oversight

Need To Detect and Correct Military Pay Errors Prior to Member's Separation From the Service

Published by the Government Accountability Office on 1971-11-03.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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                                  LMa95488




Need To Detect And
Military Pay Errors
Prior To Member’s   eparation
From The Service 6-125037

Department   of the Army




UNITED STATES
GENERAL ACCOUNTING              OFFICE
                                   UNITED STATES GENERAL ACCOUNTING OFFICE
                                                WASHINGTON.   D.C.   20548



DEFENSE    DIVISION




          B-l    25037




          Dear        Mr.   Secretary:

                  This is our report    on the need to detect and correct    military  pay
          errors    prior   to member’s    separation from the service,    Department     of
          the Army.       Cur findings,  conclusions,  and recommendations       are sum-
          marize-d    in the digest.

                     Most of the matters     referred    to have been discussed          with the
           Comptroller       of the Army,    and substantial      corrective     action has been
          initiated.      These constructive       and aggressive      actions taken by the
          Comptroller        to implement     our recommendations            are set forth in his
          letter     of September     8, 1971, attached    as appendix III.

                   This report   is subject to the provisions      of section  236 of the
          Legislative    Reorganization     Act of 1970. We shall appreciate        receiving
          copies of the statements       you furnish  to specified    committees    in accor-
          dance with these provisions.

                Copies          of this report   are being sent to the Director,        Office    of
          Management            and Budget,    and to the Secretary  of the Army.

                                                                 Sincerely   yours,




                                                                 Director,   Defense   Division

          The Honorable                                  /
          The Secretary            of Defense




                                            50TH ANNIVERSARY         7921- 1971
        I
        I    GENER'ALACCOUNTING OFFICE                                          NEED TO DETECT AND CORRECT
             REPORT TO THE                                                      MILITARY PAY ERRORS PRIOR TO
        i    SECRETARYOF DEFENSE                                                MEMBER'S SEPARATION FROM THE
        I                                                                 .-.
                                                                                SERVICE
                                                                          I     Department of the Army
                                                                                B-125037                 2 D

        I
        ;    DIGEST
             ---_--

        l     WHY THE REVIEW WASMADE
        I
        I
        I            Prior audits of pay accounts of Army members by the General Accounting
        I            Office     (GAO) have shown that errors,              mostly overpayments,     amount to
        I
    I                tens of millions      of dollars           annually   and result  principally    from poor
    I                Army   military   pay   administration           throughout   the servicemen's     period
    I                of ac ti.--@-&-@T .. ..-.-.1-11--. __.-.-,---
    i
    I
    I                In 1964 the Army instituted      the Quality  Assurance Program to upgrade
    I                the quality  of pay transactions.      Because of the significant    number of
    I                Army members who separate     from the service   each year or reenlist     (over
    I
    I                750,000 in fiscal  year 1970), GAO undertook       a review of the quality     of
    I                individual  pay accounts at the time servicemen        separate from the Army,
    I
    I                to test the improvement program started       by the Army.
    I


    I        FINDINGS AND- CONCLUSIONS
    I
    I
    I                The Army continues      to separate   thousands of servicemen each month who
    I                are either   overpaid     or underpaid at the time of separation.        GAO au-
    I
    I                dited samples of pay accounts of servicemen who separated            from the
    I                service   or reenlisted     in November 1969 and found that about 37 percent
    I
    I
                     of the pay accounts in both samples were incorrect.            About 44,000 men
    I                having 1 year or more of military         service   separated to return   to civil-
    I                ian life,   and about 7,000 men reenlisted        that month.   (See p. 7.)
    I

                     On the basis of sample audits,      GAO estimates   that,    in November 1969,
                     overpayments,    uncorrected  at the time of separation,       amounted to about
                     $2 million    and that underpayments   amounted to about $100,000.        GAO be-
                     lieves   that this is a conservative    estimate  inasmuch as it is based
                     only on records available     at the Finance Center,      U.S. Army.    (See p. 5.)

                     During prior   reviews       GAO identified      the following       major causes of er-
                     roneous payments:        (1) excessively       high-turnover        rate and shortage      of
                     trained  personnel,      (2) lack of sufficient          training,      and (3) weak super-
                     vision.   Also many      installation       commanders, in recent correspondence
                     with GAO concerning        deficiencies      in their    installations'       pay accounts,
                     concluded that high        turnover     of personnel,      shortage     of trained    person-
                     nel, and inadequate        training     were major causes of erroneous             payments.
                     (See pp. 4 and 5.)




I           Tear Sheet                                         1
I
         During this review GAO identified         the same general types of errors          .         I
         which had been reported  in prior        audits.  (See pp. 8 and 19.)   The                   i
         major types are:                                                                              I
                                                                                                       I
                                                                                                       I
           --Erroneous      leave settlements.                                                         I
           --Unliquidated        advance, casual, and partial    payments.
           --Unsatisfied       indebtedness    on discharge.
           --Duplicate      payments.
           --Unliquidated        indebtedness   established  on pay adjustment     documents.
                                                                                                       I
         GAO concluded that,   although the Army had increased     its emphasis on                     I
         pay and allowance matters      (see p. 14), the program started     by the Army               I
                                                                                                       I
         had not, as yet, significantly      improved the quality  of military     pay ad-             I
         ministration  and that additional     command emphasis was needed through-                    I
         out the Army to improve pay administration.        (See p. 19.)                               I
                                                                                                       I

                                                                                                       I
RECOiWENDATIONS OR SUGGESTIONS                                                                         I

         GAO recommends that      the Secretary       of the Army:

           --Reemphasize      the local commander's responsibility     to (1) see that
              each serviceman is paid correctly        and (2) enforce regulations   re-
              quiring    reconciliation    of personnel and finance records by person-
              nel officers      90 days prior to separation.

           --Evaluate      the commander's   performance   in these areas in the same
              manner as his performance       is evaluated   in other areas of mission
              responsibility.

           --Provide      trained   qualified  personnel,     enhance career opportunities
              for pay and personnel specialists,            and establish  greater  personnel          I
                                                                                                       I
              stabilization       in duty assignments     to support commanders' efforts      to       I
              upgrade and sustain the quality         of pay administration.

