oversight

Financial Management: Problems in Accounting for Navy Transactions Impair Funds Control and Financial Reporting

Published by the Government Accountability Office on 1999-01-19.

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

                 United States General Accounting Office

GAO              Report to Agency Officials




January 1999
                 FINANCIAL
                 MANAGEMENT
                 Problems in
                 Accounting for Navy
                 Transactions Impair
                 Funds Control and
                 Financial Reporting




GAO/AIMD-99-19
      United States
GAO   General Accounting Office
      Washington, D.C. 20548

      Accounting and Information
      Management Division

      B-276772

      January 19, 1999

      The Honorable William J. Lynn
      Under Secretary of Defense (Comptroller)

      Mr. Charles P. Nemfakos
      Senior Civilian Official for the Office of the Assistant Secretary of the Navy
      (Financial Management and Comptroller)

      Mr. Gary Amlin
      Director, Defense Finance and Accounting Service

      The Department of the Navy’s inability to accurately account for its
      disbursements and collections is a serious, long-standing financial
      management problem. As we have previously reported, the Department of
      Defense’s (DOD) continuing problems with its complex and inefficient
      payment processes generally do not permit a transaction to be properly
      recorded when it occurs, including the matching of a transaction with the
      related obligation—a critical funds control measure. Problem
      disbursements result from the difficulties in properly recording
      transactions, including matching disbursements with related obligations,
      well after the transactions have occurred.

      Our previous reports on DOD’s problem disbursements, listed at the end of
      this report, detailed long-standing concerns in this area, such as the failure
      to identify the root causes of DOD’s disbursing problems and therefore
      determine which of its numerous initiatives will improve the problem
      areas. Our reports also provided recommendations for needed actions to
      begin to address these problems.

      Corrective actions are important because problem disbursements can
      increase the risks of (1) fraudulent or erroneous payments being made
      without detection, (2) cumulative amounts of disbursements exceeding
      appropriated amounts and other legal spending limits, and (3) inaccurate
      and unreliable financial reporting. For example, we previously reported1
      that the Army’s budget execution information could not be relied on to
      ensure that the Army complied with disbursement limits established by the
      Antideficiency Act. In addition, our March 1996 report2 on the Navy’s fiscal


      1
       Financial Management: Strong Leadership Needed to Improve Army’s Financial Accountability
      (GAO/AIMD-94-12, December 22, 1993).
      2
       CFO Act Financial Audits: Increased Attention Must Be Given to Preparing Navy’s Financial Reports
      (GAO/AIMD-96-7, March 27, 1996).



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             year 1994 financial reports stated that errors in recording billions of
             dollars of Navy disbursements resulted in the Department of the Treasury
             understating by at least $4 billion the federal government’s overall budget
             deficit reported as of June 30, 1995.

             This report focuses on the effects of one type of problem
             disbursement—in-transits—on the Navy’s funds control and financial
             reporting. The Navy defines problem in-transits as disbursement
             transactions that accounting stations have matched to a Navy
             appropriation, reducing the unexpended balance of that appropriation, but
             have not been able to match to an obligation recorded against that
             appropriation within 120 days from the date of the transaction. The ability
             to match disbursements with corresponding obligations is a basic funds
             control requirement. The Defense Finance and Accounting Service (DFAS)3
             reported that the Navy’s problem in-transit transactions totaled $3.6 billion
             as of October 1997, accounting for 25 percent of the Navy’s problem
             disbursements as of that date.

             We performed this work under the Chief Financial Officers (CFO) Act4 as
             part of our broad-based review of issues affecting the accuracy and
             completeness of DOD’s financial information. As stated in our report and
             testimony on the fiscal year 1997 governmentwide financial statements,5
             the errors and omissions in DOD’s consolidated statements were a major
             factor in our inability to form an opinion on the financial statements of the
             U.S. Government.


             The issues raised in this report relate directly to weaknesses in the Navy’s
Background   funds control system that result in its inability to ensure that it has not
             incurred obligations in excess of available budget authority. As the
             Supreme Court has made clear over the years, the Appropriations Clause
             of the U.S. Constitution, often referred to as the congressional “power of
             the purse,” reflects a fundamental proposition that a federal agency is
             dependent upon the Congress for its funding. “The established rule is that

             3
              DFAS, which provides accounting services for DOD, was established on January 15, 1991, to improve,
             standardize, and consolidate DOD’s finance and accounting policy, systems, and operations.
             4
              The Chief Financial Officers Act, as expanded by the Government Management and Reform Act,
             requires executive branch agencies and certain components to prepare annual financial statements
             and have them audited.
             5
              Financial Audit: 1997 Consolidated Financial Statements of the United States Government
             (GAO/AIMD-98-127, March 31, 1998) and Department of Defense: Financial Audits Highlight
             Continuing Challenges to Correct Serious Financial Management Problems
             (GAO/T-AIMD/NSIAD-98-158, April 16, 1998).



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                    the expenditure of public funds is proper only when authorized by
                    Congress, not that public funds may be expended unless prohibited by
                    Congress.”6 By appropriating budget authority to an agency, the Congress
                    makes public funds available to the agency for obligation and expenditure.


Funds Control       The Antideficiency Act is one of a number of statutes enacted by the
Requirements        Congress to protect its prerogative over the public purse. It provides that
                    an officer or employee of the United States government may not “make or
                    authorize an expenditure or obligation exceeding an amount available in
                    an appropriation or fund for the expenditure or obligation,” or enter into a
                    contract or other obligation for the payment of money “before an
                    appropriation is made.”7 It further requires that the head of each executive
                    agency prescribe a system of administrative control to restrict obligations
                    and expenditures to amounts available.

                    In addition, the Federal Managers’ Financial Integrity Act requires that
                    agencies’ controls reasonably ensure that

                •   obligations and costs comply with applicable law and
                •   revenues and expenditures applicable to agency operations are recorded
                    and accounted for properly so that accounts and reliable financial and
                    statistical reports may be prepared and accountability of assets may be
                    maintained.8

                    Proper obligation and expenditure recording practices are essential to
                    sound funds control and compliance with the Antideficiency Act.
                    Obligations include amounts of legal liability incurred, for example, when
                    contracts are awarded or orders placed, even though the agency may not
                    receive goods or make payment until some future period of time.
                    Expenditures include such transactions as the issuance of a check, either
                    in paper or electronic form, or the disbursement of cash to pay an
                    obligation incurred. To ensure sound funds control and compliance with
                    the act, an agency’s funds control system must record obligation and
                    expenditure transactions as they occur. An agency may not avoid the
                    requirements of the act, including the reporting requirements discussed
                    below, by failing to record obligations or expenditures.



                    6
                     United States v. MacCollom, 426 U.S. 317, 321 (1976).
                    7
                     31 U.S.C. 1341(a)(1).
                    8
                     31 U.S.C. 3512(b)(1).



