The audits of DOD'S and individual military services' financial statements for fiscal year 1997 performed by the DOD Inspector General (IG) and the service audit agencies, as well as our audit of the U.S. government's financial statements, have provided further clarification of the scope and magnitude of the Department's problems, and recommendations to correct them. These problems range from an inability to properly account for billions of dollars in assets, to not properly estimating the full extent of the government's liabilities, to not being able to accurately report disbursements and account for basic transactions. Collectively, these problems leave DOD highly vulnerable to the loss of assets and inefficient operations. I will focus my remarks today on the serious material weaknesses now confronting the Department, the resulting impact on DOD'S ability to effectively carry out its programs and operations, and the efforts underway to address these deficiencies.

T-AIMD/NSIAD-98-158 Department of Defense: Financial Audits Highlight Continuing Challenges to Correct Serious Financial Management Problems