Department of Defense financial statement audit readiness, reporting relief, and related reforms

(a) Cessation and reinstatement of certain reporting requirements (1) Cessation The reporting requirements specified in paragraph (2) shall not apply upon the issuance of an unmodified audit opinion on the consolidated financial statements of the Department of Defense, including the military departments and other reporting entities defined by the Office of Management and Budget. (2) Covered reporting requirements The reporting requirements referred to in paragraph (1) are the following: (A) The requirement to submit a report and provide briefings under section 240b of title 10, United States Code, except that all other requirements of such section shall continue to apply. (B) The requirement to submit annual reports under section 817(d) of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (Public Law 107–314; 116 Stat. 2610). (3) Reinstatement If, after the cessation of applicability under paragraph (1), the Department of Defense receives an adverse opinion or disclaimer of opinion on its consolidated financial statements in a subsequent fiscal year, the reporting requirements specified in paragraph (2)(A) shall again apply until the Department receives an unmodified audit opinion in a subsequent fiscal year. (b) Additional requirements if an unmodified audit opinion is not achieved by December 31, 2028 (1) In general If the Department of Defense does not obtain an unmodified audit opinion on its consolidated financial statements for fiscal year 2028 by December 31, 2028, the requirements of this subsection shall take effect on January 1, 2029. (2) Under Secretary of Defense (Comptroller) (A) Qualifications An individual nominated for appointment as Under Secretary of Defense (Comptroller) under section 135 of title 10, United States Code shall— (i) be a certified public accountant; or (ii) have served as a chief financial officer, or in an equivalent position at— (I) a Federal or State agency that received an unmodified audit opinion during such service; or (II) a public company that received an unmodified audit opinion during such service. (B) Duties In addition to the duties specified in section 135(c) of title 10, United States Code, the Under Secretary shall perform such additional duties relating to the financial management of the Department of Defense as the Deputy Secretary of Defense, acting in the capacity of Chief Management Officer, may prescribe. (C) Exception Subparagraph (A) shall not apply if the Deputy Under Secretary of Defense (Comptroller) meets the requirements of clause (i) or clause (ii) of such subparagraph. (3) Assistant secretaries for financial management (A) Army (i) Qualifications An individual nominated for appointment as Assistant Secretary of the Army for Financial Management and Comptroller under section 7016 of title 10, United States Code, shall meet the requirements described in paragraph (2)(A)(i). (ii) Responsibilities In addition to the responsibilities specified in section 7016(b)(4) of title 10, United States Code, the individual described in clause (i) shall perform such additional responsibilities as the Deputy Secretary of Defense, acting in the capacity of Chief Management Officer, may prescribe. (iii) Exception Clause (i) shall not apply if the Principal Deputy Assistant Secretary of the Army for Financial Management and Comptroller meets the requirements described in paragraph (2)(A)(i). (B) Navy (i) Qualifications An individual nominated for appointment as Assistant Secretary of the Navy for Financial Management and Comptroller under section 8016 of title 10, United States Code, shall meet the requirements described in paragraph (2)(A)(i). (ii) Responsibilities In addition to the responsibilities specified in section 8016(b)(4) of title 10, United States Code, the individual described in clause (i) shall perform such additional responsibilities as the Deputy Secretary of Defense, acting in the capacity of Chief Management Officer, may prescribe. (iii) Exception Clause (i) shall not apply if the Principal Deputy Assistant Secretary of the Navy for Financial Management and Comptroller meets the requirements described in paragraph (2)(A)(i). (C) Air force (i) Qualifications An individual nominated for appointment as Assistant Secretary of the Air Force for Financial Management and Comptroller under section 9016 of title 10, United States Code, shall meet the requirements described in paragraph (2)(A)(i). (ii) Responsibilities In addition to the responsibilities specified in section 9016(b)(4) of title 10, United States Code, the individual described in clause (i) shall perform such additional responsibilities as the Deputy Secretary of Defense, acting in the capacity of Chief Management Officer, may prescribe. (iii) Exception Clause (i) shall not apply if the Principal Deputy Assistant Secretary of the Air Force for Financial Management and Comptroller meets the requirements described in paragraph (2)(A)(i). (4) Definitions In this subsection, the term public company has the meaning given the term issuer in section 2(a)(7) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7201(7)). (c) Authorization of appropriations for audit acceleration Of the amounts authorized to be appropriated to the Department of Defense for fiscal year 2027 for automation and artificial intelligence to accelerate remediation and systems modernization for the audit of Department of Defense financial statements— (1) $250,000,000 may be made available from Operation and Maintenance, Defense-Wide; and (2) $250,000,000 may be made available from Research, Development, Test, and Evaluation, Defense-Wide. (d) Deputy Inspector General for Financial Statement Audits (1) Establishment The Secretary of Defense shall establish within the Office of the Inspector General of the Department of Defense a position of Deputy Inspector General for Financial Statement Audits. (2) Duties The Deputy Inspector General shall oversee the selection and performance of independent external auditors conducting audits of the Department’s consolidated financial statements. (3) Qualifications An individual serving in the position shall be a certified public accountant.