Financial Management:

DOD's Approach to Financial Control Over Property Needs Structure

AIMD-97-150: Published: Sep 30, 1997. Publicly Released: Sep 30, 1997.

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GAO determined whether the Defense Property Accountability System (DPAS): (1) was designed to meet functional accounting requirements for general property, plant, and equipment (PP&E); and (2) was implemented at the Defense Information System Agency's (DISA) Defense Megacenters in a manner that ensures it meets functional accounting requirements for general PP&E.

GAO noted that: (1) as functionally designed, DPAS can provide financial control and generate information to account for most general PP&E; however, DPAS cannot yet meet requirements that become effective for accounting periods beginning after September 30, 1997; (2) DPAS does not contain the information needed to meet new federal accounting standards for deferred maintenance and environmental clean-up costs; (3) the DPAS design does not meet several current Department of Defense (DOD) accounting requirements for certain minor types of PP&E; for example, DPAS does not have the information to meet the requirements for recording depletion of natural resources, which represent 1.2 percent of DOD's total general PP&E; (4) DPAS needs to be modified with the addition of data elements and financial transactions to meet new standards and requirements as well as the current ones not yet covered; (5) implementation of DPAS at DISA did not ensure financial control and accurate reporting of general PP&E; (6) DPAS was not correctly interfaced with the accounting system due to errors in the interface program used to translate DPAS data to data understandable to DISA's general ledger; (7) this caused transactions to be recorded incorrectly in the general ledger, resulting in a material difference of over $118 million in property values between DPAS detailed records and the general ledger summary records; (8) the problem with the interface program could have been mitigated if transactions using the standard general ledger accounts were created in DPAS; (9) in addition, compensating controls, such as routine reconciliations between the two systems, were in place; (10) many of the problems with the accuracy of property data experienced at DISA can be linked to several issues that affect DOD-wide implementation of DPAS; (11) DOD, as part of its DPAS strategic planning process, has not defined the roles, responsibilities, and relationships among the various DOD entities involved, interfaces, and related controls; (12) this part of the strategic planning has not developed a detailed DPAS implementation schedule that identifies at what sites and when the system will be implemented; and (13) DOD has left it up to each military service to determine where, when, and how DPAS is to be implemented without providing adequate implementation guidance or ensuring that the implementation schedule includes all sites, making it unlikely that DPAS will be implemented across DOD by the Comptroller's target date of 2000.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DPAS program management office has identified financial systems which must interface with DPAS, including the Industrial Fund Accounting System. DPAS release 7.3.00 implemented changes to correct DISA's interface problem.

    Recommendation: To resolve the implementation problems specific to DISA, the Director, DISA, should correct the interface program.

    Agency Affected: Department of Defense: Defense Information Systems Agency

  2. Status: Closed - Implemented

    Comments: DISA submitted a System Change Request (SCR) to establish an automated accounting interface between DPAS and the general ledger accounting system used by DISA. This SCR was approved and issued with DPAS release 12.0.00 in June 2000.

    Recommendation: To resolve the implementation problems specific to DISA, the Director, DISA, should submit a request to the DPAS project office to include appropriate additional transaction edits required by DISA for general ledger processing.

    Agency Affected: Department of Defense: Defense Information Systems Agency

  3. Status: Closed - Implemented

    Comments: DLA issued update Release numbers 9, 12, and 13 dated August 1999, June 2000, and December 2000. These releases expanded DPAS functionality to include posting logic for both the debit and credit in accordance with the US Standard General Ledger and addresses federal accounting standards and DOD financial management regulations pending as of the time this recommendation was made.

    Recommendation: To ensure that DPAS meets the DOD Comptroller's stated goal of achieving financial control and accountability over general PP&E by the year 2000, the Deputy Secretary of Defense should expand DPAS functionality to ensure it includes transactions to meet all current and pending requirements related to property found in federal accounting standards and DOD financial management regulations. Transactions produced by DPAS for updating the general ledger should reflect the posting logic for both the debit and credit in accordance with the U.S. Government Standard General Ledger.

