Financial Management: Challenges Confronting DOD's Reform Initiatives

GAO discussed the Department of Defense's (DOD) plans to reform its financial management operations. GAO noted that: (1) DOD has serious, long-standing financial problems that must be addressed immediately; (2) DOD plans to reform its financial management operations by consolidating its finance and accounting operations and systems, establishing pre-validation procedures for disbursements, reengineering business practices, strengthening its internal controls, and improving management incentives; (3) a successful financial management reform will require sustained attention, cooperation, and commitment from top DOD management; (4) DOD has recognized that it has a problem with its budgeting and financial reports and has begun to take action to address these problems; and (5) DOD intends to focus management attention on the total costs of carrying out certain critical DOD business operations.