DOD FINANCIAL 

MANAGEMENT

Continued Actions 

Needed to Address 

Congressional 

Committee Panel 

Recommendations

Report to the Committee on Armed 

Services, House of Representatives

September 2015

GAO-15-463

United States Government Accountability Office
Highlights of GAO-15-463, a report to the 

Committee on Armed Services, House of 

Representatives

September 2015

DOD FINANCIAL MANAGEMENT

Continued Actions Needed to Address Congressional 

Committee Panel Recommendations

Why GAO Did This Study

A congressional panel examined the 

capacity of DOD’s financial 

management system for providing 

timely, reliable, and useful information 

for decision making and reporting. The 

panel, in its January 2012 report,

included 29 recommendations 

addressed to DOD in four areas: 

(1) FIAR strategy and methodology, 

(2) challenges to achieving financial 

management reform and auditability, 

(3) financial management workforce, 

and (4) enterprise resource planning 

systems implementation. 

GAO was asked to review the status of 

DOD’s actions to implement these 

recommendations. This report 

examines the extent to which the 

recommendations have been 

implemented. GAO reviewed pertinent 

legislation, including the National 

Defense Authorization Acts for Fiscal 

Years 2010 through 2015 as well as 

the department’s FIAR Guidance and 

FIAR Plan Status Reports. GAO 

analyzed relevant information and 

interviewed officials from the Office of 

the Secretary of Defense, the military 

departments, and two service 

providers. Using the three status

categories developed for GAO’s highrisk work—met, partially met, and not 

met—GAO determined the extent to 

which DOD implemented the panel’s 

recommendations.

What GAO Recommends

GAO is recommending that DOD

reconsider the status of three panel 

recommendations that it determined to 

be met but that GAO determined to be

only partially met. DOD concurred with 

the recommendation and described 

planned actions to address it.

What GAO Found

The Department of Defense (DOD) has made progress toward implementing 

each of the 29 recommendations made by the House Armed Services Committee 

Panel on Defense Financial Management and Auditability Reform (the panel).

GAO determined that DOD’s actions met 6 of the panel’s recommendations and 

partially met the other 23. In its May 2015 Financial Improvement and Audit 

Readiness (FIAR) Plan Status Report, DOD reported that 9 recommendations 

were met and 20 were partially met. The 3 recommendations for which GAO

disagreed with DOD’s reported status of met related to (1) attestations on audit 

readiness in each of the FIAR Plan Status Reports; (2) inclusion of FIAR-related 

goals in Senior Executive Service performance plans, and rewarding and 

evaluating performances over time based on those goals; and (3) the review of 

audit readiness assertions by component senior executive committees. For 

example, while each FIAR Plan Status Report is coordinated among FIAR 

Governance Board (Board) members, including the Comptroller/Chief Financial 

Officer among others, in these reports Board members do not explicitly attest to 

whether DOD is on track to achieve audit readiness in 2017 as called for by the 

panel’s recommendation and not all Board members provide signed statements 

about component audit readiness in the reports.

GAO and DOD agree that the remaining 20 recommendations were partially met

and continued actions are needed, but GAO found that additional actions are 

needed to address some recommendations. These 20 partially met 

recommendations cover such diverse topics as a strategy for the consolidation of 

component financial information, valuation of historical asset costs, and 

assessing the competencies of the civilian financial management workforce. For 

example, DOD has made progress in assessing the competencies of its civilian 

financial management workforce in the financial management community, but 

has not yet assessed the competencies of all civilian, military, and contracted 

personnel performing financial-related functions, as recommended by the panel. 

Other recommendations are related to the implementation of enterprise resource 

planning systems—automated systems that perform a variety of business-related 

financial management tasks. DOD officials have stated that these systems are 

critical to DOD’s ability to achieve audit readiness, but none of these

recommendations have been fully met.

The panel’s report and its recommendations touch on some of the most critical 

challenges DOD faces in achieving lasting financial management improvements 

and financial statement audit readiness. However, it is important to note that 

implementation of the panel’s recommendations may not include all of the 

actions needed for DOD to achieve auditable financial statements. As auditors 

perform examinations and audits, they may identify deficiencies that were not 

previously known and therefore were not addressed by the panel’s 

recommendations. DOD is monitoring its progress for implementing the FIAR 

Plan against interim milestones included in its April 2015 FIAR Guidance. 

However, as the audit readiness date approaches, DOD has emphasized 

asserting audit readiness by set dates over assuring that processes, systems, 

and controls are effective, reliable, and sustainable. While time frames are 

important for measuring progress, DOD should not lose sight of the ultimate goal 

of implementing lasting financial management reform, among other things, to 

ensure that it can routinely generate reliable, auditable financial information.

View GAO-15-463. For more information, 

contact Asif A. Khan (202) 512-9869 or 

khana@gao.gov.

United States Government Accountability Office
Letter 1

Background 4

DOD Has Taken Actions to Implement the Panel’s 

Recommendations, but Significant Challenges Remain to 

Achieve Auditability 14

Conclusions 24

Recommendation for Executive Action 25

Agency Comments and Our Evaluation 25

Appendix I Status of DOD’s Actions to Implement the Panel on Defense 

Financial Management and Auditability Reform Recommendations 27

Appendix II Comments from the Department of Defense 81

Appendix III GAO Contact and Staff Acknowledgments 83

Table

Table 1: Status of DOD Implementation of Recommendations 

Made by the Panel on Defense Financial Management 

and Auditability Reform (as of May 2015) 15

Contents

Page i GAO-15-463 HASC Panel Recommendations
Abbreviations

ADA Antideficiency Act

CAP corrective action plan

CMO Chief Management Officer 

CPA certified public accountant

DCMO Deputy Chief Management Officer

DEAMS Defense Enterprise Accounting and Management System

DFAS Defense Finance and Accounting Service

DLA Defense Logistics Agency

DOD Department of Defense

ECSS Expeditionary Combat Support System

ERP enterprise resource planning

FIAR Financial Improvement and Audit Readiness

FIP financial improvement plan

FMR Financial Management Regulation

GCSS-Army Global Combat Support System-Army

GFEBS General Fund Enterprise Business System

HASC House Armed Services Committee

IG Inspector General

IPA independent public accountant

MDA Milestone Decision Authority 

NDAA National Defense Authorization Act 

OT&E Operational Test and Evaluation

SBR Statement of Budgetary Resources

SES Senior Executive Service

SSAE Statement on Standards for Attestation Engagements

USD(C) Under Secretary of Defense (Comptroller)

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Page ii GAO-15-463 HASC Panel Recommendations
441 G St. N.W.

Washington, DC 20548

September 28, 2015

The Honorable Mac Thornberry

Chairman

The Honorable Adam Smith

Ranking Member

Committee on Armed Services

House of Representatives

Sound financial management practices and reliable, timely financial 

information are important to ensuring accountability over the Department 

of Defense’s (DOD) extensive resources. Achieving this goal is a 

significant challenge given the worldwide scope of DOD’s mission and 

operations; the diversity, size, and culture of the organization; and its 

reported trillions of dollars in assets and liabilities and its hundreds of 

billions of dollars in annual appropriations. Serious, continuing financial 

management problems at DOD have precluded it from producing financial 

statements that can be audited. To enhance its oversight of DOD financial 

management, in July 2011, the House Armed Services Committee 

(HASC) appointed seven of its members to a newly formed Panel on 

Defense Financial Management and Auditability Reform (hereafter 

referred to as the panel). The panel was asked to examine the capacity of 

DOD’s financial management system for providing timely, reliable, and 

useful information for decision making and reporting.1 In addition, the 

panel was to identify possible ways for DOD to improve its financial 

management and audit readiness effort.

