DODIG-2017-068, March 16, 2017 —
We determined whether the Department of the Navy (Navy) has developed and implemented an adequate information technology strategy to efficiently manage its financial systems, and identified the costs associated with maintaining and upgrading its financial systems.
The Navy did not have an information technology strategy to effectively manage its financial management systems. The Chief Financial Officers Act of 1990 requires Federal agencies to prepare annual financial statements and requires the financial statements to be audited. However, Navy personnel continued to use financial management systems that did not comply with standards to support the preparation of auditable financial statements. In addition, the Navy and Defense Finance and Accounting Service’s costs to maintain systems and develop new functionality in the Navy’s decentralized multiple systems environment were expensive.
This occurred because the Navy did not have an enterprise-wide approach to managing its financial management systems. Instead, the Navy allowed its commands to develop and select their own systems. As a result, the Navy and Defense Finance and Accounting Service spent $2.5 billion over the last decade and plan to spend an additional $823.4 million over the next 5 years on maintaining and developing new functionality for Navy financial management systems that are not compliant with the standards that might not support auditable financial statements and not meet the congressional mandate to have auditable financial statements by September 30, 2017.
We recommend that the Assistant Secretary of the Navy (Financial Management and Comptroller) develop milestones and performance measures for a Navy-wide strategic plan for financial management systems. The plan should implement compliant systems and provide a cost benefit analysis.
Management Comments and Our Response
The Acting Assistant Secretary of the Navy (Financial Management and Comptroller) agreed with our findings and recommendations. Therefore, the recommendations are resolved but remain open. We will close the recommendations after we receive the strategic plan for financial management systems and verify that it includes an implementation plan with milestones and performance measures with the agreed upon implementation of compliant systems and continued cost benefit analyses.