Army Financial Improvement Plans Generally Managed Effectively, but Better Contract Management Needed

Our objective was to determine whether the Department of the Army effectively managed its Financial Improvement Plan FIP, including contractor support, to meet Financial Improvement and Audit Readiness FIAR goals. Specifically, we focused on the FIAR priorities of improving budgetary information and verifying the existence and completeness of mission critical assets. We also assessed the Army s compliance with FIAR Guidance when developing 10 FIPs. Assistant Secretary of the Army Financial Management and Comptroller ASAFMC personnel generally managed 10 Army General Fund FIPs in an effective manner and made 6 assertions focused on the 2 FIAR priorities. However, FIAR Directorate personnel approved three Army financial statement assertions for examination despite significant internal control problems. This occurred because FIAR Directorate personnel deviated from FIAR Guidance. As a result, ASAFMC personnel expended funds on examinations in areas with known internal control weaknesses. The ASAFMC contracting officer s representative COR did not perform appropriate contract oversight and surveillance on the Army General Fund audit readiness contract. Specifically, the COR did not perform onsite monitoring of the contractor, adequately document contractor performance or report the contractor s performance in accordance with the COR designation memorandum, or complete thorough reviews of contractor invoices. This occurred because the four primary U.S. Army Corps of Engineers Huntsville Engineering and Support Center CEHNC contracting officers did not ensure that the COR had the necessary resources to perform adequate oversight. As a result, ASAFMC had reduced assurance that the 90.1 million spent on Army General Fund audit readiness services represented the actual quality and quantity of work performed. CEHNC personnel used inadvisable accounting practices.