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Whenever an agency discovers evidence of a possible overobligation or
overexpenditure, it must investigate that evidence. If the investigation
shows that the appropriation, in fact, is overobligated or overexpended,
the Antideficiency Act requires reporting the overobligation or
overexpenditure to the President and the Congress. Office of Management
and Budget (OMB) Circular A-34, Instructions on Budget Execution, which
provides funds control implementation guidance, requires agencies to
include in such reports the primary reason for the violation, a statement of
any circumstances the agency believes to be extenuating, a statement of
the adequacy of the agency’s funds control system and whether the head
of the agency determines a need for changes in the system, and a
statement of any action taken by the head of the agency to prevent
recurrence of the same type of violation.9

The act applies to expired and canceled appropriations, the types of
appropriations at issue in this report, as well as current appropriations. At
the end of the period of availability of a fixed-year appropriation,10 the
appropriation expires and for the next 5 fiscal years is available only for
recording, adjusting, and liquidating obligations properly chargeable to
that appropriation.11 However, an agency may not charge new obligations
to an expired appropriation. For example, an agency using a fiscal year
appropriation entered into a contract in fiscal year 1998. In fiscal year
1999, it incurs increased costs due to changes in specifications that fall
within the contract’s scope of work. The agency must obligate the
increased costs of this contract modification against the fiscal year 1998
expired appropriation. If an adjustment to an obligation properly
chargeable to an expired appropriation exceeds the remaining unobligated
balance of the expired appropriation, the agency has violated the
Antideficiency Act.12 The agency could also violate the act if, in liquidating
an obligation, the agency were to exceed the remaining unexpended
balance of the expired appropriation.

At the end of this 5-year period, the appropriation is closed and any
remaining balance, whether obligated or unobligated, is canceled. What
this means is that the appropriation is no longer available for any

9
 OMB Circular A-34, sec. 22.6.
10
 A fixed-year appropriation is one that is available for a fixed period of time, either 1 or more fiscal
years.
11
  Under 31 U.S.C. 1553(a), obligations are “properly chargeable” to an expired appropriation when they
reflect “bona fide needs” of the appropriation’s period of availability and meet the other requirements
imposed by law, such as purpose and amount limitations. See 71 Comp. Gen. 502 (1972).
12
    31 U.S.C. 1553(a).



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                         obligation, obligation adjustment, or expenditure at all. Obligation
                         adjustments and liquidations (expenditures) that an agency would
                         otherwise have charged against the expired appropriation are, at this point
                         in time, chargeable against a current appropriation available for the same
                         purpose, but only to the extent of the lesser of 1 percent of the current
                         appropriation or unexpended balance of the expired appropriation.13 Any
                         overobligation or overexpenditure of this amount constitutes a violation of
                         the Antideficiency Act.


The Navy’s Payment and   The Navy’s payment and accounting processes are generally separate
Accounting Processes     functions carried out by separate offices in different locations. Under the
                         Navy’s processes, the accounting for a payment occurs after the payment
                         has been made. The Navy’s payments are made either by DFAS disbursing
                         stations aligned with the Navy or other disbursing stations on behalf of the
                         Navy, such as those aligned with the Army or the Air Force. The disbursing
                         stations then transmit documentation supporting the payment transactions
                         to the DFAS accounting stations14 to match and record Navy payments to
                         the corresponding obligations. Problem disbursements arise when the
                         accounting stations are not provided the documentation that permits this
                         matching in a timely manner.

                         To resolve problem in-transit disbursements, DFAS and the Navy must
                         locate accurate, detailed accounting data for each in-transit disbursement
                         (including, for example, a contract, travel order, or other authorizing
                         document number, and information on the cognizant organization and
                         program) necessary to match these transactions to the corresponding
                         obligation recorded in the accounting system and verify that the correct
                         appropriation was charged. According to DOD’s problem disbursement
                         policy, when DFAS or the Navy determine that a corresponding obligation
                         was not recorded or it cannot be identified, the Navy must adjust its
                         accounting records by directing DFAS to record an obligation to support the
                         disbursement.


                         The Navy and DOD have not established adequate funds control as required
Results in Brief         by the Antideficiency Act. Current policies and procedures permit the
                         Navy to delay for about 5 years (1) the recording of obligations in excess


                         13
                           31 U.S.C. 1553(b).
                         14
                          To record a disbursement in the accounting records, disbursement data must be sent from the
                         disbursing station to the accounting station. The accounting station records the transaction in the
                         accounting records and matches the payment to the corresponding obligation.



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of available budget authority, (2) the initiation of required Antideficiency
Act investigations, and (3) any resulting reports of violations to the
Congress and the President. During this time, the Navy’s appropriation
balances are unreliable, leaving DOD and the Congress without assurance
that budget authority has not been exceeded.

According to Navy records, as of September 30, 1997, obligations for 9
canceled and 20 expired appropriations may have exceeded available
budget authority by a total of $290 million. Because the Navy was unable
to match problem in-transit disbursements in these 29 appropriations to
already recorded obligations, Navy officials concluded that to resolve
these problem in-transits the Navy would need to record obligations. In
accordance with DOD policy, obligations have been recorded in the nine
appropriations that have canceled. At the time of our review, the Navy’s
records indicated that these obligations may have exceeded budget
authority.

Although the Navy maintained obligations in “cuff” records (separately
prepared spreadsheets used to track obligations) that it also would need to
record to resolve problem in-transit disbursements in the 20 expired
appropriations, these obligations were not recorded in the Navy’s
accounting system, in accordance with DOD policy. If these obligations had
been recorded, the obligation records for the 20 expired appropriations
would have shown that these appropriations also may have obligations
that exceed available budget authority.

An agency may not avoid the requirements of the Antideficiency Act,
including its reporting requirements, by failing to record obligations or to
investigate potential violations. Navy officials stated that an investigation
of these appropriations would show that they, in fact, are not
overobligated. At the time of our review, the Navy had not initiated an
Antideficiency Act investigation of any of the 29 appropriations, although
DOD policy requires investigations of the 9 canceled appropriations with
recorded obligations in excess of available budget authority. The Navy
cannot rely on the possibility that over the course of time, as a result of
ordinary business activity, these potential overobligations will be resolved.

In addition to the lack of control over funds, these problems have a major
effect on the accuracy and reliability of the Navy’s financial reporting,
including its annual financial statements required under the CFO Act. For
example, these unrecorded transactions particularly affect the Statement
of Net Cost and the Statement of Budgetary Resources. Until transactions



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                        are recorded accurately and in a timely manner, and reflected in these
                        financial statements, the Navy and DOD will remain unable to achieve the
                        goal of producing reliable financial statements.

