I 
115TH CONGRESS 
1ST SESSION H. R. 3079 
To reduce by one-half of one percent the discretionary budget authority 
of the Department of Defense for a fiscal year if the financial statement 
of the Department of Defense for the previous fiscal year does not 
receive a qualified or unqualified audit opinion by an external inde-
pendent auditor, and for other purposes. 
IN THE HOUSE OF REPRESENTATIVES 
JUNE 27, 2017 
Ms. LEE (for herself, Mr. BURGESS, Ms. CLARKE of New York, Mr. CONYERS, 
Mr. ELLISON, Mr. EVANS, Mr. GRIJALVA, Ms. NORTON, Mr. HUFFMAN, 
Ms. JACKSON LEE, Ms. JAYAPAL, Ms. KELLY of Illinois, Mr. MCGOV-
ERN, Ms. MOORE, Mr. MOULTON, Mr. NOLAN, Mr. POCAN, Mr. POLIS, 
Mr. RASKIN, Ms. SCHAKOWSKY, Mr. BIGGS, Mr. BLUMENAUER, Mr. 
GOSAR, Mr. LANCE, Mr. LABRADOR, Mr. MASSIE, Mr. JONES, Mr. STIV-
ERS, Mrs. WATSON COLEMAN, Mr. WELCH, Mr. COHEN, Mr. KHANNA, 
Mr. DESAULNIER, and Mr. AMASH) introduced the following bill; which 
was referred to the Committee on Armed Services 
A BILL 
To reduce by one-half of one percent the discretionary budget 
authority of the Department of Defense for a fiscal year 
if the financial statement of the Department of Defense 
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 Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Audit the Pentagon 
Act of 2017’’. 
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 con-
trols; and 
(B) defense dollars are spent efficiently. 
(2) To instill a culture of accountability at the 
Department of Defense that supports the vast ma-
jority of dedicated members of the Armed Forces 
and civilian employees of the Department who want 
to ensure proper accounting and prevent waste, 
fraud, and abuse. 
SEC. 3. FINDINGS. 
Congress finds the following: 
(1) The 2016 Financial Report of the United 
States Government found that, the Department of 
Defense again had a disclaimer because it lacked 
any auditable reporting or accounting available for 
independent review. The Department of Defense is 
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the only covered major agency that has always had 
such disclaimers and has never had a clean audit. 
(2) The financial management of the Depart-
ment of Defense has been on the ‘‘High-Risk’’ list 
of the Government Accountability Office (GAO) 
since 1995 because it has never achieved an unquali-
fied audit opinion. The GAO’s 2015 High-Risk Re-
port found that ‘‘The Department of Defense 
(DOD) is responsible for more than half of the Fed-
eral Government’s discretionary spending. Signifi-
cant financial and related business management sys-
tems and control weaknesses have adversely affected 
DOD’s ability to control costs; ensure basic account-
ability; anticipate future costs and claims on the 
budget; measure performance; maintain funds con-
trol; prevent and detect fraud, waste, and abuse; ad-
dress pressing management issues; and prepare 
auditable financial statements. Without accurate, 
timely, and useful financial information, DOD is se-
verely hampered in making sound decisions affecting 
the department’s operations.’’. 
(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, 
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and billions of dollars more of anticipated expendi-
tures on new information technology systems for 
that purpose, may not suffice to achieve full audit 
readiness of the financial statement of the Depart-
ment. 
(4) Section 9 of article I of the Constitution of 
the United States requires all agencies of the Fed-
eral Government, including the Department of De-
fense, to publish ‘‘a regular statement and account 
of the receipts and expenditures of all public 
money’’. 
(5) Section 303(d) of the Chief Financial Offi-
cers Act of 1990 (Public Law 101–576) required 
that financial statements be prepared and independ-
ently 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, originally required 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 of 
Defense has not complied with this law. 
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(7) The Federal Financial Management Im-
provement Act of 1996 (31 U.S.C. 3512 note) re-
quires financial systems acquired by the Federal 
Government, including the Department of Defense, 
to be able to provide information to leaders to man-
age and control the cost of Government. The De-
partment has not complied with this law. 
(8) In 2005, the Department of Defense cre-
ated a Financial Improvement and Audit Readiness 
(FIAR) Plan, overseen by a directorate within the 
office of the Under Secretary of Defense (Comp-
troller), to improve Department business processes 
with the goal of producing timely, reliable, and accu-
rate financial information that could generate an 
audit-ready annual financial statement. 
(9) Then Secretary of Defense Ashton Carter 
said in a statement to the Defense Subcommittee of 
the Committee on Appropriations of the House of 
Representatives on February 25, 2016, ‘‘I cannot 
ask for more taxpayer dollars for defense without 
being candid about the fact that not every defense 
dollar is spent as wisely or responsibly as it could be, 
and also being determined to change that and make 
our department more accountable.’’. 
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(10) Then Secretary of Defense Robert M. 
Gates said in a speech on May 24, 2011: ‘‘The cur-
rent 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 with-
out centralized mechanisms to allocate resources, 
track expenditures, and measure results relative to 
the department’s overall priorities.’’. 
(11) The accounting problems of the Depart-
ment 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. DEPARTMENT OF DEFENSE SPENDING REDUC-
TIONS IN ABSENCE OF SUBMITTED FINAN-
CIAL STATEMENTS OR FAILURE TO ACHIEVE 
UNQUALIFIED OR QUALIFIED INDEPENDENT 
AUDIT OPINION. 
(a) DEFINITIONS.—In this section: 
(1) The terms ‘‘financial statement’’ and ‘‘ex-
ternal independent auditor’’ have the meanings given 
those terms in section 3521(e) of title 31, United 
States Code. 
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(2) The term ‘‘qualified’’, with respect to the 
audit status of a financial statement, includes the 
characterization modified. 
(3) The term ‘‘unqualified’’, with respect to the 
audit status of a financial statement, includes the 
characterizations clean and unmodified. 
(b) REDUCTION TO ENCOURAGE FINANCIAL AC-
COUNTABILITY.—If, by March 2 of a fiscal year, the De-
partment of Defense has not submitted a financial state-
ment for the previous fiscal year, or if, by such date, such 
financial statement has been submitted but has not re-
ceived either an unqualified or a qualified audit opinion 
by an independent external auditor, the discretionary 
budget authority available for the Department of Defense 
shall be reduced by .5 percent. 
(c) APPLICATION OF REDUCTION.—Consistent with 
applicable laws, the Secretary of Defense shall apply any 
reduction under subsection (b)— 
(1) proportionately to each Department of De-
fense account (other than an account listed in sub-
section (e) or an account for which a waiver is made 
under subsection (f)); and 
(2) in a manner that minimizes any adverse ef-
fect on national security. 
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