Case in Point: Enterprise Risk Management Program-Business Activity Monitoring

DFAS is responsible for disbursing nearly all of the DoD funds. In its effort to be an outstanding steward of these funds, and being cognizant of the criticality of sound risk management, DFAS is determined to minimize fraud against DoD financial assets and to prevent improper and late payments. For over 12 years, DFAS has successfully invested in a number of quality initiatives and techniques to detect illegal, improper and/or unusual transactions conducted against DoD assets.

While current initiatives have resulted in enhanced controls and significant benefits, some efforts are very labor-intensive. The detection models in use often identify false-positive results which lead to an expenditure of substantial labor to identify true-positives or bona fide duplicate transactions.

For example, in FY05, existing detection tool technology prevented the disbursement of approximately $120M in duplicate payments. Despite this success, DFAS later found that over $10M in duplicate payments were not automatically identified by the detection tool, and payments were disbursed in error. Furthermore, a 2005 pilot program indicated that additional cost savings could be achieved by employing updated technology to increase the number of duplicate payments identified and to reduce labor costs currently required to determine true duplicate payments.

Therefore, DFAS plans to invest in updated data-mining technology and detection modeling as a strategy to improve the accuracy in detecting invalid business transactions and to reduce the manpower associated with the analysis of potential payment errors. A Business Activity Monitoring (BAM) tool will be developed to further automate the payment analysis, tracking and reporting of improper payments for DFAS entitlement systems. The implementation of BAM will provide advanced analytics for decision making regarding the accuracy and integrity of business transactions and will suspend target transactions or report them to the appropriate party for action.