Internal Controls: Defense Fuel Supply Center's Recording and Reporting of Accounts Payable
AFMD-87-30
Published: May 13, 1987. Publicly Released: Jun 10, 1987.
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Highlights
In response to a congressional request, GAO assessed the adequacy of the Defense Fuel Supply Center's (DFSC) financial and management information system in controlling, accounting for, and reporting on its fuel program, specifically its accounts payable.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Defense | The Secretary of Defense should direct the Director of the Defense Logistics Agency (DLA) to require DFSC to determine why accounts-payable data on price adjustments, delivery dates, and quantities delivered are not being properly recorded in and processed by DFAM, and institute controls to correct these problems. |
Closed – Implemented
The Department of Defense (DOD) completed its review and identified and corrected the causes of errors.
|
| Department of Defense | The Secretary of Defense should direct the Director, DLA, to require DFSC to review the resources needed to conduct the accounts-payable reviews required by DLA regulations and, if resources are adequate, begin conducting the required reviews or, if resources are not considered adequate, develop alternatives for complying with the requirements. |
Closed – Implemented
DOD hired co-op students to conduct reviews of accounts payable balances and added 14 additional full-time staff to maintain adequate accounts payable reviews.
|
| Department of Defense | The Secretary of Defense should direct the Director, DLA, to require DFSC to classify and report negative accounts-payable amounts as accounts receivable as they occur and ensure the prompt collection of these receivables. |
Closed – Implemented
DFSC began recording negative accounts payable as accounts receivable as of December 1987. Over $30 million of negative balances have been cleared and/or collected. A complete review of negative balances was estimated to be completed by May 1988. Accomplishment report A-AFMD-87-6 was completed for $17.5 million of overpayment recoupments. Account payable review was completed in June 1988.
|
| Department of Defense | The Secretary of Defense should direct the Director, DLA, to require the Administrative Support Center (ASC) and DFSC to ensure that the accounts-payable weaknesses have been corrected, and that the payable information reported by DFAM can be depended upon for payment purposes prior to fully relying on the automated disbursing system. |
Closed – Implemented
Review of accounts-payable balances has identified problems. Also, DOD is monitoring monthly changes in manual and automated general ledgers for differences. DOD estimated full implementation of the automated disbursement system by December 1988. Problems in DFAMS have been corrected as of June 1988.
|
| Department of Defense | The Secretary of Defense should direct the Director, DLA, to require ASC and DFSC to continue to operate the manual disbursing system until the automated system shows that it can make reliable disbursements. |
Closed – Implemented
A realignment within DLA resulted in the disbursement function being transferred to DFSC. Currently, DFSF is testing the automated disbursing system and will not fully implement it until full testing has been completed.
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Topics
Accounting systemsCrude oilDefense operationsFinancial management systemsFuel suppliesInternal controlsProgram evaluationReporting requirementsAccounts payableOverpayments