oversight

Financial Management: Opportunities to Improve Experience and Training of Key Navy Comptrollers

Published by the Government Accountability Office on 1997-05-05.

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

                 United States General Accounting Office

GAO              Report to the Honorable
                 Tom Harkin, U.S. Senate



May 1997
                 FINANCIAL
                 MANAGEMENT
                 Opportunities to
                 Improve Experience
                 and Training of Key
                 Navy Comptrollers




GAO/AIMD-97-58
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Accounting and Information
      Management Division

      B-275089

      May 5, 1997

      The Honorable Tom Harkin
      United States Senate

      Dear Senator Harkin:

      We are responding to your request for information concerning the
      background and experience of Navy military officers serving in key
      comptroller positions. The Chief Financial Officers (CFO) Act of 1990, as
      expanded by the Government Management Reform Act (GMRA) of 1994,
      and the Government Performance and Results Act of 1993 (GPRA), are
      among recent laws that mandate reforms on how agencies manage
      programs and report on the results of operations. Beginning with fiscal
      year 1996, the Navy and other federal departments and agencies are
      required to produce and have audited financial statements. These
      agencies’ ability to produce auditable financial statements will be crucial
      to meeting the mandate for audited governmentwide financial statements
      for fiscal year 1997. Furthermore, accurate financial data are needed for
      measuring performance under GPRA. One key factor in agencies being able
      to achieve these objectives will be having trained and experienced
      financial management staff in key positions. In the Navy, comptrollers
      serve in positions of critical importance for ensuring that the Department
      achieves its financial management objectives as well as meets
      requirements of the recent reform acts.

      We issued a report in October 19961 that cited several advantages of
      converting military financial management and other support positions to
      civilian status. These advantages include (1) dollar savings because
      civilians are less expensive than military members of equivalent rank and
      (2) the stability of personnel because military staff frequently rotate in and
      out of positions.

      We testified in November 19952 on long-standing, serious financial
      management deficiencies in the Navy. We stated that the Navy’s financial
      reports were of little value in assessing its operations or the execution of
      its stewardship responsibilities. Our work identified substantial
      misstatements in almost all of the Navy’s major accounts and $225 billion


      1
      DOD Force Mix Issues: Converting Some Support Officer Positions to Civilian Status Could Save
      Money (GAO/NSIAD-97-15, October 23, 1996).
      2
      Financial Management: Challenges Facing DOD in Meeting the Goals of the Chief Financial Officers
      Act (GAO/T-AIMD-96-1, November 14, 1995).



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                 in errors in the Navy’s fiscal year 1994 financial reports. These problems
                 are caused by a complex set of process and system issues, and to some
                 extent by the Navy’s personnel practices. This report focuses on personnel
                 practices and the education and experience of Navy officers serving in
                 comptroller positions and options for strengthening these practices. The
                 Navy’s civilian comptrollers and other financial management personnel
                 were not the focus of this report since they are being addressed in a
                 broader study. Details of our scope and methodology are provided in
                 appendix I.


                 The CFO Act requires that an agency Chief Financial Officer (CFO) oversee
Background       all financial management activities relating to the programs and operations
                 of the agency. Some key CFO responsibilities are:

             •   developing and maintaining integrated accounting and financial
                 management systems;
             •   directing, managing, and providing policy guidance and oversight of all
                 agency financial management personnel, activities, and operations;
             •   approving and managing financial management system design and
                 enhancement projects;
             •   developing budgets for financial management operations and
                 improvements; and
             •   overseeing the recruitment, selection, and training of personnel to carry
                 out agency financial management functions.

                 One of the most important positions under the CFO is the comptroller. The
                 comptroller is the CFO’s technical expert who oversees and manages the
                 day-to-day operations. As such, the comptroller in any agency, including
                 the military services, is a key financial manager.

                 As of October 1, 1996, the Navy had 100 military officers filling key
                 comptroller jobs. These jobs have responsibilities involving a significant
                 range of Navy resources, and are designated to be staffed by officers who
                 range in rank from captain to lieutenant. For example, the comptroller of
                 the Pacific Fleet, billeted for a Navy captain, is responsible for financial
                 management and financial reporting of an annual budget of about
                 $5 billion, comparable in size to a Fortune 500 corporation; whereas a
                 comptroller at a small installation, billeted for a lieutenant, manages an
                 annual budget of about $5 million.

                 The Navy’s definition of a comptroller’s job responsibilities is:



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                                       “Directs formulation, justification and administration of fiscal and budgetary management
                                       policies, plans and procedures. Determines budget and fiscal control policies. Coordinates
                                       and approves allocation of funds to programs and organizational units. Develops reports on
                                       status of appropriations. Provides required data on utilization of labor, material, and
                                       commercial services. Prescribes required methods for budget estimation, fiscal
                                       administration, and accounting. Exercises internal control over these systems through
                                       administrative and internal activities.”


