KPMG is dissolving its federal government audit practice, reassigning over 450 US staff to other roles following the loss of a $60 million annual Pentagon contract. The Big Four firm, which audited the Army for nearly a decade, faces pressure to consolidate military financial oversight after years of failed audits. The Defense Department’s $840 billion 2026 budget remains unauditable due to systemic flaws, with only the Marines achieving a clean opinion since external reviews began in 2017. Pentagon Inspector General Platte Moring called the new agencywide audit model “meaningful progress” toward the 2028 compliance deadline.

KPMG’s exit reflects broader challenges in government accountability. The firm previously audited Justice, Energy, and Homeland Security departments but terminated those engagements this year. Its advisory arm had lobbied the Pentagon to adopt improved financial systems, citing weaknesses in tracking munitions, real estate, and software costs. The Army’s audit fees surged from $40 million to $64 million annually under a revised contract, yet KPMG still couldn’t certify accuracy due to missing documentation.

The Pentagon’s March reorganization plan aims to streamline audits by merging Army finances with the broader department, appointing a new firm later this year. Hegseth emphasized eliminating “disjointed audits” to deliver taxpayer results. While EY currently audits the Air Force, Navy, and Marines, KPMG’s departure underscores instability in military contracting. Staff transitions will continue until 2030, with the firm redeploying talent to advisory roles amid shrinking audit demand.

This shift highlights systemic weaknesses in defense spending oversight. With $840 billion at stake, accurate accounting is critical for national security and fiscal transparency. Lawmakers’ 2028 deadline looms as the Pentagon’s task force grapples with entrenched inefficiencies.