lllllllllll1lllllllllllllllllllllllllllllll 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
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)