B-136409, JUL. 10, 1958

B-136409: Jul 10, 1958

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IT IS INDICATED THAT THERE IS A RELUCTANCE TO DEPART FROM THE PRESENT UNIFORM PAY RECORD SYSTEM. THAT THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) IS OF THE OPINION THAT THE PROPOSED SYSTEM SHOULD BE ADOPTED BECAUSE IT WILL MEET THE NEEDS OF THE ARMY FOR PAY OF THE TROOPS UNDER COMBAT CONDITIONS. WE WERE PRESENTED A FULL DESCRIPTION OF THE PROBLEMS INVOLVED IN PAYMENT OF ARMY PERSONNEL IN COMBAT. THE ARMY HAS INDICATED THAT THE PRESENT MILITARY PAY SYSTEM IS VERY DIFFICULT TO OPERATE UNDER COMBAT CONDITIONS. IT IS REPORTED THAT TROOP UNIT ASSIGNMENTS CHANGE SO FLUIDLY UNDER COMBAT CONDITIONS THAT THEY CANNOT BE SERVICED DIRECTLY BY FINANCE OFFICERS WITHOUT THE PARTICIPATION OF UNIT PERSONNEL OFFICES.

B-136409, JUL. 10, 1958

TO THE SECRETARY OF DEFENSE:

MEMORANDUM OF MARCH 28, 1958, FROM THE DEPUTY COMPTROLLER FOR ACCOUNTING, FINANCE AND AUDIT POLICY, TO THE DIRECTOR, DEFENSE ACCOUNTING AND AUDITING DIVISION, REQUESTS APPROVAL OF CERTAIN MILITARY PAY FORMS IN ORDER THAT A PROPOSED MILITARY PAY SYSTEM DEVELOPED BY THE DEPARTMENT OF THE ARMY MAY BE IMPLEMENTED ON AN ARMY WIDE BASIS. IT IS INDICATED THAT THERE IS A RELUCTANCE TO DEPART FROM THE PRESENT UNIFORM PAY RECORD SYSTEM, BUT THAT THE ASSISTANT SECRETARY OF DEFENSE (COMPTROLLER) IS OF THE OPINION THAT THE PROPOSED SYSTEM SHOULD BE ADOPTED BECAUSE IT WILL MEET THE NEEDS OF THE ARMY FOR PAY OF THE TROOPS UNDER COMBAT CONDITIONS.

IT HAS BEEN STATED THAT THE ARMY'S POSITION RESTS ON THE PREMISES THAT (1) THE TROOPS MUST BE PAID THEIR ENTIRE NET ENTITLEMENT EACH PAY DAY, EVEN WHEN ENGAGED IN COMBAT, AND (2) THE ARMY SYSTEM MUST BE BASED ON NEEDS UNDER COMBAT CONDITIONS, EVEN IN PEACETIME. THE DEPARTMENT OF DEFENSE SUPPORTS THESE PREMISES WITHOUT RESERVATIONS.

WE WERE PRESENTED A FULL DESCRIPTION OF THE PROBLEMS INVOLVED IN PAYMENT OF ARMY PERSONNEL IN COMBAT. THE ARMY HAS INDICATED THAT THE PRESENT MILITARY PAY SYSTEM IS VERY DIFFICULT TO OPERATE UNDER COMBAT CONDITIONS, BECAUSE OF THE FREQUENT MOVEMENT OF THE COMBAT-SUPPORT AND SERVICE-SUPPORT UNITS, AND THE TRANSFERS OF UNITS BETWEEN DIVISIONS AND CORPS. THESE FREQUENT MOVES REQUIRE MANY TRANSFERS OF PAY RECORDS BETWEEN FINANCE OFFICES UNDER THE PRESENT SYSTEM. IT IS REPORTED THAT TROOP UNIT ASSIGNMENTS CHANGE SO FLUIDLY UNDER COMBAT CONDITIONS THAT THEY CANNOT BE SERVICED DIRECTLY BY FINANCE OFFICERS WITHOUT THE PARTICIPATION OF UNIT PERSONNEL OFFICES. THE PROPOSED SYSTEM PROVIDES FOR MOST OF THE MILITARY PAY FUNCTIONS TO BE PERFORMED IN THE UNIT PERSONNEL OFFICES, AND FOR FINANCE SERVICE UNDER COMBAT CONDITIONS TO BE FURNISHED BY THE FINANCE DISBURSING SECTION NEAREST THE LOCATION OF THE TROOPS.

