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entitled 'DOD Financial Management: Actions Needed to Address 
Deficiencies in Controls over Army Active Duty Military Payroll' which 
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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

December 2012: 

DOD Financial Management: 

Actions Needed to Address Deficiencies in Controls over Army Active 
Duty Military Payroll: 

GAO-13-28: 

GAO Highlights: 

Highlights of GAO-13-28, a report to congressional committees. 

Why GAO Did This Study: 

In March 2012, GAO reported on challenges that DOD and the Army face 
in achieving audit readiness with respect to the over $45 billion in 
reported fiscal year 2010 Army active duty military payroll 
disbursements. In performing that work, GAO identified indications of 
possible weaknesses in selected processes, systems, and controls 
relied on to reasonably assure the validity and accuracy of reported 
Army active duty military payroll that were beyond the scope of that 
audit. GAO subsequently completed work on those issues and is 
presenting the results in this report. GAO (1) assessed the design of 
key controls for payroll accuracy and (2) determined the extent to 
which the Army and DFAS-IN have monitoring controls to identify and 
address any systemic weaknesses. GAO compared selected Army and DFAS-
IN processes, systems, and controls for assuring payroll accuracy to 
applicable internal control standards and to applicable provisions of 
law, regulations, and policies and procedures. GAO also interviewed 
officials and examined related data and information. 

What GAO Found: 

GAO identified deficiencies in the design of key control procedures 
relied on by the Army and the Defense Finance and Accounting Service-
Indianapolis (DFAS-IN) to detect errors in payroll disbursements to 
active duty Army military personnel. Specifically, GAO found that the 
Army’s procedures for reviewing Unit Commander Finance Reports (UCFR) 
do not (1) provide for monitoring of required UCFR reviews to better 
assure detection of payroll errors, (2) require reporting on completed 
UCFR reviews in all cases, and (3) clearly establish time frames for 
completing and reporting on UCFR reviews. GAO’s analysis of DFAS data 
on military pay debts and Army investigations of potential fraud 
completed over the past 2 years identified numerous instances of the 
effect of errors or irregularities in Army active duty payroll 
disbursements that went undetected for lengthy periods of time, 
including some that were not detected for up to 2 years or until the 
soldier left the Army. For example: 

* A soldier who separated from the Army in 2009 continued to receive 
active duty pay totaling about $185,000 until 2011. 

* A soldier who was absent without leave from January 2010 to 
September 2011 received military pay of $33,268 to which she was not 
entitled. 

* A soldier under investigation for possible fraud allegedly received 
over $34,000 in paratrooper and language proficiency pay but did not 
have a documented record of jumps performed or up-to-date proficiency 
certifications. 

GAO’s analysis determined that the Army could reduce its risk of 
lengthy delays in detecting and correcting pay errors with more 
stringent UCFR monitoring and reporting requirements. 

GAO also found that DFAS and the Army have procedures and metrics in 
place that focus on the timeliness of manual processing and payroll 
adjustments for error corrections. However, they do not have 
procedures and metrics to enable them to gather data on active duty 
pay errors that were related to causes other than timeliness, such as 
over- and underpayments, data entry errors, and unauthorized payments. 
Further, the design of existing Defense Joint Military Pay System-
Active Component and DFAS-IN Case Management System procedures for 
transaction processing and error correction did not provide for 
monitoring to capture data on all types of pay errors and their causes 
that would be useful in identifying the extent to which there are any 
additional systemic payroll control weaknesses. For example, an Army 
National Guard colonel deployed on active duty to Afghanistan reported 
that he experienced financial hardship when his military pay was 
stopped for 1-1/2 months. The absence of data on the extent and causes 
of all types of Army active duty military payroll errors impairs the 
Army’s ability to identify and address any adverse trends that may 
indicate the existence of other systemic control weaknesses. Overall, 
the control deficiencies that GAO identified increase the risk that 
the nearly $47 billion in reported fiscal year 2011 Army active duty 
military payroll includes Army servicemembers who received pay to 
which they were not entitled and others who did not receive the full 
pay they were due. Further, to the extent that errors in Army active 
duty pay are not identified and addressed in a timely manner, they can 
have a negative effect on soldier welfare and, ultimately, could erode 
soldiers’ focus on their Army mission. 

What GAO Recommends: 

GAO made five recommendations to strengthen Army and DFAS monitoring 
and reporting controls over Army active duty military payroll 
accuracy. DOD partially concurred with all five recommendations, 
stating that it concurs fully with the goal of improving military pay 
but additional testing is needed to identify any cost-effective 
corrective actions. GAO continues to believe that its recommendations 
for corrective action are appropriate, as discussed more fully in the 
report. 

View [hyperlink, http://www.gao.gov/products/GAO-13-28. For more 
information, contact Asif Khan at (202) 512-9869 or khana@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

Scope and Methodology: 

Deficiencies in Design of Unit Commander Finance Report Monitoring and 
Reporting Procedures: 

Ineffective Procedures for Capturing Information on Payroll Errors to 
Identify and Correct Systemic Weaknesses: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Comments from the Department of Defense: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Fiscal Year 2011 Active Army Military Pay-Related Out-of-
Service Debt: 

Table 2: Incidences of Potential Military Pay-Related Fraud for Fiscal 
Years 2010 and 2011 from U.S. Army CID Reports: 

Figure: 

Figure 1: Current Process for Review and Submission of UCFRs: 

Abbreviations: 

AR: Army Regulation: 

AWOL: Absent Without Leave: 

CID: Criminal Investigation Division: 

CMS: Case Management System: 

DDMS: Defense Debt Management System: 

DFAS: Defense Finance and Accounting Service: 

DFAS-IN: Defense Finance and Accounting Service - Indianapolis: 

DJMS-AC: Defense Joint Military Pay System-Active Component: 

DMPO: Defense Military Pay Office: 

DOD: Department of Defense: 

FMR: Financial Management Regulation: 

GAAP: Generally Accepted Accounting Principles: 

iPERMS: Interactive Personnel Electronic Records Management System: 

IPPS-A: Integrated Personnel and Payroll System-Army: 

Mil Pay Ops: Military Pay Operations: 

SRD-1: Standard Financial System (STANFINS) Redesign Subsystem-1: 

STANFINS: Standard Financial System: 

TOP: Treasury Offset Program: 

UCFR: Unit Commander Finance Report: 

UCMJ: Uniform Code of Military Justice: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

December 12, 2012: 

Congressional Committees: 

On March 22, 2012, we issued a report on challenges in achieving audit 
readiness for the U.S. Army's military pay.[Footnote 1] In performing 
the work that led to our March 2012 report, we identified preliminary 
indications of weaknesses in the design of processes, systems, and 
controls used to detect and correct errors in Army military payroll 
disbursements that were beyond the scope of that audit. These 
concerns, if not addressed, increase the risk that the nearly $47 
billion in reported fiscal year 2011 military payroll includes active 
duty Army servicemembers who received pay to which they were not 
entitled or did not receive the full pay they were due. 

As discussed in our March report, although the Army had established 
the Interactive Personnel Electronic Records Management System 
(iPERMS) as the Army's Official Military Personnel File in 2007, it 
had not consistently or completely populated iPERMS with personnel 
records. Consequently, we determined that the Army did not have a 
central repository of official military personnel records and other 
documents affecting pay that was maintained, updated, and validated. 
Such a repository would have provided support for the accuracy and 
validity of the Army's active duty payroll transactions. The lack of 
such a repository of official records necessitates having effective 
compensating and monitoring controls to provide assurance over the 
accuracy and validity of active duty Army payroll data. Because of the 
lack of such a repository and the preliminary indications of 
weaknesses in processes, systems, and controls used to detect and 
correct errors in military payroll disbursements that we identified, 
we initiated this review. 

Our objectives for this report were to (1) assess the effectiveness of 
the design of the process for unit commander review of monthly payroll 
as a compensating control for assuring the accuracy of the Army's 
active duty military payroll data and (2) determine the extent to 
which the Army and the Defense Finance and Accounting Service-
Indianapolis (DFAS-IN) have monitoring controls in place to accumulate 
and analyze military payroll errors to identify and address any 
systemic weaknesses. To address our first objective, we focused our 
work on the design of compensating controls over the accuracy of 
monthly payroll data using the Unit Commander's Finance Report (UCFR). 
To address our second objective, we analyzed the design of DFAS-IN's 
processes for accumulating and analyzing data related to adjusting 
payroll amounts in the Defense Joint Military Pay System-Active 
Component (DJMS-AC) for active Army servicemembers who received over-
and underpayments. We also analyzed DFAS-IN's Case Management System 
(CMS) processes for accumulating data on the correction of Army 
military pay errors and processing of pay transactions outside of DJMS-
AC.[Footnote 2] We compared Army and DFAS-IN processes, systems, and 
related controls for assuring the reliability of Army active duty 
military payroll transactions to Standards for Internal Control in the 
Federal Government,[Footnote 3] as well as applicable provisions of 
laws and regulations, including the Department of Defense (DOD), Army, 
and DFAS policies and procedures. Further details are discussed in the 
scope and methodology section. We conducted this performance audit 
from March 2012 to December 2012 in accordance with generally accepted 
government auditing standards. Those standards require that we plan 
and perform the audit to obtain sufficient, appropriate evidence to 
provide a reasonable basis for our findings and conclusions based on 
our audit objectives. We believe that the evidence obtained provides a 
reasonable basis for our findings and conclusions based on our audit 
objectives. 

