As expected, the independent auditors issued a disclaimer of opinion on the FY 2022 DON Working Capital Fund and Navy General Fund financial statements.  “We are steadfastly focused on assessing and improving operations and increasing transparency aligned with the Chief of Naval Operations’ Get Real, Get Better campaign,” stated Ms. Alaleh Jenkins, the Acting Assistant Secretary of the Navy (Financial Management and Comptroller).

The DON made substantial progress on its audit roadmap.  The audit roadmap highlights interdependencies between business processes and needed system improvements, and documents the path to achieving an audit opinion.  The Navy downgraded one significant audit finding, known as a material weakness, representing more than 60% of Navy General Fund liabilities.  The DON further demonstrated financial excellence by sustaining six prior year material weakness downgrades and doubling the number of audit findings closed, ending FY 2022 with 15% fewer findings than FY 2021.

In FY 2022, the DON articulated its transformation vision in the DON Financial Management (FM) Strategy, which fully aligns with the Department of Defense FM Strategy and Secretary Del Toro’s enduring priorities.  Executing this strategy will better support the workforce, drive accountability and fiscal discipline, and further demonstrate the operational value of audit. The DON:

• Empowered financial management career development through new data analytics trainings, leadership development programs, and the launching of a new online one-stop-shop Human Capital portal.
• Automated manual tasks to allow the FM workforce to focus on more complex and high-value analytical tasks.  To date, the DON has deployed 176 bots, redirecting 150,000 labor hours to more value-added tasks.
• Standardized inventory processes and controls at Naval Supply Systems Command managed warehouses, improving the inventory accuracy rate to 98% as evidenced by internal testing and giving warfighters even greater command of inventory and operational readiness.
• Strengthened cybersecurity by automating Navy Enterprise Resource Planning system account provisioning, account removal, and access reviews for over 83,000 users.
• Sustained the lowest military pay and civilian pay improper payment rates in the Department of Defense, reflecting DON’s commitment to taking care of its people.
• Remained agile and responsive to emergent budget supplements and changes, including Afghan evacuees, assistance to Ukraine, disaster relief, and the Red Hill fuel spill support to affected families across all services.
• Continued decommissioning legacy general ledger systems and migrating commands to modern systems.  To date, the Navy has decommissioned eleven legacy audit-relevant systems, avoiding millions in costs from FY 2020 through FY 2026 and resolving audit findings.
• Intensified governance with real time data analytics tools to give decision-makers timely insight into budget issues and drive buying power back into the year of execution. 

These accomplishments push the DON to address long-standing challenges to its business operations.  The DON remains committed to audit remediation and improving internal controls to ensure sound financial management.  

“We will build on the findings of the annual audit to foster a culture that encourages innovation, solves problems, and achieves results to increase our lethality, improve readiness, and get the most out of every dollar entrusted to us.  In FY 2023, the DON strategy will continue to advance the Secretary of Defense Audit Priorities, including reporting a complete and accurate cash balance with the Department of Treasury and strengthening user access in our financial systems,” said Jenkins.  “It is an honor do this.”

For more information, see the DON FY 2022 Agency Financial Report.