                        In written comments on a draft of this report, DOD indicated that it
                        recognized and concurred with the intent of our recommendations.
                        However, DOD also stated that the Navy’s cuff records are unreliable and
                        should not be used to identify potential overobligations. DOD stated further
                        that the Navy has advised the Under Secretary of Defense (Comptroller)
                        that even if these amounts were recorded, a number of the accounts
                        addressed in our report still would show a positive balance when other
                        transactions are considered. DOD suggests, therefore, that the Navy first
                        perform a further review of its cuff records, as well as transactions
                        recorded in its official records.

                        We disagree with DOD’s assertion that the cuff records cannot be used to
                        identify possible overobligations, which may indicate Antideficiency Act
                        violations. During our audit, DFAS and Navy officials acknowledged that
                        after an extensive, multiyear effort, they had completed all research of the
                        in-transit disbursement transactions represented by the obligations in the
                        Navy’s cuff records. However, they were unable to match these
                        transactions to an existing obligation. The only reason that the Navy
                        recorded these amounts in cuff records rather than in its official
                        accounting records is that DOD policy permits delayed recording of the
                        amounts in the official accounting records where such recording would
                        show the related appropriations to be overobligated. The Navy’s cuff
                        records, therefore, provide affirmative evidence of the obligations that
                        must be recorded in the Navy’s accounting system to properly match
                        in-transit disbursements that have already occurred.

                        Finally, we agree, and recommended in our report, that the Navy should
                        investigate the account balance of any potentially overobligated
                        appropriations. As we also recommended in our report, the Navy should
                        report any overobligations found in such a review to the Congress and the
                        President consistent with the Antideficiency Act and guidance in OMB
                        Circular A-34.


                        The objective of this review was to assess the funds control and financial
Objective, Scope, and   reporting implications of the Navy’s long-standing inability to record
Methodology             obligations and expenditures to properly resolve in-transit transactions. To
                        complete this work, we



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•   reviewed DOD funds control regulations15 and Navy funds control policies
    and procedures,16
•   reviewed DOD Comptroller policy for researching and correcting problem
    disbursements, including in-transit transactions, issued between June 1995
    and December 1996.17 To obtain an understanding of the December 1996
    policy revision, which extended the time frame for recording
    overobligations, we reviewed Navy’s December 4, 1996, briefing document
    to the DOD Comptroller, which identified potential overobligations under
    the then existing problem disbursement policy. We discussed with DOD,
    DFAS, and Navy officials limitations on the Navy’s ability to research and
    correct problem in-transits, which resulted in the request for the policy
    change, and
•   reviewed Navy and DFAS records on disbursements and collections not yet
    recorded in the Navy’s accounting system, including in-transit transactions
    recorded in DFAS’ problem disbursement database, and the Navy’s cuff
    records—separately prepared spreadsheets that are not reflected in the
    Navy’s accounting system. Navy’s cuff records identify the amount of
    obligations that the Navy would need to record to resolve problem
    disbursements and provide evidence of potential overobligations. We also
    reviewed the Navy’s SF-133, Reports on Budget Execution, and its
    FMS-2108, Year End Closing Statement, on appropriation balances. We
    discussed this information with Navy and DFAS officials, respectively.

    The data in this report are based on Navy and DFAS records. We did not
    independently verify or audit the accuracy of these data. We performed
    our work from March 1997 to June 1998 in accordance with generally
    accepted government auditing standards at DFAS Cleveland and operating
    locations18 in Charleston, South Carolina; Norfolk, Virginia; San Diego,
    California; and the Navy’s Financial Management Office in Washington,
    D.C.

    We requested written comments on a draft of this report from the Under
    Secretary of Defense (Comptroller). These comments are presented and
    evaluated in the “Agency Comments and Our Evaluation” section and are
    reprinted in appendix III.


    15
      DOD Financial Management Regulation, Volume 14.
    16
      Navy Comptroller Manual, Volume 3, Chapter 2.
    17
       This policy guidance has been incorporated in DOD Financial Management Regulation, Volume 3,
    Chapter 11.
    18
      Operating locations, also known as OpLocs, refers to DFAS accounting and disbursing stations.



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                      The Navy’s funds control policies and procedures do not ensure that the
Funds Control         Navy can match payments to corresponding obligations before or at the
Policies and          time a payment is made. This has resulted in problem disbursements and
Procedures Do Not     the need for the Navy, after a payment has been made, to match the
                      disbursement to an obligation or to record an obligation to cover the
Ensure Accurate       disbursement.
Information for
                      In May 1997 testimony,19 the Under Secretary of Defense (Comptroller)
Oversight and         stated that DOD “has confidence in its existing budgetary accounting
Financial Reporting   systems to control and account for funds provided to DOD through the
                      Congressional appropriation process. Those systems successfully support
                      the budgetary process, generally have adequate funds control processes,
                      and satisfy requirements for appropriation balances and availability.”
                      However, our findings in this report illustrate that significant breakdowns
                      in funds control have resulted in the Navy’s problems in promptly
                      resolving its in-transit transactions and maintaining accurate and reliable
                      appropriation balances. In addition, these problems have a major effect on
                      the accuracy and reliability of the Navy’s financial reporting, including its
                      annual financial statements required under the CFO Act.


Funds Control         We found evidence that as of September 30, 1997, the Navy may have
Implications          overobligated 29 canceled and expired appropriations totaling
                      $290 million. The Navy’s obligation records for nine canceled
                      appropriations, as of September 30, 1997, show that these appropriations
                      may be overobligated. In addition, cuff records (separately prepared
                      spreadsheets that are not reflected in the Navy’s accounting system)
                      evidence possible overobligations in 20 expired appropriations. The
                      potential overobligations shown in the records of the 9 canceled
                      appropriations and the potential overobligations identified in the cuff
                      records for the 20 expired appropriations reflect the results of the Navy’s
                      efforts to research and resolve problem in-transit disbursements.

                      The DOD Comptroller has issued policy guidance on researching and
                      resolving problem disbursement transactions and investigating potential
                      overobligations that may result.20 The Navy defines problem in-transits as
                      disbursements that DFAS accounting stations have matched to a Navy
                      appropriation, reducing the appropriation’s unexpended balance, but have
                      not been able to match to a recorded obligation of that appropriation

                      19
                       Statement of the Honorable John J. Hamre, Under Secretary of Defense (Comptroller), Department
                      of Defense, Before the Senate Committee on Governmental Affairs, May 1, 1997.
                      20
                        DOD Financial Management Regulation, Volume 3, Chapter 11.



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within 120 days from the date of the transaction. The DOD Comptroller’s
initial June 1995 policy required DFAS to (1) research in-transit
disbursements within 180 days of their designation as a problem
disbursement (allowing a total of 300 days to match disbursements to
obligations) and (2) if unable to match a problem disbursement to an
obligation within 180 days, record an obligation or an obligation
adjustment (an increase or decrease to an existing obligation). The policy
also set minimum research requirements and established criteria for
discontinuing research when there is no reasonable expectation that
supporting documentation can be located.