Background: 

The U.S. Army is responsible for land-based military operations and is 
the largest and oldest established branch of the U.S. military. For 
fiscal year 2011, Congress appropriated $52.5 billion to the "Military 
Personnel, Army" appropriation, which is a 1-year appropriation 
available for the pay, benefits, incentives, allowances, housing, 
subsistence, travel, and training primarily for active duty 
servicemembers.[Footnote 4] DFAS-IN, within the Office of the Under 
Secretary of Defense Comptroller/Chief Financial Officer (DOD 
Comptroller), provides accounting, disbursing, and financial reporting 
services to the Army. According to DFAS-IN, of the $52.5 billion in 
fiscal year 2011 military personnel appropriations, nearly 800,000 
active duty Army servicemembers received nearly $47 billion in pay and 
allowances. 

DOD Organizations, Processes, and Systems Involved in Supporting the 
Army's Active Duty Military Pay: 

The DOD Comptroller's Office sets DOD financial management policy, 
including policy on military pay, which is included in DOD's Financial 
Management Regulation (FMR), Volume 7A, Military Pay Policy and 
Procedures - Active Duty and Reserve Pay. FMR, Volume 7A provides 
guidance on basic pay calculations; special pays, including pay of 
medical and dental officers, pay for hostile fire or imminent danger, 
and pay for foreign language proficiency; bonuses; allowances; 
allotments; tax withholding; and leave. FMR, Volume 7A also sets the 
policy on the effect of court-martial sentences on pay and allowances. 
The Office of the Assistant Secretary of the Army for Manpower and 
Reserve Affairs is responsible for setting the strategic direction and 
providing overall supervision for manpower, personnel, and Reserve 
Component affairs of the Army and also is responsible for the Army's 
manpower policy and human resources, among other things. In order to 
fulfill these responsibilities, Manpower and Reserve Affairs relies on 
the Deputy Chief of Staff, Army G-1, for advice and assistance. 
[Footnote 5] 

The Army G-1 Resources Division's Compensation and Entitlement Branch 
is responsible for active, reserve, and retired military compensation. 
The branch develops legislative proposals and policy directives for 
all forms of pay and allowances and represents the Army on the Per 
Diem, Travel and Transportation Allowance Committee of the Military 
Advisory Panel as well as numerous DOD working groups, including Basic 
Allowance for Subsistence, Basic Allowance for Housing, Special and 
Incentive Pays, Travel Reengineering, and Debt Avoidance. 

The Army Human Resources Command supports Army G-1 in the management 
of all military personnel by serving as the functional proponent for 
military personnel management and personnel systems. The Army Human 
Resources Command is responsible for providing DFAS-IN with accurate 
and timely information regarding changes in individual military member 
status necessary to maintain military payroll accounts. DFAS-IN is 
responsible for processing the Army's military payroll using DJMS-AC. 
DFAS-IN and its Military Pay Operations (Mil Pay Ops) staff rely on 
numerous Army military personnel records generated by the Army 
Reception Battalion installation personnel offices, Defense Military 
Pay Offices (DMPO), Army Finance Offices, Army Human Resources 
Command, and unit commanders to establish and update active duty 
military pay accounts in DJMS-AC. The Army Financial Management 
Command under the Assistant Secretary of the Army for Financial 
Management and Comptroller provides finance support and liaison to 
Army commands, installations, and tactical units and to DFAS on 
matters pertaining to the adequacy of finance policies, systems, and 
reporting requirements. 

DFAS-IN Army Military Pay Process: 

To provide payroll support to the vast number of active Army 
servicemembers, DFAS-IN has 38 DMPOs within the United 
States,[Footnote 6] and the Army has finance offices overseas that 
provide pay services to military personnel in designated geographical 
areas. Military pay starts once a master military payroll account is 
established in DJMS-AC. Army active duty military personnel are to 
receive pay and allowances based on their grade and time in service; 
location; and whether they are married, have dependents, or are 
performing special duties. The Army's active duty servicemembers may 
elect to be paid once a month--at the end of the month--or twice a 
month--at midmonth and at the end of the month. DJMS-AC consolidates 
servicemember pay information into one monthly Leave and Earnings 
Statement for each member's pay account. In addition to basic pay, 
military members may also be eligible for cash recruitment or 
retention incentives (that is, bonuses). Any necessary pay change 
after the pay account is set up is to be initiated by the appropriate 
officials throughout the Army. These changes generally relate to 
promotions, special duty pay, incentive pay, Permanent Change of 
Station assignments, Temporary Change of Station assignments, and 
changes in dependents. DFAS-IN makes payments of basic pay and 
allowances to Army active duty servicemembers using electronic funds 
transfer from DJMS-AC.[Footnote 7] DFAS-IN's Disbursing Office uses 
the Army's disbursing system[Footnote 8] to send electronic payments 
to the Federal Reserve Banks, which in turn distribute payments to 
each servicemember's bank account. 

DFAS-IN and its DMPOs are to update Army active duty military pay 
records in DJMS-AC based on changes in the soldier's status. These 
updates generally correct over-and underpayments caused by delay of 
document submissions and transaction errors.[Footnote 9] For active 
duty soldiers, underpayments are generally adjusted in the next pay 
check, while overpayments result in a deduction to the soldier's pay. 
[Footnote 10] For Army soldiers who have left the service, DFAS 
establishes an out-of-service debt and uses the Defense Debt 
Management System (DDMS) to manage the debt collection process. 
[Footnote 11],[Footnote 12] DFAS is responsible for collecting debts 
related to military pay issues as well as debts related to lost or 
damaged property and other unpaid obligations and fees. Federal 
statutes governing claims of the U.S. government authorize DOD to use 
certain debt collection tools, such as interest charges, offset, and 
private collection contractors.[Footnote 13] Thus, if debts are not 
paid before the soldier separates from military service, DFAS can 
refer these debts to private collection contractors. 

Establishing, Monitoring, and Investigating Military Pay Statuses: 

Army Regulation (AR) 37-104-4, Military Pay and Allowances Policy, 
dated June 8, 2005, provides detailed policy provisions on specific 
pay and allowances as well as guidance on pay stoppages, adjustments, 
debt collection action, and use of the UCFRs. The Compensation and 
Entitlement Branch works with DFAS-IN to research and resolve soldier 
pay issues, process adjustments to pay, and take debt collection 
action. The DMPOs and Army Finance Offices provide UCFRs containing 
monthly military payroll data generated by DJMS-AC to unit commanders 
as a compensating control for verifying payroll accuracy. The UCFR 
provides the unit commander a summary of a soldier's monthly pay 
account status. AR 37-104-4 requires unit commanders to review the 
UCFR on a monthly basis and promptly report any discrepancies to their 
local DMPO. In addition, when the Army Financial Management Command, 
the Compensation and Entitlement Branch, DMPOs, or DFAS-IN's Mil Pay 
Ops suspect irregularities in pay or potential fraud, they research 
the details and document the specifics of the pay issue and may refer 
the matter to the Army's Criminal Investigation Division (CID) for 
further investigation.[Footnote 14] 

CID is the Army's primary criminal investigative organization. Army 
CID's primary mission is to investigate serious crime, as defined in 
AR 195-2, Criminal Investigation Activities. Commensurate with 
authorities in AR 195-2, CID special agents collect, analyze, and 
disseminate criminal intelligence; conduct protective service 
operations; provide forensic laboratory support; and maintain Army 
criminal records. CID also investigates less serious crimes, such as 
military pay-related and travel reimbursement irregularities, as 
needed, to enforce Army law or regulations. 

Scope and Methodology: 

To assess the effectiveness of the design of the process for unit 
commander review of monthly payroll disbursements as a compensating 
control for assuring active duty Army payroll accuracy, we compared 
related processes and systems to applicable internal control 
standards,[Footnote 15] as well as applicable laws and regulations, 
and DOD, DFAS, and Army policies and procedures. Specifically, we 
reviewed the design of Army and DFAS-IN processes for reviewing and 
correcting military payroll data based on requirements in AR 37-104-4, 
Military Pay and Allowances Policy, and related guidance and DFAS-IN's 
Standard Operating Procedures for the Unit Commander Finance Report 
(May 4, 2009). We also reviewed DFAS-IN's Field Services Division 
procedures for ensuring the accuracy of data on UCFR submissions. For 
October 2011 to March 2012, we obtained the monthly summary of unit 
commander UCFR submissions to DMPOs that are forwarded to DFAS-IN and 
used DFAS-IN's criteria of no later than the 10th of the month for 
review and submission of UCFRs to determine the number of UCFRs that 
were submitted on time, submitted late, or not submitted at all. In 
addition, we interviewed DFAS Debt and Claims Management, DFAS-IN Mil 
Pay Ops, and DMPO officials and Army Financial Management Command, 
Army G-1, and Army CID officials to gain an understanding of their 
systems, processes, and controls. To determine ways in which UCFR 
information, if properly designed, could act as a compensating control 
for assuring payroll accuracy, we analyzed payroll errors that led to 
out-of-service debt, over-and underpayments, unauthorized payments, 
and Army CID fraud investigations. 