As part of its 6-month review, the panel held seven hearings and two 

briefings on issues related to DOD financial management.2 In January 

2012, the panel issued its report with 30 recommendations.3 Of the 30 

1

The panel defined DOD’s financial management system as the processes (whether 

automated or manual) for initiating, authorizing, recording, and reporting DOD’s operations 

and activities and for maintaining accountability for the related assets, liabilities, equity, 

and budgetary resources. 

2

An eighth hearing was on January 24, 2012, the date of the panel’s report.

3

House Armed Services Committee Panel on Defense Financial Management and 

Auditability Reform, Findings and Recommendations (Washington, D.C.: Jan. 24, 2012). 

Letter

Page 1 GAO-15-463 HASC Panel Recommendations

 
recommendations, 1 was addressed to the House Armed Services 

Committee and 29 were addressed to DOD in the following four areas 

reviewed by the panel:

• Financial Improvement and Audit Readiness (FIAR) strategy and 

methodology (6 recommendations).

• Challenges to achieving financial management reform and auditability 

(9 recommendations).

• Financial management workforce (5 recommendations).

• Enterprise resource planning (ERP) system implementation efforts (9 

recommendations).4

You asked us to review DOD’s actions to implement the panel’s 

recommendations. This report examines the extent to which DOD has 

implemented the 29 panel recommendations addressed to it. To meet this 

audit objective, we analyzed relevant documentation and interviewed key 

officials from the Office of the Under Secretary of Defense (Comptroller), 

including its Human Capital and Resource Management and FIAR 

Directorates, and the Office of the Deputy Chief Management Officer 

(DCMO) to obtain DOD’s perspective on implementation of the 

recommendations.5 We also analyzed supporting documents and 

interviewed knowledgeable officials from the three military departments6

and two service providers—the Defense Finance and Accounting Service 

(DFAS) and the Defense Logistics Agency (DLA).7 To determine DOD’s 

4

An ERP system is an automated system using commercial off-the-shelf software 

consisting of multiple, integrated functional modules that perform a variety of businessrelated tasks, such as general ledger accounting, payroll, and supply chain management. 

5

The FIAR Directorate provides management of the FIAR Plan to ensure integration of 

DOD-wide financial improvement efforts through various activities, including 

(1) developing and issuing the FIAR Guidance, (2) performing monthly detailed reviews of 

component financial improvement plans and evaluating related deliverables, and 

(3) developing metrics for monitoring and reporting progress.

6

DOD has three military departments: the Department of the Army, Department of the 

Navy, and Department of the Air Force. The Department of the Navy includes two military 

services: the Navy and the Marine Corps. 

7

DOD, in its FIAR Guidance, has defined service providers as “entities that provide 

services to and are responsible for executing one or more business processes on behalf 

of the reporting entities.”

Page 2 GAO-15-463 HASC Panel Recommendations

 
methodology and plans for achieving audit readiness, we reviewed DOD’s 

FIAR Guidance8 and semiannual FIAR Plan Status Reports.9 To 

determine the extent to which DOD had implemented the panel 

recommendations, we also considered findings disclosed in recent DOD 

Inspector General (IG) and GAO reports. We used three categories, 

consistent with those developed for GAO’s high-risk work,10 to determine 

the status of DOD’s implementation of each recommendation: met, 

partially met, or not met.11

We conducted this performance audit from June 2014 to September 2015 

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.

8

For example, the most recently issued FIAR Guidance was dated April 2015. See 

Department of Defense, Office of the Under Secretary of Defense (Comptroller)/Chief 

Financial Officer, Financial Improvement and Audit Readiness (FIAR) Guidance

(Washington, D.C.: April 2015).

9

For example, the most recently issued FIAR Plan Status Report was dated May 2015. 

See Department of Defense, Office of the Under Secretary of Defense (Comptroller)/Chief 

Financial Officer, Financial Improvement and Audit Readiness (FIAR) Plan Status Report

(Washington, D.C.: May 2015). 

10GAO maintains an ongoing program to focus on government operations that are at high 

risk because of their greater vulnerabilities to fraud, waste, abuse, and mismanagement or 

that need transformation to address economy, efficiency, or effectiveness challenges. See 

GAO, High-Risk Series: An Update, GAO-15-290 (Washington, D.C.: Feb. 11, 2015). 

11“Met” means that actions have been taken to meet the recommendation and no

significant actions need to be taken to further address the recommendation. “Partially met”

means that some, but not all actions, necessary to address this recommendation have 

been taken. “Not met” means that few, if any actions, toward addressing the 

recommendation have been taken. 

Page 3 GAO-15-463 HASC Panel Recommendations

 
DOD’s efforts to improve its financial management and achieve audit 

readiness have evolved over a number of years into its current FIAR 

effort. In 1995, we first designated DOD financial management as one of 

the federal government’s programs at high risk of waste, fraud, abuse, or 

mismanagement because of long-standing and pervasive weaknesses in 

DOD’s internal control, and it still carries that designation today.12 Over 

the past two decades, DOD has initiated efforts to strengthen its internal 

control, become auditable, and improve its financial management. 

However, as we stated in our most recent high-risk report, DOD has 

emphasized asserting audit readiness by set dates over assuring that 

processes, systems, and controls are effective, reliable, and 

sustainable.13 DOD submitted its biennial strategic plan for the 

improvement of financial management (Biennial Plan) to Congress on 

October 26, 1998, as required by section 1008 of the National Defense 

Authorization Act (NDAA) for Fiscal Year 1998.14 This Biennial Plan was 

an important first step toward DOD improving its financial management 

operations. The Biennial Plan included, for the first time, a discussion of 

the importance of the programmatic functions of personnel, acquisition, 

property management, and inventory management to the department’s 

ability to support consistent, accurate information flows to all information 

users. Although the Biennial Plan included a number of initiatives that 

would help improve DOD’s financial management plans, we reported that 

it lacked critical elements necessary for producing sustainable financial 

management improvement over the long term.15

Another initiative that preceded the FIAR effort was DOD’s 2003 Financial 

Improvement Initiative, which was intended to fundamentally transform 

DOD’s financial management operations and achieve clean financial 

12GAO-15-290. 

13GAO-15-290.

14Pub. L. No. 105-85, § 1008, 111 Stat. 1629 (Nov. 18, 1997).

15GAO, Financial Management: Analysis of DOD’s First Biennial Financial Management 

Improvement Plan, GAO/AIMD-99-44 (Washington, D.C.: Jan. 29, 1999).