    Agency Affected: Department of Defense: Office of the Deputy Secretary

  4. Status: Closed - Implemented

    Comments: In accordance with the intent of this recommendation, in March 2001, DFAS completed a Functional Description Document (FDD) that addresses all of the financial transactions required to capture, track, record, report, and reconcile the Defense Property Accountability System (DPAS). This document contains a comprehensive list of accounting events, codes, and the resulting journal entries for posting property data to the general ledger. It also has a chapter that provides specific guidance on how and when to perform reconciliations and who should be performing them.

    Recommendation: To ensure that DPAS meets the DOD Comptroller's stated goal of achieving financial control and accountability over general PP&E by the year 2000, the Deputy Secretary of Defense should revise the DPAS Implementation Handbook to: (1) specify the complete financial transactions for posting DPAS data to the general ledger; (2) include specific guidance on how and when to perform reconciliations and who should be performing them, including automated matching of DPAS records to the general ledger, where appropriate; and (3) require that all financial transactions generated by DPAS, such as equipment in transit, be used.

    Agency Affected: Department of Defense: Office of the Deputy Secretary

  5. Status: Closed - Implemented

    Comments: The DOD office responsible for DPAS implementation presented a summary schedule in March 2001, that gave the current status of DOD's DPAS conversion. The briefing included charts that specifically address the number of activities implemented, the number scheduled, and the number to be scheduled by major command across the department. In addition, the services and defense agencies were required to provide a status of their DPAS implementation schedules.

    Recommendation: To ensure that DPAS meets the DOD Comptroller's stated goal of achieving financial control and accountability over general PP&E by the year 2000, the Deputy Secretary of Defense should develop a detailed DPAS implementation plan that includes a schedule that identifies at what sites and when the system will be implemented.

    Agency Affected: Department of Defense: Office of the Deputy Secretary

  6. Status: Closed - Not Implemented

    Comments: In July 2001, DOD initiated the Financial Management Modernization Program (name changed later to Business Management Modernization Program-BMMP) to, among other things, develop a DOD financial management enterprise architecture to transform is business operations, including property functions. In April 2002, DOD released the first version of its Financial Management Enterprise Architecture. In May 2003, the DOD Comptroller changed its architecture name to the Business Enterprise Architecture to reflect the transformation of departmentwide business operations and supporting systems, including accounting and finance, budget formulation, acquisition, inventory management, logistics, personnel, and property management systems. An enterprise architecture by nature is a concept of operations outlining standard process and system requirements for use improving the efficiency and effectiveness of business operations. Within the BMMP, domain owners and DOD components are continuing efforts to refine the architecture, including defining current and future operating environments for DOD property activities and how they are and will be accomplished across the department, establishing controls, defining responsibilities and relationships, and reviewing system modifications to ensure consistency with the architecture. DPAS is considered a legacy system that will be replaced in the future with a more integrated and compliant system. As a result, if DOD's BEA is successfully implemented, DOD's Comptroller will not approve funding for DPAS improvements or modifications which are not consistent with the BEA.

    Recommendation: To ensure that DPAS meets the DOD Comptroller's stated goal of achieving financial control and accountability over general PP&E by the year 2000, the Deputy Secretary of Defense should develop, in consultation with the appropriate Assistant Secretaries, a concept of operations that: (1) lays out how the property function is to be accomplished, including identification of needed manual and automated interfaces and related controls; and (2) defines for both the current and future operating environments the roles, responsibilities, and relationships among the various DOD entities involved, such as the Comptroller's office, the Defense Finance and Accounting Service, DOD component agencies, and the military services.

    Agency Affected: Department of Defense: Office of the Deputy Secretary

  7. Status: Closed - Implemented

    Comments: According to DISA IG and DISA officials, procedures are in place and reconciliations are being performed between DISA's general ledger and DPAS's property records.

    Recommendation: To resolve the implementation problems specific to DISA, the Director, DISA, should finalize procedures for reconciliation of DISA's general ledger accounts for property to DPAS property records, including provisions to ensure that timely reconciliations are accomplished and general ledger control is maintained over general PP&E.

    Agency Affected: Department of Defense: Defense Information Systems Agency

 

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