We reviewed debt information maintained by DFAS on former military 
servicemembers (referred to as out-of-service debts by DFAS) to 
identify military pay-related debts and determine the types of pay and 
allowances that resulted in these debts to identify the underlying 
causes. Specifically, we analyzed summary and detailed data on Army 
out-of-service debts related to military pay for fiscal year 2011 and 
the first 7 months of fiscal year 2012 to identify debts by category 
and determine whether the pay problems that resulted in these debts 
could have been detected and corrected with effective review of the 
UCFRs. We analyzed selected detailed data for fiscal year 2011 and the 
month of March 2012 to identify illustrative examples of payroll 
errors that resulted in the out-of-service debts and identified the 
controls that if properly designed, could have prevented the debts 
from occurring. To determine the reliability of these data for the 
purpose of our work, we reviewed procedural guidance on DFAS's systems 
and processes for collecting out-of-service military payroll debt and 
questioned DFAS officials about any additional procedures they perform 
related to the reliability of DDMS data. We determined that these data 
were sufficiently reliable for the purpose of our work. 

In addition, we reviewed report summaries on investigations of 
potential military pay-related fraud to identify weaknesses in related 
processes, systems, and controls and whether effective review of the 
UCFR would have detected these issues. Specifically, we analyzed Army 
CID military pay-related fraud investigations for fiscal years 2010 
and 2011--a total of 285 investigations--and obtained and reviewed 
selected investigation reports for additional details. Of these 285 
investigations, 64 pertained to travel reimbursements. Therefore, we 
focused our analysis on the remaining 221 investigations consisting of 
190 investigations that related only to potential military pay fraud 
and 31 that involved potential fraud associated with both military pay 
and travel reimbursements. We met with Army CID, Army Financial 
Management Command, and Army G-1 officials to discuss what triggers 
investigations of potential military payroll fraud and the breakdowns 
in controls that allowed various types of potential military payroll 
fraud to occur. 

To determine the extent to which DFAS-IN had monitoring controls in 
place for identifying the extent of any active Army military payroll 
errors and identifying systemic weaknesses and appropriate corrective 
actions, we interviewed DFAS-IN officials to gain an understanding of 
their processes and performed walk-throughs, where appropriate. We 
analyzed military payroll data processed by DJMS-AC and CMS, which 
DFAS-IN uses to manually process pay transactions that cannot be 
processed by DJMS-AC. We assessed DFAS procedures for assuring the 
reliability of data generated by CMS and DJMS-AC. We also reviewed 
DFAS-IN performance metrics related to Army military payroll 
timeliness and accuracy to assess trends and management oversight. 

Deficiencies in Design of Unit Commander Finance Report Monitoring and 
Reporting Procedures: 

Our analysis of payroll errors that resulted in out-of-service debts 
and pay irregularities investigated by Army CID found numerous 
examples of pay problems that could have been but were not promptly 
detected, reported, and corrected through the UCFR review. 
Specifically, we found that the design of Army and DFAS-IN procedures 
for using the UCFR to assist in detecting and correcting military 
payroll errors is not an effective compensating control for assuring 
the accuracy of the Army's active duty military payroll because they 
do not (1) provide for monitoring of required UCFR reviews to better 
assure detection of payroll errors, (2) require reporting of completed 
UCFR reviews in all cases, and (3) clearly establish time frames for 
completing and reporting on UCFR reviews.[Footnote 16] Standards for 
Internal Control in the Federal Government states that internal 
control should generally be designed to assure that ongoing monitoring 
occurs in the course of normal operations.[Footnote 17] The standards 
also states that transactions should be promptly recorded to maintain 
their relevance and value to management in controlling operations and 
making decisions. Also, DFAS-IN UCFR procedural guidance states that 
the unit commander's review of the UCFR is essential for establishing 
combat readiness; reducing fraud, waste, and abuse; and ensuring that 
soldiers' pay is accurate. 

Undetected Payroll Errors Resulted in Overpayments and Debts Owed to 
the Government by Soldiers No Longer in the Army: 

Our review of DFAS Debt and Claims Management data and Army CID 
reports on investigations of potential military pay-related fraud 
identified numerous instances of military pay errors and 
irregularities that the Army and DFAS-IN did not detect and correct 
for several months, or only after soldiers had left the service. The 
following examples from our analysis of DDMS data illustrate the types 
of pay errors that went undetected for lengthy periods of time. 

* A reserve soldier assigned to active duty was overpaid approximately 
$185,000 over a 2-year period from May 2009 to May 2011 because the 
DMPO did not enter into DJMS-AC the end-of-tour date from the order 
mobilizing the Army Reserve soldier to active duty. The soldier 
continued to receive pay and allowances after separation from the 
service in May 2009 until the local DMPO processed the separation 
transaction in DJMS-AC in May 2011. Effective review of the UCFR could 
have determined that this soldier, who had left active duty, was 
continuing to receive active duty pay. 

* A soldier who was absent without leave (AWOL) from January 2010 to 
September 2011 received military pay of $33,268 to which she was not 
entitled. Her unit notified the finance office to suspend her pay in 
September 2011. However, an effective UCFR review process could have 
detected this issue earlier and reduced the accumulated debt for this 
soldier. 

* Another soldier who was later determined to be AWOL received $13,208 
in pay and allowances to which he was not entitled from October 15, 
2008, to January 30, 2009. In February 2009, the installation where 
the solider was stationed initiated a CMS case, and in March 2012, 
DFAS-IN recorded the soldier's expired term of service in DJMS-AC 
effective on June 10, 2011. An additional $12,571 of debt for unearned 
enlistment bonus, travel advance, Army emergency relief payment, and 
government property loss and damage resulted in a total debt amount of 
$25,779. Effective review of the UCFR would have detected that the 
AWOL soldier was still receiving active duty pay. 

Table 1 shows, by category, the amount of fiscal year 2011 Army 
military pay-related debt that was owed by soldiers who had left the 
Army. At that time, DFAS was pursuing over $50 million of these debts. 
According to unaudited DFAS data, military pay-related debts accounted 
for over 90 percent of the Army's out-of-service debts in fiscal year 
2011. 

Table 1: Fiscal Year 2011 Active Army Military Pay-Related Out-of-
Service Debt: 

Out-of-service debt category: Unearned bonus[A]; 
Number of soldier debts: 7,248; 
Percentage of debt amount: 53.82%; 
Original dollar amount of debt: $29,937,382. 

Out-of-service debt category: Overpayment of pay and allowance -no 
entitlement[B]; 
Number of soldier debts: 6,001; 
Percentage of debt amount: 11.07%; 
Original dollar amount of debt: $6,157,416. 

Out-of-service debt category: Partial pay received that was not 
considered in the final pay computation; 
Number of soldier debts: 1,329; 
Percentage of debt amount: 5.54%; 
Original dollar amount of debt: $3,080,305. 

Out-of-service debt category: Appellate review leave status[C]; 
Number of soldier debts: 457; 
Percentage of debt amount: 4.84%; 
Original dollar amount of debt: $2,691,413. 

Out-of-service debt category: Overpayment of leave; 
Number of soldier debts: 1,904; 
Percentage of debt amount: 3.73%; 
Original dollar amount of debt: $2,075,951. 

Out-of-service debt category: Overpayment of basic allowance for 
housing; 
Number of soldier debts: 935; 
Percentage of debt amount: 2.81%; 
Original dollar amount of debt: $1,564,688. 

Out-of-service debt category: Payment received while in a nonpay 
status; 
Number of soldier debts: 205; 
Percentage of debt amount: 2.69%; 
Original dollar amount of debt: $1,497,491. 

Out-of-service debt category: Overpayment of a military pay or 
allowance entitlement; 
Number of soldier debts: 359; 
Percentage of debt amount: 2.32%; 
Original dollar amount of debt: $1,291,639. 

Out-of-service debt category: Overpayment while absent without leave; 
Number of soldier debts: 348; 
Percentage of debt amount: 2.20%; 
Original dollar amount of debt: $1,226,404. 

Out-of-service debt category: Tuition assistance received prior to 
separation; 
Number of soldier debts: 1,965; 
Percentage of debt amount: 1.41%; 
Original dollar amount of debt: $783,320. 

Total, active Army military pay-related out-of-service debts: 
Number of soldier debts: 20,751; 
Percentage of debt amount: 90.44%; 
Original dollar amount of debt: $50,306,009. 

All other Army debts: 
Number of soldier debts: 3,546; 
Percentage of debt amount: 9.56%; 
Original dollar amount of debt: $5,316,341. 

Total, all active Army out-of-service debts: 
Number of soldier debts: 24,297; 
Percentage of debt amount: 100.00%; 
Original dollar amount of debt: 55,622,350. 

Source: GAO analysis of unaudited Defense Debt Management System data. 

[A] A bonus is earned as the term of service is fulfilled. An unearned 
bonus occurs when a servicemember does not fulfill the service 
contract, causing all or a portion of the bonus to be unearned. 

[B] For an overpayment of pay and allowances, no entitlement occurs 
when a servicemember is paid for a period in which he or she was not 
entitled to pay and allowance. 

[C] According to DFAS officials, appellate review leave status occurs 
when a servicemember is undergoing a court-martial. In this situation, 
the member has been separated as far as the pay account is concerned 
but has not been separated from the military. 

[End of table] 

In addition, our analysis of 221 fiscal year 2010 and 2011 Army CID 
investigations of potential military pay-related fraud identified the 
following examples of adverse effects of lingering undetected Army 
payroll errors. 