                                       Table 1 shows the 100 comptroller jobs by rank.


Table 1: Navy Officers Designated as
Comptrollers as of October 1, 1996                               Number of
                                       Rank                        officers           Typical positions or functions
                                       Captain                                        -Fleet and force comptrollers
                                                                                      -Naval shipyard comptrollers
                                                                                      -Fiscal planning and budget management
                                                                           22          positions
                                       Commander                                      -Comptroller billets at:
                                                                                       Naval air stations
                                                                                       Naval stations
                                                                                       Other fleet support stations
                                                                                      -Financial analysis, budgeting, cost analysis,
                                                                           44          and fiscal planning billets
                                       Lieutenant                                     -Comptroller billets at:
                                       Commander                                       Naval air stations
                                                                                       Naval bases
                                                                                       Naval training centers
                                                                                      -Financial management, procedural,
                                                                           24          and budget analysis billets
                                       Lieutenant                                     -Comptroller billets at:
                                                                                       Overseas navy activities
                                                                                       Naval training center
                                                                           10          Naval tactical center
                                       Total                             100

                                       In November 1995, the Joint Financial Management Improvement Program
                                       (JFMIP) published Framework for Core Competencies for Financial
                                       Management Personnel in the Federal Government,3 designed to highlight
                                       the knowledge, skills, and abilities that accountants, budget analysts, and
                                       financial managers in the federal government should possess or develop to
                                       perform their functions effectively. JFMIP stated that federal financial
                                       managers need to be well equipped to contribute to financial management
                                       activities such as:


                                       3
                                         Framework for Core Competencies for Financial Management Personnel in the Federal Government,
                                       A Joint Project of the Human Resources Committee of the Chief Financial Officers Council and the
                                       Joint Financial Management Improvement Program, November 1995.



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                   •   the preparation, analysis, and interpretation of consolidated financial
                       statements;
                   •   the formulation/execution of budgets under increasingly constrained
                       resource caps; and
                   •   the development and implementation of complex financial systems.

                       In defining core competencies needed to effectively perform as a senior
                       accountant and financial manager, which includes positions such as
                       military service comptrollers, JFMIP emphasizes the need for a broad range
                       of knowledge, skills, and abilities, including:

                   •   accounting education with updated knowledge of accounting principles
                       and federal accounting concepts;
                   •   knowledge of agency financial statements, internal control environment,
                       and agency business practices;
                   •   strategic vision for implementation of GPRA and formulation of budgets;
                   •   resource and program management skills, with knowledge of
                       appropriation structure and agency management control systems; and
                   •   human resource skills to effectively manage a workforce.

                       These core competencies suggest that individuals filling key comptroller
                       positions in the federal government need to come to their jobs with a
                       broad range of knowledge, skills, and abilities, including a strong
                       foundation of experience and education in accounting. Accordingly, the
                       Office of Personnel Management (OPM) has required that individuals in
                       civilian accounting positions in the federal government, which are in the
                       GS-510 series, meet a minimum qualification standard of 24 semester
                       hours of college-level accounting courses plus an appropriate number of
                       years of experience for the specific position. We recognize that there are
                       always individuals who may lack the educational background desired but
                       who have developed the technical competencies needed through actual
                       experience. However, formal education and technical training are crucial
                       factors in maintaining a professional workforce whether an individual is a
                       warfare officer or a financial manager.


                       The Navy’s personnel practices do not provide a career path for Navy
Results in Brief       officers to develop and maintain the core competencies needed by a
                       comptroller. By contrast, the Air Force and the Army offer a career path in
                       comptrollership. Because of the Navy’s approach, many officers in key
                       comptroller positions lack the financial management experience and the




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                       accounting education needed to meet the demands of today’s financial
                       management environment.

                       Slightly more than half of the Navy’s key comptroller positions are filled
                       by line officers whose primary occupation in the Navy is in surface
                       warfare, submarines, aviation, or operational staff positions. These
                       officers averaged 17.8 years of commissioned service in the Navy, but only
                       3.4 of those years had been spent in any financial management position,
                       including their current comptroller job. About 60 percent of the line
                       officers had obtained masters degrees in business-related majors, but due
                       to Navy personnel practices, many did not utilize their financial
                       management education until several years after graduation and generally
                       served in a comptroller position for only one tour in their career. About
                       26 percent of the line officers serving as comptrollers had no college
                       degree in any business-related field.

                       Supply corps officers, while more qualified from a formal education
                       perspective than line officers for comptroller positions, generally lacked
                       the depth of experience needed by a comptroller for the 1990s and beyond.
                       Most of the supply officers held a college degree at the bachelors or
                       masters level in accounting or business, but few had substantial
                       experience in Navy fiscal administration assignments involving such roles
                       as budget officer, accountant, or comptroller. They averaged 16.1 years of
                       commissioned service in the Navy of which 3.4 years were in fiscal
                       administration and 5.7 years were in logistics positions that involved some
                       financial management experience. In a few cases, senior supply corps
                       officers had as much as 10 years of experience in fiscal administration.


