The Office of Management and Budget is calling for a major overhaul in how federal agencies conduct financial audits.
In its June 23, 2025, memorandum (
The federal government spends hundreds of millions of dollars each year on financial audits. Yet, according to Vought, audits have become "rote exercises that do not ensure sound financial management," not preventing fraud, waste, and abuse — even as the national debt exceeds $36 trillion.
The shortcomings are clear. In fiscal year 2024, only 18 of 24 CFO Act agencies received clean (unqualified) audit opinions, reaching 20-year lows. The Department of Defense stays a consistent example of failure, unable to secure a clean opinion despite significant investment.
To address these issues, OMB is implementing a single-year audit format starting with fiscal year 2025. This model emphasizes current-year activity and balances, aiming to improve relevance and timeliness. The intent is to outline this in a forthcoming update to Circular A-136, which governs federal financial reporting.
"This change allows us to streamline the audit process, focus on high-risk areas in real time, and establish a clearer foundation for progress in future years," the memo explains.
In addition to the new audit format, OMB is launching a four-part agenda to improve the effectiveness of federal audits:
- Auditing the auditors: OMB will review the roles and value of auditors — including public accountants, inspectors general and agency CFOs — to ensure audits align with risk and mission outcomes.
- Focusing on high-impact audits: The government will prioritize audits that reduce risk and improve accountability, while combining or ending audits that serve only compliance.
- Linking transparency to reform: Audit results will guide program improvements, not just generate reports. Integration with oversight and root-cause analysis will be key.
- Addressing improper payments: A government-wide strategy is underway to tackle improper payments, and the systemic issues audits often miss.
The OMB's strategy calls on agencies to rethink the purpose of audits. As Vought notes, "We owe the public much more than multiple disclaimers, super-late financial reports, and ever-more spending that only furthers Federal deficits and debt."
This new direction aims to transform audits from routine paperwork into meaningful instruments of fiscal responsibility. The primary goal is to guarantee that governments manage taxpayer funds responsibly and with full transparency.
