This bill, called the Audit the Pentagon Act of 2026, aims to make the Department of Defense (DoD) get a clean (unqualified) audit opinion on its full financial statements. If a DoD department, agency, or element does not receive an unqualified opinion in a fiscal year after 2025, that entity’s available budget is cut by 0.5 percent for the year the determination is made and by 1.0 percent for any later fiscal year in which it still lacks an unqualified opinion. Reductions are applied pro rata across programs, projects, and activities for that entity. Money from the reductions is deposited into the General Fund of the Treasury for deficit reduction.
The bill lists accounts that are excluded from cuts: military personnel, reserve personnel, National Guard personnel accounts, and the Defense Health Program account. The President can waive the cuts for an account by certifying that applying the cuts would harm national security or affect the Defense Health Program, and must send Congress a report explaining the waiver. The Office of Management and Budget must report to Congress within 60 days after a reduction takes effect, naming affected elements and reduction amounts.
The bill also includes findings that the Pentagon failed its eighth consecutive audit in December 2025 and that in November 2023 the Pentagon could not account for hundreds of billions of dollars, representing 63 percent of nearly $4 trillion in assets. The bill states that valuation of legacy assets should be simplified without weakening controls and says nothing in the bill requires declassification of accounting details for classified defense programs; auditors with clearances should be used where needed.
If a part of the DoD does not get a clean audit, that part will face a small percentage cut in its available budget (0.5% the year of the finding, 1.0% in later years) spread across its programs. Cuts do not apply to military personnel pay accounts, reserve or National Guard accounts, or the Defense Health Program. The President can stop cuts for national security reasons by sending a report to Congress. OMB will report which parts were cut and by how much within 60 days of a cut.
The bill requires specific percentage reductions (0.5% and 1.0%) to be taken from affected DoD elements and directs those reduced amounts to the General Fund for deficit reduction. The bill text does not provide overall cost estimates, budgetary scoring, or projected dollar amounts beyond these percentage reductions. No publicly available information on total fiscal impact beyond these provisions.
The bill’s text expresses that supporters want the DoD to achieve financial accountability through a clean audit. The bill’s findings and sense of Congress emphasize protecting wounded warrior accounts and essential protection for troops, simplifying valuation of legacy assets without weakening controls, and using auditors with security clearances so classified programs remain accountable without declassification.
No publicly available information.