           --Require     the Finance Center to expand and improve the Quality           As-     ': '   i
   ;2-
              surance Program by (1) increasing      surveillance      of field quality     as-        I
   /'                                                                                                  I
              surance activities,    (2) expanding the audits of accounts of final                     I
              separations    and of separations  to reenlist,     and (3) expanding and
              upgrading the reporting     on the results    of audits.




                                                                                                       I




                                                  2
                          Contents
                                                               Page

DIGEST                                                           1

CHAPTER

  1        INTRODUCTION                                          3
               Previous GAO reviews of Army pay and
                 allowances                                      3
               Centralized   audits of disbursing of-
                 ficers accounts                                 5
               Army responsibilities                             6
               Development of Joint Uniform Military
                 Pay System                                      6

  2        OVERPAYMENTS    AND UNDERPAYHENTS    OF MILITARY
           PAY AT SEPARATION                                     7
               Erroneous leave settlements                       8
                    Use of travel vouchers in the au-
                       dit of leave                              8
               Unliquidated     advance, casual, and par-
                 tial payments                                   9
               Unsatisfied    indebtedness    on final sepa-
                 ration not collected       by FCUSA            10
               Duplicate payments                               11
               Unliquidated     indebtedness established
                 by pay adjustment documents                    11
  3        NEEDEDIMPROVEMENT  IN THE ARMYQUALITY AS-
           SURANCEPROGRAM                                       13
              Quality assurance reviews by field in:
                stallations                                     15
              Quality assurance program at FCUSA                17
  4        CONCLUSIONSAND RECOMMENDATIONS                       19
  5        SCOPEOF REVIEW                                       21
APPENDIX

  I        Analysis of errors    by type,   number, and
             amount                                             25
                                                       Page

APPENDIX

  II       Projection   of sample audit      results    26

III        Letter dated September 8, 1971, from the
             Comptroller of the Army                    27

                             ABBREVIATIONS

FCUSA      Finance Center,     U.S. Army

GAO        General Accounting       Office

JUMPS      Joint   Uniform   Military    Pay System
    GlMERAL ACCOUNTING OFFICE                                     NEED TO DETECT AND CORRECT
*   REPORT TO THE                                                 MILITARY PAY ERRORS PRIOR TO
    SECRETARY OF DEFENSE                                          MEMBER'S SEPARATION FROM THE
                                                                  SERVICE
                                                                  Department of the Army
                                                                  B-125037


    DIGEST
    ------

    WHY THE REVIEW WASMADE

         Prior audits of pay accounts of Army members by the General Accounting
         Office   (GAO) have shown that errors,           mostly overpayments,     amount to
         tens of millions       of dollars     annually   and result  principally    from poor
         Army military       pay administration      throughout   the servicemen's     period
         of active     duty.

         In 1964 the Army instituted       the Quality  Assurance Program to upgrade
         the quality  of pay transactions.       Because of the significant     number of
         Army members who separate      from the service   each year or reenlist     (over
         750,000 in fiscal  year 1970), GAO undertook        a review of the quality     of
         individual  pay accounts at the time servicemen         separate  from the Army,
         to test the improvement     program started    by the Army.


    FINDINGS AND CONCLUSIONS

        The Army continues      to separate   thousands of servicemen    each month who
        are either   overpaid     or underpaid at the time of separation.        GAO au-
        dited samples of pay accounts of servicemen who separated            from the
        service   or reenlisted     in November 1969 and found that about 37 percent
        of the pay accounts in both samples were incorrect.            About 44,000 men
        having 1 year or more of military         service   separated to return   to civil-
        ian life,   and about 7,000 men reenlisted        that month.   (See p. 7.)

         On the basis of sample audits,      GAO estimates   that,    in November 1969,
         overpayments,    uncorrected  at the time of separation,       amounted to about
         $2 million    and that underpayments   amounted to about $100,000.        GAO be-
         lieves   that this is a conservative    estimate  inasmuch as it is based
         only on records available     at the Finance Center,      U.S. Army.    (See p. 5.)

         During prior   reviews       GAO identified     the following        major causes of er-
         roneous payments:        (1) excessively       high-turnover        rate and shortage    of
         trained  personnel,      (2) lack of sufficient          training,      and (3) weak super-
         vision.   Also many      installation       commanders, in recent correspondence
         with GAO concerning       deficiencies       in their    installations'      pay accounts,
         concluded that high        turnover    of personnel,       shortage of trained      person-
         nel, and inadequate        training    were major causes of erroneous           payments.
         (See pp. 4 and 5.)



                                                   1
    During this review GAO identified           the same general types of errors               .
    which had been reported  in prior          audits.  (See pp. 8 and 79.)   The
    major types are:

       --Erroneous      leave settlements.
       --Unliquidated        advance, casual,    and partial   payments.
       --Unsatisfied       indebtedness    on discharge.
       --Duplicate      payments.
       --Unliquidated        indebtedness   established    on pay adjustment      documents.

     GAO concluded that,   although     the Army had increased   its emphasis on
     pay and allowance   matters    (see p. 14), the program started       by the Army
     had not, as yet, significantly        improved the quality  of military     pay ad-
     ministration  and that additional       command emphasis was needed through-
     out the Army to improve pay administration.          (See p. 19.)


RECOhhfENDATIONS OR SUGGESTIONS

     GAO recommends that       the Secretary    of the Army

       --Reemphasize     the local commander's respons i bility      to (1) see that
          each serviceman       is paid correctly   and 1.2) enforce regulati 0 ns re-
          quiring   reconciliation     of personnel    and finance  records by person-
          nel officers     90 days prior    to separation.

       --Evaluate       the commander's   performance   in these areas in the same
          manner as his performance        is evaluated   in other areas of m ssion
          responsibility.

       --Provide      trained   qualified     personnel,     enhance career opportunities
          for pay and personnel          specialists,      and establish    greater personnel
          stabilization       in duty assignments        to support     commanders' efforts   to
          upgrade and sustain         the quality     of pay administration.