                       The financial management core competencies needed by individuals in
The Navy Has No        comptroller positions require both formal education in accounting and
Specific Career Path   business, and experience in financial management. The Navy has
for Its Officers to    recognized the need to upgrade the knowledge and skills of its individuals
                       in financial management positions. However, unlike the Air Force and the
Develop Core           Army, the Navy has no specific career path in financial management aimed
Competencies in        at developing needed core competencies for officers in key comptroller
                       positions.
Comptrollership
                       Our testimony to the Congress in November 1995 on Navy financial
                       management stated that the Navy’s financial reporting problems could be
                       attributed in part to the long-standing failure to instill discipline in its
                       financial operations and follow basic procedures. We noted that even



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rudimentary controls were not routinely carried out, such as ensuring the
conduct of periodic physical inventories, reconciling related accounts and
records, documenting adjustments, and reviewing abnormal account
balances. We also stated that the Navy displayed financial management
deficiencies to an even greater extent than the other military services. The
Assistant Secretary of the Navy, Financial Management and Comptroller
(ASN/FM&C), made the following statement at the same hearing:

“Serious problems exist in many facets of DON [Department of Navy] financial
management...and (we) have responsive improvement plans well under way... Recent
changes in law and policy have made this a more demanding task and require staffs to
acquire new knowledge and skills.”


We agree with the ASN/FM&C that financial management staff need to
acquire new knowledge and skills. One of the more critical positions in a
strong financial management function is the comptroller. However, we
found that the Navy’s present staffing practices for military officers fail to
provide a career path for the critically important comptroller function.
Under present practices, Navy officers filling fiscal administration jobs,
including comptrollers, devote most of their careers to either operational
command positions or logistics functions. About half of the key
comptroller positions are staffed by line officers and half by officers in the
supply corps. Line officers are generally individuals who are eligible to
command at sea, and whose primary occupational specialty is surface
warfare, aviation, or submarines. Line officers may also include
individuals not eligible to command who serve in various operational staff
positions. The supply corps officers are considered by the Navy to be the
Navy’s business managers and they serve in a wide variety of logistics and
financial management positions.

By contrast, the Air Force and the Army offer a career path in
comptrollership. Under the Air Force’s career program in financial
management and comptrollership, many Air Force officers devote their
entire careers to financial management. The Army has designed its own
unique approach to developing a cadre of financial management officers.
All Army officers are required to spend at least the first 5 years of their
careers in positions in either comptrollership or one of the operational
branches of the Army, such as infantry, artillery, or armor. Army officers
can elect to serve in comptrollership positions under one of two programs.
In the single track program, an officer can stay exclusively in financial
management as a specialty. In the dual track program, an officer can rotate




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                          between financial management jobs and command positions in the
                          operational branch.

                          To illustrate, we judgmentally selected and reviewed the career
                          experiences of a Navy captain, an Air Force colonel, and an Army colonel,
                          each currently serving as the comptroller of a major command. Each of
                          these comptrollers carries significant responsibility for the financial
                          management and financial reporting of activities with annual budgets
                          ranging from around $1 to $5 billion. The profiles show that the Air Force
                          and Army comptrollers have significant career experiences that are
                          important in developing core competencies needed by a military
                          comptroller. However, the Navy officer’s profile illustrates a focus on a
                          career as a Navy combat operations officer, rather than on developing
                          competencies needed as a military comptroller.


Profile of a Navy Major   He graduated from a major university with a degree in business. Devoted
Command Comptroller       his first 7 years to junior command positions as a warfare officer, then
                          went to graduate school and obtained a masters degree in business. In the
                          following 14 years, he served in various assignments at sea and in training
                          as a warfare officer, and spent almost 2 years as a plans and policies
                          director for the Joint Chiefs of Staff. He was subsequently appointed
                          commanding officer of a naval station and, 2 years later, became
                          commanding officer of an amphibious group in the Pacific Fleet. After a
                          26-year career as a warfare officer, this captain was assigned as
                          comptroller of a Navy fleet.


Profile of an Air Force   He graduated from a major university with a degree in finance. Spent the
Major Command             first 13 years primarily as a budget officer at two bases and an air field, at
Comptroller               the U.S. Air Forces Europe, and at the Office of the Air Force Comptroller
                          at the Pentagon. Then, he went to graduate school and obtained a masters
                          degree in business administration. For the next 7 years, he served in
                          various positions, such as, base comptroller and director of budget for a
                          major command. Then he spent 2 years as an executive officer and
                          division chief in the Office of Assistant Secretary of the Air Force for
                          Financial Management and Comptroller (ASFM). Then, for approximately 1
                          year, he was Director of Accounting and Finance for a major command.
                          Then, he returned to the Pentagon as Director of Budget and
                          Appropriations, ASFM, for about 3 years. After a 27-year career in financial
                          management, he was appointed comptroller of a major command.




