Global Combat Support System–Army Did Not Comply With ...

Report No. DODIG-2014-104

Inspector General

U.S. Department of Defense

SEPTEMBER 3, 2014

Global Combat Support System?Army Did Not Comply With Treasury and DoD Financial Reporting Requirements

INTEGRITY EFFICIENCY ACCOUNTABILITY EXCELLENCE

INTEGRITY EFFICIENCY ACCOUNTABILITY EXCELLENCE

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Results in Brief

Global Combat Support System?Army Did Not Comply With Treasury and DoD Financial Reporting Requirements

September 3, 2014

Objective

We determined whether the Army fielded the Global Combat Support System?Army (GCSS?Army) with the proper functionality to provide reliable financial information and support audit readiness requirements.

Finding

Office of the Assistant Secretary of the Army (Financial Management and Comptroller) and GCSS?Army Product Management Office personnel did not field GCCS?Army with the proper functionality to comply with Treasury and DoD guidance, which is necessary to provide reliable financial information and support for audit readiness requirements.

This occurred because DoD and Army management did not have adequate controls, including procedures and annual reviews, in place to ensure GCSS?Army compliance with Treasury and DoD guidance. In addition, the Office of the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, and Office of the Deputy Chief Management Officer personnel did not provide adequate account attribute, chart of account, or posting logic guidance. This occurred because they did not have formal processes for reviewing and ensuring that DoD guidance is complete and consistent and aligns with Treasury guidance.

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Finding (cont'd)

Although Army personnel have been responsive to correcting deficiencies identified during the audit, the Army has spent $725.7 million on a system that still has significant obstacles to overcome to comply with the Federal Financial Management Improvement Act and meet the FYs 2014 and 2017 auditability deadlines. This includes posting logic issues that resulted in abnormal balances of $703.7 million, or 23.5 percent, of the $3.0 billion GCSS?Army fourth quarter FY 2013 Trial Balance.

Recommendations

The Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, in coordination with the DoD Deputy Chief Management Officer, should develop and implement procedures to validate that GCSS?Army complies with applicable guidance and internal control standards. They should also publish account attribute, chart of account, and posting logic guidance by the beginning of each fiscal year, with a deadline for system implementation. The Assistant Secretary of the Army (Financial Management and Comptroller), in coordination with the GCSS?Army Product Manager, should formalize and expand the annual review process of GCSS?Army to include a review of the account attributes, chart of accounts, and posting logic and develop an automated functionality for demonstrating GCSS?Army account postings.

Management Comments and Our Response

We request that the Under Secretary of Defense (Comptroller)/ Chief Financial Officer, DoD, provide additional comments to Recommendations 1.a.ii, 1.a.iii, and 1.c, and the Assistant Secretary of the Army (Financial Management and Comptroller) provide additional comments on Recommendations 2.b and 2.f. Please see the Recommendations Table on the back of this page.

DODIG-2014-104 (Project No. D2013-D000FL-0163.000) i

Recommendations Table

Management

Under Secretary of Defense (Comptroller)/ Chief Financial Officer, DoD Assistant Secretary of the Army (Financial Management and Comptroller)

Recommendations Requiring Comment

No additional Comments Required

1.a.ii, 1.a.iii, 1.c

1.a.i, 1.b.i, 1.b.ii, 1.b.iii, 1.d

2.b, 2.f

2.a.i, 2.a.ii, 2.a.iii, 2.c, 2.d, 2.e

Please provide comments by October 3, 2014.

ii Project No. D2013-D000FL-0163.000

INSPECTOR GENERAL

DEPARTMENT OF DEFENSE 4800 MARK CENTER DRIVE ALEXANDRIA, VIRGINIA 22350-1500

September 3, 2014

MEMORANDUM FOR UNDER SECRETARY OF DEFENSE (COMPTROLLER)/ CHIEF FINANCIAL OFFICER, DOD DEPARTMENT OF DEFENSE DEPUTY CHIEF MANAGEMENT OFFICER AUDITOR GENERAL, DEPARTMENT OF THE ARMY

SUBJECT: Global Combat Support System?Army Did Not Comply With Treasury and DoD Financial Reporting Requirements (Report No. DODIG-2014-104)

We are providing this report for your review and comment. The Army did not ensure Global Combat Support System?Army complied with Treasury and DoD guidance, which is necessary for providing reliable financial information and supporting audit readiness requirements. Although Army personnel have been responsive to correcting deficiencies identified during the audit, the Army has spent $725.7 million on a system that has significant obstacles to overcome to comply with the Federal Financial Management Improvement Act and meet the FYs 2014 and 2017 auditability deadlines. This includes posting logic issues that resulted in abnormal balances of $703.7 million, or 23.5 percent, of the $3.0 billion GCSS?Army fourth quarter FY 2013 Trial Balance.

We considered management comments on a draft of this report when preparing the final report. DoD Directive 7650.3 requires that all recommendations be resolved promptly. Comments from the Under Secretary of Defense (Comptroller)/Deputy Chief Financial Officer, DoD, on Recommendations 1.a.i, 1.b, and 1.d, and from Deputy Assistant Secretary of the Army (Financial Operations) on Recommendations 2.a.i, 2.a.ii, 2.a.iii, 2.c, 2.d, and 2.e, addressed all specifics of the recommendations and conformed to the requirements of DoD Directive 7650.3; therefore, we do not require additional comments. We request that the Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD, provide additional comments on Recommendations 1.a.ii, 1.a.iii, and 1.c, and the Assistant Secretary of the Army (Financial Management and Comptroller) provide additional comments on Recommendations 2.b and 2.f, by October 3, 2014.

DODIG-2014-104 iii

Please send a PDF file containing your comments to audfmr@dodig.mil. Copies of your comments must have the actual signature of the authorizing official for your organization. We cannot accept the /Signed/ symbol in place of the actual signature. If you arrange to send classified comments electronically, you must send them over the SECRET Internet Protocol Router Network (SIPRNET). We appreciate the courtesies extended to the staff. Please direct questions to me at (703) 601-5945.

Lorin T. Venable, CPA Assistant Inspector General Financial Management and Reporting

iv DODIG-2014-104

Contents

Introduction

Objective__________________________________________________________________________________________1 Background_______________________________________________________________________________________1 Review of Internal Controls_____________________________________________________________________4

Finding. Insufficient Implementation of Treasury and DoD Financial Reporting Requirements______________________5

Army Did Not Ensure Compliance with Treasury and DoD Financial Requirements ______6 Inadequate System Controls__________________________________________________________________ 19 Inadequate DoD Guidance ____________________________________________________________________ 20 System Might Not Produce Reliable Information or Correct Army's

Material Weakness ________________________________________________________________________ 21 Management Comments on the Finding and Our Response _______________________________ 22 Recommendations, Management Comments, and Our Response__________________________ 22

Appendixes

Appendix A. Scope and Methodology________________________________________________________ 29 Use of Computer-Processed Data_ _______________________________________________________ 30 Use of Technical Assistance_______________________________________________________________ 30

Appendix B. Prior Coverage __________________________________________________________________ 31 Appendix C. Army Comments on Findings and Our Response_____________________________ 34

Management Comments

Under Secretary of Defense (Comptroller)/Chief Financial Officer, DoD__________________ 38 Assistant Secretary of the Army (Financial Management and Comptroller)______________ 41

Acronyms and Abbreviations______________________________________________ 50

DODIG-2014-104 v

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