       --Require     the Finance Center to expand and improve the Quality           As-
          surance Program by (1) increasing         surveillance    of field quality as-
          surance activities,        (2) expanding the audits of accounts of final
          separations      and of separations    to reenlist,    and (3) expanding and
          upgrading     the reporting    on the results of audits.
                               CHAPTER1

                            INTRODUCTION

        Army members, on completion of specified          tours of duty,
are either separated from the service to return to civilian
life    (final    separation)   or separated for the purpose of re-
enlisting      for another tour of duty.       Those finally    separated
receive their pay and allowances through the date of dis-
charge, including         cash settlement  for unused leave and
travel allowances to their home of record or place of entry
in the service.         Those separated to reenlist     are entitled
to substantially        the same benefits;    however, they can elect
to carry their unused leave forward to the new enlistment.

       Separations to reenlist      occur at any Army installation;
however, final separations       generally    take place at locations
within the continental      United States.        Army members gener-
ally are paid through the date of separation             by finance of-
ficers at the separation      point.     Original    copies of all pay
vouchers are forwarded to the Finance Center, U.S. Army
(FCUSA), at Fort Benjamin Harrison,          Indiana,where     individual
pay accounts are maintained for each man.                              i.
                                                                    =.!2-,
      The purposes of this review were to determine (ll'the
correctness     of pay records and the accuracy of payments at
the time of separation,      (2) whether reviews of pay records
by field installations      were made in accordance with Army
regulations,     and (3) whether postseparation        audits by FCUSA
were adequate.

PREVIOUSGAO REVIEWSOF
ARMYPAY AND ALLOWANCES

      Since 1963 the General Accounting Office has issued
numerous reports to the Congress and to local installation
commanders concerning improvement needed in the administra-
tion of Army pay and allowances.      Collectively,   these re-
ports have covered virtually     the entire spectrum of military
pay and allowances and have pointed out that discrepancies
amount to many millions    of dollars  annually.    Following are
examples of these reports.



                                    3
       In April 1963 we issued a report to the Congress en-
titled   "Review of Causes of Overpayments of Military            Pay and
Allowances, Department of Defense" (B-125037).             A follow-up
report, under the same reference number, was issued in April
1968. These reports pointed out that serious deficiencies
in administration     existed and that greater efforts         on the
part of the Department of Defense were necessary if military
pay, allowances,    leave, and travel were to be correctly             ad-
ministered.     Among the causes of erroneous payments cited
in the reports were:        (1) excessively   high-turnover      rate and
shortage of trained personnels        (2) lack of sufficient        train-
ing, and (3) weak supervision.
       In April 1970 we issued a report to the Congress en-
titled   "Overpayments to Army Personnel Resulting   from Weak-
nesses in Payroll Procedures, Department of the Army"
(B-125037), in which we estimated that casual and partial
payments totaling    about $3.5 million during the first
6 months of calendar year 1968 were not offset against pay
in subsequent payroll     periods.

       As a result of our report,     FCUSA reinstituted     a program
for verifying    collections    at the time the regular monthly
pay vouchers are filed in the individual        military    pay jack-
ets.    During the first     5 months after restoring    the control
review, FCUSA identified       errors and prepared adjustment doc-
uments to recover casual and partial        payments at a rate of
almost $1 million      a month. FCUSA, however, did not maintain
control   over such payments during February 1968 through Oc-
tober 1969. Many of the errors which we found occurred dur-
ing this period.

       In April 1971 we issued a report to the Congress en-
titled   "Serious Problems in Accounting for Military  leave,
Department of the Army" (B-1250371, in which we estimated
that errors in accounting for leave could result in errone-
ous payments to servicemen amounting to almost $26 million
a year.    The review covered leave accounting during selected
months in fiscal    year 1970.

       In that review we examined records at 12 installations
that were not readily    available at FCUSA. The use of these
additional    records, such as morning reports, personnel


                                    4
registers,      and permanent-change-of-station        travel   vouchers,
resulted      in the large number of errors       found.

       In June 1971 we were advised that the Army was taking
action in line with our recommendations for increased cov-
erage of pay and allowance areas, particularly   military
leave.
CENTRALIZEDAUDITS OF
DISBURSINGOFFICERS ACCOUNTS

      The objectives       of our centralized     audit at FCUSA are
to identify     those installations      experiencing     excessive er-
ror rates and to report on the condition            of the accounts to
the installation       commanders. In addition        to reviewing mili-
tary pay,    we   reviewed   other  disbursements,      such as military
and civilian     travel,    reserve pay, dependent travel,         and
household goods shipments.

        Since 1967 we have issued 325 reports to individual
installation    commanders, with copies to the next command and
to the Comptroller     of the Army, dealing with deficiencies
in these accounts.      We estimated that errors amounted to
about $25 million     a year.   We believe that our estimate is
conservative    because, when auditing    disbursing officers ac-
counts centrally,    we have access to only those records on
file at FCUSA.

     When an audit showed a significant   number of errors for
one or more types of documents, we requested the installa-
tion commander to advise us of the causes of the erroneous
payments.    Their replies stated that most erroneous payments
were due to:

      1.     Inadequate staffing.
      2.     Lack of trained personnel.
      3.     High turnover of personnel.
      4.     Inadequate training.
      5.     Misinterpretation    of regulations.
      6.     Inadequate Quality Assurance Program.
It is apparent from these replies that many of the same
problems we reported in 1963 and 1968 still exist.


                                      5
ARMY RESPONSIBILITIES

       The Comptroller     General, in a letter         to heads of Fed-
eral departments and agencies (August 1, 1969, B-1614571,
reemphasized their responsibilities             for proper accounting
and internal   control,     including     internal     audit, for func-
tions of their accountable         officers.       Department and agency
procedures and controls,        the   Comptroller      General pointed
out, should include adequate administrative               procedures for
systematically   examining disbursement and collection                trans-
actions to verify      their legality,       propriety,      and correctness
at the point in time when any needed preventive                 or correc-
tive action can be taken most effectively.

DEVELOPMENT OF JOINT UNIFORM
MILITARY PAY SYSTEM

       Since 1966 the Department of Defense has been engaged
in developing    the Joint Uniform Military    Pay System (JUME'S).
The proposed system has the following       goals:  (1) service,
(2) uniformity,     (3) centralized and computerized pay account
maintenance,    (4) optimum support of the planning,    program-
ming, and budgeting systems, and (5) reduction       of erroneous
or illegal   payments.

