DOD Financial Management
Improvements Are Needed in Antideficiency Act Controls and Investigations Gao ID: GAO-08-1063 September 26, 2008Senate Report No. 110-77 directed GAO to review the Department of Defense's (DOD) procedures for Antideficiency Act (ADA) violations. GAO focused on whether (1) existing DOD funds control systems, processes, and internal controls provide reasonable assurance that ADA violations will be prevented or detected and whether key funds control personnel are trained; (2) investigations of ADA violations are processed in accordance with applicable DOD regulations; and (3) DOD tracks and reports metrics pertaining to its ADA investigations and what disciplinary actions are taken when ADA violations have occurred. GAO's review included all 54 ADA military service case files closed in fiscal years 2006 and 2007. GAO did not assess the appropriateness of the conclusions reached or of the disciplinary actions taken for the ADA cases.
DOD's complex and inefficient payment processes, nonintegrated business systems, and weak internal controls impair its ability to maintain proper funds control, leaving the department at risk of overobligating or overspending its appropriations in violation of the ADA. DOD Comptroller and military service financial management and comptroller officials responsible for the department's ADA programs have stated that because of weaknesses in DOD's business operations, knowledgeable personnel are critical to improving the department's funds control, and these officials have or are developing training courses. However, only the Army has attempted to identify and determine whether key funds control personnel have received appropriate training to provide them with the knowledge and skills to fulfill their responsibilities, including the ADA, required by DOD regulations. GAO's analysis of the 54 ADA cases and other documentation provided by the military services disclosed that the military services did not fully comply with DOD regulations intended to ensure that ADA reviews and investigations were conducted by qualified and independent personnel and were completed in a timely manner. More specifically, GAO found the following: (1) Only 6 of the 66 investigating officers assigned to the 54 ADA cases reviewed had received all of the required training. (2) Nineteen of the 54 ADA cases lacked documentation needed to determine whether the investigating officer was organizationally independent. Further, because the military services focused on organizational independence, they could not be assured that investigating officers were free of personal or external impairments to independence. ? ADA investigations were generally not completed within the 15 months and 25 days set forth by DOD. Of the 54 ADA cases reviewed, 22 cases took over 30 months to complete and only 16 were completed on time. GAO also noted that DOD, as required, reported the 34 cases in which it had concluded that an ADA violation had occurred to the President and the Congress, with a copy to GAO. For the remaining 20 cases, DOD concluded that an ADA violation had not occurred and therefore external reporting was not required. Further, DOD has taken steps to improve transparency over the ADA investigation process by requiring DOD components to report status information when an ADA investigation is initiated. Additionally, for the 34 ADA cases in which DOD concluded that an ADA violation had occurred, the nature of the disciplinary actions taken and reported to the President and the Congress was consistent with the criteria set forth in the DOD regulations. The ADA requires that employees who are responsible for ADA violations be subject to appropriate administrative discipline. The DOD regulations specify that administrative discipline can range from no action to the termination of the individual's employment.
RecommendationsOur 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:GAO-08-1063, DOD Financial Management: Improvements Are Needed in Antideficiency Act Controls and Investigations
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Report to Congressional Committees:
United States Government Accountability Office:
GAO:
September 2008:
DOD Financial Management:
Improvements Are Needed in Antideficiency Act Controls and
Investigations:
GAO-08-1063:
GAO Highlights:
Highlights of GAO-08-1063, a report to congressional committees.
Why GAO Did This Study:
Senate Report No. 110-77 directed GAO to review the Department of
Defense‘s (DOD) procedures for Antideficiency Act (ADA) violations. GAO
focused on whether (1) existing DOD funds control systems, processes,
and internal controls provide reasonable assurance that ADA violations
will be prevented or detected and whether key funds control personnel
are trained; (2) investigations of ADA violations are processed in
accordance with applicable DOD regulations; and (3) DOD tracks and
reports metrics pertaining to its ADA investigations and what
disciplinary actions are taken when ADA violations have occurred. GAO‘s
review included all 54 ADA military service case files closed in fiscal
years 2006 and 2007. GAO did not assess the appropriateness of the
conclusions reached or of the disciplinary actions taken for the ADA
cases.
What GAO Found:
DOD‘s complex and inefficient payment processes, nonintegrated business
systems, and weak internal controls impair its ability to maintain
proper funds control, leaving the department at risk of overobligating
or overspending its appropriations in violation of the ADA. DOD
Comptroller and military service financial management and comptroller
officials responsible for the department‘s ADA programs have stated
that because of weaknesses in DOD‘s business operations, knowledgeable
personnel are critical to improving the department‘s funds control, and
these officials have or are developing training courses. However, only
the Army has attempted to identify and determine whether key funds
control personnel have received appropriate training to provide them
with the knowledge and skills to fulfill their responsibilities,
including the ADA, required by DOD regulations.
GAO‘s analysis of the 54 ADA cases and other documentation provided by
the military services disclosed that the military services did not
fully comply with DOD regulations intended to ensure that ADA reviews
and investigations were conducted by qualified and independent
personnel and were completed in a timely manner. More specifically, GAO
found the following:
* Only 6 of the 66 investigating officers assigned to the 54 ADA cases
reviewed had received all of the required training.
* Nineteen of the 54 ADA cases lacked documentation needed to determine
whether the investigating officer was organizationally independent.
Further, because the military services focused on organizational
independence, they could not be assured that investigating officers
were free of personal or external impairments to independence.
* ADA investigations were generally not completed within the 15 months
and 25 days set forth by DOD. Of the 54 ADA cases reviewed, 22 cases
took over 30 months to complete and only 16 were completed on time.
GAO also noted that DOD, as required, reported the 34 cases in which it
had concluded that an ADA violation had occurred to the President and
the Congress, with a copy to GAO. For the remaining 20 cases, DOD
concluded that an ADA violation had not occurred and therefore external
reporting was not required. Further, DOD has taken steps to improve
transparency over the ADA investigation process by requiring DOD
components to report status information when an ADA investigation is
initiated. Additionally, for the 34 ADA cases in which DOD concluded
that an ADA violation had occurred, the nature of the disciplinary
actions taken and reported to the President and the Congress was
consistent with the criteria set forth in the DOD regulations. The ADA
requires that employees who are responsible for ADA violations be
subject to appropriate administrative discipline. The DOD regulations
specify that administrative discipline can range from no action to the
termination of the individual‘s employment.
What GAO Recommends:
GAO makes six recommendations related to ensuring that key funds
control personnel are trained and to improving compliance with the DOD
regulations pertaining to ADA investigations. DOD concurred with the
recommendations and identified specific actions that it has taken to
implement them.
To view the full product, including the scope and methodology, click on
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1063]. For more
information, contact Paula M. Rascona at (202) 512-9095 or
rasconap@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Long-standing Financial Management Weaknesses Undermine DOD's Ability
to Prevent and Identify Potential Antideficiency Act Violations:
DOD Lacks Assurance That Potential ADA Investigations Are Processed in
Accordance with DOD Regulations:
DOD Has Taken Steps to Improve Transparency of Reporting, and the
Nature of Disciplinary Actions Taken Is Consistent with the ADA and the
DOD FMR:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Comments from the Department of Defense:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Crosswalk between Congressional Areas of Interest and GAO
Objectives:
Table 2: General Classes of Impairments to Independence:
Table 3: Disciplinary Actions Taken by the Military Services for ADA
Violations Reported in Fiscal Years 2006 and 2007:
Abbreviations:
ADA: Antideficiency Act:
DOD: Department of Defense:
FMR: Financial Management Regulation:
OMB: Office of Management and Budget:
OSD: Office of the Secretary of Defense:
PCIE/ECIE: President's Council on Integrity and Efficiency/Executive
Council on Integrity and Efficiency:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
September 26, 2008:
Congressional Committees:
Federal agencies, including the Department of Defense (DOD), are
responsible for ensuring that appropriated funds are used only for
purposes, and within the amount and time frames, prescribed by the
Congress. In fiscal year 2008, DOD had appropriations totaling more
than $669 billion. To comply with legal and regulatory requirements,
DOD must implement and maintain administrative controls that ensure the
proper use of its appropriated funds, including the use of accounting
and funds control systems that are able to accurately record
obligations,[Footnote 1] collections, and disbursements[Footnote 2]
against appropriations and the accounts established to track the status
of appropriations. DOD financial management has been on our high-risk
list since 1995 because of the department's continuing inability to
provide accurate, timely, and complete financial and performance
information for management use and reporting.[Footnote 3]
The Antideficiency Act (ADA)[Footnote 4] prohibits any DOD officer or
employee from incurring obligations or making expenditures in excess or
in advance of appropriations or apportionments.[Footnote 5] Under the
ADA, the Office of Management and Budget (OMB) apportions appropriated
funds and other budgetary resources to DOD. The act further requires
DOD to establish by regulation a system of administrative controls to
restrict obligations and disbursements to the amounts of
appropriations, apportionments, and DOD's subdivisions of those
apportionments. Further, when DOD determines that a violation of one of
the ADA's proscriptions has occurred, the ADA requires DOD to "report
immediately to the President and Congress all relevant facts and a
statement of actions taken" and to submit a copy to the Comptroller
General at the same time.
On January 17, 2007, the DOD Acting Inspector General testified before
the Subcommittee on Readiness and Management Support, Senate Committee
on Armed Services, on potential violations of the ADA at DOD. Based on
the DOD Acting Inspector General's testimony, the committee expressed
concerns about the volume of potential ADA violations, the pace and
transparency of ADA investigations, and DOD's process for preventing,
identifying, investigating, and reporting potential ADA violations.
Senate Report No. 110-77,[Footnote 6] which accompanied the National
Defense Authorization Act for Fiscal Year 2008,[Footnote 7] directed
GAO to review the department's ADA procedures for preventing,
identifying, investigating, and reporting ADA violations and the
disciplinary actions taken when violations occur. More specifically,
the Senate report identified seven areas of congressional interest,
which we have grouped into three objectives, as outlined in table 1.
Table 1: Crosswalk between Congressional Areas of Interest and GAO
Objectives:
Senate report areas of interest: Determine the effectiveness of
existing measures for the prevention of ADA violations; Determine the
adequacy of training provided to DOD military and civilian personnel;
GAO objectives: (1) Determine whether existing DOD funds control
systems, processes, and internal controls provide reasonable assurance
that potential ADA violations will be prevented or identified and
whether key funds control personnel are trained.