According to DOD’s funds control regulations,21 if evidence of a potential
Antideficiency Act violation is found, an investigation is to be initiated.
The regulations state that this investigation consists of a preliminary
review to gather basic facts about a potential violation to determine
whether a formal investigation is warranted. The preliminary review
would include, for example, checking for duplicate transactions. If the
preliminary review determines that there is a potential violation of the act,
a formal investigation is to be initiated. The formal investigation is to
encompass a review of all activity within the appropriation to determine if
a violation of the act has, in fact, occurred.

DOD’s  problem disbursement policy was revised on at least two occasions,
permitting the Navy to delay recording and investigating potential
overobligations that may result in Antideficiency Act violations. The
October 1996 policy revision directed that (1) obligations resulting from
actions to resolve problem disbursements be recorded in an appropriation
only up to the amount of that appropriation’s unobligated balance, (2) if,
during the 5-year expired phase, obligational authority becomes available,
record obligations for problem disbursements before recording any
program obligational adjustments, and (3) record any remaining
obligations when the appropriation cancels—5 years after the
appropriation expires. Thus, this policy provided that recording
obligations for problem disbursements would take priority over recording
program obligational adjustments. This policy also suspended the
requirement to conduct investigations of potential Antideficiency Act
violations caused by recording problem disbursements until 6 months
after the appropriation canceled.

Under DOD’s funds control regulations, obligations are to be recorded at
the time they occur and Antideficiency Act investigations are to be

21
  DOD Financial Management Regulation, Volume 14.



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initiated when there is evidence that a violation may have occurred.
However, under the October 1996 policy revision, the Navy was not
required to record obligations needed to cover problem disbursements on
an ongoing and current basis if recording the obligation would cause the
appropriation to be potentially overobligated. This policy runs counter to
the funds control objectives of the Antideficiency Act.

In response to a briefing from Navy financial managers, the DOD
Comptroller revised the problem disbursement policy again on December
16, 1996, to avoid the negative impact on appropriations that affect the
Navy’s readiness resulting from recording obligations to resolve problem
in-transit disbursements. For example, the December policy change
allowed program obligational adjustments to be recorded to
appropriations, eliminating the requirement to record, on a priority basis,
obligations to resolve problem in-transit disbursements. Under this policy
revision, the Navy is not required to establish obligations to resolve
problem in-transits that cannot be matched to an existing obligation in a
current or expired appropriation until June 30 of the fiscal year in which
the cited appropriation account is scheduled to cancel—in other words,
about 90 days short of 5 years after the appropriation has expired. This
can amount to a total of about 8 years after the original disbursement
transaction occurred in those cases where an appropriation covered
3 fiscal years. Of the 29 potentially overobligated appropriations, 8
appropriations covered at least 3 fiscal years.

In the December 1996 briefing, the Navy requested that the DOD
Comptroller revise the obligation requirement for in-transits because the
Navy’s ability to resolve them was limited. The briefing document noted
the number of overobligated appropriations that the Navy would have to
investigate and report if it complied with the 180-day policy for recording
obligations to resolve problem in-transit disbursements.

We identified evidence of overobligations in the nine canceled
appropriations through discussions with Navy financial management
officials on the Navy’s implementation of the DOD Comptroller’s problem
disbursement policy. We reviewed Navy journal vouchers (documentation
of transactions) used to record these obligations. The Navy’s obligation
records for these nine canceled appropriations, as of September 30, 1997,
show that the appropriations may have obligations in excess of available
budget authority. Appendix I contains a list of the nine canceled
appropriations and the amounts by which the Navy may have obligations
in excess of available budget authority.



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We also identified evidence of overobligations in the 20 expired
appropriations through discussions with Navy financial management
officials on the reasons why the DOD Comptroller policy was revised to
extend the period for recording obligations needed to resolve problem
in-transits. Navy officials showed us cuff records identifying obligations
that the Navy’s research indicated are necessary to resolve problem
in-transit disbursements in these 20 appropriations. The Navy uses these
cuff records to track obligations that it concludes are necessary to resolve
problem disbursements. The data on these spreadsheets are not reflected
in the Navy’s accounting system.

Navy officials told us that they had not recorded these obligations against
the appropriations because they were not required to do so by the DOD
Comptroller’s December 16, 1996, policy for resolving problem
disbursements. However, if the obligations shown in the cuff records were
recorded in the Navy’s accounting system, the obligation records for these
20 expired appropriations, like the records for the 9 canceled
appropriations, would show that these appropriations also may have
obligations in excess of available budget authority. Appendix II contains a
list of the 20 expired appropriations and the amounts by which the cuff
records show that these appropriation accounts may have obligations in
excess of available budget authority as of September 30, 1997. As stated
earlier, DOD’s current policy, as revised on December 16, 1996, does not
require the Navy to record these obligations in its accounting system until
3 months before the appropriation is scheduled to cancel.

Navy officials also stated that while available evidence as of September 30,
1997, may show that the 29 appropriations appear overobligated, they do
not believe them to actually be overobligated. They indicated that an
Antideficiency Act investigation of each appropriation could result in
identifying (1) other disbursements recorded incorrectly against the
appropriation, (2) obligations that are no longer valid and can be
deobligated,22 or (3) other accounting errors that would, when corrected,
reduce recorded obligations, leaving funds available to permit recording of
these disbursement transactions without incurring an overobligation. The
officials also stated that “historical trends” suggest that over a period of
time, as a result of ordinary business operations, the Navy will be able to
deobligate previously recorded obligations.



22
  Under 31 U.S.C. 1501 and OMB Circular A-34, agencies are required to ensure that obligations are not
over- or understated. Agencies are required to make appropriate upward and downward adjustments
to obligations, deobligating, in whole or in part, obligations that are not likely to require payment.



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                      Navy officials told us that they had completed all research of the problem
                      in-transit disbursements that resulted in the obligations recorded in the 9
                      canceled appropriations and identified in the cuff records for the 20
                      expired appropriations. As of the completion of our review, the Navy had
                      not initiated an Antideficiency Act investigation of any of these 29
                      appropriations. An agency may not avoid the requirements of the act,
                      including its reporting requirements, by failing to record obligations or to
                      investigate potential violations. Also, the Navy cannot rely on the
                      possibility that over the course of time, as a result of ordinary business
                      activity, these potential overobligations will be resolved. Moreover, the
                      Navy has no assurance on an ongoing basis that it has sufficient budget
                      authority to cover adjustments to other obligations incurred during the
                      normal course of business and properly chargeable to these
                      appropriations, as discussed previously.