       Under the JUMPS concept input from the installations
will be sent to a centralized        computer center for mainte-
nance of individual      military  pay accounts, for preparation
of regular pay vouchers, and for issuance of checks.           The
specifications      for JUMPS require that leave accounting      be
integrated     into the military   payroll   system.   The Army's
version of JUMPS is tentatively        scheduled to be operable
Army-wide by January 1972 and fully         implemented by January
1973.




                                      6
                                      CHAPTER2

                        OVERPAYMENTS
                                   AND UNDERPAYMENTS
                                                  OF

                          MILITARY PAY AT SEPARATION

      The Army is separating     thousands of servicemen each
month who are in an overpaid or underpaid status at the
time of separation.      The errors, mostly overpayments, are
amounting to tens of millions       of dollars annually and re-
sult principally    from poor Army military    pay administration
throughout    the servicemen's   period of active duty.

       During fiscal year 1970 the Army separated more than
750,000 members from active duty.       We selected random
samples of the pay accounts of (1) servicemen who had sepa-
rated from the Army after completing 1 year or more of mil-
itary service and (2) servicemen who reenlisted        for another
term of service.       We selected the pay accounts  from   vouchers
assembled by FCUSA and considered 1 month's separations
(November 1969-j 'for processing purposes.      The vouchers as-
sembled for the November 1969 processing period were the
most recently .filkd in the individual     pay accounts at the
time we selected our sample,, These vouchers, for simpli-
fication,    are referred   to as November 1969 separations    in
this report.

      About 37 percent of the pay accounts             in both samples
contained one or more errors,  as follows:
                                                  Total
                                                 accounts    Percent of
       Type      ofI.        . Uni-                with       accounts
   Separ_aticm               tierse    Sample     errors      in error

Final separations      ..43,812      257        96         37.4
Reenlistments         . 6,905        196        73         37.2
      By projecting      the errors found in our samples to all
November 1969 separations        (see app. II), we estimate that
members who separated from the service were overpaid about
$2 million    and were underpaid about $100,000 that month.,
Further details     on the types of errors found in our sample
review are listed     in appendix I,

                                         7
      The significant       types of errors    are discussed   below.

ERRONEOUS
        LEAVE SETTLEMENTS
      On the basis of our samples, the pay accounts for the
November 1969 separations  are estimated to contain about
15,700 leave errors valued at about $548,000.    We identi-
fied the following  types of leave errors.

      1. Leave computed incorrectly   on travel vouchers and
         leave not recorded or incorrectly    recorded on leave
         records.

      2. Ordinary leave not recorded          or incorrectly   recorded
         on leave records.

      3. Computation      errors   on leave records.

      4. Erroneous      leave settlements,
Use of travel    vouchers     in the audit    of leave
       We arranged the fiscal  year 1969 travel vouchers of
members in our sample in payee order for association     with
their pay accounts.    We estimate that about 8,600 leave
errors amounting to about $233,000 could have been identi-
fied through using the fiscal    year 1969 travel vouchers in
auditing   all November 1969 separations.

        In view of the error identification      potential   using
travel vouchers applicable       to the members' entire periods
of service,    we  believe  that   these travel vouchers, if pro-
perly used, could be an effective         management tool in iden-
tifying    and correcting   the underlying    causes of leave errors
made by field installations,,        Also, once.arranged    in payee
order, travel vouchers could be used in auditing           such other
entitlements    as travel performed through use of Government
transportation     requests or in identifying,duplicate       pay-
ments for the same travel.
      In the past FCUSA arranged all military    travel vouchers
in payee order for association     with the pay accounts in its
audit of the delay-en-route    portion of leave settlements.
FCUSA discontinued   this examination technique in December

                                     8
1968 on the basis that (1) it was not justifiable       from a
cost benefit    standpoint and (2) in-depth administrative     ex-
amination of accrued leave payments could be accomplished
by obtaining    travel vouchers directly   from the disbursing
officers'   retained accounts when there was otherwise reason
to believe that an error had occurred.        FCUSA had been us-
ing 13 employees at an estimated cost of $70,000 a year to
arrange the vouchers in payee order.

      At the close of our review, we discussed this matter
with FCUSA officials    and recommended that they reconsider
arranging   the vouchers in payee order.    In August 1971 we
were informed by FCUSA that the vouchers would be arranged
in payee order starting    with the July 1971 vouchers.

UNLIQUIDATEDADVANCE, CASUAL, AND
PARTIAL PAYMENTS
      We estimate that Army members separated in November
1969 received about 5,300 advance, casual, or partial     pay-
ments (interim payments between regularly    scheduled pay-
days), totaling   about $750,000, which subsequently   were not
entered for collection   in the members' accounts,

       In the earlier   report on this problem (see pa 41, we
concluded that many of these payments had not been liqui-
dated because financial      records had not been adequately
protected    from unauthorized     access and payment vouchers
had been lost or removed.        It was not feasible  to determine
the causes of the errors found during the current review
because our sample included pay records from members sta-
tioned throughout the world,




                                 9
UNSATISFIED INDEBTEDNESSON FINAL
SEPARATIONNOT COLLECTEDBY FCUSA
       We estimate that local disbursing      officers  identified
about 2,000 servicemen     who  separated   in   November  1969 and
who were in debt to the Government.        These debts, which
amounted to about $265,000 arose for such reasons as
(1) prior overpayments,     (2) failure   to deduct allotments,
or (3) excess leave taken.      Many of these debts were not
identified    until a short time prior to separation       from the
Army.

      Army regulations     provide that, when an enlisted    member
has insufficient     accrued entitlements    on final separation
to satisfy    an indebtedness,    such indebtedness be noted on
the final pay voucher mailed to FCUSA. Prior to our review
FCUSA established     accounts receivable    for only those indebt-
edness cases which it identified       during its sample audits
(see p, 17) of final pay vouchers.         The sample audits in-
cluded only about 5.5 percent of all final pay vouchers.
The remainder was filed without action,
        The Federal Claims Collection   Act, Public Law 89-508,
imposes a statutory     duty on each agency head to attempt col-
lection    of all claims of the United States arising     out of
activities    of his agency.   This duty is required to be ex-
ercised in accordance with regulations       promulgated jointly
by the Attorney General and the Comptroller       General, which
are embodied in the Code of the Federal Regulations         (4 CFR
 101-105.7~.
     Among other things,     these regulations    require   the head
of each agency to:

        "take aggressive action,   on a timely basis with
        effective  follow-up,  to collect  all claims of the
        United States *** arising    out of the activities
        *** of his agency."

