Our audit objective was to determine whether adjustments made to the data during the FY 2017 financial statement compilation process were adequately documented and supported in accordance with the DoD Financial Management Regulation (FMR). We also reviewed the process for validating its information technology (IT) corrective action plans (CAPs).
Prior audits identified deficiencies related to the Navy’s journal voucher (JV) process and IT CAP validation process. The purpose of this audit was to determine whether these deficiencies existed.
Adjustments made to the data during the FY 2017 financial statement compilation process were not adequately documented and supported in accordance with the DoD FMR. This occurred because the JV standard operating procedures did not include specific instructions tied to the DoD FMR. Until the consistently follows the DoD FMR to maintain fully documented JVs, the Navy’s financial statements will remain unsupported and will be potentially misstated.
Two of the six IT CAPs that the Information Technology Audit Readiness (ITAR) Team verified as complete were incorrectly closed. This occurred because the ITAR Team did not have an IT CAP Validation policy that included all Office of Management and Budget (OMB) Circular A-123 requirements to correct control deficiencies.
We recommend that the Comptroller:
- Develop policies and implement procedures to ensure JVs contain valid GL accounts, include adequate documentation, reflect correct dollar amounts, contain accurate financial information, and contain required approvals.
- Implement quality control review procedures in accordance with the DoD FMR.
- Develop, document, and implement a policy to validate that corrective actions have been effectively designed and implemented in accordance with OMB Circular A-123 criteria.
- Test all controls to ensure deficiencies are corrected prior to closing IT CAPs. Specifically, determine whether the controls are implemented correctly, operating as intended, and producing the desired outcome.
- Maintain an updated and accurate status for identified control deficiencies throughout the entire process.
Management Comments and Our Response:
The Comptroller addressed all specifics of the recommendations related to JV and IT CAP Validation policies and procedures. Therefore, the recommendations are resolved. We will close the recommendations once we verify the new policies and procedures have been implemented.