                      Further, an agency may not establish a policy to avoid proper funds
                      control and the consequences of the Antideficiency Act. The DOD
                      Comptroller’s current policy, permitting the Navy to delay recording
                      obligations for problem in-transits for 5 years or more, runs counter to the
                      funds control objectives of the Antideficiency Act. It allows the Navy to
                      ignore evidence of potential overobligations, and delay for over 5 years
                      required Antideficiency Act investigations and any resulting reports to the
                      Congress and the President, limiting their ability to maintain oversight. In
                      addition, DOD’s current problem disbursement policy,23 which states that
                      an investigation be initiated for potential Antideficiency Act violations that
                      have not been resolved within 6 months after the appropriation cancels,
                      would apply to the nine canceled accounts, although DOD did not ensure
                      that the policy was followed.


Financial Reporting   The Navy’s ongoing problems in properly and promptly recording its
Implications          transactions also affect the reliability of its financial reporting, including
                      its annual financial statements. For example, these unrecorded
                      transactions particularly affect the Statement of Net Cost and the
                      Statement of Budgetary Resources. Until transactions are recorded
                      accurately and in a timely manner and reflected in these financial
                      statements, the Navy and DOD will remain unable to achieve the goal of
                      producing reliable financial statements.

                      The Statement of Net Cost is intended to provide information on an
                      agency’s cost of operations and would generally be derived from cost

                      23
                        DOD Financial Management Regulation, Volume 3, Chapter 11.



                      Page 13                                        GAO/AIMD-99-19 Navy Problem Disbursements
              B-276772




              accounting information. However, because the Navy and DOD lack
              appropriate cost accounting systems, they use obligation and expenditure
              data to calculate costs. The reliability of this information is impaired not
              only because obligation data do not represent actual cost, but also
              because the Navy’s obligation data are unreliable, as evidenced by the
              delay in recording in-transit transactions and the potential overobligations
              discussed in this report. This factor further limits the reliability of the
              Statement of Net Cost.

              The Statement of Budgetary Resources is required for federal agencies
              beginning with fiscal year 1998. The purpose of the Statement of
              Budgetary Resources is to have audited budget information, which is
              reconciled to the Statement of Net Cost. This statement is intended to
              provide information on the type of resources used to fund the operation of
              the agency, as well as the year-end status of those funds. The required
              supplementary information to support this statement includes information
              by appropriation on obligations and expenditures for the period.
              Therefore, inaccurate and incomplete information on expenditures and
              obligations directly affects the reliability of this statement.


              Until the Navy corrects the fundamental deficiencies in its system of funds
Conclusions   control to allow for accurate recording of its transactions on an ongoing
              and current basis, its ability to produce accurate information on the status
              of its obligations and expenditures will continue to be severely
              compromised. As evidenced by the 29 potentially overobligated expired
              and canceled appropriations discussed in this report, the Navy’s failure to
              adequately and timely account for disbursements against recorded
              obligations impairs its ability to ensure, in accordance with the
              Antideficiency Act’s funds control requirements, that on an ongoing basis,
              obligations and disbursements do not exceed the budget authority made
              available by the Congress.

              The DOD Comptroller’s current policy, permitting the Navy to delay
              recording obligations for problem in-transits for 5 years or longer, runs
              counter to the funds control objectives of the Antideficiency Act. It allows
              the Navy to ignore evidence of potential overobligations, and delay for
              almost 5 years required Antideficiency Act investigations and any resulting
              reports to the Congress and the President.

              DOD may not avoid the requirements of the act by failing to record
              obligations or expenditures and to investigate evidence of overobligations



              Page 14                               GAO/AIMD-99-19 Navy Problem Disbursements
                         B-276772




                         or overexpenditures. To do so affects not only DOD’s ability to maintain
                         funds control, but also limits the effectiveness of congressional oversight.
                         Incomplete and inaccurate information on the Navy’s transactions also
                         affects the reliability of its financial information used for financial
                         reporting, including its annual financial statements, a mechanism for
                         oversight by the Congress and the public.


                         We recommend that the DOD Comptroller revise the problem disbursement
Recommendations          policies and procedures to ensure that the Navy’s funds control system
                         maintains, on an ongoing and current basis, accurate and reliable
                         unobligated and unexpended balances for the Navy’s expired and canceled
                         appropriations consistent with the Antideficiency Act and requirements
                         for accurate and timely financial reporting. The DOD Comptroller should
                         also monitor compliance with the revised policies and procedures.

                         We also recommend that the Navy’s Assistant Secretary (Financial
                         Management and Comptroller) in concert with DFAS

                     •   record obligations in the Navy’s official accounting and funds control
                         records for the 20 expired appropriations identified in the Navy’s cuff
                         records,
                     •   immediately investigate any of the 9 canceled appropriations and the 20
                         expired appropriations that are potentially overobligated, and
                     •   report any overobligations to the Congress and the President pursuant to
                         the Antideficiency Act and implementing guidance in OMB Circular A-34.


                         In written comments on a draft of this report, DOD indicated that it
Agency Comments          recognized and concurred with the intent of our recommendations. DOD
and Our Evaluation       stated that it has implemented various policies and procedures intended to
                         ensure that the funds control systems of each of the DOD components
                         maintain accurate unobligated and unexpended balances and comply with
                         the Antideficiency Act. DOD also stated that we did not validate and should
                         not have relied on the Navy’s cuff records to identify potential
                         overobligations because (1) the Navy advised the Under Secretary of
                         Defense (Comptroller) that its cuff records may not accurately reflect
                         amounts that should be properly recorded in the applicable Navy accounts
                         and (2) even if the obligations were recorded, a number of the accounts
                         addressed in our report would show a positive balance, and it would be
                         premature to conduct Antideficiency Act investigations based on these
                         cuff records.



                         Page 15                               GAO/AIMD-99-19 Navy Problem Disbursements
B-276772




We disagree with DOD’s and the Navy’s assertions. DOD’s problem
disbursement policy allows DOD agencies, including the Navy, to
undermine the funds control objectives of the Antideficiency Act and OMB
guidance. As stated in our report, DOD’s policy inappropriately allows the
Navy to ignore evidence of potential overobligations for almost 5 years,
and to maintain inaccurate and unreliable appropriation balances during
that period of time.

Further, DOD’s comments ignore the basis for our finding that obligations
recorded in the Navy’s cuff records should be recorded in the Navy’s
official accounting records. The level and quality of research supporting
amounts in the cuff records is no different from the research supporting
amounts that the Navy has already recorded in the official obligation
records to resolve other problem in-transit disbursement transactions. The
obligations recorded in the Navy’s cuff records are a direct result of
extensive, multiyear DFAS and Navy efforts to research and resolve the
Navy’s problem in-transit disbursement transactions. When this research
fails to identify a corresponding obligation, the Navy will record an
obligation in its official records, but only up to the amount of the
appropriations’ remaining unobligated budget authority. According to
Navy officials, an amount is recorded in cuff records when official
accounting records show insufficient unobligated budget authority to
cover the obligation. The only reason that the Navy records these amounts
in cuff records rather than in its official accounting records is that DOD
policy permits delayed recording of the amounts in the official accounting
records where such recording would show the related appropriations to
be overobligated. Because the same level and quality of research supports
obligations that the Navy records in both its official records and the cuff
records, the cuff records represent affirmative evidence of possible
overobligations. The Navy, by its own admission, would have recorded
these amounts in its official records had there been sufficient unobligated
budget authority to cover these obligations. As recommended in our
report, the Navy should record these amounts and, without further delay,
begin investigations of this evidence.

