Objective:
We determined whether Other Defense
Organizations (ODOs) had appropriate
controls in place over the procure‑to‑pay
process to ensure accurate, complete,
and auditable line-item data for financial
statement audits. Specifically, we
reviewed whether controls were in
place to ensure the accurate and timely
update of ODO expenditures identified
as problem disbursements.
Finding:
For the ODOs we reviewed, controls did not
effectively ensure the accurate and timely
update of ODO expenditures identified as
problem disbursements.
As a result, the Office of the Under Secretary
of Defense (Comptroller) (OUSD(C)) could
not use detail‑level disbursement and
collection detail provided by the Defense
Finance and Accounting Service (DFAS) to
support U.S. Treasury index 97 Fund Balance
With Treasury reconciliations.
OUSD(C) must be able to reconcile (match)
detail-level data to U.S. Treasury data to
demonstrate that controls are in place to
produce a complete universe of transactions
for auditable financial statements. Until a
complete universe can be produced, OUSD(C)
may be unable to resolve its longstanding
Fund Balance With Treasury material
weakness or achieve audit readiness.
Recommendations:
We recommend that the Under Secretary
of Defense (Comptroller) and the Deputy Chief
Management Officer:
- develop a coordinated and standardized strategy with the DFAS and the ODOs to exchange and manage problem disbursement data; and
- oversee the strategy’s implementation to ensure standardization.
We also recommend that the Directors, ODOs, and DFAS
revise service-level agreements based on the end-to-end
business process identified. These agreements should
include clearly defined roles and responsibilities, internal
controls, performance metrics, and quality assurance plans
to provide detail-level data and timely correct and reduce
problem disbursements.
Management Comments and
Our Response:
Comments from the Deputy Chief Financial Officer, responding
for the Under Secretary of Defense (Comptroller) and the
Deputy Chief Management Officer; the Principal Director for
Business Operations, Defense Security Cooperation Agency
(DSCA), responding for the Director, DSCA; and the Deputy
Director, Missile Defense Agency (MDA), responding for the
Director, MDA, addressed all specifics of the recommendations,
and no additional comments are required.
However, comments from the Deputy Director of Operations,
DFAS, responding for the Director, DFAS, and the Director of
Finance, Defense Logistics Agency (DLA), responding for the
Director, DLA, partially addressed the recommendations. In
addition, the Director, Defense Health Agency (DHA) did not
provide comments to the draft report. We request Deputy
Director of Operations, DFAS; Director of Finance, DLA; and
Director, DHA, provide comments to the final report by
April 29, 2016.