oversight

Serious Problems in Accounting for Military Leave

Published by the Government Accountability Office on 1971-04-02.

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

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    REPORT Tb-?‘HE C
                               lllllMl~llllllllllllllnlllllu
                                    LM095673




    Serious Problems
    In Accounting For
    Military Leave 8-125037
    Department   of the Army




    BY THE COMPTROLLER GENERAL
    OF THE UNITED STATES
             COMPTROLLER     GENERAL     OF      THE UNITED   STATES
                           WASHINGTON.    D.C.     20548




B-125037




To the President  of the Senate and the
Speaker of the House of Representatives

       This is our report   on serious    problems                     in accounting
for   military leave, Department     of the Army.

         Our review  was made pursuant   to the Budget and Ac-
counting    Act, 1921 (31 U.S.C. 53), and the Accounting and
Auditing    Act of 1950 (31 U.S.C. 67).

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




                                                 Comptroller       General
                                                 of the United     States




                   50 TH ANNWPRSARY                1921- 1971
     CONi?TROLLER
                GEIVERAL'S                        SERIOUS PROBLEMS IN ACCOUNTING FOR MILITARY
     REPORTTO THE CONGRFSS                        LEAVE
                                                  Department of the Army B-125037


     DIGEST
     ------

     WHYTHE REVlli3WWASMADE
           Payment for unused leave at the time of an individual's        separation from
           military  service has been one of the largest      areas of improper payments
I
           made by the Army each year and has been the subject        of a number of
 I
           earlier  reports  by the General Accounting   Office    (GAO).
I

I          The weaknesses in the recording   of leave have persisted in spite                of the
I          adoption of additional procedures   and controls by the Army.

           This     GAO review   concerns certain       aspects of the     ai.agJi29A~9r
                                       .ia.-&kd~&t_h.as      been in ?e.   ticuiar     atten-
                                                                           .Iuo'wJcr~*~w~j
                                                                                       "hY;+..v
                                                                                            -.
                                       d to an ex%i??%?~~~f'?he            of 12 military
                                         months of September and November 1969 and January
           1970.


     FIflDIYGS AND CONCLUSIoNS
;
           GAO estimates    that errors     in accounting     for     leave in the Army could re-
I
I          sult in almost $23 million         in overpayments       annually   to servicemen    and
           about $3 million     in underpayments.        (See p.      6.)   GAO believes   that this
           is a conservative      estimate,     inasmuch as it      is based on the rates of pay
           at the time the errors were discovered.

           The ultimate   lump-sum payments to individuals     for          unused leave when
,          they are discharged    or separated from active duty             could be at consider-
           ably higher rates because of longevity     increases,            promotions,  and stat-
I
           utory pay increases.
I


           When leave is not charged properly,        the    serviceman has more unearned
           leave available     to him during his term       of service.   If the unearned
           leave is taken by the serviceman rather           than cashed in, the projected
           leave errors    could represent   an annual      net loss of manpower availability
           approximating    4,600 man-years (periods        of leave undercharged  less periods
           of leave overcharged),       (See app. I.)
            The following   conditions      contributed   to the high      incidence   of leave
            errors encountered.

                  --Prescribed    records were not used to establish        dates servicemen
                     arrived   at installations.   In cases of delay       en route (leave taken

     Tear Sheet



                                              1
          while in a travel status), the showing of an early  arrival date on
          a travel claim would serve to reduce the leave charged.    (See p. 7
          to 9.1
       --Leave in connection         with   an intrapost     transfer  was incorrectly
          treated as routine        delay en route.        (See p. 9.)

       --Morning    reports     (attendance       records)  were not used as the source
          for posting     ordinary     leave.       (See p. 17.)

       --Carelessness     on the part       of pay clerks      and the   Jack of supervisory
          review.     (See p. 12.)

       --In  the past several years,     little     or no audit or review of leave
          had been performed  by either       the local internaJ  review staffs  or
          the Army Audit Agency.     (See pa 13.)


RECOMMEi!7DATIOl'JS
                  OR SUGGESTIONS

     The Secretary     of the Army should:           (See p* 55.)

       --Direct   that local internal            review staffs   be increased     and that they
          and the Army Audit Agency             regularly  conduct reviews of pay and
          allowances, with particular             emphasis on military     leave.

       --Order     a study of the Army's leave practices    to ensure that the               leave
          data   input to the mi 7itary  pay system wi J 1 be more accurate.

       --Direct   that travel  orders be endorsed by appropriate                officials     to
          show dates of arriva’f and departure     at aJ J military           locations     to
          which the individual    traveJed, including    intermediate            points,
          and that these endorsements     be used with the travel             voucher to com-
          pute the amount of leave chargeable.


AGENCY ACTIONS AJD VNRESOLlrEDISSL!ZS

     The Army has concurred,     in general9   in GAO's observations            and con-
     clusions.     It accepted the first    two recommendations,but            not the
     third.    (See pp. 16, 17 and app. III.)

     GAO plans to periodically   examine into the effectiveness       of the actions
     taken by the Army to strengthen    leave accounting,   including    the adequacy
     of its internal  review coverage.


MATTERS FOR COiKSIDERATIO~~BY THE CONGRESS

    The appropriate     Committees of the Congress may wish to pursue with
    the military    departments    the continued  high incidence of errors re-
    ported by this Office       in the management of leave.


                                            2
                            contents
                                                                  Page

DIGEST                                                              1

CHAPTER

       1    INTRODUCTION                                            3

       2    NEED FOR IMPROVEMENTS  IN CONTROLSOVER
            ACCOUNTINGFOR MILITARY LRAVE                            6
               Errors in accounting    for delay en route           7
               Poor procedures to control    recording
                  delays en route on intrapost    transfers         9
               Ordinary leave errors                               11
               Causes of errors                                    12
               Unreliable  morning reports                         12
               Lack of internal   audits or reviews                13
               Conclusions                                         14
               Recommendations                                     15

       3    AGENCYCOMMENTS
                         AND GAO EVALUATION                        16

       4    SCOPEOF REVIEW                                         18

APPENDIX

        I   Summary of errors,    estimate of annual
              leave errors,    and consolidated summary
              of errors                                            21

   II       Analysis   of errors       by type                     25

 III        Letter dated November 10, 1970, from the
              Deputy Assistant Secretary of the Army               32

   IV       Principal    officials     of the Department
               of Defense and the Department of the Army
               responsible      for the activities   -discussed
               in this report                                      36
                            ABBREVIATIONS

        Army Audit   Agency

DA      Department   of the Army

FCUSA   Finance   Center,     U.S. Army

GAO     General Accounting         Office

JUMPS   Joint   Uniform     Military    Pay System
COMPTROLLERGEiVERAL'S                     SERIOUS PROBLEMS IN ACCOUNTING FOR MILITARY
REPORTTO THE CONGRESS                     LEAVE
                                          Department of the Army B-125037


DIGEST
------

WHYTHE REVIEWWASMADE
    Payment for unused leave at the time of an individual's         separation from
    military  service  has been one of the largest      areas of improper payments
    made by the Army each year and has been the subject         of a number of
    earlier  reports  by the General Accounting    Office    (GAO).

     The weaknesses in the recording   of leave have persisted in spite                 of the
     adoption of additional procedures   and controls by the Army.

