SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Audit the Pentagon 
Act of 2015’’. 
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 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 account-
ing available for independent review. In the Finan-
cial Report, the Treasury Department summarized: 
‘‘Since the passage of the CFO Act of 1990, the fed-
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eral financial community has made important strides 
in instilling strong accounting and financial report-
ing practices. In 2014, 23 of the 24 CFO Act agen-
cies obtained an opinion from the independent audi-
tors on their financial statements. Out of the 24 
major ‘CFO Act’ agencies, there were 22 clean opin-
ions, 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 Depart-
ment 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 expendi-
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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 1 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, requires the agencies of the Federal Govern-
ment, 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. 
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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 Depart-
ment 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. In December 
2005, that directorate, known as the FIAR Direc-
torate, issued the first of a series of semiannual re-
ports 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 appa-
ratus 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 
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system—an amalgam of fiefdoms without centralized 
mechanisms to allocate resources, track expendi-
tures, and measure results relative to the depart-
ment’s overall priorities.’’. 
(10) 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. 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 para-
graph (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 ‘‘finan-
cial statement’’ and ‘‘external independent auditor’’ have 
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