"September 10th, 2001 then Secretary of Defense Donald Rumsfeld acknowledged to the American public that Pentagon can't account for 2.3 trillion" - https://www.youtube.com/watch?v=4FWFAs9ffGk
AIUI, the Pentagon failing an audit is essentially akin to most people failing an audit because they can't produce every single paper receipt for everything they've ever purchased. Combine that with the fact that the Pentagon is (I believe) the single largest purchaser on the planet, the fact that much of what it does is compartmentalized in different security buckets, and that the managerial staff tends to be younger than most organizations, and it shouldn't be so surprising that it's persistently in a state of being unable to literally dot every i and cross every t.
They use auditors with clearance. I'd imagine certain programs require very specific auditors to supervise them, like how the FISA court works with specific vetted lawyers at times.
The more mundane problem is things like "drive that truck over there… drive another one back" often result in the exact location of an asset being unclear fairly frequently.