    This GAO review concerns certain        aspects of the Army's accounting    for
    military      leave which in the past has been in need of particular     atten-
    tion.      It was directed   to an examination  of the records of 12 military
    installations       for the months of September and November 1969 and January
    1970.


FIiVDIlVGSAND COiVCLUSIOiVS
     GAO estimates    that errors      in accounting     for     leave in the Army could re-
     sult in almost $23 million          in overpayments       annually   to servicemen    and
     about $3 million     in underpayments.         (See p.      6.)   GAO believes   that this
     is a conservative      estimate,      inasmuch as it      is based on the rates of pay
     at the time the errors        were discovered.
     The ultimate  lump-sum payments to individuals     for           unused leave when
     they are discharged   or separated from active duty              could be at consider-
     ably higher rates because of longevity    increases,             promotions,  and stat-
     utory pay increases.

     When leave is not charged properly,        the     serviceman has more        unearned
     leave available     to him during his term        of service.   If the       unearned
     leave is taken by the serviceman      rather       than cashed in, the        projected
     leave errors    could represent   an annual       net loss of manpower        availability
     approximating    4,600 man-years (periods         of leave undercharged        less periods
     of leave overcharged).       (See app. I.)

     The following   conditions       contributed    to the high      incidence   of leave
     errors encountered.

         --Prescribed    records were not used to establish            dates servicemen
            arrived   at installations.   In cases of delay           en route (leave taken
         while in a travel status),          the showing of an early arrival   date on
         a travel claim would serve          to reduce the leave charged.    (See pa 7
         to 9.1

       --Leave in connection      with   an intrapost     transfer  was incorrectly
          treated as routine     delay   en route.      (See p. 9.)

       --Morning    reports (attendance       records)  were not used as the source
          for posting ordinary     leave.       (See p. 11.)

       --Carelessness     on the part    of pay clerks     and the lack     of supervisory
          review.     (See p. 12.)

       --In the past several years,     little     or no audit or review of leave
           had been performed by either      the local internal  review staffs  or
           the Army Audit Agency.    (See p. 13.)


RECO~NDATIONS OR SUGGESTIONS
    The Secretary     of the Army should:        (See p. 15.)

       --Direct    that local internal  review staffs   be increased     and that they
          and the Army Audit Agency regularly     conduct reviews of pay and
          allowances,   with particular  emphasis on military     leave.

       --Order     a study of the Army's leave practices         to ensure that the leave
          data   input to the military   pay system will        be more accurate.

       --Direct   that travel   orders be endorsed by appropriate             officials   to
          show dates of arrival      and departure     at all military      locations   to
          which the individual     traveled,    including    intermediate      points,
          and that these endorsements be used with the travel               voucher to com-
          pute the amount of leave chargeable.


AG73VCY
      ACTIONS AND UNRESOLVED
                           ISSUES

    The Army has concurred,     in general,    in GAO"s observations         and con-
    clusions.     It accepted the first     two recommendations,but         not the
    third.    (See pp. 16, 17 and app. III.)
    GAO plans to periodically   examine into the effectiveness       of the actions
    taken by the Army to strengthen    leave accounting,   including    the adequacy
    of its internal  review coverage.


MATTERSFOR CONSIDEIZATION
                        BY TfiE CONGRESS
    The appropriate     Committees of the Congress may wish to pursue with
    the military    departments    the continued  high incidence of errors re-
    ported by this Office       in the management of leave.


                                         2
                            CHAPTER1

                          INTRODUCTION

       The Armed Forces Leave Act of 1946, (10 U.S.C. 701) pro-
vides that each member of the Armed Forces on active duty is
entitled   to leave with pay and allowances at the rate of
2-l/2 calendar days for each month of active service- except
for certain   excluded periods,  such as absence without leave
or confinement    as the result of a sentence of a court-
martial.

        Leave taken and leave credited    is accumulated on a
fiscal-year      basis.  Generally the total amount of accrued
leave will not exceed 60 days at any time, except that leave
actually     taken during any fiscal year may be charged to
leave accruing during that fiscal      year without regard to the
60-day limitation.       On discharge or relief  from active duty,
each member is entitled      to payment for unused accrued leave,
not to exceed 60 days. When leave is taken it is recorded
from various source documents onto the serviceman's         leave
record.

      An officer    having   accrued leave to his credit at the
time of his discharge is entitled         to be paid for that leave
on the basis of the basic pay and allowances to which he
was entitled     on the date of discharge.        An enlisted person
having accrued leave to his credit          at the time of his dis-
charge is entitled       to be paid for that leave on the basis of
the basic pay to which he was entitled           on the date of dis-
charge, plus an allowance at the rate of 70 cents a day for
subsistence.,     Also enlisted    personnel in pay grades E-5
through E-9 with dependents receive an allowance at the rate
of $1.25 a day for quarters.         The Department of the Army
paid a total of about $119 million          in lump-sum leave pay-
ments to 395,895 Army personnel during calendar year 1969,
or an average of about $300 to each member.

      In our report to the Congress entitled   "Review of
Causes of Overpayments of Military    Pay and Allowances,  De-
partment of Defense," issued in April 1963, we pointed out
that accrued leave continued to be one of the largest     areas
of overpayments,   in spite of the recognized  need for correc-
tive action since 1946. We concluded in that report that

                                 3
aggressive  administrative      actions   were required    to correct
the weaknesses.

      The Assistant Secretary      of Defense (Manpower) commented
on this matter, in pertinent       part, that:

      "The administrative      shortcQmings reported are
      recognized,   corrective    actions have been ini-
      tiated and are being pursued vigorously.       Prs-
      gress is being achieved."

      In September 1964 we issued another report to the Con-
gress entitled  "Ineffective  Administration  Qf Military
Leave, Department of the Army."    We concluded that little       or
no improvements had been made in the administration       of mili-
tary leave, and we proposed that the Secretary of the Army
see that the recommendations in Qur report of April 1963 are
implemented.

       The Deputy Under Secretary of the Army (Personnel
Management) informed us that the Army (I) had developed an
additional   training    program for personnel in the pay field,
(2) had established      a policy for stabilizing     assignment of
personnel in the pay area, (3) had adopted directed           assign-
ments of personnel to the pay area, and (4) had increased
the grade structure      for pay specialists    to give greater pro-
motion potential      to career supervisory    personnel.

      In April 1968 we issued to the Congress still           another
report on military     pay and allowances entitled      lVFollow-Up
Review of Causes of Erroneous Payments of Military           Pay and
Allowances,    Department of Defense."       We concluded that, al-
though the Department of Defense and the services had taken
a number of actions to improve the administration           of leave,
as well as military       pay and allowances,   serious deficiencies
in administration     still   existed and resulted    in significant
numbers of overpayments and underpayments to military            person-
nel.

      Since 1966 the Department of Defense has been develop-
ing a Joint Uniform Military    Pay System (JUMPS). The pro-
posed system has as its primary goal the best and most effi-
cient operating  techniques for (1) service to military    per-
sonnel, (2) maximum practicable    uniformity among the military

                                   4
departments,     (3) maintenance of centralized,  computerized
pay accounts,     and (4) optimum support of the planning,    pro-
gramming, and budgeting systems through comprehensive,        ac-
curate,   and timely accounting reports and other end products.
A related    goal is to eliminate  or reduce erroneous and ille-
gal payments.

       Under the JUMPS concepts,      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 1973.
       Since our review was directed   at three aspects of mili-
tary leave, namely (1) leave not involving      a travel    status
(ordinary   leave and emergency leave),   (2) delay en route
leave, and (3) delay en route leave in connection        with an
intrapost   transfer,  this report is not intended as an eval-
uation of other aspects of the Army's leave system.

       The   scope of our review is on page 18. A list of the
principal     officials  of the Department of Defense and the De-
partment     of the Army responsible   for the activities dis-
cussed in     this report is included as appendix IV.
                               CHAPTER'2

                NEED FOR IMPROVEMENTS
                                    IN CONTROLS

               OVERACCOTJNTING
                             FOR MILITARY LEAVE

        In the interest  of (1) ensuring effective       use of man-
power and funds, (2) building         troop confidence and morale,
and (3) maintaining     effective     financial  management, it is
imperative    that the military     services accurately     account
for leave taken by service personnel.           Our review of mili-
tary leave'accounting      in the Army has revealed serious de-
ficiencies    in the controls     over the accounting    for leave
and in the manner in which leave accounting procedures are
followed.

       When leave is not properly accounted for, either un-
earned leave becomes available    to the individual  or he is
deprived of earned leave during his term of service,      Un-
earned leave could be either liquidated     during a term of
service or cashed in at completion of one9s service.

       In our tests we included only a relatively             small sam-
ple, but there is no reason to believe that it is not typi-
cal of the conditions       existing     at all other Army installa-
tions.     We estimate,   therefore,      that errors and omissions
in computing and recording         leave could result     in erroneous
payments amounting to almost $26 million            annually,   which
consist of almost $23 million          in overpayments and about
$3 million     in underpayments.       Converted to man-years, the
projected    leave errors could represent an annual net loss
of 4,600 man-years (periods of leave undercharged less pe-
riods of leave overcharged).           (See app. I.1

      We believe that our estimate of $26 million         in errone-
ous payments is conservative     because it is based on the
rates of pay of service personnel at the time we detected
the errors.     The ultimate  lump-sum leave payments these
servicemen will receive at the expiration        of their term of
service will be at considerably       higher rates because of
longevity   pay increases,   promotions,    and statutory   pay in-
creases.
     The types of leave discussed         further   in this   report
are defined below.

      Delay en route--    leave authorized in conjunction with a
                          permanent change of station or tempo-
                          rary duty.

      Delay en route
      in connection
      with intrapost
      transfer       --leave authorized    in connection with a
                        transfer  from a trainee or student
                         status to permanent party status at
                        the same station.

      Ordinary   leave-- leave granted on request of a service
                         member within the limits of accrued
                         leave and/or leave that may be ad-
                         vanced.
ERRORSIN ACCOUNTINGFOR DELAY EN ROUTE

        During fiscal     year 1969 over one million       travel vouch-
ers involving      delays en route were processed in the Army.
Over 28 percent of the 2,310 cases we examined had errors.
We therefore      projected   that Army-wide there were almost
300,000 errors       annually   involving    over $17 million    in po-
tential     improper payments.         (See app. I.>
       Under Army procedures the number of days' delay en
route in conjunction    with a permanent change of station         is
determined by subtracting      authorized    travel time from the
elapsed time between stations.         Finance office    travel clerks
compute the authorized     travel time for the individual's
itinerary   shown on his travel voucher and enter the time
computed on the face of the voucher.           The voucher is then
forwarded to the pay clerk who computes the period of de-
lay en route and enters it on the member's leave record.

       Under current procedures,   travel clerks accept the
itinerary,   including   reporting dates, shown by the member
on his travel voucher without checking morning reports or
other records.      We noted that, in numerous instances,  the
reporting   dates shown on the travel vouchers differed    from

                                    7
those shown on official  installation       records;   ioe.p   morn-
ing reports and personnel registers,

       During our review Army officials     pointed out that Army
regulations    do not require that the arrival     date at the new
station    shown on the travel claim be verified     with morning
report entries or other official      records.

        In an earlier review of the administration of military
leave in the Department of the Army we commented on this
situation.     In our report (B-125037, September 1964) we
stated that:
      ‘t-k** in view of the high incidence of error in
      computing delay en route leave, we proposed that
      endorsements be placed on servicemen's    travel
      orders by the old and new stations   to show the
      dates and places of departure and arrival     and
      that these endorsements be used in computing the
      leave."

     The Deputy Under Secretary of the Army (Personnel            Man-
agement), in replying to our proposal, stated that:

      "The Department of the Army concurs in principle
      in your recommendation concerning the endorsement
      of travel orders when delay en route leave is
      authorized,   and that the endorsements be used in
      the computation of such leave.      A procedure sub-
      stantially  as recommended has been included in
      an impending revision     of the Army military  leave
      regulation   (AR 630-5>.ts

      Such a procedure    has not been implemented.

         Our current findings    demonstrate the imperative    need
for obtaining      more accurate itinerary   information    in prepar-
ing travel vouchers, rather than relying         on the memory of
the individuals.       In view of the number of discrepancies
noted by us in arrival       dates, we have doubts about the re-
liability     of departure dates as well and of arrival       and de-
parture dates at ports of embarkation and debarkation.
Since all of these dates have equal weight in computing the
leave charge, we believe that members' travel orders should

                                  8
be endorsed by appropriate     officials   at the sending and re-
ceiving organizations    to show dates and places of departure
and arrival  as well as arrival      and departure dates at inter-
mediary points,    such as ports of embarkation and debarka-
tion, and that these endorsements should be used along with
the travel voucher to compute the amount of leave charge-
able.
POORPROCEDURES TO CONTROLRECORDINGOF
DELAYS EN ROUTEON INTRAPOST TRANSFERS
      We reviewed 156 intrapost   transfers, where leave was
authorized,   and found that leave had not been posted or had
been posted inaccurately    in 58 percent of the transactions.
(See app. I.>
       At seven of the nine U.S. installations    visited, ft was
the practice   to authorize    delays en route on intrapost
transfers.    Usually this occurs when trainees     complete
training   and are granted leave on reassignment to another
unit at the same installation.
       There were no prescribed    procedures for handling such
cases except as routine delay en route.       The defect in this
practice    is that, whereas routine delay en route is re-
corded from a copy of the member's travel voucher, in the
case of intrapost    transfers,  no official  travel is involved
md no travel voucher is prepared by the service member.
Wiithout the voucher there is no source posting document and
a breakdown develops in the leave control.
        In cases of intrapost transfer where leave had been
recorded on the leave record, we found, generally,     that the
pay clerks had, contrary to prescribed     procedures, recorded
the number of days9 leave authorized    in the orders without
verifying    the actual number of days' leave taken.
       During our review the Finance Center, U.S. Army
 (FCUSA), noted the problems of charging leave for intrapost
transfer,    FCUSA9s All Points Bulletin of May 28, 1970,
contained a discussion   of our findings which concluded by          .
stating:
      Vhe granting of leave in connection with an
      intra-post  transfer should not be delay en route

                                 9
     leave -- rather it should be ordinary leave
     wtiich should be controlled       by the gaining orga-
     nization    following    the recording  of the transfer
     action.     Leave control could be ac'hieved by uti-
     lizing    DA [Department of the Army] Form 31 (Re-
     west and Authority         for Leave) and applying cor-
     rect posting procedures of DA Form 481 from morn-
     ing reports in accordance with paragraph 3-56,
     AR 37-104-Z.       For this reason, delay en route as
     a transfer     procedure with respect to intra-post
     transfers     should be discontinued."

