Improved Internal Controls Are Needed To Better Assure That Obligations Will Not Be Backdated

AFMD-84-14: Published: Nov 9, 1983. Publicly Released: Nov 9, 1983.

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GAO reviewed 85 Department of Defense (DOD) activities to determine whether existing internal controls adequately preclude the backdating of obligations against expired appropriations.

GAO found that, although there was virtually no evidence of backdated obligation transactions at the activities reviewed, a number of internal control weaknesses need to be corrected to provide reasonable assurance that backdating does not occur. GAO noted that effective controls are needed to provide an audit trail enabling management and audit personnel to verify whether obligation transactions were finalized before the appropriation expired.

Recommendations for Executive Action

  1. Status: Closed - Not Implemented

    Comments: DOD, while recognizing the need to continue to review its internal controls, believed that further clarification and better enforcement of existing guidance and regulations would adequately preclude backdating of obligations and prevent recurrence of the specific examples discussed in the report.

    Recommendation: The Secretary of Defense should require the military services to devise internal controls to help preclude backdating of obligations for stock fund requisitions, industrial fund customer orders, and contracts. At a minimum, the military services should require their industrial funds to maintain a control record showing the status of customer orders received and customer orders accepted as of the end of the fiscal year. The record should be certified by an official other than the one responsible for accepting customer orders.

    Agency Affected: Department of Defense

  2. Status: Closed - Not Implemented

    Comments: DOD, while recognizing the need to continue to review its internal controls, believed that further clarification and better enforcement of existing guidance and regulations would adequately preclude backdating of obligations and recurrence of specific examples discussed in the report.

    Recommendation: The Secretary of Defense should require the military services to devise internal controls to help preclude backdating of obligations for stock fund requisitions, industrial fund customer orders, and contracts. At a minimum, the Navy and the Air Force should implement regulations to require that requisitions for stock fund items not be processed after the funds cited on the requisitions expire.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD fully concurred with this recommendation.

    Recommendation: The Secretary of Defense, in those instances where backdating was detected, should direct that backdated obligations recorded against expired appropriations be removed from accounting records.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD made the recommended determination.

    Recommendation: The Secretary of Defense, in those instances where backdating was detected, should determined whether 18 U.S.C 1018 and 31 U.S.C. 1341 have been violated and take appropriate action.

    Agency Affected: Department of Defense

  5. Status: Closed - Not Implemented

    Comments: DOD, while recognizing the need to continue to review its internal controls, believed that further clarification and better enforcement of existing guidance and regulations would adequately preclude backdating of obligations and prevent recurrence of the specific examples discussed in the report.

    Recommendation: The Secretary of Defense should require the military services to devise internal controls to help preclude backdating of obligations for stock fund requisitions, industrial fund customer orders, and contracts. At a minimum, the military services should require a statement that specifies a final cutoff for contracts in process not signed by year-end. The reconciliation statement should be certified by a responsible official.

    Agency Affected: Department of Defense

 

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