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DEPARTMENT OF DEFENSE: Sustained Leadership is Critical to Effective Financial and Business Management Transformation

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DODs pervasive financial and business management problems adversely affect the economy, efficiency, and effectiveness of its operations, and have resulted in a lack of adequate accountability across all major business areas. These problems have left the department vulnerable to billions of dollars of fraud, waste, and abuse annually, at a time of increasing fiscal constraint. Further evidence of DOD s problems is the long-standing inability of any military service or major defense component to pass the test of an independent financial audit because of pervasive weaknesses in financial management systems, operations, and controls. The following examples indicate the magnitude and severity of the problems. We found that hundreds of separated battle-injured soldiers were pursued for collection of military debts incurred through no fault of their own, including 74 soldiers whose debts had been reported to credit bureaus, private collection agencies, and the Treasury Offset Program. Overpayment of pay and allowances entitlements, pay calculation errors, and erroneous leave payments caused 73 percent of the reported debts. We found numerous problems with DOD s processes for recording and reporting costs for the Global War on Terrorism GWOT, raising significant concerns about the overall reliability of DOD s reported cost data. As noted in our September 2005 report, neither DOD nor Congress know how much the war was costing and how appropriated funds were spent, or have historical data useful in considering future funding needs. In at least one case, the reported costs may have been materially overstated. Specifically, DOD s reported obligations for mobilized Army reservists in fiscal year 2004 were based primarily on estimates rather than actual information and differed from related payroll information by as much as 2.1 billion, or 30 percent of the amount DOD reported in its cost report.

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  • Administration and Management
  • Economics and Cost Analysis

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