Although DOD and the Navy now assert that the cuff records are unreliable,
both have used the cuff records as evidence of possible overobligations.
As discussed in our report, the Navy offered, and the DOD Comptroller
accepted, the Navy’s cuff records as evidence of overobligations in 29
Navy appropriations if the Navy were to record such obligations as
required by DOD’s previous problem disbursement policy. As a result, the
DOD Comptroller revised this policy to extend the time frame for recording




Page 16                              GAO/AIMD-99-19 Navy Problem Disbursements
B-276772




such obligations for nearly 5 years. Moreover, pursuant to the revised
policy, the Navy used these same records as sufficient evidence of the
amount of obligations they needed to record in its official records for the
nine canceled appropriation accounts listed in appendix I to this report.

DOD  also suggested that the Navy’s cuff records should be reviewed
further. DOD stated that preliminary reviews conducted by the Navy
indicate that the cuff records may not accurately reflect the amount of
obligations that should be recorded in some of the appropriation accounts
in question. However, DOD did not provide documentation to support this
assertion. We are concerned that DOD’s comments represent a further
attempt to avoid the requirements of the Antideficiency Act and, at the
very least, underscore DOD’s serious difficulties in resolving its problem
disbursements and maintaining accurate, reliable accounting records.
Moreover, unless DOD establishes accurate and current appropriation
balances by recording transactions when they occur, it will be difficult, if
not impossible, for DOD to effectively monitor and report on the use of
resources provided by the Congress.

DOD  also stated, but offered no documentation, that even if the Navy
recorded cuff record amounts in its official records, a number of the
appropriations would show a positive balance. Although DOD stated that it
would be premature, for this reason, to conduct an Antideficiency Act
investigation, it suggested a review of the transactions in the cuff records
and those in the Navy’s official records. We agree that the Navy should
investigate the account balance of any potentially overobligated
appropriations, as recommended in our report. This sort of investigation
could result in identifying (1) other disbursements recorded incorrectly
against the appropriation, (2) obligations that are no longer valid and can
be deobligated, or (3) other accounting errors that would, when corrected,
reduce recorded obligations, leaving funds available to permit recording of
these disbursement transactions without incurring an overobligation. As
we recommended, the Navy should report any overobligations found as a
result of such an investigation to the Congress and the President pursuant
to the Antideficiency Act and implementing guidance in OMB Circular A-34.


This report contains recommendations to the Under Secretary of Defense
(Comptroller) and the Assistant Secretary of the Navy (Financial
Management and Comptroller). Within 60 days of the date of this letter, we
would appreciate receiving written statements on actions taken to address
these recommendations.



Page 17                               GAO/AIMD-99-19 Navy Problem Disbursements
B-276772




We are sending copies of this letter to the Chairmen and Ranking Minority
Members of the Senate Committee on Armed Services, the House
Committee on National Security, the Senate Committee on Governmental
Affairs, the House Committee on Government Reform and Oversight, the
House and Senate Committees on Appropriations and the Director of the
Office of Management of Budget. We are also sending copies to the
Secretary of Defense and the Secretary of the Navy. Copies will also be
made available to others upon request.

Please contact me at (202) 512-9095 if you or your staffs have any
questions on this report. Major contributors to this report are listed in
appendix IV.




Lisa G. Jacobson
Director, Defense Audits




Page 18                               GAO/AIMD-99-19 Navy Problem Disbursements
Page 19   GAO/AIMD-99-19 Navy Problem Disbursements
Contents



Letter                                                                   1


Appendix I                                                              22
Canceled
Appropriations for
Which the Navy’s
Accounting System
Indicated Potential
Overobligations as of
September 30, 1997
Appendix II                                                             23
Expired
Appropriations Which
the Navy’s Cuff
Records Indicated
May Be Overobligated
as of September 30,
1997
Appendix III                                                            24
Comments From the
Department of
Defense
Appendix IV                                                             31
Major Contributors to
This Report
Related GAO Products                                                    35




                        Page 20   GAO/AIMD-99-19 Navy Problem Disbursements
Contents




Abbreviations

CFO        chief financial officer
DFAS       Defense Finance and Accounting Service
DOD        Department of Defense
OMB        Office of Management and Budget


Page 21                           GAO/AIMD-99-19 Navy Problem Disbursements
Appendix I

Canceled Appropriations for Which the
Navy’s Accounting System Indicated
Potential Overobligations as of
September 30, 1997
              Dollars in thousands
                                                                    Account                           Potentiala
              Appropriation account                                 number        Fiscal year     overobligation
              Appropriations affected by other
              problem disbursements and in-transits:
              Aircraft Procurement, Navy                                1506       1987-1989              $10,500
              Weapons Procurement, Navy                                 1507       1987-1989               34,700
              Other Procurement, Navy                                   1810       1987-1989               57,800
              Other Procurement, Navy                                   1810             1989                    100
              Coastal Defense Augmentation                              0380       1985-1989                    5,600
              Research, Development, Test &
              Evaluation, Navy                                          1319                 Mb            32,700
                  Subtotal                                                                              $141,400
              Appropriations affected by in-transits
              only:
              Operation and Maintenance, Marine
              Corps Reserve                                             1107             1991                    $20
              Operation and Maintenance, Marines                        1106             1990                   4,000
              Military Personnel, Navy                                  1453             1991                     20
                  Subtotal                                                                                 $4,040
              Total                                                                                     $145,440
              Note: These appropriation accounts did not have sufficient unobligated balances to obligate the
              full amount of in-transits after recording obligations to resolve other problem disbursements.
              a
               These amounts relate to other problem disbursements as well as in-transits.
              b
               An M account was a successor account into which unobligated balances were transferred, or
              merged, from an expired account at the end of the second full fiscal year following expiration.
              Under the National Defense Authorization Act of 1991, existing M accounts were phased out.