* A lieutenant colonel allegedly received active duty pay to which she 
was not entitled after she was discharged from active duty on December 
17, 2008. The estimated loss to the government was approximately 
$188,700. An effective review of the UCFR could have detected this 
type of pay issue because the unit commanders or battalion personnel 
sergeants (or S-1) would have been in a position to know whether a 
servicemember had separated from the service and thus no longer should 
be receiving active duty pay. 

* A colonel allegedly collected foreign language proficiency pay even 
though he had not recertified his language proficiency since 1999. The 
investigative report stated that the colonel also allegedly received 
jump pay from January 1999 through March 2008 that he was not 
authorized to receive.[Footnote 18] Army CID estimated the total loss 
to the government for this case at $34,455. A CID review of jump 
records revealed that the colonel had made no documented jumps since 
1999. According to the Army Financial Management Command, once jump 
pay is initially authorized by the unit, jump pay is automatically 
paid to an individual assigned to a unit-level position requiring 
jumps. If the unit was not performing jumps, then the soldier would 
not be entitled to this pay. In addition, foreign language proficiency 
pay is governed by AR 11-6, Chapter 6, which gives the unit commander 
or the battalion S-1 the primary responsibility for monitoring this 
pay, including monitoring language proficiency, preparing a monthly 
report on who is entitled to and is receiving foreign language pay, 
and verifying the UCFR.[Footnote 19] Because the unit commander and S-
1 were in a position to know whether their unit was required to 
perform jumps and would have a record of a soldier's foreign language 
certifications and applicable dates, an effective review of the UCFR 
could have detected these pay issues. 

* A private first class allegedly continued to receive his military 
pay and allowances and utilized his TRICARE benefits while AWOL from 
assigned duty. The estimated loss to the government was $24,194. 
Effective review of the UCFR could have identified this kind of pay 
issue because unit commanders and S-1s would have knowledge of whether 
their soldiers are reporting for duty and whether any absences are for 
authorized reasons. 

* Another soldier allegedly received family separation allowance for 
31 months, an allowance to which he was not entitled as his family 
resided with him in Columbus, Georgia. The estimated loss to the 
government was approximately $7,750. Effective review of the UCFR 
could have detected this type of pay issue because family separation 
allowance applies to soldiers who are away from their dependents for 
more than 30 days, and unit commanders are in a position to know where 
soldiers are stationed in relation to their family residences. 

To the extent that any overpayments or frauds involving Army active 
duty military pay are not timely and effectively identified and 
corrected, they become more difficult to collect after individuals 
have left the service because rather than processing payroll offsets, 
formal debt collection action must be taken. Such collections are 
likely to be increasingly difficult to make with the passage of time. 

Army CID investigators stated that they uncovered sufficient evidence 
of potential fraud to meet the Army's standards for referring the 
investigations for additional DOD action.[Footnote 20] Our analysis 
included 190 investigations that identified 320 incidences of 
potential fraud with a total estimated loss to the government of a 
little over $6 million related only to potential military pay fraud 
and 31 investigations totaling nearly $1 million that involved 
potential fraud associated with both military pay and travel 
reimbursements. Table 2 shows the results of our analysis of the 190 
CID investigations involving only military pay. Many of these 
investigations involved more than one incidence of potential fraud. 
For example, of the 138 incidences of potential fraud related to basic 
allowance for housing, 21 also involved incidences of potential fraud 
related to family separation allowance. 

Table 2: Incidences of Potential Military Pay-Related Fraud for Fiscal 
Years 2010 and 2011 from U.S. Army CID Reports: 

Military pay fraud type: Basic allowance for housing; 
Number of incidents of potential military pay fraud: 138; 
Percentage: of potential amount: 45.19%; 
Potential amount: $2,727,081. 

Military pay fraud type: Multiple allowances[A]; 
Number of incidents of potential military pay fraud: 34; 
Percentage: of potential amount: 21.46%; 
Potential amount: $1,295,004. 

Military pay fraud type: Active duty, incentive, and special pay; 
Number of incidents of potential military pay fraud: 9; 
Percentage: of potential amount: 9.09%; 
Potential amount: $548,414. 

Military pay fraud type: Other[B]; 
Number of incidents of potential military pay fraud: 30; 
Percentage: of potential amount: 7.24%; 
Potential amount: $437,070. 

Military pay fraud type: Living quarters allowance and temporary 
quarters subsistence allowance; 
Number of incidents of potential military pay fraud: 13; 
Percentage: of potential amount: 5.73%; 
Potential amount: $345,527. 

Military pay fraud type: Overseas housing allowance; 
Number of incidents of potential military pay fraud: 14; 
Percentage: of potential amount: 4.82%; 
Potential amount: $290,788. 

Military pay fraud type: Entitlements[C]; 
Number of incidents of potential military pay fraud: 37; 
Percentage: of potential amount: 4.25%; 
Potential amount: $256,227. 

Military pay fraud type: Promotion and enlistment; 
Number of incidents of potential military pay fraud: 12; 
Percentage: of potential amount: 1.76%; 
Potential amount: $106,282. 

Military pay fraud type: Family separation allowance; 
Number of incidents of potential military pay fraud: 33; 
Percentage: of potential amount: 0.47%; 
Potential amount: $28,442. 

Military pay fraud type: Total; 
Number of incidents of potential military pay fraud: 320[D]; 
Percentage: of potential amount: 100.00%; 
Potential amount: $6,034,834. 

Source: GAO analysis of unaudited U.S. Army CID reports on 
investigations of potential military pay-related frauds from fiscal 
years 2010 and 2011. 

Note: Numbers may not add because of rounding. 

[A] Generally, multiple allowances include a combination of basic 
allowance for housing and other allowances, such as family separation 
allowance where amount of the potential fraud was not broken out by 
allowance. 

[B] Other includes potential fraud related to time card charges, GI 
Bill (education) benefits, and leased housing. 

[C] This category includes TRICARE benefits as well as cost-of-living 
adjustment, and other entitlements not included in other categories, 
such as post allowance, and entitlements not otherwise specifically 
identified. TRICARE is the health care program for uniformed service 
members, retirees, and their families worldwide. 

[D] These 320 incidences were drawn from a total of 190 investigations. 

[End of table] 

Current UCFR Monitoring and Reporting Requirement Provides Limited 
Assurance of Active Duty Military Payroll Accuracy: 

We identified the following deficiencies in the Army's procedures that 
impaired the effectiveness of the UCFR reviews. First, Army procedures 
do not provide for monitoring to assure effective UCFR reviews. 
Second, AR 37-104-4, Military Pay and Allowances Policy, only requires 
unit commanders to submit their UCFRs to their designated finance 
offices or DMPOs if corrections are needed. When unit commanders do 
not return their UCFRs, the local finance offices and DMPOs do not 
receive documented evidence that the UCFRs have been reviewed and thus 
have no timely, positive assurance of the accuracy of the UCFR. 
[Footnote 21] Third, AR 37-104-4 does not clearly define the time 
frame for "immediately" reporting any needed corrections, such as no 
later than the 10th of the month, specified in DFAS-IN guidance. The 
UCFR could serve as an effective compensating control for confirming 
pay status and allowances if reviews were monitored to help assure 
that they were appropriately performed, were required to be reported 
in all cases, and were required to be submitted within a clearly 
prescribed time frame, such as the 10th of the month specified in DFAS-
IN guidance. 

AR 37-104-4 establishes procedures for assuring accurate and timely 
processing of military payroll and requires battalion S-1s to verify 
their UCFRs' accuracy with respect to personnel-and pay-related 
information monthly. Specifically, as prescribed by AR 37-104-4, S-1s 
are to ensure the verification of data in monthly UCFRs to the Unit 
Personnel Accountability Report to determine whether data on pay 
account status is consistent with soldier duty status in the personnel 
records, including servicemember's name, grade, net pay, allotments, 
housing allowance, subsistence allowance, leave balance, court-
martial/Article 15,[Footnote 22] AWOL, debt owed the government, and 
expiration of term of service, as well as authorizations to receive 
special pays and incentive pays, such as jump pay and foreign language 
proficiency bonus. Further, AR 37-104-4 requires S-1s to prepare pay-
related documents, respond to soldier pay inquiries, forward pay-
related documents to the finance office or DMPO daily, and process 
certain pay grade advancements and all reductions, and it requires 
unit commanders to ensure that documents affecting pay are accurate 
and are promptly forwarded to the finance office or DMPO. 
Consequently, S-1s and unit commanders are in a position to identify 
discrepancies, such as any soldiers who are AWOL but continue to 
receive pay and allowances and any soldiers who receive an overseas 
housing allowance while living on post. Additionally, because S-1s 
review and unit commanders certify soldier eligibility for special 
pays based on soldiers meeting the requisite training and 
certification requirements, they also are in a position to know what 
special pays their soldiers are entitled to receive. 

Consistent with AR 37-104-4, Army Vice Chief of Staff guidance 
[Footnote 23] requires UCFRs to be immediately reviewed and, if 
discrepancies are identified, submitted timely, so that any needed 
corrections and updates can be made before the next monthly payroll. 
However, as shown in figure 1, because AR 37-104-4 and Army Vice Chief 
of Staff guidance only require UCFRs to be submitted if corrections or 
updates are needed, the Army and DFAS-IN do not have positive 
assurance that all UCFRs were appropriately reviewed. However, current 
Army regulations do not include any requirements to monitor the 
effectiveness of required UCFR reviews. Further, the lack of a 
mandatory requirement to submit UCFRs impairs the ability of the Army 
and DFAS-IN to obtain a population of UCFRs that could be used to 
periodically monitor and test the effectiveness of UCFR reviews for 
assuring the accuracy of active duty Army military payroll 
transactions. DFAS-IN and Army officials acknowledged that UCFR review 
and submission could be a useful compensating control if submission of 
the reports was a mandatory requirement whether or not corrections or 
updates are needed. Further, monitoring to better ensure that 
appropriate review of monthly UCFRs in concert with a requirement for 
mandatory UCFR submission within a certain number of days could 
provide a useful compensating control for assuring active duty Army 
military payroll accuracy by providing early detection of the types of 
payroll errors and irregularities that we identified. 

