Inspector General Robert P. Storch announced today that the Department of Defense Office of Inspector General released the “Audit of the DoD’s Plans to Address Longstanding Issues with Outdated Financial Management Systems.” The report highlights enduring concerns with the DoD’s financial management systems. These financial management systems must provide accurate, reliable, and timely financial management information to enable the DoD to ensure financial accountability.
“The DoD faces critical challenges in ensuring the accuracy of its internal controls over financial reporting,” said IG Storch. “Without prompt corrective actions, the DoD will continue to allocate significant resources to noncompliant, outdated systems, jeopardizing its ability to produce accurate financial management information and increasing the risk of poor enterprise-wide decisions.”
The DoD OIG found in the audit released today that the DoD had an incomplete list of its financial management systems, and its plans for system compliance were inadequate. The DoD OIG also identified $727.9 million in potential monetary benefits that could be realized if the DoD retires systems that are not scheduled to retire in the next few years, and operates in a more simplified systems environment.
Without resolution of the issues identified in our audit, instead of the DoD achieving its goal to create a simplified, integrated, and modern Information Technology systems environment, it will continue to spend large sums of money on noncompliant, outdated systems. Without compliant and modern systems, the DoD is at risk of making poor enterprise-wide business decisions, which could directly impact the DoD’s mission to ensure the security of our Nation.
To address these issues, the DoD OIG made 31 recommendations to the Deputy Secretary of Defense, the Under Secretary of Defense (Comptroller)/Chief Financial Officer, the DoD, and the DoD Chief Information Officer. The recommendations included creating an ideal end-state document that identifies the financial management systems the DoD will have when it achieves compliance with the Federal Financial Management Improvement Act of 1996 (FFMIA); creating a strategy for all DoD financial management systems to become FFMIA compliant or retired and replaced in a timely manner; and obtaining justification from system owners for the continued use of each system in the Defense Business System Audit Remediation Plan.
The DoD OIG also recommended that the Deputy Secretary of Defense approve the continued use of each system in the Defense Business System Audit Remediation Plan, and that the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, reevaluate the DoD’s timeline for modernizing the DoD’s financial systems in an effort to expedite the remediation of the DoD’s noncompliance with the FFMIA.
The DoD OIG will continue to monitor the DoD’s progress toward full implementation of the recommendations in this report.