Pentagon to lean on AI to achieve audit goals

The Pentagon for many years has repeatedly failed to pass a clean department-wide audit, but senior officials are hoping that new AI capabilities can help them get over the hump.

The department is under pressure to achieve results.

“We’ve got a mandate. Congress passed a law that says that we need to get a clean opinion by our FY28 agency-wide financial statements. If not, they’re going to start taking money from us, significant amounts of money,” Tom Harker, deputy CFO in the Department of Defense comptroller’s office, said Tuesday at the UiPath Fusion conference, presented by FedScoop.

Defense Secretary Pete Hegseth released a video on social media last week in which he said that for far too long, the department’s financial reporting has been a “disaster,” adding that the “era of excuses is over.”

He vowed that the DOD would secure a “clean, unquestionable audit” in its 2028 financial statements, stating that it’s a top priority for the Pentagon under his watch.

Hegseth noted that the department will deploy AI and advanced automation to help achieve that goal.

The Pentagon is taking a multi-pronged approach to achieve a clean audit, according to Harker, including the integration of new technology.

The department can’t just rely on old-school methods of controls and substantive testing, he suggested.

“Substantive test work is onerous, painful. It’s pulling data, it’s doing large sampling across the enterprise. It takes a lot of work. It’s non-value-added work in that it only helps you with regards to auditing, and doesn’t give you better insights, doesn’t give you better information to make decisions,” he said. “What we’re adding into it is AI [and] automation.”

Officials want to figure out where and how to deploy the tech in order to “solve all of our problems, get information available in a way that’s better, faster, cheaper than doing substantive testing or waiting to put controls in place,” he added.

The department still needs to do a lot of substantive testing, he noted, but getting through it is a challenge.

To achieve its audit goals, the Pentagon needs a “full universe of transactions,” Harker said.

“We need to ingest all of the data from every financial, HR, logistics system into Advana, which is our universe of transactions. It’s something that got started a while back, kind of went on a … slow-moving path for a number of years, and has lately been reemphasized. We’re focused on getting everything into Advana. That’s going to give us the ability to do a lot with AI and automation, going and looking at our intergovernmental transactions, finding out who the trading partners are, pulling together things that we couldn’t previously do. Testing a full population using AI, we can get insights overnight that previously would have taken 4,5, 6, months of mind crunching to get through,” he said.

Advana is a mashup of two words: advancing analytics.

Officials are hoping that recent changes to the Advana program under the second Trump administration will be a key enabler for successful audits.

Earlier this year, Deputy Secretary of Defense Stephen Feinberg issued a memo on transforming Advana. His plan called for the financial management elements to be transferred back to the comptroller’s office, among other shakeups.

“It’s basically giving us back control of the Advana piece that … has been gone for the last four or five years. That’s what’s going to enable us to do a lot of this,” Harker said at Tuesday’s conference.

Meanwhile, officials are eyeing automation to help with the substantive test work.

“The auditors are still going to need to do substantive testing. They’re going to pull large samples of a lot of our physical assets,” Harker said. “Pulling the substantive tests, the auditors are using AI. They’ve set it up so that they can come in and use AI to test what we give them. The challenge is, can we meet that test and give them information?”

He continued: “So we’re using robotics, we’re using automation, we’re using AI to go out through our databases, find the documents, find the source information, pull it together, do the repetitive processes that was the start of the automation piece, but then also apply the AI to it so you can go out, look at it and say, ‘What are the characters on here that matter? What’s the things that we need to know to support the auditors?’ If their sample is looking for, you know, purchase price, the date, amount, invoice date, invoice amount, procurement number, any number of things — use the AI in conjunction with the automation to go in and pull all that together and have it ready as an automated package stage so that the auditors can come in, apply their AI tools, go through the testing.”

Time is a limiting factor, he suggested.

“We’ve got smart people, really good at accounting, really good at business processes. What we don’t have is enough time to do all that substantive test work. So using AI and automation is necessary for us. We’re in the process of deploying that. We’ve got a lot of really cool things going on,” Harker said.

However, the Pentagon also needs to bring in people with the right know-how, Harker noted.

“The biggest challenge we’re facing is in the people space. We’ve got a lot of financial managers that understand AI and automation, that understand how we can do these things. What we’re missing is some of the technical people. [The department is] looking at people who do coding, configuration of all the various systems that are out there, being able to come and work in Advana, work in Foundry, work in data rights, people who can use Python and other tools to come in and help us achieve these things,” he said.

Harker made a recruitment pitch for those who might be interested in working for the department.

“I know for some of you on the outside that have those skills, you’re getting paid a lot more than we can pay you, but we would love to have you. We have direct-hire authority. It’s an opportunity to come in and work on some of the biggest problems that are in government,” he said. “It’s a challenge. It’s awesome. You’ll be part of it. Come in for a couple [or a] few years.”

He suggested that such work could be a steppingstone toward future opportunities.

“The folks that built the Advana team originally have mostly left. Some of them are in senior executive roles elsewhere in government, others are in executive roles elsewhere in the private sector. So coming in and working on these problems for government is a great career accelerator for you as well,” Harker told the conference attendees.