Management Advisory: Improvements Needed in the DoD’s Planning for and Use of SSAE 18 Engagements (Report No. DODIG 2025 044)

Management Advisory: Improvements Needed in the DoD's Planning for and Use of SSAE 18 Engagements (Report No. DODIG-2025-044)

Audit

The objective of this management advisory was to determine whether the DoD effectively planned for and used Statement on Standards for Attestation Engagements No. 18 (SSAE 18), as amended, to improve its financial statement audit readiness and efficiency. We assessed DoD management's planning for and use of System and Organization Controls 1 (SOC 1) reports on internal controls performed by service organizations. We also assessed DoD implementation of complementary user entity controls (CUECs) by organizations that relied on the service organizations and the internal controls described in the service organizations' SOC 1 reports. We prepared this management advisory in accordance with the Council of the Inspectors General for Integrity and Efficiency's Quality Standards for Federal Offices of Inspector General, which require that we conduct our work with integrity, objectivity, and independence.

The "Chief Financial Officers Act of 1990" requires the DoD to prepare audited financial statements. To comply with this requirement, the DoD produces a set of financial statements that consolidates the financial activity of more than 60 DoD reporting entities, including the Military Departments, Defense agencies, and DoD field activities. The consolidation of these DoD entities makes up the DoD Agency-Wide financial statements. This consolidation process requires that each DoD entity develop, document, implement, and monitor a set of internal controls over financial reporting. The DoD's current goal is to achieve an unmodified opinion on the DoD and DoD entities' financial statements by FY 2028; as legislated by Congress within the National Defense Authorization Act for FY 2024.

The DoD Components implemented 18 actions to increase the diversity of the STEM Program applicant pool of the six DoD STEM education programs included in our review. However, the DoD Components could not determine the effectiveness of these actions.