10 U.S.C. § 240h — Annual report on auditable financial

Page 334 TITLE 10—ARMED FORCES § 240f § 240f. Audits: selection of service providers for audit services The Department of Defense shall select service providers for auditing services based on the best value to the Department, as determined by the resource sponsor for an auditing contract, rath- er than based on the lowest price technically ac- ceptable service provider. (Added and amended Pub. L. 115–91, div. A, title X, § 1002(g)(1), (2), Dec. 12, 2017, 131 Stat. 1542, § 254b; renumbered § 240f, Pub. L. 115–232, div. A, title X, § 1002(a)(1)(A), Aug. 13, 2018, 132 Stat. 1945.) Editorial Notes CODIFICATION Text of section, as added by Pub. L. 115–91, is based on text of section 892 of Pub. L. 114–328, div. A, title VIII, Dec. 23, 2016, 130 Stat. 2324, which was formerly set out as a note under section 2331 of this title, prior to repeal by Pub. L. 115–91, div. A, title X, § 1002(g)(3), Dec. 12, 2017, 131 Stat. 1542. AMENDMENTS 2018—Pub. L. 115–232 renumbered section 254b of this title as this section. 2017—Pub. L. 115–91, § 1002(g)(2), struck out ‘‘and audit readiness services’’ after ‘‘auditing services’’. Statutory Notes and Related Subsidiaries NOTIFICATION REQUIREMENT FOR CERTAIN CONTRACTS FOR AUDIT SERVICES Pub. L. 115–91, div. A, title X, § 1007, Dec. 12, 2017, 131 Stat. 1545, provided that: ‘‘(a) NOTIFICATION TO CONGRESS.—If the Under Sec- retary of Defense (Comptroller) makes a written find- ing that a delay in performance of a covered contract while a protest is pending would hinder the annual preparation of audited financial statements for the De- partment of Defense, and the head of the procuring ac- tivity responsible for the award of the covered contract does not authorize the award of the contract (pursuant to section 3553(c)(2) of title 31, United States Code) or the performance of the contract (pursuant to section 3553(d)(3)(C) of such title), the Secretary of Defense shall— ‘‘(1) notify the congressional defense committees [Committees on Armed Services and Appropriations of the Senate and the House of Representatives] with- in 10 days after such finding is made; and ‘‘(2) describe any steps the Department of Defense plans to take to mitigate any hindrance identified in such finding to the annual preparation of audited fi- nancial statements for the Department. ‘‘(b) COVERED CONTRACT DEFINED.—In this section, the term ‘covered contract’ means a contract for serv- ices to perform an audit to comply with the require- ments of section 3515 of title 31, United States Code.’’ § 240g. Defense Business Audit Remediation Plan (a) IN GENERAL.—The Secretary of Defense shall maintain a plan, to be known as the ‘‘De- fense Business Systems Audit Remediation Plan’’. Such plan shall include a current ac- counting of the defense business systems of the Department of Defense that will be introduced, replaced, updated, modified, or retired in con- nection with the audit of the full financial statements of the Department, including a com- prehensive roadmap that displays— (1) in-service, retirement, and other perti- nent dates for affected defense business sys- tems; (2) current cost-to-complete estimates for each affected defense business system; (3) dependencies both between the various defense business systems and between the in- troduction, replacement, update, modification, and retirement of such systems; (4) the amount spent by the Department on operating and maintaining financial manage- ment systems during the preceding five fiscal years; and (5) the amount spent by the Department on acquiring or developing new financial manage- ment systems during such five fiscal years. (b) REPORT AND BRIEFING REQUIREMENTS.— (1) ANNUAL REPORT.—Not later than June 30, 2020, and annually thereafter, the Secretary of Defense shall submit to the congressional de- fense committees an updated report on the De- fense Business Systems Audit Remediation Plan under subsection (a). (2) SEMIANNUAL BRIEFINGS.—Not later than January 31 and June 30 each year, the Sec- retary shall provide to the congressional de- fense committees a briefing on the status of the Defense Business Systems Audit Remedi- ation Plan. Such briefing shall include a de- scription of any updates to the defense busi- ness systems roadmap referred to in sub- section (a). (c) DEFENSE BUSINESS SYSTEM.—In this sec- tion, the term ‘‘defense business system’’ has the meaning given such term in section 2222(i)(1)(A) of this title. (Added Pub. L. 116–92, div. A, title X, § 1002(a), Dec. 20, 2019, 133 Stat. 1570; amended Pub. L. 116–283, div. A, title X, § 1005(a), Jan. 1, 2021, 134 Stat. 3837; Pub. L. 117–81, div. A, title X, § 1081(a)(8), Dec. 27, 2021, 135 Stat. 1920.) Editorial Notes AMENDMENTS 2021—Subsec. (a)(3). Pub. L. 117–81 substituted a semi- colon for ‘‘; and’’ at end. Subsec. (a)(4), (5). Pub. L. 116–283 added pars. (4) and (5). § 240h. Annual report on auditable financial statements (a) IN GENERAL.—Not later than January 30 of each year, the Secretary of Defense shall submit to the congressional defense committees a re- port that includes a ranking of all of the mili- tary departments and Defense Agencies in order of how advanced each such department and Agency is in achieving auditable financial state- ments, as required by law. In preparing the re- port, the Secretary shall seek to exclude infor- mation that is otherwise available in other re- ports to Congress. (b) BOTTOM QUARTILE.