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Profile of an Army Major   He graduated from a major university with a degree in finance. Spent the
Command Comptroller        first 5 years as a tank platoon leader and a special services officer, then
                           entered the single track comptrollership series and served as an
                           installation comptroller (resource management officer) and a finance
                           instructor over the next 7 years. During that 7-year period, he obtained a
                           masters degree in business administration with an emphasis in
                           comptrollership. Over the next 5 years, he served as military assistant to
                           the Director of the Office of Management and Budget, White House. Then
                           he was assigned for 4 years to a comptroller billet position at the Office of
                           the Joint Chiefs of Staff, Pentagon. He then served as the Deputy Chief of
                           Staff for Resource Management for an army installation. After a 24-year
                           Army career, with 19 years in financial management, he became the
                           comptroller of U.S. Army, Pacific.

                           We also looked at an Army colonel who was a comptroller of a $4 billion
                           activity. This individual was in the Army’s dual track program. Out of a
                           25-year career this person spent only 6 years in financial management
                           positions. While most Army officers are in the dual track program, we have
                           not reviewed the Army’s comptroller billets to determine if this Army
                           colonel comptroller is typical. Also, the single track officer may not be
                           representative of Army comptrollers either, but he demonstrates the type
                           of experience one would expect of a comptroller of a major activity.


                           The Navy has staffed its military comptroller positions with individuals
Navy Officers in           who, on average, lack the depth of financial management experience and
Comptroller Positions      the accounting education needed for the financial management
Often Lack Financial       environment of the 1990s. Line officers, who fill most of the senior-level
                           comptroller positions at the captain and commander ranks, have spent
Management                 almost their entire careers in command positions such as surface warfare
Experience and             officers, aviators, or submariners. Supply corps officers fill the remaining
                           comptroller positions, and, although they have stronger business-related
Accounting Education       educational backgrounds and more exposure to financial management
                           activities, most of their careers have been devoted to Navy logistics.


Profile of Navy Line       Of the 100 key comptroller positions filled by Navy officers in
Officers in Comptroller    October 1996, 53 were occupied by line officers whose primary career
Positions                  fields were in Navy operational commands, including surface weapons
                           officers, aviators, and submariners. For these officers, a comptroller
                           position offers a temporary shore duty between commands at sea. While
                           these line officers are typically highly educated individuals and have



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    considerable operational experience, they lack both the financial
    management experience and accounting education needed by a
    comptroller. These 53 officers present the following profile:

•   They filled mostly senior-level comptroller positions—14 were captains
    and 25 were commanders.
•   They averaged 17.8 years of commissioned service in the Navy, but only
    3.4 years in financial management jobs, including their tenure in their
    current comptroller position.
•   Only 19 of the 53 (36 percent) majored in accounting or other
    business-related curriculum as undergraduate students.
•   Thirty-two of the 53 officers (60 percent) obtained masters degrees in a
    business-related major, but 14 of the remaining 21 officers (26 percent)
    lacked either undergraduate or graduate education in any business-related
    field.
•   Our review of a sample of line officers’ college transcripts reveals that they
    averaged about 12 semester hours of accounting courses, mostly acquired
    in graduate studies in financial management.

    Appendix II summarizes the education and experience of the 53 line
    officers filling comptroller positions in October 1996.

    Of the 53 line officers in comptroller positions, 43 earned masters degrees,
    22 from the Naval Postgraduate School (NPS) in Monterey, California.
    Based on Navy data, officers selected for NPS spend 18 months in the
    program at a cost of about $150,000, including salary and benefits.

    Of the 43 officers with masters degrees, 32 earned their masters in
    business from either NPS or other participating universities. The NPS degree
    program in financial management includes approximately 11 semester
    hours of accounting and has the objective of preparing Navy officers for
    assignments to positions in budgeting, accounting, business and financial
    management, and internal control and auditing. However, after graduating
    with their masters degrees in business, many line officers do not rotate
    directly to a financial management position where they could immediately
    apply their education. Navy data on officers serving in comptroller
    positions show that line officers selected for financial management
    positions spend only a small percentage of their career in finance. Navy
    data on a broader universe of all officers who obtain a masters degree in
    financial management at NPS show that 49 percent of line officers do not
    use their training for at least 6 years after graduation and 40 percent never
    use their education in a Navy financial management job. Navy staffing



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                              practices are inadequate to ensure that the investment made in
                              postgraduate financial management training is effectively utilized in
                              financial management positions.


Profile of Navy Supply        The remaining 47 of the 100 Navy officers filling comptroller positions on
Officers in Comptroller       October 1, 1996, were supply corps officers. The Navy defines the mission
Positions                     of the supply corps as providing expertise to the Navy and other
                              Department of Defense (DOD) operations in logistics, acquisition, and
                              financial management, and refers to the cadre of supply officers as the
                              Navy’s business managers. While these officers have careers with more
                              exposure to financial management activities than line officers, many
                              supply officers still lack the depth of experience in fiscal administration
                              and the accounting education needed for comptrollership in today’s
                              complex financial management environment. The 47 supply officers
                              present the following profile.

