Financial Management

Because of lapses in internal controls over its payroll system, the military overpaid thousands of Army personnel. These payments totaled more than $6 million in September 1992 alone. In addition, the Defense Finance and Accounting System (1) did not report and remit about $66 million due to the Internal Revenue Service for soldiers' income and social security and Medicare taxes and (2) erroneously charged and did not fully reimburse the active Army's Military Personnel appropriation for costs chargeable to the Army's appropriations for Reserve and National Guard personnel. These errors occurred because Army payroll systems did not accurately summarize payroll tax information and did not contain the proper codes to correctly identify appropriation charges. These payroll problems were exacerbated because the Army did not correct existing system and data deficiencies, test payroll data, or provide adequate payroll system training. To correct these shortcomings, the Army recently established a task force. GAO recommends several measures to ensure that payments to soldiers are accurately made, recorded, and reported.

GAO found that: (1) the Defense Finance and Accounting Service (DFAS) has made numerous erroneous payments to Army personnel not entitled to payment due to field officers' failure to enter personnel transaction information into the payroll system in a timely manner; (2) the Army and DFAS have not reconciled military payroll and personnel records due to the large volume of discrepancies between payroll and personnel data; (3) data discrepancies are partly due to payments to reserve and National Guard personnel on active duty; (4) the Joint Services Software (JSS) system does not accurately summarize and report payroll tax information or correctly identify appropriation charges; (5) the Army identified several payroll problems in fiscal year 1992, but DFAS has not corrected them; (6) DFAS cannot ensure that income, social security, Medicare taxes, and other deductions are accurately reported and remitted, since it cannot reconcile the Army's gross and net pay reports; (7) the Army's military personnel appropriation has been erroneously charged for reserve and National Guard personnel costs because some personnel are incorrectly coded in JSS; (8) DFAS has not followed the required procedures for JSS implementation which allowed the existing system's deficiencies to persist; and (9) DFAS has established a task force to address the Army's military payroll system deficiencies and integrate the Army's payroll and personnel systems.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: