Financial Management:

Defense's System for Army Military Payroll Is Unreliable

AIMD-93-32: Published: Sep 30, 1993. Publicly Released: Sep 30, 1993.

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GAO evaluated the Army's military personnel payroll system, focusing on whether payments are: (1) made only to military personnel entitled to them; and (2) accurately recorded, summarized, and reported.

GAO found that: (1) the Defense Finance and Accounting Service (DFAS) has made numerous erroneous payments to Army personnel not entitled to payment due to field officers' failure to enter personnel transaction information into the payroll system in a timely manner; (2) the Army and DFAS have not reconciled military payroll and personnel records due to the large volume of discrepancies between payroll and personnel data; (3) data discrepancies are partly due to payments to reserve and National Guard personnel on active duty; (4) the Joint Services Software (JSS) system does not accurately summarize and report payroll tax information or correctly identify appropriation charges; (5) the Army identified several payroll problems in fiscal year 1992, but DFAS has not corrected them; (6) DFAS cannot ensure that income, social security, Medicare taxes, and other deductions are accurately reported and remitted, since it cannot reconcile the Army's gross and net pay reports; (7) the Army's military personnel appropriation has been erroneously charged for reserve and National Guard personnel costs because some personnel are incorrectly coded in JSS; (8) DFAS has not followed the required procedures for JSS implementation which allowed the existing system's deficiencies to persist; and (9) DFAS has established a task force to address the Army's military payroll system deficiencies and integrate the Army's payroll and personnel systems.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DFAS instituted a number of monthly database comparisons to identify any additional potential payroll overpayments. DOD reported that none of the comparisons conducted between June 1995 and January 1996 disclosed any mismatches warranting criminal investigation. According to DFAS officials, all payroll debts have been recorded on the Debt Management System and collection efforts are continuing for those cases deemed collectible, including some prosecutions in which the Army Criminal Investigations Division has been involved. In March 1996, the Army Audit Agency reported progress in resolving control weaknesses in this area to the extent that the area was no longer considered a material weakness.

    Recommendation: The Secretary of Defense should instruct the Acting Secretary of the Army and the Acting Department of Defense (DOD) Chief Financial Officer (CFO) to direct and monitor efforts to recover the amounts due to the government resulting from improper Army payroll payments.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DFAS developed its own program outside of DJMS to reconcile the gross and net payroll. As a result, DFAS has been able to reconcile gross and net every month since October 1994. The Army Personnel Command sent a memo, dated August 1995, to all Army unit commanders requiring that they review monthly Unit Commanders Finance Reports in detail and return a certified copy to their local finance office. The task force instituted numerous matches between various databases to identify all payroll debts owed by soldiers. These matches continue to be conducted on a monthly basis. Collection efforts continue and are being managed by another section of DFAS and Army CID. DFAS and the Army Personnel Command continue to work together to develop interfaces between personnel and payroll. Of 31 key elements identified for interfacing, 15 are in place. Others are not expected until at least 1996, after a new version of the personnel system (SIDPERS) is in place.

    Recommendation: The Secretary of Defense should instruct the Acting Secretary of the Army and the Acting DOD CFO to monitor the progress and effectiveness of the special task force for resolving problems with the JSS system used for the Army to ensure that overpayments are identified and corrected and that future JSS reports are accurate.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: The Army and DFAS have established specific milestones for completing approximately 125 interfaces between pay and personnel, which will coincide with the installation of the Army's new personnel system, SIDPERS 3. While about 20 interfaces have been completed, the rest cannot be completed until SIDPERS 3 is in place; scheduled completion is in 1999. The Defense Science Board recommended the establishment of a joint working group to develop a DOD-wide fully integrated military personnel and pay system. The group, which consists of representatives from each service and DFAS, is responsible for defining functional requirements for and overseeing implementation of the new system. A Joint Program Management Office is responsible for designing and developing the system. The new system, recently named the Defense Integrated Military Human Resource System, is supposed to have initial operating capability by 2001, but this goal is rather tentative.

    Recommendation: The Secretary of Defense should direct the DOD Acting CFO, in consultation with the Assistant Secretary for Command, Control, Communications, and Intelligence, and the service secretaries, to include in the DOD CFO Financial Management 5-Year Plan, specific milestones and steps for developing an interim interface between payroll and personnel, and ultimately, integration of those systems.

    Agency Affected: Department of Defense

  4. Status: Closed - Not Implemented

    Comments: DOD is now developing an integrated system, the Defense Integrated Military Human Resources System (DIMHRS), that is excepted to replace DJMS (formerly JSS) as well as other DOD payroll and personnel systems. DOD plans to begin using DIMHRS for the Army in 2003 and expects all services to be converted to DIMHRS by March 2005.

    Recommendation: The Secretary of Defense should require the service secretaries and the Director, DFAS, to incorporate basic system development standards and requirements into the planned JSS conversions, which include: (1) identifying the services' relevant requirements; (2) incorporating those requirements into JSS; (3) validating the accuracy of payroll data entered into JSS; and (4) providing adequate training for personnel who will work with JSS.

    Agency Affected: Department of Defense

 

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