Senate report areas of interest: Determine the adequacy of current
procedures utilized for preliminary and formal investigations of
potential ADA violations; Determine the qualifications and independence
of personnel utilized at each stage of an investigation; Determine the
timeliness of investigations of potential violations;
GAO objectives: (2) Ascertain whether the military services comply with
DOD regulations and criteria related to investigating officer
qualifications, including training and independence, and the time
frames for conducting preliminary reviews and formal investigations of
potential ADA violations.
Senate report areas of interest: Determine the transparency both inside
and outside DOD of the investigating process; Determine the use and
adequacy of available disciplinary measures for ADA violations;
GAO objectives: (3) Determine whether DOD tracks and reports metrics
pertaining to its preliminary reviews and formal investigations of
potential ADA violations and what disciplinary actions are taken when
ADA violations have occurred.
Source: GAO.
[End of table]
This report presents more details regarding the preliminary
observations we provided on July 28, 2008, in response to the Senate
report.[Footnote 8] To address the first objective, we reviewed prior
GAO and DOD Inspector General audit reports and OMB and GAO guidance to
obtain an understanding of the deficiencies in DOD's funds control
systems, processes, and internal controls that impede its ability to
prevent or identify ADA violations. DOD has acknowledged the financial
management weaknesses reported by GAO and DOD auditors and the impact
these weaknesses have on the reliability of the department's financial
information. As a result, we did not perform additional work to
substantiate the adequacy of DOD's financial management environment and
internal controls. We interviewed DOD and military service personnel
and reviewed documentation, such as the DOD Financial Management
Regulation (FMR) and military service training curricula, to ascertain
whether the military services had processes in place to identify and
ensure that key funds control personnel are trained.
To address the second objective, we reviewed the DOD FMR and
interviewed appropriate officials within the DOD Comptroller and
military services' financial management and comptroller offices
responsible for the ADA programs at DOD or the military services to
identify DOD criteria pertaining to the qualifications, training, and
independence requirements of investigating officers and the reporting
of ADA cases. Additionally, we reviewed the President's Council on
Integrity and Efficiency/Executive Council on Integrity and Efficiency
(PCIE/ECIE) Quality Standards for Investigations to obtain an
understanding of qualification, independence, and due professional care
standards applicable to investigations.[Footnote 9] To assess
investigating officers' qualifications, we focused our review on
whether the investigating officers had received training and if there
was an internal control in place to ensure that the investigating
officers did not have any personal, organizational, or external
impairments to their ability to conduct impartial and independent
investigations.
To address the third objective, we interviewed DOD Comptroller and
military service financial management and comptroller officials
responsible for ADA programs at DOD or the military services and
reviewed DOD's metrics for tracking and reporting on preliminary
reviews and formal investigations of potential ADA violations and the
results of all 54 Army, Navy, and Air Force formal ADA investigations
[Footnote 10] closed by DOD in fiscal years 2006 and 2007. We did not
assess whether the conclusions reached by DOD for the 54 closed ADA
cases or the disciplinary actions taken on the 34 cases for which DOD
concluded that an ADA violation had occurred were appropriate. Further
details on our scope and methodology are presented in appendix I.
We conducted this performance audit from July 2007 through September
2008 in accordance with generally accepted government auditing
standards. Those standards require that we plan and perform the audit
to obtain sufficient, appropriate evidence to provide a reasonable
basis for our findings and conclusions based on our audit objectives.
We believe that the evidence obtained provides a reasonable basis for
our findings and conclusions based on our audit objectives. We received
written comments from the Acting Deputy Chief Financial Officer, which
are reprinted in appendix II.
Results in Brief:
DOD's complex and inefficient payment processes, nonintegrated business
systems, and weak internal control environment impair its ability to
reliably control transactions and record them when they occur,
including the prompt and proper matching of disbursements with the
related obligations, which is critical to ensuring proper funds
control. As a result of continuing financial management weaknesses,
including difficulties in ensuring the proper authorization,
processing, and recording of payments, DOD's ability to timely and
reliably determine the amount of funds that it has available to spend
is impaired, and the department remains at risk of overobligating and
overexpending its appropriations in violation of the ADA. In its fiscal
year 2006 Performance and Accountability Report and fiscal year 2007
Agency Financial Report, the department acknowledged that there are
pervasive weaknesses in its internal control system, including funds
control.[Footnote 11] The department has numerous efforts under way to
modernize its business systems, processes, and controls as part of its
business transformation initiative.[Footnote 12] Over the past several
years, we have made numerous recommendations aimed at improving the
department's business transformation efforts. Generally, the department
has agreed with our recommendations and has identified or is planning
specific actions to implement our recommendations.
Recognizing the importance of knowledgeable personnel in establishing
and maintaining effective funds control, the DOD FMR requires DOD
components to ensure that appropriate training programs are in place to
provide key funds control personnel with the knowledge, skills, and
abilities needed to perform their duties. DOD officials stated that
they intend to rely on trained and knowledgeable personnel, such as
certifying officers[Footnote 13] and departmental accountable
officials,[Footnote 14] within the funds control process to prevent,
identify, and report potential ADA violations. DOD and the military
services rely on fiscal law (or appropriations law) courses or
comparable courses to provide key funds control personnel within the
department with the knowledge to prevent, identify, and report
potential ADA violations. However, there is no DOD-wide requirement to
identify key personnel within the funds control process and implement
and document processes and controls to ensure that they are identified
and have received the appropriate training. While each of the military
services has developed courses, including Web-based courses, only the
Army has attempted to identify key personnel within its funds control
process and determine whether they have received appropriate training.
The Navy and the Air Force have not implemented a process for
identifying key personnel within their funds control processes and
determining whether they have been trained. Without adequate processes,
procedures, and controls to (1) identify individuals who are performing
key funds control roles, such as certifying officers, contracting
officers, program managers, funds certifying officials, and others, and
(2) ensure that they have received the training necessary to fulfill
their responsibilities in compliance with the FMR and the ADA, DOD and
the military services lack reasonable assurance that these key
personnel can serve as a mitigating control in reliably preventing,
identifying, and reporting potential ADA violations.[Footnote 15]
Our analysis of the 54 ADA cases[Footnote 16] disclosed that the
military services did not comply with the DOD FMR's procedural
requirements regarding the assignment of a qualified, trained, and
independent investigating officer and the time frames for completing
the investigation process.[Footnote 17] Specifically, the military
services did not (1) consistently maintain and utilize a roster of
individuals qualified to perform preliminary reviews or formal
investigations of potential ADA violations and (2) establish processes,
procedures, and controls for ensuring that investigating officers were
properly trained and independent and that preliminary reviews and
formal investigations of potential ADA violations were completed within
the time frame prescribed by the DOD FMR.[Footnote 18] The DOD FMR
states that the investigating officer should be chosen from a roster of
qualified personnel and meet specific qualification requirements,
including training and independence, but does not specify that
documentation be maintained to support that the DOD component complied
with the DOD FMR's requirements. Additionally, the DOD FMR requires
that the entire ADA investigation process, including the preliminary
review, formal investigation, and Office of the Secretary of Defense
(OSD) review, should generally be completed within a total of 475 days.
In 34 of the 54 ADA cases we reviewed, DOD concluded that an ADA
violation had occurred and provided a report to the President and the
Congress and a copy to GAO as required by the ADA.[Footnote 19] For the
remaining 20 ADA cases, DOD concluded that an ADA violation had not
occurred and therefore no external reporting was required.[Footnote 20]
The department's internal reporting of ADA formal investigations cases
was consistent with the DOD FMR, and the DOD Comptroller has taken
steps to improve internal visibility over pending preliminary reviews
and formal investigations. For example, in February 2008, the DOD
Comptroller revised the DOD FMR to require DOD components, including
the military services, to begin reporting information on preliminary
reviews of potential ADA violations, such as the number of reviews
under way and a brief description of why a review was initiated.
[Footnote 21] However, as of June 17, 2008, none of the military
services had reported the full scope of required information.
Finally, our analysis of the 34 ADA cases with confirmed ADA violations
found that the disciplinary actions taken by the military services were
in accordance with the criteria set forth in the DOD FMR and were
reported to the President and the Congress, with a copy to the
Comptroller General, as required by the ADA. The ADA requires that
employees who are responsible for an ADA violation be subject to
appropriate administrative discipline. Within DOD, the DOD FMR
specifies that such administrative discipline can range in severity
from no action to the termination of the individual's federal
employment. Responsibility for determining what disciplinary action is
warranted once it has been determined that an ADA violation has
occurred resides with the military service, within established
procedures for disciplining civilian and military personnel.
We recommend that the Secretary of Defense direct the Under Secretary
of Defense (Comptroller) to take the following two actions to update
the DOD FMR to require that (1) ADA case files document that the
investigating officer(s) selected to conduct a preliminary review or
formal investigation is(are) free of personal, external, and
organizational independence impairments and (2) DOD components maintain
documentation of the date by which an investigating officer must
receive refresher training in order to remain qualified to perform ADA
preliminary reviews and investigations. Additionally, we recommend that
the Secretary of Defense direct the Secretary of the Army, the
Secretary of the Navy, and the Secretary of the Air Force to take the
following four actions: (1) implement and document processes,
procedures, and controls to identify and help ensure that key funds
control personnel, including funds certifying officials, are properly
trained so that they can fulfill their responsibilities to prevent,
identify, and report potential ADA violations; (2) implement and
document processes, procedures, and controls to oversee and monitor
compliance with DOD FMR provisions requiring the maintenance and use of
a roster for selecting qualified ADA investigating officers; (3)
develop, implement, and document policies and procedures to help ensure
compliance with the DOD FMR requirements for investigating officer
training; and (4) develop, implement, and document policies and
procedures to help ensure compliance with the DOD FMR requirements for
investigating officer independence. We received written comments from
the Acting Deputy Chief Financial Officer, which are reprinted in
appendix II. DOD concurred with our recommendations and identified
specific actions it has taken to implement these recommendations.
Background:
The ADA is one of the major laws in the statutory scheme by which the
Congress exercises its constitutional control of the public purse.
[Footnote 22] Despite the name, it is not a single act, but rather a
series of related provisions that evolved over a period of time in
response to various abuses. As late as the post-Civil War period, it
was not uncommon for agencies to incur obligations in excess, or in
advance, of appropriations. Perhaps most egregious of all, some
agencies would spend their entire appropriations during the first few
months of the fiscal year, continue to incur obligations, and then
return to the Congress for appropriations to fund these "coercive
deficiencies."[Footnote 23] These were obligations to others who had
fulfilled their part of the bargain with the United States and who now
had at least a moral--and in some cases also a legal--right to be paid.
The Congress felt it had no choice but to fulfill these commitments,
but the frequency of deficiency appropriations played havoc with the
United States' budget. The Congress expanded the ADA several times
throughout the 20th century to require and enforce apportionments and
agency subdivisions of apportionments to achieve more effective control
and conservation of funds.
The ADA contains both affirmative requirements and specific
prohibitions, as highlighted below. The ADA:
* Prohibits the incurring of obligations or the making of expenditures
in advance or in excess of an appropriation. For example, an agency
officer may not award a contract that obligates the agency to pay for
goods and services before the Congress makes an appropriation for the
cost of such a contract or that exceeds the appropriations available.
* Requires the apportionment of appropriated funds and other budgetary
resources for all executive branch agencies. An apportionment may
divide amounts available for obligation by specific time periods
(usually quarters), activities, projects, objects, or a combination
thereof. OMB, on delegation from the President, apportions funds for
executive agencies.
* Requires a system of administrative controls within each agency,
established by regulation, that is designed to (1) prevent obligations
and expenditures in excess of apportionments or reapportionments; (2)
fix responsibility for any such obligations or expenditures; and (3)
establish the levels at which the agency may administratively subdivide
apportionments, if it chooses to do so.
* Prohibits the incurring of obligations or the making of expenditures
in excess of amounts apportioned by OMB or amounts of an agency's
subdivision of apportionments.
* Prohibits the acceptance of voluntary services, except where
authorized by law.
* Specifies potential penalties for violations of its prohibitions,
such as suspension from duty without pay or removal from office. In
addition, an officer or employee convicted of willfully and knowingly
violating the prohibitions may be fined not more than $5,000,
imprisoned for not more than 2 years, or both.
* Requires that for violations of the act's prohibitions, the relevant
agency report immediately to the President and to the Congress all
relevant facts and a statement of actions taken with a copy to the
Comptroller General of the United States.
The requirements of the ADA and the enforcement of its proscriptions
are reinforced by, among other laws, the Recording Statute, 31 U.S.C. §
1501(a), which requires agencies to record obligations in their
accounting systems, and the 1982 law commonly known as the Federal
Managers' Financial Integrity Act of 1982, 31 U.S.C. § 3512(c), (d),
which requires executive agencies to implement and maintain effective
internal controls. Federal agencies use "obligational accounting" to
ensure compliance with the ADA and other fiscal laws. Obligational
accounting involves the accounting systems, processes, and people
involved in collecting financial information necessary to control,
monitor, and report on all funds made available to federal agencies by
legislation--including both permanent, indefinite appropriations and
appropriations enacted in annual and supplemental appropriations laws
that may be available for 1 or multiple fiscal years. Executive branch
agencies use obligational accounting, sometimes referred to as
budgetary accounting, to report on the execution of the budget.
[Footnote 24]
Overview of DOD's Process for Identifying, Investigating, and Reporting
ADA Violations:
The DOD FMR, Volume 14, Administrative Control of Funds and
Antideficiency Act Violations, establishes procedures for DOD
components in identifying, investigating, and reporting potential ADA
violations. The ADA does not prescribe the process for conducting an
ADA investigation.
Upon learning of or identifying a possible violation of the ADA, an
individual should report the potential violation to his/her immediate
supervisor within 10 working days.[Footnote 25] Next, the DOD component
appoints an investigating officer to perform a preliminary review of
the applicable business transactions and accounting records. The
purpose of a preliminary review is to gather basic facts and determine
whether a violation may have occurred. The DOD FMR states that the
preliminary review should be completed in a timely manner, usually
within 90 days. If the investigating officer determines, based upon the
results of the preliminary review, that there is a potential ADA
violation, the DOD component is required to initiate a formal
investigation within 15 days.
The purpose of a formal investigation is to determine the relevant
facts and circumstances concerning the potential violation, to discern
whether a violation actually occurred, and, if so, to determine the
cause, the appropriate corrective actions, any lessons learned, and to
ascertain who was responsible for the violation. According to the DOD
FMR, the DOD component should complete the formal investigation of an
ADA violation, including submission of final summary reports to the
office of the Under Secretary of Defense (Comptroller), within 9 months
of initiating the formal investigation.[Footnote 26] The OSD, including
the DOD Comptroller's office, then has 3 months to review the DOD
component's final summary report and prepare and submit transmittal
letters to the President and the leaders of both Houses of the
Congress, with a copy to the Comptroller General. The DOD FMR has
established that a preliminary review, formal investigation, and OSD
review should be completed within approximately 15 months and 25 days-
-or about 475 days.
Long-standing Financial Management Weaknesses Undermine DOD's Ability
to Prevent and Identify Potential Antideficiency Act Violations:
DOD's complex and inefficient payment processes, lack of integrated
business systems, and weak internal control environment hinder its
ability to control and properly record transactions and to ensure
prompt and proper matching of disbursements with obligations, which is
essential for the proper recording of transactions. DOD Comptroller and
military service financial management and comptroller officials
responsible for the department's ADA programs have stated that because
of weaknesses in the department's business processes and systems,
knowledgeable personnel are critical to improving the department's
funds control processes. DOD components responsible for executing the
department's budget, such as the military services, are responsible for
ensuring that key personnel within their funds control processes are
properly trained to fulfill their responsibilities. The military
services have efforts under way to provide classroom or Web-based
training to key funds control personnel. However, neither the Navy nor
the Air Force has identified specific key funds control personnel who
should be trained. Moreover, the Navy and the Air Force financial
management and comptroller officials responsible for their military
services' ADA programs could not provide documentation of the processes
and procedures each military service has or will utilize to ensure that
key funds control personnel are trained. Army Financial Management and
Comptroller Office officials responsible for the Army's ADA program
stated that the Army has begun to identify key personnel within the its
funds control processes and determine if they have received training.
However, the Army officials acknowledged that many of the Army's key
funds control personnel have not received training. As discussed later
in this report, we also noted that of the 54 ADA cases reviewed, 20
case files (or over 37 percent) indicated that improved training of key
funds control personnel was needed. Without adequate processes,
procedures, and controls to (1) identify individuals who are performing
key funds control roles, such as funds certifying officials, resource
managers, fund holders, certifying officers, contracting officers,
program managers, and others, and (2) ensure that they have received
the training necessary to fulfill their responsibilities in compliance
with the FMR and the ADA, DOD and the military services lack reasonable
assurance that these key personnel can reliably prevent, identify, and
report ADA violations.
Weaknesses in Controls, Processes, and Systems Hinder DOD's Ability to
Maintain Effective Funds Control:
Given the numerous documented control risks over funds control, DOD
does not have reasonable assurance that it has prevented, identified,
investigated, and reported all potential ADA violations. These
weaknesses have adversely affected the ability of DOD to ensure basic
accountability, maintain funds control, and prevent fraud. For example,
we reported in 2005 that after decades of continuing financial
management and accounting weaknesses, information related to long-
standing unreconciled disbursement and collection activity was so
inadequate that DOD was unable to determine the true value of certain
disbursement and collection suspense differences that it removed from
its records by writing them off. As a result, DOD could not determine
whether any of the write-off amounts, had they been charged to the
proper appropriation, would have caused an ADA violation.[Footnote 27]
Pervasive business system, process, and control weaknesses acknowledged
by the department have hindered DOD's ability to prevent, identify,
investigate, and report ADA violations. Recent reports by the DOD
Inspector General indicate that the weak control environment continues
to exist today. For instance:
* In November 2006 and 2007, the DOD Inspector General reported, and
the department acknowledged, that it continues to have significant
internal control deficiencies that impede its ability to produce
accurate and reliable information on the results of its operations.
These deficiencies adversely affect the ability of the department's
financial management systems to reliably and accurately record
accounting entries and report financial information, such as its fund
balance with Treasury, accounts payable, and accounts receivable. For
example, DOD made over $22 billion in unsupported adjustments for
fiscal year 2007 to force its cost accounts to match obligation
information. These weaknesses affect the safeguarding of assets and
proper use of funds and impair the prevention and identification of
fraud, waste, and abuse.[Footnote 28]
* The DOD Inspector General reported in March 2008 that the Air Force
and the Defense Finance and Accounting Service did not establish and
maintain adequate and effective internal control over Air Force vendor
disbursements. The DOD Inspector General noted numerous internal
control weaknesses in contract formation and funding, funds control,
vendor payment, and financial accounting. According to the report,
these weaknesses represent a high risk that violations of laws and
regulations not only occurred, but will likely continue to occur if
corrective action is not taken.[Footnote 29]
As part of its long-term initiative to address such weaknesses, the
department has embarked upon a massive effort to transform its business
operations, including financial management. Over the next several
years, the department will be spending billions of dollars to implement
these systems. However, it will be a number of years before the
department's business system modernization efforts are complete, and as
we have previously reported, DOD has encountered challenges in
developing systems that meet time frame, cost, and functionality goals.
[Footnote 30] Until DOD can successfully transform its business
operations, including implementation of effective business processes,
controls, and systems, the department's ability to ensure proper funds
control and compliance with the ADA will continue to be impaired. Until
then, mitigating controls, including knowledgeable personnel, will be
key to effective funds control. Over the past several years, GAO has
made numerous recommendations aimed at improving the department's
business transformation efforts. Generally, the department has agreed
with our recommendations and has identified or is planning specific
actions to implement our recommendations.
