Marine getting paid.

The Navy has improved its pay systems, but 14 of 34 internal pay controls still do not work well, and could hamper its future audit readiness, according to a Government Accountability Office report.

An independent public accountant had audited a month of pay activity from 2013, and found that the pay transactions were adequately supported. GAO auditors found nothing leading them to doubt that conclusion.

Still, some deficiencies clearly remain. The report noted incidents where the Navy had double-paid a service member for more than two months after previously extending their service end date and generating an erroneous debt to the member. Another service member received lower pay than intended, due to a system failure.

Read the report.

"Until these deficiencies are fully resolved, the Navy will continue to face risks that could affect its ability to achieve future financial statement auditability," the report said.

The Navy concurred with the GAO's two recommendations, stating that it already established a policy to ensure proper coordination with auditors during future audits, meeting one of the recommendations. For the other recommendation, establishing milestones for assessing and implementing controls as identified by the Defense Finance and Accounting Service, work is in progress.

The report is part of a continuing evaluation into the Department of Defense's financial management, which the GAO has deemed as high risk since 1995, in part because of the department's inability to provide auditable information on its books.

As part of the 2010 National Defense Authorization Act, DoD has until Sept. 30, 2017 to reform financial deficiencies and ensure that statements are ready for audit.

The Navy reported in March 2013 that it had achieved audit readiness. The independent public accountant examined the Navy's financial records from April 2013 and determined there was adequate documentation to audit the service for that scope of time, but expressed concerns over whether a broader audit could be achieved.

Sen. Tom Carper, D-Del, ranking member of the Senate Committee on Homeland Security & Governmental Affairs, said in a statement that the Navy's progress should be applauded, but called the DoD's audit difficulties "unacceptable."

"This GAO report gives us some hope that the Navy is making progress toward conducting and passing a financial audit," he said. "Just three years ago, GAO found that the Army payroll was not even auditable. However, the Navy's declared its $29 billion a year payroll system as auditable, and the Government Accountability Office agrees. The Navy deserves credit in making solid progress towards solving the financial management puzzle, although there is still more work to be done."

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