Figure 1: Current Process for Review and Submission of UCFRs: 

[Refer to PDF for image: process] 

Monthly report: 
Defense Military Pay Office (DMPO) or local Army Finance Office 
provides monthly Unit Commander Finance Report (UCFR), which includes 
data on the soldier's pay grade, duty status, housing and subsistence 
allowances, allotments, and entitlements and indicates if the soldier 
is receiving incentive or special pay. 

Review: 
Unit commander or battalion personnel sergeant (S-1) performs a review 
of monthly UCFR pay data to check for errors and irregularities by 
comparing the UCFR information related to an individual soldier to the 
Unit Personnel Accountability Report list of soldiers assigned to the 
unit to verify the accuracy of grad and pay-related information such 
as duty status, housing status, family separation allowance, and pay 
entitlements. Unit commender or S-1 compares monthly UCFR incentive 
and specialty pay information related to special skills to the unit 
commander certification for these pays. 

Reporting: 
If no errors or irregularities are found, unit commander currently has 
no reporting obligation and no requirement to certify that a UCFR 
review was, in fact, performed. 

If errors or irregularities are found, unit commander is to 
"immediately" report discrepancies to the DMPO or Army Finance Office 
for correction. 

Correction: 
The DMPO or Army Finance Office makes the correction in the pay 
account (Defense Joint Military Pay System-Active Component), or if 
they cannot resolve the issue at the field site, they create a case 
file in the Case Management System to support collection of necessary 
supporting documentation for Defense Finance and Accounting Service-
Indianapolis to resolve the pay issue. 

At any time during this process, any one of the reviewers can notify 
the Army Criminal Investigation Division of potential fraud. 

Source: GAO analysis of Army and DFAS-IN UCFR processes. 

[End of figure] 

The current reporting requirement also limits the effectiveness of the 
requirement for monthly UCFR reviews. The requirement to only submit 
UCFRs if discrepancies are noted does not provide positive assurance 
that the required review was performed. Further, although AR 37-104-4 
and Army Vice Chief of Staff guidance do not define "immediately" 
related to the requirement to submit UCFRs that identify 
discrepancies, DFAS-IN guidance defines timely submission of UCFRs as 
no later than the 10th of the following month. Based on DFAS-IN's 
timeliness criteria, our analysis of unaudited data on unit commander 
UCFR submissions from October 2011 through March 2012 showed that 26 
percent of the UCFRs were submitted late or were not submitted at all. 
Our analysis also determined that although 19 of the 38 DMPOs had high 
average rates (90 percent or greater) for timely receipt of Army unit 
commander UCFR submissions, 5 of the remaining 19 DMPOs--Indianapolis, 
Fort Hood, Fort Lewis McChord, Fort Bliss, and Redstone Arsenal--had 
an average rate for unsubmitted UCFRs of 40 percent or greater during 
the first 6 months of fiscal year 2012. Without positive assurance 
that UCFRs were appropriately reviewed and that no military pay 
corrections or updates were needed, DFAS-IN and the Army cannot rely 
on UCFR review as an effective control to detect payroll issues and 
ensure that errors or irregularities are identified and submitted for 
correction in a timely manner. 

Ineffective Procedures for Capturing Information on Payroll Errors to 
Identify and Correct Systemic Weaknesses: 

Existing monitoring processes and controls for resolving Army active 
duty payroll errors were not designed to serve as effective 
compensating controls to provide for monitoring to capture data on the 
extent and causes of any over-and underpayments, unauthorized 
payments, and other pay errors. Effectively designed monitoring could 
be used to help identify and address any systemic internal control 
weaknesses, determine appropriate corrective actions, and monitor 
trends in the payroll data to determine the effectiveness of 
corrective actions. Standards for Internal Control in the Federal 
Government states that internal control should generally be designed 
to assure that ongoing monitoring occurs in the course of normal 
operations.[Footnote 24] Such monitoring should assess the quality of 
internal control performance over time and includes regular management 
activities, such as comparisons, reconciliations, and other reviews. 

DFAS-IN and the Army Do Not Have a Comprehensive Metric for Monitoring 
the Army's Active Duty Military Payroll Accuracy: 

DFAS-IN and the Army have not established a comprehensive metric for 
monitoring the accuracy of active duty Army military payroll. The Army 
Financial Management Command Director and DFAS-IN's Mil Pay Ops 
Director stated that DOD-wide military payroll metrics, including the 
Army's military payroll metric, are designed to track timeliness but 
not accuracy and emphasized that they believe transaction timeliness 
is the best primary metric for monitoring the accuracy of soldier pay. 
However, all pay errors are not a result of timeliness issues as 
discussed later in this report; errors also occurred as a result of 
certain overpayments, data entry errors, unauthorized payments, and 
fraud. DFAS-IN and the Army do not have monitoring procedures in place 
to accumulate and analyze pay problems that are not related to 
timeliness. Consequently, DFAS-IN and the Army do not accumulate data 
and do not have a corresponding metric to track pay accuracy for all 
types of military pay and entitlements. If not corrected, this 
condition could impede the Army's ability to respond to a financial 
audit because to the extent that auditors cannot rely on controls, 
they will need to increase transaction testing. Moreover, to the 
extent that errors in Army active duty pay are not identified and 
addressed in a timely manner, they can have a negative effect on 
soldier welfare and, ultimately, could erode the focus on Army mission 
readiness. 

The Directors of DFAS-IN and the Army Financial Management Command 
stated that DFAS and the Army monitor and follow up on late 
submissions of pay-affecting documents. The Directors stated that not 
all late submissions of pay changes indicate pay errors. For example, 
the Directors explained that if a commander approves and military 
orders are issued for retroactive promotions, they recognize that the 
pay amounts could be viewed as inaccurate until the retroactive 
promotions are processed. However, the retroactive nature of the 
adjustment does not indicate that there was an error. While timeliness 
is the issue in these cases, the retroactive effective date of the 
promotion indicates both timeliness and accuracy are issues of concern 
because servicemembers were paid an incorrect amount for a period of 
time. According to the DFAS-IN Mil Pay Ops Director, the Office of the 
Secretary of Defense Personnel/Pay Council's Pay Performance Metrics 
include such retroactive payments in the timeliness "metric" for 
processing of military pay transactions within 30 days of the 
effective date. However, the 20-day CMS metric for timeliness does not 
consider the period of time during which a pay amount was incorrect. 

Our analysis determined that if DFAS-IN wanted to accumulate separate 
information on types of active duty Army military pay errors, it would 
need to establish criteria and perform a labor-intensive review of the 
details of approximately 300,000 CMS cases annually,[Footnote 25] 
survey DMPOs for information on active Army military pay errors they 
correct locally but are not required to document and report, and 
consider the extent to which other processes identify error 
corrections in order to extract information on errors by pay category 
and the causes of those errors. 

Data on Payroll Adjustments for Underpayment or Overpayment of Active 
Duty Military Pay Are Not Used to Help Identify Potential Systemic 
Control Weaknesses: 

The system that DFAS-IN uses to pay Army active duty soldiers (DJMS-
AC) does not have the capability to identify and report the extent and 
causes of under-and overpayments and other types of payroll errors 
related to active duty Army soldier pay. As a result, DFAS-IN is not 
able to analyze the extent to which there may be any systemic control 
weaknesses that need corrective action. Without the ability to detect 
and correct systemic weaknesses, over-and underpayments are likely to 
continue, creating a financial burden for soldiers who did not receive 
all the pay they were due and soldiers who received more than their 
entitled amounts and were subjected to collection action. Either 
problem may pose financial hardship for the soldiers and detract from 
their focus on mission. 

Underpayments occur when the events that increase basic pay and 
allowances are not reflected in a military pay transaction at the time 
they occur. Underpayments also occur when a soldier is not paid in a 
timely manner for special pays when the related certification training 
is completed.[Footnote 26] When underpayments are identified and 
confirmed, DFAS-IN pays them to the soldier in the next paycheck. 
Underpayments affect soldiers' personal finances, especially when they 
are not resolved in a timely fashion. For example, a colonel in the 
Army National Guard reported experiencing numerous underpayments 
throughout his 28 years of service, including suffering financial 
hardship when he was on active duty in 2003 to Afghanistan and his 
active duty pay was stopped for 1-1/2 months. He also stated he did 
not receive hardship duty pay and hostile fire pay while on a 
deployment to Southeast Asia, which took approximately 1-1/2 years to 
correct. Further, he reported that his pay problems have persisted, 
with the most recent being in January 2012. 

