Defense Logistics Agency's Progress in Implementing the Federal Managers' Financial Integrity Act

NSIAD-85-148: Published: Sep 27, 1985. Publicly Released: Sep 27, 1985.

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GAO reviewed the Defense Logistics Agency's (DLA) continuing efforts to implement and comply with the Federal Managers' Financial Integrity Act of 1982 (FMFIA).

GAO found that: (1) DLA has made progress toward implementing a program for evaluating its systems of internal accounting and administrative controls, but the program experienced developmental problems that delayed full implementation; (2) DLA failed to identify several significant management control problems during the evaluation process; (3) the evaluation of DLA accounting systems did not include testing systems in operation; (4) the limited involvement of DLA headquarters elements hampered full disclosure of all material weaknesses; and (5) DLA needs to improve its approach for evaluating automatic data processing (ADP) internal controls. GAO also found that: (1) DLA did not have an adequate basis for reporting that its accounting systems were in conformance with Comptroller General requirements because of the lack of review of those systems in operation; (2) 48 percent of all contract disbursements were performed manually which increased the risk of over or underpayments to contractors; (3) additional deficiencies were not reported; (4) corrective actions were mostly long range and dependent on a proposed ADP equipment replacement program; and (5) the DLA evaluation system has not been developed to the point that it can provide a sufficient basis to ensure the requirements of the act have been met.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DLA will continue to use its complete network of management controls as a basis for determining compliance with FMFIA. The DLA 1986 Annual FMFIA Statement once again cited this as a basis to conclude that it had overall reasonable assurance.

    Recommendation: The Director, DLA, should discontinue reporting that its systems of internal accounting and administrative control, taken as a whole, meet the requirements of FMFIA until the program provides an adequate basis for determining the overall status of internal controls.

    Agency Affected: Department of Defense: Defense Logistics Agency

  2. Status: Closed - Implemented

    Comments: DLA does not agree that a panel is required. It took a decentralized approach, assigning responsibility to each staff element and field activity. The systems automation center will coordinate and identify systematic problems.

    Recommendation: The DLA accounting systems should not be reported as being in conformance with the Comptroller General's requirements until the systems are reviewed and tested in operation and the major deficiencies are corrected.

    Agency Affected: Department of Defense: Defense Logistics Agency

  3. Status: Closed - Implemented

    Comments: DLA established the Financial Systems Evaluation Office, which will evaluate and test systems in operation.

    Recommendation: The Director, DLA, should establish a centrally controlled, coordinated approach for evaluating internal controls with ADP systems and use the Department of Defense ADP Internal Control Guidelines as a guide.

    Agency Affected: Department of Defense: Defense Logistics Agency

 

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