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DOD Financial Management: Air Force Needs to Improve Its System Migration Efforts

GAO-22-103636 Published: Feb 28, 2022. Publicly Released: Feb 28, 2022.
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Highlights

What GAO Found

The Air Force relies on its financial management systems to help manage department operations and support core accounting activities, such as maintaining financial records and making payments. Its environment is complex and consists of multiple systems that are not fully integrated, preventing Air Force management from obtaining timely, accurate, and reliable information on the results of its business operations. To address these issues, the Air Force has been migrating from its legacy, or aging, financial management systems to more modern target systems. One such key target is the Defense Enterprise Accounting and Management System (DEAMS), which is to be the Air Force's core accounting and finance system. DEAMS has been deployed incrementally to Air Force users since 2005, and the Air Force plans to expand its use in the future (see figure).

Air Force's Defense Enterprise Accounting and Management System (DEAMS) Timeline

Air Force's Defense Enterprise Accounting and Management System (DEAMS) Timeline

The Air Force has not followed leading practices, such as developing a migration plan to guide its transition from the existing legacy system to DEAMS. Instead, the Air Force decided to pursue a dual processing policy in which the legacy and target systems would both continue to operate for at least the next 10 years. The continued use of the legacy system means that resolution of its deficiencies would be delayed for many years. Further, associated internal control weaknesses would also persist.

Auditors have identified numerous issues related to the Air Force's broader financial management systems, including DEAMS. For fiscal year 2020, auditors reported deficiencies including nonintegrated Air Force financial systems, an insufficient financial reporting process, and a lack of controls in the design of information systems. While the Air Force has some efforts under way to address financial management system–related deficiencies, it does not have a comprehensive strategy encompassing the entirety of its financial management systems modernization efforts. Without such a comprehensive financial management system strategy, it will be more difficult for the Air Force to report accurate and reliable financial information. Moreover, the Air Force will continue to face difficulties developing and fully implementing Air Force–wide corrective action plans to address the system-related issues that auditors identified. These issues have led to the Air Force not being able to provide sufficient, appropriate audit evidence to support the reported amounts in its financial statements.

Why GAO Did This Study

The Air Force is currently modernizing and migrating its financial management systems as part of a broader effort to improve financial management operations and prepare auditable financial statements. Successful system migration is key to the Air Force addressing weaknesses that financial statement auditors have identified.

The Government Management Reform Act of 1994 includes a provision for GAO to audit the U.S. government's consolidated financial statements. This report examines the extent to which the Air Force is (1) following leading practices for its financial management system migration and (2) planning to address the financial management system–related issues that auditors identified.

GAO reviewed guidance on system migration leading practices; observed DEAMS program operations; reviewed documentation related to the Air Force's migration efforts and strategy, financial statement audit results, and efforts to resolve system deficiencies; and interviewed cognizant officials.

Recommendations

GAO is making four recommendations to the Air Force, including that it develop a migration plan to more timely transition to its target core accounting systems and develop a comprehensive strategy that includes all of its financial management systems modernization efforts. The Department of Defense agreed with all four recommendations and described actions taken or planned to address them.

Recommendations for Executive Action

Agency Affected Recommendation Status
Department of the Air Force
Priority Rec.
The Assistant Secretary of the Air Force (Financial Management and Comptroller) should develop a systems migration plan based on leading migration practices to more timely transition from the Air Force's General Accounting and Finance System–Reengineered environment to the Defense Enterprise Accounting and Management System (DEAMS). (Recommendation 1)
Open – Partially Addressed
In October 2023, the Department of Defense (DOD) provided its September 2023 Department of the Air Force General Accounting and Finance System Migration Strategy and Plan ("the plan"). The plan was consistent with four of the leading migration practices described in our report and partially consistent with two of the practices. Specifically, the plan was consistent with leading practices associated with user interface capability, database capability, transition support, and system interface compatibility. The plan was partially consistent with leading practices associated with training and informing users about transition tasks and workloads. In particular, while the plan recognized the importance of training, it stated that the Air Force will develop the training content and the training schedule during the execution of the system migration. In addition, the plan provided general methods for informing users about transition tasks and workloads. However, the plan only documented high-level milestones for phase one of a three-phase migration. The plan also referred to additional documentation, which DOD did not provide in October 2023. We will continue to follow-up with DOD and update the status of this recommendation as department provides additional information.
Department of the Air Force During future DEAMS upgrades, the Assistant Secretary of the Air Force (Financial Management and Comptroller) should minimize the number of reports, interfaces, conversions, and extensions modifications and instead maximize the centralized functionality and capabilities of the target accounting system to reengineer business processes. (Recommendation 2)
Open
In its written response to GAO's final report, the Air Force concurred with this recommendation and provided a corrective action plan. In its corrective action plan, the Air Force stated that it will focus any future system upgrades and sustainment of the existing system to minimize modifications to allow the program to maximize centralized functionality and capabilities of the target accounting system. As of January 6, 2023, DOD stated that it has established a development team with primary responsibility for the reduction of modifications in DEAMS. DOD also stated that it plans to remediate or remove the DEAMS modifications to address this recommendation. The Air Force's estimated closure date for this recommendation is March 31, 2024. After DOD completes its plan we will determine if it meets the intent of our recommendation.
Department of the Air Force The Assistant Secretary of the Air Force (Financial Management and Comptroller) should ensure that future financial management system version upgrades are planned to address identified deficiencies and provide functionality that promotes Air Force compliance with federal financial management systems requirements, applicable federal accounting standards, and the U.S. Standard General Ledger at the transaction level. (Recommendation 3)
Open
In its written response to GAO's final report, the Air Force concurred with this recommendation and provided a corrective action plan. In its corrective action plan, the Air Force stated that it will focus any future system upgrades to address identified deficiencies and provide functionality that promotes Air Force compliance with federal financial management systems requirements through its agile software development methodology. As of January 6, 2023, DOD stated that it has completed development and testing of financial management system upgrade using core functionality to improve financial reporting accuracy. The Air Force's estimated closure date for this recommendation is March 31, 2024. After DOD completes its plan we will determine if it meets the intent of our recommendation.
Department of the Air Force The Assistant Secretary of the Air Force (Financial Management and Comptroller) should develop a comprehensive strategy with appropriate performance metrics and consideration of a concept of operations, for its entire financial management systems modernization effort in support of the financial statement audit. (Recommendation 4)
Open
In its written response to GAO's final report, the Air Force concurred with this recommendation and provided a corrective action plan. In its corrective action plan, the Air Force stated that it will develop a comprehensive strategy with appropriate performance metrics and consideration of a concept of operations for its entire financial management systems modernization effort. As of January 6, 2023, the Air Force stated that they are on track to implement the strategy and roadmap. The Air Force's estimated closure date for this recommendation is September 30, 2023. After DOD completes its plan we will determine if it meets the intent of our recommendation.

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Accounting standardsBest practicesFinancial managementFinancial reportingFinancial statementsInternal controlsMaterial weaknessesMilitary forcesFinancial management systemsFinancial systems