Objective
We determined whether the United States Transportation Command (USTRANSCOM) performed triannual reviews (TARs) of certain financial transactions in accordance with applicable regulations. Specifically, we determined whether the TARs performed provided reasonable assurance that unliquidated obligations, accounts payable, unfilled customer orders, and accounts receivable transactions were valid, accurate, and complete.
Finding
We focused on May 31, 2016, and September 30, 2016, for our review. USTRANSCOM did not perform TARs during this period in accordance with the DoD Financial Management Regulation. This occurred because Program Analysis and Financial Management Directorate personnel did not develop required processes and procedures to complete TARs. In addition, USTRANSCOM personnel stated that Financial Improvement and Audit Readiness workload priorities precluded completion of TAR reporting efforts under DoD Financial Management Regulation guidelines. Instead, Directorate personnel limited their review to actions on a manually created open document list (ODL) that did not contain all open obligations as required by the DoD Financial Management Regulation. As a result, USTRANSCOM was unable to determine that unliquidated obligations of $1.8 billion, accounts payable balances of $0.7 billion, accounts receivable balances of $1.3 billion, and unfilled customer orders were valid, accurate, and complete.
Furthermore, because USTRANSCOM was unable to provide sufficient supporting documentation we were unable to obtain reasonable assurance that those balances were properly reported. Because TARs were not completed as required, USTRANSCOM and the Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD may not have had reliable financial information to make informed decisions.
Recommendations
We recommend that the Director, Program Analysis and Financial Management Directorate, USTRANSCOM, develop and implement procedures to execute triannual reviews in accordance with DoD Financial Management Regulation requirements. The processes and procedures should ensure that each commitment, obligation, accounts payable, unfilled customer order, and accounts receivable is properly recorded, and reports are prepared for submission in the DoD standard format. Moreover, the processes and procedures should identify staff positions responsible for executing proper TARs.
Management Comments and Our Response
The Deputy Commander, USTRANSCOM, agreed with our finding and recommendations. The Deputy Commander agreed to coordinate with the Office of the Secretary of Defense (Comptroller) and the Air Force to develop, document, and implement processes and procedures to execute triannual reviews in accordance with Office of Secretary of Defense guidance, including identifying responsible personnel. Additionally, the Deputy Commander agreed to ensure reports are correctly and accurately prepared based on Office of Secretary of Defense guidance. We consider the Deputy Commanders comments responsive to our recommendations; therefore, the recommendation is resolved but remains open.
We will close this recommendation once we verify that USTRANSCOM has developed, documented, and implemented processes and procedures for properly executing the triannual review that include identifying responsible personnel, coordination with the Office of Secretary of Defense (Comptroller) and Air Force, and detailed instructions to ensure reports are correctly prepared based on Office of Secretary of Defense guidance. The Deputy Commander, USTRANSCOM, estimated that the recommendation would be implemented by September 30, 2017.
This report is a result of Project No. D2016-D000FS-0219.000.