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Antideficiency Act Controls and Investigations' which was released on 
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Report to Congressional Committees: 

United States Government Accountability Office: 
GAO: 

September 2008: 

DOD Financial Management: 

Improvements Are Needed in Antideficiency Act Controls and 
Investigations: 

GAO-08-1063: 

GAO Highlights: 

Highlights of GAO-08-1063, a report to congressional committees. 

Why GAO Did This Study: 

Senate Report No. 110-77 directed GAO to review the Department of 
Defense’s (DOD) procedures for Antideficiency Act (ADA) violations. GAO 
focused on whether (1) existing DOD funds control systems, processes, 
and internal controls provide reasonable assurance that ADA violations 
will be prevented or detected and whether key funds control personnel 
are trained; (2) investigations of ADA violations are processed in 
accordance with applicable DOD regulations; and (3) DOD tracks and 
reports metrics pertaining to its ADA investigations and what 
disciplinary actions are taken when ADA violations have occurred. GAO’s 
review included all 54 ADA military service case files closed in fiscal 
years 2006 and 2007. GAO did not assess the appropriateness of the 
conclusions reached or of the disciplinary actions taken for the ADA 
cases. 

What GAO Found: 

DOD’s complex and inefficient payment processes, nonintegrated business 
systems, and weak internal controls impair its ability to maintain 
proper funds control, leaving the department at risk of overobligating 
or overspending its appropriations in violation of the ADA. DOD 
Comptroller and military service financial management and comptroller 
officials responsible for the department’s ADA programs have stated 
that because of weaknesses in DOD’s business operations, knowledgeable 
personnel are critical to improving the department’s funds control, and 
these officials have or are developing training courses. However, only 
the Army has attempted to identify and determine whether key funds 
control personnel have received appropriate training to provide them 
with the knowledge and skills to fulfill their responsibilities, 
including the ADA, required by DOD regulations. 

GAO’s analysis of the 54 ADA cases and other documentation provided by 
the military services disclosed that the military services did not 
fully comply with DOD regulations intended to ensure that ADA reviews 
and investigations were conducted by qualified and independent 
personnel and were completed in a timely manner. More specifically, GAO 
found the following: 

* Only 6 of the 66 investigating officers assigned to the 54 ADA cases 
reviewed had received all of the required training. 

* Nineteen of the 54 ADA cases lacked documentation needed to determine 
whether the investigating officer was organizationally independent. 
Further, because the military services focused on organizational 
independence, they could not be assured that investigating officers 
were free of personal or external impairments to independence. 

* ADA investigations were generally not completed within the 15 months 
and 25 days set forth by DOD. Of the 54 ADA cases reviewed, 22 cases 
took over 30 months to complete and only 16 were completed on time. 

GAO also noted that DOD, as required, reported the 34 cases in which it 
had concluded that an ADA violation had occurred to the President and 
the Congress, with a copy to GAO. For the remaining 20 cases, DOD 
concluded that an ADA violation had not occurred and therefore external 
reporting was not required. Further, DOD has taken steps to improve 
transparency over the ADA investigation process by requiring DOD 
components to report status information when an ADA investigation is 
initiated. Additionally, for the 34 ADA cases in which DOD concluded 
that an ADA violation had occurred, the nature of the disciplinary 
actions taken and reported to the President and the Congress was 
consistent with the criteria set forth in the DOD regulations. The ADA 
requires that employees who are responsible for ADA violations be 
subject to appropriate administrative discipline. The DOD regulations 
specify that administrative discipline can range from no action to the 
termination of the individual’s employment. 

What GAO Recommends: 

GAO makes six recommendations related to ensuring that key funds 
control personnel are trained and to improving compliance with the DOD 
regulations pertaining to ADA investigations. DOD concurred with the 
recommendations and identified specific actions that it has taken to 
implement them. 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-1063]. For more 
information, contact Paula M. Rascona at (202) 512-9095 or 
rasconap@gao.gov. 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Long-standing Financial Management Weaknesses Undermine DOD's Ability 
to Prevent and Identify Potential Antideficiency Act Violations: 

DOD Lacks Assurance That Potential ADA Investigations Are Processed in 
Accordance with DOD Regulations: 

DOD Has Taken Steps to Improve Transparency of Reporting, and the 
Nature of Disciplinary Actions Taken Is Consistent with the ADA and the 
DOD FMR: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Comments from the Department of Defense: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Crosswalk between Congressional Areas of Interest and GAO 
Objectives: 

Table 2: General Classes of Impairments to Independence: 

Table 3: Disciplinary Actions Taken by the Military Services for ADA 
Violations Reported in Fiscal Years 2006 and 2007: 

Abbreviations: 

ADA: Antideficiency Act: 

DOD: Department of Defense: 

FMR: Financial Management Regulation: 

OMB: Office of Management and Budget: 

OSD: Office of the Secretary of Defense: 

PCIE/ECIE: President's Council on Integrity and Efficiency/Executive 
Council on Integrity and Efficiency: 

[End of section] 

United States Government Accountability Office:
Washington, DC 20548: 

September 26, 2008: 

Congressional Committees: 

Federal agencies, including the Department of Defense (DOD), are 
responsible for ensuring that appropriated funds are used only for 
purposes, and within the amount and time frames, prescribed by the 
Congress. In fiscal year 2008, DOD had appropriations totaling more 
than $669 billion. To comply with legal and regulatory requirements, 
DOD must implement and maintain administrative controls that ensure the 
proper use of its appropriated funds, including the use of accounting 
and funds control systems that are able to accurately record 
obligations,[Footnote 1] collections, and disbursements[Footnote 2] 
against appropriations and the accounts established to track the status 
of appropriations. DOD financial management has been on our high-risk 
list since 1995 because of the department's continuing inability to 
provide accurate, timely, and complete financial and performance 
information for management use and reporting.[Footnote 3] 

The Antideficiency Act (ADA)[Footnote 4] prohibits any DOD officer or 
employee from incurring obligations or making expenditures in excess or 
in advance of appropriations or apportionments.[Footnote 5] Under the 
ADA, the Office of Management and Budget (OMB) apportions appropriated 
funds and other budgetary resources to DOD. The act further requires 
DOD to establish by regulation a system of administrative controls to 
restrict obligations and disbursements to the amounts of 
appropriations, apportionments, and DOD's subdivisions of those 
apportionments. Further, when DOD determines that a violation of one of 
the ADA's proscriptions has occurred, the ADA requires DOD to "report 
immediately to the President and Congress all relevant facts and a 
statement of actions taken" and to submit a copy to the Comptroller 
General at the same time. 

On January 17, 2007, the DOD Acting Inspector General testified before 
the Subcommittee on Readiness and Management Support, Senate Committee 
on Armed Services, on potential violations of the ADA at DOD. Based on 
the DOD Acting Inspector General's testimony, the committee expressed 
concerns about the volume of potential ADA violations, the pace and 
transparency of ADA investigations, and DOD's process for preventing, 
identifying, investigating, and reporting potential ADA violations. 
Senate Report No. 110-77,[Footnote 6] which accompanied the National 
Defense Authorization Act for Fiscal Year 2008,[Footnote 7] directed 
GAO to review the department's ADA procedures for preventing, 
identifying, investigating, and reporting ADA violations and the 
disciplinary actions taken when violations occur. More specifically, 
the Senate report identified seven areas of congressional interest, 
which we have grouped into three objectives, as outlined in table 1. 

Table 1: Crosswalk between Congressional Areas of Interest and GAO 
Objectives: 

Senate report areas of interest: Determine the effectiveness of 
existing measures for the prevention of ADA violations; Determine the 
adequacy of training provided to DOD military and civilian personnel; 
GAO objectives: (1) Determine whether existing DOD funds control 
systems, processes, and internal controls provide reasonable assurance 
that potential ADA violations will be prevented or identified and 
whether key funds control personnel are trained. 

Senate report areas of interest: Determine the adequacy of current 
procedures utilized for preliminary and formal investigations of 
potential ADA violations; Determine the qualifications and independence 
of personnel utilized at each stage of an investigation; Determine the 
timeliness of investigations of potential violations; 
GAO objectives: (2) Ascertain whether the military services comply with 
DOD regulations and criteria related to investigating officer 
qualifications, including training and independence, and the time 
frames for conducting preliminary reviews and formal investigations of 
potential ADA violations. 

Senate report areas of interest: Determine the transparency both inside 
and outside DOD of the investigating process; Determine the use and 
adequacy of available disciplinary measures for ADA violations; 
GAO objectives: (3) Determine whether DOD tracks and reports metrics 
pertaining to its preliminary reviews and formal investigations of 
potential ADA violations and what disciplinary actions are taken when 
ADA violations have occurred. 

Source: GAO. 

[End of table] 

This report presents more details regarding the preliminary 
observations we provided on July 28, 2008, in response to the Senate 
report.[Footnote 8] To address the first objective, we reviewed prior 
GAO and DOD Inspector General audit reports and OMB and GAO guidance to 
obtain an understanding of the deficiencies in DOD's funds control 
systems, processes, and internal controls that impede its ability to 
prevent or identify ADA violations. DOD has acknowledged the financial 
management weaknesses reported by GAO and DOD auditors and the impact 
these weaknesses have on the reliability of the department's financial 
information. As a result, we did not perform additional work to 
substantiate the adequacy of DOD's financial management environment and 
internal controls. We interviewed DOD and military service personnel 
and reviewed documentation, such as the DOD Financial Management 
Regulation (FMR) and military service training curricula, to ascertain 
whether the military services had processes in place to identify and 
ensure that key funds control personnel are trained. 

To address the second objective, we reviewed the DOD FMR and 
interviewed appropriate officials within the DOD Comptroller and 
military services' financial management and comptroller offices 
responsible for the ADA programs at DOD or the military services to 
identify DOD criteria pertaining to the qualifications, training, and 
independence requirements of investigating officers and the reporting 
of ADA cases. Additionally, we reviewed the President's Council on 
Integrity and Efficiency/Executive Council on Integrity and Efficiency 
(PCIE/ECIE) Quality Standards for Investigations to obtain an 
understanding of qualification, independence, and due professional care 
standards applicable to investigations.[Footnote 9] To assess 
investigating officers' qualifications, we focused our review on 
whether the investigating officers had received training and if there 
was an internal control in place to ensure that the investigating 
officers did not have any personal, organizational, or external 
impairments to their ability to conduct impartial and independent 
investigations. 