Background

DOD’s Efforts to 

Strengthen Internal 

Control, Improve Financial 

Management, and Achieve 

Audit Readiness

Page 4 GAO-15-463 HASC Panel Recommendations

 
statement audit opinions.16 While DOD’s former Comptroller started the 

2003 Financial Improvement Initiative with the goal of obtaining an 

unqualified audit opinion for fiscal year 2007 on DOD’s department-wide 

financial statements, the initiative lacked a clearly defined, welldocumented, and realistic plan to make the goal a reality. As we 

previously reported, although most of the DOD components, including the 

Army, Navy, and Air Force, had submitted improvement plans to the DOD 

Comptroller, DOD had not yet developed an integrated departmental 

strategy, key milestones, accountability mechanisms, or departmental 

cost estimates for achieving its fiscal year 2007 audit opinion goal.17

In 2005, the DOD Comptroller established the DOD FIAR Directorate to 

develop, manage, and implement a strategic approach for addressing the 

department’s financial management weaknesses and achieving 

auditability and to integrate those efforts with other improvement 

activities, such as the department’s business system modernization 

efforts. DOD’s first FIAR Plan was issued in 2005 and is updated 

semiannually through the FIAR Plan Status Reports, which also 

summarize the current status of DOD and its components in executing 

the FIAR Plan.

DOD’s FIAR strategy and approach have evolved since the issuance of 

the first FIAR Plan in 2005. The DOD Comptroller announced in August 

2009 that in DOD’s effort to improve its financial management 

information, priority would be given to improving those processes and 

controls that produce information on which DOD managers rely most 

heavily to run the agency. Because budgetary information is widely and 

regularly used for management, the DOD Comptroller designated as one 

of DOD’s highest priorities the improvement of its budgetary information 

and processes underlying the Statement of Budgetary Resources 

16For the purposes of this report, we use “clean opinion” to refer to either an unmodified 

opinion or an unqualified opinion. According to the American Institute of Certified Public 

Accountants’ Forming an Opinion and Reporting on Financial Statements (AU-C Section 

700), effective for audits of financial statements for periods ending on or after December 

15, 2012, an unmodified opinion states that the financial statements are presented fairly, 

in all material respects, in accordance with the applicable accounting principles. For 

periods ending before December 15, 2012, an unmodified opinion was known as an 

unqualified opinion. 

17GAO, Financial Management: Further Actions Are Needed to Establish Framework to 

Guide Audit Opinion and Business Management Improvement Efforts at DOD, 

GAO-04-910R (Washington, D.C.: Sept. 20, 2004). 

Page 5 GAO-15-463 HASC Panel Recommendations

 
(SBR).18 The United States Marine Corps was selected as the pilot 

military service for an audit of the SBR.19 The Secretary of Defense 

underscored the department’s SBR priority with an October 2011 

memorandum directing the Comptroller to provide a revised plan for 

achieving audit readiness of the SBR by September 30, 2014, with the 

aim to provide DOD managers with auditable General Fund information to 

track spending, identify waste, and improve DOD’s business processes.20

In response to component difficulties in preparing for an audit of the SBR, 

the November 2014 FIAR Plan Status Report and the November 2013 

revised FIAR Guidance included a revision to narrow the scope of initial 

audits to only current year budget activity and expenditures on a General 

Fund Schedule of Budgetary Activity.21

The NDAA for Fiscal Year 2002 required DOD to minimize the resources 

spent to develop, compile, report, and audit financial statements that the 

Secretary of Defense assesses as expected to be unreliable.22

Additionally, the NDAA for Fiscal Year 2008 designated the Deputy 

Secretary of Defense as the department’s Chief Management Officer 

18The financial information in the SBR is predominately derived from a federal entity’s 

budget accounts, which are used to account for and track the use of public funds in 

accordance with budgetary accounting rules. The SBR provides information, at a specific 

point in time, about budgetary resources made available to an agency as well as the 

status of those resources. The other priority was mission-critical asset information.

19The Marine Corps received disclaimers of opinion on its fiscal year 2010 and 2011 

Statement of Budgetary Resources. The Marine Corps initially received a clean opinion on 

its fiscal year 2012 Schedule of Budgetary Activity; however, this opinion was withdrawn in 

March 2015.

20The General Fund includes appropriated funding for personnel, operation and 

maintenance, procurement, research and development, and military construction. It does 

not include the Working Capital Fund, which is funded primarily from fees charged for 

goods and services provided to customers. 

21The Schedule of Budgetary Activity, like the SBR, is designed to provide information on 

budgeted spending authority as outlined in the President’s Budget, including budgetary 

resources, availability of budgetary resources, and how obligated resources have been 

used. However, unlike the SBR, beginning balances and prior year activities will be 

excluded from the Schedule of Budgetary Activity. The first-year Schedule of Budgetary 

Activity (fiscal year 2015) will only cover activity on current year appropriations. As 

described in the FIAR Guidance, for each successive fiscal year Schedule of Budgetary 

Activity, the audited ending balances will carry forward to the subsequent year’s beginning 

balance, building toward the SBR.

22Pub. L. No. 107-107, § 1008, 115 Stat. 1020, 1205-06 (Dec. 28, 2001).

Legislative Requirements 

and Time Frames

Page 6 GAO-15-463 HASC Panel Recommendations

 
(CMO), created a DCMO position, and designated the under secretary of 

each military department as the CMO for the respective department.23

The act also required the Secretary of Defense, acting through the CMO, 

to develop a strategic management plan that among other things would 

provide a detailed description of performance goals and measures for 

improving and evaluating the overall efficiency and effectiveness of 

DOD’s business operations and actions under way to improve operations.

To establish statutory objectives for DOD to achieve financial statements 

that are validated as ready for audit by a certain date, the NDAA for Fiscal 

Year 2010 mandated that DOD develop and maintain a FIAR Plan that 

includes, among other things, the specific actions to be taken and costs 

associated with (1) correcting the financial management deficiencies that 

impair the department’s ability to prepare timely, reliable, and complete 

financial management information and (2) ensuring that DOD’s financial 

statements are validated as ready for audit by not later than September 

30, 2017.24 In addition, the 2010 NDAA required that DOD (1) provide 

semiannual reports by no later than May 15 and November 15 on the 

status of the department’s implementation of the FIAR Plan (which DOD 

provides as FIAR Plan Status Reports) to congressional defense

committees, (2) develop standardized guidance for DOD components’

financial improvement plans (FIP),25 and (3) define oversight roles and 

assign accountability for carrying out the FIAR Plan to appropriate 

officials and organizations.

The NDAA for Fiscal Year 2013 amended the legal requirement to 

additionally require that the FIAR Plan Status Reports should include 

(1) a description of the actions military departments have taken to achieve 

an auditable SBR for DOD by September 30, 2014, and (2) a 

determination by each military department’s CMO on whether the unit is 

able to achieve an auditable SBR by September 30, 2014, without an 

unaffordable or unsustainable level of onetime fixes and manual work23Pub. L. No. 110-181, § 904, 122 Stat. 3, 273 (Jan. 28, 2008).

24Pub. L. No. 111-84, § 1003(a), (b), 123 Stat. 2190, 2439-40 (Oct. 28, 2009). 

25DOD’s FIAR Guidance, first issued in May 2010 and updated in December 2011, March 

2013, November 2013, and April 2015, is DOD’s standardized guidance providing the 

methodology for the components to follow to develop and implement their FIPs. FIPs 

provide a framework for planning and tracking the steps and supporting documentation 

necessary to achieve auditability within the FIAR Methodology. 

