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DoD falls behind on audit goals - again

May. 13, 2014 - 06:00AM   |  
By ANDY MEDICI   |   Comments
DoD Comptroller Robert Hale stressed the government shutdown, short-term continuing resolutions and repeated furloughs have hurt the department's efforts to be audit ready by the end of the fiscal year.
DoD Comptroller Robert Hale stressed the government shutdown, short-term continuing resolutions and repeated furloughs have hurt the department's efforts to be audit ready by the end of the fiscal year. (Gannett Government Media Corp)

The Defense Department will miss a key deadline for improving its financial management, the Pentagon’s comptroller told lawmakers.

Robert Hale said at a May 13 hearing that the department will not have all of its budget statements ready to be audited by the end of this fiscal year – a needed step toward passing a full audit.

Instead, he said he hopes that about 80 percent or more of DoD’s budget statements are ready, but he stressed that the government shutdown, short-term continuing resolutions and repeated furloughs have hurt DoD efforts.

“This turmoil has definitely usurped time that could have been spent on audit and other activities,” Hale said.

DoD is still struggling to revamp its financial systems as part of a plan to audit its books by fiscal 2017, according to DoD officials, lawmakers and watchdogs.

A clean departmentwide audit would help the agency identify improper payments, hold officials accountable and possibly save hundreds of millions of dollars in waste, according to Sen. Tom Carper, D-Del., the chairman of the Senate Homeland Security and Government Affairs Committee.

“In these tough economic times, we simply cannot tolerate this continuing level of mismanagement and waste,” Carper said at the hearing.

The financial management systems of the Defense Department have been placed on the Government Accountability Office’s high-risk list for 20 years and DoD has failed to meet deadlines stretched out over the last two decades, Carper said.

DoD has worked to integrate its financial management systems, revamp its business practices and has focused more resources on managing the effort, according to Hale.

“I believe we are on track to achieve audit readiness for all our financial statements by 2017,” Hale said.

But DoD’s inability to meet the goal to have its budget statements audit ready by the end of September will hurt its effort to meet its ultimate fiscal 2017 goal, according to Asif Khan, the director of financial management and assurance at GAO.

He said DoD should have rolled out new financial management systems in smaller chunks instead of introducing systemwide software and procedures.

Weaknesses in DoD’s transaction and business system controls have led the department to make program and operational decisions based on unreliable data, according to a GAO report issued May 13.

But DoD efforts to improve many of these systems won’t kick in until fiscal 2017, which means DoD goals for financial accountability and achieving a clean audit will be harder to achieve, according to the report.

In fiscal 2013, DoD recorded $9.6 billion in suspense accounts – accounts used to temporarily hold funds for payments – because it could not identify the proper appropriation accounts to be charged for the expenses, usually because of errors in software, according to GAO.

DoD needs to focus on improving its training, supervision and management oversight of financial systems and create processes and systems to boost transaction controls in order to be able to improve financial management.

But while some services are on track to meet its goals, others are too far behind.

Susan Rabern, the assistant secretary of the Navy for financial management and comptroller, said the service is “cautiously optimistic” it will have its budget statements in audit ready form by the end of the fiscal year.

She said it would require much more hard work as the service upgrades its business system and develops the capacity to handle a complex audit.

But the Air Force won’t be able to make the goal of having audit-ready budget statements by the end of the fiscal year, according to GAO. The service is on track to achieve the goal in the first few months of fiscal 2015.

Jamie Morin, the assistant secretary of the Air Force of financial management and comptroller, said the Air Force is years behind the other services in upgrading its financial management systems.

He said the service has increased funding and staff resources and has worked to correct problems it has encountered along the way – saying it’s the journey more than the destination that is improving its internal financial processes.

Sen. Tom Coburn, R-Okla., the ranking member of the committee, said that until DoD can achieve a clean financial audit, it will not be able to say for sure how it is spending its money and whether that spending is effective.

He said DoD continues to put off or delay deadline after deadline to integrate its hodge-podge of financial systems or streamline its convoluted business process which amounts to wasting money during a time of budget cuts.

“When the Pentagon itself does not know and cannot tell Congress how it’s spending its money, good programs face cuts alongside wasteful programs that we do not need,” he said.

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