To address the third objective, we interviewed DOD Comptroller and 
military service financial management and comptroller officials 
responsible for ADA programs at DOD or the military services and 
reviewed DOD's metrics for tracking and reporting on preliminary 
reviews and formal investigations of potential ADA violations and the 
results of all 54 Army, Navy, and Air Force formal ADA investigations 
[Footnote 10] closed by DOD in fiscal years 2006 and 2007. We did not 
assess whether the conclusions reached by DOD for the 54 closed ADA 
cases or the disciplinary actions taken on the 34 cases for which DOD 
concluded that an ADA violation had occurred were appropriate. Further 
details on our scope and methodology are presented in appendix I. 

We conducted this performance audit from July 2007 through September 
2008 in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. We received 
written comments from the Acting Deputy Chief Financial Officer, which 
are reprinted in appendix II. 

Results in Brief: 

DOD's complex and inefficient payment processes, nonintegrated business 
systems, and weak internal control environment impair its ability to 
reliably control transactions and record them when they occur, 
including the prompt and proper matching of disbursements with the 
related obligations, which is critical to ensuring proper funds 
control. As a result of continuing financial management weaknesses, 
including difficulties in ensuring the proper authorization, 
processing, and recording of payments, DOD's ability to timely and 
reliably determine the amount of funds that it has available to spend 
is impaired, and the department remains at risk of overobligating and 
overexpending its appropriations in violation of the ADA. In its fiscal 
year 2006 Performance and Accountability Report and fiscal year 2007 
Agency Financial Report, the department acknowledged that there are 
pervasive weaknesses in its internal control system, including funds 
control.[Footnote 11] The department has numerous efforts under way to 
modernize its business systems, processes, and controls as part of its 
business transformation initiative.[Footnote 12] Over the past several 
years, we have made numerous recommendations aimed at improving the 
department's business transformation efforts. Generally, the department 
has agreed with our recommendations and has identified or is planning 
specific actions to implement our recommendations. 

Recognizing the importance of knowledgeable personnel in establishing 
and maintaining effective funds control, the DOD FMR requires DOD 
components to ensure that appropriate training programs are in place to 
provide key funds control personnel with the knowledge, skills, and 
abilities needed to perform their duties. DOD officials stated that 
they intend to rely on trained and knowledgeable personnel, such as 
certifying officers[Footnote 13] and departmental accountable 
officials,[Footnote 14] within the funds control process to prevent, 
identify, and report potential ADA violations. DOD and the military 
services rely on fiscal law (or appropriations law) courses or 
comparable courses to provide key funds control personnel within the 
department with the knowledge to prevent, identify, and report 
potential ADA violations. However, there is no DOD-wide requirement to 
identify key personnel within the funds control process and implement 
and document processes and controls to ensure that they are identified 
and have received the appropriate training. While each of the military 
services has developed courses, including Web-based courses, only the 
Army has attempted to identify key personnel within its funds control 
process and determine whether they have received appropriate training. 
The Navy and the Air Force have not implemented a process for 
identifying key personnel within their funds control processes and 
determining whether they have been trained. Without adequate processes, 
procedures, and controls to (1) identify individuals who are performing 
key funds control roles, such as certifying officers, contracting 
officers, program managers, funds certifying officials, and others, and 
(2) ensure that they have received the training necessary to fulfill 
their responsibilities in compliance with the FMR and the ADA, DOD and 
the military services lack reasonable assurance that these key 
personnel can serve as a mitigating control in reliably preventing, 
identifying, and reporting potential ADA violations.[Footnote 15] 

Our analysis of the 54 ADA cases[Footnote 16] disclosed that the 
military services did not comply with the DOD FMR's procedural 
requirements regarding the assignment of a qualified, trained, and 
independent investigating officer and the time frames for completing 
the investigation process.[Footnote 17] Specifically, the military 
services did not (1) consistently maintain and utilize a roster of 
individuals qualified to perform preliminary reviews or formal 
investigations of potential ADA violations and (2) establish processes, 
procedures, and controls for ensuring that investigating officers were 
properly trained and independent and that preliminary reviews and 
formal investigations of potential ADA violations were completed within 
the time frame prescribed by the DOD FMR.[Footnote 18] The DOD FMR 
states that the investigating officer should be chosen from a roster of 
qualified personnel and meet specific qualification requirements, 
including training and independence, but does not specify that 
documentation be maintained to support that the DOD component complied 
with the DOD FMR's requirements. Additionally, the DOD FMR requires 
that the entire ADA investigation process, including the preliminary 
review, formal investigation, and Office of the Secretary of Defense 
(OSD) review, should generally be completed within a total of 475 days. 

In 34 of the 54 ADA cases we reviewed, DOD concluded that an ADA 
violation had occurred and provided a report to the President and the 
Congress and a copy to GAO as required by the ADA.[Footnote 19] For the 
remaining 20 ADA cases, DOD concluded that an ADA violation had not 
occurred and therefore no external reporting was required.[Footnote 20] 
The department's internal reporting of ADA formal investigations cases 
was consistent with the DOD FMR, and the DOD Comptroller has taken 
steps to improve internal visibility over pending preliminary reviews 
and formal investigations. For example, in February 2008, the DOD 
Comptroller revised the DOD FMR to require DOD components, including 
the military services, to begin reporting information on preliminary 
reviews of potential ADA violations, such as the number of reviews 
under way and a brief description of why a review was initiated. 
[Footnote 21] However, as of June 17, 2008, none of the military 
services had reported the full scope of required information. 

Finally, our analysis of the 34 ADA cases with confirmed ADA violations 
found that the disciplinary actions taken by the military services were 
in accordance with the criteria set forth in the DOD FMR and were 
reported to the President and the Congress, with a copy to the 
Comptroller General, as required by the ADA. The ADA requires that 
employees who are responsible for an ADA violation be subject to 
appropriate administrative discipline. Within DOD, the DOD FMR 
specifies that such administrative discipline can range in severity 
from no action to the termination of the individual's federal 
employment. Responsibility for determining what disciplinary action is 
warranted once it has been determined that an ADA violation has 
occurred resides with the military service, within established 
procedures for disciplining civilian and military personnel. 

We recommend that the Secretary of Defense direct the Under Secretary 
of Defense (Comptroller) to take the following two actions to update 
the DOD FMR to require that (1) ADA case files document that the 
investigating officer(s) selected to conduct a preliminary review or 
formal investigation is(are) free of personal, external, and 
organizational independence impairments and (2) DOD components maintain 
documentation of the date by which an investigating officer must 
receive refresher training in order to remain qualified to perform ADA 
preliminary reviews and investigations. Additionally, we recommend that 
the Secretary of Defense direct the Secretary of the Army, the 
Secretary of the Navy, and the Secretary of the Air Force to take the 
following four actions: (1) implement and document processes, 
procedures, and controls to identify and help ensure that key funds 
control personnel, including funds certifying officials, are properly 
trained so that they can fulfill their responsibilities to prevent, 
identify, and report potential ADA violations; (2) implement and 
document processes, procedures, and controls to oversee and monitor 
compliance with DOD FMR provisions requiring the maintenance and use of 
a roster for selecting qualified ADA investigating officers; (3) 
develop, implement, and document policies and procedures to help ensure 
compliance with the DOD FMR requirements for investigating officer 
training; and (4) develop, implement, and document policies and 
procedures to help ensure compliance with the DOD FMR requirements for 
investigating officer independence. We received written comments from 
the Acting Deputy Chief Financial Officer, which are reprinted in 
appendix II. DOD concurred with our recommendations and identified 
specific actions it has taken to implement these recommendations. 

Background: 

The ADA is one of the major laws in the statutory scheme by which the 
Congress exercises its constitutional control of the public purse. 
[Footnote 22] Despite the name, it is not a single act, but rather a 
series of related provisions that evolved over a period of time in 
response to various abuses. As late as the post-Civil War period, it 
was not uncommon for agencies to incur obligations in excess, or in 
advance, of appropriations. Perhaps most egregious of all, some 
agencies would spend their entire appropriations during the first few 
months of the fiscal year, continue to incur obligations, and then 
return to the Congress for appropriations to fund these "coercive 
deficiencies."[Footnote 23] These were obligations to others who had 
fulfilled their part of the bargain with the United States and who now 
had at least a moral--and in some cases also a legal--right to be paid. 
The Congress felt it had no choice but to fulfill these commitments, 
but the frequency of deficiency appropriations played havoc with the 
United States' budget. The Congress expanded the ADA several times 
throughout the 20th century to require and enforce apportionments and 
agency subdivisions of apportionments to achieve more effective control 
and conservation of funds. 

The ADA contains both affirmative requirements and specific 
prohibitions, as highlighted below. The ADA: 

* Prohibits the incurring of obligations or the making of expenditures 
in advance or in excess of an appropriation. For example, an agency 
officer may not award a contract that obligates the agency to pay for 
goods and services before the Congress makes an appropriation for the 
cost of such a contract or that exceeds the appropriations available. 

* Requires the apportionment of appropriated funds and other budgetary 
resources for all executive branch agencies. An apportionment may 
divide amounts available for obligation by specific time periods 
(usually quarters), activities, projects, objects, or a combination 
thereof. OMB, on delegation from the President, apportions funds for 
executive agencies. 

* Requires a system of administrative controls within each agency, 
established by regulation, that is designed to (1) prevent obligations 
and expenditures in excess of apportionments or reapportionments; (2) 
fix responsibility for any such obligations or expenditures; and (3) 
establish the levels at which the agency may administratively subdivide 
apportionments, if it chooses to do so. 

* Prohibits the incurring of obligations or the making of expenditures 
in excess of amounts apportioned by OMB or amounts of an agency's 
subdivision of apportionments. 

* Prohibits the acceptance of voluntary services, except where 
authorized by law. 

* Specifies potential penalties for violations of its prohibitions, 
such as suspension from duty without pay or removal from office. In 
addition, an officer or employee convicted of willfully and knowingly 
violating the prohibitions may be fined not more than $5,000, 
imprisoned for not more than 2 years, or both. 

