Financial Management: DOD Inventory of Financial Management Systems Is Incomplete

DOD has revised its Financial Management Regulation definitions of financial management systems to include primary accounting systems, administrative accounting systems, and feeder systems. DOD's feeder systems are similar to the OMB definition of a mixed system, the financial portion of which OMB specifies should be included as an agency financial management system. Specifically, OMB defines a mixed system as any information system that supports both financial and nonfinancial functions of the federal government or components thereof. Consistent with this definition, DOD's definition of feeder systems includes logistics systems, inventory systems and personnel systems. However, DOD's revised Financial Management Regulation definition of feeder systems is inconsistent with OMB's definition of a mixed system in that it states that the feeder systems do not generate financial information and are not within the scope of Section 4 of the Integrity Act.

DOD has historically omitted feeder systems from its inventory of financial management systems. In its first Biennial Financial Management Improvement Plan, DOD reported an inventory of financial management systems that included, for the first time, 83 feeder, or mixed, systems. While not a complete listing, these are those systems DOD deems critical.

DOD identified 192 systems in its first Biennial Financial Management Improvement Plan. In the forward to this plan, DOD states that it is also intended to satisfy the (1) reporting requirements of the Chief Financial Officers (CFO) Financial Management Five Year Plan - CFO Act of 1990, (2) Remediation Plan - Federal Financial Management Improvement Act of 1996, and (3) Statement of Assurance, Section IV - Federal Managers' Financial Integrity Act of 1982.