Summary

GAO reviewed the Department of Defense's (DOD) efforts to implement and comply with the Federal Managers' Financial Integrity Act (FMFIA), which is aimed at strengthening management controls and accounting systems.

GAO found that DOD has established a basic framework to allow for implementation of the act, but its management controls evaluation program has not progressed to the point where it can provide an adequate basis for drawing conclusions about overall DOD compliance with the act because: (1) a number of portions of the overall evaluation program are not yet operational; (2) DOD has not identified and reported some material weaknesses as departmentwide conditions; (3) there is a wide variance in the specificity of material weaknesses reported by DOD components; and (4) the Office of the Secretary of Defense (OSD) does not have an adequate ability to recognize systemic weaknesses. In addition, GAO found that DOD did not have an adequate basis for reporting that its accounting systems were in conformance with the act and the Comptroller General's requirements for accounting systems because it: (1) only performed limited transaction testing for a small number of its accounting systems; (2) has not issued an accounting systems evaluation policy directive or timely reporting instructions to its components; and (3) does not have a tracking system to ensure that timely and corrective actions are taken in response to reported material weaknesses.