H.R. 7555: Audit the Pentagon Act of 2026 (119th Congress) Bill Summary

The Audit the Pentagon Act of 2026 aims to ensure that the U.S. Department of Defense (DoD) achieves a clean audit opinion on its financial statements. This act is in response to the Pentagon failing its eighth consecutive audit in December 2025, during which it could not account for substantial amounts of its assets, leading to questions about financial accountability and management of funds.

Key Provisions

Audit Requirements: The Comptroller of the Department of Defense must certify to Congress that every department, agency, or component of the DoD has achieved an unqualified audit opinion on its financial statements.
Budget Reductions: If the DoD cannot provide this certification, it faces budget reductions. Specifically:
- A 0.5% reduction in funds for the fiscal year in which the failure is determined.
- A 1.0% reduction for each subsequent fiscal year that the failure continues.
Exemptions: Certain accounts, such as those related to military and reserve personnel and the Defense Health Program, are exempt from these budget reductions.
Presidential Waivers: The President can waive these cuts if they would harm national security or impact defense health programs, provided a report detailing the situation is submitted to Congress.
Reporting Requirements: Within 60 days of a budget reduction, the Director of the Office of Management and Budget must report to Congress on which elements of the DoD are affected and the amount of the reductions.

Congressional Intent

The bill reflects the sense of Congress that as defense budgets may be cut, it is important not to jeopardize the safety and support of armed forces personnel. The valuation of older (legacy) assets within the DoD should be simplified for better accountability, but this must not compromise essential controls or auditing standards. Additionally, the legislation clarifies that there should be no declassification of sensitive financial information regarding classified defense programs, ensuring accountability while respecting security protocols.

Objective

The overall goal of the act is to enhance financial transparency and accountability within the Department of Defense, addressing significant concerns about the management of large sums of taxpayer money allocated to national defense. By linking budget reductions to audit performance, the legislation aims to drive improvements in financial reporting and management practices within the Pentagon.