Report | Nov. 20, 2014

Additional Actions Needed to Effectively Implement the Army Fund Balance With Treasury Reconciliation Tool

DODIG-2015-038

Objective

The objective was to determine whether the Defense Finance and Accounting Service (DFAS), in coordination with the U.S. Army, properly designed the Army Fund Balance With Treasury (FBWT) Tool (AFT) to effectively complete the FBWT reconciliation between the U.S. Army General Fund and the U.S. Treasury.

Finding

The Army and DFAS-Indianapolis (DFAS-IN) did not design and implement AFT and corresponding processes in a way that effectively reconciles Army’s FBWT account balance. Specifically:

  • DFAS-IN did not reengineer its processes to effectively integrate the AFT;
  • AFT did not effectively compare the Army’s summary-level FBWT with Treasury; and
  • AFT included only 32 percent of the Army’s net outlays at the transaction level.

The Army and DFAS-IN personnel did not develop and implement a coordinated strategy for integrating AFT into the reconciliation process. In addition, the summary-level reconciliation is not effective because the AFT Program Management Office’s (PMO) goal was only to support the transaction-level reconciliation, not summary-level adjustments. AFT’s transaction-level reconciliation was limited because the Army and AFT PMO expect that the total value of FBWT activity from the legacy systems and the appropriations before FY 2013 would decrease over time and eventually be immaterial to the FBWT account.

As a result, the Army could not use AFT to support its reconciliation at the transaction level for $173 billion of $302 billion, or 57 percent, of net outlays for all appropriations. For current-year appropriations, the Army could not use AFT to support reconciling $38 billion of $65 billion of net outlays. Although the Army asserted to the audit readiness of its FY 2015 Schedule of Budgetary Activity (SBA), the Army has not demonstrated an effective FBWT transaction-level reconciliation, a key requirement for assertion. The inability to reconcile at the transaction level for current-year appropriations represents a significant obstacle the Army must overcome to show it has controls in place to produce a complete universe of transactions for an auditable SBA. Until these issues are corrected, the Army is at risk of being unable to resolve its longstanding FBWT material weakness.

Recommendations

Army officials should update the Army’s Financial Improvement Plan to show the steps and milestones needed to put AFT in operation. In addition, Army and DFAS officials should implement a coordinated strategy for integrating AFT into DFAS-IN’s reconciliation process; determine the most effective method for completing the summary-level reconciliation; document the decrease of Army’s legacy balances to become immaterial over time; and implement a methodology for reconciling all FBWT transactions.

Management Comments and Our Response

Comments from the Deputy Assistant Secretary of the Army (Financial Operations), responding for the Assistant Secretary of the Army (Financial Management and Comptroller), and the Deputy Director, DFAS-IN, responding for the Director, DFAS-IN, addressed the recommendations and no further comments are required.