Page 7 GAO-15-463 HASC Panel Recommendations

 
arounds and without delaying the auditability of the financial statements.26

In the event that the CMO of a military department determines that the 

military department would not be able to achieve an auditable SBR by 

that date, the CMO is required to explain why the military department 

cannot meet that date and provide an alternative date for meeting the 

target date.

In the November 2014 FIAR Plan Status Report, DOD acknowledged that 

it did not meet the September 30, 2014, target date for achieving audit 

readiness of the SBR, but stated that the three military departments 

asserted Schedule of Budgetary Activity audit readiness in the last 

quarter of fiscal year 2014. In January 2015, independent public 

accountant (IPA) firms began auditing the military departments’ General 

Fund Schedules of Budgetary Activity for fiscal year 2015. For the firstyear Schedule of Budgetary Activity audits, the scope is the schedules 

containing only current year appropriations and all related activity, such 

as obligations and outlays, against those appropriated funds approved on 

or after October 1, 2014. As a result, these first-year Schedule of 

Budgetary Activity audits exclude unexpended amounts, whether 

obligated or unobligated, carried over from prior years’ funding as well as 

information on the status and use of such funding in subsequent years 

(e.g., obligations incurred and outlays).27 These amounts will remain 

unaudited. Over the ensuing years, as the unaudited portion of SBR 

balances and activity related to this funding decline, the audited portion is 

expected to increase.

The NDAA for Fiscal Year 2014 mandates that upon the conclusion of 

fiscal year 2018, the Secretary of Defense shall ensure that a full audit is 

performed on DOD’s fiscal year 2018 financial statements and submit the 

results of that audit to Congress not later than March 31, 2019.28

26Pub. L. No. 112-239, § 1005(a), 126 Stat. 1632, 1904 (Jan. 2, 2013). 

27Unobligated amounts are the cumulative portion of an entity’s obligation authority that 

has not yet been obligated. An agency incurs an obligation, for example, when it places an 

order, signs a contract, awards a grant, purchases a service, or takes other actions that 

require the government to make payments to the public or from one government account 

to another. Obligations are usually liquidated by payments (outlays). Unexpended 

amounts represent unobligated funds or obligated amounts that have not yet been 

liquidated.

28Pub. L. No. 113-66, § 1003, 127 Stat. 671, 842 (Dec. 26, 2013), codified at 10 U.S.C. § 

2222 note. 

Page 8 GAO-15-463 HASC Panel Recommendations

 
DOD’s FIAR Plan is DOD’s strategic plan and management tool for 

guiding, monitoring, and reporting on the department’s financial 

management improvement efforts. As such, the plan communicates 

incremental progress in addressing the department’s financial 

management weaknesses and achieving financial statement auditability. 

The plan focuses on several goals:

1. achieve and sustain unqualified assurance on the effectiveness of 

internal controls through the implementation of sustained

improvements in business processes and controls addressing the 

material weaknesses in internal control,29

2. develop and implement financial management systems that support 

effective financial management, and

3. achieve and sustain financial statement audit readiness.

The department has envisioned achieving financial statement auditability 

in four waves of concerted improvement activities described in its FIAR 

Plan. The activities of these four waves are within groups of end-to-end 

business processes, which are further broken down into discrete units, 

called assessable units. DOD defines an assessable unit as any part of 

the financial statements, such as a line item or a class of assets, a class 

of transactions, or a process or a system, that helps produce the financial 

statements. The four waves are as follows:

• Wave 1: Appropriations Received Audit

• Wave 2: Schedule of Budgetary Activity/SBR Audit

• Wave 3: Mission Critical Asset Existence and Completeness Audit

• Wave 4: Full Financial Statements Audit

Waves 1 through 3 started concurrently, and an IPA firm validated Wave 

1 as audit ready in August 2011. In the November 2013 FIAR Plan Status 

report, DOD defined the term audit ready as meaning that the department 

29A material weakness is a deficiency, or combination of deficiencies, in internal control 

over financial reporting, such that there is a reasonable possibility that a material 

misstatement of the entity’s financial statements will not be prevented, or detected and 

corrected, on a timely basis. A deficiency in internal control exists when the design or 

operation of a control does not allow management or employees, in the normal course of 

performing their assigned functions, to prevent, or detect and correct, misstatements on a 

timely basis.

FIAR Plan

Page 9 GAO-15-463 HASC Panel Recommendations

 
has strengthened internal controls and improved financial practices, 

processes, and systems so that there is reasonable confidence that the 

information can withstand an audit by an independent auditor. The 

department organized these audit readiness waves to use the 

interdependencies between budgetary and accounting information. FIAR 

priorities have required reporting entities to devote their resources and 

efforts toward completing audit readiness activities for Waves 1 through 3 

before beginning work for Wave 4.30 DOD officials have stated that much 

of the audit readiness work required to complete Waves 1 through 3 

affects Wave 4 requirements and objectives. For example, DOD has 

identified interdependencies between accounts included in Waves 2 

(budgetary) and 4 (accounting information). DOD officials stated that the 

department has expanded its audit readiness priorities from budgetary 

data reported on the SBR to all financial transactions reported on the 

Balance Sheet and the Statements of Net Cost and Changes in Net 

Position.31 As stated in the May 2015 FIAR Plan Status Report, the focus 

of current FIAR activity includes (1) valuing and accurately reporting over 

$2.2 trillion in assets, (2) reporting over $2.4 trillion in liabilities, and 

(3) preparing full financial statements for audit.

The FIAR Guidance, first issued in May 2010 and periodically updated, 

provides the standard methodology by which the components are to 

implement the FIAR Plan. DOD components are required to establish 

assessable units for all processes, systems, or classes of assets that 

result in material transactions and balances in their financial statements 

to focus their improvement efforts. Components are required to prepare 

FIPs for each assessable unit under the FIAR Guidance. According to the 

FIAR Guidance, component audit readiness assertions for assessable 

units are to specify that (1) control activities are suitably designed and 

implemented, operating effectively, and sufficiently documented to 

provide reasonable assurance that applicable financial reporting 

objectives are achieved; (2) key supporting documents are readily 

30Under the FIAR Guidance, DOD components include reporting entities (i.e., DOD

entities or funds that prepare stand-alone financial statements included in the DOD-wide 

financial statements) and service providers that provide a variety of accounting, personnel, 

logistics, systems, or other support services.

31Department of Defense, Office of the Under Secretary of Defense (Comptroller)/Chief 

Financial Officer, Financial Improvement and Audit Readiness (FIAR) Plan Status Report

(Washington, D.C.: May 2015).

FIAR Guidance

Page 10 GAO-15-463 HASC Panel Recommendations

 
available for review; and (3) account balances and transactions are 

accurately recorded. DOD has established a mandatory set of five 

standardized phases for achieving audit readiness that its components 

are required to apply to each assessable unit. As of the April 2015 FIAR 

Guidance, these five phases were Discovery, Corrective Action, 

Assertion/Examination, Validation, and Audit.