* Requires that for violations of the act's prohibitions, the relevant 
agency report immediately to the President and to the Congress all 
relevant facts and a statement of actions taken with a copy to the 
Comptroller General of the United States. 

The requirements of the ADA and the enforcement of its proscriptions 
are reinforced by, among other laws, the Recording Statute, 31 U.S.C. § 
1501(a), which requires agencies to record obligations in their 
accounting systems, and the 1982 law commonly known as the Federal 
Managers' Financial Integrity Act of 1982, 31 U.S.C. § 3512(c), (d), 
which requires executive agencies to implement and maintain effective 
internal controls. Federal agencies use "obligational accounting" to 
ensure compliance with the ADA and other fiscal laws. Obligational 
accounting involves the accounting systems, processes, and people 
involved in collecting financial information necessary to control, 
monitor, and report on all funds made available to federal agencies by 
legislation--including both permanent, indefinite appropriations and 
appropriations enacted in annual and supplemental appropriations laws 
that may be available for 1 or multiple fiscal years. Executive branch 
agencies use obligational accounting, sometimes referred to as 
budgetary accounting, to report on the execution of the budget. 
[Footnote 24] 

Overview of DOD's Process for Identifying, Investigating, and Reporting 
ADA Violations: 

The DOD FMR, Volume 14, Administrative Control of Funds and 
Antideficiency Act Violations, establishes procedures for DOD 
components in identifying, investigating, and reporting potential ADA 
violations. The ADA does not prescribe the process for conducting an 
ADA investigation. 

Upon learning of or identifying a possible violation of the ADA, an 
individual should report the potential violation to his/her immediate 
supervisor within 10 working days.[Footnote 25] Next, the DOD component 
appoints an investigating officer to perform a preliminary review of 
the applicable business transactions and accounting records. The 
purpose of a preliminary review is to gather basic facts and determine 
whether a violation may have occurred. The DOD FMR states that the 
preliminary review should be completed in a timely manner, usually 
within 90 days. If the investigating officer determines, based upon the 
results of the preliminary review, that there is a potential ADA 
violation, the DOD component is required to initiate a formal 
investigation within 15 days. 

The purpose of a formal investigation is to determine the relevant 
facts and circumstances concerning the potential violation, to discern 
whether a violation actually occurred, and, if so, to determine the 
cause, the appropriate corrective actions, any lessons learned, and to 
ascertain who was responsible for the violation. According to the DOD 
FMR, the DOD component should complete the formal investigation of an 
ADA violation, including submission of final summary reports to the 
office of the Under Secretary of Defense (Comptroller), within 9 months 
of initiating the formal investigation.[Footnote 26] The OSD, including 
the DOD Comptroller's office, then has 3 months to review the DOD 
component's final summary report and prepare and submit transmittal 
letters to the President and the leaders of both Houses of the 
Congress, with a copy to the Comptroller General. The DOD FMR has 
established that a preliminary review, formal investigation, and OSD 
review should be completed within approximately 15 months and 25 days-
-or about 475 days. 

Long-standing Financial Management Weaknesses Undermine DOD's Ability 
to Prevent and Identify Potential Antideficiency Act Violations: 

DOD's complex and inefficient payment processes, lack of integrated 
business systems, and weak internal control environment hinder its 
ability to control and properly record transactions and to ensure 
prompt and proper matching of disbursements with obligations, which is 
essential for the proper recording of transactions. DOD Comptroller and 
military service financial management and comptroller officials 
responsible for the department's ADA programs have stated that because 
of weaknesses in the department's business processes and systems, 
knowledgeable personnel are critical to improving the department's 
funds control processes. DOD components responsible for executing the 
department's budget, such as the military services, are responsible for 
ensuring that key personnel within their funds control processes are 
properly trained to fulfill their responsibilities. The military 
services have efforts under way to provide classroom or Web-based 
training to key funds control personnel. However, neither the Navy nor 
the Air Force has identified specific key funds control personnel who 
should be trained. Moreover, the Navy and the Air Force financial 
management and comptroller officials responsible for their military 
services' ADA programs could not provide documentation of the processes 
and procedures each military service has or will utilize to ensure that 
key funds control personnel are trained. Army Financial Management and 
Comptroller Office officials responsible for the Army's ADA program 
stated that the Army has begun to identify key personnel within the its 
funds control processes and determine if they have received training. 
However, the Army officials acknowledged that many of the Army's key 
funds control personnel have not received training. As discussed later 
in this report, we also noted that of the 54 ADA cases reviewed, 20 
case files (or over 37 percent) indicated that improved training of key 
funds control personnel was needed. Without adequate processes, 
procedures, and controls to (1) identify individuals who are performing 
key funds control roles, such as funds certifying officials, resource 
managers, fund holders, certifying officers, contracting officers, 
program managers, and others, and (2) ensure that they have received 
the training necessary to fulfill their responsibilities in compliance 
with the FMR and the ADA, DOD and the military services lack reasonable 
assurance that these key personnel can reliably prevent, identify, and 
report ADA violations. 

Weaknesses in Controls, Processes, and Systems Hinder DOD's Ability to 
Maintain Effective Funds Control: 

Given the numerous documented control risks over funds control, DOD 
does not have reasonable assurance that it has prevented, identified, 
investigated, and reported all potential ADA violations. These 
weaknesses have adversely affected the ability of DOD to ensure basic 
accountability, maintain funds control, and prevent fraud. For example, 
we reported in 2005 that after decades of continuing financial 
management and accounting weaknesses, information related to long- 
standing unreconciled disbursement and collection activity was so 
inadequate that DOD was unable to determine the true value of certain 
disbursement and collection suspense differences that it removed from 
its records by writing them off. As a result, DOD could not determine 
whether any of the write-off amounts, had they been charged to the 
proper appropriation, would have caused an ADA violation.[Footnote 27] 

Pervasive business system, process, and control weaknesses acknowledged 
by the department have hindered DOD's ability to prevent, identify, 
investigate, and report ADA violations. Recent reports by the DOD 
Inspector General indicate that the weak control environment continues 
to exist today. For instance: 

* In November 2006 and 2007, the DOD Inspector General reported, and 
the department acknowledged, that it continues to have significant 
internal control deficiencies that impede its ability to produce 
accurate and reliable information on the results of its operations. 
These deficiencies adversely affect the ability of the department's 
financial management systems to reliably and accurately record 
accounting entries and report financial information, such as its fund 
balance with Treasury, accounts payable, and accounts receivable. For 
example, DOD made over $22 billion in unsupported adjustments for 
fiscal year 2007 to force its cost accounts to match obligation 
information. These weaknesses affect the safeguarding of assets and 
proper use of funds and impair the prevention and identification of 
fraud, waste, and abuse.[Footnote 28] 

* The DOD Inspector General reported in March 2008 that the Air Force 
and the Defense Finance and Accounting Service did not establish and 
maintain adequate and effective internal control over Air Force vendor 
disbursements. The DOD Inspector General noted numerous internal 
control weaknesses in contract formation and funding, funds control, 
vendor payment, and financial accounting. According to the report, 
these weaknesses represent a high risk that violations of laws and 
regulations not only occurred, but will likely continue to occur if 
corrective action is not taken.[Footnote 29] 

As part of its long-term initiative to address such weaknesses, the 
department has embarked upon a massive effort to transform its business 
operations, including financial management. Over the next several 
years, the department will be spending billions of dollars to implement 
these systems. However, it will be a number of years before the 
department's business system modernization efforts are complete, and as 
we have previously reported, DOD has encountered challenges in 
developing systems that meet time frame, cost, and functionality goals. 
[Footnote 30] Until DOD can successfully transform its business 
operations, including implementation of effective business processes, 
controls, and systems, the department's ability to ensure proper funds 
control and compliance with the ADA will continue to be impaired. Until 
then, mitigating controls, including knowledgeable personnel, will be 
key to effective funds control. Over the past several years, GAO has 
made numerous recommendations aimed at improving the department's 
business transformation efforts. Generally, the department has agreed 
with our recommendations and has identified or is planning specific 
actions to implement our recommendations. 

Key Funds Control Personnel May Not Have Received Training to Fulfill 
Their Responsibilities in Preventing, Identifying, and Reporting 
Potential ADA Violations: 

As DOD auditors have previously reported, improper disbursements or 
payments have occurred, in part, because personnel failed to comply 
with DOD policy and provide accurate and timely information to support 
the payment of and properly record the transactions.[Footnote 31] For 
example, the DOD Inspector General reported in April 2008 that the Mid- 
Atlantic, Southeast, and South Central Regional Maintenance Centers 
inappropriately obligated funds on ship maintenance and repair 
contracts because of ineffective internal controls. As a result, at 
least $103 million of U.S. Fleet Force Command Operations and 
Maintenance appropriations were not available for other ship 
maintenance and repair needs.[Footnote 32] The knowledge and 
understanding of DOD regulations and applicable federal laws, such as 
the ADA, by DOD personnel involved in the obligation, payment 
authorization, and recording processes are critical to the prevention 
and detection of ADA violations within the department. Both DOD and 
military service officials responsible for ADA programs at DOD or the 
military services have stated the importance of trained and 
knowledgeable personnel in establishing and maintaining effective funds 
control. Additionally, the DOD FMR requires DOD components to ensure 
that appropriate training programs are in place to provide personnel 
with the knowledge, skills, and abilities needed to perform their funds 
control duties. However, there is no DOD-wide requirement for DOD 
components to establish and document that key employees within their 
funds control processes, such as fund certifying officials, certifying 
officials, and departmental accountable officers, are identified and 
have received the appropriate training. 

Efforts are under way to provide key funds control personnel classroom 
and Web-based training. Additionally, the Army began an effort in 2006 
to identify its fund certifying officials and track their training. 
While the training of these individuals is critical to improving the 
Army's overall funds control process, this training does not include 
other key individuals, such as certifying officers and departmental 
accountable officials. Also, neither the Navy nor the Air Force could 
provide documentation of the processes, procedures, and controls they 
have or will utilize to ensure that key funds control personnel are 
trained. Navy and Air Force financial management and comptroller 
officials acknowledged that their military services currently do not 
identify and track training of individual key funds control personnel 
to ensure that they have received the training needed to fulfill their 
responsibilities in preventing, identifying, and reporting potential 
ADA violations. Moreover, follow-up with two Navy and two Air Force 
major commands with reported ADA violations in fiscal years 2006 and 
2007 revealed that they could not identify specific key funds control 
personnel or provide information on the training, if any, they had 
received. 

