Financial Management

This testimony, drawing on GAO's second comprehensive evaluation of the Army's financial operations as well as related GAO work, calls into question the adequacy of the Pentagon's internal controls to safeguard military resources from waste, fraud, abuse, and mismanagement. According to the Comptroller General, deep-rooted weaknesses in the Defense Department's (DOD) fundamental controls have led to millions of dollars in losses and inefficiencies. For example, an Air Force accountant was recently convicted of illegally diverting about $2 million in Air Force funds during a three-year period to his personal bank accounts, and a clerk at an Army finance and accounting office siphoned off more than $31,000 by falsifying documents and creating a "ghost" soldier in the payroll system. Similarly, internal controls at four Army depots GAO visited fell short in protecting millions of dollars in weapons and equipment during the maintenance process. Because many repairables were stored, often for years, without adequate protection, they were highly vulnerable to corrosion and rust, which greatly increased scrappage rates and maintenance costs. Finally, the information needed to assess whether funds were being correctly disbursed was unreliable. GAO discovered billions of dollars in unmatched disbursements, missing records needed to verify how individual disbursements were reflected in summary disbursement totals, and unacceptably high rates of changes from one appropriation to another when disbursements were initially and finally accounted for.