Financial Management

Problem disbursements by the Department of Defense--those that have not been matched with corresponding obligations--have been the source of concern for many years because such disbursements increase the risks of fraudulent or erroneous payments being made without detection and cumulative amounts of disbursements exceeding appropriated funds. Defense Finance and Accounting Service (DFAS) officials have stated that transactions paid at one location, but accounted for at another--known as transactions by others (TBO)--are the major contributors to problem disbursements. To address the problem, DFAS established a project to implement improvements to the current disbursement process and identified 14 action items to improve TBO disbursement operations. A GAO review found that as of October 1996, 10 of the 14 action items had either not been implemented or were only partially completed. Of the four items implemented, GAO's review of the two for which some implementation information was available showed that DFAS had not effectively met its objectives. GAO identified three issues that limited DFAS' ability to effectively and promptly achieve its goal of improved TBO processing: First, DFAS did not develop adequate information to effectively diagnose the causes of problem disbursements, implement solutions, and evaluate progress; second, DFAS did not provide strong, consistent management for the project; and finally, DFAS may not be allocating sufficient resources to critical areas.

GAO noted that: (1) DFAS recognized the need to reform its TBO and cross disbursing processes in the short term, and established aggressive milestones to complete the 14 action items, with most slated for completion in late 1995; (2) however, their implementation has been significantly delayed; (3) as of October 1996, 10 of the 14 action items had either not been implemented or were only partially completed; (4) of the four items implemented, GAO's review of the two for which some implementation information was available showed that they had not effectively met their objectives; (5) GAO identified three issues that limited DFAS' ability to effectively and promptly achieve its goal of improved TBO processing; (6) DFAS did not develop adequate information to effectively diagnose the causes of problem disbursements, implement solutions, and evaluate progress; (7) DFAS managed its reform effort based on the experience of knowledgeable staff without the benefit of enough supporting analysis of processes, causes, and alternatives; (8) without an analysis, DFAS does not know if its stated time frames are reasonable or obtainable; (9) officials at two centers questioned whether the time frames were reasonable and results at one processing center validate that concern; (10) DFAS did not provide strong, consistent management for the project; (11) at least three people headed the project during the first 6 months of 1996; (12) management turnover contributed to delays in issuing the DFAS report and implementing some action items; (13) although a permanent project officer was appointed in July 1996, a position description or formal tasking as to the responsibilities and scope of the job had not been prepared as of the completion of GAO's work in December 1996; (14) DFAS may not be allocating sufficient resources to critical areas; (15) because DFAS did not establish priorities based upon quantitative analysis, DFAS has expended resources without ensuring that it is addressing the more significant problems; (16) for example, after 2 months of work on one action item dealing with rerouting payments between two sections of one DFAS center, DFAS cancelled the action item because it was determined that the completion would not have a significant impact; (17) conversely, DFAS officials said that resource constraints had led to one center's backlog of unprocessed transactions continuing to exist 1 year after DFAS had planned to eliminate it; and (18) by better addressing these critical issues, DFAS will be in a stronger position to achieve meaningful and timely reforms in its TBO processing and ultimately reduce problem disbursements.

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.

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