Sen. Bernie Sanders and Sen. Chuck Grassley reintroduced the Audit the Pentagon Act on July 30, legislation that would impose financial penalties on the Department of Defense if its components fail to achieve clean audit opinions.
The bill would withhold 2% of the budget from any Pentagon component that fails to earn an unqualified audit opinion, with the withheld funds redirected to the Treasury for deficit reduction. The measure applies to any Defense Department element that receives a disclaimer of opinion—the technical term for a failed audit—on its financial statements.
The Audit the Pentagon Act carries 10 bipartisan cosponsors, including Republicans Mike Lee of Utah and Rand Paul of Kentucky alongside Democrats Elizabeth Warren of Massachusetts and Cory Booker of New Jersey. The legislation first emerged in 2021 and was reintroduced in 2023 during the Biden administration, underscoring its perennial struggle to advance through Congress.
The Pentagon failed its eighth consecutive financial audit in December 2025, unable to account for $4.65 trillion in reported assets and $4.7 trillion in liabilities across all 50 states and more than 40 countries. The Department of Defense Office of Inspector General identified 26 material weaknesses—the most severe auditing errors—and two additional significant deficiencies in the department’s internal controls over financial reporting. Of the 2,485 findings issued that year, 929 had no scheduled date for correction, and 622 had been reissued seven times since audits began in 2018.
The Pentagon stands alone as the only federal agency to have never passed a clean financial audit since Congress first required one in the early 1990s and made audits mandatory annually beginning in 2018. Despite accounting for more than half of the federal government’s discretionary spending and roughly two-thirds of all federal contracting activity, the department has consistently failed to meet basic financial accountability standards.
Sanders argued in a statement that the recurring failures demand consequences. “Year after year, the Pentagon fails an audit, and year after year, Congress hands it another blank check,” he said. “At a moment when the administration has dragged us into an unconstitutional war with Iran and is demanding the largest military budget in our history to pay for it, the Pentagon still cannot tell us where trillions of dollars have gone.”
Grassley framed the bill as holding the department “to the same audit standards as other agencies, or it faces a financial penalty.” Pentagon officials have argued that audit failures reflect the complexity of valuing decades-old equipment rather than wasteful spending. Acting Comptroller Jules Hurst stated the department must account for the present-day value of assets such as a nuclear missile purchased in the 1970s, including every repair and modification made over 50 years.
The Pentagon has made incremental progress. The inspector general found 13.9% fewer material weaknesses and 17.7% fewer audit findings than the prior year, and both the Military Retirement Fund and the Marine Corps earned clean opinions. However, of the 2,485 findings issued, 1,911 were carried over from prior years. Congress has set a statutory deadline of December 31, 2028, for the Pentagon to achieve a clean audit opinion, giving the department just over two years to address systemic financial management failures.
Sources
- Senator Bernie Sanders official website — full text of the July 30, 2026 press release announcing the reintroduction of the Audit the Pentagon Act, including bill details, cosponsors, and Sanders’ statement
- The Hill — reporting on the bill’s reintroduction, 2% budget penalty mechanism, bipartisan cosponsors, and Grassley’s statement
- The Center Square — details on the bill’s mechanism, the Pentagon’s eighth consecutive failed audit in December 2025, the $4.65 trillion in assets and $4.7 trillion in liabilities, 26 material weaknesses, and audit findings data
- Defense News — confirmation of the December 2025 audit failure, the $4.65 trillion in assets, and the 26 material weaknesses identified
- U.S. News & World Report — reporting on the December 2025 audit failure, the 26 material weaknesses and 2 significant deficiencies, and auditor findings