Key Funds Control Personnel May Not Have Received Training to Fulfill
Their Responsibilities in Preventing, Identifying, and Reporting
Potential ADA Violations:
As DOD auditors have previously reported, improper disbursements or
payments have occurred, in part, because personnel failed to comply
with DOD policy and provide accurate and timely information to support
the payment of and properly record the transactions.[Footnote 31] For
example, the DOD Inspector General reported in April 2008 that the Mid-
Atlantic, Southeast, and South Central Regional Maintenance Centers
inappropriately obligated funds on ship maintenance and repair
contracts because of ineffective internal controls. As a result, at
least $103 million of U.S. Fleet Force Command Operations and
Maintenance appropriations were not available for other ship
maintenance and repair needs.[Footnote 32] The knowledge and
understanding of DOD regulations and applicable federal laws, such as
the ADA, by DOD personnel involved in the obligation, payment
authorization, and recording processes are critical to the prevention
and detection of ADA violations within the department. Both DOD and
military service officials responsible for ADA programs at DOD or the
military services have stated the importance of trained and
knowledgeable personnel in establishing and maintaining effective funds
control. Additionally, the DOD FMR requires DOD components to ensure
that appropriate training programs are in place to provide personnel
with the knowledge, skills, and abilities needed to perform their funds
control duties. However, there is no DOD-wide requirement for DOD
components to establish and document that key employees within their
funds control processes, such as fund certifying officials, certifying
officials, and departmental accountable officers, are identified and
have received the appropriate training.
Efforts are under way to provide key funds control personnel classroom
and Web-based training. Additionally, the Army began an effort in 2006
to identify its fund certifying officials and track their training.
While the training of these individuals is critical to improving the
Army's overall funds control process, this training does not include
other key individuals, such as certifying officers and departmental
accountable officials. Also, neither the Navy nor the Air Force could
provide documentation of the processes, procedures, and controls they
have or will utilize to ensure that key funds control personnel are
trained. Navy and Air Force financial management and comptroller
officials acknowledged that their military services currently do not
identify and track training of individual key funds control personnel
to ensure that they have received the training needed to fulfill their
responsibilities in preventing, identifying, and reporting potential
ADA violations. Moreover, follow-up with two Navy and two Air Force
major commands with reported ADA violations in fiscal years 2006 and
2007 revealed that they could not identify specific key funds control
personnel or provide information on the training, if any, they had
received.
To its credit, in 2006, the Army began an effort to identify key
personnel within its funds control process and to begin tracking the
training provided. According to a June 2, 2006, memorandum signed by
the Assistant Secretary of the Army, Financial Management and
Comptroller, "the Army's ADA portfolio has reached an unacceptable
level ...[and] reflects negatively on the Army's financial
stewardship." The Assistant Secretary directed all Army major commands
to identify their funds certifying officials and report back as to the
number of these personnel who had received training. Based upon the
training information it obtained as of June 5, 2008, Army officials
acknowledged that their effort to identify key personnel within the
Army's control processes and the training they received had revealed
that many of its key funds control personnel had not been trained.
According to Army officials, the Army is now working to ensure that
this situation is corrected.
DOD Lacks Assurance That Potential ADA Investigations Are Processed in
Accordance with DOD Regulations:
DOD and the military services have not established processes and
procedures to oversee and monitor compliance with DOD FMR provisions
requiring the assignment of qualified, trained, and independent ADA
investigating officers and the completion of investigations within the
prescribed time frames.[Footnote 33] The DOD FMR establishes procedures
for DOD components to assign investigating officers. Specifically, the
DOD FMR states that the investigating officer should be chosen from a
roster of qualified personnel to ensure that he/she meets all the
following qualifications:
* adequately trained to conduct an investigation of this type,
* adequate experience in the functional area that is involved with the
apparent violation,
* knowledgeable of financial management policies and procedures, and:
* skilled in investigating potential ADA violations.
Each DOD component is responsible for ensuring that its ADA
investigating officers are qualified to conduct investigations and have
received the required training, as prescribed by the DOD FMR. Training
requirements include completion of a fiscal law, or equivalent, course
and any additional training on an as-needed basis to ensure that the
investigating officer is qualified. To remain qualified to conduct ADA
investigations, the DOD FMR also requires that investigating officers
receive refresher training every 5 years. Once an individual completes
the appropriate training and meets the above-mentioned qualifications,
the DOD FMR requires that his/her name be included on a roster of
available ADA investigating officers maintained by each DOD component.
Further, the DOD FMR states that investigating officers must be
independent and capable of conducting a complete, impartial, and
unbiased investigation. Finally, the DOD FMR establishes a time frame
of approximately 15 months and 25 days for completing an ADA
investigation. The following sections highlight specific examples of
where the military services did not comply with DOD FMR criteria.
Rosters Were Not Consistently Used to Select Qualified Investigating
Officers:
Army and Air Force officials informed us that selection of an
investigating officer was left to the major command where the violation
had occurred and that each major command is responsible for maintaining
its own roster. The data required by the DOD FMR to be maintained on
the roster of available investigating officers include name, rank/
grade, date initial training was received, organization to which
assigned, functional specialties, and the number of investigations
previously conducted. Collectively, these attributes help substantiate
the qualifications, including training and organizational independence,
of the person selected to be an ADA investigating officer. For the
Army, we requested rosters from the 10 commands that were responsible
for selecting the 39 investigating officers who reviewed the 31 Army
ADA cases. The Army commands could not provide the rosters, nor could
the Army provide documentation of how it ensures that its investigating
officers are qualified. Interviews with 3 Army investigating officers
and Army financial management and comptroller officials and our
analysis of the Army cases disclosed that the Army appoints
investigating officers based on functional specialty or work
experience. The Air Force uses a roster in selecting 5 of its 12
investigating officers to review the 10 Air Force ADA cases, but could
not provide rosters or other documentation regarding how the remaining
7 investigating officers were selected and how their qualifications
were determined. The Navy uses a centralized roster to select its
investigating officers; however, only 7 of the 15 investigating
officers assigned to the 13 closed Navy ADA cases reviewed were
selected from the roster. The Navy financial management and comptroller
official responsible for the Navy's ADA program could not provide
documentation regarding how the other 8 investigating officers were
selected or why they were not selected from the centralized roster.
The requirement to use rosters in selecting investigating officers is
intended to ensure that investigating officers are selected from a
population of predetermined qualified individuals. During our review,
Army and Navy financial management and comptroller officials
responsible for their military services' ADA programs stated that the
DOD FMR requirement regarding the maintenance and utilization of a
roster of qualified individuals to select investigating officers was no
longer required. However, follow-up with DOD Comptroller officials
responsible for the department's ADA program refuted the military
services' assertion. The DOD Comptroller officials stated on several
occasions that the requirement to use a roster was still valid and not
under consideration for revision. The inconsistent manner in which the
military services have complied with this requirement raises concerns
as to whether DOD or the military services have reasonable assurance
that individuals assigned to conduct ADA reviews and investigations are
qualified.
Military Services Were Unable to Provide Documentation That All
Investigating Officers Are Properly Trained:
The military services do not maintain adequate documentation that
investigating officers selected to perform ADA preliminary reviews and
formal investigations have been properly trained. Based on our review
of the closed ADA case files, the rosters, and other documentation
provided by the military services, we were only able to determine that
6 of the 66 investigating officers assigned to the 54 ADA cases
reviewed had received the required training. Our analysis of available
documentation disclosed that only 13 of the 66 investigating officers
had received initial training in fiscal law and 10 of the 13 had
received required refresher fiscal law training within 5 years of the
initial training.[Footnote 34] Further, our analysis disclosed that
only 6 of the 13 investigating officers received all of the required
training, including training on how to conduct an investigation.
Training requirements for investigating officers outlined in the DOD
FMR specify the following:
* a fiscal law, or equivalent, course;
* a refresher fiscal law, or equivalent, course within 5 years of
initial training; and:
* training in interviewing, gathering evidence, developing facts,
documenting findings and recommendations, preparing reports of
violation, recommending appropriate disciplinary action, meeting time
frames established for the completion of an investigation, and
recommending corrective actions.
Once an individual completes the required training, the component is to
issue a certificate indicating that all of the required courses have
been taken, and the individual's name is added to the roster of
individuals deemed qualified to be ADA investigating officers. To
remain eligible to conduct investigations, an individual is required to
renew his/her certificate every 5 years by attending a refresher
training course.
While the training requirements for investigating officers are
explicit, the military services were not able to provide documentation
that clearly indicated that all investigating officers selected to
perform the investigations in the 54 ADA cases that were closed in
fiscal years 2006 and 2007 had received the required training.
Specifically, the Army does not currently track when an investigating
officer received initial or subsequent training. As a result, we could
not determine if any of the 39 investigating officers used by the Army
to complete the 31 ADA cases were properly trained. An Army Financial
Management and Comptroller Office official responsible for the Army's
ADA program stated that Army investigating officers are required to
read the Army Investigating Officer Handbook. However, the Army
official acknowledged that the Army does not have a process or
procedure for ensuring that each of its investigating officers actually
reads or receives a copy of the manual, which we confirmed through
interviews with Army investigating officers. The Army official further
stated that the Army is developing an online investigating officer
training course that will require participants to pass a test before
they can receive course credit. The Army plans to have the course
online later this calendar year.
Regarding the 12 investigating officers assigned to the 10 closed Air
Force ADA cases we reviewed, we could not determine from the rosters or
ADA case files if the investigating officers had taken a fiscal law
course within the past 5 years. An official within the Air Force's
Financial Management and Comptroller Office responsible for the Air
Force's ADA program stated that fiscal law is incorporated into the Air
Force's Web-based investigating officer training. As a result, the Air
Force does not require investigating officers to take an individual
fiscal law course. Air Force investigating officers are required to
include a copy of the verification of class completion documentation as
an attachment to their draft ADA preliminary review or investigation
reports. Our analysis of the 10 closed Air Force ADA case files found
that only 6 of the 12 investigating officers provided verification that
the required training had been completed. The Air Force could not
provide documentation that the remaining 6 investigating officers were
trained.
With respect to the Navy, 15 investigating officers were used in the 13
closed Navy ADA cases we reviewed. Of the 15 investigating officers,
the supporting documentation provided by the Navy indicated that only 7
had received initial training in fiscal law and 4 of the 7 had received
required refresher fiscal law training within 5 years of the initial
training. In June 2008, an official within the Navy's Financial
Management and Comptroller Office responsible for the Navy's ADA
program stated that the Navy was in the process of developing and
testing an investigating officer training curriculum of online courses
designed to provide investigative officers with the required skills and
techniques, such as interviewing witnesses and developing facts and
conclusions, as prescribed by the DOD FMR. The Navy plans to have these
courses online by the end of this calendar year.
