Financial Management: Navy Records Contain Billions of Dollars in Unmatched Disbursements

AFMD-93-21 Published: Jun 09, 1993. Publicly Released: Jun 09, 1993.

Highlights

GAO provided information on the: (1) dollar value, age, and causes of unmatched disbursements in the Navy's Standard Accounting and Reporting System; and (2) Navy's procedures for matching disbursements with obligations and the adequacy of Navy corrective action plans.

Recommendations

Recommendations for Executive Action

Agency Affected	Recommendation	Status
Department of the Navy	The Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to: (1) enforce existing regulations and/or procedures requiring Navy organizations to research and properly resolve existing unmatched disbursements; and (2) establish milestones for achieving this objective.	Closed – Implemented The DOD Comptroller has issued several policy memoranda describing procedures for resolving problem disbursements. In addition, the Navy established a problem disbursements project office and prepared a plan for eliminating problem disbursements, which included specific milestones. Also, the DFAS Cleveland Center developed a plan with over 200 action items to address the Navy's problem disbursements. Nevertheless, significant amounts of such disbursements still exist in the Navy's accounting records, and it is continuing to work on the problems.
Department of the Navy	The Secretary of the Navy should report unmatched disbursements as a material weakness in the Navy's annual Federal Managers' Financial Integrity Act report to DOD.	Closed – Implemented DOD concurred that unmatched disbursements represented a reportable material weakness for the Navy and disclosed such in its 1993 FMFIA report.
Department of the Navy	The Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to provide sufficient resources, including training and management oversight, to the accounting organizations responsible for resolving unmatched disbursements to competently address the problem.	Closed – Implemented DOD concurred with this recommendation, and has taken some steps in response to it. For example, staffing has been provided to task forces initiated to address and resolve the Navy's unmatched disbursement problems. DFAS and military service senior management officials have established formal goals to reduce the quantity and dollar amount of problem disbursements, including unmatched disbursements. Progress toward these goals is monitored monthly by the DOD Comptroller and the Comptroller of the military services, including the Navy. In addition, in March 1997, Navy issued detailed instructions on the processes to be used when resolving unmatched disbursements. Also, the Navy liaison... View More
Department of the Navy	To prevent future unmatched disbursements, the Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to emphasize to all funding and accounting offices the importance of recording all obligations promptly and accurately in the accounting system.	Closed – Implemented The Navy and DFAS issued separate memorandums in May and June 1993 which reemphasized to the respective organizations' management the need and importance of recording obligations promptly and accurately in fund control and accounting systems.
Department of the Navy	The Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to emphasize to all funding, disbursing, and accounting offices the importance of entering disbursements correctly in the Navy's financial reporting system, which provides data to the accounting system.	Closed – Implemented The Navy and DFAS issued memorandums in May and June 1993 detailing the importance of entering disbursements correctly in financial systems.
Department of the Navy	The Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to emphasize to all funding, disbursing, and accounting offices the importance of using authorized contract numbers and payment supporting documentation to correctly match unmatched disbursements with related obligations.	Closed – Implemented DOD concurred and in June 1993 the Navy implemented new procedures and practices for reviewing and reentering unmatched transactions to the proper obligation records in the accounting system. In August 1993, DFAS implemented a Master Business Plan to eliminate systemic problems that cause unmatched disbursements and negative unliquidated obligations.
Department of the Navy	To ensure that disbursing office errors are promptly detected and corrected, the Secretary of the Navy should direct the Assistant Secretary of the Navy (Financial Management) to modify Navy regulations and procedures to require that copies of necessary documentation, including contracts, acceptances, and invoices, be made available to and used by the organizations responsible for resolving unmatched disbursements.	Closed – Implemented DOD adopted procedures for the "task force" review of unmatched disbursements that require the necessary documentation for identified unmatched transactions being forwarded to the DFAS center while the transactions are researched and resolved.

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Topics

Auditing and Financial Management

Accounting proceduresAppropriated fundsBudget obligationsBudget outlaysErroneous paymentsFederal agency accounting systemsFinancial managementFinancial recordsInternal controlsExpenditure of funds