In the FIAR Guidance, service providers, such as DFAS and DLA, are 

defined as components that are responsible for their systems and data, 

processes and internal controls, and supporting documentation that affect 

a reporting entity’s audit readiness. Service providers are to prepare 

documentation illustrating the financial reporting aspects of their 

operations through end-to-end business processes. Based on that 

documentation, the service providers are to identify and evaluate control 

activities and supporting documentation over those processes that affect 

the reporting entities’ financial reporting objectives (i.e., the outcomes 

needed to achieve proper financial reporting and serve as a point against 

which the effectiveness of internal controls over financial reporting can be 

evaluated). In accordance with the FIAR Guidance, service providers’

control activities and supporting documentation undergo examinations 

conducted in accordance with the Statement on Standards for Attestation 

Engagements (SSAE) No. 16, Reporting on Controls at a Service 

Organization.

32 Service providers, such as DFAS, with three or more 

customers working to become audit ready must obtain SSAE No. 16 

examinations on their internal controls over financial reporting. According 

to DOD officials, the results of these examinations can then be relied 

upon by all of the customers, reducing audit time and therefore saving 

money.

The updated FIAR Guidance, issued in April 2015, provides specific 

tasks, work products, and deliverables for achieving and validating full 

financial statement auditability. As described in this FIAR Guidance, DOD 

has expanded its FIAR priorities from budgetary information and mission32In accordance with SSAE No. 16, Reporting on Controls at a Service Organization, the 

auditors of each of these external service organizations issue reports concerning the 

design and operating effectiveness of the service organizations’ internal control over the 

processing of user transactions. Services provided by an external service organization are 

considered part of a user entity’s information system relevant to the user entity’s financial 

reporting if the services affect classes of transactions that are significant to the user 

entity’s financial statements as well as the financial reporting process used to prepare the 

financial statements. 

Page 11 GAO-15-463 HASC Panel Recommendations

 
critical asset information to include two other priorities—proprietary 

accounting data/information for the Balance Sheet and Statements of Net 

Cost and Changes in Net Position and valuation of assets and liabilities.33

It also includes newly established milestones that the components must 

meet to give DOD the best opportunity to succeed in achieving auditable 

financial statements by fiscal-year end 2017.

The panel reviewed the following four areas and provided a total of 29 

recommendations to DOD to resolve the issues it found in each area.

• FIAR strategy and methodology (6 recommendations). While 

acknowledging that the department had a reasonable strategy and 

methodology for its FIAR effort, the panel stated that DOD’s strategy 

needed to be more detailed and refined. For example, according to 

the panel, DOD had not yet fully defined all of the elements of the 

strategy necessary to achieve audit readiness on all financial 

statements in 2017. Moreover, the panel was concerned that certain 

DOD components may not be effectively implementing the FIAR 

strategy and methodology.

• Challenges to achieving financial management reform and auditability 

(9 recommendations). The panel recognized that DOD’s size and 

complexity contribute to the complicated and pervasive challenges to 

its financial management processes and related business operations 

and systems. In its report, the panel expressed concern about DOD’s 

progress in addressing long-standing weaknesses in internal controls. 

Specifically, the panel referred to the numerous material weaknesses 

in internal control over financial reporting—cited by the DOD IG in its 

reports since the mid-1990s—that have affected DOD’s ability to 

achieve a clean audit opinion. In addition, the panel noted that 

weaknesses in controls over the recording, accounting, and reporting 

of financial information jeopardize DOD’s ability to safeguard taxpayer 

dollars. For example, these weaknesses can result in improper 

33Proprietary accounts provide the information for the financial statements based on 

Federal Accounting Standards Advisory Board standards and are intended to produce an 

economic, rather than budgetary, measure of operations and resources.

The Panel Report

Page 12 GAO-15-463 HASC Panel Recommendations

 
payments,34 Antideficiency Act (ADA) violations,35 and problem 

disbursements.36 The panel also noted organizational challenges 

faced by the logistics community, military components, and DFAS. 

Specifically, the majority of transactions recorded in accounting 

systems are initiated by military components, including military 

commands, installations, and bases, and within nonfinancial functional 

communities, such as acquisition and logistics. The panel stated that 

continued emphasis must be placed on fully engaging both the 

military components and functional communities in audit readiness 

efforts.

• Financial management workforce (5 recommendations). According to 

the panel, ensuring that the financial management workforce is 

adequately staffed, skilled, and well-trained is crucial to DOD’s ability 

to improve financial management. For example, the panel was 

concerned that DOD had not yet performed a complete departmentwide systematic competency assessment, which would include 

analysis of the types and ranges of abilities, knowledge bases, and 

skills of the present financial management workforce and those that 

will be needed in the future.

• ERP system implementation efforts (9 recommendations). While 

acknowledging that DOD has taken positive steps, the panel 

34Under the Improper Payments Information Act of 2002, as amended, an improper 

payment is statutorily defined as any payment that should not have been made or that 

was made in an incorrect amount (including overpayments and underpayments) under 

statutory, contractual, administrative, or other legally applicable requirements. It includes 

any payment to an ineligible recipient, any payment for an ineligible good or service, any 

duplicate payment, any payment for a good or service not received (except for such 

payments where authorized by law), and any payment that does not account for credit for 

applicable discounts. Pub. L. No. 107-300, 116 Stat. 2350 (Nov. 26, 2002) codified as 

amended at 31 U.S.C. § 3321 note. 

3531 U.S.C. §§ 1341-42, 1349-52, 1511-19. The ADA, among other things, prohibits 

agencies from incurring obligations or making expenditures in excess of or in advance of 

an appropriation or in excess of an apportionment.

36Problem disbursements include both unmatched disbursements and negative 

unliquidated obligations. Unmatched disbursements are disbursements that have been 

paid by an accounting office but have not been matched to the correct obligation records. 

A negative unliquidated obligation is a disbursement transaction that has been matched to 

an obligation, but the total recorded disbursement exceeds the recorded obligation. In its 

report, the panel stated that problem disbursements impede DOD’s performance of proper 

Fund Balance with Treasury reconciliations, which affects DOD’s ability to report reliable 

information on its financial statements. 

Page 13 GAO-15-463 HASC Panel Recommendations

 
expressed five concerns about the department’s ERP system 

implementation efforts, including (1) reported schedule delays and 

cost overruns as well as the reliability of ERP schedule and cost 

estimates; (2) issues with the requirements process in that in some 

cases not enough requirements are identified and in some cases too 

many requirements are included in ERP systems;37 (3) ERP systems 

that may not provide the capabilities needed for achieving FIAR 

objectives; (4) poor execution of data conversion that could cause 

delays in the full implementation of the ERP systems;38 and (5) the 

numerous interfaces that exist between the legacy systems and the 

ERP systems and the problems associated with these interfaces that 

could compromise ERP functionality. In its report, the panel also 

recognized that because most financial information is maintained in 

computer systems, the reliability of the financial data in these systems 

depends on the effectiveness of information system controls over how 

those systems operate.

We determined that DOD’s actions have met 6 of the panel’s 

recommendations and partially met 23. In its May 2015 FIAR Plan Status 

Report, DOD stated that 9 recommendations were met and the remaining 

20 were partially met. With regard to the 9 recommendations that DOD 

reported as met, we determined three to be partially met. Table 1 includes 

a list of the 29 panel recommendations, shown by the four areas reviewed 

by the panel, and our determination on the status of DOD’s 

implementation of each recommendation along with the status DOD 

reported in May 2015. See appendix I for detailed information on each of 

the 29 recommendations. While DOD is making progress, it is important 

to note that implementation of the panel’s recommendations may not 

include all of the actions that the department must take to achieve 

auditable financial statements. For example, as the DOD IG and the IPA 

37Requirements establish what the system is to do, how well it is to do it, and how it is to 

interact with other systems. Appropriate requirements development involves eliciting and 

developing customer and stakeholder requirements and analyzing them to ensure that 

they will meet users’ needs and expectations. It also consists of validating requirements 

as the system is being developed to ensure that the final system to be deployed will 

perform as intended in an operational environment. The inclusion of too many 

requirements can make ERPs more complicated than needed; too few requirements may 

result in ERPs that do not provide the needed functionality.