                          •   They filled both senior- and mid-level comptroller positions—27 were
                              captains or commanders and 20 were lieutenant commanders or
                              lieutenants.
                          •   They averaged 16.1 years of commissioned service in the Navy of which
                              3.4 years were in fiscal-related positions and 5.7 years were in logistics
                              positions that involved some financial management experience.
                          •   Twenty of the 47 (43 percent) majored in accounting or some other
                              business-related field in undergraduate school.
                          •   Thirty-one of the 47 officers (66 percent) obtained masters degrees in
                              business-related fields. Our analysis of transcripts for a sample of these
                              officers showed that they averaged about 14 semester hours of accounting.

                              Appendix III summarizes the education and experience of the 47 supply
                              corps officers filling comptroller positions in October 1996.

                              An officer assigned to the supply corps usually will spend his or her career
                              in one of seven occupational groups:

                              1. fiscal,
                              2. subsistence, open mess, and bachelors quarters management,
                              3. transportation,
                              4. material distribution,
                              5. procurement,
                              6. inventory control, or
                              7. general.



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Of the seven occupational groups, six are predominantly logistics-
oriented, while fiscal assignments can provide Navy officers with
experience for developing core competencies needed by comptrollers. The
following five job series are included under the fiscal grouping.


Navy job series                    Position title
1005                               Accounting Officer
1015                               Internal Review Officer
1025                               Budget Officer
1045                               Disbursing Officer
1050                               Comptroller

Our review of the career histories of the 47 Navy supply officers in
comptroller jobs showed that most of these officers devoted 59 percent of
their careers to the six job categories in the logistics field, rather than to
fiscal administration assignments. The most common assignment for these
officers was as a general supply officer (job series 1918), with the
following primary duties, according to the Navy manual:

“Directs supply department activities. Applies supply policies to operation of department.
Determines demand in accordance with mission and standard allowance lists. Approves
requisitions, balance sheets and summaries. Directs receiving, storage, inventory control,
issue and salvage of material. Oversees procurement and sale of goods and services.
Administers operation of general mess, including procurement, storage, issue, and
inventory of provisions. Conducts disbursing activities in connection with property
accountability and transfer, payroll, and personal accounts.”


The duties of a general supply officer provide financial management
experience to supply corps officers, as indicated by the above description
of duties. Other supply officer assignments in logistics specialties also
have financial management components, such as budget management.
While the logistic positions provide officers with some financial
management experience, it is the fiscal administration-type assignment,
i.e., budget officer, accountant, or comptroller that best addresses the core
competencies needed by key financial managers.

Although the Navy does not have a career path in financial management, a
few supply corps officers have a career profile that was heavily focused on
fiscal assignments. For example, one captain now serving as the
comptroller of a major Navy command has 25 years in the Navy, and he
has spent 10 of the past 13 years in comptroller positions. However, we




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                             believe most of the supply corps officers in comptroller positions would
                             fall short of meeting JFMIP’s core competencies because their career paths
                             have not been concentrated in fiscal administration. As stated earlier in
                             this report, recent reform initiatives aimed at addressing long-standing and
                             severe federal financial management problems, including the CFO Act and
                             GPRA, have placed demands on comptrollers in the 1990s that are
                             substantially greater than in the past. To meet these demands, Navy
                             personnel practices for key comptroller positions need improvement to
                             ensure the development of the core competencies and experience
                             necessary to meet today’s considerable challenges.


                             Conversion of military financial management and other support positions
Comptroller Positions        to civilian status was the topic of our October 1996 report.4 We cited two
Are Candidates for           advantages of conversion to civilian status: (1) dollar savings because
Conversion to Civilian       civilians are less expensive than military members of equivalent rank, and
                             (2) stability of personnel because of frequent rotation of military staff that
Status                       rotate in and out of positions.

                             Our report suggested that DOD could save as much as $95 million annually
                             by converting positions occupied by military officers to civilian status. In
                             that report, we identified about 9,500 administrative and support positions
                             that civilians may be able to fill at lower cost and with greater productivity
                             due to the civilians’ much less frequent rotations. Examples of career
                             fields that contain positions that might be converted are information and
                             financial management, which would include comptroller positions.

                             DOD  guidance on civilian versus military staffing of positions was written in
                             1954. It requires that civilians be used to staff positions wherever possible.
                             However, the guidance also provides a high degree of flexibility to DOD by
                             allowing positions to be designated as military essential, and therefore to
                             be filled by an active military officer for any of the following reasons.