—Not later than June 30 of each year, the head of each of the military de- partments and Defense Agencies that were ranked in the bottom quartile of the report sub- mitted under subsection (a) for that year shall submit to the congressional defense committees a report that includes the following information for that military department or Defense Agency: (1) A description of the material weaknesses of the military department or Defense Agency. Page 335 TITLE 10—ARMED FORCES § 241 1 See References in Text note below. (2) The underlying causes of such weak- nesses. (3) A plan for remediating such weaknesses. (4) The total number of open audit notices of findings and recommendations (hereinafter re- ferred to as ‘‘NFRs’’) for the most recently concluded fiscal year and the preceding two fiscal years, where applicable. (5) The number of repeat or reissued NFRs from the most recently concluded fiscal year. (6) The number of NFRs that were previously forecasted to be closed during the most re- cently concluded fiscal year that remain open. (7) The number of closed NFRs during the current fiscal year and prior fiscal years. (8) The number of material weaknesses that were validated by external auditors as fully resolved or downgraded in the current fiscal year over prior fiscal years. (9) A breakdown by fiscal years in which open NFRs are forecasted to be closed. (10) Explanations for unfavorable trends in the information under paragraphs (1) through (9). (Added Pub. L. 116–92, div. A, title X, § 1004(a)(1), Dec. 20, 2019, 133 Stat. 1572.) § 240i. Annual report on unfunded priorities (a) IN GENERAL.—Not later than 10 days after the date on which the budget of the President for a fiscal year is submitted to Congress pursu- ant to section 1105 of title 31, the Under Sec- retary of Defense (Comptroller) shall submit to the Secretary of Defense, the Chairman of the Joint Chiefs of Staff, and the congressional de- fense committees a report on unfunded prior- ities of the Department of Defense related to audit readiness and remediation. (b) ELEMENTS.—(1) Each report under sub- section (a) shall include, for each unfunded pri- ority covered by such report, the following: (A) A summary description of such priority, including the objectives to be achieved if such priority were to be funded (whether in whole or in part). (B) The additional amount of funds rec- ommended in connection with the objectives identified under subparagraph (A). (C) Account information with respect to such priority, including, as applicable, the fol- lowing: (i) Line item number, in the case of appli- cable procurement accounts. (ii) Program element number, in the case of applicable research, development, test, and evaluation accounts. (iii) Sub-activity group, in the case of ap- plicable operation and maintenance ac- counts. (2) The Under Secretary shall ensure that the unfunded priorities covered by a report under subsection (a) are listed in the order of urgency of priority, as determined by the Under Sec- retary. (c) UNFUNDED PRIORITY DEFINED.—In this sec- tion, the term ‘‘unfunded priority’’, with respect to a fiscal year, means an activity related to an audit readiness or remediation effort stemming from a relevant requirement under the Chief Fi- nancial Officer Act 1 (Public Law 101–576), chap- ter 9 of title 31, or this chapter that— (1) is not funded in the budget of the Presi- dent for that fiscal year, as submitted to Con- gress pursuant to section 1105 of title 31; (2) is necessary to address a shortfall in an audit readiness or remediation activity; and (3) would have been recommended for fund- ing through the budget referred to in para- graph (1) if— (A) additional resources had been available for the budget to fund the program, activity, or mission requirement; or (B) the program, activity, or mission re- quirement had emerged before the budget was formulated. (Added Pub. L. 116–283, div. A, title X, § 1005(b)(1), Jan. 1, 2021, 134 Stat. 3837.) Editorial Notes REFERENCES IN TEXT The Chief Financial Officer Act, referred to in subsec. (c), probably means the Chief Financial Officers Act of 1990, Pub. L. 101–576, Nov. 15, 1990, 104 Stat. 2838. For complete classification of this Act to the Code, see Short Title of 1990 Amendment note set out under sec- tion 501 of Title 31, Money and Finance, and Tables. [§§ 251 to 254b. Renumbered §§ 240a to 240f] CHAPTER 11—RESERVE COMPONENTS Sec. 241. Reference to chapters 1003, 1005, and 1007. Editorial Notes AMENDMENTS 2018—Pub. L. 115–232, div. A, title X, § 1081(a)(4), Aug. 13, 2018, 132 Stat. 1983, which directed amendment of the analysis of chapter 4 of this title by renumbering item 261 as 241, was executed by making the amendment in this analysis to reflect the probable intent of Congress. 1994—Pub. L. 103–337, div. A, title XVI, § 1661(a)(2)(B), Oct. 5, 1994, 108 Stat. 2979, added item 261 and struck out former items 261 to 281. 1993—Pub. L. 103–160, div. A, title VIII, § 828(c)(1), Nov. 30, 1993, 107 Stat. 1714, added item 279. 1984—Pub. L. 98–525, title XIV, § 1405(7)(C), Oct. 19, 1984, 98 Stat. 2622, in item 264 substituted ‘‘armed force’’ for ‘‘military department’’ and ‘‘Reserves’’ for ‘‘reserves’’ and struck out ‘‘; reports to Congress’’ at end. 1978—Pub. L. 95–485, title IV, § 406(b)(2), Oct. 20, 1978, 92 Stat. 1616, struck out item 279 ‘‘Training reports’’. 1967—Pub. L. 90–168, § 2(7), Dec. 1, 1967, 81 Stat. 522, substituted ‘‘designation of general or flag officers of each military department; personnel and logistic sup- port for reserves; reports to Congress’’ for ‘‘responsi- bility for’’ in item 264. 1960—Pub. L. 86–559, § 1(2)(D), June 30, 1960, 74 Stat. 264, added item 281. 1958—Pub. L. 85–861, § 1(6), Sept. 2, 1958, 72 Stat. 1439, added items 270, 271, 272 and 279. § 241. Reference to chapters 1003, 1005, and 1007 Provisions of law relating to the reserve com- ponents generally, including provisions relating to the organization and administration of the reserve components, are set forth in chapter 1003 (beginning with section 10101), chapter 1005 (be- ginning with section 10141), and chapter 1007 (be- ginning with section 10201) of this title.