To its credit, in 2006, the Army began an effort to identify key 
personnel within its funds control process and to begin tracking the 
training provided. According to a June 2, 2006, memorandum signed by 
the Assistant Secretary of the Army, Financial Management and 
Comptroller, "the Army's ADA portfolio has reached an unacceptable 
level ...[and] reflects negatively on the Army's financial 
stewardship." The Assistant Secretary directed all Army major commands 
to identify their funds certifying officials and report back as to the 
number of these personnel who had received training. Based upon the 
training information it obtained as of June 5, 2008, Army officials 
acknowledged that their effort to identify key personnel within the 
Army's control processes and the training they received had revealed 
that many of its key funds control personnel had not been trained. 
According to Army officials, the Army is now working to ensure that 
this situation is corrected. 

DOD Lacks Assurance That Potential ADA Investigations Are Processed in 
Accordance with DOD Regulations: 

DOD and the military services have not established processes and 
procedures to oversee and monitor compliance with DOD FMR provisions 
requiring the assignment of qualified, trained, and independent ADA 
investigating officers and the completion of investigations within the 
prescribed time frames.[Footnote 33] The DOD FMR establishes procedures 
for DOD components to assign investigating officers. Specifically, the 
DOD FMR states that the investigating officer should be chosen from a 
roster of qualified personnel to ensure that he/she meets all the 
following qualifications: 

* adequately trained to conduct an investigation of this type, 

* adequate experience in the functional area that is involved with the 
apparent violation, 

* knowledgeable of financial management policies and procedures, and: 

* skilled in investigating potential ADA violations. 

Each DOD component is responsible for ensuring that its ADA 
investigating officers are qualified to conduct investigations and have 
received the required training, as prescribed by the DOD FMR. Training 
requirements include completion of a fiscal law, or equivalent, course 
and any additional training on an as-needed basis to ensure that the 
investigating officer is qualified. To remain qualified to conduct ADA 
investigations, the DOD FMR also requires that investigating officers 
receive refresher training every 5 years. Once an individual completes 
the appropriate training and meets the above-mentioned qualifications, 
the DOD FMR requires that his/her name be included on a roster of 
available ADA investigating officers maintained by each DOD component. 
Further, the DOD FMR states that investigating officers must be 
independent and capable of conducting a complete, impartial, and 
unbiased investigation. Finally, the DOD FMR establishes a time frame 
of approximately 15 months and 25 days for completing an ADA 
investigation. The following sections highlight specific examples of 
where the military services did not comply with DOD FMR criteria. 

Rosters Were Not Consistently Used to Select Qualified Investigating 
Officers: 

Army and Air Force officials informed us that selection of an 
investigating officer was left to the major command where the violation 
had occurred and that each major command is responsible for maintaining 
its own roster. The data required by the DOD FMR to be maintained on 
the roster of available investigating officers include name, rank/ 
grade, date initial training was received, organization to which 
assigned, functional specialties, and the number of investigations 
previously conducted. Collectively, these attributes help substantiate 
the qualifications, including training and organizational independence, 
of the person selected to be an ADA investigating officer. For the 
Army, we requested rosters from the 10 commands that were responsible 
for selecting the 39 investigating officers who reviewed the 31 Army 
ADA cases. The Army commands could not provide the rosters, nor could 
the Army provide documentation of how it ensures that its investigating 
officers are qualified. Interviews with 3 Army investigating officers 
and Army financial management and comptroller officials and our 
analysis of the Army cases disclosed that the Army appoints 
investigating officers based on functional specialty or work 
experience. The Air Force uses a roster in selecting 5 of its 12 
investigating officers to review the 10 Air Force ADA cases, but could 
not provide rosters or other documentation regarding how the remaining 
7 investigating officers were selected and how their qualifications 
were determined. The Navy uses a centralized roster to select its 
investigating officers; however, only 7 of the 15 investigating 
officers assigned to the 13 closed Navy ADA cases reviewed were 
selected from the roster. The Navy financial management and comptroller 
official responsible for the Navy's ADA program could not provide 
documentation regarding how the other 8 investigating officers were 
selected or why they were not selected from the centralized roster. 

The requirement to use rosters in selecting investigating officers is 
intended to ensure that investigating officers are selected from a 
population of predetermined qualified individuals. During our review, 
Army and Navy financial management and comptroller officials 
responsible for their military services' ADA programs stated that the 
DOD FMR requirement regarding the maintenance and utilization of a 
roster of qualified individuals to select investigating officers was no 
longer required. However, follow-up with DOD Comptroller officials 
responsible for the department's ADA program refuted the military 
services' assertion. The DOD Comptroller officials stated on several 
occasions that the requirement to use a roster was still valid and not 
under consideration for revision. The inconsistent manner in which the 
military services have complied with this requirement raises concerns 
as to whether DOD or the military services have reasonable assurance 
that individuals assigned to conduct ADA reviews and investigations are 
qualified. 

Military Services Were Unable to Provide Documentation That All 
Investigating Officers Are Properly Trained: 

The military services do not maintain adequate documentation that 
investigating officers selected to perform ADA preliminary reviews and 
formal investigations have been properly trained. Based on our review 
of the closed ADA case files, the rosters, and other documentation 
provided by the military services, we were only able to determine that 
6 of the 66 investigating officers assigned to the 54 ADA cases 
reviewed had received the required training. Our analysis of available 
documentation disclosed that only 13 of the 66 investigating officers 
had received initial training in fiscal law and 10 of the 13 had 
received required refresher fiscal law training within 5 years of the 
initial training.[Footnote 34] Further, our analysis disclosed that 
only 6 of the 13 investigating officers received all of the required 
training, including training on how to conduct an investigation. 
Training requirements for investigating officers outlined in the DOD 
FMR specify the following: 

* a fiscal law, or equivalent, course; 

* a refresher fiscal law, or equivalent, course within 5 years of 
initial training; and: 

* training in interviewing, gathering evidence, developing facts, 
documenting findings and recommendations, preparing reports of 
violation, recommending appropriate disciplinary action, meeting time 
frames established for the completion of an investigation, and 
recommending corrective actions. 

Once an individual completes the required training, the component is to 
issue a certificate indicating that all of the required courses have 
been taken, and the individual's name is added to the roster of 
individuals deemed qualified to be ADA investigating officers. To 
remain eligible to conduct investigations, an individual is required to 
renew his/her certificate every 5 years by attending a refresher 
training course. 

While the training requirements for investigating officers are 
explicit, the military services were not able to provide documentation 
that clearly indicated that all investigating officers selected to 
perform the investigations in the 54 ADA cases that were closed in 
fiscal years 2006 and 2007 had received the required training. 
Specifically, the Army does not currently track when an investigating 
officer received initial or subsequent training. As a result, we could 
not determine if any of the 39 investigating officers used by the Army 
to complete the 31 ADA cases were properly trained. An Army Financial 
Management and Comptroller Office official responsible for the Army's 
ADA program stated that Army investigating officers are required to 
read the Army Investigating Officer Handbook. However, the Army 
official acknowledged that the Army does not have a process or 
procedure for ensuring that each of its investigating officers actually 
reads or receives a copy of the manual, which we confirmed through 
interviews with Army investigating officers. The Army official further 
stated that the Army is developing an online investigating officer 
training course that will require participants to pass a test before 
they can receive course credit. The Army plans to have the course 
online later this calendar year. 

Regarding the 12 investigating officers assigned to the 10 closed Air 
Force ADA cases we reviewed, we could not determine from the rosters or 
ADA case files if the investigating officers had taken a fiscal law 
course within the past 5 years. An official within the Air Force's 
Financial Management and Comptroller Office responsible for the Air 
Force's ADA program stated that fiscal law is incorporated into the Air 
Force's Web-based investigating officer training. As a result, the Air 
Force does not require investigating officers to take an individual 
fiscal law course. Air Force investigating officers are required to 
include a copy of the verification of class completion documentation as 
an attachment to their draft ADA preliminary review or investigation 
reports. Our analysis of the 10 closed Air Force ADA case files found 
that only 6 of the 12 investigating officers provided verification that 
the required training had been completed. The Air Force could not 
provide documentation that the remaining 6 investigating officers were 
trained. 

With respect to the Navy, 15 investigating officers were used in the 13 
closed Navy ADA cases we reviewed. Of the 15 investigating officers, 
the supporting documentation provided by the Navy indicated that only 7 
had received initial training in fiscal law and 4 of the 7 had received 
required refresher fiscal law training within 5 years of the initial 
training. In June 2008, an official within the Navy's Financial 
Management and Comptroller Office responsible for the Navy's ADA 
program stated that the Navy was in the process of developing and 
testing an investigating officer training curriculum of online courses 
designed to provide investigative officers with the required skills and 
techniques, such as interviewing witnesses and developing facts and 
conclusions, as prescribed by the DOD FMR. The Navy plans to have these 
courses online by the end of this calendar year. 

Moreover, based on documentation provided, only 10 of the 66 
investigating officers assigned to the 54 ADA cases received the 
required refresher fiscal law training. The FMR does not include a 
requirement for the roster to document when refresher training was 
needed or received. Without up-to-date rosters or some comparable 
method to track the status of training received by potential 
investigating officers, the military services do not have a process to 
provide reasonable assurance that the investigating officers appointed 
to conduct preliminary reviews and investigations of potential ADA 
violations are properly trained. 

Independence of Investigating Officer Is Not Ensured: 

The military services do not have an established process or procedure 
for ensuring and documenting that investigating officers do not have 
any personal or external impairment that would affect their 
independence and objectivity in conducting ADA reviews and 
investigations. The DOD FMR states that individuals with no vested 
interest in the outcome, and who are capable of conducting a complete, 
impartial, unbiased investigation, shall conduct investigations of 
potential violations. Additionally, the regulation states that an 
investigating officer must be chosen from an organization external to 
the organization being investigated, which the use of a roster, as 
discussed earlier, is intended to facilitate. 