       We brought this matter to the attention       of FCUSA offi-
cials,    and we were advised in July 1971 that FCUSA's out-
of-service    collection     procedures were being revised to im-
plement collection       action in all final separation   indebted-
ness cases in which the amount due the United States is over
$20.
                                  10
DUPLICATE PAYMENTS
      We estimate that there were about 950 duplicate      pay-
ments valued at about $195,000 made to servicemen separated
during November 1969. Generally the second payments were
made by different  disbursing   officers,   although there were
instances where both the initial      and duplicate  payment were
made by the same disbursing   officer,
UNLIQUIDATED INDEBTEDNESS
ESTABLISHEDBY PAY ADJUSTMENTDOCUMENTS

      We estimated that about 1,470 pay adjustments valued
at about $200,000 had not been entered on the accounts of
servicemen separated during November 1969. These discrep-
ancies occurred during the members' service and were recorded
on:
      1. Pay adjustment authorizations     issued by FCUSA, finance
         and accounting officers,    or transportation  officers
         for the purposes of adjusting     members' pay accounts,
      2. Pay and allowance inquiries   issued to notify   finance
         and accounting officers   of apparent discrepancies
         in members' payment and allotment    accounts identified
         during FCUSA audits,

Since pay adjustment documents were issued by finance and
transportation      officers   throughout    the world, as well as at
FCUSA, it was not feasible         to identify   and locate all adjust-
ment documents issued during the members' periods of active
service.      Therefore we limited our review to those documents
filed    in the military     pay jackets at FCUSA.

     We found that:
      1. Documents were apparently   received by the permanent
         station  too late to make the collections    prior to
         the members' transfer   to other stations   or return to
         the United States for separation    from the service,

     2. Collections  were not made although documents had
        been properly mailed to the permanent stations   and
        the members had remained at those stations   for 2 or


                                   1’1
   more months after   the adjustment     documents were
   issued.
3. Members had been separated    before    the adjustment
   documents were issued.




                           12
                               CHAPTER3

                       NEEDEDIMPROVEMENTIN THE
                     ARMYQUALITY ASSURANCEPROGRAM

      In 1964 the Army started the Military         Pay Administra-
tion Quality Assurance Program to reduce the number of er-
rors inmilitary      pay. All commands down to installation         or
comparable level were required to initiate          a comprehensive
and aggressive Quality Assurance Program.          Each commander
was required to give the Quality Assurance Program high pri-
ority and to emphasize the need for accuracy in maintaining
records and in preparing military       payrolls.     In 1965 the
Army established      the following functional    responsibilities
for quality     assurance sections at installations.

      1. Performing       a comprehensive audit of financial        data
           records    onsite by using a sampling method.

      2.   Performing a comprehensive audit of &     financial
           data records of personnel processing  into an instal-
           lation.

      3. Performing a comprehensive audit of &      financial
         data records to include the leave record, prior to
         the preparation  of separation and reenlistment      bonus
         vouchers and final separation  vouchers.

      4. Reviewing the annual audit of military            leave records
         made by finance office personnel.

      5. Participating      in and/or    conducting   specialized
         audits.

      6. Maintaining   liaison  and assisting the operating   pay
         and allowance sections in resolving     matters of a
         technical   nature that pertain to their scope of op-
         eration.

      7. Processing monthly personnel rosters           and reviewing
         financial  data records in conjunction          with reenlist-
         ment bonus payments.



                                    13
                                                                          '   t
        In 1969 the Army delegated the responsibility         for ad-
ministering    the program .A.rmy-wide to the commanding general,
FCUSA. Also, in 1969, the U.S. Continental             Army Command is-
sued implementing instructions       requiring     that, as a minimum,
installations     and activities  should adopt a system within
the finance and accounting office        to record errors as de-
tected; to identify     errors by type, cause, and responsible
individuals;     and to review these records at least monthly
with a view toward taking appropriate          corrective   or improve-
ment action.

        Beginning in 1970 the Department of the Army, and par-
ticularly     the Comptroller of the Army,increased the emphasis
on pay and allowance matters and provided additional     direc-
tion to field units.

      We made a limited review of the Quality Assurance Pro-
gram in connection with our review of separations        and found
indications      that the program was not being fully   implemented
by field    installations    and that the program should be ex-
panded at FCUSA. Also we believe that the program has not
adequately      influenced installation  commanders to improve pay
administration.




                                 14
QUALITY ASSURANCEREVIEWS
BY FIELD INSTALLATIONS

      During October through November 1970, we visited       three
major field installations     to determine the extent that they
reviewed pay accounts prior to separation       and at other times
during active military    service.    We discussed the Quality
Assurance Program with finance officials       and reviewed the
procedures established    at each installation    to carry out
the program.   Although we did not make a comprehensive au-
dit of pay records at the installations,       we found generally
that:

         1. All three installations                           had reviewed              pay accounts
            of members transferred                           in.

         2, All three installations had made quality assurance
            reviews of the pay accounts of members being sepa-
            rated from the service.

         3. Only one of the installations                                 had made the required
            onsite periodic reviews.

         4. Only one of the installations                               had made a comprehen-
            sive review of pay accounts                               at reenlistment.

         5. only one of the installations    had analyzed error
            data generated by the quality    assurance section to
            identify  the pay units or individual    clerks respon-
            sible for the errors.