                         •   Required training is only available in the military.
                         •   The position is needed to maintain combat readiness.
                         •   The position requires a general military background for successful
                             execution.
                         •   The law requires that the position be staffed by military personnel.
                         •   The position must be military in order to maintain good order and
                             discipline or exercise authority under the Uniform Code of Military
                             Justice.

                             4
                              GAO/NSIAD-97-15, October 23, 1996.



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•   The position is needed to ensure adequate opportunities to rotate
    personnel from overseas locations or sea duty to tours of duty in the
    continental United States.
•   The position must be military for security reasons in which the incumbent
    may be involved in combat, expected to use deadly force, or expected to
    exhibit an unquestioned response to orders.
•   The position requires unusual duty hours that are not normally compatible
    with civilian employment.

    Since these guidelines were issued over 40 years ago, the government’s
    financial management environment and personnel needs have changed
    substantially, particularly with respect to the need for specialized
    positions such as comptroller. Increased demands and challenges faced by
    government financial managers resulting from financial management
    reform legislation of the 1990s warrants a closer look at staffing these key
    positions.

    To identify candidates for conversion in our October 1996 report, we
    developed criteria based on the above DOD directive and service
    implementing guidance. The criteria consisted of four questions that
    reflect the substance of the DOD criteria. Answering “no” to all four
    questions would be one approach to identifying positions that could be
    converted to civilian status. The questions were as follows.

    (1) Is the primary skill or knowledge required in the position uniquely
    available in the military?

    (2) Does the position have a mission to deploy to a theater of operations in
    wartime or during a contingency?

    (3) Does any law require that the position be staffed by a military person?

    (4) Is the position needed to support the normal rotation of service
    members deployed overseas or afloat to assignments in the continental
    United States?

    DOD’s  response to our October 1996 report acknowledged the potential
    savings and other advantages of military-to-civilian conversions. DOD also
    noted impediments to placing civilians in certain positions, such as the
    lack of consistent funding for the hiring of civilian replacements, the
    ongoing civilian personnel draw-down, and military strength floors. DOD, in
    its response to the report’s recommendation, said the issue of



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                      military-to-civilian conversion is an important component of DOD
                      manpower requirements determination and the issue is currently being
                      discussed in planning for the Quadrennial Defense Review (QDR).

                      We recognize the difficulties DOD and the Navy face while operating in
                      fiscally constrained times. However, DOD and the Navy should benefit
                      significantly in terms of more efficient and effective operations if a strong
                      comptroller function is established and maintained. A well-educated and
                      experienced cadre of comptrollers, whether military or civilian, is critical
                      to managing a large organization such as the Navy.


                      While DOD anticipates that the QDR will concentrate on identifying methods
Conclusion            to overcome the impediments to large-scale military-to-civilian
                      conversions for all the military services, steps need to be taken to address
                      the Navy’s lack of a career path for military comptrollers. As the Air Force
                      and the Army have recognized, financial management and comptrollership
                      is a professional career track that requires highly trained and skilled
                      individuals. In the military combat operations environment one would not
                      expect an officer with only 3 to 4 years experience to command a ship,
                      squadron, or fleet. Similarly, one would not expect a comptrollership,
                      responsible for billions of dollars, to be staffed temporarily by a less than
                      fully experienced financial manager. This would be true whether the
                      comptroller was a military officer or a civilian. However, that in effect is
                      the unintended consequence of the Navy’s present personnel practices
                      with respect to assigning its military officers to comptroller positions.
                      Therefore, if the Navy is to be successful in meeting the objectives of the
                      various governmentwide financial management reform initiatives, it must
                      have a highly skilled and experienced financial management staff in place
                      to help guide and manage its efforts.


                      We recommend that the Secretary of Defense ensure that the following
Recommendations       steps are taken by the Navy.

                  •   Identify which key military comptroller positions can be converted to
                      civilian status in order to gain greater continuity, technical competency,
                      and costs savings.
                  •   For those comptroller positions identified for conversion to civilian status,
                      ensure that those positions are filled by individuals who possess both the
                      proper education and experience needed to meet the JFMIP core
                      competencies.



                      Page 14                                        GAO/AIMD-97-58 Navy Comptrollers
                         B-275089




                     •   For those comptroller positions that should remain as military billets,
                         establish a career path in financial management that ensures that military
                         officers are prepared, both in terms of education and experience, for
                         comptrollership responsibilities.


                         In commenting on a draft of this report, DOD generally agreed with the
Agency Comments          report findings. These comments are summarized below and reprinted in
and Our Evaluation       appendix IV. Specifically, DOD agreed that there may be key military
                         comptroller positions that can be converted to civilian status. The
                         Department also recognized the need to fill such positions with individuals
                         who possess the proper education and experience, and supported the
                         report’s message that the Navy needs to strengthen its existing training
                         program for financial management subspecialists.