38Data conversion is the modification of existing data to enable it to operate with similar 

functional capability in a different environment. 

DOD Has Taken 

Actions to Implement 

the Panel’s 

Recommendations, 

but Significant 

Challenges Remain 

to Achieve Auditability

Page 14 GAO-15-463 HASC Panel Recommendations

 
firms perform examinations and audits, they may identify deficiencies in 

internal controls that were not previously known and therefore were not 

addressed by the panel’s recommendations.39

Table 1: Status of DOD Implementation of Recommendations Made by the Panel on Defense Financial Management and 

Auditability Reform (as of May 2015)

No. Panel recommendation Status per GAO Status per DOD

Financial Improvement and Audit Readiness (FIAR) strategy and methodology

1.1 The Department’s FIAR Strategy for Wave 4 (Full Audit Except for Legacy Asset 

Valuation) should include a complete analysis of interdependencies among Waves 1-

3 and Wave 4.

Partially met Partially met

1.2 The Department should establish a DOD Financial Reporting element, or wave, that 

includes a process for consolidating the components’ financial information into the 

DOD’s agency-wide financial statements. The Department should report this 

element’s audit readiness progress in the FIAR Plan Status Report. 

Partially met Partially met

1.3 The DOD should re-evaluate its position on accepting historical asset costs when the 

Department nears auditability on its financial statements in light of certain allowances 

in federal accounting standards. The findings of a re-evaluation may support the 

development of an audit readiness strategy for valuing legacy asset balances. 

Partially met Partially met

1.4 The Department should: (1) analyze the causes of FIAR Plan implementation 

difficulties; (2) develop and implement corrective action plans to address identified 

weaknesses or deficiencies; and (3) develop a communications plan to circulate any 

resulting lessons-learned throughout the Department. 

Partially met Partially met

1.5 The Under Secretary of Defense (Comptroller) (USD(C)), in consultation with the 

Deputy Chief Management Officer (DCMO) of the Department of Defense, the 

secretaries of the military departments, and the heads of the defense agencies and 

field activities should incorporate risk mitigation plans to support the meeting of future 

interim milestones in the FIAR Plan. 

Partially met Partially met

1.6 The FIAR Governance Board should attest as to whether the DOD is on track to 

achieve audit readiness in 2017 in each FIAR Plan Status Report.

Partially met Met

Challenges to achieving financial management reform and auditability

2.1 The Department should include objective and measurable criteria regarding FIARrelated goals in its senior personnel performance plans and evaluations. Performance 

evaluated on the basis of such criteria should be appropriately rewarded or held 

accountable. Evaluated performances should be documented and tracked to 

measure progress over time.

Partially met Met

39Examinations of audit readiness are done by either the DOD IG or an IPA firm. 

Examinations are different from financial statement audits. According to DOD, auditors 

complete an examination to validate management’s assertion that the business or 

financial process is audit ready.

Page 15 GAO-15-463 HASC Panel Recommendations

 
No. Panel recommendation Status per GAO Status per DOD

2.2 To improve oversight of the FIAR effort, the Department should require each DOD 

component senior executive committee to review its corresponding component’s 

audit readiness assertion packages for compliance with FIAR Guidance prior to 

submission of those packages to the Office of the USD(C) for validation. 

Partially met Met

2.3 The Department should develop comprehensive corrective action plans to address 

existing material weaknesses and those identified during the FIAR effort. 

Partially met Partially met

2.4 To reduce improper payments, the Department should re-evaluate its methodology 

for identifying and reporting improper payments. 

Partially met Partially met

2.5 To reduce Antideficiency Act (ADA) violations, the Department should (1) perform an 

analysis of the causes for its ADA violations and then develop and implement 

procedures to address identified causes and (2) ensure that key funds control 

personnel are adequately trained to prevent, detect, and report ADA violations. 

Met Met

2.6 To reduce problem disbursements, the Department should address the underlying 

causes of problem disbursements in its efforts to develop and implement enterprise 

resource planning (ERP) systems.

Partially met Partially met

2.7 The Department should identify and institutionalize best practices, as applicable, 

throughout the DOD to reinforce the full engagement of those functional communities 

outside of the financial management community in audit readiness efforts. 

Partially met Partially met

2.8 The Department should develop a forum in which the military commands can share 

lessons learned from their respective audit efforts.

Met Met

2.9 The DOD Comptroller should include milestones along with the status of DOD 

financial service provider efforts to achieve effective controls over the major 

processes that affect DOD customers in the FIAR Plan Status Reports. These 

milestones should be consistent with the customer organizations’ audit readiness 

milestones.

Partially met Partially met

Financial management workforce

3.1 The Department should assess its financial management workforce and that of all 

other functional areas performing financial management-related functions regarding: 

(1) critical skills and competencies of the existing civilian employee workforce; 

(2) critical skills and competencies that may be needed over the next decade; 

(3) gaps between current requirements and existing workforce competencies; and 

(4) gaps between projected requirements and existing workforce competencies. The 

assessment should include federal civilian, military, and contracted personnel 

performing financial management-related functions. 

Partially met Partially met

3.2 The Department should utilize the expertise of certified public accountants (CPAs) 

with financial statement audit experience in its audit readiness efforts as conducted 

by the federal civilian workforce or contracted personnel, as appropriate. 

Met Met

3.3 The Department should develop and implement effective financial training programs 

for personnel serving in functional communities outside of the financial management 

community.

Met Met

3.4 The Department should develop and implement effective ERP training programs for 

personnel within and outside of the financial management community who utilize, or 

will be expected to utilize, an ERP system in their day-to-day operations. In 

developing these training programs, the Department should implement lessons 

learned from previous training provided to ERP users.

Met Met

Page 16 GAO-15-463 HASC Panel Recommendations
No. Panel recommendation Status per GAO Status per DOD

3.5 The Department should develop its proposal for an exchange program between the 

DOD and the private sector. In doing so, the Department should develop specific 

criteria, regarding the personnel to be exchanged and the organizations that would 

participate. The Department should then submit its proposal to the congressional 

committees of jurisdiction for consideration.

Met Met

ERP system implementation efforts

4.1 The Department should include additional details on ERP programs in the FIAR Plan 

Status Reports, including full deployment dates, when known, and key milestone 

dates. These status reports should describe the risks and potential consequences of: 

(1) failing to satisfy outstanding ERP functionality requirements; or (2) incurring future 

ERP milestone delays. The status reports should describe the mitigation measures 

taken by the Department to reduce these risks. The status reports should also explain 

any actual schedule slippages or cost increases and the actions taken by the DOD to 

remedy any such development.