      We believe   that this procedure,    if adopted by all Army
finance offices,     should correct this   particular leave sys-
tem deficiency.




                               10
ORDINARYLEAVE RRRORS
     At 11 installations  we found that errors had been made
in the posting of ordinary leave to the military  leave rec-
ord in 17.6 percent of the 2,856 cases reviewed.    (See
app. I.)

      Posting ordinary   leave is a relatively    simple operation.
The only technical    knowledge required    is the fact that the
date of departure is a day of leave and the date of return
is a day of duty and that these dates are obtained from the
morning reports.

      Notwithstanding     the simplicity  of the operation,     we
found ordinary     leave errors at all installations     visited.
The error rates ranged from 6 percent to 30 percent,           with
four installations      having error rates in excess of 24 per-
cent.

      At one installation,       the record clerks had audited the
leave records immediately prior to our review; yet, in 13
percent of the ordinary       leave cases we reviewed, no postings
of periods of leave taken had been made to the leave records.
An earlier  internal     audit report issued by the comptroller
of an Army Corps contained the following          comments about the
use of ordinary    leave at this installation.
     "Personnel at *          are maintaining      members' leave
     records in such an uncurrent manner that a major
     deficiency     has developed.        There is a general
     knowledge throughout          the division     that 'one should
     take as much leave as possible prior to reassign-
     ment from the division,          because there is a good
     chance that this leave will not be posted.                If
     you are ETS [expiration          of term of service],       you
     may get paid for your unearned accrued leave or
     you may not be charged for your excess leave!                 If
     you are PCS [permanent change of station],               you
     will have a greater leave balance to carry for-
     ward to your next unit !I ** The magnitude of
     this deficiency        should require      (i) immediate in-
     vestigation,     (ii) a major revision          of morning re-
     port control,      (iii)    the active supervision       of -k-k*
     clerks,    (iv) complete audit of leaves for the

                                    11
      period [that the organization]  was responsible
      for posting leave from the morning reports,     and
      (v) the initiation  of special controls  to insure
      that leaves taken during the last 40 days the
      member is assigned the division  will be charged
      against the member's accrued leave balance."

     At four installations ordinary  leave was being posted
from the DA Form 31 rather than from the morning reports,
and at three installations pay clerks were considering    the
date of return from leave as a day of leave rather than a
day of duty.
CAUSESOF ERRORS
       The majority     of leave errors noted on delays en route
and on intrapost      transfers      were attributable       to:     the fact
that there was no requirement            that the arrival        date the mem-
ber shows on his travel         itinerary     be verified      with official
records and to treating         leave on intrapost        transfers     as de-
lays en route.      Also, prescribed         procedures were not being
followed;   for example, pay clerks were posting ordinary
leave from the DA Form 31 rather than from the morning re-
ports.    We attribute     the failures       to record any delay
en route or ordinary       leave at all to carelessness              by the pay
clerks and to inadequate supervision,

      Officials    at a number of the installations       attributed
their high error rates to the present conditions           of person-
nel turbulence     in the Army and to increased work loads on
finance office     personnel due to reductions      in staff.      Station
commanders, replying      to our letter    reports which summarized
the findings    noted at their installations       (see p. 181, cited
a variety    of local procedures and controls       designed to cor-
rect the defects in recording       leave.

UNRELIABLE MORNINGREPORTS

        In our review at installations       in the United States,
we relied on morning reports to establish            the dates members
officially    arrived at the installations       and to verify   the
leave postings.      In addition    to errors where the reporting
dates shown on travel vouchers differed           from those shown on
morning reports,     there were errors in the reporting        dates on

                                      12
a significant   number of morning reports.     Officials    at these
installations   had to refer to official   personnel registers,
guest house registers,    or other documents to learn the dates
servicemen officially    arrived at the stations     to determine
whether travel voucher or morning report dates were correct.
The reporting   dates on morning reports were wrong in 229 out
of 1,384 cases, for an error rate of 16.5 percent.          In a
number of instances at several installations       the names of
newly arrived members were not picked up on the morning re-
ports at all.

        The unreliability         of morning reports points up a seri-
ous deficiency      not only in recording          leave but in other ar-
eas involving      the ArmyOs personnel accounting practices.
Army regulations         stipulate     that the morning report be the
basic record reflecting            the official    daily status of the re-
porting organization           and of each person assigned or attached
thereto.     The morning report is used for official             strength
and other statistical           reports.      It is used as evidence in
military    court-martial        proceedings     and in the adjudication
of claims based on the duty status of the claimant at any
particular    time.

      Since other documents which are the sources for morning
report entries   are eventually destroyed and since only the
morning report survives as an official    record, it is impor-
tant that the data reported on this record be accurate.

LACK OF INTERNAL AUDITS OR REVIEWS

       Little     or no review of military    pay and allowances had
been made in the past several years by the installations'
internal      review staffs,   the Army Audit Agency (AAA), or any
other Army agency with audit responsibility.             At only one of
the nine U.S. installations        we visited    had the internal    re-
view staff reviewed military        leave during the previous
2-year period.        At most of the installations      the Internal
Review Section did not appear to have the manpower to con-
duct reviews of military        pay and allowances and still       handle
the other review work load imposed on it.




                                    13
        The AAA had recently    visited  some of the locations  we
visited,    but officials    at these installations  advised us
that the scope of AAAs review did not include military          pay
and allowances.

     A team of auditors     from a Corps Headquarters    in Europe
had made technical    inspections  of the finance offices    for
the two installations     in Germany. These inspections,     how-
ever, included only a limited     review of leave transactions.

CONCLUSIONS

        In prior reports we have cited deficiencies         in the ad-
ministration       of military     leave, and the Army has responded
with several procedural           changes.  Nevertheless, serious de-
ficiencies      still  exist in the Army's accounting     for military
leave, which requires          prompt and aggressive management ac-
tion.

       Simply issuing additional    directives and procedures
will not bring significant     improvements unless there is a
continuous   effort  on the part of management at all levels to
see that these procedures are applied properly.

      Local Army officials    were cooperative   and receptive   to
our findings   and viewpoints   and took steps to revise local
procedures to prevent future errors of the types we noted.
We are concerned, however, that the deficiencies        we observed
could be typical   of most all Army installations,      and, with-
out the attention    of Army officials   at all levels,   the sit-
uation will not be corrected.
      Our experience has shown that military           pay and allow-
ance matters require         constant surveillance,    particularly   at
the installation      level.      Experience has shown also that lo-
cal internal     review groups are generally        unable to devote
the necessary effort         to these important fiscal     management
matters.

