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Financial Management: DOD Needs to Lower the Disbursement Prevalidation Threshold
[Technical Report, Congressional Report]
Government Accountability Office
Pagination or Media Count:
DOD implemented the prevalidation program to confirm that it had sufficient obligations to cover invoices exceeding 5 million before payment, as Public Law 103-335 required. This helped to identify errors and fix problem disbursements earlier in the payment and accounting process. In addition, Defense has lowered the 5 million threshold to 1 million at all disbursement locations, except for the Defense Finance and Accounting Services DFAS Columbus Center. Also, for eight primary contract accounting systems and its contract paying system at the DFAS Columbus Center, DOD has automated the prevalidation process to better handle the volume of transactions. Nevertheless, while these new prevalidation controls were in effect, DODs efforts to correct existing problem disbursements were overshadowed by the inflow of new problematic transactions. For example, DOD reports show that during the period of October 1995 through January 1996, DOD corrected 19.5 billion of problematic disbursements however, it incurred an additional 21.8 billion of new problem balances during the same period - a 2.3 billion net increase. This is chiefly the result of long-standing system weaknesses throughout the disbursement process and failure to comply with basic accounting procedures, both of which are offsetting gains made by correcting existing balances in the latter stages of the process. DODs implementation of the prevalidation program is also limited in its ability to resolve Defenses annual multibillion-dollar disbursement problems because there currently is no plan to lower the prevalidation threshold further at DFAS Columbus, which is responsible for almost 40 percent of DODs 160 billion annual contractor and vendor payments.
[A, Approved For Public Release]