Financial Management: Status of Defense Efforts to Correct Disbursement Problems
AIMD-95-7
Published: Oct 05, 1994. Publicly Released: Oct 05, 1994.
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Highlights
Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) efforts to properly match disbursements with corresponding obligations, focusing on: (1) DOD progress in resolving its disbursement problems; (2) DOD criteria for identifying and reporting improperly matched disbursements; and (3) systemic control weaknesses that prevent DOD from resolving disbursement problems.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of the Comptroller | The Comptroller, DOD, should establish a new benchmark to measure progress in reducing DOD disbursement problems. At a minimum, the new benchmark figure should: (1) include all DOD activities; (2) be comprised of gross values; and (3) include all disbursements that have not been received by an accountable activity for matching with an obligation within 60 days after a payment is made. |
A benchmark was established using the criteria we recommended in the report. However, because there are millions of transactions involved, it is not possible to validate all of DOD's figures. In addition, the numbers change daily as new balances are identified during routing reconciliations. This recommendation will always be valid as long as DOD disburses monies.
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| Office of the Comptroller | The Comptroller, DOD, should enforce existing regulations requiring DOD activities to record obligations and disbursements in an accurate and timely manner. |
Both the Deputy Secretary of Defense and the DOD Comptroller issued memorandums reinforcing the need to follow DOD policies and procedures.
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| Office of the Comptroller | The Comptroller, DOD, should require DOD activities to reconcile disbursements that have not been properly matched to obligations and correct its accounting records for all appropriation accounts, including those accounts that have been closed. |
In response to GAO's work, the DOD Comptroller has issued several memoranda reemphasizing the importance of reviewing and correcting unmatched disbursement transactions.
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| Defense Finance and Accounting Service | The Director, Defense Finance and Accounting Service (DFAS), should direct the DFAS-Columbus office to resolve the $1 billion of negative balances for the 2,551 contracts in the Mechanization of Contract Administration Services. |
The DFAS Director instructed DFAS Columbus to reconcile over disbursed contracts. In addition, DFAS Columbus implemented a policy that requires supervisory approval before a disbursement can be made that would cause a negative obligation contract. This procedure should provide management with more control and visibility over contracts that have recorded expenditures in excess of recorded obligations.
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| Defense Finance and Accounting Service | The Director, DFAS, should require the DFAS-Columbus office to report monthly to DFAS headquarters on the number of contracts that have expenditures in excess of obligations. The report should include: (1) an aging schedule to show specific periods of time that the contracts and the related dollar values have been in a negative status; (2) the number and dollar amounts of new overdisbursed contracts added during the period; and (3) the number and dollar amounts of overdisbursed contracts resolved during the period. |
DFAS Columbus developed a monthly report to show the status of contracts in overdisbursed status.
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Topics
Accounting proceduresBalances of budget authorityDefense appropriationsErroneous paymentsExpired appropriationsFederal agency accounting systemsFinancial managementFinancial recordsInternal controlsExpenditure of funds