      We feel that JUMPS, scheduled for full implementation
by January 1973, may help improve the situation      to the ex-
tent that a computerized   system is mathematically     more ac-
curate than a manual system.     It must be recognized,    however,
that even computerized   systems are dependent upon the

                                   14
accuracy and the timeliness    of data input to that system.
Many of the present-day   problems with input data in leave
accounting could continue to exist under JUMPS.
      The erroneous leave charges arising     from discrepancies
between arrival   dates on travel vouchers and those on morn-
ing reports or other documents demonstrate a need for
greater emphasis on obtaining    accurate itinerary    information
when preparing   an individual's  travel voucher.
       Regarding delays en route in connection with intrapost
transfers,    the action taken through FCUSA's All Points Bul-
letin concerning such leave, if adopted by all Army units
and made a matter for periodic     surveillance by audit and re-
view groups, should correct the situation.

       The procedures and practices     for posting ordinary   leave
must emphasize the examination of morning reports as the
principal   means to identify    dates servicemen departed and
returned to duty.      The Army must improve controls     over morn-
ing reports in order to restore credibility        to this impor-
tant document.     Better controls    should improve their accu-
racy, timeliness,    and correct processing.

RECOMMENDATIONS

     The Secretary    of the Army should:

     1. Direct that local internal  review staffs be in-
        creased and that they and the AAA regularly      conduct
        reviews of pay and allowances,   with particular    em-
        phasis on military  leave.

      2. Order a study of the Army's leave practices    to en-
         sure that the leave data input to the military    pay
         system will be more accurate.

      3. Direct that travel orders be endors-ed by appropriate
         officials    to show dates of arrival       and departure    at
         all military    locations    to which the individual      trav-
         eled, including     intermediate    points,   and that these
         endorsements be used with the travel voucher to com-
         pute the amount of leave chargeable.


                                   15
                              CHAPTER3


               AGENCYCOMPENTSAND GAO EVALUATION

        In his letter     of November 10, 1970 (see app. III),        the
Deputy Assistant        Secretary of the Army (Manpower and Reserve
Affairs)     stated that the Army had no exceptions         to the
findings     in the report or to the conclusion        that errors in
military     leave accounting     could result   in erroneous pay-
ments of significant         amounts.   He stated also that the Army
had acted in line with two of the three GAO recommendations.
In regard to the recommended procedure involving             endorse-
ment of travel orders, he stated that there was doubt that
any significant       reduction   in the current error rate would
result    from such a procedure,

      With respect to our recommendation that local internal
review staffs be increased and that they and AAA regularly
conduct reviews of pay and allowances,        with particular       em-
phasis on military    leave, the Deputy Assistant        Secretary
commented that the AAA fiscal year 1971 schedule provides
for audits of military     pay and allowances,     including     mili-
tary leave, at nine installations.         He commented also that
the size and the use of internal      review staffs would depend
upon the commander's priorities     and that internal        review
staffs would make special studies,       surveys, and analyses
and would serve as troubleshooters       for the commander in the
discharge of his responsibilities.

        The fact that AAA plans to review military          pay and al-
lowances, including      military    leave, at nine Army installa-
tions is commendable.         We believe,     however, that the defi-
ciencies    in accounting     for military     leave are of such a
serious nature and involve so much of the funds that in-
stallation     commanders should recognize that this is a
trouble area and that they should be directed             to use their
troubleshooters     to examine military        leave, at least to the
extent of determining       whether similar unsatisfactory        condi-
tions exist at their installations,             We believe that, as a
part of such reviews, the audit and review groups should as-
sist in developing      or recommend to installation        personnel
standard operating      procedures to ensure more effective         con-
trol over the accounting         for military     leave.
       In commenting on our draft report,          the Army did not
adopt our recommendation on endorsing travel               orders.    We
understand,     however, that, at certain      selected installa-
tions, the Army is using a Statement of Arrival                Time which
will officially     indicate    member's date of arrival          at the
gaining organization       on transfer   to a new station.          This
statement can be used to correlate         travel,      leave, and morn-
ing report data by the finance and accounting               office.     Also
we have learned informally        that the Army is considering
using a similar     statement to substantiate         the date of de-
parture from the old station.

       We plan to periodically     examine into the effectiveness
of the Army's revised leave accounting procedures,          includ-
ing the adequacy of its internal        review coverage.    The ap-
propriate    Committees of the Congress, however, may wish to
pursue with the military       departments the continued high in-
cidence of errors reported by this Office in the management
of leave.




                                                                               .Li   .-




                                     17
                            CHAPTER4

                         SCQPEOF REVIEW

        We performed our review of leave at nine U.S. instal-
lations    and at the Finance Center, U.S. Army. Records for
the stations     in Europe were available   at the Army Finance
Center, while the unit in Korea furnished        us copies of the
leave records maintained      in the field.   We examined perti-
nent regulations     of the Department of the Army which imple-
mented provisions     of the Armed Forces Leave Act of 1946
(10 U.S.C. 701).      We examined controls,   procedures,   and
documents for recording     leave and independently     computed
the amounts of leave chargeable.

      We issued reports of our findings     to the Commander of
each U.S. installation  we visited;   to the Commanding General,
7th Army; and to the Commanding Officer,      Zlst Finance Sec-
tion.  Copies of our reports were furnished       the Comptroller
of the Army; the Commanding General, Finance Center; and,
except for Fort Knox, to the appropriate      Army Commander.

       We reviewed leave records for the period September
1969 through January 1970 at or for the following      installa-
tions:
                                                 Records
                                                 reviewed
                      Installation             for month
       United States:
             Fort Bliss, Texas                 Nov. 1969
             Fort Campbell, Kentucky               Do.
             Fort Dix, New Jersey                  Do.
             Fort Jackson. South Carolina          Do.
             Fort Knox, Kentucky               Sept. 1969
             Fort Ord, California              Nov.      "
             Fort Riley, Kansas                    Do.
             Fort Sill,    Oklahoma                Do.
             Fort Leonard Wood, Missouri       Jan. 1970
       Europe:
             3d Infantry     Division, Germany     Do.
             44th Finance Section,        "        Do.
       Asia:
             Zlst Finance Section, Korea           Do.
APPENDIXES




       19
             SERIOUS PROBLEMS IN ACCOUNTING FOR MILITARY LEAVE
                                 DEPARTMENTOF THE ARMY
                                       SUMMARYOF ERRORS

                                                                      Potential
                                                                    overpayments
  Type of leave                   Sample          Number                Amount             Percent
Delay   en route                      2,310          490             $34,957.25                 21.2
Ordinary                              2,856.         306              27,825.75                 10.7

Intrapost      transfer                 156              75             4,017.57                48.3.
     Total                            5,322      Z871     $66,800.57                            16.4
                            Estimate     of Annual Leave Errors
                                                                   Potential
                                                                 overpayments
                                                                   Man-years
        Type of leave                          Number              (note d)            Amount
Delay en route         (note     a)            218,774               3,454         $f5,608,000
Ordinary      (note    b)                       76,500               1,644            6,855,OOO
Intrapost    transfer
    (note c)                                     8,052                 199               431,000
     Total                                     303,326               5,297         $22,894,000
     Potential        underpayments                                     687
     Net man-years                                                   4,610

aDelay en route --1,031,363  permanent-change-of-station                               travel
 vouchers with orders authorizing    delay en route for                            fiscal
 year 1969.

bOrdinary  leave --720,900    occurrences                  for     800,000 permanent
 party personnel    annually.
                                                                                   APPENDIX I
                                                                                       Page 1




             Potential
           underpayments                                        Total errors
Number           Amount           PercGiC        Number             Amount             Percent

  169          $4,011.85                7.3            659        $38,969.10                 28.5
  197           4,384.78                6.9            503            32,210.53              17.6
   16             370.95            10.2                 91            4,388.52              58.3

  Z382         $8,767.58                7.2       1,253           $75,568.15                 23.6



                  Potential
                underpayments                                  Total errors
  Number          Man-years        Amount        Number          Man-years            Amount
   75,455             459        $1,791,000      294,229               3,913       $17,399,000
   49,428             208         1,085,OOO 125,928                    1,852         7,940,ooo

     1,752              20              41,000         9,804             219           472,000
  126,635             687
                      C          $2,917,000      429,961               5,984       $25,811,000




 'Intrapost      transfer    --16,800    occurrences      involving      delay    en route
   annually.

 dComputed using        365 days per man-year.




