Nov. 30, 2012 —
What We Did
We determined whether DoD developed and implemented effective controls to prevent future Antideficiency Act (ADA) violations in the Military Personnel (MILPERS) accounts. This audit was required by Section 8109 of the Consolidated Appropriations Act, 2012.
What We Found
The Military Departments were generally effective in implementing and sustaining corrective actions for the nine MILPERS ADA violations, totaling $541.9 million, reported since October 1, 2002. Specifically, the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD (USD[C]/CFO) and the Military Department's Assistant Secretaries for Financial Management and Comptroller (Comptroller) personnel provided adequate support to substantiate that 36 of 44 corrective actions were implemented and sustained. However, in four of the nine violations, Army and Navy Comptroller personnel could not demonstrate that they had completed and sustained eight corrective actions, including three actions still in process. This occurred because DoD had not established sufficient controls to ensure that required corrective actions in MILPERS ADA violation reports were properly implemented, sustained, and documented. As a result, DoD remained vulnerable to future MILPERS ADA violations.
Army and Navy Comptroller personnel did not assess the adequacy of control procedures established for managing centrally managed allotments (CMAs). This occurred because Army personnel did not recognize this requirement before FY 2012, and Navy personnel did not understand that the MILPERS accounts were covered by this requirement. As a result, the Army and Navy had limited assurance that controls will prevent future MILPERS ADA violations and they have not justified the continued operation of MILPERS accounts as CMAs.
The USD(C)/CFO should require the Military Departments to report the status of all unimplemented corrective actions and update the DoD Financial Management Regulation to clarify the definition of a CMA and require the Military Departments to provide written assurance of their annual review of CMAs to the USD(C)/CFO.
We recommend that the Assistant Secretaries of the Army, Navy, and Air Force (Financial Management and Comptroller) establish procedures to document corrective actions taken. The Navy should also identify all its CMAs and begin performing and documenting annual reviews.
Management Comments and Our Response
Comments from the Navy were responsive. Comments from the USD(C)/CFO, Army, and Air Force were partially responsive. We request additional comments.
This report is a result of Project No. D2012-D000FI-0118.000.