Major Deficiencies in Army's Washington, D.C., Finance and Accounting Operation

FGMSD-80-53: Published: Jun 5, 1980. Publicly Released: Jun 5, 1980.

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The Military District of Washington's Finance and Accounting Office disburses about $1.5 billion annually and provides finance and accounting services to many Army and Defense organizations in the Washington, D.C., area. The adequacy of the Finance and Accounting office's internal controls and procedures for the processing of disbursements and for transactions involving accounting and civilian payroll were reviewed and analyzed as part of an effort to determine whether executive departments and agencies have accounting control over funds and assets.

Despite numerous internal management and audit reports and a prior GAO report, conditions at the Office remained unsatisfactory. The disbursing and payroll operation was inadequate for preventing erroneous payments and for deterring fraud. The Office has also failed to provide adequate accounting services to Army and Defense organizations. Inadequate systems, procedures, and internal controls contributed to this ineffectiveness. However, the most pressing problem was in retaining enough competent people to handle the very large workload.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Defense should direct the Secretary of the Army to: develop a plan with specific objectives and timeframes for reducing personnel turnover and retaining competent staff at the Military District of Washington Finance and Accounting Office; assign experts on a temporary basis from the Army Finance and Accounting Center or other Army finance and accounting offices to help the Military District of Washington develop and implement adequate internal procedures and controls; implement the Standard Army Civilian Payroll System design, as approved, and develop and implement additional automated edits, if feasible to help prevent duplicate and erroneous payments; assure that legal and regulatory requirements for reporting fraudulent actions are followed; consider increasing the number of days allotted to payroll preparation and processing to allow sufficient time for supervisory review of work before check processing; seek to minimize the differences between Army and Defense organizations' accounting requirements; and require that the Military District of Washington make a reasonable attempt to determine whether the adjustment to the General Ledger for over $500 million made in 1977 and the adjustment for $31 million made in 1978 can be adequately supported. The Secretary of Defense and the Secretary of the Army should also consider reducing the workload of the Military District of Washington Finance and Accounting Office if the Army cannot, within a reasonable period of time, adequately reduce the Office's personnel turnover and begin to retain competent personnel. If a decision is made to reassign the workload, the capability of another Defense or Army organization to provide adequate finance and accounting services must be considered.

    Agency Affected:

 

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