The PCIE/ECIE publication, entitled Quality Standards for 
Investigations, states that "in all matters relative to investigating 
work, the investigating organization must be free, both in fact and 
appearance, from impairments to independence; must be organizationally 
independent; and must maintain an independent attitude."[Footnote 35] 
Further, the standard for independence places the responsibility for 
maintaining independence upon agencies, investigative organizations, 
and investigating officers themselves, so that judgments used in 
obtaining evidence, conducting interviews, and making recommendations 
will be impartial and will be viewed as impartial by knowledgeable 
third parties. To maintain a high degree of integrity, objectivity, and 
independence, organizations should take into account the three general 
classes of independence--personal, external, and organizational. 
[Footnote 36] Table 2 illustrates the types of independence 
impairments. 

Table 2: General Classes of Impairments to Independence: 

General classes of impairments to independence: Personal; 
Examples of impairments: Relationships or beliefs that might limit the 
extent of the inquiry, limit disclosure, or weaken or slant the 
investigation findings. 

General classes of impairments to independence: External; 
Examples of impairments: Actual or perceived pressure from management 
and employees of the entity or oversight organization under 
investigation that deter an individual from acting independently and 
objectively and exercising professional skepticism. 

General classes of impairments to independence: Organizational; 
Examples of impairments: When the investigating function is 
organizationally located within the reporting line of the areas under 
the investigation or when the individual is assigned or takes on 
responsibilities that affect operations of the area under the 
investigation. 

Source: PCIE/ECIE, Quality Standards for Investigations. 

[End of table] 

If one or more of these impairments affects or can be perceived to 
affect independence, the individual selected to perform the 
investigation should not be assigned to perform the work. In addition, 
organizations should maintain documentation of the steps taken to 
identify potential personal independence impairments. 

Our analysis of the 54 ADA cases closed for the military services in 
fiscal years 2006 and 2007 disclosed that the military services focused 
on organizational independence as a criterion for ensuring 
investigating officer independence. In 35 of the 54 ADA cases reviewed, 
the investigating officers were chosen from an organization external to 
the one under investigation and therefore were determined by DOD to be 
organizationally independent.[Footnote 37] The remaining 19 case files 
lacked documentation as to whether the investigating officers assigned 
to the case were organizationally independent. Additionally, the 
military services did not maintain documentation in the case files or 
through other means to support that they took steps to ensure that the 
investigating officers assigned to each of the 54 cases were free from 
personal or external impairments that may have adversely affected their 
ability to conduct independent and objective investigations. 

Currently, the DOD FMR does not require documentation of an 
investigating officer's independence. Further, the military services do 
not require documentation of the steps taken to ensure investigating 
officers' independence or obtain written assertions regarding 
independence from the investigating officers. Instead, based on our 
analysis of the ADA case files and statements made by officials 
responsible for the military services' ADA programs, it appeared that 
the military services assume that an investigating officer is 
independent if he/she was selected from an organization external to the 
one that incurred the potential violation. Due to the constant 
rotational nature of the military, the act of selecting an "external" 
individual does not by itself provide assurance that the independence 
standards will be met. As a result, until the military services 
document the steps taken to confirm independence, they cannot be 
assured that the investigating officers who conduct ADA investigations 
are independent. 

DOD Lacks Assurance That ADA Cases Are Completed within Required Time 
Frames: 

Our analysis of the 54 ADA cases closed for the military services in 
fiscal years 2006 and 2007 disclosed that the time frame for completing 
both the preliminary review and formal investigation of a potential ADA 
violation was generally longer than the time frame specified in the DOD 
FMR. While the DOD Comptroller tracks the number and identity of 
overdue formal ADA investigations and issues memorandums to DOD 
components to follow up on overdue ADA reports, we found that 22 (or 
over 41 percent) of the 54 closed ADA cases reviewed took longer than 
30 months to complete and only 16 of the 54 cases (or about 30 percent) 
were completed within the 475 days generally required by the DOD FMR. 
Including the 3 months allotted to OSD to review the final report, the 
Army took an average of 33 months and the Air Force took an average of 
31 months to complete preliminary reviews and formal investigations. We 
were unable to ascertain the length of time the Navy took to complete 
its preliminary reviews because the Navy ADA case files did not contain 
complete information on the preliminary review phase of the 
investigation. However, we were able to determine that the Navy took on 
average 17 months to complete the formal ADA investigation phase, 
including OSD's review period, for the 13 Navy ADA cases closed in 
fiscal years 2006 and 2007. The DOD FMR generally requires that this 
stage of the investigation be completed within 12 months. 

Military service officials were unable to provide specific reasons why 
the established time frames were sometimes not achieved other than 
indicating that each case has its own set of specific circumstances and 
complexities. To attempt to identify more specific reasons why the time 
frames were not met, we contacted several investigating officers who 
indicated that inexperience in performing investigations and other job 
demands had adversely affected their ability to meet the prescribed 
time frames. They acknowledged, and DOD Comptroller and military 
service financial management and comptroller officials concurred, that 
they were not dedicated to the ADA investigation full-time, but were 
often required to complete the investigation in addition to their 
regularly assigned jobs. Without effective oversight and monitoring, 
neither DOD nor the military services can be certain why a preliminary 
review or formal investigation is not completed within the allotted 
time frame and what actions, if any, need to be taken to ensure timely 
completion of the ADA preliminary review or investigation. 

DOD Has Taken Steps to Improve Transparency of Reporting, and the 
Nature of Disciplinary Actions Taken Is Consistent with the ADA and the 
DOD FMR: 

The military services provided OSD the required monthly investigation 
summary information for the 54 ADA cases reviewed. Additionally, for 
the 34 cases for which DOD concluded that ADA violations had occurred, 
the violations were reported to the President and the Congress and 
copies of the reports were provided to the Comptroller General, as 
required by the ADA. The remaining 20 closed ADA cases were deemed not 
to have been ADA violations and therefore did not require reporting 
external to DOD. Additionally, the DOD Comptroller has taken steps in 
recent years to improve visibility within the department over the ADA 
investigation process, including preliminary reviews and formal 
investigations. Further, our analysis of the 34 ADA cases with 
confirmed ADA violations found that the disciplinary actions taken by 
the military services were in accordance with the criteria set forth in 
the DOD FMR. The ADA requires that employees who are responsible for an 
ADA violation be subject to appropriate administrative action. Within 
DOD, the FMR specifies that such administrative discipline can range in 
severity from no action to the termination of the individual's federal 
employment. Responsibility for determining what disciplinary action is 
warranted once it has been determined that an ADA violation has 
occurred resides with the military service, within established 
procedures for disciplining civilian and military personnel. 

DOD Is Taking Steps to Improve Transparency over the ADA Investigative 
Process: 

DOD reported the results of the 34 ADA cases that it concluded had an 
ADA violation to the President and the Congress, with a copy of the 
report to Comptroller General, as required by the ADA and OMB 
guidance.[Footnote 38] The act states that reports of violations should 
include all relevant facts and a statement of actions taken. OMB 
guidance notes that the report should include: 

* the title and Department of the Treasury (Treasury) symbol (including 
the fiscal year) of the appropriation or fund account, the amount 
involved, and the date on which the violation occurred; 

* the name(s) and position(s) of the individual(s) responsible for the 
violation; 

* all facts pertaining to the violation, including the type of 
violation, the primary reason or cause, and any statement from the 
responsible individual; 

* the disciplinary action taken; 

* a statement confirming that all information has been submitted to the 
Department of Justice if it is deemed that the violation was knowing 
and willful; 

* a statement regarding the adequacy of the system of administrative 
control prescribed by the head of the agency and approved by OMB and a 
proposal for a regulation change, if the head of the agency determines 
a change is needed; 

* statement of any additional action taken by, or at the discretion of, 
the agency head; and: 

* a statement concerning the steps taken to coordinate the report with 
the other agency, if another agency is involved. 

As noted above, each ADA violation case file should contain a statement 
regarding additional action(s) taken as result of the violation. Of the 
34 ADA violations, DOD reported taking corrective action in 33 cases. 
In 11 of the 33 cases, DOD indicated that improved training of key 
funds control personnel was needed. In the one case in which no 
corrective action was identified, the responsible individual was 
relieved of command. For the 20 ADA cases in which DOD concluded that 
no ADA violation occurred, we found that 13 of those cases identified 
corrective actions to be taken by the DOD component. Nine of the 13 
cases recommended training of key funds control personnel as a 
corrective action. Although the ADA reviews and investigations of 
potential ADA violations recognized the need for the military services 
to provide key funds control personnel with proper training, as we 
stated earlier, other than actions initiated by the Army, the military 
services have not established processes and procedures for ensuring 
that these important personnel are identified and properly trained. 

Required internal reporting for formal investigations is more detailed 
than the reporting requirements outlined by OMB guidance for reporting 
ADA violations. The DOD FMR requires DOD components to provide, on a 
monthly basis, specific status information to the DOD Comptroller 
regarding their ongoing formal ADA investigations. This status 
information includes (1) case number, (2) status, (3) amount, (4) 
appropriation and Treasury account symbol, (5) U.S. Code reference, (6) 
organization where potential violation occurred, (7) location where 
potential violation occurred, (8) nature of potential violation, (9) 
date potential violation occurred, (10) date potential violation was 
discovered, (11) date investigation began, (12) source of potential 
violation, (13) brief description of potential violation(s), and (14) 
progress of the investigation/other comments. Our review of the 54 
military service ADA cases closed by DOD in fiscal years 2006 and 2007 
found that the military services had complied with DOD's internal 
reporting requirements. 