                                                  21
                                                  CONSOLIDATEDSUMMARYOF ERRORS



                                                                   Potential                        Potential
                                                                 overpayments                     underpayments
                                                 Month               Per-                             Per-                   Total   errors
            Installations                      reviewed      Number cent
                                                             --              Amount            Number cent
                                                                                               --             Amount
                                                                                                              ---          Number
Fort     Knox, Ky.                                    9-69      142      79.8 $12,322.19          36   20.2 $     896.56      178 $13,218,75
Fort Bliss,        Tex.                          11-69           73      69.5       5,436.31      32   30.5       840.88      105     6,277.19
Fort Jackson,            S.C.                    11-69           33      55.0       2,418.67      27   45.0       605.14       60     3.023.81
Fort Riley,        Kan.                          11-69           44      60.3       3.872.71      29   39.7       628.91       73     4,501.62
Fort Ord, Calif.                                 11-69           61      78.2       5,230.18      17   21.8       345.82       78     5,576.OO
Fort     Dix,    N.J.                            11-69          166      80.2       7,971.56      41   19.8       608.04      207     8,579.60
Fort     Campbell,        Ky.                    11-69           66      55.9       4,414.65      52   44.1     1,485.44      118     5,900.09
Fort     Leonard Wood, MO.                            l-70       91      65.0       4,638.98      49   35.0       915.61      140     5,554.59
Fort     Sill,    Okra.                          11-69          - 44     69.8       2,593.33    - 19   30.2       397.44       63 2,990.77
        Total    U.S. installations                                      70.5 $48,898.58
                                                                =720                            =302   29.5 $6,723.84       1,022 $55,622.42
3d Infantry        Div.,        Germany               l-70       106     71.6      14,500.U       42   28.4     1,387.53      148    15,887.64
44th Finance Sec.,               Germany              l-70       15      46.9       1,303.22      17   53.1       186.78       32     1,490.oo
21st Finance            Sec., Korea                   l-70     - 30      58.8       2,098.66    - 21   41.2       469.43       51     2,568.09
        Total    foreign        sta.
                                                               =151
                                                                         65.4 $17,?01.99
                                                                               --               I 80 34.5 $2,043.74
                                                                                                           --               - 231 $19,945.73
                                                               =871
Total                                                                    69.5 $66,800.57        382  30.5 $8,767.58         1,253 $75,568.15
                                                                                                ==ES
aOnly delay en route reviewed.

bIntrapost        transfers            not reviewed     at foreign     stations.
                                                                                           APPENDIX I
                                                                                               Page 2




       Delay en route                    Ordinary                       Intrapost       transfers
Num-     Per-                             Per-                                      Per-
-ber     cent         Amount    Number    cent        Amount       Number           cent        Amount
  93      52.2     $ 6,520.X       59     33.2      $ 5,X8.72        26             14.6    $1,579.88
  64      60.9       3,500.05     32.     30.5        1,927.82          9            8.6        849.32
  30      50.0         835.89      17     28.3        1,780.02      13              21.7        407.90
  53      72.6       3,811.37     19      26.0            600.97        1            1.4         89.28
  39      50.0       2,385.57      36     46.2        2,879.OO          3            3.8        311.43
 122      58.9       5,027.91     79      38.2        3,165.36          6            2.9        386.33
  48      40.7       3,701.41     70      59.3        2.198.68
  40      28.6       1.423.52     67      47.9        3,366.69      33              23.5        764.38

- 42      66.7       2.188.54    - 21     33.3            802.23    -
=531      52.0     $29.394.41    =400
                                          39.1      $21.839.49      I91              8.9    $4,388.52
  60      40.5       6.710.42      88     59.5        9J77.22
  17      53.1         296.18     15      46.9        1.193.82

- 51     100.0a      2.568.09    -                                  -
 128
=r        55.4     $ 9,574.69    =103     44.6      $10,371.04      =               Ib)     $    -

=659      52.6     $38,969.10
                                 =503
                                          40.1      $32,210.53      =91              7.3    $4,388.52




                                                    23’
             SERIOUS PROBLEMSIN ACCOUNTINGFOR MILITARY LEAVE
                            DEPARTMENT
                                     OF THE ARMY



                          ANiiLYSIS OF ERRORSBY TYPE




                                                Errors
                          Potentialoverpayments Potential      underpayments
                                 Per-                         Per-                   Total errors
                          Number
                          ---    cent   ARIOWIC        Number cent
                                                      ---            Amount       Number
                                                                                  -I__      Amount
Delay en route              490       74.4 $34,957.25    169    25.6 $4,011.85        659 $38,969.10
Ordinary     leave          306       60.8   27,825,75   197    39.2   4,384.78      503 32,210.53
Intrapost     transfers     -- 75     82.4    4,017.57   --16   17.6     370.95       91    4,388,52
     Total                  871
                            G         69.5 $66,f300.57   -382   30.5 $8,767.58     1,253 $75,568.15

aMorning reports.
                                                                               APPENDIX II
                                                                                   Page 1




                                        Type of errors
   Date on M/R different
      than on voucher             Computation of leave               Not posted
-.        (note a>               and/or travel incorrect          to leave record
           Per-                           Per-                        Per-
Number -cent
~                    Amount
                     _II      Number
                              --          cent   --Amount     Number cent      Amour1   t

  302     45.8   $9,691.23      278        42.2 $ 8,194.60       79    12.0     $21,083.27
                                303        60.2    8,253.88     200    39.8      23,956.65

  -       -                     -- 42      -46.2     555.73     - 49   -53.8      3,832.79
  302     45.8   $9,691.23      X623       49.7 $17,004.21     328     26.2     $48,872.71




