Trump Administration to Overhaul Federal Auditing Process, Says Current System Broken

The Trump Administration wants a “strategic reset” on the way the federal government conducts audits, saying bluntly that “federal audits do not work.”

In a memo, Office of Management and Budget (OMB) Director Russell Vought writes that audits “have become, in many places, rote exercises that do not ensure sound financial management and instead contribute to the 36 trillion dollars of debt the Federal government currently carries.”  

The director notes that this varies by agency. 

“While some agencies use audit findings to strengthen internal controls, others receive clean audit opinions for years despite squandering hundreds of millions of dollars in wasted, improper payments,” says the memo. 

In addition, Director Vought points out that the Department of Government Efficiency (DOGE) identified breakdowns including fund control lapses and procurement irregularities that traditional audits “missed entirely.”

OMB notes that only 18 CFO Act agencies received an unqualified opinion in FY 2024, while six had either a disclaimer or a qualified opinion.

According to Robert Shea, a former OMB official from the George W. Bush White House and CEO of GovNavigators, the memo “comes suspiciously around the time CFO shops are struggling to meet deadlines in lean times, but no one can argue the oversight industrial compliance could use some scrutiny.”

A Single-Year Approach

To improve the audit process, OMB will move to a single year approach, noting that a single-year approach offers numerous benefits over the current multi-year approach, which can blur the true financial state of an agency. 

The single-year approach:

• Allows auditors to put a focus on current-year activity and balances

• Streamlines audit scope

• Establishes a cleaner, clearer baseline for progress

• Provides the opportunity to address high-risk programs and control weaknesses in real time 

In addition, OMB will take the following actions:

• Audit the auditors to see how audit dollars are spent and ensure they align with risk, outcomes, and mission deliver 

• Focus on high-impact audits and transparency

• Integrate audit results with program oversight, performance management, and root cause analysis 

“Government-wide, what this will do is allow agencies to really focus in on the important things and that is tracking the dollars that we have right now, tracking the liabilities we have right now,” a senior Trump administration official told the Washington Examiner. “We’re going to put our time and effort into making sure we’re accounting for the dollars and cents from what we’re doing and, going forward, we’re not putting dollars and resources into trying to explain why the last administration exploded the size of government.”

The OMB memo also states that getting the Department of Defense (DOD) to pass a full-year audit is a priority. DOD is the only federal agency that has never passed a financial audit.