         6. One installation      had not made the required recon-
            ciliationl     of personnel and financial   records 90 days


‘Army regulations    require that unit personnel officers reconcile personnel and financial records of each in-
 dividual scheduled for separation,    other than for cause, 90 days prior to the date of separation.      The
 stated purposes of this review are (I) to provide for a reconciliation    between all documents    contained     in
 the individual’s  military personnel records jacket having a bearing on the individual’s    pay and all docu-
  ments contained   in the military financial data records; (2) to ensure that copies of all documents       having
 a bearing on pay which pertain to the individual     are present; and (3) to ensure that all postings have been
  made and that copy 5 of the last military pay voucher showsan accurate and legible recording of all
 changes in pay status up to the date of commencement          of transfer processing.




                                                        15
                                                                              l

          prior to separation.     The other       two had made only
          a limited reconcilation.

        Although Army regulations       specifically     provide that
commanders give the Quality Assurance Program high priority
and emphasize the need for accuracy in maintaining               pay rec-
ords, field quality         assurance is falling     far short of what
is needed to detect and correct errors in pay accounts.                  If
the functional       responsibilities    of field quality      assurance
staffs,     outlined    in 1965, were followed,      all pay accounts
would receive at least one comprehensive audit in the field
and most would be audited two or more times during a normal
term of service.          Such reviews should identify       and correct
most errors and should reduce significantly              the number of
erroneous pay accounts at separation.




                                    16
.
    QUALITY ASSURANCEPROGRAM
                           AT FCUSA

          The FCUSA program consists primarily     of sample audits
    of monthly pay vouchers, sample audits of pay accounts after
    final separation,    and a limited audit of all pay accounts of
    members separated to reenlist,       The FCUSA reports quarterly
    the statistical    data generated by the audits of monthly pay
    vouchers to the Continental      Army Command and to other major
    Army commands. Prior to December 1970, FCUSA did not include
    in these quarterly     reports data generated from the audits of
    pay accounts of separated servicemen and of vouchers of ser-
    vicemen separated to reenlist.

           The reports generated by the FCUSA Quality Assurance
    Program are statistical      in nature however, and the reported
    errors cannot be traced to specific        pay units within the ap-
    plicable   installation   finance office.     The reports,   there-
    fore, are of little     use in identifying    individual   pay clerks
    or pay units that are in need of closer supervision          and
    training.

          On a random basis, we examined the pay records of 146
    servicemen who had been separated from the service and the
    records of 184 servicemen who had separated to reenlist.
    FCUSAhad audited these records previously         under its Quality
    Assurance Program during July 1970. During that month FCUSA
    audited the records of 2,991 men who separated from the ser-
    vice and the records of 3,846 men who reenlisted.           The
    2,991 final separation      pay accounts represented   about 6.6
    percent of the total servicemen separated during that month.
    The records of all men who reenlist      are normally audited by
    FCUSA; however, the scope of the audit is limited         to reen-
    listment    bonus data and, for members separated outside the
    continental    United States, the scope includes an audit of
    cash settlements     for leave and travel allowances.      There was
    no indication    that FCUSA's audit included the use of related
    travel vouchers for any of the pay accounts audited during
    the month.

         We found undetected errors in the pay records of 57 of
    the 146 men who separated from the service,     a case error rate
    of 39 percent,     The significant  errors were referred    to FCUSA
    for an explanation    of why the errors were not identified     in
    its audit.   FCUSA concluded that two thirds of the errors
were due to examiner oversight and that the remainder        per-
tained to pay items outside the scope of the audit.

        We found that, of the 184 pay records of men who reen-
listed,    56 contained errors not discovered by FCUSA, a case
error rate of 30 percent,      After reviewing     the errors,  FCUSA
concluded that only a few were due to examiner oversight,
About 97 percent of the errors pertained         to pay areas out-
side the scope of the audit.       As previously    noted, the audit
scope for reenlistments     is generally   limited    to bonus data.




                                 1X
                              CHAPTER4

                 CONCLUSIONSAND RECOMMENDATIONS

       This review, though limited in scope, points up the
serious effects    of continued poor administration     of mili-
tary pay. Errors, mostly overpayments, are running into
the tens of millions    of dollars annually.     Many of these
problem areas have been discussed previously        in our re-
ports,

        The Army has indicated      its awareness of these problems
by initiating       the Quality Assurance Program to upgrade the
quality     of pay administration      and is participating     in de-
velopment of the new centralized           and computerized pay sys-
tem. We noted, however, that the scope of the Quality As-
surance Program at FCUSAwas limited and that, during re-
cent years, some of FCUSA's examination techniques actually
had been curtailed       or discontinued     although little    or no
improvement had been noted in the quality            of pay adminis-
tration     by field installations.        We believe that the Qual-
ity Assurance Program at FCUSA is too limited              in scope and
that the audit reports generated under the program are of
little    value in identifying      specific    pay clerks or pay
units in need of closer supervision           and training.

       Numerous Army members separated each month are in-
debted to the United States at the time of separation.
These debts are identified       by the field installation at the
time   of separation   and are noted on the member's final pay
voucher which is forwarded to FCUSA. FCUSAwas taking ac-
tion to identify     these debts and to make collections   in     '
only about 5.5 percent of the cases through its sampling
techniques.     After we brought this matter to the attention
of FCUSAofficials,       procedures were changed to provide for
collection   of all indebtedness      cases over $20.

        We found only partial    compliance with the procedures
established     for the Quality Assurance Program and for recon-
ciliation     of pay accounts with personnel files at the three
field installations     visited.    We concluded that additional
command emphasis would be required to establish        satisfactory
pay administration     practices   throughout  the Army.


                                  19
       We feel that the proper design and implementation       of
JUMPSmay help to reduce errors to the extent that a com-
puterized    system is mathematically     more accurate than a
manual system.       It must be recognized,   however, that even
computerized     systems are dependent upon the accuracy and
the timeliness     of data input to that system.      Many of the
present-day    problems with input data in leave accounting
and other areas could continue to exist under JUMPS. The
current problems, therefore,      are so significant    as to re-
quire remedial action until      such time as the Army can de-
monstrate the effectiveness      of its new computerized pay sys-
tem.

     We are therefore    recommending that     the Secretary    of
the Army:
     1. Reemphasize the local commander's responsibility     to
        (1) see that each serviceman is paid correctly     and
        (2) enforce regulations   requiring reconciliation   of
        personnel and finance records by personnel officers
        90 days prior to separation.

