Title: Audit the Pentagon Act of 2017
Policy area: Armed Forces and National Security

Summary:
Audit the Pentagon Act of 2017
This bill requires a .5% reduction in Department of Defense (DOD) discretionary budget authority if DOD has not submitted a financial statement by March 2 of a fiscal year for the previous fiscal year or such financial statement has not received an unqualified or qualified audit opinion by an independent auditor. This reduction does not apply to military, reserve, and National Guard personnel accounts or the Defense Health Program account. The bill permits the President to waive any reduction in DOD budget authority if the reduction would harm national security or military personnel deployed in combat zones.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3079 Introduced in House (IH)]

<DOC>






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 independent 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. McGovern, 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. Stivers, 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 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 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 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 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 the only covered major agency that has always had 
        such disclaimers and has never had a clean audit.
            (2) The financial management of the Department of Defense 
        has been on the ``High-Risk'' list of the Government 
        Accountability Office (GAO) since 1995 because it has never 
        achieved an unqualified audit opinion. The GAO's 2015 High-Risk 
        Report found that ``The Department of Defense (DOD) is 
        responsible for more than half of the Federal Government's 
        discretionary spending. Significant financial and related 
        business management systems and control weaknesses have 
        adversely affected DOD's ability to control costs; ensure basic 
        accountability; anticipate future costs and claims on the 
        budget; measure performance; maintain funds control; prevent 
        and detect fraud, waste, and abuse; address pressing management 
        issues; and prepare auditable financial statements. Without 
        accurate, timely, and useful financial information, DOD is 
        severely 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, 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 I 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, 
        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.
            (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.
            (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.''.
            (10) Then 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.''.
            (11) 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. DEPARTMENT OF DEFENSE SPENDING REDUCTIONS IN ABSENCE OF 
              SUBMITTED FINANCIAL STATEMENTS OR FAILURE TO ACHIEVE 
              UNQUALIFIED OR QUALIFIED INDEPENDENT AUDIT OPINION.

    (a) Definitions.--In this section:
            (1) The terms ``financial statement'' and ``external 
        independent auditor'' have the meanings given those terms in 
        section 3521(e) of title 31, United States Code.
            (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 Accountability.--If, by March 
2 of a fiscal year, the Department of Defense has not submitted a 
financial statement for the previous fiscal year, or if, by such date, 
such financial statement has been submitted but has not received 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 Defense account 
        (other than an account listed in subsection (e) or an account 
        for which a waiver is made under subsection (f)); and
            (2) in a manner that minimizes any adverse effect on 
        national security.
    (d) Deficit Reduction.--An amount equal to the total amount of any 
reduction under subsection (b) shall be retained in the general fund of 
the Treasury for the purposes of deficit reduction.
    (e) Accounts Excluded.--The following accounts are excluded from 
any reductions under subsection (b):
            (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.
    (f) Waiver.--The President may waive subsection (b) 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 deployed in combat zones.
    (g) Report.--Not later than 60 days after a reduction takes effect 
under subsection (c), the Director of the Office of Management and 
Budget shall submit to Congress a report specifying each Department of 
Defense subject to reduction and the amount of the reduction.

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 
of Defense 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 Armed Forces by reducing wounded warrior accounts 
        or vital protection (such as body armor) for members of the 
        Armed Forces serving 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>