UNDER THE ARMY'S PROPOSED PAY SYSTEM, A SEPARATE VOUCHER IN AN ORIGINAL AND FOUR COPIES IS PREPARED FOR EACH MONTHLY PAYMENT MADE TO AN INDIVIDUAL MEMBER. ONE OF THE COPIES IS FURNISHED THE MEMBER AT THE TIME OF PAYMENT. THESE INDIVIDUAL VOUCHERS ARE PREPARED IN THE UNIT PERSONNEL OFFICES AND FORWARDED TO THE FINANCE OFFICE FOR COMPUTATION AND PAYMENT. THE PAY VOUCHERS ARE SUMMARIZED MONTHLY ON SUMMARY AND CERTIFICATION SHEETS. THE PROPOSED SYSTEM IS SUBSTANTIALLY THE SAME AS THAT USED BY THE ARMY FOR PAYING ENLISTED PERSONNEL PRIOR TO JULY 1, 1949, EXCEPT AT THAT TIME SEVERAL MEMBERS' NAMES COULD BE LISTED ON ONE PAYROLL VOUCHER AND COPIES OF VOUCHERS WERE NEITHER FURNISHED THE MEMBER NOR CENTRALLY FILED IN INDIVIDUAL JACKETS.

UNDER THE PRESENT UNIFORM PAY SYSTEM, FINANCIAL DATA CONCERNING EACH MEMBER IS MAINTAINED ON A SIX MONTHS' CUMULATIVE PAY RECORD IN THE FINANCE OFFICE. THIS RECORD IS POSTED ON THE BASIS OF PAY CHANGES UTILIZING MILITARY PAY ORDERS AND SUBSTANTIATING DOCUMENTS RECEIVED FROM THE PERSONNEL OFFICE. EACH PAY DAY THE RECORD IS COMPUTED AND THE NET AMOUNT DUE EACH MEMBER IS ENTERED ON A MULTI-NAME MONEY LIST. PAYMENT IS MADE TO THE MEMBERS BY THE FINANCE OFFICE ON THE BASIS OF THE AMOUNTS SHOWN ON THE MONEY LIST.

IN B-61937, DATED MAY 22, 1956, PERMISSION WAS GRANTED TO USE ON A TEST BASIS THE FORMS NOW PRESENTED FOR OUR APPROVAL. IN THAT DECISION CERTAIN STANDARDS WERE SET FORTH TO BE ATTAINED IN THE PROPOSED SYSTEM AND IT WAS STATED THAT THE TEST SHOULD PROVE CONCLUSIVELY THAT:

ADEQUATE CONTROLS ARE BEING ESTABLISHED AND THE ADVANTAGES OVER THE PRESENT SYSTEM ARE SUFFICIENTLY SIGNIFICANT TO OUTWEIGH ANY ADDED COSTS WHICH MAY RESULT FROM THE CONVERSION.

THE SYSTEM IS BASICALLY ADAPTABLE FOR MECHANIZED USE UNDER NON COMBAT CONDITIONS AS WELL AS BEING DESIGNED FOR MANUAL USE IN COMBAT AREAS.

THE SYSTEM IS COORDINATED WITH AND FITS READILY INTO ACCOUNTING AND REPORTING PROCEDURES DESIGNED TO FURNISH RELIABLE DATA TO MANAGEMENT.

OUR EVALUATION DISCLOSED THE FOLLOWING DEFICIENCIES IN THE PROPOSED SYSTEM:

1. THE PRINCIPAL PAYROLL FUNCTIONS ARE NOT PROPERLY SEGREGATED, AND THERE IS NO PROVISION FOR INDEPENDENT CONTROLS TO ASSURE A REASONABLE DEGREE OF ACCURACY AS TO ENTITLEMENTS, PAYMENTS, AND THE RECORDATION THEREOF IN READILY AUDITABLE RECORDS.

