What We Did
We determined whether internal controls at the Army disbursing office on Soto Cano Air Base, Honduras, were effectively designed and operating adequately to safeguard, account for, document, and report Cash and Other Monetary Assets (COMA). The Honduras disbursing office had $1.2 million in cash on hand as of November 2, 2011. We also evaluated whether the U.S. Army Financial Management Command (USAFMCOM) effectively implemented technical oversight and provided assistance to the Honduras disbursing office.
What We Found
Controls at the Honduras disbursing office were not adequate to safeguard, account for, document, and report cash. Specifically, the then deputy disbursing officer (DDO) did not avoid conflicts of interest, properly complete “Security Container Check Sheets,” and secure cash.
This occurred because DDO appointments were rotated approximately every 6 months and the DO did not have adequate standard operating procedures in place. Moreover, the then DDO stated that he was not aware of the requirements and was not trained to perform these duties.
In addition, the disbursing officer (DO) did not prepare the report on foreign currency purchased and improperly revoked and appointed DDOs. This occurred because he did not have procedures in place to ensure that the report was prepared and DDO revocations and appointments were conducted in a timely manner.
The Commander, Joint Task Force-Bravo (JTF-B), did not properly complete physical loss of funds (LOF) investigations. The DO staff stated that the lack of Command involvement in appointing investigating officers and the inexperience of the DDOs and their 6-month rotation caused the problems with the LOF investigations. The Deputy Commander, JTF-B, also attributed the problems with the investigations to the lack of continuity of staff.
Lastly, the Director, USAFMCOM, did not provide adequate oversight. The Director stated that adequate oversight was provided during staff assistance visits. However, none of the visits corrected the control issues identified in this report.
As a result, the Army increased its risk of loss due to error, theft, and fraud at the Honduras disbursing office.
What We Recommend
Among other recommendations, we recommended corrective actions in the areas of separation of duties, training, staff assistance visits, and improved procedures all of which should improve security over cash. We also recommended that senior management review the actions of officials responsible for providing oversight of the Honduras disbursing office, conducting LOF investigations, and ensuring adequate procedures are in place.
Management Comments and Our Response
We received management comments from the Army and Defense Finance and Accounting Service that were responsive, partially responsive, and nonresponsive. We did not receive comments from the U.S. Southern Command. We request that management provide additional comments in response to this report by April 3, 2013.
This report is a result of Project No. D2011-D000FP-0260.000.