                         However, DOD did not concur with our third recommendation on
                         establishing a specific career path in financial management. This
                         recommendation is aimed at ensuring that Navy military officers develop
                         the technical competencies needed to be effective comptrollers through
                         training and experience. The Navy does not believe a formal career
                         program in comptrollership is feasible because of the small number of
                         officers in this field combined with a need for extensive experience in fleet
                         operations. While fleet experience may help to develop a better
                         understanding of operational issues, a comptrollership function demands a
                         high level of financial management expertise for an individual to be
                         effective in today’s complex environment. Further, the relative number of
                         military comptrollers is not the issue, rather the issue is that these officers
                         should have the technical competencies necessary to perform in these key
                         Navy comptroller positions.

                         Although DOD did not concur with our recommendation, the Department
                         acknowledged that some naval officers may have been assigned as
                         comptrollers without a strong background in some aspects of financial
                         management. To address this problem, DOD plans to take steps to increase
                         the number of tours or months of experience required to become a
                         financial management subspecialist and upgrade all comptroller billets to
                         proven subspecialist billets. These steps should increase the amount of
                         experience that Navy officers bring to the comptroller positions. However,
                         the Navy needs to ensure that its comptroller positions are filled with
                         individuals who bring a strong background of financial management
                         experience to those positions. We are concerned that simply increasing
                         the number of months necessary to qualify as a subspecialist or adding a



                         Page 15                                         GAO/AIMD-97-58 Navy Comptrollers
B-275089




tour of duty, though a positive step, will not fully achieve the desired goal.
We continue to believe that a career path, similar to the Air Force or Army,
is the best approach.

We are also pleased that the Navy plans to enhance its training for military
officers who will serve in comptroller positions. A critical aspect of such
training is that officers completing the course should be assigned to a
comptroller position within a relatively short period of time so that the
benefits of the training are not lost before being put into application for
the benefit of the Navy. As noted in this report, utilization of financial
management training by Navy officers has been a problem in the past
because many years elapsed between completion of training and an
assignment to a key financial management position.


As agreed with your office, unless you publicly announce the contents of
this report earlier, we will not distribute it until 30 days from the date of
this letter. At that time, we will send copies of this report to the Chairmen
and Ranking Minority Members of the Senate Committee on Governmental
Affairs and the House Committee on Government Reform and Oversight
and other interested committees. We will also send copies to the
Secretaries of Defense and the Navy and the Director of the Office of
Management and Budget. Copies will be made available to others upon
request.

If you have any questions about this report, please contact me at
(202) 512-9095. The major contributors to this report are listed in
appendix V.

Sincerely yours,




Lisa G. Jacobson
Director, Defense Audits




Page 16                                        GAO/AIMD-97-58 Navy Comptrollers
Page 17   GAO/AIMD-97-58 Navy Comptrollers
Contents



Letter                                                          1


Appendix I                                                     20

Scope and
Methodology
Appendix II                                                    22

Profile of Education
and Experience of
Navy Line Officers
Occupying
Comptroller Positions
as of October 1, 1996
Appendix III                                                   23

Profile of Education
and Experience of
Navy Supply Officers
Occupying
Comptroller Positions
as of October 1, 1996
Appendix IV                                                    24

Comments From the
Department of
Defense
Appendix V                                                     28

Major Contributors to
This Report




                        Page 18   GAO/AIMD-97-58 Navy Comptrollers
        Contents




Table   Table 1: Navy Officers Designated as Comptrollers as of                   3
          October 1, 1996




        Abbreviations

        ASFM         Assistant Secretary of the Air Force for Financial
                          Management
        ASN/FM&C     Assistant Secretary of the Navy, Financial Management
                          and Comptroller
        CFO          Chief Financial Officer
        DOD          Department of Defense
        GMRA         Government Management and Reform Act
        GPRA         Government Performance and Results Act
        JFMIP        Joint Financial Management Improvement Program
        NPS          Naval Postgraduate School
        OPM          Office of Personnel Management
        QDR          Quadrennial Defense Review


        Page 19                                     GAO/AIMD-97-58 Navy Comptrollers
Appendix I

Scope and Methodology


             We identified the Navy’s military comptroller billets by interviewing
             Bureau of Naval Personnel officials and reviewing Navy staffing policy and
             procedures manuals. We obtained a database from the Bureau of Naval
             Personnel on Navy officers who were in financial management positions.
             Using this database, we identified the universe of military officers in
             comptroller positions as of October 1, 1996. We also used this database to
             document the formal education and experience of these officers. We
             supplemented the database information by reviewing microfiche records
             which contained detailed career histories and college transcripts for each
             officer. We interviewed officials at the Bureau of Naval Personnel and met
             with selected Navy comptrollers to obtain a detailed understanding of
             Navy staffing practices and Navy recordkeeping systems.