Overpayments may occur when a servicemember returns from a combat zone 
deployment to a duty station in the United States and the Army 
personnel system fails to notify the pay system. Overpayments are 
recovered through withholding from the soldier's subsequent pay. 
[Footnote 27] If soldiers' entitlements are not adjusted in a timely 
manner as their duty status changes, and they spend the extra pay 
received, collection action can pose a financial hardship.[Footnote 28] 

DFAS-IN procedures for DJMS-AC do not include steps to identify and 
report the dollar amounts of and reasons for adjustments it made to 
correct active duty soldiers' military pay accounts for under-and 
overpayments on its nearly $47 billion in reported Army military pay 
for fiscal year 2011. DFAS-IN officials explained that DJMS-AC does 
not have unique transaction codes that identify adjustments to active 
duty Army soldiers' pay. As a result, adjustments for underpayments of 
military pay are entered with the same codes as those used for 
original military pay transactions. Therefore, although DFAS-IN can 
identify the total number of transactions by type of pay and 
allowance, it cannot separately identify the number or causes of 
underpayments made to active duty servicemembers. Further, DFAS-IN 
cannot provide a detailed breakdown of the reasons for and dollar 
amounts of overpayments because DJMS-AC is not configured to capture 
information on the detailed causes of overpayments of pay and 
allowances. Instead, debt reason codes in DJMS-AC relate generally to 
the type of pay and allowance debt that is being assessed against a 
soldier's pay account, such as basic allowance of housing or hostile 
fire pay. The DFAS-IN Mil Pay Ops Director said it would be too costly 
to change the current system to include transaction codes related to 
correction of under-and overpayments. The Director of the Army 
Financial Management Command and Army G-1 officials told us that user 
requirements for the Integrated Personnel and Pay System-Army (IPPS-
A), which is intended to replace the Army's DJMS, include this type of 
functionality. However, IPPS-A full functionality for military payroll 
is not targeted for implementation until the third quarter of 2016. 
Consequently, without establishing an interim process for capturing 
data on payroll errors and identifying their causes, both DFAS-IN and 
the Army will be limited in their ability to reasonably assure the 
effectiveness of any corrective actions until comparable IPPS-A 
functionality is implemented. 

CMS Processing of Corrections to Active Duty Military Pay Is Not 
Designed to Capture Information on the Extent of Errors to Identify 
Systemic Weaknesses: 

We found that the DFAS-IN's CMS process used to process Army military 
pay transactions and error corrections that are handled outside of 
DJMS-AC was not designed to identify military payroll errors and 
monitor trends in the occurrence of these errors. As a result, the 
Army and its Financial Management Command cannot use CMS to help 
monitor the number of errors by pay category and their causes. 
Further, CMS does not capture and accumulate data on the types and 
causes of pay errors that are corrected by DMPOs and finance offices. 
Without a CMS monitoring capability, the Army is limited in its 
ability to identify and address any additional systemic military 
payroll control weaknesses. 

Our analysis of Mil Pay Ops processes determined that CMS serves as an 
electronic file folder that accumulates documents needed to resolve 
military pay issues with the capability to identify information on 
types of cases, such as separations, and their status to ensure that 
they are processed or corrected within DFAS timeliness metrics. Our 
analysis of unaudited CMS data showed that the CMS process adopted for 
Army payroll cases has processed an average of 310,000 DJMS-AC system-
generated cases and manual cases annually since fiscal year 2008, 
[Footnote 29],[Footnote 30] many of which involved problems with 
multiple types of pay transactions. For the first 11 months of fiscal 
year 2012, approximately half of the cases processed were manual 
cases. We determined that both the manual and the system-generated 
case categories contain cases that relate to error corrections. 
However, CMS processes do not require the identification of the types 
of cases or the extent to which they relate to error corrections. 
Because CMS does not capture and accumulate data on all corrections of 
military payroll errors, it does not serve as an effective monitoring 
control for providing DFAS-IN and the Army the ability to determine 
the extent and nature of active duty Army military pay errors and 
identify systemic weaknesses and their causes in order to design 
appropriate corrective actions, leaving the Army at risk of continuing 
errors. 

For example, our analysis and discussions with DFAS-IN officials 
regarding pay system rejects--DJMS-AC system-generated transactions 
that were not allowed to process in DJMS-AC--determined that some of 
these system-generated rejects relate to error corrections. For 
example, the reject analysis reports contain error codes that identify 
the type of transactions that DJMS-AC controls did not allow DJMS-AC 
to process. The reject analysis report breaks out the number of 
rejects that are to be sent to DMPOs or finance offices for correction 
and those that must be corrected centrally by DFAS-IN and have a CMS 
case created for tracking and visibility. DMPO officials told us that 
upon receiving reject reports, they would contact military units to 
alert them about any unusually high numbers of errors in a pay 
category, such as basic allowance for housing. However, information on 
the extent of those errors, their causes, and any corrective actions 
taken by the Army units or the DMPOs is not accumulated and reported 
by the DMPOs. 

Conclusions: 

The Army's weaknesses in the design of processes, systems, and 
controls for detecting and correcting errors in payroll disbursements 
to active duty Army military personnel increase the risk that its 
active duty military payroll includes servicemembers who received pay 
to which they were not entitled and others who did not receive the 
full pay they were due. Accordingly, it is important that the Army 
implement appropriate and effective compensating controls, including 
monitoring controls to assess the quality of performance over time. 
Improved procedures for monitoring and reporting on monthly UCFRs--
which detail most pay and allowance information for soldiers--could 
provide an important compensating control for assuring payroll 
accuracy. In addition, because DFAS-IN and the Army do not have a 
comprehensive accuracy metric for military payroll and current 
processes, systems, and controls are not designed to identify and 
document the extent and cause of payroll errors, irregularities, and 
corrections, DFAS-IN and the Army are limited in their ability to 
determine the overall accuracy of Army active duty military pay or 
whether there are any related unidentified systemic weaknesses that 
should be corrected. Without immediate action to address these 
deficiencies, DFAS-IN and the Army will not be able to assure that 
soldiers are paid timely and accurately. Moreover, these weaknesses 
can have a negative impact on soldier welfare and mission readiness 
because payroll errors can detract from soldiers' focus on their 
mission. 

Recommendations for Executive Action: 

We are making five recommendations to the Secretary of Defense to 
strengthen the design of controls over active duty Army military 
payroll. 

To assure the effectiveness of the UCFR process as a compensating 
control for confirming the accuracy of its military pay, we recommend 
that the Secretary of Defense direct the Secretary of the Army to 
revise AR 37-104-4, Military Pay and Allowances Policy, to include the 
following three actions: 

* establish a requirement for periodic monitoring of the effectiveness 
of unit commander UCFR reviews; 

* require unit commanders to review and submit documentation showing 
completion of all monthly UCFR reviews; and: 

* specify the time frame for submitting UCFRs, such as no later than 
the 10th of the month. 

To provide a means for monitoring the overall accuracy of the Army's 
military payroll, we recommend that the Secretary of Defense direct 
the DOD Comptroller to require DFAS-IN to take the following two 
actions: 

* develop criteria and establish a comprehensive metric to capture and 
measure all types of pay errors affecting accuracy and: 

* establish an interim mechanism at DFAS-IN for identifying and 
analyzing the extent and causes of all types of military payroll 
errors processed by DMPOs, Army Finance Offices, DJMS-AC, and CMS to 
address any systemic control weaknesses. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to DOD for review and comment. In 
its comments, DOD expressed concern that the draft does not present 
the military pay issues discussed in the proper context. DOD stated 
that the bonus amounts presented in table 1 of this report are not 
payroll errors, but instead arise when servicemembers leave the 
service before the end of their service commitments. We disagree. We 
recognized in the report that an unearned bonus occurs when a 
servicemember does not fulfill the service contract, causing all or a 
portion of the bonus to be unearned. We also pointed out that doing so 
has resulted in the largest amount of Army military pay-related out-of-
service debt. 

Further, DOD stated that our audit approach focused solely on the 
design of the controls without analysis of whether undetected errors 
exist and whether the recommended additional activities would 
efficiently detect any missed errors. DOD is correct that the focus of 
this engagement was on the design of controls, as discussed in detail 
in the scope and methodology section of this report. However, because 
we identified flaws in the design of controls, we determined there 
would be little benefit in testing the implementation of a flawed 
control. Further, as discussed in our report, because the flawed 
design of the UCFR process does not provide positive assurance that 
payroll errors will be detected and corrected, we reviewed the results 
of other processes, including DFAS's debt and claims management 
information related to military payroll debt and Army CID's 
investigations of potential fraud, to determine if those processes 
identified any errors or irregularities that went undetected for 
lengthy periods of time. 

With regard to our three recommendations to strengthen UCFR controls, 
DOD partially agreed, stating that it concurred fully with the goal of 
improving the accuracy of military pay to the extent that cost-
effective corrective actions are warranted. However, we continue to 
believe that the design of the UCFR process is not fully effective in 
providing positive assurance of military payroll accuracy. 
Consequently, as discussed in our report, UCFR reviews do not provide 
an effective compensating control. Accordingly, we believe that our 
recommendations in this area are appropriate and are intended to help 
strengthen the design of existing processes and controls to help 
improve DOD's ability to rely on UCFR reviews as a compensating 
control. Our first recommendation is directed at establishing a 
requirement for periodic monitoring of the effectiveness of UCFR 
reviews. Because the current UCFR control as designed requires 
reporting only if deficiencies are found, it is not possible to 
monitor and test the extent to which required reviews were effective 
in identifying military payroll errors. Our second recommendation to 
enhance the control design is directed at revising AR 37-104-04, 
Military Pay and Allowances Policy, to require unit commanders to 
document completion of all monthly UCFR reviews, and our third 
recommended enhancement calls for the Army to clarify the required 
time frame for submitting UCFRs. DOD's response to all three 
recommendations was that by February 28, 2013, the Army, working with 
DFAS, will complete statistically valid tests to determine to what 
extent payroll errors occur and whether any identified errors can be 
efficiently detected and prevented before payment by implementing 
additional control activities. However, as discussed in our report, 
Army and DFAS systems and processes do not currently capture data on 
all errors and their causes. Consequently, it is not clear how DOD 
will identify a statistically valid universe for testing to support a 
decision on whether additional actions are warranted to strengthen the 
UCFR process as a compensating control. 