              Page 22                                           GAO/AIMD-99-19 Navy Problem Disbursements
Appendix II

Expired Appropriations Which the Navy’s
Cuff Records Indicated May Be
Overobligated as of September 30, 1997

              Dollars in thousands
                                                                   Account                            Potentiala
              Appropriation account                                number        Fiscal year      overobligation
              Appropriations affected by other
              problem disbursements and in-transits:
              Reserve Personnel, Navy                                  1405             1997                   $150
              Operation and Maintenance, Marine
              Corps Reserve                                            1107             1993                    197
              Operation and Maintenance, Marine
              Corps Reserve                                            1107             1996                      3
              Procurement of Ammunition, Navy and
              Marine Corps                                             1508       1995-1997                       4
                                                                                              b
              Shipbuilding & Conversion, Navy                          1611                 X                   176
              Shipbuilding & Conversion, Navy                          1611       1995-1996                       5
              Other Procurement, Navy                                  1810       1994-1996               14,480
              Research, Development, Test, and
              Evaluation, Navy                                         1319       1995-1996                     258
                  Subtotal                                                                               $15,273
              Appropriations affected by in-transits
              only:
              Reserve Personnel, Marine Corps                          1108             1995                     $3
              Operation and Maintenance, Navy                          1804             1994              38,161
              Operation and Maintenance, Navy                          1804             1995              17,064
              Operation and Maintenance, Navy                          1804             1996              50,729
              Operation and Maintenance, Marine
              Corps                                                    1106             1997                     55
              Operation and Maintenance, Marine
              Corps Reserve                                            1107             1994                     70
              Aircraft Procurement, Navy                               1506       1995-1997                    2,567
              Shipbuilding and Conversion, Navy                        1611       1986-1990                    1,495
              Other Procurement, Navy                                  1810       1993-1995                    6,025
              Procurement, Marine Corps                                1109       1992-1994               10,054
              Research, Development, Test, and
              Evaluation, Navy                                         1319       1996-1997                    2,564
              Military Construction, Naval Reserve                     1235       1995-1999                     144
                  Subtotal                                                                             $128,931
              Total                                                                                    $144,204
              a
               Includes amounts for in-transits only.
              b
               The “X” denotes a no-year appropriation, for which funds are available until expended without
              regard to fiscal year. The Navy included this appropriation in its cuff records of expired
              appropriations.




              Page 23                                          GAO/AIMD-99-19 Navy Problem Disbursements
Appendix III

Comments From the Department of Defense


Note: GAO comments
supplementing those in the
report text appear at the
end of this appendix.




See comment 1.




See comment 2.




See comment 3.




See comment 4.



See comment 5.




                             Page 24   GAO/AIMD-99-19 Navy Problem Disbursements
                 Appendix III
                 Comments From the Department of Defense




See comment 6.




                 Page 25                                   GAO/AIMD-99-19 Navy Problem Disbursements
                 Appendix III
                 Comments From the Department of Defense




See comment 7.




                 Page 26                                   GAO/AIMD-99-19 Navy Problem Disbursements
                 Appendix III
                 Comments From the Department of Defense




See comment 8.




                 Page 27                                   GAO/AIMD-99-19 Navy Problem Disbursements
               Appendix III
               Comments From the Department of Defense




               The following are GAO’s comments on the Department of Defense’s letter
               dated November 24, 1998.


               1. DOD’s problems resulting from its outdated finance and accounting
GAO Comments   systems are long-standing. However, DOD’s inability to match disbursement
               transactions to obligations at the time a payment is made is not a
               temporary situation as DOD’s comments have indicated. As discussed in
               our report, some of the unmatched transactions represented by the Navy’s
               cuff records are at least 8 years old.

               2. We recognize that DOD has made progress in addressing problem
               disbursements. However, as stated in our May 1997 report,1 DOD cannot
               ensure accurate and consistent reporting. For example, our testing of
               problem disbursement amounts reported by DOD as of May 31, 1996,
               showed that the $18 billion reported by DOD was understated by at least
               $25 billion. We reported that DOD significantly understates the magnitude
               of its problem disbursements by (1) netting positive and negative amounts
               that result from disbursements, collections, reimbursements, or
               adjustments and (2) excluding certain transactions. DOD continues to
               understate the magnitude of its problem disbursements by reporting net
               amounts. For example, DOD’s April 1998 testimony on financial
               management,2 indicated that as of January 31, 1998, DOD’s problem
               disbursements totaled $14.3 billion, including in-transits, when, in fact, the
               absolute value of DOD’s problem disbursements would have totaled
               $22.6 billion, if positive and negative amounts had not been used to offset
               one another.

               3. DOD stated that it requires its component agencies to research and
               resolve problem disbursements and to record obligations for those
               disbursements that are not matched to a corresponding obligation within
               specified time frames. A fundamental premise of funds control accounting
               is that an agency records its obligations at the time incurred and disburses
               funds based on an obligation to pay. The 5-year time frame allowed by
               DOD’s policy for recording obligations to resolve problem in-transit
               disbursements undermines fund control accounting.



               1
                Financial Management: Improved Reporting Needed for DOD Problem Disbursements
               (GAO/AIMD-97-59, May 1, 1997).
               2
                Statement of Nelson Toye, Deputy Chief Financial Officer, Before the Committee on Government
               Reform and Oversight, Subcommittee on Government Management, Information and Technology, April
               16, 1998.



               Page 28                                       GAO/AIMD-99-19 Navy Problem Disbursements
Appendix III
Comments From the Department of Defense




DOD stated that its policy requires review and confirmation of the
accuracy, completeness, and timeliness of commitment and obligation
transactions at least three times a year. According to DOD officials, DOD’s
requirement for a triannual review of obligations was implemented about 3
years ago. These reviews do not retroactively cover prior obligations, and
they do not cover the obligations recorded in the Navy’s cuff records.
Regardless, the Navy’s failure to record all known obligations impairs the
effectiveness of DOD’s triannual review of obligations as a funds control
mechanism.

4. The statements and recommendations in our report are consistent with
our past position on potential Antideficiency Act violations. When our
audits have identified potential overobligations or overexpenditures, we
have recommended that DOD investigate the transactions and report any
resulting overobligations and/or overexpenditures to the President and the
Congress pursuant to the act.3

5. We appropriately consider the obligations in the Navy’s cuff records to
be affirmative evidence of potential overobligations. The particular Navy
cuff records that we discuss in this report represent the Department of the
Navy’s determination, after an extensive, multiyear research effort, of the
obligations that need to be recorded in the Navy’s accounting system to
match in-transit disbursement transactions that have already occurred. As
discussed in this report, DOD and Navy officials told us that all research to
identify existing obligations for the transactions represented by the cuff
records has been performed. The only reason that these obligations have
not been recorded in the Navy’s accounting system is that DOD policy
permits the Navy to delay such recording for almost 5 years if recording
the amounts in official records would indicate potential overobligations
that would need to be investigated pursuant to OMB’s funds control
guidance and the Antideficiency Act.

