Summary
Improvised explosive devices (IED) have been and continue to be a significant threat to U.S. forces. The Department of Defense (DOD) expanded efforts to defeat IEDs with the establishment of the Joint Improvised Explosive Device Defeat Organization (JIEDDO) in January 2006. GAO was asked to review JIEDDO's management and operations. For this second report in its series, GAO determined (1) the extent to which JIEDDO's management processes provide adequate assurances that its financial information is accurate and provides transparency over its operations and (2) the extent to which JIEDDO identifies, records, tracks, and reports numbers of all personnel, including contractors. GAO analyzed data for the first half of fiscal year 2007, which included 47 funding transactions totaling $1.34 billion for 24 initiatives to address these objectives.
JIEDDO's financial management processes do not provide adequate assurances that its financial information is accurate, and as a result, JIEDDO is unable to provide full transparency over the cost of its operations. While JIEDDO has improved its financial management processes, it has not yet reached a point where those processes contain an effective system of internal control. According to federal standards, internal control comprises the plans, methods, and procedures used to meet missions, goals, and objectives of an organization and help it to achieve desired results through effective stewardship of its resources. GAO identified four internal control weaknesses that affect JIEDDO's financial management processes. First, JIEDDO has not comprehensively documented its administrative policies and operating manuals, which affects the consistency of how its financial management personnel perform their duties. Second, JIEDDO does not have adequate funds authorization controls to ensure that transactions are properly authorized before funds are committed. In reviewing funding transactions totaling $795 million, 18 of 24 initiatives were not properly authorized in accordance with internal control standards. As a result, funds may be used without proper scrutiny and without a mechanism to detect, correct, or address this control failure. Third, JIEDDO does not have controls to ensure that transactions are properly categorized. For example, of the $1.34 billion in fiscal year 2007 commitments reviewed, JIEDDO inaccurately categorized at least 83 percent of these dollars under one category that should have been applied to others. This could distort information used in assessing trends and prioritizing funds. Fourth, JIEDDO does not have an adequate internal process to monitor and review the efficacy of its internal controls. In the absence of an adequate system of internal control, the agency may not achieve all of its objectives and its use of resources may not be consistent with DOD priorities. Furthermore, decision makers may be basing their decisions on inaccurate financial data and reports. At the end of this review, JIEDDO managers said that they had corrected these weaknesses; however, because these actions occurred after audit completion, GAO could not determine their effectiveness. JIEDDO does not fully identify, track, and report all government and contractor personnel as provided for in DOD Directive 1100.4. Identifying all government and contractor personnel is important to JIEDDO's management and oversight responsibilities and contributes to its ability to effectively plan for its future workforce needs. While JIEDDO has a system in place for routinely tracking and reporting numbers of personnel JIEDDO regards as staff, this system is limited because it does not track all government and contractor personnel performing work for JIEDDO. However, since its creation in February 2006, JIEDDO has relied heavily on contractor support to accomplish its mission, which is not fully reflected in JIEDDO's system. When the Senate Appropriations Committee directed that JIEDDO provide a comprehensive accounting of all of its personnel, including contractors, by May 2007, JIEDDO had to rely on an ad hoc process to develop the report, which resulted in several inaccuracies and inconsistencies.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
William M. Solis
Government Accountability Office: Defense Capabilities and Management
(202) 512-8365
Recommendations for Executive Action
Recommendation: To comply with federal internal control standards as well as improve the quality of JIEDDO's financial management and the reliability of resulting financial data and reports, the Secretary of Defense should direct the Director of JIEDDO to develop and document a comprehensive system of internal control for its financial management processes. Actions to develop and implement JIEDDO's system of internal control to address specific control weaknesses we identified should, at a minimum, include fully documenting all internal control processes and procedures related to its financial management through the development of management directives, administrative policies, standard operating procedures, or other documentation that describe how JIEDDO personnel should perform their duties.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To comply with federal internal control standards as well as improve the quality of JIEDDO's financial management and the reliability of resulting financial data and reports, the Secretary of Defense should direct the Director of JIEDDO to develop and document a comprehensive system of internal control for its financial management processes. Actions to develop and implement JIEDDO's system of internal control to address specific control weaknesses we identified should, at a minimum, include establishing effective controls to ensure that transactions are properly authorized before funding is executed, related documentation supporting transactions is accurately dated, and exceptions are properly approved and documented.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To comply with federal internal control standards as well as improve the quality of JIEDDO's financial management and the reliability of resulting financial data and reports, the Secretary of Defense should direct the Director of JIEDDO to develop and document a comprehensive system of internal control for its financial management processes. Actions to develop and implement JIEDDO's system of internal control to address specific control weaknesses we identified should, at a minimum, include establishing effective controls to ensure that all transactions are properly classified by lines of operation and other expenditure categories used by JIEDDO, and to promptly and properly correct misclassifications when identified.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To comply with federal internal control standards as well as improve the quality of JIEDDO's financial management and the reliability of resulting financial data and reports, the Secretary of Defense should direct the Director of JIEDDO to develop and document a comprehensive system of internal control for its financial management processes. Actions to develop and implement JIEDDO's system of internal control to address specific control weaknesses we identified should, at a minimum, include developing an internal process, to include involvement of its internal audit staff, to routinely monitor and review the efficacy of JIEDDO's system of internal control and promptly correct any weaknesses identified.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Secretary of Defense should direct the Director of JIEDDO to report to Congress on the status of its efforts to implement its comprehensive system of internal control 1 year from the date of this report.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To improve JIEDDO personnel or manpower management and provide Congress with the information it needs to perform its oversight duties effectively, the Secretary of Defense should direct the Director of JIEDDO to establish and document a method or system to comprehensively identify, track, and report on a routine basis all government and contractor personnel.
Agency Affected: Department of Defense
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
