We determined whether DoD properly planned the implementation of the Invoice Processing Platform (IPP) to mitigate the material weakness of improperly eliminating intragovernmental transactions (IGTs) for Other Defense Organizations.
DoD financial management systems cannot produce the transaction-level details and supporting documentation necessary to reconcile buyer and seller data and support IGT eliminations on the applicable DoD financial statements.
DoD is committed to implementing the U.S. Department of Treasury-developed IPP system for storing IGT documentation to remediate IGT elimination challenges. However, the Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD (OUSD[C]/CFO), did not appropriately plan for implementing IPP across DoD. This occurred because OUSD(C)/CFO did not:
- perform an assessment of IPP to determine whether it effectively reconciles and eliminates IGTs,
- designate an official to oversee the implementation of IPP,
- develop cost estimates and obtain funding for implementing IPP across DoD,
- establish an implementation date with measurable milestones for implementing IPP throughout DoD,
- issue Buy/Sell transaction implementation guidance, or
- develop a plan to reconcile and eliminate IGTs other than Buy/Sell transactions.
As a result, intragovernmental account balances reported on the DoD Agency-wide basic financial statements were not accurate and supported. Inaccurate and unsupported intragovernmental account balances continues to be one of the long-standing material control weaknesses preventing DoD from achieving audit readiness on the DoD Agency-wide basic financial statements. Specifically, DoD’s ability to be audit ready by FY 2017 is at risk.
The Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, (USD[C]/CFO), should review the results of the IPP pilot program to determine whether it should be implemented throughout DoD. If IPP should be implemented, the USD(C)/CFO should designate an official to oversee the implementation, develop cost estimates and obtain funding, establish an implementation date with milestones, develop and issue implementation guidance, and revise DoD Financial Management Regulations.
Management Comments and Our Response
The Deputy CFO, responding for the USD(C)/CFO, stated that IPP will be implemented throughout DoD. Management comments addressed all the specifics of the recommendations, and no further comments are required.