The Pentagon has failed its annual financial audit for the eighth straight year, a result that again underscores long-running problems with accounting systems, inventory tracking and basic financial controls across the federal government’s largest agency.

The Department of Defense said the fiscal 2025 audit ended in a “disclaimer of opinion,” meaning independent auditors could not obtain enough evidence to determine whether the department’s agency-wide financial statements were reliable. 

The audit effort, overseen by the Defense Department inspector general and supported by audits of nearly 30 defense components, assessed about $4.6 trillion in assets.

Auditors reported 26 “material weaknesses” and two significant deficiencies in internal controls over financial reporting for fiscal 2025. 

Material weaknesses are serious control failures that can create a reasonable possibility that major errors in financial statements will not be prevented or detected in time.

Defense leaders have repeatedly pointed to the department’s size and complexity as major obstacles. 

The Pentagon operates across thousands of locations worldwide, manages sprawling real estate and infrastructure, and relies on layers of legacy accounting and logistics systems that were built over decades and often do not communicate cleanly with one another. 

Those limitations can make it difficult to trace transactions, reconcile accounts, and verify the existence and value of equipment and other assets.

In a statement released with the audit, Secretary of War Pete Hegseth said: “The Department cannot resolve decades of war, neglect of America’s defense industrial base, and soaring national debt through unchecked spending.”

Despite the latest failure, the department has maintained a goal of achieving a clean, unmodified audit opinion by the end of fiscal 2028, a deadline that has been a focal point for lawmakers demanding stronger oversight. 

Pentagon officials have argued that the annual audits are producing incremental gains by identifying problem areas, forcing documentation improvements and tightening some processes even without a clean opinion.

A clean audit would not by itself guarantee that money is being spent wisely, but it would signal that the Pentagon can consistently account for what it owns and how it spends public funds. 

The continued inability to pass an audit has fueled bipartisan frustration on Capitol Hill, particularly as defense budgets remain high and the military seeks major investments in ships, aircraft, munitions and emerging technologies.

The audit does not, on its own, allege fraud or prove money is missing. Instead, it highlights that the department’s records and controls remain insufficient for auditors to verify the overall financial picture with confidence.

The failed audit comes as President Donald Trump signed a nearly $901 billion annual defense policy bill. Trump has also discussed renaming the Defense Department as the “Department of War,” a change that would require congressional approval.

The Pentagon is expected to begin another remediation cycle aimed at correcting weaknesses flagged in fiscal 2025 and improving results in the next audit.