Moreover, based on documentation provided, only 10 of the 66
investigating officers assigned to the 54 ADA cases received the
required refresher fiscal law training. The FMR does not include a
requirement for the roster to document when refresher training was
needed or received. Without up-to-date rosters or some comparable
method to track the status of training received by potential
investigating officers, the military services do not have a process to
provide reasonable assurance that the investigating officers appointed
to conduct preliminary reviews and investigations of potential ADA
violations are properly trained.
Independence of Investigating Officer Is Not Ensured:
The military services do not have an established process or procedure
for ensuring and documenting that investigating officers do not have
any personal or external impairment that would affect their
independence and objectivity in conducting ADA reviews and
investigations. The DOD FMR states that individuals with no vested
interest in the outcome, and who are capable of conducting a complete,
impartial, unbiased investigation, shall conduct investigations of
potential violations. Additionally, the regulation states that an
investigating officer must be chosen from an organization external to
the organization being investigated, which the use of a roster, as
discussed earlier, is intended to facilitate.
The PCIE/ECIE publication, entitled Quality Standards for
Investigations, states that "in all matters relative to investigating
work, the investigating organization must be free, both in fact and
appearance, from impairments to independence; must be organizationally
independent; and must maintain an independent attitude."[Footnote 35]
Further, the standard for independence places the responsibility for
maintaining independence upon agencies, investigative organizations,
and investigating officers themselves, so that judgments used in
obtaining evidence, conducting interviews, and making recommendations
will be impartial and will be viewed as impartial by knowledgeable
third parties. To maintain a high degree of integrity, objectivity, and
independence, organizations should take into account the three general
classes of independence--personal, external, and organizational.
[Footnote 36] Table 2 illustrates the types of independence
impairments.
Table 2: General Classes of Impairments to Independence:
General classes of impairments to independence: Personal;
Examples of impairments: Relationships or beliefs that might limit the
extent of the inquiry, limit disclosure, or weaken or slant the
investigation findings.
General classes of impairments to independence: External;
Examples of impairments: Actual or perceived pressure from management
and employees of the entity or oversight organization under
investigation that deter an individual from acting independently and
objectively and exercising professional skepticism.
General classes of impairments to independence: Organizational;
Examples of impairments: When the investigating function is
organizationally located within the reporting line of the areas under
the investigation or when the individual is assigned or takes on
responsibilities that affect operations of the area under the
investigation.
Source: PCIE/ECIE, Quality Standards for Investigations.
[End of table]
If one or more of these impairments affects or can be perceived to
affect independence, the individual selected to perform the
investigation should not be assigned to perform the work. In addition,
organizations should maintain documentation of the steps taken to
identify potential personal independence impairments.
Our analysis of the 54 ADA cases closed for the military services in
fiscal years 2006 and 2007 disclosed that the military services focused
on organizational independence as a criterion for ensuring
investigating officer independence. In 35 of the 54 ADA cases reviewed,
the investigating officers were chosen from an organization external to
the one under investigation and therefore were determined by DOD to be
organizationally independent.[Footnote 37] The remaining 19 case files
lacked documentation as to whether the investigating officers assigned
to the case were organizationally independent. Additionally, the
military services did not maintain documentation in the case files or
through other means to support that they took steps to ensure that the
investigating officers assigned to each of the 54 cases were free from
personal or external impairments that may have adversely affected their
ability to conduct independent and objective investigations.
Currently, the DOD FMR does not require documentation of an
investigating officer's independence. Further, the military services do
not require documentation of the steps taken to ensure investigating
officers' independence or obtain written assertions regarding
independence from the investigating officers. Instead, based on our
analysis of the ADA case files and statements made by officials
responsible for the military services' ADA programs, it appeared that
the military services assume that an investigating officer is
independent if he/she was selected from an organization external to the
one that incurred the potential violation. Due to the constant
rotational nature of the military, the act of selecting an "external"
individual does not by itself provide assurance that the independence
standards will be met. As a result, until the military services
document the steps taken to confirm independence, they cannot be
assured that the investigating officers who conduct ADA investigations
are independent.
DOD Lacks Assurance That ADA Cases Are Completed within Required Time
Frames:
Our analysis of the 54 ADA cases closed for the military services in
fiscal years 2006 and 2007 disclosed that the time frame for completing
both the preliminary review and formal investigation of a potential ADA
violation was generally longer than the time frame specified in the DOD
FMR. While the DOD Comptroller tracks the number and identity of
overdue formal ADA investigations and issues memorandums to DOD
components to follow up on overdue ADA reports, we found that 22 (or
over 41 percent) of the 54 closed ADA cases reviewed took longer than
30 months to complete and only 16 of the 54 cases (or about 30 percent)
were completed within the 475 days generally required by the DOD FMR.
Including the 3 months allotted to OSD to review the final report, the
Army took an average of 33 months and the Air Force took an average of
31 months to complete preliminary reviews and formal investigations. We
were unable to ascertain the length of time the Navy took to complete
its preliminary reviews because the Navy ADA case files did not contain
complete information on the preliminary review phase of the
investigation. However, we were able to determine that the Navy took on
average 17 months to complete the formal ADA investigation phase,
including OSD's review period, for the 13 Navy ADA cases closed in
fiscal years 2006 and 2007. The DOD FMR generally requires that this
stage of the investigation be completed within 12 months.
Military service officials were unable to provide specific reasons why
the established time frames were sometimes not achieved other than
indicating that each case has its own set of specific circumstances and
complexities. To attempt to identify more specific reasons why the time
frames were not met, we contacted several investigating officers who
indicated that inexperience in performing investigations and other job
demands had adversely affected their ability to meet the prescribed
time frames. They acknowledged, and DOD Comptroller and military
service financial management and comptroller officials concurred, that
they were not dedicated to the ADA investigation full-time, but were
often required to complete the investigation in addition to their
regularly assigned jobs. Without effective oversight and monitoring,
neither DOD nor the military services can be certain why a preliminary
review or formal investigation is not completed within the allotted
time frame and what actions, if any, need to be taken to ensure timely
completion of the ADA preliminary review or investigation.
DOD Has Taken Steps to Improve Transparency of Reporting, and the
Nature of Disciplinary Actions Taken Is Consistent with the ADA and the
DOD FMR:
The military services provided OSD the required monthly investigation
summary information for the 54 ADA cases reviewed. Additionally, for
the 34 cases for which DOD concluded that ADA violations had occurred,
the violations were reported to the President and the Congress and
copies of the reports were provided to the Comptroller General, as
required by the ADA. The remaining 20 closed ADA cases were deemed not
to have been ADA violations and therefore did not require reporting
external to DOD. Additionally, the DOD Comptroller has taken steps in
recent years to improve visibility within the department over the ADA
investigation process, including preliminary reviews and formal
investigations. Further, our analysis of the 34 ADA cases with
confirmed ADA violations found that the disciplinary actions taken by
the military services were in accordance with the criteria set forth in
the DOD FMR. The ADA requires that employees who are responsible for an
ADA violation be subject to appropriate administrative action. Within
DOD, the FMR specifies that such administrative discipline can range in
severity from no action to the termination of the individual's federal
employment. Responsibility for determining what disciplinary action is
warranted once it has been determined that an ADA violation has
occurred resides with the military service, within established
procedures for disciplining civilian and military personnel.
DOD Is Taking Steps to Improve Transparency over the ADA Investigative
Process:
DOD reported the results of the 34 ADA cases that it concluded had an
ADA violation to the President and the Congress, with a copy of the
report to Comptroller General, as required by the ADA and OMB
guidance.[Footnote 38] The act states that reports of violations should
include all relevant facts and a statement of actions taken. OMB
guidance notes that the report should include:
* the title and Department of the Treasury (Treasury) symbol (including
the fiscal year) of the appropriation or fund account, the amount
involved, and the date on which the violation occurred;
* the name(s) and position(s) of the individual(s) responsible for the
violation;
* all facts pertaining to the violation, including the type of
violation, the primary reason or cause, and any statement from the
responsible individual;
* the disciplinary action taken;
* a statement confirming that all information has been submitted to the
Department of Justice if it is deemed that the violation was knowing
and willful;
* a statement regarding the adequacy of the system of administrative
control prescribed by the head of the agency and approved by OMB and a
proposal for a regulation change, if the head of the agency determines
a change is needed;
* statement of any additional action taken by, or at the discretion of,
the agency head; and:
* a statement concerning the steps taken to coordinate the report with
the other agency, if another agency is involved.
As noted above, each ADA violation case file should contain a statement
regarding additional action(s) taken as result of the violation. Of the
34 ADA violations, DOD reported taking corrective action in 33 cases.
In 11 of the 33 cases, DOD indicated that improved training of key
funds control personnel was needed. In the one case in which no
corrective action was identified, the responsible individual was
relieved of command. For the 20 ADA cases in which DOD concluded that
no ADA violation occurred, we found that 13 of those cases identified
corrective actions to be taken by the DOD component. Nine of the 13
cases recommended training of key funds control personnel as a
corrective action. Although the ADA reviews and investigations of
potential ADA violations recognized the need for the military services
to provide key funds control personnel with proper training, as we
stated earlier, other than actions initiated by the Army, the military
services have not established processes and procedures for ensuring
that these important personnel are identified and properly trained.
Required internal reporting for formal investigations is more detailed
than the reporting requirements outlined by OMB guidance for reporting
ADA violations. The DOD FMR requires DOD components to provide, on a
monthly basis, specific status information to the DOD Comptroller
regarding their ongoing formal ADA investigations. This status
information includes (1) case number, (2) status, (3) amount, (4)
appropriation and Treasury account symbol, (5) U.S. Code reference, (6)
organization where potential violation occurred, (7) location where
potential violation occurred, (8) nature of potential violation, (9)
date potential violation occurred, (10) date potential violation was
discovered, (11) date investigation began, (12) source of potential
violation, (13) brief description of potential violation(s), and (14)
progress of the investigation/other comments. Our review of the 54
military service ADA cases closed by DOD in fiscal years 2006 and 2007
found that the military services had complied with DOD's internal
reporting requirements.