2. THE SYSTEM IS DEPENDENT ON FILING OF COPIES IN PROPER PLACES TO PREVENT DUPLICATE PAYMENTS AND TO CONTROL RECOUPMENTS SUCH AS DEBT LIQUIDATIONS, PARTIAL PAYMENTS AND ADVANCE TRAVEL PAYMENTS. OUR AUDIT FINDINGS INDICATE THAT SUCH MANUAL ACTIONS ARE UNRELIABLE AS ELEMENTS OF CONTROL.

3. THE VAST AMOUNT OF PAPERWORK GENERATED BY THE SYSTEM WILL BE DIFFICULT TO CONTROL, IMPAIR THE EFFICIENCY OF OPERATIONS, AND RESULT IN INCREASED COSTS.

4. THERE WILL BE A SUBSTANTIAL INCREASE IN THE VOLUME OF ERRONEOUS PAYMENTS AND OTHER ERRORS AS COMPARED TO THE PRESENT SYSTEM.

5. CROSS-SERVICING IN THE MILITARY PAY AREA WILL BE MADE MORE DIFFICULT BECAUSE OF THE ABANDONMENT OF THE UNIFORM MILITARY PAY RECORD SYSTEM.

ON THE BASIS OF OUR FINDINGS WE HAVE CONCLUDED THAT THE PROPOSED SYSTEM DOES NOT ADEQUATELY MEET THE PRINCIPLES AND STANDARDS OF THIS OFFICE AND THAT THE PROCEDURES AND CONTROLS PROVIDED BY THE SYSTEM WILL NOT ASSURE EFFICIENT AND ECONOMICAL OPERATIONS.

THE DEPARTMENT OF THE ARMY HAS INDICATED THAT THEY ARE PURSUING THE MECHANIZATION OF THE PROPOSED PAY SYSTEM WITH THE OBJECTIVE OF ACCOMPLISHING THE MOST EFFICIENT AND ECONOMICAL DEGREE OF MECHANIZATION CONSISTENT WITH THE VOLUME OF WORK AND THE LOCAL SITUATION. THE DEFICIENCIES IN THE PROPOSED SYSTEM HERETOFORE CITED COULD BE OVERCOME TO A CERTAIN EXTENT BY A PROPER APPLICATION OF APPROPRIATE MECHANICAL EQUIPMENT, WHERE FEASIBLE.

IN VIEW OF THE REPRESENTATIONS MADE THAT THE PROPOSED SYSTEM IS THE ONLY SYSTEM IN EXISTENCE WHICH WILL MEET THE NEEDS OF THE ARMY IN COMBAT, AND SINCE PROPER UTILIZATION OF MECHANICAL EQUIPMENT FOR MILITARY PAY WILL OVERCOME CERTAIN OF THE DEFICIENCIES DISCLOSED BY US, THE FORMS (FC FORM T -023, MILITARY PAY VOUCHER, AND FC FORM T-024, MILITARY PAY VOUCHER SUMMARY AND CERTIFICATION SHEET) ARE APPROVED FOR ARMY-WIDE USE EFFECTIVE JANUARY 1, 1959.

WE WILL, OF COURSE, REVIEW IMPLEMENTING REGULATIONS TO INSURE THAT OPERATION OF THE SYSTEM MEETS OUR REQUIREMENTS IN RESPECT TO THE AUDIT AND SETTLEMENT OF ACCOUNTS AND THE RETENTION OF RECORDS.

INTER-SERVICE PAYMENT OF MILITARY PAY IS AN IMPORTANT MATTER INVOLVING A SIGNIFICANT AMOUNT OF MONEY. SINCE THE ARMY WILL BE USING A DIFFERENT SYSTEM THAN THE OTHER MILITARY DEPARTMENTS, PROCEDURES SHOULD BE DEVISED TO PROVIDE FOR THE PROPER HANDLING OF THIS TYPE OF PAYMENT BY ALL DEPARTMENTS.

WE WILL BE PLEASED TO COOPERATE WITH THE DEPARTMENT OF DEFENSE IN EFFECTING NECESSARY IMPROVEMENTS, INCLUDING REVIEW OF THE PROCEDURES FOR MECHANIZATION.

IT IS REQUESTED THAT FOUR COPIES OF THE FORMS BE FURNISHED TO THIS OFFICE WHEN PRINTED.