DOD Financial Management: Navy Needs to Fully Address Strategic Planning and Systems Migration Leading Practices
Fast Facts
The Navy has spent billions of dollars on obsolete IT systems. Modernizing its financial management systems is critical to DOD’s goal of getting a “clean” audit opinion—i.e., when financial statements are presented fairly and consistent with accounting principles.
The Navy has made progress, but hasn’t fully followed leading strategic and system migration planning practices. For example, it didn’t have a complete approach for executives to monitor issues that contribute to delays—which could make it harder to modernize systems on time.
Our recommendations address this and more.
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Highlights
What GAO Found
In response to its December 2020 acknowledgment that it had wasted billions of dollars sustaining redundant and obsolete IT systems, the Department of the Navy initiated an effort to modernize, consolidate, and retire its systems. The Navy reports that this initiative has resulted in terminating at least 11 legacy systems and saved more than $100 million. In addition, the Navy announced in January 2026 that it had completed its effort to migrate remaining Navy commands to Navy Enterprise Resource Planning, its financial system of record.
Fully adhering to leading practices for strategic and migration planning could strengthen the Navy’s systems modernization. Regarding strategic planning, the Navy met two of three leading practices and partially met one. For example, the Navy demonstrated that the portion of its Navy Financial Management Strategy associated with financial management systems aligned with relevant Navy and DOD-level strategic plans. However, the Navy did not fully implement performance measurement approaches for seven of the nine fiscal year 2025 metrics that it identified for this portion of its financial management strategy.
GAO’s Assessment of Navy Financial Management Systems Modernization Strategic Planning
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Leading practices |
GAO assessment |
|---|---|
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Align with the overall strategic plan |
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Identify results-oriented goals and performance metrics |
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Identify and implement performance measurement approaches |
◐ |
● Met = The Navy addressed all elements of the corresponding leading practice.
◐ Partially met = The Navy addressed some, but not all, elements of the corresponding leading practice.
Source: GAO analysis of Navy documentation. | GAO-26-107119
Regarding migration planning, the Navy met one and partially met three of four leading practices. For example, the Navy’s executive management uses Systems Consolidation Action Plans to obtain status reports and monitor system consolidations. Navy actions to fully comply with the remaining migration leading practices could further reduce modernization risks.
GAO’s Assessment of Navy Financial Management Systems Modernization Migration Planning
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Leading practices |
GAO assessment |
|---|---|
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Develop an enterprise roadmap |
◐ |
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Provide a mechanism for executive management to monitor the migration effort |
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Schedule periodic reviews |
◐ |
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Establish a tracking system for executive management to manage progress, issues, and other action items |
◐ |
● Met = The Navy addressed all elements of the corresponding leading practice.
◐ Partially met = The Navy addressed some, but not all, elements of the corresponding leading practice.
Source: GAO analysis of Navy documentation. | GAO-26-107119
In reviewing the extent to which the Navy established a tracking system to manage progress, issues, and action items, GAO identified at least 111 changes to Navy consolidation plans, including at least 49 system schedule delays. These slippages may limit the Navy’s ability to fully support DOD’s auditability goals.
Why GAO Did This Study
The Department of Defense (DOD) remains the only major federal agency to not achieve an unmodified (clean) audit opinion. Modernizing and consolidating the Department of the Navy’s financial management systems is critical to its ability to support DOD’s goal of a clean opinion by the end of 2028. Attaining that goal would enable informed department officials to be accountable stewards of scarce federal resources needed for readiness and the warfighter.
This report was developed in connection with GAO’s audit of the U.S. government’s consolidated financial statements. It examines the extent to which the Navy’s consolidation and modernization of its financial management systems (1) are consistent with strategic planning leading practices and (2) align with migration planning leading practices.
GAO compared key Navy strategic planning documentation and associated evidence to leading practices in strategic planning. In addition, GAO compared Navy transition plans to migration planning leading practices and agency guidance. GAO also interviewed key Navy program officials.
Recommendations
GAO is making five recommendations to the Navy: four on strategic and migration planning and one on the magnitude of schedule delays and their impact on the critical path to achieving a clean opinion. The Navy concurred with one recommendation; partially concurred with two; and did not concur with two. As discussed in the report, GAO maintains that all five recommendations are warranted.
For more information, Vijay A. D'Souza at dsouzav@gao.gov or Asif Khan at khana@gao.gov.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of the Navy | The Secretary of the Navy should direct the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) and other Navy entities, as appropriate, to ensure that it identifies and follows through on an approach to collect actual performance results for its financial systems goals. (Recommendation 1) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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| Department of the Navy | The Secretary of the Navy should direct the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) and other Navy entities, as appropriate, to ensure that the Navy develops an enterprise roadmap to guide its audit-relevant financial system migration efforts and ensure that it develops and uses an enterprise roadmap that fully addresses leading practices. (Recommendation 2) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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| Department of the Navy | The Secretary of the Navy should direct the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) and other Navy entities, as appropriate, to ensure that the Navy prioritizes its efforts to more closely monitor its audit-relevant system migrations by resuming more frequent Systems Consolidation Action Plan updates and ensuring these updates are provided to senior leadership and stakeholders. (Recommendation 3) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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| Department of the Navy | The Secretary of the Navy should direct the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) and other Navy entities, as appropriate, to ensure that the Navy develops and follows through with a process to track and manage issues and other action items associated with its audit-relevant system migration efforts. This process should include a mechanism to monitor identified issues and action items, evaluate the results, and remediate identified deficiencies on a timely basis. (Recommendation 4) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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| Department of the Navy | The Secretary of the Navy should direct the Office of the Assistant Secretary of the Navy (Financial Management and Comptroller) and other Navy entities, as appropriate, to ensure that the Navy takes steps to identify the magnitude of schedule delays to audit-relevant systems and their impact to systems that are on the critical path for achieving a clean audit opinion by the end of 2028. (Recommendation 5) |
When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
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