Partially met Partially met

4.2 The ERP program offices should integrate FIAR milestones into their program 

schedules. ERP program managers should be evaluated on their ability to maintain 

FIAR milestones as well as program acquisition-related milestones.

Partially met Partially met

4.3 The Department should develop ERP-related schedule and cost estimates based on 

best practices for future ERP deployments.

Partially met Partially met

4.4 The Department should evaluate changes to ERP requirements as those systems are 

developed, implemented, and utilized.

Partially met Partially met

4.5 The Department should evaluate its requirement process for ERP systems. The 

Department should assess the decision-making process, regarding ERP 

requirements, at every level of authority. The Department should then determine 

what, if any, changes may be needed. 

Partially met Partially met

4.6 The Department should establish risk mitigation plans to address actual and potential 

weaknesses or deficiencies associated with the development, implementation, or 

utilization of its ERP systems that could affect the achievement of FIAR goals. At a 

minimum, each risk mitigation plan should: (1) identify measures for resolving any 

such weaknesses or deficiencies; (2) assign responsibilities within the Department to 

implement such measures; (3) specify implementation steps for such measures; 

(4) provide timeframes for implementing such measures; and (5) identify any 

alternative arrangements outside of the ERP environment that may be necessary for 

meeting FIAR objectives.

Partially met Partially met

4.7 The Department should evaluate lessons learned from previous data conversion 

efforts, and it should incorporate these lessons into its ERP data conversion plans. 

The Department should update its ERP data conversion plans periodically. Updates 

should include assessments of: the progress made in converting data into the ERP 

environment; whether that progress supports the satisfaction of existing 

requirements; and whether additional data conversion requirements would facilitate 

the achievement of FIAR objectives. The Department should also assess the merits 

of designating a senior official (such as the Chief Management Officer (CMO) or the 

DCMO) to be responsible for the coordination and managerial oversight of data 

conversion.

Partially met Partially met

4.8 The Department should: (1) evaluate the causes of system interface problems; 

(2) determine whether the number of interfaces can be reduced (e.g., by 

incorporating activities performed by legacy systems into the ERPs); and 

(3) determine what improvements can be made to support more effective interfaces 

between systems.

Partially met Partially met

Page 17 GAO-15-463 HASC Panel Recommendations
No. Panel recommendation Status per GAO Status per DOD

4.9 The DOD DCMO, in coordination with the Director, Operational Test and Evaluation 

and the Deputy Assistant Secretary of Defense for Development Test and Evaluation, 

should assess information system control testing needs for all ERPs being developed 

by the DOD and determine whether appropriate workforce levels and corresponding 

skill sets exist within the Department’s developmental and operational test 

communities. The Department should take actions to address any identified 

shortfalls.

Partially met Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense 

(FIAR Plan Status Report, May 2015); and GAO (analysis). │ GAO-15-463

We agree with DOD’s status determinations that its actions have met six 

of the panel’s recommendations (see table 1, recommendations 2.5, 2.8, 

3.2, 3.3, 3.4, and 3.5). Two of these relate to the area on challenges to 

achieving financial management reform and auditability. DOD has taken 

the actions recommended by the panel to reduce ADA violations by 

analyzing the causes of these violations; developing and implementing 

procedures to address them; and ensuring that key funds control 

personnel are adequately trained to prevent, detect, and report ADA 

violations (2.5). In addition, as recommended by the panel, DOD has 

developed forums for sharing lessons learned within commands of 

military departments as well as external to these departments (2.8). 

These information-sharing forums include newsletters, quarterly inprocess reviews, and stakeholder meetings as well as the FIAR 

Governance Board, FIAR Committee, and FIAR Subcommittee. DOD has 

also met the requirements of four financial management workforcerelated recommendations. Actions taken include using the expertise of 

certified public accountants with financial statement audit experience in its 

audit readiness efforts (3.2); developing and making financial 

management web-based courses available to both personnel in the 

financial management functional community and those outside of the 

financial management community, such as personnel in the logistics and 

acquisition functional communities (3.3); providing training programs for 

the department’s current ERP systems that users are to complete prior to 

obtaining access to these systems (3.4); and submitting a proposal to 

both the Senate and House Armed Services Committees for a financial 

management exchange program between DOD and the private sector 

(3.5). Further details on the specific recommendations made and DOD’s 

actions taken are discussed in appendix I.

DOD’s Actions Have Met 

Six of the Panel’s 

Recommendations

Page 18 GAO-15-463 HASC Panel Recommendations
We determined that DOD’s actions partially met three of the panel’s 

recommendations for which DOD had reported the status as met (see 

table 1, recommendations 1.6, 2.1, and 2.2). Descriptions of the panel’s 

recommendations, the department’s actions, our reasons for disagreeing 

with DOD on the status of these recommendations, and the additional 

actions needed to fully address the panel recommendations are 

discussed below.

• The panel recommended that the FIAR Governance Board attest to 

whether DOD is on track to achieve audit readiness in 2017 in each 

FIAR Plan Status Report (1.6).40 DOD reported this recommendation 

as met because each FIAR Plan Status Report is coordinated among 

FIAR Governance Board members, providing them with the 

opportunity to (1) formally attest to the accuracy and completeness 

and (2) determine if their components are on track to achieve audit 

readiness in 2017. DOD officials also stated that each military 

department’s CMO reports on audit readiness progress and 

challenges in signed statements in the FIAR Plan Status Report and 

indicates whether the military department is on track to achieve audit 

readiness by September 30, 2017. However, we consider this 

recommendation to be partially met because all FIAR Governance 

Board members need to attest for their individual components, and 

the DOD Comptroller needs to attest for the department, whether they 

are on track to achieve audit readiness in 2017 in each FIAR Plan 

Status Report to fully meet this recommendation. In making these 

attestations, it is critical that the FIAR Governance Board consider the 

effect of known factors (e.g., the lack of integrated systems) and other 

risks, such as weaknesses and deficiencies that may be identified in 

examinations and audits, on the status of their respective 

components’ financial statement audit readiness.

• The panel required DOD to (1) include objective and measurable 

criteria regarding FIAR-related goals in its senior personnel 

performance plans and evaluations, (2) appropriately reward or hold 

officials accountable based on evaluated performance against the 

FIAR-related goals, and (3) document and track evaluated 

performances to measure progress over time (2.1). On April 9, 2013, 

40The FIAR Governance Board is charged with providing vision, leadership, oversight, and 

accountability for the FIAR effort. Members of the board include, among others, the 

Comptroller/Chief Financial Officer, the Deputy Chief Financial Officer, the DCMO, and the 

military department deputy chief management officers.

DOD’s Actions Have 

Partially Met Three 

Recommendations That 

DOD Classified as Met

Page 19 GAO-15-463 HASC Panel Recommendations

 
the Deputy Secretary of Defense issued a memorandum, stating that 

most, if not all, of DOD’s executives have a role in its effort to achieve 

audit readiness and that Senior Executive Service (SES) performance 

plans were to be updated with FIAR-related goals by April 30, 2013.41

We consider this recommendation partially met because, although 

DOD components have inserted FIAR-related requirements in SES 

performance plans, they have not yet determined how to reward 

executives based on evaluated performance for FIAR-related goals 

and assessed the effect on accomplishing FIAR activities by tracking 

evaluated performances over time.

