GAO discussed the Department of Defense's (DOD) efforts to reform its financial management operations. GAO noted that: (1) DOD complex operations and multiple accounting systems have exacerbated its financial management problems; (2) DOD financial management reform plans include consolidating its finance and accounting operations and systems, establishing prevalidation for disbursements, reengineering DOD business practices, strengthening internal controls, and improving management incentives; (3) although DOD established the Defense Finance and Accounting Service (DFAS) in 1991 to improve its departmentwide finance and accounting operations, DOD still must overcome problems related to DFAS responsibility, internal controls, personnel requirements, documentation, reorganization, and downsizing; (4) DOD has begun consolidating its finance and accounting systems, but it has not addressed all the factors that should be considered during the consolidation; (5) DOD has implemented a policy that certain payments be validated prior to disbursement and it plans to require such validations for all payments; (6) DOD is studying how to reengineer its business practices to decrease costs and increase efficiency; (7) DOD recognizes the importance of the Chief Financial Officers Act and management support to improving its financial operations and controls; and (8) closer congressional and management oversight of the Defense Business Operations Fund (DBOF) would improve DBOF operations.
Recommendations for Executive Action
|Department of Defense||1. To help turn the reform blueprint into substantive improvements, the Secretary of Defense should determine what skills are required to ensure that the plan is developed and implemented.|
|Department of Defense||2. To help turn the reform blueprint into substantive improvements, the Secretary of Defense should provide to Congress by October 1, 1995, more specific details on how the DOD reform blueprint will be implemented. This should be provided at two levels. First, a strategic overview providing more detail on the linkage between the individual reform elements, organizational responsibility, potential costs, and identification of barriers/impediments which could require congressional attention. Second, a tactical plan for fiscal year 1996 which provides specific details for each element on expected objectives to be reached, steps required to meet those objectives, milestones for each step, and performance measures so that progress can be tracked and evaluated.|
|Department of Defense||3. To help turn the reform blueprint into substantive improvements, the Secretary of Defense should clean up the existing data in the financial systems and place special emphasis on ensuring that basic accounting policies and procedures are followed so as to improve data accuracy in the current systems while new systems are under development.|
|Department of Defense||4. To help turn the reform blueprint into substantive improvements, the Secretary of Defense should establish an independent, outside board of experts to provide counsel, oversight, and perspective to reform efforts.|