Indianapolis, Ind.  –   The Defense Finance and Accounting Service (DFAS) announced the results of its Fiscal Year 2025 (FY25) Service Organization Control (SOC) 1 audit reports today. The agency's continued audit successes are attributed to a sustained commitment to maintaining a robust internal control environment and ensuring integrity the Department of War’s financial operations. 

The SOC 1 reports, conducted by independent auditors, assess the design and operating effectiveness of internal controls over financial reporting and the impact of these processes and internal controls on customer financial statements.

"These results reflect the diligent efforts of DFAS personnel across all levels of the organization," stated Melissa Sikora, director of DFAS, Enterprise Accounting and Audit Support. "Adherence to established internal controls is paramount to ensuring the reliability and accuracy of financial processes and systems." 

Key Observations from the FY25 SOC 1 Reports 

• Overall Assessment: All DFAS SOC 1 reports received favorable opinions, indicating consistent performance in key control areas. 

• Civilian Pay: Maintained its strong control environment for the 13th consecutive year, achieving an Unmodified Opinion of operations supporting all War Department federal employees and leveraged by four other federal departments and agencies to achieve favorable independent audits.

• Disbursing: Earned its 13th consecutive Unmodified Opinion, demonstrating a sustained commitment to financial integrity and accountability. 

• Contract Pay: Secured its 12th consecutive Unmodified Opinion through proactive risk management and stakeholder collaboration. 

• DCAS (Defense Cash Accountability System): Obtained its second consecutive Unmodified Opinion, signifying the system's reliability in supporting Fund Balance with Treasury operations. 

• Vendor Pay: Achieved second consecutive Unmodified Opinions for all five reports, demonstrating strong internal controls in seven systems used across the Military Services to facilitate Vendor Payments for the DoW. 

• Military Pay and Financial Reporting: Achieved favorable Modified Qualified Opinions.  These reports can still be relied upon by financial statement auditors for internal controls achieved

Enhancements to Internal Control Processes 
DFAS is committed to continuous improvement in its internal control environment. During FY25, the agency implemented several enhancements, including: 

• Integration of Automation and Artificial Intelligence (AI): The incorporation of automated tools and AI-assisted processes improves efficiency and effectiveness in areas such as access provisioning, monitoring, and document comparison. The System Access Tracking Tool (SATT) now provides monitoring capabilities for system access management, reducing the risk of unauthorized access to DFAS systems. 

• Process Improvements: DCAS implemented systemic changes to monitor the independent review of Manual Inputs to ensure transactions processed timely and accurately. DCAS automated user access reviews, streamlining the process and improving controls. 

Strategic Implications for DFAS and Stakeholders 
These favorable SOC 1 outcomes provide assurance to the DoW, Congress, and other stakeholders regarding the effectiveness of DFAS's internal controls. The successful SOC 1 examinations can facilitate more efficient financial statement audits and potentially reduce the scope of testing required by DFAS customers’ external auditors. 

Impact on Warfighter Readiness
The reliability of DFAS's financial operations is directly linked to warfighter readiness. Accurate and timely financial transactions ensure that military personnel receive appropriate pay and benefits, and that resources are available to support essential operations and equipment procurement. 
"DFAS remains committed to its mission of providing high-quality financial services to the Department of War," Sikora said. "Our continued focus on strengthening internal controls and promoting operational efficiency is essential to supporting the readiness and effectiveness of our military services.
“The successes we are announcing represent some of the efforts DFAS, the military services and defense agencies are focused on to meet the Secretary of War goal to satisfy the congressional mandate of a clean DoW-wide audit by fiscal year 2028.”