                                                     25
                                            ANALYSISOF ERRORSBY TYPE
                                                     DELAYEN ROUTE
                                                         Errors
                                           Potential                 Potential
                                         overpayments              underpayments
                           Month            Per-                       Per-                       Total errors
       Installation      reviewed   Nmber --cent     Amount    Number cent
                                                               ---             Amount          Number Amount
                                                                                               --
Fort Knox                   9-69       72     77.4 $ 5,868.06         21      22.6 $ 652.09      93    $ 6,520.15
Fort Bliss                 11-69       48     75.0      3,046.02      16      25.0    454.03      64     3,500.05
Fort Jackson               11-69       13     43.3        618.37      17      56.7    217.52      30       835.89
Fort     Riley             11-69       38     71.7      3,441.43      15      28.3    369.94     53      3,811.37
Fort Ord                   11-69       30     76.9      2,117.24          9   23.1    268.33     39      2,385.57
Fort Dix                   11-69      104     85.2      4,768.44      18      14.8    259.47    122      5,027.Yl
Fort Campbell              11-69       35     72.9      3,216.84      13      27.1    484.57     48      3,701.4.l.
Fort Leonard Wood           l-70       31     77.5      1,097.08          9   22.5    326.44     40      1,423.52
Fort Sill                  11-69     --34     81.0      1,976.56     -- 8     19.0    211.98    42       2,188.54
       Total U.S. In-
         stallations                 405
                                     W        76.3 $26,150.04        Z126     23.7 $3,244.37    531 $29,394.41
                                                                                                D
3d Infantry       Div.      l-70      49      al.7      6,524.43       11     18.3    185.99     60   6,710.42
44th Finance Sec.          l-70        6      35.3        184.12      11      64.7    112.06     17        296.18
21st Finance Sec.          l-70      --30     58.8      2,098.66     --21     41.2    469.43     51      2,568,09
       Total foreign
         sta.                        Z 85     66.4 $ 8,807.21        E43      33.6 $ 767.48     128
                                                                                                B      $ 9,574.69
       Aggregate to-
         tal                         490
                                     =        74.4 $34,957.25        &g       25.6 $4,011.85    659 $38,969.10
                                                                                                D
                                                                                         APPENDIX II
                                                                                             Page 2




                                               Type of errors
  Date on M/R different                Computation        of leave                  Not posted   to
                                     and/o% travel        incorrect              leave record
           Per-                                    Per-                              Per-
Number     cent      Amount         Number         cent         Amount    Number     cent     Amount
   61      65.6    $1,953.45           24          25.8     $1,227.74           8        8.6     $ 3,338.96
   38      59.4           692.79       14          21.9          631.93     12          18.7          2,175.33
   18      60.0           377.24       10          33.3          121.37         2        6.7            337.28
   35      66.1     1,539.70           12          22.6          422.63         6       11.3          1,849.04
   23      59.0           973.71       10          25.6          285.63         6       15.4          1,126.23
   45      36.9     2,407.30           71          58.2      1,621.16           6        4.9            999.45
   27      56.2           512.31       12          25.0          613.69         9       18.8          2,575.41.
   33      82.5           928 .OO          6       15.0          426.08         1        2.5             69.44
   22      52.4           306.73       15          35.7          465.10     2           11.9          1,416.71


  z302     56.9    $9,691.23          Z174         32.8     $5,815.33       =55         10.3     $13,887.85
                                        42         70.0      1,105.09        18         30.0          5,605.33
                                       15          88.2          144.81         2       11.8            151.37
                                      47           92.2      1,129.37       4            7.8          1,438.72


                                      =104         81.2     $2,379.27       c24         18.8     $ 7,195.42
                                                                                                         -.

  302      45.8    $9,691.23          278
                                      D            42.2     $8,194.60      79            12.0    $21,083.27-




                                                            27
                                          SPS OF          ORS BY TYPE




                                Month                                                Fer-
       Installation           reviewed   Number cent          &%tlmlnt    Number     cent     Amount
Fort Knox                        9-69         46   78.0     $ 4,885,08       13      22.0   $ 233.64
Fort Bliss                      11-69         18   56,2       1#580,65       14      43.8       347.17
Fort Jackson                    11-69          9   52.9       1,503.93           8   47.1      276.09
Fort Riley                      11-69          5   26.3          342.00      14      73.7      258.97
Fort     Ord                    11-69         28   77.8       2,801.51           8   22.2       77.49
Fort Dix                        11-69         56   70.9       2,816.79       23      29.1      348.57
Fort Campbell                  11-69          31   44.3       1,197,81      39       55.7    1,000.87
Fort Leonard Wood                l-70         37   55.2       2,986.43      30       44.8      380.26
Fort Sill                      11-69      --10     47,6         616.77      11       52.4      185.46
       Total U.S. In-
         stallations                      =240     60.0     $18,730.97               40.0   $3,108.52
3d Infantry           Div.      l-70        57     64.8       7,975.68               35.2    1,201.54
44th Finance Sec.               l-70      -- 9     60.0       1,119.lO               40.0       74.72
       Total foreign
         sta.                             = 66     64.1                    37        35.9   $1,276.26
       Aggregate        to-
         tal                              E        60.8     $27.825.75     f97       39.2   $4,384.78
                                                                      APPENDIX II
                                                                          Page 3



                                             -es      .of errors
                            Computation of leave                   Not posted to
                          and/ok travel incorrect                  leave
                                                                       - record
   Total    errors                  P&r-                               Per-
Number       Amount     Number      cent       Amount        Number cent       Amount
   59      $ 5,118.72         21    35.6     $ 397.57         38       64.4   $ 4,721.15
   32        1,927.W          27    84.4      1,43.7.36          s     15.6       510.46
   17        1,780.02      LO       50.8         311.34          7     41.2     1,468.68
   19          600.97         17    89.5         307.02          2     10.5       293.15
   36        2,879.OO         11    30.6         179.48       25       69.4     2,699.52
   79        3,165.36      45       57.0         809.73       34       43.0     2,275.63
   70        2,198.60         50    71.4      1,269.68        20       28.6       929 .oo
   67        3,366.69         45    67.2         699 .OS      22       32.8     2,667.64
   21          802.23     2         81.0         421.04          4     19.0       381.19


  Z400     $21,839.49               60.7     $5.893.07       157       39.3   $15,946.42
             9,177.22               56.8       r,a05.89          38    43:2     7,291,33
             1.193.82               .66.7        474.92      2         33.3       718.90

  103
  E        $10,371.04               58.3      $2,360.81      - 43      41.7   $ 8,010,23


  X503     $32,210.53               60,2      $8.253.88      200       39.8   $23,956.65




                                            29
                               lmALYsPs OF          ORSBY TYPE
                                   . I-ST          TRANSFERS



                                                             Errors
                                                                               Potential
                                      Potential     overpayments             underpayments
                          Month              Per-                            Per-
   Installation         reviewed      Number cent         Amount      Number cent       Amount

Fort    Knox                9-69        24         92.3 $1,569.05       2         7.7 $ 10.83
Fort    Bliss             11-69             7      77.8    809.64       2        22.2        39.68

Fort    Jackson           11-69         11         84.6    296.37       2        15.4   111.53
Fort    Riley             11-69             1     100.0     89.28
Fort    Ord               11-69             3     100.0    311.43
Fort    Dix               11-69             6     1oo;o    386.33
Fort    Leonard Wood        I-70        23         69.7    555.47      10        30.3   208.91
       Total U.S. in-
         stallations                    i75        82.4 $4,017.57      i16       17.6 $370.95
                                                           APPENDIX II
                                                               Page 4