With respect to our two recommendations directed at actions needed to 
improve monitoring of payroll accuracy, DOD also partially agreed, 
stating that DFAS believes that it has procedures and metrics to 
gather comprehensive data for all types of payroll errors, including 
both timeliness and improper payments. However, as discussed in our 
report, DOD does not have a comprehensive metric for monitoring the 
accuracy of soldier pay. Specifically, we found that Army and DFAS 
payroll processes and systems capture data on pay timeliness but do 
not capture data on all errors and the causes of the errors. All pay 
errors are not a result of timeliness issues. Our report discusses pay 
errors resulting from overpayments, data entry errors, unauthorized 
payments, and potential fraud. We identified errors that were not 
detected and corrected for several months or, in some cases, for 
several years. Further, errors are not captured and reported when 
detected if they are corrected within 30 days of the effective date. 
DOD also stated that DFAS would analyze military payroll metrics to 
determine whether any gaps exist between current timeliness metrics 
and accuracy and the errors discussed in our report. However, without 
developing criteria to identify and capture data on all types of 
payroll errors, a review of current processes and metrics is likely to 
be ineffective in identifying such gaps. In responding to our 
recommendation to develop an interim mechanism for identifying and 
analyzing the extent and causes of all types of errors (until such 
functionality can be implemented in IPPS-A), DOD stated that if gaps 
are discovered in its analysis, it would take steps to correct them. 
However, a onetime DFAS-IN analysis of payroll metrics to identify 
gaps in timeliness and accuracy would not serve the purpose of 
establishing an interim mechanism. 

DOD's letter is reprinted in its entirety in appendix I. In addition, 
DOD provided us with technical comments, which we have incorporated as 
appropriate. 

We are sending copies of this report to the Chairmen and Ranking 
Members of the Senate Committee on Homeland Security and Governmental 
Affairs, the Senate Committee on Armed Services, the House Committee 
on Oversight and Government Reform, and the House Committee on Armed 
Services. We also are sending copies to the Secretary of Defense; the 
Under Secretary of Defense (Comptroller) and Chief Financial Officer; 
the Deputy Chief Financial Officer; the Director for Financial 
Improvement and Audit Readiness; the Assistant Secretary of the Army 
for Manpower and Reserve Affairs; the Deputy Chief of Staff, Army G-1; 
the Assistant Secretary of the Army--Financial Management and 
Comptroller; the Deputy Assistant Secretary of the Army for Financial 
Operations; the Director of the U.S. Army Financial Management 
Command; the Commanding General of the U.S. Army Criminal 
Investigation Command; the Directors of the Defense Finance and 
Accounting Service and its Indianapolis Center; the Director of the 
Office of Management and Budget; and other interested parties. In 
addition, the report is available at no charge on the GAO website at 
[hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions about this report, please 
contact me at (202) 512-9869 or khana@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff members who made key 
contributions to this report are listed in appendix II. 

Signed by: 

Asif A. Khan: 
Director: 
Financial Management and Assurance: 

List of Committees: 

The Honorable Thomas R. Carper:
Chairman:
The Honorable Scott P. Brown:
Ranking Member:
Subcommittee on Federal Financial Management, Government Information,
Federal Services, and International Security:
Committee on Homeland Security and Governmental Affairs:
United States Senate: 

The Honorable Claire McCaskill:
Chairman:
Subcommittee on Contracting Oversight:
Committee on Homeland Security and Governmental Affairs:
United States Senate: 

The Honorable Tom Coburn:
Ranking Member:
Permanent Subcommittee on Investigations:
Committee on Homeland Security and Governmental Affairs:
United States Senate: 

The Honorable Todd Platts:
Chairman:
The Honorable Edolphus Towns:
Ranking Member:
Subcommittee on Government Organization, Efficiency, and Financial 
Management:
Committee on Oversight and Government Reform:
House of Representatives: 

[End of section] 

Appendix I: Comments from the Department of Defense: 

Under Secretary of Defense: 
Comptroller: 
1100 Defense Pentagon: 
Washington, DC 20301-1100: 

October 19, 2012: 

Mr. Asif A. Khan: 
Director, Financial Management and Assurance: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Khan: 

This is the Department of Defense (DoD) response to the Government 
Accountability Office (GAO) draft report, GAO-13-28, "DOD Financial 
Management: Actions Needed to Address Deficiencies in Controls over 
Army Active Duty Military Payroll," dated September 19, 2012 (GAO Code 
198712). Our responses to the recommendations and our additional 
detailed comments are enclosed with this letter. 

While I agree that we need to strive to improve payroll accuracy, I 
believe the report does not put the issues in the proper context. Your 
report highlights individual instances of payroll errors and in Table 
1 presents counts and balances of debts, most of which are not pay 
errors but rather the result of service members leaving service before 
the end of commitments that were tied to bonuses or other 
compensation. In light of over $45 billion in military pay 
disbursements, the rate of errors and amount of debt are remarkably 
low. The DoD strives to continuously improve payroll for service 
members and will implement improvements as a part of ongoing efforts 
to eliminate any pay issues under DoD control. 

The DoD partially agrees with the recommendations related to Defense 
Finance and Accounting Service (DFAS) analysis and monitoring of pay 
issues in your draft report. DFAS believes it has appropriate measures 
and controls but will be directed to review them to ensure it 
distinguishes payroll errors from normal retroactive payments, develop 
new metrics if needed, analyze root causes of any errors, and 
implement appropriate corrective actions if they are cost effective. 

The DoD partially agrees with your recommendations to the Army. The 
GAO audit approach focused solely on the design of the controls 
without analysis of whether undetected errors exist and whether the 
recommended additional activities would efficiently detect any missed 
errors. The Army will investigate the effectiveness of the current 
controls using statistical sampling methods and weigh any benefits of 
further control activities against their costs. If additional control 
activities are warranted, they will be implemented. Taking action to 
implement additional and possibly expensive control activities without 
a rigorous analysis of the extent of the issue and cost of the 
proposed solution is not sound stewardship of resources. 

I appreciate the opportunity to provide comments and trust you will 
consider them in developing your final report. I look forward to your 
continued support toward our common goal of improving financial 
management controls. My point of contact for this effort is
Mr. Joseph Quinn. He can be reached at 571-256-2678 or at 
Joseph.Quinn@osd.mil. 

Sincerely, 

Signed by: 

Robert F. Hale: 

Enclosure: As stated: 

cc: 

Assistant Secretary of the Army for Financial Management and 
Comptroller Director, Defense Finance and Accounting Service. 

Enclosure: 

Government Accountability Office Draft Report Dated September 19, 2012: 
GAO-13-28 (GAO Code 198712): 

"DOD Financial Management: Actions Needed To Address Deficiencies In 
Controls Over Army Active Duty Military Payroll" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: To assure the effectiveness of the UCFR process as a 
compensating control for confirming the accuracy of its military pay, 
we recommend that the Secretary of Defense direct the Secretary of the 
Army to revise Army Regulation (AR) 37-104-4, Military Pay and 
Allowances Policy, to establish a requirement for periodic monitoring 
of the effectiveness of unit commander UCFR reviews. 

DoD Response: Partially concur. We concur fully with the goal of 
improving the accuracy of military pay, so long as it is done in a 
manner that minimizes costs to the taxpayer. We are not yet convinced, 
however, that storing and monitoring large volumes of Unit Commander 
Financial Reports (UCFR) reviews represents a cost effective approach. 
Therefore, on behalf of the Secretary of Defense, the Under Secretary 
of Defense (Comptroller)/Chief Financial Officer (USD(C)/CFO) will 
direct the Secretary of the Army to use appropriate and statistically 
valid testing methods to determine to what extent payroll errors occur 
and whether those errors can be efficiently detected and prevented 
before payment by additional control activities. The Army will work 
with the Defense Finance and Accounting Service (DFAS) to be sure that 
all aspects of pay processing is considered. This analysis will be 
completed by February 28, 2013. 

Recommendation 2: To assure the effectiveness of the UCFR process as a 
compensating control for confirming the accuracy of its military pay, 
we recommend that the Secretary of Defense direct the Secretary of the 
Army to revise Army Regulation (AR) 37-104-4, Military Pay and 
Allowances Policy, to require unit commanders to review and submit 
documentation showing completion of all monthly UCFR reviews. 

DoD Response: Partially concur. On behalf of the Secretary of Defense, 
the USD(C)/CFO will direct the Secretary of the Army to use 
appropriate testing methods to determine to what extent payroll errors 
occur and whether those errors can be efficiently detected and 
prevented before payment by additional control activities. This 
analysis will be completed by February 28, 2013. 

