Report | May 5, 2014

Logistics Modernization ProgramSystem Not Configured to SupportStatement of Budgetary Resources

DODIG-2014-066

Objective

We determined whether the Army’s Logistics Modernization Program (LMP) system Product Management Office implemented the Budget-to-Report (B2R) business process required to support the Army Working Capital Fund (AWCF) Statement of Budgetary Resources.

Findings

LMP did not contain the functionality to perform the B2R business process. Specifically, Army financial managers did not provide the LMP Product Management Office the correct system configuration requirements. This occurred because Army financial managers did not assess the DoD transaction codes to determine applicability to AWCF business areas or to incorporate existing manual workarounds, and managers in the Office of the Under Secretary of Defense (Comptroller)/ Deputy Chief Financial Officer, DoD, did not provide sufficient oversight. As a result, Army financial managers, despite spending more than $1.8 billion, could not use the LMP trial balance data to prepare the Statement of Budgetary Resources and other budgetary reports without making more than $41 billion in adjustments. This put at risk the Army’s ability to achieve audit-ready AWCF financial statements by FY 2017.

Office of Under Secretary of Defense (Comptroller) personnel did not provide information about the preparation, submission, and approval of the apportionment to the Army Budget Office for accurate and timely recording in the general ledger. This occurred because personnel did not reengineer the funds-distribution-process or develop procedures for budget offices to record appropriate accounting entries in enterprise resource planning systems. In addition, Army Budget Office personnel did not appropriately suballot all types of budgetary authority. As a result, Army financial managers configured LMP to post the end effects of multiple business events that misreported the amount and status of budgetary resources by about $1.8 billion.

Recommendations

We recommend the Under Secretary of Defense (Comptroller)/ Chief Financial Officer, DoD, develop procedures for distributing budget authority to the budget offices for recording in the enterprise resource planning systems and establish comprehensive suballotment procedures. We recommend the Deputy Chief Financial Officer collaborate with the Deputy Chief Management Officer to extend the DoD transaction codes’ alignment in the DoD Business Enterprise Architecture. Among other recommendations, we recommend that Army financial managers develop a plan of action and milestones to validate and certify that system functionality aligns with the Transaction Library, applicable business events, and the B2R business process.

Management Comments and Our Response

The response from the Deputy Chief Financial Officer on Recommendation B.1 partially addressed the recommendation. Based on comments from the Acting Deputy Chief Management Officer, we redirected Recommendation A.2 to the Deputy Chief Financial Officer. The response from the Deputy Assistant Secretary of the Army (Financial Operations) addressed all the specifics of the recommendations directed to the Army.