Financial Management: Challenges Facing DOD in Meeting the Goals of the Chief Financial Officers Act

Pursuant to a congressional request, GAO discussed the Department of Defense's (DOD) efforts to implement the Chief Financial Officer's (CFO) Act, focusing on the: (1) financial problems facing the department; (2) actions DOD plans to take; and (3) issues DOD must address to overcome its problems. GAO noted that DOD: (1) does not have adequate financial management processes or financial data to detect errors in annual disbursements; (2) has not properly reported billions of dollars in potential future liabilities; (3) continues to have problems protecting its assets from fraud, waste, and abuse; (4) has been unable to provide Congress with accurate accounts of its operating costs; (5) needs accurate financial information and appropriate internal controls to effectively manage over $1 trillion in assets, 3 million military and civilian personnel, and a budget of over $250 billion; and (6) has taken several initiatives to consolidate its finance and accounting systems, establish prevalidation procedures for annual disbursements, reengineer DOD business practices, and strengthen internal controls.