When One Military Service Pays Another's Members, Overpayments May Result

AFMD-81-41: Published: Apr 14, 1981. Publicly Released: Apr 14, 1981.

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GAO reviewed procedures and controls relating to military pay cross disbursements and the reconciliation of accounting data to pay data at all military service finance centers to determine if the military services were following the applicable guidance in reporting and controlling cross disbursements and if the services' systems were effective in preventing or detecting pay errors and irregularities.

In a test of almost 3,000 cross disbursement cases, 160 payments were found which had not been charged to the members' pay accounts and represented potential overpayments. The cross disbursements not posted were from several months to over a year old. Disbursing officers in many cases did not adhere to prescribed procedures in reporting cross disbursements. Also, the military finance centers failed to establish or carry out required controls that were designed to ensure the prompt receipt of all military pay cross disbursement data. An important basic control consists of a reconciliation which compares the charges made by disbursing officers to military pay appropriations to amounts charged to members' pay amounts. Although this control is applicable to both pay disbursements within the services and cross disbursement payrolls, it was not used by the Army and Marine Corps and ineffectively used by the Navy and Air Force. Because of the general lack of effective internal controls, GAO believes that there may be many more cross disbursement payments than those identified which have not been posted to pay accounts. It also believes that fraud could go undetected unless the procedures and controls are improved.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to issue instructions to all disbursing officers stressing the importance of well-prepared, complete, and legible financial documents, in compliance with applicable guidance, including the proper numbering of cross disbursement payment vouchers and the proper maintenance of cross disbursement suspense files.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to institute a reconciliation process in the Army and Marine Corps Centers to ensure that charges to military pay appropriations have a corresponding charge to pay accounts.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to establish and/or improve military finance center procedures to ensure adequate control over receipt of all military pay cross disbursement vouchers in accord with Defense Handbook 7220.9-H.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to collect any overpayments identified by the special review that resulted from failure to charge pay records for cross disbursements.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to make a special review of available documentation at all disbursing offices and finance centers to ensure that disbursing officers submitted all cross disbursement documents to appropriate finance centers and the related confirmations were received, and finance centers received all cross disbursement documents, and related payments were posted to pay accounts.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Secretary of Defense should require the Secretaries of the Army, Navy, and Air Force to require internal audit and administrative examination of efforts at disbursing office and finance center locations to review periodically the effectiveness of procedures and internal controls used to ensure that pay cross disbursements are properly processed and recorded.

    Agency Affected: Department of Defense

 

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