To enhance DOD's ability to oversee the investigation process, the DOD
Comptroller implemented an electronic "dashboard" in 2006 that contains
key metrics derived from the monthly status information reported by the
DOD components for use in monitoring the status of ongoing formal
investigations within the department.[Footnote 39] According to DOD
Comptroller and military service personnel, memos are issued to DOD
components to follow up on overdue investigations identified through
the "dashboard" metrics. The February 2008 update to the FMR also calls
for status tracking of preliminary reviews.[Footnote 40] DOD components
are now required to report information regarding the status of
preliminary reviews of potential ADA violations to the DOD Comptroller
on the fifth day of each month.[Footnote 41] While the military
services have begun reporting information regarding their preliminary
reviews of potential ADA violations to the DOD Comptroller in response
to the updated FMR, as of June 17, 2008, none of the military services
had reported the full scope of information required by the FMR.
Examples of information missing from military services' reports
regarding their preliminary reviews include (1) the means by which the
violation was discovered, (2) anticipated dates of completion, and (3)
the names and contact information for members of the preliminary review
team. The lack of complete reporting information on preliminary reviews
hinders DOD's ability to monitor and oversee the progress of a specific
review.
Disciplinary Actions Taken Were in Accordance with the Act and DOD
Guidance:
Our analysis of the 34 ADA violations reported by DOD as being closed
in fiscal years 2006 and 2007 found that disciplinary actions taken
were in accordance with the criteria set forth in the DOD FMR and were
reported to the President and the Congress, with a copy to the
Comptroller General, as required by the ADA. The ADA requires that
employees who are responsible for an ADA violation be subject to
appropriate administrative discipline.[Footnote 42] Within DOD, the FMR
specifies that such administrative discipline can range in severity
from no action to the termination of the individual's federal
employment. Additionally, as established by laws and regulations
addressing employee discipline within DOD generally, the specific
action that is taken in each case is determined by the employee's
commander or supervisor with the assistance of legal counsel. Table 3
illustrates the disciplinary actions taken by the military services.
Table 3: Disciplinary Actions Taken by the Military Services for ADA
Violations Reported in Fiscal Years 2006 and 2007:
Types of discipline: No discipline;
Army: 19;
Navy: 6;
Air Force: 2.
Types of discipline: Verbal discipline;
Army: 2;
Navy: 4;
Air Force: 4.
Types of discipline: Nonpunitive discipline;
Army: 19;
Navy: 5;
Air Force: 1.
Types of discipline: Formal discipline;
Army: 19;
Navy: 2;
Air Force: 0.
Types of discipline: Total;
Army: 59;
Navy: 17;
Air Force: 7.
Source: GAO analysis of DOD data.
Note: Disciplinary actions may have been taken against multiple
individuals.
[End of table]
An explanation of each type of discipline is provided below.
* No discipline: The individual responsible received no discipline in
any form. Based on case file analysis, an individual who was identified
as responsible for the ADA violation typically did not receive any
discipline if (1) the individual had retired from federal service or
(2) the investigation concluded that while the individual was
responsible for the violation, he/she had acted in good faith and
followed what he/she believed to have been the correct policies and
procedures when the violation had occurred.
* Verbal discipline: The individual named responsible received verbal
discipline from supervisor. An example of this form of discipline could
include a one-on-one conversation with the individual named as
responsible and his/her immediate supervisor, including a discussion of
how to prevent future occurrences.
* Nonpunitive discipline: The individual named responsible received
either a memorandum of concern or letter of counseling. An example of
this form of discipline could include a written letter of counseling by
the named individual's immediate supervisor in conjunction with
completion of required additional training.
* Formal discipline: The individual named responsible received written
reprimands, reassignment or removal, suspension, or an unfavorable
evaluation. Examples of formal discipline, based on our review of case
files, could include dismissal from federal service and removal from
current position.
We did not assess the appropriateness of disciplinary actions imposed
in any of the cases reviewed.
Conclusions:
Given the numerous documented control risks over funds control, DOD
does not have reasonable assurance that it has prevented, identified,
and investigated all potential ADA violations. DOD's successful
completion of modernizing its business operations, including systems,
processes, policies, and controls, is critical to helping reduce the
department's risk of ADA violations. DOD and the military services'
stated intention to rely on better training of key funds control
personnel as an interim action for preventing and detecting ADA
violations was not supported by actions taken at either the department
or military service levels. Specifically, other than an effort by the
Army to identify funds certifying officials, the military services had
not identified key individuals within their funds control processes and
ensured that they had received training needed to fulfill their
responsibilities in preventing, identifying, and reporting potential
ADA violations. The lack of adherence at the departmental and military
service levels to the department's established qualifications,
training, and independence requirements for investigating officers
undermines the reliability of the investigation process. Although DOD
has taken steps to improve visibility over the investigation process,
additional actions are needed to improve its ability to prevent,
detect, investigate, and report on ADA violations.
Recommendations for Executive Action:
To improve management and oversight of preliminary reviews and formal
investigations of potential ADA violations, we recommend that the
Secretary of Defense direct the Under Secretary of Defense
(Comptroller) to take the following two actions to update the
department's FMR to require that (1) ADA case files document that the
investigating officer(s) selected to conduct a preliminary review or
formal investigation is(are) free of personal, external, and
organizational impairments and (2) DOD components maintain
documentation of the date by which an investigating officer must
receive refresher training in order to remain qualified to perform ADA
reviews and investigations.
Additionally, we recommend that the Secretary of Defense direct the
Secretary of the Army, the Secretary of the Navy, and the Secretary of
the Air Force to take the following four actions: (1) implement and
document processes, procedures, and controls to identify and help
ensure that key funds control personnel, including funds certifying
officials, are properly trained so that they can fulfill their
responsibilities to prevent, identify, and report potential ADA
violations; (2) implement and document processes, procedures, and
controls to oversee and monitor compliance with DOD FMR provisions
requiring the maintenance and use of a roster for selecting qualified
ADA investigating officers; (3) develop, implement, and document
policies and procedures to help ensure compliance with the DOD FMR
requirements for investigating officer training; and (4) develop,
implement, and document policies and procedures to help ensure
compliance with the DOD FMR requirements for investigating officer
independence.
Agency Comments and Our Evaluation:
We received written comments from the Acting Deputy Chief Financial
Officer, which are reprinted in appendix II. DOD concurred with our
recommendations and identified specific actions it has taken to
implement these recommendations. On September 5, 2008, the department
issued a memorandum to the Assistant Secretaries (Financial Management
and Comptroller) of the Army, the Navy, and the Air Force, as well as
other activities within the department, which detailed new requirements
in the areas we recommended. The memorandum noted that the policy
changes identified, which were effective immediately, would be included
in the next update to the department's Financial Management Regulation.
More specifically, the memorandum requires DOD components to document
processes, procedures, and controls used to identify key fund control
personnel, including fund certifying officials; train those individuals
in appropriations law; validate that the individuals have received
appropriations law training within the last 5 years; or a combination
of these. The memorandum also notes that DOD components must require
that these individuals attend a refresher appropriations law course
every 5 years.
In addition, the memorandum directs DOD components to retain
documentation in each ADA case file that supports that ADA
investigators are qualified; trained; and free of personal, external,
and organizational impairments. Furthermore, these documents must be
provided to the Office of the Under Secretary of Defense (Comptroller)
and the Deputy Chief Financial Officer when a formal investigation is
initiated. Each DOD component must also implement and document
processes, procedures, and controls to oversee and monitor the
maintenance and use of a roster for selecting qualified ADA
investigators and establish a date by which each investigator must
receive required refresher training.
We will send copies of this report to interested congressional
committees, the Secretary of Defense, the Secretary of the Army, the
Secretary of the Navy, the Secretary of the Air Force, and the Under
Secretary of Defense (Comptroller). We will make copies available to
others upon request. In addition, the report will be available at no
charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions concerning this report, please
contact me at (202) 512-9095 or rasconap@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. Key contributors to this report are
listed in appendix III.
Signed by:
Paula M. Rascona:
Director, Financial Management and Assurance:
List of Committees:
The Honorable Carl Levin:
Chairman:
The Honorable John McCain:
Ranking Member:
Committee on Armed Services:
United States Senate:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
United States Senate:
The Honorable Ike Skelton:
Chairman:
The Honorable Duncan L. Hunter:
Ranking Member:
Committee on Armed Services:
House of Representatives:
The Honorable John P. Murtha:
Chairman:
The Honorable C.W. Bill Young:
Ranking Member:
Subcommittee on Defense:
Committee on Appropriations:
House of Representatives:
[End of section]
Appendix I: Scope and Methodology:
To determine whether existing Department of Defense (DOD) funds control
systems, processes, and internal controls provide reasonable assurance
that potential Antideficiency Act (ADA) violations will be prevented
and detected, we interviewed DOD Comptroller officials and reviewed GAO
and DOD Inspector General audit reports, including financial-related
reports; performance reports; and reports specifically related to the
ADA, compliance with laws and regulations, or both.[Footnote 43]
Specifically, we reviewed prior GAO reports related to DOD business
transformation; High-Risk Series reports; and business modernization,
financial management, and problem disbursements reports. These reports
document long-standing weaknesses related to funds control, a key
element in being able to prevent or detect an ADA violation. DOD has
acknowledged the financial management weaknesses reported by GAO and
DOD auditors and the impact these weaknesses have on the reliability of
the department's financial information. As a result, we did not perform
additional work to substantiate the condition of DOD's financial
management environment and internal controls.
We reviewed the DOD Financial Management Regulation (FMR), Volume 14,
Administrative Control of Funds and Antideficiency Act Violations, to
determine what controls and procedures had been established to help
preclude ADA violations and prevent future occurrences of violations.
In addition, we reviewed Office of Management and Budget (OMB) Circular
No. A-11, Preparation, Submission, and Execution of the Budget, section
145, "Requirements for Reporting Antideficiency Act Violations."
[Footnote 44] We interviewed DOD Comptroller and military service
officials responsible for ADA programs at DOD or the military services
to identify appropriate training for key funds control personnel and to
obtain an understanding of the processes, procedures, and controls to
ensure that key funds control personnel receive training.
