What We Did
We determined whether the Defense Agencies Initiative (DAI) fulfilled selected functional capabilities needed to generate accurate and reliable financial data and reported data in compliance with United States Standard General Ledger (USSGL) requirements. Due to the disestablishment of the Business Transformation Agency, Defense Logistics Agency assumed responsibility for DAI on August 1, 2011.
What We Found
DAI did not fulfill functional capabilities needed to generate reliable financial data. DAI officials did not:
- consistently transmit 9 of 53 attributes needed to generate reliable financial information. This occurred because DAI officials did not follow guidance when configuring DAI reporting attributes and did not prevent DAI from processing incomplete manual vouchers.
- demonstrate that DAI could record transactions in compliance with the Standard Financial Information Structure Transaction Library (SFIS). Of 1,612 account codes, 1,551 were missing. This occurred because DAI officials did not have complete system documentation.
- include 3 out of 1,064 accounts in the DoD Standard Chart of Accounts(SCOA). This occurred because DAI officials did not believe all accounts were necessary because the organizations that used DAI did not use these accounts.
The root cause of these problems was that the Deputy Chief Management Officer (DCMO) and the Under Secretary of Defense (Comptroller)/Chief Financial Officer [USD(C)/CFO] did not ensure DAI officials properly configured DAI before deploying the system. As a result, financial data were unreliable, creating uncertainty on how $402 million out of $9.3 billion was reported on FY 2011 financial statements for the Defense Technical Information Center, Missile Defense Agency, and the Uniformed Services University of the Health Services.
What We Recommend
We recommend that DoD officials configure DAI with all USSGL reporting attributes, establish controls over manual vouchers, develop complete system documentation, and annually certify that DAI is USSGL and SFIS compliant. In addition, DoD officials should revise the DoD Financial Management Regulation to require core financial systems to include all the accounts in the DoD SCOA, and require DoD to accumulate and report major program costs by program instead of appropriations. Also, DoD officials should improve their oversight of DAI to ensure it complies with USSGL and SFIS guidance.
Management Comments and Our Response
Management comments were responsive for four of eight recommendations. We request that USD(C)/CFO and DCMO provide additional comments.