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Military Personnel: DOD Needs to Strengthen the Annual Review and Certification of Military Personnel Obligations

GAO-05-87R Published: Nov 29, 2004. Publicly Released: Nov 29, 2004.
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Highlights

Each year, Congress appropriates billions of dollars to pay and support U.S. military personnel at home and overseas. In fiscal year 2003, military personnel (MILPERS) appropriations amounted to more than $109 billion. Once the funds are appropriated, the military services are responsible for ensuring that the funds are properly obligated and disbursed. Their end-of-the-fiscal-year review is critical to the next year's budget formulation process because the services use the obligations for the most recent fiscal year completed as a point of reference in developing their new budgets, and Congress uses this information as a point of comparison in its review of the new budget requests. In our prior work for the House and Senate appropriation and authorization committees, reviewing the services' budget justifications, we found that although the services were conducting annual reviews and certifications, the services did not review transactions by matching obligations to individual disbursements in all of the years that disbursements can occur, as required by the Department of Defense (DOD) Financial Management Regulation. We also found that the services disbursed some obligations for purposes other than those reported in their budget submission, but their year-end reviews did not show how these funds were actually disbursed. As a result of our work, the report by the conferees for the House and Senate defense appropriations committees for fiscal year 2004 directed "the Secretary of Defense to ensure that the services strengthen the annual review process by including a review of the accuracy of prior year appropriations below the budget activity level. To facilitate this review, the financial management improvement initiative should include financial decision-making processes that provide transparency of disbursements at the same level as the budget submission." In its report for fiscal year 2005, the House Appropriations Committee reiterated this direction. For this letter, we examined whether the military services are reviewing the accuracy of their MILPERS obligation balances as required by DOD's Financial Management Regulation and as directed by congressional conferees, and, if not, what factors are preventing the services from doing this.

Recommendations

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of Defense To ensure that the services are reviewing the accuracy of MILPERS obligations and disbursements as required, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller/Chief Financial Officer) to require the Office of Accounting, Finance, Policy and Analysis to monitor the services' review results and to clarify the regulation that applies to the review and certification of the accuracy of MILPERS obligations, by including MILPERS accounts in its triannual review requirements and providing specific guidance to the services to match obligations to individual disbursement transactions until the appropriation cancels.
Closed – Not Implemented
According to the DOD IG in July 2009, although the Under Secretary of Defense (Comptroller) published a revision to the Department of Defene Financial Management Regulation Volume 3, Chapter 8 in June 2005, the Under Secretary withdrew the revision in April 2009. The Office of the Under Secretary of Defense (Comptroller) will clarify the guidance in the Financial Management Regulation during the first quarter of fiscal year 2010 to include the Military Personnel appropriations in the triannual review requirements.
Department of Defense To ensure that the services are reviewing the accuracy of MILPERS obligations and disbursements as required, the Secretary of Defense should direct the Under Secretary of Defense (Comptroller/Chief Financial Officer) to require the Defense Finance and Accounting Service to change the format in the monthly financial reports for MILPERS appropriations to include information at the line item level (budget submission level) for all 6 years that funds can be disbursed until the appropriation cancels.
Closed – Implemented
GAO recommended that the Defense Financial Accounting Service, the organization responsible for providing detailed financial data to the services, change the format in the monthly financial reports for the military personnel appropriations to include information at the line item level (budget submission level) for all 6 years that funds can be disbursed until the appropriation cancels. In response to our recommendation, the Department of Defense revised instructions in its Financial Management Regulation (Volume 6A, Chapter 4 released in November 2006) to require that the military services report information in their respective monthly accounting reports on budget execution data for at...

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Accounting proceduresAppropriated fundsBudget obligationsBudget outlaysCost analysisDefense economic analysisFunds managementMilitary appropriationsMilitary personnelFinancial managementMilitary forcesTransparency