     2. Evaluate the commander's performance in these areas
        in the same manner as his performance is evaluated
        in other areas of mission responsibility.
     3. Provide trained qualified      personnel,    enhance career
        opportunities      for pay and personnel specialists,       and
        establish     greater personnel stabilization      in duty
        assignments to support commanders' efforts           to up-
        grade and sustain the quality       of pay administration.

     4. Require FCUSA to expand and improve the Quality As-
        surance Program by (1) increasing         surveillance    of
        field quality   assurance activities,        (2) expanding
        the audits of accounts of final separations            and of
        separations   to reenlist,    and (3) expanding and up-
        grading the reporting      on the results     of audits.




                                20
                             CHAPTER5

                         SCOPEOF REVIEW

      Our review was made during 1970 and 1971 at FCUSA;
Fort Knox, Kentucky; Fort Penning, Georgia; and Fort Jack-
son, South Carolina.    At FCUSAwe examined 453 pay accounts
of members who separated or reenlisted   during FCUSA's proc-
essing month of November 1969. November 1969 was the last
processing month completed at the time we selected the sam-
ple.   Also we selected and reviewed 330 similar accounts
previously   audited by FCUSA under its Quality Assurance Pro-
gram.

      At the three field installations,      we interviewed     re-
sponsible officials     and examined pertinent    instructions,
regulations,   reports,   and other documentation      relative  to
reviews made under the field Quality Assurance Program.




                                  21
APPENDIXES




23
                                                                                                                                                                     AS'ENDIX I


                                                                          ANALYSIS             OF ERRORS

                                                                                              BY

                                                                      'M'E,     RUMBER, AND AXWiT



                                                                                            Total     errors                                  overpayments                     Underpayments
                       m       of    error:                                   Number                                m                       BP          Amount                Number      Amount

FINAL SEPARATIONS (Errors found I” 96 acwunts)            :
     Delay-en-route         leave computed incorrectly             on
        travel    vouchers                                                          41                         ti         569                  28          $         388        13         $181
     Delay-en-route         leave not recorded           on the
        military     leave record                                                       3                                 412                      3                 412
     Delay-en-route         leave recorded       incorrectly       on
        the military        leave record                                                2                                 108                                                       2       108
     Ordinary     leave not recorded          on the military
        leave.record                                                                    1                                 126                      1                 126
     Ordinary     leave recorded        incorrectly         on the
        military     leave record                                                       3                                   48                     3                   48
     Computation       error     on the military         leave rec-
        ord made prior         to separation                                        20                                    465                  16                    395            4           70
     Erroneous      exceSS leave collections                                         5                                    244                   3                    208            2           36
     Miscellaneous        leave settlement          errors    made at
        the time of separation                                                  8                                   198                        r           158                  2           40
           Total    errors    related         to   leave                        83           (61%)                  2.170         (27%)        59          1,735                25          435

     Unliouidated          advance.     casual, . and .partial
        payments                                                                    19                                  1,657                  19               1,657
     Unsatisfied        indebtedness        on discharge                            12                                  1,552                  12               1,552
     Duplicate      payments                                                         5                                     996                  5                  996
     Unliquidated          indebtedness       established      on
        DD form 139 and other              adiustment     documents                     8                               1,110                       a           1,110
     Unearned     reenlistment          bonus                                           1                                 426                    1                 426
     Erroneous      travel       payments on discharge                          2                                           92                 .2              48                4           .Ai
           Total    errors    not    related        to     leave                r*           (39%)                      5,833     (73%)        x!              5.789             9          44
           Total                                                                g7           (100%)            s        8.003     (100%)      J!g          $7.524                2         $2
SEPARATIONS '10 F.F,ENLIST (Enorslwnd in 73 accounts):
    Ordinary     leave not recorded            on the military
       leave record                                                                     7                      $        1,822                       7      $ 1,822                         $-
    ECCO*~OUS wzcsss leave collections                                                  2                                  633                      1           815              -1             18
    Delay-en-route          leave not recorded            on the
       military      leave record                                                       1                                  235                      1                235
    Computation        error     on the military          leave rec-
       ord made prior           to separation                                           6                                  140                      6                140
    Delay-en-route           leave recorded       incorrectly       on
        the military         leave record                                                1                                 115                      1                115
    Delay-en-route           leave computed       incorrectly       on
        travel   vouchers                                                            14                                   475                       2                   32       12          443
    Ordinary      leave recorded         incorrectly         on the
       military      leave      record                                                   1                                  18                      1                    18
    Hiscella"eous          leave settlement          errors    made
        at the time of separation                                                11                                 1.406                      7               1.297             -- 4        109

            Total   errors     related         to leave                          43           (33%)                 5             (25%)        26              4.474             L7_         570

      Unliquidated       advance,     casual,      and partial
         payments                                                                       59                          13,379                         59           13,379
      Duplicate     payments                                                             3                              704                         3               704
      Unliquidated       indebtedness       established        on DD
         form 139 and other          adjustment       documents                          3                                  276                        3                276
      Unliquidated       article     15 forfeitures                                      2                                  274                        2                274
      Erroieous      travel     payment on discharge                                    19                                  191                        9                 79         ;0          112
      Unearned     reenlistment       bonus                                         2                                        35                2                35                  I           2
            Total    errors    not      related      to leave                       88        (67%)                  14.859       (75%)        78               14.747              II!         112

            Total                                                                   131       (100%)                $19.903        (100%~      104             $19.221              p       $682




                                                                                                     25
APPENDIX II


                                               PROJECTION OF

                                           SAMPLE AUDIT RESULTS



                                                                    Average
                                              Errors  found         amount                   Projected  errors
                                                 in sample            per                 for November 1969
                                  Sample     Number     Amount       error     Universe   --Number     Amount
FINAL SEPARATIONS:
     Number of pay accounts         257         -     $-             $-         43,812       -       $         -
     Total overpayment  items        -         109         7,524          69              18,582         1,282,158
     Total underpayment   items      -          28            479         17               4,773             81,141

