Status of the Defense Emergency Response Fund in Support of the Global War on Terror

Our objective was to determine whether the Defense Emergency Response Fund DERF for the Global War on Terror GWOT was used as intended and whether the use of the funds complied with the Office of Management and Budget guidance. We will issue at least one additional report addressing this audit objective. For this report, we determined whether DoD transferred all DERF balances to the Iraq Freedom Fund IFF as intended by Public Laws 108-11 and 108-106. These public laws require that balances in DERF as of October 31, 2003, be transferred to IFF. What We Found On April 15, 2004, DoD transferred more than 126 million from DERF to IFF as required by the public laws. However, the DoD Components internal controls were not adequate to ensure that DoD transferred all DERF for GWOT balances to IFF. The Components did not review their obligations to ensure that they were valid and accurate and that unliquidated obligations were deobligated. As a result, 5 years and 6 months after the public law has mandated the transfer of balance in DERF to IFF, there is still about 108.9 million, classified as unpaid obligations, and an additional 151.1 million, classified as unobligated, for a total of 260 million in DERF for GWOT that DoD needs to transfer to the Department of Treasury because the law to transfer the funds to IFF had expired. In addition, there is 15.3 million in DERF for disaster and humanitarian assistance that DoD needs to transfer to the Department of Treasury. Because it has been more than 5 years and 6 months since the public law mandated the transfer of balance in DERF to IFF, the Defense Finance and Accounting Service should not make any more disbursements from DERF.