Although DOD and the Navy now assert that the cuff records are unreliable,
both have used the cuff records as evidence of possible overobligations.
As discussed in our report, the Navy and the DOD Comptroller accepted the
Navy’s cuff records as evidence of overobligations in 29 Navy
appropriations if the Navy were to record such obligations as required by
DOD’s previous problem disbursement policy. As a result, the DOD
Comptroller revised this policy to extend the time frame for recording

3
 TOPAZ II Space Nuclear Power Program: Management, Funding, and Contracting Problems
(GAO/OSI-98-3R, December 1, 1997), Air Force Appropriations: Funding Practices at the Ballistic
Missile Organization (GAO/NSIAD-93-47, July 16, 1993), and Financial Management: Agencies’ Actions
to Eliminate “M” Accounts and Merged Surplus Authority (GAO/AFMD-93-7, April 2, 1993).



Page 29                                          GAO/AIMD-99-19 Navy Problem Disbursements
Appendix III
Comments From the Department of Defense




such obligations for nearly 5 years. Moreover, pursuant to the revised
policy, Navy officials used these same records as sufficient evidence of the
amount of obligations they needed to record in the Navy’s official records
for the nine canceled appropriation accounts listed in appendix I of this
report.

6. DOD stated, but offered no documentary support, that even if the Navy
recorded cuff record amounts in its official records, a number of the
appropriations would show a positive balance. Although DOD asserted that
it would be premature, for this reason, to conduct an Antideficiency Act
investigation, it suggested a review of the transactions in the cuff records
and those in the Navy’s official records. We agree, and recommended in
our report, that the Navy should undertake an investigation to accurately
establish the balances in the 29 appropriations discussed in our report. As
explained in our report, this sort of investigation could result in identifying
(1) other disbursements recorded incorrectly against the appropriation,
(2) obligations that are no longer valid and can be deobligated, or (3) other
accounting errors that would, when corrected, reduce recorded
obligations, leaving funds available to permit recording of these
disbursement transactions without incurring an overobligation. As we
recommended, the Navy should report any overobligations found as a
result of such an investigation to the Congress and the President pursuant
to the Antideficiency Act and implementing guidance in OMB Circular A-34.

7. We disagree with DOD’s position that it has implemented procedures
intended to ensure adequate funds controls and compliance with the
Antideficiency Act. Current policies and procedures permit the Navy to
delay for about 5 years (1) the recording of obligations needed to support
payments already made, (2) avoid the initiation of Antideficiency Act
investigations of any potential violations, and (3) any resulting reports of
violations to the Congress and the President. During this time, the Navy’s
appropriation balances are unreliable, leaving DOD and the Congress
without assurance that the Navy has not incurred obligations in excess of
available budget authority. Based on the findings in our report, we have
recommended that DOD revise its problem disbursement policies and
procedures to ensure that the Navy’s funds control system maintains, on
an ongoing and current basis, accurate and reliable unobligated and
unexpended balances in expired and canceled accounts.

8. See comments 5 and 6.




Page 30                                   GAO/AIMD-99-19 Navy Problem Disbursements
Appendix IV

Major Contributors to This Report


                        Gayle Fischer, Assistant Director
Accounting and          Miguel Castillo, Senior Accountant
Information             Francine DelVecchio, Communications Analyst
Management Division,
Washington, D.C.
                        Keith McDaniel, Project Manager
Chicago Field Office    Jean Lee, Accountant


                        Thomas Armstrong, Assistant General Counsel
Office of the General   Andrea Levine, Senior Attorney
Counsel




                        Page 31                           GAO/AIMD-99-19 Navy Problem Disbursements
Appendix IV
Major Contributors to This Report




Page 32                             GAO/AIMD-99-19 Navy Problem Disbursements
Appendix IV
Major Contributors to This Report




Page 33                             GAO/AIMD-99-19 Navy Problem Disbursements
Appendix IV
Major Contributors to This Report




Page 34                             GAO/AIMD-99-19 Navy Problem Disbursements
Related GAO Products


              Department of Defense: Financial Audits Highlight Continuing Challenges
              to Correct Serious Financial Management Problems (GAO/T-AIMD/NSIAD-98-158,
              April 16, 1998).

              Correspondence to the Honorable Charles E. Grassley, United States
              Senate, on “Fast Pay” Provision of DOD Reform Act (B-279620, March 31,
              1998).

              CFOAct Financial Audits: Programmatic and Budgetary Implications of
              Navy Financial Data Deficiencies (GAO/AIMD-98-56, March 16, 1998).

              DOD Procurement: Funds Returned by Defense Contractors
              (GAO/NSIAD-98-46R, October 28, 1997).

              Financial Management: DOD Progress Payment Distribution Procedures
              (GAO/AIMD-97-107R, July 21, 1997).

              DOD High-Risk Areas: Eliminating Underlying Causes Will Avoid Billions of
              Dollars in Waste (GAO/T-NSIAD/AIMD-97-143, May 1, 1997).

              Financial Management: The Prompt Payment Act and DOD Problem
              Disbursements (GAO/AIMD-97-71, May 23, 1997).

              Financial Management: Improved Reporting Needed for DOD Problem
              Disbursements (GAO/AIMD-97-59, May 1, 1997).

              Contract Management: Fixing DOD’s Payment Problems Is Imperative
              (GAO/NSIAD-97-37, April 10, 1997).

              DODProblem Disbursements: Contract Modifications Not Properly
              Recorded in Payment System (GAO/AIMD-97-69R, April 3, 1997).

              Financial Management: Improved Management Needed for DOD
              Disbursement Process Reforms (GAO/AIMD-97-45, March 31, 1997).

              DOD Problem Disbursement Reporting Excludes In-Transits
              (GAO/AIMD-97-36R, February 20, 1997.)

              High-Risk Series: Defense Financial Management (GAO/HR-97-3,
              February 1997).




              Page 35                             GAO/AIMD-99-19 Navy Problem Disbursements
           Related GAO Products




           CFOAct Financial Audits: Increased Attention Must Be Given to Preparing
           Navy’s Financial Reports (GAO/AIMD-96-7, March 27, 1996).

           Financial Management: Challenges Facing DOD in Meeting the Goals of the
           Chief Financial Officers Act (GAO/T-AIMD-96-1, November 14, 1995).

           Financial Management: Status of Defense Efforts to Correct Disbursement
           Problems (GAO/AIMD-95-7, October 5, 1994).

           Financial Management: Financial Control and System Weaknesses
           Continue to Waste DOD Resources and Undermine Operations
           (GAO/T-AIMD/NSIAD-94-154, April 12, 1994).

           DOD Procurement: Millions in Overpayments Returned by DOD Contractors
           (GAO/NSIAD-94-106, March 14, 1994).

           Financial Management: DOD Has Not Responded Effectively to Serious,
           Long-standing Problems (GAO/T-AIMD-93-1, July 1, 1993).

           Financial Management: Navy Records Contain Billions of Dollars in
           Unmatched Disbursements (GAO/AFMD-93-21, June 9, 1993).




(919052)   Page 36                            GAO/AIMD-99-19 Navy Problem Disbursements
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