Recommendation 3: To assure the effectiveness of the UCFR process as a 
compensating control for confirming the accuracy of its military pay, 
we recommend that the Secretary of Defense direct the Secretary of the 
Army to revise Army Regulation (AR) 37-104-4, Military Pay and 
Allowances Policy, specify the timeframe for submitting UCFRs, such as 
within 10 days of receiving UCFRs for review. 

DoD Response: Partially concur. On behalf of the Secretary of Defense, 
the USD(C)/CFO will direct the Secretary of the Army to use 
appropriate testing methods to determine to what extent payroll errors 
occur and whether those errors can be efficiently detected and 
prevented before payment by additional control activities. This 
analysis will be completed by February 28, 2013. 

Recommendation 4: To provide a means for monitoring the overall 
accuracy of the Army's military payroll, we recommend that the 
Secretary of Defense direct the DOD Comptroller to require DFAS-IN to 
develop criteria and establish a comprehensive metric to capture and 
measure all types of pay errors impacting accuracy. 

DoD Response: Partially concur. DFAS believes that it has procedures 
and metrics to gather comprehensive data for all types of payroll 
errors, including both timeliness and improper payments. We will, 
however, review these procedures and metrics. On behalf of the 
Secretary of Defense. the USD(C)/CFO will direct the Director of DFAS 
to analyze the payroll metrics to determine whether any gaps exist 
between current metrics capturing timeliness and accuracy and the 
errors discussed in the GAO report. 

Recommendation 5: To provide a means for monitoring the overall 
accuracy of the Army's military payroll, we recommend that the 
Secretary of Defense direct the DOD Comptroller to require DFAS-IN to 
establish an interim mechanism at DFAS-IN for identifying and 
analyzing the extent and causes of all types of military payroll 
errors processed by Defense Military Pay Offices, Army Finance 
Offices, DJMS-AC [Defense Joint Military Pay System —Active 
Component], and CMS [Case Management System] to address any systemic 
control weaknesses. 

Don RESPONSE: Partially concur. If gaps are discovered based on steps 
taken in response to Recommendation 4, we will take steps to correct 
them. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Asif A. Khan, (202) 512-9869 or khana@gao.gov: 

Staff Acknowledgments: 

In addition to the contact named above, Gayle L. Fischer (Assistant 
Director), Lauren S. Fassler, Donald D. Holzinger, Katherine Lenane 
(Assistant General Counsel), Sheila D. M. Miller, Meg Mills, and 
Heather L. Rasmussen made key contributions to this report. 

[End of section] 

Footnotes: 

[1] GAO, DOD Financial Management: The Army Faces Significant 
Challenges in Achieving Audit Readiness for Its Military Pay, 
[hyperlink, http://www.gao.gov/products/GAO-12-406] (Washington, D.C.: 
Mar. 22, 2012). 

[2] The Army and DFAS-IN developed CMS to track and measure timeliness 
of manual work-arounds to calculate military pay where DJMS-AC had 
limited functionality. CMS also tracks cases for correcting pay errors 
identified by soldiers, local military pay offices, and other sources. 

[3] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[4] Department of Defense Appropriations Act, 2011, Pub. L. No. 112-
10, div. A, 125 Stat. 38, 38, 85 (Apr. 15, 2011). 

[5] The Deputy Chief of Staff, Army G-1, function also is referred to 
as Army Personnel. 

[6] DFAS-IN also has 14 satellite offices in the United States. 

[7] Although most payments are electronic fund transfers to the 
servicemember, some payments may be made manually. For example, casual 
pay (an advance payment) may be made using a U.S. Treasury check, 
cash, or a stored value card (that is, a debit card). 

[8] The Army's disbursing system, Standard Financial System (STANFINS) 
Redesign Subsystem-1, also referred to by the Army as SRD-1, is an 
online, interactive accounting and finance system that incorporates 
military pay, accounts payable, civilian pay, accounting, and 
disbursing into the online finance and accounting system. 

[9] Other updates that do not affect the monthly pay amount include 
name change and expiration of term of service. 

[10] According to the DOD FMR, Volume 7A, Chapter 50, dated February 
2012, an overpayment of pay or allowances determined to be caused by 
fault of the member will be recovered in monthly installments not to 
exceed two-thirds of the member's monthly disposable pay. An 
overpayment of pay or allowances determined to be through no fault of 
the member will be recovered in monthly installments not to exceed 15 
percent of the member's monthly disposable pay. 

[11] DDMS is a DOD-wide system used by DFAS to track and collect 
unpaid debts of civilian and military employees who have left DOD. 

[12] DFAS debt collection action can involve assessing a penalty and 
an administrative fee, arranging for installment payments and, if 
necessary, placing the debt with a private collection contractor and 
referring the debt to the Treasury Offset Program (TOP). Under TOP, 
Treasury's Financial Management Service also may place debts with debt 
collection contractors, offset debts against federal tax refunds or 
other federal payments, and refer cases to the Department of Justice 
for litigation in federal court. 

[13] See, generally, 31 U.S.C. chapter 37, Claims of the U.S. 
Government; see 10 U.S.C. § 2780, Armed Forces: Debt Collection; see 
also, generally, the Federal Claims Collection Standards regulations, 
which are codified, as amended, in 31 C.F.R. parts 900-904, and 
include government-wide debt collection standards that are prescribed 
by the U.S. Attorney General and the Secretary of the Treasury. 

[14] CID was established in 1863 as the first criminal investigation 
division of the U.S. Army. On September 17, 1971, CID was designated 
as a major Army command, but kept its original name. 

[15] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[16] AR 37-104-4, Military Pay and Allowances Policy, dated June 8, 
2005 and DFAS-IN, Standard Operating Procedures for the Unit Commander 
Finance Report (May 4, 2009). 

[17] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[18] In accordance with AR 37-104-4, June 8 2005, Chapter 10 on other 
hazardous duty incentive pays as well as DOD FMR Volume 7A, Chapter 
24, March 2011, a servicemember qualifies for a hazardous duty 
incentive pay for parachute duty, or "jump pay" when the individual is 
assigned to a unit-level position requiring parachute jumps that are 
authorized by the unit. 

[19] Under AR 11-6, Army Foreign Language Program, Aug. 31, 2009, 
Chapter 6 on foreign language proficiency bonus, the unit commander 
has primary responsibility for monitoring foreign language proficiency 
bonuses and is required to prepare a monthly report on who is entitled 
to receive and is receiving this special pay. 

[20] For the purposes of this report, we focused on report summaries 
of Army CID investigations of allegations of fraud. We did not review 
documentation on the ultimate outcome of each referral for additional 
DOD action and whether the referrals resulted in the investigated 
individual being subject to adverse outcomes, which may include 
administrative action (for example, a requirement to take corrective 
training), nonjudicial punishments under Article 15 of the Uniform 
Code of Military Justice (UCMJ), or a court-martial. 

[21] Positive assurance is a level of assurance one has that something 
is good or bad, or effective or ineffective, based on evidence or 
experience. For example, an opinion that the financial statements are 
presented fairly in conformity with U.S. generally accepted accounting 
principles (GAAP) must be based on sufficient audit evidence to 
support such a positive assurance opinion. Negative assurance is a 
statement of the level of confidence based on what is not known. For 
example, the statement that the auditor was not aware of material 
modifications that should be made to financial statements for them to 
conform to U.S. GAAP is negative assurance. 

[22] A court-martial is a military court convened under military 
authority to try members of the U.S. armed forces who are accused of 
violating the UCMJ. Article 15 of the UCMJ, which is codified, as 
amended, at 10 U.S.C. § 815, provides for nonjudicial punishment 
imposed by a commander and accepted by the military member. 

[23] Vice Chief of Staff, U.S. Army to All Army Activities - 
ALARACT168/2010: Commanders' Obligations Regarding the Unit 
Commander's Finance Report (UCFR) and Soldier Options for Debt 
Suspension and Mitigation, para. 4 (June 3, 2010). 

[24] [hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1]. 

[25] CMS includes pay cases involving manual work-arounds necessitated 
by limited DJMS-AC programming updates related to long-term plans for 
DJMS-AC's replacement. 

[26] An underpayment could occur when a soldier gets married and does 
not notify the DMPO of the related change in dependency status in a 
timely manner. Dependency status entitles a soldier to a higher rate 
of pay for certain entitlements. Thus, if a soldier did not notify the 
DMPO of a marriage, he or she would have an underpayment of basic 
allowance for housing. Further, if the soldier was assigned to duty 
away from dependents for more than 30 days, the lack of timely notice 
of this change could result in underpayment of family separation 
allowance. 

[27] According to the DOD FMR, Volume 7A, Chapter 50, dated February 
2012, an overpayment of pay or allowance determined to be caused by 
fault of the member will be recovered in monthly installments not to 
exceed two-thirds of the member's disposable monthly pay. An 
overpayment of pay or allowances determined to be through no fault of 
the member will be recovered in monthly installments not to exceed 15 
percent of the member's disposable monthly pay. 

[28] For example, in situations involving overpayments, a soldier who 
returns from combat zone deployment would continue to receive 
entitlements linked to the combat zone location, such as hardship duty 
pay, hostile fire pay, and combat zone tax exclusion. 

[29] DJMS-AC system-generated cases relate to military personnel and 
pay transactions that cannot be processed in DJMS-AC and transactions 
that DJMS-AC processing controls reject. 

[30] Sources of manual cases include soldier inquiries, deficiencies 
identified in UCFR submissions, and pay issues identified in Army CID 
investigations. 

[End of section] 

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