To determine whether preliminary reviews[Footnote 45] and formal
investigations[Footnote 46] of ADA violations are processed in
accordance with applicable DOD regulations and criteria related to
qualifications, training, independence, and timeliness of
investigations, we reviewed applicable policies, procedures, and
guidance contained in the DOD FMR. Additionally, we reviewed the
President's Council on Integrity and Efficiency/Executive Council on
Integrity and Efficiency, Quality Standards for Investigations, to
obtain an understanding of qualification, independence, and due
professional care standards and criteria applicable to investigations.
[Footnote 47] We also reviewed all 54 ADA cases for the military
services that were closed by DOD for fiscal years 2006 and 2007 and
available military service rosters from which the investigating
officers assigned to these cases files were or should have been chosen,
and interviewed appropriate agency officials from the Army, the Navy,
the Air Force, and the DOD Comptroller's Office responsible for ADA
programs at DOD or the military services to determine how
qualifications, training, and independence are ensured and documented.
To assess investigating officers' qualifications, we focused our review
on whether the investigating officers had received training and if
there was an internal control in place to ensure that the investigating
officers did not have any personal, external, or organizational
independence impairments to their ability to conduct an investigation.
We did not verify their fields of specialty or areas of expertise.
To determine whether DOD tracks and reports metrics on preliminary
reviews and formal investigations of ADA violations, we reviewed
applicable policies, procedures, and program guidance contained in the
DOD FMR. We also obtained and analyzed military service metrics for
preliminary reviews and formal ADA investigations to ascertain whether
the 54 ADA cases were completed within the time frames established by
the DOD FMR. We also obtained and reviewed the DOD FMR, Volume 14,
Administrative Control of Funds and Antideficiency Act Violations,
chapter 6, "Status Reports on Investigations," to determine reporting
criteria. With respect to disciplinary actions taken, we analyzed the
34 ADA case files in which DOD had concluded that an ADA violation had
occurred to identify the disciplinary action taken. We compared the
disciplinary action documented in each case file to the criteria set
forth in the DOD FMR. We did not assess the appropriateness of the
conclusions reached by DOD for the 54 closed ADA cases or the
disciplinary actions taken in the 34 cases for which DOD concluded that
an ADA violation had occurred.
The listing of 54 closed ADA cases for fiscal years 2006 and 2007 was
obtained from the DOD Comptroller. We compared the listing of 54 closed
ADA cases to information maintained by our Office of General Counsel on
ADA cases reported to the President and the Congress, as filed with the
Comptroller General, to ascertain the completeness and accuracy of the
DOD listing. Our comparison and subsequent follow-up with the DOD
Comptroller's Office, found that 34 of the 54 ADA cases investigated by
DOD concluded that an ADA violation had occurred and were reported as
required by law. For the remaining 20 ADA cases, DOD concluded that no
ADA violation had occurred, and therefore these cases were not reported
externally. We reviewed each case file to ensure that it contained the
information set forth in the OMB circular and the DOD FMR. We conducted
our work at the Office of the Under Secretary of Defense (Comptroller),
the Financial Management and Comptroller Offices of the Army, the Navy,
and the Air Force, and 12 military service major commands. We conducted
this performance audit from July 2007 through September 2008 in
accordance with generally accepted government auditing standards. Those
standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe that
the evidence obtained provides a reasonable basis for our findings and
conclusions based on our audit objectives. We received written comments
from the Acting Deputy Chief Financial Officer, which are reprinted in
appendix II.
[End of section]
Appendix II: Comments from the Department of Defense:
Office Of The Under Secretary Of Defense:
1100 Defense Pentagon:
Washington, DC 20301-1100:
Ms. Paula M. Rascona:
Director, Financial Management and Assurance:
Government Accountability Office:
441 G Street, N.W.
Washington, DC 20548:
Dear Ms. Rascona:
This is the Department of Defense's (DoD) response to the Government
Accountability Office (GAO) draft report, DoD Financial Management:
Improvements Are Needed in Antideficiency Act Controls and
Investigations, dated August 2008, (GAO Code 197078/GAO-08-1063).
I concur with the findings and recommendations in the report.
Corrective actions have been taken on all the recommendations directed
to the Secretary of Defense.
My point of contact on this matter is Ms. Jodie Fisher. She may be
reached by email at jodie.fisher@osd.mil or telephone at (703) 602-
0371.
Signed by:
David P. Smith:
Acting Deputy Chief Financial Officer:
Attachment: As stated:
GAO Draft Report Dated August 25, 2008:
GAO-08-1063 (GAO Code 197078):
DOD Financial Management: Improvements Are Needed In Antideficiency Act
Controls And Investigations:
Department Of Defense Comments To The GAO Recommendations:
Recommendation 1: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) to update the
Department's Financial Management Regulation (FMR) to require that
Antideficiency Act (ADA) case files document that the investigating
officer(s) selected to conduct a preliminary review or formal
investigation is/are free of personal, external, and organizational
impairments. (p. 41/GAO Draft Report)
DOD Response: Concur. The Office of the Under Secretary of Defense
(Comptroller) (OUSD(C)) updated the DoD FMR to require ADA case files
contain documentation that the investigating officer(s) selected to
conduct a preliminary review or formal investigation is/are free of
personal, external, and organizational impairments. Action is complete.
Recommendation 2: The GAO recommends that the Secretary of Defense
direct the Under Secretary of Defense (Comptroller) to update the
Department's FMR to require that DoD components maintain documentation
of the date by which an investigating officer must receive refresher
training in order to remain qualified to perform ADA reviews and
investigations. (p. 41/GAO Draft Report)
DOD Response: Concur. The OUSD(C) updated the DoD FMR to require
Components maintain documentation of the date by which an investigating
officer must receive refresher training in order to remain qualified to
perform ADA reviews and investigations. Action is complete.
Recommendation 3: The GAO recommends that the Secretary of Defense
direct the Secretary of the Army, the Secretary of the Navy, and the
Secretary of the Air Force to implement and document processes,
procedures, and controls to identify and help ensure that key funds
control personnel, including funds certifying officials, are properly
trained so that they can fulfill their responsibilities to prevent,
identify, and report potential ADA violations. (p. 41/GAO Draft Report)
DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries
(Financial Management and Comptroller) of the Army, Navy, and Air Force
implement and document processes, procedures, and controls to identify
and help ensure that key funds control personnel, including funds
certifying officials, are properly trained so that they can fulfill
their responsibilities to prevent, identify, and report potential ADA
violations. Action is complete.
Recommendation 4: The GAO recommends that the Secretary of Defense
direct the Secretary of the Army, the Secretary of the Navy, and the
Secretary of the Air Force to implement and document processes,
procedures, and controls to oversee and monitor compliance with DoD FMR
provisions requiring the maintenance and use of a roster for selecting
qualified ADA investigating officer(s). (p. 41/GAO Draft Report)
DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries
(Financial Management and Comptroller) of the Army, Navy, and Air Force
to implement and document processes, procedures, and controls to
oversee and monitor compliance with DoD FMR provisions requiring the
maintenance and use of a roster for selecting qualified ADA
investigating officer(s). Action is complete.
Recommendation 5: The GAO recommends that the Secretary of Defense
direct the Secretary of the Army, the Secretary of the Navy, and the
Secretary of the Air Force to develop, implement, and document policies
and procedures to help ensure compliance with the DoD FMR requirements
for investigating officer training. (p. 41/GAO Draft Report)
DOD Response: The OUSD(C) directed the Assistant Secretaries (Financial
Management and Comptroller) of the Army, Navy, and Air Force to
develop, implement, and document policies and procedures to help ensure
compliance with the DoD FMR requirements for investigating officer
training. Action is complete.
Recommendation 6: The GAO recommends that the Secretary of Defense
direct the Secretary of the Army, the Secretary of the Navy, and the
Secretary of the Air Force to develop, implement, and document policies
and procedures to help ensure compliance with the DoD FMR requirements
for investigating officer independence. (p. 41/GAO Draft Report)
DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries
(Financial Management and Comptroller) of the Army, Navy, and Air Force
to develop, implement, and document policies and procedures to help
ensure compliance with the DoD FMR requirements for investigating
officer independence. Action is complete.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Paula M. Rascona, (202) 512-9095 or rasconap@gao.gov:
Acknowledgments:
In addition to the contact named above, the following individuals made
key contributions to this report: Darby Smith, Assistant Director;
Evelyn Logue, Assistant Director; F. Abe Dymond, Assistant General
Counsel; Lauren Catchpole; Francine DelVecchio; Jamie Haynes; Wil
Holloway; Kristi Karls; Jason Kelly; Jason Kirwan; and Sandra Lord-
Drakes.
[End of section]
Footnotes:
[1] An obligation is a definite commitment that creates a legal
liability of the government for the payment of appropriated funds for
goods and services ordered and received, or a legal duty on the part of
the United States that could mature into a legal liability by virtue of
actions on the part of the other party beyond the control of the United
States. Obligations include, for example, the awarding of contracts and
grants.
[2] A disbursement is an amount paid by a federal agency, by cash or
cash equivalent, during the fiscal year to liquidate obligations, such
as payment for goods received under a contract.
[3] GAO, High-Risk Series: An Update, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-07-310] (Washington, D.C.:
January 2007).
[4] 31 U.S.C. §§ 1341-42, 1349-51, 1511-19.
[5] An expenditure is the actual spending of money, typically a
disbursement.
[6] S. Rep. No. 110-77, at 401 (Oct. 1, 2007).
[7] S. 1547, 110th Cong.; See Pub. L. No. 110-181, 122 Stat. 3 (Jan.
28, 2008).
[8] GAO, Financial Management: DOD's Ability to Prevent, Identify,
Investigate, and Report on Antideficiency Act Violations, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-08-941R] (Washington, D.C.: July
28, 2008).
[9] President's Council on Integrity and Efficiency/Executive Council
on Integrity and Efficiency, Quality Standards for Investigations
(December 2003).
[10] The purpose of the formal investigation is to determine the
relevant facts and circumstances concerning the potential violation
and, if a violation occurred, what caused it, what are the appropriate
corrective actions and lessons learned, and who is responsible for the
violation.
