S. 3902 — RECEIPTS Act

This section states congressional findings regarding the Department of Defense's noncompliance with constitutional and statutory requirements to produce auditable financial statements, including under 31 U.S.C. §3515(a) (due not later than March 1, 2003); the Federal Financial Management Improvement Act of 1996; section 1003 of the National Defense Authorization Act for Fiscal Year 2010 (audit-ready statements by September 30, 2017); and section 1005 of the National Defense Authorization Act for Fiscal Year 2013 (budgetary resources statement by September 30, 2014). The findings also note the Department's placement on the Government Accountability Office high-risk list since before 2005, its creation of a Financial Improvement and Audit Readiness Plan that year, and a June 2025 commitment by its Acting Comptroller to achieve audit-ready budget statements by 2028.

This section establishes enhanced Department of Defense (DoD) transfer and reprogramming authorities—applicable in the fiscal year succeeding any fiscal year after FY2028 in which DoD, a military department, Defense Agency, or DoD Field Activity receives an unqualified audit opinion on its financial statements—as follows: (1) for the Secretary of Defense's general transfer authority in the national interest, a total limit equal to the greater of $10 billion or 1 percent of total DoD budget authority; and (2) for entity-specific reprogrammings without prior congressional notice, thresholds of $60 million for procurement programs, $30 million for research programs, $45 million for operation and maintenance budget activities, and $30 million for military personnel budget activities. (Reprogramming authority allows shifts of funds within appropriations below specified thresholds; this section preserves all other notice requirements.) Terms such as *program base amount*, *procurement program*, *research program*, and *budget activity* have the meanings given in the DoD Financial Management Regulation (DoD 7000.14-R).

This section terminates specified reporting requirements applicable to Department of Defense (DoD) financial statements upon issuance of an unqualified audit opinion. The requirements cease for a military department upon a clean audit opinion on its financial statements and for DoD overall—including military departments and other Office of Management and Budget-defined reporting entities—upon a clean audit opinion on DoD's financial statements. The requirements are (1) annual reports under section 892(b) of the Ike Skelton National Defense Authorization Act for Fiscal Year 2011 (P.L. 111–383), (2) semi-annual reports under section 1003(b) of the National Defense Authorization Act for Fiscal Year 2010 (P.L. 111–84), (3) annual reports under section 817(d) of the Bob Stump National Defense Authorization Act for Fiscal Year 2003 (P.L. 107–314), and (4) periodic reports under section 908(b) of the Defense Acquisition Improvement Act of 1986 (P.L. 99–500) and duplicate provisions under section 6 of the Defense Technical Corrections Act of 1987 (P.L. 100–26). (As background, these reports address DoD's financial management deficiencies and remediation plans amid ongoing efforts to achieve a clean audit opinion, first attempted in FY2018.)

This section establishes additional qualifications and duties for the Under Secretary of Defense (Comptroller) and the Assistant Secretaries for Financial Management of the Army, Navy, and Air Force if the Department of Defense fails to obtain an audit with an unqualified opinion on its FY2028 financial statements by December 31, 2028, effective January 1, 2029. Specifically, it requires nominees for these positions to be certified public accountants (CPAs) who have served as chief financial officers (or equivalent) of a federal or state agency or public company (i.e., issuer under the Sarbanes-Oxley Act of 2002) that received an unqualified audit opinion on its financial statements during their service; it also authorizes the Deputy Secretary of Defense (acting as Chief Management Officer or successor) to prescribe additional duties for the Under Secretary and additional responsibilities for the Assistant Secretaries.

This section requires the Secretary of Defense, if the Department of Defense fails to obtain an audit with an unqualified opinion on its FY2028 financial statements by December 31, 2028, to transfer—in coordination with the Secretary of the Treasury and the Director of the Office of Management and Budget—the non-defense payroll and finance services of the Defense Finance and Accounting Service (DFAS) to another U.S. government payroll and finance service. Non-defense services are those DFAS provides to other federal agencies (e.g., Department of Health and Human Services) but exclude services for military retirees, the Department of Veterans Affairs, or the Executive Office of the President.

This section directs the Secretary of Defense to require the Defense Finance and Accounting Service (DFAS) to amend its mission statement and vision to incorporate the following principles: (1) DFAS is a critical part of the U.S. military's financial management and accounting team and is not solely a pay and finance service provider to the military services; and (2) DFAS is jointly responsible with the military services for (A) accounting for military spending through accurate and timely recording, analysis, summarization, and classification of military service financial transactions; (B) ensuring those transactions are recorded in the military services' financial statements; and (C) achieving an unqualified audit opinion for the Department of Defense's financial statements.

This section authorizes $150 million for deploying automation and artificial intelligence to accelerate audits of Department of Defense (DoD) financial statements and $150 million for business systems replacements—pursuant to 10 U.S.C. chapter 9A (DoD financial management) and §2222 (defense business systems and processes)—to improve financial statement accuracy, offset by terminating an equal amount of existing contracts for contractor consulting services on financial statement audits and preparation. It states the sense of Congress that DoD should maximize use of such technology to automate financial statement preparation and audits while minimizing additional contractor personnel.

This section establishes a Department of Defense Audit Committee, chaired by the Deputy Secretary of Defense, to select and oversee the audit of the department's financial statements by an independent external auditor. The committee comprises (1) the Deputy Secretary of Defense (chair), (2) the Chief Information Officer, (3) the Deputy Inspector General (Audit), (4)-(7) one individual each appointed by the chair and ranking member of the Senate and House Armed Services Committees (who must be CPAs with federal financial statement audit experience), and (8) one individual appointed by the Secretary from the Defense Business Board; it excludes the Under Secretary of Defense (Comptroller)/Chief Financial Officer, Deputy Under Secretary of Defense (Comptroller), and Director of the Defense Finance and Accounting Service. This section further amends 31 U.S.C. §3521(a)—which requires executive agencies to prepare and have audited annual financial statements—to mandate that the Department of Defense audit be performed by an independent external auditor.