Financial Management:

Improved Management Needed for DOD Disbursement Process Reforms

AIMD-97-45: Published: Mar 31, 1997. Publicly Released: Mar 31, 1997.

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GAO reviewed the Defense Finance and Accounting Service's (DFAS) development and implementation of its project to improve disbursement processes and significantly reduce problem disbursements, focusing on 14 action items to improve transactions by others (TBO) disbursement operations in the short term.

GAO noted that: (1) DFAS recognized the need to reform its TBO and cross disbursing processes in the short term, and established aggressive milestones to complete the 14 action items, with most slated for completion in late 1995; (2) however, their implementation has been significantly delayed; (3) as of October 1996, 10 of the 14 action items had either not been implemented or were only partially completed; (4) of the four items implemented, GAO's review of the two for which some implementation information was available showed that they had not effectively met their objectives; (5) GAO identified three issues that limited DFAS' ability to effectively and promptly achieve its goal of improved TBO processing; (6) DFAS did not develop adequate information to effectively diagnose the causes of problem disbursements, implement solutions, and evaluate progress; (7) DFAS managed its reform effort based on the experience of knowledgeable staff without the benefit of enough supporting analysis of processes, causes, and alternatives; (8) without an analysis, DFAS does not know if its stated time frames are reasonable or obtainable; (9) officials at two centers questioned whether the time frames were reasonable and results at one processing center validate that concern; (10) DFAS did not provide strong, consistent management for the project; (11) at least three people headed the project during the first 6 months of 1996; (12) management turnover contributed to delays in issuing the DFAS report and implementing some action items; (13) although a permanent project officer was appointed in July 1996, a position description or formal tasking as to the responsibilities and scope of the job had not been prepared as of the completion of GAO's work in December 1996; (14) DFAS may not be allocating sufficient resources to critical areas; (15) because DFAS did not establish priorities based upon quantitative analysis, DFAS has expended resources without ensuring that it is addressing the more significant problems; (16) for example, after 2 months of work on one action item dealing with rerouting payments between two sections of one DFAS center, DFAS cancelled the action item because it was determined that the completion would not have a significant impact; (17) conversely, DFAS officials said that resource constraints had led to one center's backlog of unprocessed transactions continuing to exist 1 year after DFAS had planned to eliminate it; and (18) by better addressing these critical issues, DFAS will be in a stronger position to achieve meaningful and timely reforms in its TBO processing and ultimately reduce problem disbursements.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In February 1997, DFAS designated a new program office to focus on eliminating "For-Others" transactions and reducing problem in-transit disbursements. DFAS analyzed the "For-Others" payment process and identified weaknesses in several business processes as the source of many of its disbursement problems. DFAS has implemented several initiatives, such as the Defense Cash Accountability System (DCAS), to change existing business processes, by automating the internal routing processes for moving edited data to the accounting stations and improving payment timeliness and accuracy. GAO's review of DOD documentation showed that the DCAS module that will reengineer the "For-Others" process was fully implemented at all DFAS locations by the end of fiscal year 1999. According to DOD's February 2000 problem disbursement report, the absolute value of problem in-transit disbursements has decreased by 83 percent since June 1997.

    Recommendation: To ensure the effective management of ongoing and future disbursement reform efforts, the Director, DFAS, should develop more complete analysis to identify underlying causes, define solutions, and measure progress.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  2. Status: Closed - Implemented

    Comments: DFAS dedicated a manager with extensive project, accounting and financial management experience to be responsible for reducing in-transits and overseeing a business process reengineering effort to eliminate for-others transactions. DFAS believes the manager's responsibilities and authority have been clearly articulated to her and DFAS says it will identify and assign staff to be dedicated to this reform effort.

    Recommendation: To ensure the effective management of ongoing and future disbursement reform efforts, the Director, DFAS, should provide for consistent project management with clearly defined responsibilities and authority.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

  3. Status: Closed - Implemented

    Comments: Annually, DFAS establishes a goal and timeframes for reducing problem in-transit disbursements and eliminating "For-Others" transactions to the extent possible. To help them meet their reduction goals, DFAS implemented the first module of the Defense Cash Accountability System (DCAS), automating the "For-Others" process by electronically transmitting collections, disbursements, and reimbursements between DFAS disbursing and accounting stations. This improved the timeliness for recording in-transit disbursements. This DCAS module was fully implemented at all DFAS locations by the end of fiscal year 1999. According to DOD's February 2000 problem in-transit report, the absolute value of problem in-transit disbursements decreased by 83 percent since June 1997.

    Recommendation: To ensure the effective management of ongoing and future disbursement reform efforts, the Director, DFAS, should prioritize reform efforts to ensure that sufficient resources are allocated to the most severe sources of problems.

    Agency Affected: Department of Defense: Defense Finance and Accounting Service

 

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