The Pentagon has come under fire from its watchdog component which came out with a new report Tuesday that shows “enduring concerns” with the Defense Department’s (DoD) financial management systems.
According to the DoD Inspector General (IG), the Pentagon continues to spend too much money on noncompliant and outdated financial systems. DoD could potentially save up to nearly $728 million if it gets rid of old systems that it has no plans to modernize, the IG said.
The department’s watchdog found in the audit released on Jan. 23 that DoD had an incomplete list of its financial management systems, and its plans for system compliance were inadequate. These financial management systems must provide accurate, reliable, and timely financial management information to enable the DoD to ensure financial accountability, the report notes.
“The DoD faces critical challenges in ensuring the accuracy of its internal controls over financial reporting,” DoD IG Robert Storch said in a statement. “Without prompt corrective actions, the DoD will continue to allocate significant resources to noncompliant, outdated systems, jeopardizing its ability to produce accurate financial management information and increasing the risk of poor enterprise-wide decisions.”
The DoD IG identified $727.9 million in potential monetary benefits that could be realized if the DoD retires systems that are not scheduled to be retired in the next few years, and operates in a more simplified systems environment.
For example, the 74-page IG report found that DoD doesn’t plan to retire several systems that are more than 50 years old until fiscal year 2031, and that those systems will never be compliant with the Federal Financial Management Improvement Act of 1996 (FFMIA).
“Without resolution of the issues identified in our audit, instead of the DoD achieving its goal to create a simplified, integrated, and modern Information Technology systems environment, it will continue to spend large sums of money on noncompliant, outdated systems,” the watchdog said. “Without compliant and modern systems, the DoD is at risk of making poor enterprise-wide business decisions, which could directly impact the DoD’s mission to ensure the security of our Nation.”
To address these issues, the DoD IG made 31 recommendations to the deputy secretary of defense, the DoD chief financial officer, and the DoD CIO.
The recommendations included creating an ideal end-state document that identifies the financial management systems the DoD will have when it achieves compliance with FFMIA; creating a strategy for all DoD financial management systems to become FFMIA compliant or retired and replaced in a timely manner; and obtaining justification from system owners for the continued use of each system in the Defense Business System Audit Remediation Plan.
The DoD OIG also recommended that the deputy secretary of defense approve the continued use of each system in the Defense Business System Audit Remediation Plan, and that the DoD chief financial officer reevaluate the department’s timeline for modernizing its financial systems in an effort to expedite the remediation of the DoD’s noncompliance with the FFMIA.
The Pentagon agreed to all 31 recommendations.