             We identified 191 military comptroller (code 1050) billets as of October 1,
             1996. Further analysis showed that 91 of the 191 comptrollers were in
             either the Medical Service Corps or Civil Engineering Corps. We excluded
             the 89 medical corps officers from our analysis because (1) medical
             comptrollers perform specialized duties that are closely related to the field
             of health care administration and (2) funding in this area represented only
             about 1 percent of the Navy’s budget. We also excluded the two civil corps
             officers to maintain a clear distinction between the line officers and supply
             officers who were the focus of our review.

             Based on the data provided by the Navy, we profiled the career
             experiences, in terms of education and assignment history, of the
             remaining 100 Navy officers filling comptroller positions. We segregated
             these officers for purposes of analysis into line officers and supply officers
             to assess if there were any differences in educational background and
             financial management experiences due to a career track. Further, to
             illustrate the possible disparities in the financial management experiences
             of comptrollers representing the three military services, we judgmentally
             selected for analysis senior officers representing the Navy, Air Force, and
             Army. These individuals were chosen based solely on whether the officer
             was the comptroller of a major command—in the $1 to $5 billion dollar
             budget range. However, this assignment was principally focused on the
             analysis of the qualifications of Navy officers in key comptroller positions.
             As such, we did not review the profiles of all Air Force and Army officers
             in key comptroller positions.

             This review excluded any analysis of civilians in comptroller positions
             because we have a broader review underway that will analyze the
             education and experience of key financial managers throughout DOD.



             Page 20                                        GAO/AIMD-97-58 Navy Comptrollers
Appendix I
Scope and Methodology




We conducted our work from July 1996 to March 1997 in accordance with
generally accepted government auditing standards. We requested written
comments on a draft of this report from the Secretary of Defense. DOD
provided us with written comments. These comments are discussed in the
“Agency Comments and our Evaluation” section and are reprinted in
appendix IV.




Page 21                                    GAO/AIMD-97-58 Navy Comptrollers
Appendix II

Profile of Education and Experience of
Navy Line Officers Occupying Comptroller
Positions as of October 1, 1996

              Education and experience of Navy Line     Number of
              Officers                                    officers              Percent
              Number currently in comptroller billets          53                 100.0
              Number with bachelors degrees in
              accounting or business-related majors            19                   35.8
              Number with masters degrees                      43                   81.1
              Number with masters degrees in
              accounting or business-related majors            32                   60.4
              Number with no degrees in accounting or
              business-related majors                          14                   26.4
              Average semester hours in accounting
              courses                                         11.9
              Average number of years of Navy
              experience                                      17.8                100.0
              Average number of years of Navy
              experience in fiscal administration              1.9                  10.7
              Average number of years of Navy
              experience in other financial
              management positions                             1.5                   8.4




              Page 22                                   GAO/AIMD-97-58 Navy Comptrollers
Appendix III

Profile of Education and Experience of
Navy Supply Officers Occupying
Comptroller Positions as of October 1, 1996

               Education and experience of Navy             Number of
               Supply Officers                                officers              Percent
               Number of supply officers in comptroller
               positions                                           47                 100.0
               Number with bachelors degrees in
               accounting or business-related majors               20                   42.6
               Number with masters degrees                         33                   70.2
               Number with masters degrees in
               accounting or business-related majors               31                   66.0
               Number with no degree in
               accounting or business-related majors                 8                  17.0
               Average semester hours of accounting
               courses                                            14.2
               Average number of years of Navy
               experience                                         16.1                100.0
               Average number of years of Navy
               experience in fiscal administration
               positions                                           3.4                  21.1
               Average number of years of Navy
               experience in logistic positions with some
               financial management exposure                       5.7                  35.4




               Page 23                                      GAO/AIMD-97-58 Navy Comptrollers
Appendix IV

Comments From the Department of Defense


Note: GAO’s comment
supplementing those in the
report text appears at the
end of this appendix.




See comment 1.




                             Page 24   GAO/AIMD-97-58 Navy Comptrollers
                 Appendix IV
                 Comments From the Department of Defense




Now on p. 14.




Now on p. 14.




Now on p. 15.

See comment 1.




                 Page 25                                   GAO/AIMD-97-58 Navy Comptrollers
Appendix IV
Comments From the Department of Defense




Page 26                                   GAO/AIMD-97-58 Navy Comptrollers
              Appendix IV
              Comments From the Department of Defense




              The following is GAO’s comment on the Department of Defense’s letter
              dated April 18, 1997.


              1. Discussed in the “Agency Comments and Our Evaluation” section.
GAO Comment




              Page 27                                     GAO/AIMD-97-58 Navy Comptrollers
Appendix V

Major Contributors to This Report


                       Patricia A. Summers, Senior Auditor
Accounting and         W. David Grindstaff, Assistant Director
Information
Management Division,
Washington, D.C.
                       Lowell E. Hegg, Assistant Director
Denver Field Office
                       Richard L. Harada, Senior Evaluator
Seattle Field Office   Karlin I. Richardson, Senior Evaluator




(918865)               Page 28                                   GAO/AIMD-97-58 Navy Comptrollers
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