To enhance DOD's ability to oversee the investigation process, the DOD 
Comptroller implemented an electronic "dashboard" in 2006 that contains 
key metrics derived from the monthly status information reported by the 
DOD components for use in monitoring the status of ongoing formal 
investigations within the department.[Footnote 39] According to DOD 
Comptroller and military service personnel, memos are issued to DOD 
components to follow up on overdue investigations identified through 
the "dashboard" metrics. The February 2008 update to the FMR also calls 
for status tracking of preliminary reviews.[Footnote 40] DOD components 
are now required to report information regarding the status of 
preliminary reviews of potential ADA violations to the DOD Comptroller 
on the fifth day of each month.[Footnote 41] While the military 
services have begun reporting information regarding their preliminary 
reviews of potential ADA violations to the DOD Comptroller in response 
to the updated FMR, as of June 17, 2008, none of the military services 
had reported the full scope of information required by the FMR. 
Examples of information missing from military services' reports 
regarding their preliminary reviews include (1) the means by which the 
violation was discovered, (2) anticipated dates of completion, and (3) 
the names and contact information for members of the preliminary review 
team. The lack of complete reporting information on preliminary reviews 
hinders DOD's ability to monitor and oversee the progress of a specific 
review. 

Disciplinary Actions Taken Were in Accordance with the Act and DOD 
Guidance: 

Our analysis of the 34 ADA violations reported by DOD as being closed 
in fiscal years 2006 and 2007 found that disciplinary actions taken 
were in accordance with the criteria set forth in the DOD FMR and were 
reported to the President and the Congress, with a copy to the 
Comptroller General, as required by the ADA. The ADA requires that 
employees who are responsible for an ADA violation be subject to 
appropriate administrative discipline.[Footnote 42] Within DOD, the FMR 
specifies that such administrative discipline can range in severity 
from no action to the termination of the individual's federal 
employment. Additionally, as established by laws and regulations 
addressing employee discipline within DOD generally, the specific 
action that is taken in each case is determined by the employee's 
commander or supervisor with the assistance of legal counsel. Table 3 
illustrates the disciplinary actions taken by the military services. 

Table 3: Disciplinary Actions Taken by the Military Services for ADA 
Violations Reported in Fiscal Years 2006 and 2007: 

Types of discipline: No discipline; 
Army: 19; 
Navy: 6; 
Air Force: 2. 

Types of discipline: Verbal discipline; 
Army: 2; 
Navy: 4; 
Air Force: 4. 

Types of discipline: Nonpunitive discipline; 
Army: 19; 
Navy: 5; 
Air Force: 1. 

Types of discipline: Formal discipline; 
Army: 19; 
Navy: 2; 
Air Force: 0. 

Types of discipline: Total; 
Army: 59; 
Navy: 17; 
Air Force: 7. 

Source: GAO analysis of DOD data. 

Note: Disciplinary actions may have been taken against multiple 
individuals. 

[End of table] 

An explanation of each type of discipline is provided below. 

* No discipline: The individual responsible received no discipline in 
any form. Based on case file analysis, an individual who was identified 
as responsible for the ADA violation typically did not receive any 
discipline if (1) the individual had retired from federal service or 
(2) the investigation concluded that while the individual was 
responsible for the violation, he/she had acted in good faith and 
followed what he/she believed to have been the correct policies and 
procedures when the violation had occurred. 

* Verbal discipline: The individual named responsible received verbal 
discipline from supervisor. An example of this form of discipline could 
include a one-on-one conversation with the individual named as 
responsible and his/her immediate supervisor, including a discussion of 
how to prevent future occurrences. 

* Nonpunitive discipline: The individual named responsible received 
either a memorandum of concern or letter of counseling. An example of 
this form of discipline could include a written letter of counseling by 
the named individual's immediate supervisor in conjunction with 
completion of required additional training. 

* Formal discipline: The individual named responsible received written 
reprimands, reassignment or removal, suspension, or an unfavorable 
evaluation. Examples of formal discipline, based on our review of case 
files, could include dismissal from federal service and removal from 
current position. 

We did not assess the appropriateness of disciplinary actions imposed 
in any of the cases reviewed. 

Conclusions: 

Given the numerous documented control risks over funds control, DOD 
does not have reasonable assurance that it has prevented, identified, 
and investigated all potential ADA violations. DOD's successful 
completion of modernizing its business operations, including systems, 
processes, policies, and controls, is critical to helping reduce the 
department's risk of ADA violations. DOD and the military services' 
stated intention to rely on better training of key funds control 
personnel as an interim action for preventing and detecting ADA 
violations was not supported by actions taken at either the department 
or military service levels. Specifically, other than an effort by the 
Army to identify funds certifying officials, the military services had 
not identified key individuals within their funds control processes and 
ensured that they had received training needed to fulfill their 
responsibilities in preventing, identifying, and reporting potential 
ADA violations. The lack of adherence at the departmental and military 
service levels to the department's established qualifications, 
training, and independence requirements for investigating officers 
undermines the reliability of the investigation process. Although DOD 
has taken steps to improve visibility over the investigation process, 
additional actions are needed to improve its ability to prevent, 
detect, investigate, and report on ADA violations. 

Recommendations for Executive Action: 

To improve management and oversight of preliminary reviews and formal 
investigations of potential ADA violations, we recommend that the 
Secretary of Defense direct the Under Secretary of Defense 
(Comptroller) to take the following two actions to update the 
department's FMR to require that (1) ADA case files document that the 
investigating officer(s) selected to conduct a preliminary review or 
formal investigation is(are) free of personal, external, and 
organizational impairments and (2) DOD components maintain 
documentation of the date by which an investigating officer must 
receive refresher training in order to remain qualified to perform ADA 
reviews and investigations. 

Additionally, we recommend that the Secretary of Defense direct the 
Secretary of the Army, the Secretary of the Navy, and the Secretary of 
the Air Force to take the following four actions: (1) implement and 
document processes, procedures, and controls to identify and help 
ensure that key funds control personnel, including funds certifying 
officials, are properly trained so that they can fulfill their 
responsibilities to prevent, identify, and report potential ADA 
violations; (2) implement and document processes, procedures, and 
controls to oversee and monitor compliance with DOD FMR provisions 
requiring the maintenance and use of a roster for selecting qualified 
ADA investigating officers; (3) develop, implement, and document 
policies and procedures to help ensure compliance with the DOD FMR 
requirements for investigating officer training; and (4) develop, 
implement, and document policies and procedures to help ensure 
compliance with the DOD FMR requirements for investigating officer 
independence. 

Agency Comments and Our Evaluation: 

We received written comments from the Acting Deputy Chief Financial 
Officer, which are reprinted in appendix II. DOD concurred with our 
recommendations and identified specific actions it has taken to 
implement these recommendations. On September 5, 2008, the department 
issued a memorandum to the Assistant Secretaries (Financial Management 
and Comptroller) of the Army, the Navy, and the Air Force, as well as 
other activities within the department, which detailed new requirements 
in the areas we recommended. The memorandum noted that the policy 
changes identified, which were effective immediately, would be included 
in the next update to the department's Financial Management Regulation. 

More specifically, the memorandum requires DOD components to document 
processes, procedures, and controls used to identify key fund control 
personnel, including fund certifying officials; train those individuals 
in appropriations law; validate that the individuals have received 
appropriations law training within the last 5 years; or a combination 
of these. The memorandum also notes that DOD components must require 
that these individuals attend a refresher appropriations law course 
every 5 years. 

In addition, the memorandum directs DOD components to retain 
documentation in each ADA case file that supports that ADA 
investigators are qualified; trained; and free of personal, external, 
and organizational impairments. Furthermore, these documents must be 
provided to the Office of the Under Secretary of Defense (Comptroller) 
and the Deputy Chief Financial Officer when a formal investigation is 
initiated. Each DOD component must also implement and document 
processes, procedures, and controls to oversee and monitor the 
maintenance and use of a roster for selecting qualified ADA 
investigators and establish a date by which each investigator must 
receive required refresher training. 

We will send copies of this report to interested congressional 
committees, the Secretary of Defense, the Secretary of the Army, the 
Secretary of the Navy, the Secretary of the Air Force, and the Under 
Secretary of Defense (Comptroller). We will make copies available to 
others upon request. In addition, the report will be available at no 
charge on the GAO Web site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions concerning this report, please 
contact me at (202) 512-9095 or rasconap@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. Key contributors to this report are 
listed in appendix III. 

Signed by: 

Paula M. Rascona: 
Director, Financial Management and Assurance: 

List of Committees: 

The Honorable Carl Levin: 
Chairman: 
The Honorable John McCain: 
Ranking Member: 
Committee on Armed Services: 
United States Senate: 

The Honorable Daniel K. Inouye: 
Chairman: 
The Honorable Thad Cochran: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
United States Senate: 

The Honorable Ike Skelton: 
Chairman: 
The Honorable Duncan L. Hunter: 
Ranking Member: 
Committee on Armed Services: 
House of Representatives: 

The Honorable John P. Murtha: 
Chairman: 
The Honorable C.W. Bill Young: 
Ranking Member: 
Subcommittee on Defense: 
Committee on Appropriations: 
House of Representatives: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine whether existing Department of Defense (DOD) funds control 
systems, processes, and internal controls provide reasonable assurance 
that potential Antideficiency Act (ADA) violations will be prevented 
and detected, we interviewed DOD Comptroller officials and reviewed GAO 
and DOD Inspector General audit reports, including financial-related 
reports; performance reports; and reports specifically related to the 
ADA, compliance with laws and regulations, or both.[Footnote 43] 
Specifically, we reviewed prior GAO reports related to DOD business 
transformation; High-Risk Series reports; and business modernization, 
financial management, and problem disbursements reports. These reports 
document long-standing weaknesses related to funds control, a key 
element in being able to prevent or detect an ADA violation. DOD has 
acknowledged the financial management weaknesses reported by GAO and 
DOD auditors and the impact these weaknesses have on the reliability of 
the department's financial information. As a result, we did not perform 
additional work to substantiate the condition of DOD's financial 
management environment and internal controls. 

We reviewed the DOD Financial Management Regulation (FMR), Volume 14, 
Administrative Control of Funds and Antideficiency Act Violations, to 
determine what controls and procedures had been established to help 
preclude ADA violations and prevent future occurrences of violations. 
In addition, we reviewed Office of Management and Budget (OMB) Circular 
No. A-11, Preparation, Submission, and Execution of the Budget, section 
145, "Requirements for Reporting Antideficiency Act Violations." 
[Footnote 44] We interviewed DOD Comptroller and military service 
officials responsible for ADA programs at DOD or the military services 
to identify appropriate training for key funds control personnel and to 
obtain an understanding of the processes, procedures, and controls to 
ensure that key funds control personnel receive training. 