[11] Department of Defense, Performance and Accountability Report:
Fiscal Year 2006 (Washington, D.C.: Nov. 15, 2006) and Agency Financial
Report: Fiscal Year 2007 (Washington, D.C.: Nov. 15, 2007).
[12] In 2001, DOD began a massive transformation effort to improve the
capability of its business systems and processes to provide the timely,
reliable, accurate, and relevant information needed for management,
decision making, and reporting. To help guide this undertaking, DOD
released its first integrated Enterprise Transition Plan on September
30, 2005, which it updates annually.
[13] Under law, disbursements may be made only on vouchers certified by
the head of an agency or a certifying officer designated by the head of
the agency. 31 U.S.C. §§ 3322; 3325(a). By law, certifying officers are
responsible for (1) the correctness of the facts in the certificate,
voucher, and supporting documentation; (2) the correctness of
computations on the voucher; and (3) the legality of a proposed payment
under the appropriation or fund involved. 31 U.S.C. § 3528.
[14] A departmental accountable official is an individual who is
responsible in the performance of his/her duties for providing a
certifying officer with information, data, or services that the
certifying officer relies upon in the certification of vouchers for
payment. Departmental accountable officials may include resource
managers, fund holders, and funds certifying officials, who are
responsible for the proper assignment of funding on an obligation
document before the obligation is incurred and for maintaining a system
of positive funds control. Departmental accountable officers also may
include officers and employees who enter into obligations, such as
contracting officers, and who make payment eligibility determinations.
[15] Funds certifying officials are responsible for certifying that
funds to procure goods or services are properly chargeable to the
appropriate allotment(s) and the available balance(s) within the
allotment(s) is sufficient to cover the estimated total price of the
procurement transaction.
[16] Of the 54 ADA cases closed for the military services by DOD in
fiscal years 2006 and 2007, 31 were Army, 13 were Navy, and 10 were Air
Force.
[17] Department of Defense Financial Management Regulation, 7000.14R,
Volume 14, Administrative Control of Funds and Antideficiency Act
Violations (August 1995).
[18] The purpose of a preliminary review is to gather basic facts to
determine whether a formal investigation is warranted. This should be
done in a timely manner--usually within 90 days.
[19] Of the 34 military service ADA cases, the Army, Navy, and Air
Force were responsible for 21, 7, and 6 of these cases, respectively.
[20] Of the 20 military service ADA cases that were closed by DOD and
did not require external reporting, the Army, Navy, and Air Force were
responsible for 10, 6, and 4 of these cases, respectively.
[21] Department of Defense Financial Management Regulation, 7000.14R,
Volume 14, Administrative Control of Funds and Antideficiency Act
Violations, ch. 3, "Preliminary Reviews of Potential Violations"
(February 2008).
[22] "No money shall be drawn from the Treasury, but in Consequence of
Appropriations made by law." U.S. Const. art. I, § 9, cl. 7.
[23] For an explanation of coercive deficiencies, see GAO, Principles
of Appropriations Law, vol. 2, 3rd ed., [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO/OGC-06-382SP] (Washington, D.C.:
February 2006), 6-34.
[24] DOD must also implement and maintain proprietary (or financial)
accounting to record and report financial information in audited
financial statements prepared in accordance with generally accepted
accounting principles. Agency audited financial statements include a
Statement of Budgetary Resources that reports information on the status
of appropriations. For a description of the different methods for
tracking funds in the federal government, see app. III of GAO, A
Glossary of Terms Used in the Federal Budget Process, [hyperlink,
http://www.gao.gov/cgi-bin/getrpt?GAO-05-734SP] (Washington, D.C.:
September 2005).
[25] When apprised of a potential violation by an audit report or other
means, the Office of the Under Secretary of Defense (Comptroller) can
also request a DOD component to perform a preliminary review of the
circumstances surrounding a potential ADA violation.
[26] The head of a DOD component may grant an extension of up to 3
months on a case-by-case basis with a statement of justification
submitted to the DOD Comptroller.
[27] GAO, DOD Problem Disbursements: Long-standing Accounting
Weaknesses Result in Inaccurate Records and Substantial Write-offs,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-521] (Washington,
D.C.: June 2, 2005).
[28] Department of Defense, Performance and Accountability Report:
Fiscal Year 2006, and Agency Financial Report: Fiscal Year 2007.
[29] Department of Defense Office of Inspector General, Vendor Pay
Disbursement Cycle, Air Force General Fund, Report No. D-2008-063
(Arlington, Va.: Mar. 12, 2008).
[30] GAO, DOD Business Transformation: Lack of an Integrated Strategy
Puts the Army's Asset Visibility System Investments at Risk,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860] (Washington,
D.C.: July 27, 2007).
[31] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-521] and DOD
Inspector General Report No. D-2008-063.
[32] Department of Defense Office of Inspector General, Obligation of
Funds for Ship Maintenance and Repair at the U.S. Fleet Forces Command
Regional Maintenance Centers, Report No. D-2008-083 (Arlington, Va.:
Apr. 25, 2008).
[33] If a potential violation appears to involve a complex situation or
a multitude of functional areas, the DOD component may utilize a team
of investigating officers to conduct the investigation.
[34] Based on additional information received from the Navy and the Air
Force, we updated the information presented in our July 28, 2008,
report, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-941R].
[35] President's Council on Integrity and Efficiency and Executive
Council on Integrity and Efficiency, Quality Standards for
Investigations. These standards provide guidelines primarily for
criminal investigating officers working with offices of inspectors
general. Because ADA investigating officers in DOD are required to name
one or more responsible individuals when they decide that a violation
has occurred, and because these individuals are subject to disciplinary
actions based on the investigation's findings, the threats to
investigating officer independence are similar to those faced by
criminal investigators. Thus, we believe that these are appropriate
standards to apply to internal DOD ADA investigations.
[36] President's Council on Integrity and Efficiency/Executive Council
on Integrity and Efficiency, Quality Standards for Investigations.
(December 2003).
[37] Sixty-six investigative officers were assigned to the 54 closed
military service ADA cases we reviewed. In some cases, the preliminary
review and formal investigation were performed by different
investigative officers.
[38] OMB Circular No. A-11, Preparation, Submission, and Execution of
the Budget, § 145, (July 2007), specifies report contents.
[39] Metrics are identified by DOD component, including the military
services and defense agencies, and include (1) the number of open
formal investigations; (2) the number of open formal investigation case
files that have been turned over to DOD for processing, concurrence,
and external reporting; (3) the number and identity of formal
investigations that have been open less than 12 months; and (4) the
number and identity of formal investigations that are overdue.
[40] As of July 7, 2008, the Army, Navy, and Air Force reported 14, 2,
and 6 preliminary reviews under way, respectively.
[41] Information on preliminary reviews required as a result of the
February 2008 update to the DOD FMR include the (1) accounting
classification of funds involved, (2) location where the alleged
violation occurred, (3) location of the activity issuing the fund
authorization, (4) amount of fund authorization or limitation that was
exceeded, (5) amount and nature of the alleged violation, (6) date the
alleged violation occurred, (7) date the alleged violation was
discovered, (8) means of discovery, (9) description of the facts and
circumstances of the case, (10) anticipated dates of completion of the
investigation and submission of the report, and (11) names and phone
numbers of members of the preliminary investigation team.
[42] Criminal prosecution may also be sought for violations found to
have been committed knowingly and willfully.
[43] See GAO, DOD Business Transformation: Lack of an Integrated
Strategy Puts the Army's Asset Visibility System Investments at Risk,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860] (Washington,
D.C.: July 27, 2007); DOD Business Systems Modernization: Progress
Continues to Be Made in Establishing Corporate Management Controls, but
Further Steps Are Needed, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-733] (Washington, D.C.: May 14, 2007); High-Risk
Series: An Update, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
310] (Washington, D.C.: January 2007); DOD Problem Disbursements: Long-
standing Accounting Weaknesses Result in Inaccurate Records and
Substantial Write-offs, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-521] (Washington, D.C.: June 2, 2005); and Financial
Management: Improved Reporting Needed for DOD Problem Disbursements,
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-97-59]
(Washington, D.C.: May 1, 1997). Also, see Department of Defense Office
of Inspector General, Vendor Pay Disbursement Cycle, Air Force General
Fund, Report No. D-2008-063 (Arlington, Va.: Mar. 12, 2008); Potential
Antideficiency Act Violations Made Through Non-DOD Agencies, Report No.
D-2007-042 (Arlington, Va.: Jan. 2, 2007); FY 2005 DoD Purchases Made
Through the General Services Administration, Report No. D-2007-007
(Arlington, Va.: Oct. 30, 2006); and Financial Management, DOD
Antideficiency Act Reporting and Disciplinary Process, Report No. D-
2005-003 (Arlington, Va.: Oct. 14, 2004). See also Department of
Defense, Performance and Accountability Report: Fiscal Year 2006
(Washington, D.C.: Nov. 15, 2006), and Agency Financial Report: Fiscal
Year 2007 (Washington, D.C.: Nov. 15, 2007).
[44] OMB Circular No. A-11, Preparation, Submission, and Execution of
the Budget (July 2007), and GAO, GAO Policy and Procedures Manual for
Guidance of Federal Agencies, title VII, "Fiscal Guidance" (May 18,
1993).
[45] The purpose of a preliminary review is to gather basic facts to
determine whether a formal investigation is warranted. This should be
done in a timely manner--usually within 90 days.
[46] The purpose of the formal investigation is to determine the
relevant facts and circumstances concerning the potential violation
and, if a violation occurred, what caused it, what are the appropriate
corrective actions and lessons learned, and who is responsible for the
violation.
[47] President's Council on Integrity and Efficiency/Executive Council
on Integrity and Efficiency, Quality Standards for Investigations
(December 2003).
[End of section]
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Web site: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]:
E-mail: fraudnet@gao.gov:
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Ralph Dawn, Managing Director, dawnr@gao.gov:
(202) 512-4400:
U.S. Government Accountability Office:
441 G Street NW, Room 7125:
Washington, D.C. 20548:
Public Affairs:
Chuck Young, Managing Director, youngc1@gao.gov:
(202) 512-4800:
U.S. Government Accountability Office:
441 G Street NW, Room 7149:
Washington, D.C. 20548:
