A Critical Analysis of Material Weakness in the U.S. Navy's Assurance Reports from 2013 to 2022

Abstract

This study examines a decade of Department of the Navy (DON) Statement of Assurance (SOA) reports from Fiscal Year (FY) 2013–2022 to determine why recurring material weaknesses persist despite reform efforts. Using the Committee of Sponsoring Organizations of the Treadway Commission (COSO) Internal Control Integrated Framework and auditability theory, 122 material weaknesses were mapped to internal control components and assessed for persistence over time. These material weaknesses were cataloged in a structured database and analyzed via quantitative trend analysis and qualitative cross-component evaluation. The findings revealed recurring material weaknesses in five areas: Property, Plant, and Equipment (PP&E) accountability; feeder-system reconciliation; contract oversight; Corrective Action Plan (CAP) validation; and Information Technology (IT) access controls. These stem from decentralized execution, personnel turnover, and manual controls, highlighting systemic barriers to auditability within the DON. The findings also indicated that 50% of persistent deficiencies occurred in control activities, underscoring gaps in the implementation of processes. This study concluded that sustained audit readiness demands enterprise-wide process standardization, workforce stability, expanded automation, and enhanced leadership accountability. These recommendations provide a roadmap for durable DON internal control improvements and the Department of Defense’s (DoD) clean audit goal.