DOD correcting mismanagement of financial records

The Defense Department is making progress in rectifying its mismanagement of financial records and improving its accountability, including by implementing new IT strategies, but problems remain in carrying out enterprisewide reform, officials have told a Senate panel.

“We continue to make important progress but also face significant challenges in transforming all elements of the DOD business environment in order to produce high quality, timely and reliable financial information,” DOD Comptroller Robert Hale said in a Sept. 15 statement submitted to a subcommittee of the Senate Homeland Security and Governmental Affairs Committee.

Another hearing examining DOD financial management is scheduled for Sept. 23 before the House Oversight and Government Reform Committee.

Hale and Elizabeth McGrath, DOD's deputy chief management officer, outlined their goals and some of their successes so far before the Federal Financial Management, Government Information, Federal Services and International Security Subcommittee.

They also testified about the importance of new IT systems to help bring financial management up to date.

“In pursuit of these goals, we are taking an enterprise approach to meet the challenges of implementing IT systems on time, within budget and with needed capabilities and establishing effective governance over their operations,” McGrath said. “Our goal is to deliver a streamlined, 21st-century systems environment [comprising] IT capabilities that work seamlessly together to support effective and efficient business processes and operations.”

She also highlighted efforts to improve the acquisition and implementation of IT systems, including revisions to the DOD Instruction 5000.2 directive for the IT acquisition processes.

Hale said that every business day, DOD obligates an average of $2 billion to $3 billion and handle hundreds of thousands of payment transactions in thousands of locations worldwide, including combat zones, and highlighted the priority placed on improving management and auditability across the department.

He testified that Defense Secretary Leon Panetta has taken an active role in the reform effort, including directing Hale’s team to tackle wasteful spending and overhead staffing, and ordering a review of the financial improvement strategy.

“That review is ongoing. The secretary’s interest in these issues will be very helpful in the days ahead,” Hale said.

Hale also testified that DOD is also partnering with the Government Accountability Office to address concerns outlined by GAO in a July 2011 memo that raised questions about DOD’s leadership, workforce competency, governance, oversight and accountability, timely and on-budget implementation of IT systems and internal controls.

He said DOD has implemented a new governance structure and is taking advantage of independent public accountants to deal with governance issues, and to improve the workforce is delivering short-term training already and developing long-term plans for certification programs.