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for audit by not later than September 30, 2014’’ after ‘‘Sep-
tember 30, 2017’’. 
(b) AFFORDABLE AND SUSTAINABLE APPROACH.— 
(1) IN GENERAL.—The Chief Management Offi-
cer of the Department of Defense and the Chief Man-
agement Officers of each of the military departments 
shall ensure that plans to achieve an auditable state-
ment of budgetary resources of the Department of De-
fense by September 30, 2014, include appropriate 
steps to minimize one-time fixes and manual work- 
arounds, are sustainable and affordable, and will not 
delay full auditability of financial statements. 
(2) ADDITIONAL ELEMENTS IN FIAR PLAN RE-
PORT.—Each semi-annual report on the Financial 
Improvement and Audit Readiness Plan of the De-
partment of Defense submitted by the Under Sec-
retary of Defense (Comptroller) under section 1003(b) 
of the National Defense Authorization Act for Fiscal 
Year 2010 during the period beginning on the date of 
the enactment of this Act and ending on September 
30, 2014, shall include the following: 
(A) A description of the actions taken by 
the military departments pursuant to paragraph 
(1). 
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(B) A determination by the Chief Manage-
ment Officer of each military department wheth-
er or not such military department is able to 
achieve an auditable statement of budgetary re-
sources by September 30, 2014, without an 
unaffordable or unsustainable level of one-time 
fixes and manual work-arounds and without de-
laying the full auditability of the financial state-
ments of such military department. 
(C) If the Chief Management Officer of a 
military department determines under subpara-
graph (B) that the military department is not 
able to achieve an auditable statement of budg-
etary resources by September 30, 2014, as de-
scribed in that subparagraph— 
(i) an explanation why the military 
department is unable to meet the deadline; 
(ii) an alternative deadline by which 
the military department will achieve an 
auditable statement of budgetary resources; 
(iii) a description of the plan of the 
military department for meeting the alter-
native deadline. 
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SEC. 1004. REPORT ON EFFECTS OF BUDGET SEQUESTRA-
TION ON THE DEPARTMENT OF DEFENSE. 
(a) FINDINGS.—Congress makes the following findings: 
(1) The inability of the Joint Select Committee 
on Deficit Reduction to find $1,200,000,000,000 in 
savings will trigger automatic funding reductions 
known as ‘‘sequestration’’ to the Department of De-
fense of $492,000,000,000 between 2013 and 2021 
under section 251A of the Balanced Budget and 
Emergency Deficit Control Act of 1985 (2 USC 901a). 
(2) These reductions are in addition to reduc-
tions of $487,000,000,000 already being implemented 
by the Department of Defense, and would decrease the 
readiness and capabilities of the Armed Forces while 
increasing risks to the effective implementation of the 
National Security Strategy of the United States. 
(3) The leaders of the Department of Defense 
have consistently testified that threats to the national 
security of the United States have increased, not de-
creased. Secretary of Defense Leon Panetta said that 
these reductions would ‘‘inflict severe damage to our 
national defense for generations’’, comments that have 
been echoed by the Secretaries of the Army, Navy, and 
Air Force. 
(4) While reductions in funds available for the 
Department of Defense will automatically commence 
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January 2, 2013, uncertainty regarding the reduc-
tions has already exacerbated Department of Defense 
efforts to plan future defense budget. 
(5) Sequestration will have a detrimental effect 
on the industrial base that supports the Department 
of Defense. 
(b) REPORT.— 
(1) IN
GENERAL.—Not later than August 15, 
2012, the Secretary of Defense shall submit to the 
Committees on Armed Services of the Senate and the 
House of Representatives a detailed report on the im-
pact on the Department of Defense of the sequestra-
tion of funds authorized and appropriated for fiscal 
year 2013 for the Department of Defense, if automati-
cally triggered on January 2, 2013, under section 
251A of the Balanced Budget and Emergency Deficit 
Control Act of 1985. 
(2) ELEMENTS.—The report required by para-
graph (1) shall include the following: 
(A) An assessment of the potential impact 
of sequestration on the readiness of the Armed 
Forces, including impacts to steaming hours, fly-
ing hours, and full spectrum training miles, and 
an estimate of the increase or decrease in readi-
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ness (as defined in the C status C–1 through C– 
5). 
(B) An assessment of the potential impact 
of sequestration on the ability of the Department 
of Defense to carry out the National Military 
Strategy of the United States, and any changes 
to the most recent Risk Assessment of the Chair-
man of the Joint Chiefs of Staff under section 
153(b) of title 10, United States Code arising 
from sequestration. 
(C) A list of the programs, projects, and ac-
tivities across the Department of Defense, the 
military departments, and the elements and 
components of the Department of Defense that 
would be reduced or terminated as a result of se-
questration. 
(D) An estimate of the number and value of 
all contracts that will be terminated, restruc-
tured, or revised in scope as a result of sequestra-
tion, including an estimate of potential termi-
nation costs and of increased contract costs due 
to renegotiation and reinstatement of contracts. 
(3) ASSUMPTIONS.—The report required by 
paragraph (1) shall assume the following: 
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(A) Except as provided in subparagraph 
(B), the funds subject to sequester are the funds 
in all 050 accounts, including all unobligated 
balances. 
(B) The funds exempt from the sequester are 
the following: 
(i) Funds in accounts for military per-
sonnel. 
(ii) Funds in accounts for overseas 
contingency operations. 
(4) PRESENTATION OF CERTAIN INFORMATION.— 
In listing programs, projects, and activities under 
paragraph (2)(C), the report required by paragraph 
(1) shall set forth for each the following: 
(A) The most specific level of budget item 
identified in applicable appropriations Acts. 
(B) Related classified annexes and explana-
tory statements. 
(C) Department of Defense budget justifica-
tion documents DOD P–1 and R–1 as subse-
quently modified by congressional action, and as 
submitted by the Department of Defense together 
with the budget materials for the budget of the 
President for fiscal year 2013 (as submitted to 
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