To determine whether preliminary reviews[Footnote 45] and formal 
investigations[Footnote 46] of ADA violations are processed in 
accordance with applicable DOD regulations and criteria related to 
qualifications, training, independence, and timeliness of 
investigations, we reviewed applicable policies, procedures, and 
guidance contained in the DOD FMR. Additionally, we reviewed the 
President's Council on Integrity and Efficiency/Executive Council on 
Integrity and Efficiency, Quality Standards for Investigations, to 
obtain an understanding of qualification, independence, and due 
professional care standards and criteria applicable to investigations. 
[Footnote 47] We also reviewed all 54 ADA cases for the military 
services that were closed by DOD for fiscal years 2006 and 2007 and 
available military service rosters from which the investigating 
officers assigned to these cases files were or should have been chosen, 
and interviewed appropriate agency officials from the Army, the Navy, 
the Air Force, and the DOD Comptroller's Office responsible for ADA 
programs at DOD or the military services to determine how 
qualifications, training, and independence are ensured and documented. 
To assess investigating officers' qualifications, we focused our review 
on whether the investigating officers had received training and if 
there was an internal control in place to ensure that the investigating 
officers did not have any personal, external, or organizational 
independence impairments to their ability to conduct an investigation. 
We did not verify their fields of specialty or areas of expertise. 

To determine whether DOD tracks and reports metrics on preliminary 
reviews and formal investigations of ADA violations, we reviewed 
applicable policies, procedures, and program guidance contained in the 
DOD FMR. We also obtained and analyzed military service metrics for 
preliminary reviews and formal ADA investigations to ascertain whether 
the 54 ADA cases were completed within the time frames established by 
the DOD FMR. We also obtained and reviewed the DOD FMR, Volume 14, 
Administrative Control of Funds and Antideficiency Act Violations, 
chapter 6, "Status Reports on Investigations," to determine reporting 
criteria. With respect to disciplinary actions taken, we analyzed the 
34 ADA case files in which DOD had concluded that an ADA violation had 
occurred to identify the disciplinary action taken. We compared the 
disciplinary action documented in each case file to the criteria set 
forth in the DOD FMR. We did not assess the appropriateness of the 
conclusions reached by DOD for the 54 closed ADA cases or the 
disciplinary actions taken in the 34 cases for which DOD concluded that 
an ADA violation had occurred. 

The listing of 54 closed ADA cases for fiscal years 2006 and 2007 was 
obtained from the DOD Comptroller. We compared the listing of 54 closed 
ADA cases to information maintained by our Office of General Counsel on 
ADA cases reported to the President and the Congress, as filed with the 
Comptroller General, to ascertain the completeness and accuracy of the 
DOD listing. Our comparison and subsequent follow-up with the DOD 
Comptroller's Office, found that 34 of the 54 ADA cases investigated by 
DOD concluded that an ADA violation had occurred and were reported as 
required by law. For the remaining 20 ADA cases, DOD concluded that no 
ADA violation had occurred, and therefore these cases were not reported 
externally. We reviewed each case file to ensure that it contained the 
information set forth in the OMB circular and the DOD FMR. We conducted 
our work at the Office of the Under Secretary of Defense (Comptroller), 
the Financial Management and Comptroller Offices of the Army, the Navy, 
and the Air Force, and 12 military service major commands. We conducted 
this performance audit from July 2007 through September 2008 in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe that 
the evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives. We received written comments 
from the Acting Deputy Chief Financial Officer, which are reprinted in 
appendix II. 

[End of section] 

Appendix II: Comments from the Department of Defense: 

Office Of The Under Secretary Of Defense: 
1100 Defense Pentagon: 
Washington, DC 20301-1100: 

Ms. Paula M. Rascona: 
Director, Financial Management and Assurance: 
Government Accountability Office: 
441 G Street, N.W. 
Washington, DC 20548: 

Dear Ms. Rascona: 

This is the Department of Defense's (DoD) response to the Government 
Accountability Office (GAO) draft report, DoD Financial Management: 
Improvements Are Needed in Antideficiency Act Controls and 
Investigations, dated August 2008, (GAO Code 197078/GAO-08-1063). 

I concur with the findings and recommendations in the report. 
Corrective actions have been taken on all the recommendations directed 
to the Secretary of Defense. 

My point of contact on this matter is Ms. Jodie Fisher. She may be 
reached by email at jodie.fisher@osd.mil or telephone at (703) 602-
0371. 

Signed by: 

David P. Smith: 
Acting Deputy Chief Financial Officer: 

Attachment: As stated: 

GAO Draft Report Dated August 25, 2008: 
GAO-08-1063 (GAO Code 197078): 

DOD Financial Management: Improvements Are Needed In Antideficiency Act 
Controls And Investigations: 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Comptroller) to update the 
Department's Financial Management Regulation (FMR) to require that 
Antideficiency Act (ADA) case files document that the investigating 
officer(s) selected to conduct a preliminary review or formal 
investigation is/are free of personal, external, and organizational 
impairments. (p. 41/GAO Draft Report) 

DOD Response: Concur. The Office of the Under Secretary of Defense 
(Comptroller) (OUSD(C)) updated the DoD FMR to require ADA case files 
contain documentation that the investigating officer(s) selected to 
conduct a preliminary review or formal investigation is/are free of 
personal, external, and organizational impairments. Action is complete. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Under Secretary of Defense (Comptroller) to update the 
Department's FMR to require that DoD components maintain documentation 
of the date by which an investigating officer must receive refresher 
training in order to remain qualified to perform ADA reviews and 
investigations. (p. 41/GAO Draft Report) 

DOD Response: Concur. The OUSD(C) updated the DoD FMR to require 
Components maintain documentation of the date by which an investigating 
officer must receive refresher training in order to remain qualified to 
perform ADA reviews and investigations. Action is complete. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army, the Secretary of the Navy, and the 
Secretary of the Air Force to implement and document processes, 
procedures, and controls to identify and help ensure that key funds 
control personnel, including funds certifying officials, are properly 
trained so that they can fulfill their responsibilities to prevent, 
identify, and report potential ADA violations. (p. 41/GAO Draft Report) 

DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries 
(Financial Management and Comptroller) of the Army, Navy, and Air Force 
implement and document processes, procedures, and controls to identify 
and help ensure that key funds control personnel, including funds 
certifying officials, are properly trained so that they can fulfill 
their responsibilities to prevent, identify, and report potential ADA 
violations. Action is complete. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army, the Secretary of the Navy, and the 
Secretary of the Air Force to implement and document processes, 
procedures, and controls to oversee and monitor compliance with DoD FMR 
provisions requiring the maintenance and use of a roster for selecting 
qualified ADA investigating officer(s). (p. 41/GAO Draft Report) 

DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries 
(Financial Management and Comptroller) of the Army, Navy, and Air Force 
to implement and document processes, procedures, and controls to 
oversee and monitor compliance with DoD FMR provisions requiring the 
maintenance and use of a roster for selecting qualified ADA 
investigating officer(s). Action is complete. 

Recommendation 5: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army, the Secretary of the Navy, and the 
Secretary of the Air Force to develop, implement, and document policies 
and procedures to help ensure compliance with the DoD FMR requirements 
for investigating officer training. (p. 41/GAO Draft Report) 

DOD Response: The OUSD(C) directed the Assistant Secretaries (Financial 
Management and Comptroller) of the Army, Navy, and Air Force to 
develop, implement, and document policies and procedures to help ensure 
compliance with the DoD FMR requirements for investigating officer 
training. Action is complete. 

Recommendation 6: The GAO recommends that the Secretary of Defense 
direct the Secretary of the Army, the Secretary of the Navy, and the 
Secretary of the Air Force to develop, implement, and document policies 
and procedures to help ensure compliance with the DoD FMR requirements 
for investigating officer independence. (p. 41/GAO Draft Report) 

DOD Response: Concur. The OUSD(C) directed the Assistant Secretaries 
(Financial Management and Comptroller) of the Army, Navy, and Air Force 
to develop, implement, and document policies and procedures to help 
ensure compliance with the DoD FMR requirements for investigating 
officer independence. Action is complete. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Paula M. Rascona, (202) 512-9095 or rasconap@gao.gov: 

Acknowledgments: 

In addition to the contact named above, the following individuals made 
key contributions to this report: Darby Smith, Assistant Director; 
Evelyn Logue, Assistant Director; F. Abe Dymond, Assistant General 
Counsel; Lauren Catchpole; Francine DelVecchio; Jamie Haynes; Wil 
Holloway; Kristi Karls; Jason Kelly; Jason Kirwan; and Sandra Lord- 
Drakes. 

[End of section] 

Footnotes: 

[1] An obligation is a definite commitment that creates a legal 
liability of the government for the payment of appropriated funds for 
goods and services ordered and received, or a legal duty on the part of 
the United States that could mature into a legal liability by virtue of 
actions on the part of the other party beyond the control of the United 
States. Obligations include, for example, the awarding of contracts and 
grants. 

[2] A disbursement is an amount paid by a federal agency, by cash or 
cash equivalent, during the fiscal year to liquidate obligations, such 
as payment for goods received under a contract. 

[3] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-07-310] (Washington, D.C.: 
January 2007). 

[4] 31 U.S.C. §§ 1341-42, 1349-51, 1511-19. 

[5] An expenditure is the actual spending of money, typically a 
disbursement. 

[6] S. Rep. No. 110-77, at 401 (Oct. 1, 2007). 

[7] S. 1547, 110th Cong.; See Pub. L. No. 110-181, 122 Stat. 3 (Jan. 
28, 2008). 

[8] GAO, Financial Management: DOD's Ability to Prevent, Identify, 
Investigate, and Report on Antideficiency Act Violations, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-08-941R] (Washington, D.C.: July 
28, 2008). 

[9] President's Council on Integrity and Efficiency/Executive Council 
on Integrity and Efficiency, Quality Standards for Investigations 
(December 2003). 

[10] The purpose of the formal investigation is to determine the 
relevant facts and circumstances concerning the potential violation 
and, if a violation occurred, what caused it, what are the appropriate 
corrective actions and lessons learned, and who is responsible for the 
violation. 

