Internal Controls:

Reporting Air Force Vendor Payment System Weaknesses Under the Federal Managers' Financial Integrity Act

AIMD-99-33R: Published: Dec 21, 1998. Publicly Released: Dec 21, 1998.

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GAO provided information on the Department of Defense's (DOD): (1) reporting of the Air Force's vendor payment system weaknesses; and (2) efforts to implement corrective action. GAO made recommendations in its previous report to strengthen payment processing controls, revise vendor payment system access levels, and reduce the number of employees with vendor payment system access.

GAO noted that: (1) DOD concurred with GAO's recommendations and described ongoing efforts by the Defense Finance and Accounting Service and the Defense Information Systems Agency to address them; (2) the plans for corrective action included: (a) revising internal control guidance to better ensure segregation of duties; (b) reviewing and adjusting vendor payment system access to the minimum number of personnel needed to properly conduct business; and (c) correcting the identified vulnerabilities in computer operating system security; (3) these are positive steps toward improving vendor payment system controls; (4) at the same time, because the control deficiencies GAO identified are serious and the planned corrective actions are not yet complete, it would be appropriate to include Air Force vendor payment system's vulnerability to fraudulent and improper payments as a material weakness in the department's annual statement of assurance for fiscal year 1998, pursuant to the Federal Managers' Financial Integrity Act; (5) the act requires that the head of each executive agency report annually to the President and Congress on material weaknesses in the agency's systems of internal accounting and administrative control and the plans and schedule for correcting these weaknesses; and (6) by evaluating progress in resolving these material weaknesses through the Financial Integrity Act reporting process, the department's top-level managers and Congress would have information for monitoring the effective completion of the plans DOD has outlined and thus for ensuring that improved Air Force vendor payment systems and controls are in place and operating as intended.

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