FINANCIAL AUDIT - IMPROVING NAVY READINESS:
CLASSIFICATION: UNCLASSIFIED//
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SUBJ/FINANCIAL AUDIT - IMPROVING NAVY READINESS//
RMKS/1. The Fiscal Year 2024 National Defense Authorization Act requires the
Department of Defense to achieve an unqualified opinion on its financial
statements (a clean report) by December 31, 2028.
2. The plan for the Navy to achieve a clean audit in 2028 is aggressive and
audacious, but also achievable. It will take all our efforts across the
uniform, civilian, Fleet and Secretariat levels to get there. This audit
goes beyond just examining financial management or supply inventory. It
involves reviewing all business processes that contribute to figure in the
year-end financial statements. The audit assesses the existence, quality,
location, completeness, valuation and condition of military equipment, real
property, and inventory, as well as travel claims, Permanent Change of
Station orders, Operating Materials and Supplies (OM&S) and galley meal
receipts.
3. Achieving a clean audit by 2028 is a team effort. Ernst and Young (EY),
a private accounting firm, was hired to conduct the audit for Navy. These
civilian auditors have and will continue to interact directly with our
commands at every level to gather documentation to support achieving the
clean audit. In this record, each one of us are critical to the success of
the audit effort to ensure we account for every dollar, track OM&S and other
asset inventory, and document financial transactions.
4. I will periodically meet with the Assistant Secretary of the Navy
(Financial Management and Comptroller), OPNAV Staff, EY auditors, and
selective Budget Submitting Officers (BSOs) to review our progress. These
meetings will include metrics on performance (e.g. timelines, accuracy, etc.)
and corrective actions required across Navy commands to meet the clean audit
goal. This effort requires ruthless transparency and a mindset to critically
evaluate data and metrics to determine whether we on track to meet our
goals. And when not on track, we must be ready to adjust our processes or
implement new processes to achieve a different result.
5. Most importantly, achieving a clean audit by 2028 demonstrates to the
American taxpayers and Congress that we are managing the country's business
and funds responsibly. While we have made some progress toward this goal
over the last few years, the most difficult part of the journey lies
ahead. We must proceed with focus and urgency, leveraging lessons learned
from ourselves and other Services to improve our audit readiness and mission
effectiveness. This is a whole of Navy task and will take a whole of Navy
effort to achieve the clean audit.
6. Released by ADM J. W. Kilby, Vice Chief of Naval Operations.//
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