[11] Department of Defense, Performance and Accountability Report: 
Fiscal Year 2006 (Washington, D.C.: Nov. 15, 2006) and Agency Financial 
Report: Fiscal Year 2007 (Washington, D.C.: Nov. 15, 2007). 

[12] In 2001, DOD began a massive transformation effort to improve the 
capability of its business systems and processes to provide the timely, 
reliable, accurate, and relevant information needed for management, 
decision making, and reporting. To help guide this undertaking, DOD 
released its first integrated Enterprise Transition Plan on September 
30, 2005, which it updates annually. 

[13] Under law, disbursements may be made only on vouchers certified by 
the head of an agency or a certifying officer designated by the head of 
the agency. 31 U.S.C. §§ 3322; 3325(a). By law, certifying officers are 
responsible for (1) the correctness of the facts in the certificate, 
voucher, and supporting documentation; (2) the correctness of 
computations on the voucher; and (3) the legality of a proposed payment 
under the appropriation or fund involved. 31 U.S.C. § 3528. 

[14] A departmental accountable official is an individual who is 
responsible in the performance of his/her duties for providing a 
certifying officer with information, data, or services that the 
certifying officer relies upon in the certification of vouchers for 
payment. Departmental accountable officials may include resource 
managers, fund holders, and funds certifying officials, who are 
responsible for the proper assignment of funding on an obligation 
document before the obligation is incurred and for maintaining a system 
of positive funds control. Departmental accountable officers also may 
include officers and employees who enter into obligations, such as 
contracting officers, and who make payment eligibility determinations. 

[15] Funds certifying officials are responsible for certifying that 
funds to procure goods or services are properly chargeable to the 
appropriate allotment(s) and the available balance(s) within the 
allotment(s) is sufficient to cover the estimated total price of the 
procurement transaction. 

[16] Of the 54 ADA cases closed for the military services by DOD in 
fiscal years 2006 and 2007, 31 were Army, 13 were Navy, and 10 were Air 
Force. 

[17] Department of Defense Financial Management Regulation, 7000.14R, 
Volume 14, Administrative Control of Funds and Antideficiency Act 
Violations (August 1995). 

[18] The purpose of a preliminary review is to gather basic facts to 
determine whether a formal investigation is warranted. This should be 
done in a timely manner--usually within 90 days. 

[19] Of the 34 military service ADA cases, the Army, Navy, and Air 
Force were responsible for 21, 7, and 6 of these cases, respectively. 

[20] Of the 20 military service ADA cases that were closed by DOD and 
did not require external reporting, the Army, Navy, and Air Force were 
responsible for 10, 6, and 4 of these cases, respectively. 

[21] Department of Defense Financial Management Regulation, 7000.14R, 
Volume 14, Administrative Control of Funds and Antideficiency Act 
Violations, ch. 3, "Preliminary Reviews of Potential Violations" 
(February 2008). 

[22] "No money shall be drawn from the Treasury, but in Consequence of 
Appropriations made by law." U.S. Const. art. I, § 9, cl. 7. 

[23] For an explanation of coercive deficiencies, see GAO, Principles 
of Appropriations Law, vol. 2, 3rd ed., [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO/OGC-06-382SP] (Washington, D.C.: 
February 2006), 6-34. 

[24] DOD must also implement and maintain proprietary (or financial) 
accounting to record and report financial information in audited 
financial statements prepared in accordance with generally accepted 
accounting principles. Agency audited financial statements include a 
Statement of Budgetary Resources that reports information on the status 
of appropriations. For a description of the different methods for 
tracking funds in the federal government, see app. III of GAO, A 
Glossary of Terms Used in the Federal Budget Process, [hyperlink, 
http://www.gao.gov/cgi-bin/getrpt?GAO-05-734SP] (Washington, D.C.: 
September 2005). 

[25] When apprised of a potential violation by an audit report or other 
means, the Office of the Under Secretary of Defense (Comptroller) can 
also request a DOD component to perform a preliminary review of the 
circumstances surrounding a potential ADA violation. 

[26] The head of a DOD component may grant an extension of up to 3 
months on a case-by-case basis with a statement of justification 
submitted to the DOD Comptroller. 

[27] GAO, DOD Problem Disbursements: Long-standing Accounting 
Weaknesses Result in Inaccurate Records and Substantial Write-offs, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-521] (Washington, 
D.C.: June 2, 2005). 

[28] Department of Defense, Performance and Accountability Report: 
Fiscal Year 2006, and Agency Financial Report: Fiscal Year 2007. 

[29] Department of Defense Office of Inspector General, Vendor Pay 
Disbursement Cycle, Air Force General Fund, Report No. D-2008-063 
(Arlington, Va.: Mar. 12, 2008). 

[30] GAO, DOD Business Transformation: Lack of an Integrated Strategy 
Puts the Army's Asset Visibility System Investments at Risk, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860] (Washington, 
D.C.: July 27, 2007). 

[31] [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-05-521] and DOD 
Inspector General Report No. D-2008-063. 

[32] Department of Defense Office of Inspector General, Obligation of 
Funds for Ship Maintenance and Repair at the U.S. Fleet Forces Command 
Regional Maintenance Centers, Report No. D-2008-083 (Arlington, Va.: 
Apr. 25, 2008). 

[33] If a potential violation appears to involve a complex situation or 
a multitude of functional areas, the DOD component may utilize a team 
of investigating officers to conduct the investigation. 

[34] Based on additional information received from the Navy and the Air 
Force, we updated the information presented in our July 28, 2008, 
report, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-08-941R]. 

[35] President's Council on Integrity and Efficiency and Executive 
Council on Integrity and Efficiency, Quality Standards for 
Investigations. These standards provide guidelines primarily for 
criminal investigating officers working with offices of inspectors 
general. Because ADA investigating officers in DOD are required to name 
one or more responsible individuals when they decide that a violation 
has occurred, and because these individuals are subject to disciplinary 
actions based on the investigation's findings, the threats to 
investigating officer independence are similar to those faced by 
criminal investigators. Thus, we believe that these are appropriate 
standards to apply to internal DOD ADA investigations. 

[36] President's Council on Integrity and Efficiency/Executive Council 
on Integrity and Efficiency, Quality Standards for Investigations. 
(December 2003). 

[37] Sixty-six investigative officers were assigned to the 54 closed 
military service ADA cases we reviewed. In some cases, the preliminary 
review and formal investigation were performed by different 
investigative officers. 

[38] OMB Circular No. A-11, Preparation, Submission, and Execution of 
the Budget, § 145, (July 2007), specifies report contents. 

[39] Metrics are identified by DOD component, including the military 
services and defense agencies, and include (1) the number of open 
formal investigations; (2) the number of open formal investigation case 
files that have been turned over to DOD for processing, concurrence, 
and external reporting; (3) the number and identity of formal 
investigations that have been open less than 12 months; and (4) the 
number and identity of formal investigations that are overdue. 

[40] As of July 7, 2008, the Army, Navy, and Air Force reported 14, 2, 
and 6 preliminary reviews under way, respectively. 

[41] Information on preliminary reviews required as a result of the 
February 2008 update to the DOD FMR include the (1) accounting 
classification of funds involved, (2) location where the alleged 
violation occurred, (3) location of the activity issuing the fund 
authorization, (4) amount of fund authorization or limitation that was 
exceeded, (5) amount and nature of the alleged violation, (6) date the 
alleged violation occurred, (7) date the alleged violation was 
discovered, (8) means of discovery, (9) description of the facts and 
circumstances of the case, (10) anticipated dates of completion of the 
investigation and submission of the report, and (11) names and phone 
numbers of members of the preliminary investigation team. 

[42] Criminal prosecution may also be sought for violations found to 
have been committed knowingly and willfully. 

[43] See GAO, DOD Business Transformation: Lack of an Integrated 
Strategy Puts the Army's Asset Visibility System Investments at Risk, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-860] (Washington, 
D.C.: July 27, 2007); DOD Business Systems Modernization: Progress 
Continues to Be Made in Establishing Corporate Management Controls, but 
Further Steps Are Needed, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-07-733] (Washington, D.C.: May 14, 2007); High-Risk 
Series: An Update, [hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-
310] (Washington, D.C.: January 2007); DOD Problem Disbursements: Long-
standing Accounting Weaknesses Result in Inaccurate Records and 
Substantial Write-offs, [hyperlink, http://www.gao.gov/cgi-
bin/getrpt?GAO-05-521] (Washington, D.C.: June 2, 2005); and Financial 
Management: Improved Reporting Needed for DOD Problem Disbursements, 
[hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-97-59] 
(Washington, D.C.: May 1, 1997). Also, see Department of Defense Office 
of Inspector General, Vendor Pay Disbursement Cycle, Air Force General 
Fund, Report No. D-2008-063 (Arlington, Va.: Mar. 12, 2008); Potential 
Antideficiency Act Violations Made Through Non-DOD Agencies, Report No. 
D-2007-042 (Arlington, Va.: Jan. 2, 2007); FY 2005 DoD Purchases Made 
Through the General Services Administration, Report No. D-2007-007 
(Arlington, Va.: Oct. 30, 2006); and Financial Management, DOD 
Antideficiency Act Reporting and Disciplinary Process, Report No. D-
2005-003 (Arlington, Va.: Oct. 14, 2004). See also Department of 
Defense, Performance and Accountability Report: Fiscal Year 2006 
(Washington, D.C.: Nov. 15, 2006), and Agency Financial Report: Fiscal 
Year 2007 (Washington, D.C.: Nov. 15, 2007). 

[44] OMB Circular No. A-11, Preparation, Submission, and Execution of 
the Budget (July 2007), and GAO, GAO Policy and Procedures Manual for 
Guidance of Federal Agencies, title VII, "Fiscal Guidance" (May 18, 
1993). 

[45] The purpose of a preliminary review is to gather basic facts to 
determine whether a formal investigation is warranted. This should be 
done in a timely manner--usually within 90 days. 

[46] The purpose of the formal investigation is to determine the 
relevant facts and circumstances concerning the potential violation 
and, if a violation occurred, what caused it, what are the appropriate 
corrective actions and lessons learned, and who is responsible for the 
violation. 

[47] President's Council on Integrity and Efficiency/Executive Council 
on Integrity and Efficiency, Quality Standards for Investigations 
(December 2003). 

[End of section] 

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