Summary
The Department of Defense (DOD) has historically been unable to accurately account for and record its disbursements. In March 2002, the DOD Comptroller cited metrics that showed dramatic reductions in payment recording errors (57 percent between October 2000 and October 2001), backlogs of commercial payments (41 percent between April and October 2001), and travel card payment delinquencies (34 percent for those individually billed and 86 percent for those centrally billed between January and December 2001). As a result, the Congress asked us to determine whether the cited reductions were (1) calculated using consistent definitions and methodologies, (2) properly supported, and (3) effective indicators of short-term financial management progress.
The DOD Comptroller's metrics showing significant reductions in payment recording errors and in commercial and travel card payment delinquencies were, in general, based on definitions and methodologies that were either consistent with or better than those used for prior reporting on these issues. Although the methodology used to calculate two of the cited measures resulted in overstating the rates of improvement, our recalculation after correcting for the methodology errors still showed positive--although less dramatic--improvement trends. While we were able to verify the reductions in travel card delinquencies because the underlying data were available from an independent source, we could not verify the accuracy of the specific improvement percentages reported for payment recording errors and commercial payment delinquencies. DOD's archaic and nonintegrated systems either do not contain the transaction-level detail to support the completeness and accuracy of the metrics or they make it extremely onerous and time consuming for the staff to gather and reconcile the needed detail. However, we were able to verify that DOD has made numerous policy, procedure, and systems changes that support an overall trend toward improved performance in these areas. If they could be verified, some of the cited metrics could be effective indicators of short-term financial management progress. However, if considered alone, delinquency rates are not necessarily good indicators for centrally billed travel cards or commercial payments. Placing too much emphasis on paying bills promptly may tempt DOD staff to bypass important internal controls meant to ensure that the goods and services being paid for were properly authorized and actually received. Despite shortcomings, the cited metrics have focused DOD's attention on highly visible financial management problems. As shown below, recent metrics issued by the DOD Comptroller indicate continuing improvements.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
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Recommendations for Executive Action
Recommendation: To improve the reported metrics, the DOD Comptroller should use definitions and criteria that are consistent with Defense Finance and Accounting Service (DFAS) definitions and criteria when calculating and reporting metrics related to payment recording errors.
Agency Affected: Department of Defense: Office of the Comptroller
Status: Implemented
Comments: The DOD metrics program complements the DFAS metrics program and appropriately uses consistent definitions and reporting criteria. The intent of a good metrics program is to emphasize the leading indicators rather than the lagging indicators. The leading indicators help the manager identify performance headed in an undesirable direction, while the lagging indicators inform managers of unsatisfactory performance. GAO's metrics program emphasizes the leading indicators rather than the lagging indicators.
Recommendation: To improve the reported metrics, the DOD Comptroller should measure improvements in individually billed travel card delinquencies by using same month to same month comparisons.
Agency Affected: Department of Defense: Office of the Comptroller
Status: Implemented
Comments: DOD now measures improvements in individually billed travel card delinquencies using same month to same month comparisons.
Recommendation: To improve the reported metrics, the DOD Comptroller should work with the military service Assistant Secretaries for Financial Management to develop performance measures for the military services and other defense agencies in areas for which there is shared responsibility, in order to complement the DFAS metrics program.
Agency Affected: Department of Defense: Office of the Comptroller
Status: Implemented
Comments: DOD concurred with the recommendation and directed the military service Assistant Secretaries for Financial Management and defense agency directors to cascade the Comptroller's metrics to every level in their organizations where positive change in performance could be influenced. The Comptroller's Office also established a website describing the Comptroller's performance measurement criteria and goals. By directly involving the military services and defense agencies in the metrics program, the Comptroller has made the components critical partners with DFAS in resolving DOD's financial management problems.
