Pentagon audit failure streak hits eight years with $4.73T in liabilities outweighing assets

The Pentagon has blown its eighth audit in a row, still unable to pass a full financial check of its books.

The Department of War admitted in a fresh report that it’s once again failed to account for what it owns versus what it owes, leaving $4.73 trillion in liabilities towering over its assets. The Pentagon also reiterated that it has pushed its clean audit goal to 2028, when Trump would’ve already been out of office.

The largest audit flagged 26 material weaknesses and 2 major deficiencies across financial reporting controls for fiscal year 2025.

A material weakness, in government terms, is a giant red flag; proof that errors and misstatements probably won’t be caught in time. And they had 26 of them, meaning there’s no real grip on the Pentagon’s accounting structure.

F-35 inventory records not reported

The F-35 Joint Strike Fighter program, the Pentagon’s most expensive weapon system, added fuel to the fire.

According to the report, the Department failed to include the program’s global spares pool in its financial records. That’s a huge pile of parts, gear, and equipment that nobody properly logged.

“Because the DoD is unable to provide or obtain accurate and reliable data to verify the existence, completeness, or value of its Global Spares Pool assets for the Joint Strike Fighter Program, we could not quantify the material misstatement in the DoD’s assets on the Agency-Wide Financial Statements,” the audit document stated.

Basically, they don’t know how much of the F-35 stockpile even exists, and even if it does, what it’s worth.

Defense Secretary Pete Hegseth responded to the report, saying the Pentagon “remains steadfast in its commitment to rigorous annual financial statement audits.” He added that the 2025 audit did show “significant progress,” but the department still has major clean-up to do.

The only wins this year? One material weakness was resolved and another one got merged into a broader category. Not a huge turnaround by any means.

Jules Hurst, acting comptroller, admitted the department won’t get a clean audit without speeding things up fast. “While we made significant progress in FY 2025, the Department of War will not reach its goal of achieving a clean financial statement audit without a significant acceleration of its efforts,” Hurst wrote in a letter included in the audit. “We will change the trajectory in FY 2026 to rapidly address longstanding issues through a revised strategy and approach.”

He added, “The Department of War is committed to resolving its critical issues and achieving an unmodified audit opinion by 2028.”

On the same day the audit dropped, the Senate confirmed Michael Powers as the Pentagon’s new comptroller. During his July confirmation hearing, Powers said his team would get to work “within weeks” to figure out clear milestones toward a clean audit, as required under the FY24 National Defense Authorization Act.

“The work is underneath: How do we get to a common or a couple of common financial systems,” Powers told lawmakers at the time.

All that’s left now is four more audit seasons and trillions of dollars to track.

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