SEPARATIONS TO REENLIST:
    Number of pay accounts          196         -          -                     6,905      -
    Total overpayment  items         -         104      19,221        la5                  3,664           677,840
    Total underpayment   items       -          27           682        25                    951           23,775
TOTAL PROJECTED OVERPAYMENTS                                                              22,246
                                                                                          __--       $L,9_59,998
                                                                                                      ~.--
TOTAL PROJECTED UNDERPAYMENTS                                                             .-~5,724   $ ------
                                                                                                           104,916




                                                     26
                                                                                      APPENDIX III


                          DEPARTMENT                   OF THE          ARMY
                       OFFICE   OF    THE   COMPTROLLER         OF     THE   ARMY
                                     WASH   I NGTON.    D.C.   20310




COMPT-FCIS                                                                           8 SIP 1971


Mr. Charles M. Bailey
Director,   Defense Division
U. S. General Accounting     Office
441 G Street,    N. W.
Washington,   D. C. 20548




Dear Mr. Bailey:

I would like to bring you up to date on the actions                                 we have taken
since our last meeting to provide for more efficient                                 military  payment
activities  within the Army.

In my opinion,     the progress we have made in implementing           JUMPS-Army
is most significant.       All objectives   scheduled for completion        by
31 December 1972 have been met, and payments under this new pay system
were made at the end of July to military          personnel assigned to Head-
quarters,    Department of the Army.      Payments at the end of August were
extended to include the Phase I organizations           previously     paid on a
centralized    basis and all organizations      within   the continental     United
States.     The Commanding General of the Finance Center has been providing
your representative     Mr. Takash with all documentation          relating   to this
progress so that he may be currently        informed.

Prior to placing the accounts of any organization                               on the JUMPS-Army
master file at the Finance Center,    all individual                            Financial  Data Record
Folders were subjected   to a 100% quality   audit.                           Errors detected during
these audits were corrected   prior to converting                            the accounts.

In those instances   where an indebtedness       was identified,     appropriate
action was initiated    to insure that amounts due the government will be
collected.   These actions provide for collections           to be effected      in
monthly increments   (within   statutory   limits)   to liquidate     the indebted-
ness prior to the service member's separation.           Whenever these collection
actions are inadequate     for liquidating    the total    indebtedness,     follow-on
collection  action will be pursued after        the member's separation.           In-
structions  have been issued to the Commanding General of the Finance




                                            27
  APPENDIX III

COMPT-FCIS
Mr. Bailey

Center, together  with necessary  guidance,    to insure that the requirements
of the Joint Standards  for implementing    the Claims Collection  Act of 1966
are   met.

There is every indication         that the number and magnitude of unliquidated
indebtedness     cases will    be significantly     reduced under JUMPS-Army and
those cases that do persist          will  be placed under control  for specific
follow-on    collection    actions.

With regard to the deficiencies            cited by Mr. Sorando that relate                   to the
financial    aspects of travel       and transportation          activities        we have taken
two series of actions        which are considered           to be noteworthy.           First,       we
have made a detailed       and comprehensive        review of all Army regulations
pertaining     to the travel     and transportation           of service       members and their
dependents -- to include         those dealing with the movement of trailers                         or
mobile homes. As a result           of this review we concluded that our regula-
tions were sufficient,         and if they were appropriately                 implemented       the
cited deficiencies      would be eliminated.           Accordingly,           a telegraphic
message was sent to commanders throughout                 the world directing            their     at-
tention    to the pertinent      regulatory     provisions       dealing with each cited
deficiency     and requiring     that they report         their   corrective        actions       by
1 October 1971.       The GAO resident-auditor            at the Finance Center was most
helpful    in reviewing     this message before         its release         to insure that all
salient    matters were covered.

The second series of actions                are still      in progress      and are scheduled to
be completed next month.               The final      product      of these actions      will    be a
new Department         of the Army Circular           in the Audit Trends 36-1 series.
This circular        will    identify     the different         types of errors      cited in your
audit reports        as well as those identified                by the Army Audit Agency and
the Finance Center in their               respective      examination       programs.      Each
deficiency       is discussed        in terms of its genesis and required                 corrective
action.      The circular         deals not only with the correction                of travel      and
transportation         errors     but also with those stemming from Casual, Advance
and Partial        Payments and the administration                 of military    leave.      Hopefully,
by reemphasizing          the responsibilities           of Commanders in these matters
favorable      results     will    be achieved.         With the advent of JUMPS-Army, and
the introduction          of controls       dealing with a new Local Payment Receipt
Form, the perennial            problems associated           with Casual, Advance and Partial
payments are expected to be eliminated.                       By January 1972 we also expect
that this new pay system will                eliminate       all allotment      overpayments.
                                                                        APPENDIX III


COMPT-FCIS
Mr. Bailey

In order to insure payment of cost-charge        transportation      requests,     the
Finance Center has been tasked to develop procedures            which will     place
tight    controls   on all such requests  which are issued to service          members
without    adequate funds to proceed to their      duty stations.       These controls
will    be oriented   to the Finance Center computer so that timely          collections
can be made. We expect that these procedures           will   be completed and opera-
tional    by not later    than 31 December 1971.

As a final    item, guidance was provided        to the Finance Center with instruct-
ions to expand and upgrade its examination             programs to be compatible       with
the requirements       of JUMPS-Army.     The plan for accomplishing         these actions,
to include placing military        travel   vouchers     in payee order for leave
settlement    reviews,    has been prepared and coordinated          with your resident-
auditor    at the Center.     My staff    is currently     reviewing    this effort   and
early implementation       is expected to be approved.

I hope that your time will          permit my staff     to provide you with a briefing
on our progress     in implementing       JUMPS-Army at an early date.          I know you
have an intense     interest     in this subject,     and we can schedule a briefing
at your convenience.         Since we have had a request         for this briefing    by
Mr. Donald L. Scantlebury          of the Field Operations       Division    of your organ-
ization    perhaps we could set a time that would accommodate both of your
schedules.      If a joint    briefing    is acceptable    to you, please call General
Richards    on extension     50303 and he will     make necessary       arrangements.

In general,       I believe   that we are making meaningful progress         in achieving
our mutual       objectives   and we shall continue to move positively         in that
direction.

                                           Sincerely,




                                                                     r
                                                                     rmy




US   GAO, Wash.. D.C.
                                             29