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Financial Management: Differences in Army and Air Force Disbursing and Accounting Records

AIMD-00-20 Published: Mar 07, 2000. Publicly Released: Mar 07, 2000.
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Highlights

Pursuant to a congressional request, GAO provided information on differences in the Army's and Air Force's disbursing and accounting records, focusing on: (1) if, and to what extent, contract payment transactions recorded in the Army and the Air Force official accounting records differed from mechanization of contract administration services (MOCAS) disbursing system records; (2) the types of differences between the disbursing and accounting systems and, to the extent possible, the causes for the differences; and (3) the potential effect any identified deficiencies may have on the Department of Defense's (DOD) planned contract payment system improvements.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense In implementing DOD's new corporate procurement and payment systems, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller) and the Defense Contract Management Command (DCMC) to develop and implement a data conversion plan identifying responsibilities and milestone dates for resolving data reliability problems associated with existing contract payment data. In developing such a plan, the Comptroller and DCMC officials should consider the basic steps discussed in this report, such as: (1) comparing the two sets of records to identify the magnitude of the differences between MOCAS and the accounting records; (2) stratifying the contracts by the number and amount of the difference so that priorities can be established; (3) developing a policy for addressing how the differences will be handled; and (4) for those existing contracts that will be entered into the new system, including steps to retain the transactional history of each contract, whether in MOCAS or by some other automated means.
Closed – Implemented
DOD originally planned to address GAO's recommendations through the implementation of its new corporate contractor payment system--the Defense Procurement Payment System (DPPS), which was targeted to begin implementation in 2001. In March 2000, DOD issued DOD Reform Initiative (DRID) 53 directing the military departments and the Defense Contract Management Agency (DCMA) to develop comprehensive plans for closing out all completed contracts to prepare for the orderly transition to DPPS. The Defense Finance and Accounting Service (DFAS) was to reengineer the contract reconciliation process and develop procedures to support the conversion from the existing Mechanization of Contract Administration Services (MOCAS) system to DPPS. The Comptroller and DCMA developed and implemented a plan with assigned responsibilities and milestone dates for resolving data reliability problems associated with existing contract payment data. DOD established an Integrated Process Team chaired by the Principal Under Secretary of Defense (Acquisition and Comptroller) to integrate and coordinate the reconciliation, closeout, and conversion of MOCAS to DPPS. To identify the magnitude of differences requiring reconciliation, DOD compared contract records with disbursing and accounting records. DOD also stratified contracts by the number and amount of the difference to establish reconciliation priorities. Under DRID 53, the initial focus was to reconcile contracts that would be the most difficult to reconcile and contracts over $100 million with expeditious efforts to move forward to reconcile and close all other contracts. In May 2001, the DOD Comptroller published new business rules for contract reconciliations in volume 10, chapter 20 of the DOD Financial Management Regulation. In January 2003, due to unresolved problems, DOD terminated efforts to implement DPPS, and funding was made available to implement systemic and process improvements in MOCAS. As a result, transaction history was retained in MOCAS. DOD's contract payment and reconciliation process improvements, which were documented by DFAS as completed in March 2003, addressed GAO's recommendations by eliminating or significantly reducing the differences between disbursing and accounting system data.

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Topics

Accounting proceduresAccounting standardsComparative analysisContractor paymentsData integrityDefense procurementFederal agency accounting systemsFinancial managementFinancial recordsInternal controls