Army Efforts To Restore Integrity to Its Financial Management Systems
FGMSD-78-28: Published: Apr 27, 1978. Publicly Released: Apr 27, 1978.
- Full Report:
In October 1975, the Assistant Secretary of the Army (Financial Management) notified the House Appropriations Committee of a serious breakdown in the financial control over Army procurement appropriations which resulted in violations of the Antideficiency Act totaling more than $225 million. These violations related to the section of the Act that provides that no officer or employee shall make or authorize an expenditure from, or create or authorize an obligation under, any appropriation exceeding the amount therein.
The most serious factors contributing to the Army's overall financial management problems were: failure to design and implement an effective procurement appropriation accounting system; failure to adequately control fund allocations, reprogrammings, and transfers; and failure to accurately account for customer orders. The impact of these problems was compounded by the phenomenal growth of the Army's customer order program over several years. Army efforts to correct the financial management problems have been concentrated in: eliminating erroneous balances in its accounting records, primarily in the procurement appropriation accounts and improving its accounting, reporting, and fund control systems to prevent recurrence of these problems. The Army has recorded over $1.5 billion in adjustments to its accounting records but, because many of the records are missing or in poor condition, it is unlikely that all errors will ever be found or corrected.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Secretary of Defense should have the Secretary of the Army: make sure the design and implementation of the remaining phase of the Army's new procurement appropriation program and fund control system are accomplished as quickly as possible, develop a plan to implement a standardized procurement appropriation accounting system at the installation level with a single data source, notify him and Congress of any unreconciled trust fund cash balances for individual countries, have the Army Audit Agency review procedures used to account for and control undistributed disbursements and collections, maintain an adequate and balanced level of internal review and audit within the Army, and periodically report to Congress on the status of Army efforts to obtain GAO approval of its accounting systems.