The Audit the Pentagon Act of 2026 aims to pressure the Department of Defense to pass its financial audits by imposing automatic budget cuts on any Pentagon department or agency that fails to receive a clean audit opinion. The bill stems from the Pentagon's failure to pass its eighth consecutive financial audit in December 2025, during which auditors could not account for hundreds of billions of dollars. Starting in fiscal year 2026, any Pentagon unit that fails its audit will face a 0.5 percent budget reduction that first year and 1.0 percent cuts in subsequent years, with the money directed to deficit reduction. However, the bill protects military personnel accounts, reserve accounts, and the Defense Health Program from these cuts, and gives the President authority to waive penalties if deemed necessary for national security. The Office of Management and Budget must report to Congress within 60 days of any reduction detailing which Pentagon units were affected and the amounts cut.
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