently able to ``control costs; ensure basic 
        accountability; anticipate future costs and claims on the 
        budget; measure performance; maintain funds control; and 
        prevent and detect fraud, waste, and abuse''.
            (3) At a September 2010 hearing of the Senate, the 
        Government Accountability Office stated that past expenditures 
        by the Department of Defense of $5,800,000,000 to improve 
        financial information, and billions of dollars more of 
        anticipated expenditures on new information technology systems 
        for that purpose, may not suffice to achieve full audit 
        readiness of the financial statement of the Department.
            (4) Section 9 of article 1 of the Constitution of the 
        United States requires all agencies of the Federal Government, 
        including the Department of Defense, to publish ``a regular 
        statement and account of the receipts and expenditures of all 
        public money''.
            (5) Section 303(d) of the Chief Financial Officers Act of 
        1990 (Public Law 101-576) required that financial statements be 
        prepared and independently audited for the Department of the 
        Army by March 31, 1992, and for the Department of the Air Force 
        by March 31, 1993. Neither the Department of the Army nor the 
        Department of the Air Force has complied.
            (6) Section 3515 of title 31, United States Code, requires 
        the agencies of the Federal Government, including the 
        Department of Defense, to present auditable financial 
        statements beginning not later than March 1, 1997. The 
        Department has not complied with this law.
            (7) The Federal Financial Management Improvement Act of 
        1996 (31 U.S.C. 3512 note) requires financial systems acquired 
        by the Federal Government, including the Department of Defense, 
        to be able to provide information to leaders to manage and 
        control the cost of government. The Department has not complied 
        with this law.
            (8) In 2005, the Department of Defense created a Financial 
        Improvement and Audit Readiness (FIAR) Plan, overseen by a 
        directorate within the office of the Under Secretary of Defense 
        (Comptroller), to improve Department business processes with 
        the goal of producing timely, reliable, and accurate financial 
        information that could generate an audit-ready annual financial 
        statement. In December 2005, that directorate, known as the 
        FIAR Directorate, issued the first of a series of semiannual 
        reports on the status of the Financial Improvement and Audit 
        Readiness Plan.
            (9) Secretary of Defense Robert M. Gates said in a speech 
        on May 24, 2011: ``The current apparatus for managing people 
        and money across the DoD enterprise is woefully inadequate. The 
        agencies, field activities, joint headquarters, and support 
        staff functions of the department operate as a semi-feudal 
        system--an amalgam of fiefdoms without centralized mechanisms 
        to allocate resources, track expenditures, and measure results 
        relative to the department's overall priorities.''.
            (10) The accounting problems of the Department of Defense 
        result in widespread errors in pay that can be difficult to 
        correct. Such payroll errors can impose hardship on members of 
        the Armed Forces and their families.

SEC. 4. SPENDING REDUCTIONS FOR AGENCIES WITHOUT CLEAN AUDITS.

    (a) Applicability.--
            (1) In general.--Subject to paragraph (2), this section 
        applies to each Federal agency identified by the Director of 
        the Office of Management and Budget as required to have an 
        audited financial statement under section 3515 of title 31, 
        United States Code.
            (2) Applicability to military departments and defense 
        agencies.--For purposes of paragraph (1), in the case of the 
        Department of Defense, each military department and each 
        Defense Agency shall be treated as a separate Federal agency.
    (b) Definitions.--In this section, the terms ``financial 
statement'' and ``external independent auditor'' have the same meanings 
as those terms have under section 3521(e) of title 31, United States 
Code.
    (c) Adjustments for Financial Accountability.--
            (1) On March 2 of fiscal year 2015 and each subsequent 
        fiscal year, the discretionary budget authority available for 
        each Federal agency for such fiscal year is adjusted as 
        provided in paragraph (2).
            (2) If a Federal agency has not submitted a financial 
        statement for the previous fiscal year, or if such financial 
        statement has not received either an unqualified or a qualified 
        audit opinion by an independent external auditor, the 
        discretionary budget authority available for the Federal agency 
        is reduced by .5 percent, with the reduction applied 
        proportionately to each account (other than an account listed 
        in subsection (d) or an account for which a waiver is made 
        under subsection (e)).
            (3) Consistent with applicable laws, the Secretary of 
        Defense may make any reduction under paragraph (2) in a manner 
        that minimizes any effect on national security.
            (4) An amount equal to the total amount of any reduction 
        under paragraph (2) shall be retained in the general fund of 
        the Treasury for the purposes of deficit reduction.
    (d) Accounts Excluded.--The following accounts are excluded from 
any reductions referred to in subsection (c)(2):
            (1) Military personnel, reserve personnel, and National 
        Guard personnel accounts of the Department of Defense.
            (2) The Defense Health Program account of the Department of 
        Defense.
    (e) Waiver.--The President may waive subsection (c)(2) with respect 
to an account if the President certifies that applying the subsection 
to that account would harm national security or members of the Armed 
Forces who are in combat.
    (f) Report.--Not later than 60 days after an adjustment under 
subsection (c), the Director of the Office of Management and Budget 
shall submit to Congress a report describing the amount and account of 
each adjustment.

SEC. 5. REPORT ON DEPARTMENT OF DEFENSE REPORTING REQUIREMENTS.

    Not later than 180 days after the date of the enactment of this 
Act, the Under Secretary of Defense (Comptroller) shall submit to 
Congress a report setting forth a list of each report of the Department 
required by law to be submitted to Congress which, in the opinion of 
the Under Secretary, interferes with the capacity of the Department to 
achieve an audit of the financial statements of the Department with an 
unqualified opinion.

SEC. 6. SENSE OF CONGRESS.

    It is the sense of Congress that--
            (1) as the overall defense budget is cut, congressional 
        defense committees and the Department of Defense should not 
        endanger the Nation's troops by reducing wounded warrior 
        accounts or vital protection (such as body armor) for members 
        of the Armed Forces in harm's way;
            (2) the valuation of legacy assets by the Department of 
        Defense should be simplified without compromising essential 
        controls or generally accepted government auditing standards; 
        and
            (3) nothing in this Act should be construed to require or 
        permit the declassification of accounting details about 
        classified defense programs, and, as required by law, the 
        Department of Defense should ensure financial accountability in 
        such programs using proven practices, including using auditors 
        with security clearances.
                                 <all>
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