                                         Types of errors
                        Computation of leave             Not posted to
                       and/or travel incorrect            leave record
 Total   errors                   Per-                        Per-
Number     Amount     Number      cent    Amount Number cent           Amount
  26     $1,579.88       8       30.8   $ 43.32      18      69.2   $1,536,56
  9          849.32      3       33.3        44.64    6      66.7      804.68
 13          407.90     10       76.9    186.84       3      23.1      221.06
  1           89.28                                   1     100.0        89.28
  3          311.43                                   3     100.0      311.43
  6          386.33      1       16.7         5.87    5      83.3        380.46

 -33         764.38     20       60.6    275.06      r3      39.4      489.32


 =91     $4,388.52     =42       46.2   $555.73      =49     53.8   $3,832.79




                                        31
APPENDIX III
          Page 1


                            IEPARTMENT OF THE ARMY
                      OFFICE OF THE ASSETANT  SECRETARY
                                WASHINGTON,        D.C.   20310




                                                                  NOV 10 1970


 Mr. Charles M. Bailey
 Director,   Defense Division
 United States General Accounting         Office
 Washington,   D. C. 20548



 Dear Hr.   Bailey:

 The Secretary  of Defense has asked me to comment on the GAO Draft                      Report,
 dated 15 September 1970,   Subject:  Certain Aspects of Accounting                      for
 Military  Leave (OSD Case 113181).

 No exceptions      are taken to findings     in the report or to the conclusion
  that errors    in military   leave accounting      could result in erroneous payments
 of significant      amount.   Actions have been taken which are in line with two
 of the three GAO recommendations.          In regard to the recommended procedure
 involving    indorsement    of travel  orders,    there is doubt that any significant
 reduction    in the current     error rate would result.

 Comments on each GAO recommendation           are contained         in Inclosure   1.




 1 Incl
 as
                                                          Johfi
                                                           6.   Kester
                                                             Secretary sf the Army
                                              (PAanp”t!ver at;4 Rem-da Affairs)




                                         32
                                                                            APPENDIX III
                                                                                 Page 2


                     COMMENTSON GAO DRAFT REPORT (OSD i/3181)



Reconrnendation.    That local internal review staffs     be increased                and that
they and the U. S. Army Audit Agency regularly      conduct reviews                 of pay and
allowances,    with particular emphasis on military    leave.

Comment. In regard to increased         audit activity,      the U. S. Army Audit
Agency fiscal     year 1971   schedules  provide    for  audits   of military      pay,
including   military    leave, at nine installations.          Additional    military
pay audits may be scheduled,        depending on priorities        and manpower avail-
ability.    In addition     to the above, military      pay audits have recently
been completed at the Finance Center, U. S. Army, Fort Carson, Fort Hood
and in Vietnam, all in connection        with JUMPS.

The size of the installation        internal      review staff       depends upon the
commander's priorities.        He is responsible           for making the most effective
use of his personnel      resources    and staffing          of organizational      elements
is accomplished     on that basis.       Internal      review staffs       in the Department
of the Army do not make periodic           examinations        of military     pay activities
unless there is evidence of trouble or problems are known or suspected
to exist.    Internal   review personnel        make special        studies,    surveys and
analyses,   and serve as "trouble        shooters"       for the commander in the dis-
charge of his responsibilities,          but do not perform comprehensive               audits
or make regularly     scheduled recurring         or cyclical       reviews of appropriated
fund operations.


Recommendation.   That a study of the Army's leave practices   be made to
insure that the leave input to the Joint Uniform Military    Pay System
 (JUMPS) will be more accurate.

Comment.    Recommended study was initiated          in August 1970.    In early
recognition     of the need for improved accuracy of leave data input,              a
major project     action was established      within    the JUMPS-Army Master Plan
requiring   the development of improved leave accounting           procedures.        To
facilitate    accomplishment,      a joint Comptroller     of the Army-Deputy      Chief
of Staff for Personnel        study group was organized      in August 1970 to ex-
plore potential     means of achieving     required    input accuracy.     Project
completion    is scheduled for September 1971.




                                                33
  APPENDIX III
       Page 3


Recommendation.      That travel    orders be indorsed   to show dates of arrival
and departure     at all military    locations  to which the individual   traveled,
including   intermediate    points,    and that these indorsements   be used with
the travel    voucher to compute the amount of leave chargeable.

Comment.        It is doubtful   that adoption       of such a procedure would signifi-
cantly      reduce the current     error rate.       While it is difficult     to evaluate
the full       impact of the proposed procedure,          it appears that its effective-
ness would be dependent upon actions             to be taken by numerous disinterested
individuals       in the replacement     chain,    thus tending    to compound further     the
possibility       of error.    The present    system of controls       is considered   sound
and relatively        simple to administer,

It is believed     that procedures         and controls    presently   prescribed      in account-
ing for leave to be charged in connection               with delay enroute movement
should be retained.        Deficiencies       cited in the GAO report        indicate    a
failure    on the part of operating          personnel   to observe basic established
procedures     and a further     failure     on the part of responsible         supervisory
personnel    to properly     monitor     leave accounting      to detect deficiencies       in
performance     and to take timely,         appropriate    corrective   action.

The need for continuous         surveillance      in the area of military           leave account-
ing is recognized.        This need has been emphasized through command channels.
A recent directive       provides    that commanders will        assure that efforts          are
directed    toward reduction       of these errors*        Suggested actions          to be taken
on a continuing      basis include       internal   review evaluations         in addition     to
supervisory     reviews of work performed          by individual      clerks     involved   in
maintenance     of leave records and computation            of travel      time.




                                                34
                                                                                APPENDIX III
                                                                                     Page 4

Other Comments.        The Finance Center,       U, S. Army, in its June and July 1970
issues of the "All Points Bulletin",            again called attention      to this subject
by advising     finance and accounting       officers    of the many errors     found during
the GAO audit and stressed          the need for improvement in administration           of
military    leave.     The following    special    guidance   was furnished   in   an effort
to eliminate      these errors.

    a. Model standing         operating    procedure      for   maintenance          of the military
leave record (June).

   b.      Check list   for   use in reviewing        the military     leave         record    (June).

   C*      Model standing     operating    procedure      on accounting        for     delay
enroute     leave (July).

   d.      Special report     on deficiencies     in administration            of the military
leave     system (July).




                                                 35
                                                                    AFPENDIX IV

                                PRINCIPAL OFFICUG
                           OF THE ~EP~~~T      OF

                           Am THE DEPAR     MT OF

                           RESPONSHB FOR        ACTIVITIES

                             DISCUSSEDIN THIS       PORT


                                                       Tenure of office
                                                                       -To


  SECRETARYOF DEFENSE:
     Melvin R. Lair-d                               Jan D 1969      Present
     Clark M. Clifford                                T-
                                                      -e 1968       Jan. 1969
     Robert S, ??fcN                                      1961      Feb. 1968

 ASSISTANT SECRETARYOF DE
   ~corPTRoLLlER):
     Robert C. Moot                                 Aug *    1968   Present
     Robert N. Anthony                              Sept.    1965   July    1968

                              BEPAR       OF

 SECRETARYOF THE ARMY:
    Stanley R. Resor                                July     1965   Present
 ASSISTANT SECRETARYOF THE
   (FINANCIAL MANAGEMENT):
     Eugene M. Becker                               July    1967    Present
     W, Brewster Kopp                                               June 1967




U.S.   GAO   Wash., D.C.

                                          36