The Government Accountability Office said the Department of the Navy has made progress in modernizing financial management systems but needs to strengthen planning practices to meet audit objectives.
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What Progress Has the Navy Made?
According to the GAO report published Tuesday, the Navy began efforts to modernize and consolidate financial IT systems after acknowledging in 2020 that it had spent billions maintaining outdated platforms. The initiative has led to the termination of at least 11 legacy systems and generated more than $100 million in savings. The service also reported completing the migration of remaining commands to its Navy Enterprise Resource Planning system, which serves as its financial system of record.
What Challenges Did GAO Identify?
Despite progress, GAO found the Navy did not fully follow leading practices for strategic and migration planning. The agency met some planning criteria but only partially implemented performance measurement approaches tied to fiscal 2025 goals.
Moreover, GAO identified at least 111 changes to consolidation plans, including 49 schedule delays. These issues could affect the Navy's ability to meet Department of War auditability targets.
What Recommendations Were Issued?
GAO issued five recommendations to the Navy, primarily focused on strengthening strategic and migration planning and assessing schedule delays affecting the path to a clean audit opinion by 2028. The Navy concurred with one recommendation, partially concurred with two and did not concur with two.
The agency urged Navy leadership to enhance performance monitoring of financial systems, develop a comprehensive enterprise migration roadmap, improve tracking of audit-relevant system migrations through regular Systems Consolidation Action Plan updates, implement a process to manage migration-related issues and evaluate the impact of system delays on audit readiness.
How Is GAO Expanding Oversight Across Navy Programs?
Beyond financial systems, GAO is also examining broader Navy operations. In a separate January 2026 report, the watchdog identified gaps in how the service plans and conducts operational testing to validate new vessels' ability to counter adversary threats.