• To improve oversight of the FIAR effort, the panel recommended that 

DOD require each component senior executive committee to review 

its corresponding component’s audit readiness assertion packages for 

compliance with FIAR Guidance before submitting those packages to 

the Office of the Under Secretary of Defense (Comptroller) for 

validation (2.2). DOD considers the recommendation to be met 

because the FIAR Guidance states that management’s audit 

readiness assertions must be signed by the person, individual, or 

representative of the organization responsible for the subject matter 

(assessable unit) and that this level of review and approval is 

appropriate. DOD requires review of the assertion package in 

accordance with the FIAR Guidance, but we consider this 

recommendation partially met because the FIAR Guidance does not 

require senior executive committee reviews of audit readiness 

assertion packages as the panel recommended.

We agree with DOD that the department’s actions partially met the 

remaining 20 panel recommendations, described below by the four areas 

of the panel’s review, and continued actions are needed. However, 

additional actions beyond what DOD indicated is planned are needed in 

some cases to fully address the panel recommendations. See appendix I 

for details on all partially met recommendations, including actions under 

way or additional actions needed to meet these recommendations.

41The memorandum also included a waiver from this requirement for those SES members 

who do not manage resources or business processes and do not have a role in achieving 

audit readiness.

DOD’s Actions Have 

Partially Met 20 of the 

Panel’s Remaining 

Recommendations

Page 20 GAO-15-463 HASC Panel Recommendations

 
The panel made six recommendations in this area, including 

recommendation 1.6 discussed above that DOD considers met which we 

consider partially met and the remaining five for which we agree with 

DOD’s determination that these are partially met. Two of the five 

remaining partially met recommendations in this area specifically relate to 

DOD’s implementation of its FIAR strategy and methodology (1.1 and 

1.4). In addition, one recommendation relates to the department’s 

process for consolidating the components’ financial statements to prepare 

the department-wide consolidated financial statements (1.2). Another 

recommendation is related to the valuation of mission-critical assets (1.3). 

The other remaining partially met recommendation relates to risk 

management activities associated with implementing the FIAR Plan (1.5).

Although some actions have been taken, continued actions are needed to 

address all recommendations in this area, and additional actions are 

needed for some. For example, the panel recommended that the 

Comptroller’s office, in consultation with DOD’s DCMO, the secretaries of 

the military departments, and the heads of the defense agencies and field 

activities, incorporate risk mitigation plans to support meeting future 

interim milestones in the FIAR Plan (1.5). As we reported in August 2013, 

DOD officials acknowledged that there is not a department-wide written 

risk management policy for its FIAR effort.42 DOD officials had stated 

earlier that a department-wide risk management plan would aid in 

assessing and integrating risk strategies across the department. 

However, instead of a department-wide risk management plan, DOD is 

using a three-pronged approach to address aspects of risk management, 

as stated in its May 2015 FIAR Plan Status Report.43 While DOD’s threepronged approach to address risk management includes the use of “dealbreakers,” DOD’s critical path, and its centralized notices of findings and 

recommendations tracking database, a department-wide risk 

management plan, as DOD had previously planned to implement, is 

42GAO, DOD Financial Management: Ineffective Risk Management Could Impair Progress 

toward Audit-Ready Financial Statements, GAO-13-123 (Washington, D.C.: Aug. 2, 2013). 

43The department’s three-pronged approach for addressing risk management includes 

(1) identifying audit readiness deal-breakers by reviewing past audits, (2) defining the 

critical path to achieving financial statement auditability and included related tasks and 

milestones in the April 2015 FIAR Guidance, and (3) reinforcing the importance of internal 

controls over areas of significant risk by including a new chapter on internal controls in the 

FIAR Guidance and implementing a centralized tracking database to monitor corrective 

actions developed in response to notices of findings and recommendations generated 

from audits and examinations.

FIAR Strategy and 

Methodology

Page 21 GAO-15-463 HASC Panel Recommendations

 
needed for developing and implementing consistent risk mitigation 

strategies across DOD and thus to support meeting future interim 

milestones as called for in the recommendation.

The panel made nine recommendations in this area, including two 

recommendations previously discussed that DOD considers met and we 

consider partially met (2.1 and 2.2) and two recommendations that we 

agree have been met (2.5 and 2.8). For the remaining five 

recommendations, we agree with DOD’s determination that they are 

partially met. These five relate to addressing existing material 

weaknesses and those identified during the FIAR effort (2.3), reducing 

improper payments and problem disbursements (2.4 and 2.6), identifying 

and institutionalizing best practices (2.7), and ensuring that components 

and service providers working with them have consistent milestones (2.9).

Although DOD has taken some actions to address these 

recommendations, continued or additional actions are needed as detailed 

in appendix I. For example, the panel recommended that to reduce 

problem disbursements, the department should address the underlying 

causes of problem disbursements in its efforts to develop and implement 

ERP systems (2.6). According to a DOD official, the implementation of 

modern financial systems, including ERP systems, has increased the 

level of problem disbursements because of data quality issues and 

interfaces with legacy systems that are still in use.44 The DOD official also 

stated that when the ERP systems are fully implemented and operating in 

the stable end states, these systems should provide an automated, 

integrated environment that will significantly reduce the number of 

problem disbursements. In its May 2015 FIAR Plan Status Report, DOD 

officials stated that analyses to assist in identifying root causes and 

implementing corrective actions, as called for in the recommendation, will 

be performed on a recurring basis until the department can retire all 

legacy systems and fully implement the ERP systems’ capabilities.

The panel made five recommendations in this area, four of which have 

been met, as previously discussed, and one for which we agree with 

DOD’s partially met assessment. This recommendation relates to DOD 

44Mark Easton, Deputy Chief Financial Officer, Department of Defense, DOD’s Efforts to 

Improve Payment and Funds Control, testimony before the House Committee on Armed 

Services, Panel on Defense Financial Management and Auditability Reform, 112th Cong., 

1st sess., September 22, 2011. 

Challenges to Achieving 

Financial Management Reform 

and Auditability

Financial Management 

Workforce

Page 22 GAO-15-463 HASC Panel Recommendations

 
performing a department-wide systematic skills assessment of its 

financial management workforce and that of all other functional areas that 

are performing financial management-related functions (3.1). The panel 

recognized the importance of having personnel within DOD’s other 

functional communities who are skilled in performing financial 

management-related tasks, because these communities initiate and 

maintain much of the financial information critical to the results of DOD’s 

operations.45 DOD completed its systematic competency assessment of 

certain occupations in its financial management workforce and has plans 

to assess the remaining financial management workforce in phases. 

However, at the time of our review, DOD had not yet assessed other 

functional communities as called for by the panel recommendation.

The panel made nine recommendations in this area, and we agree with 

DOD that all of these recommendations have been partially met and none 

have been fully met. The first six include recommendations relating to 

ERP schedule delays and cost overruns, issues with the requirements 

process, and the capabilities of the ERP systems to achieve FIAR 

objectives. For example, the panel recommended that DOD develop 

ERP-related schedule and cost estimates based on best practices for 

future ERP deployments (4.3). While the Army had made some 

improvements to the schedule and cost estimates for Army’s Global 

Combat Support System (GCSS-Army),46 we reported in 2014 that DOD 

has not fully implemented best practices in its schedule estimates, cost 

estimates, or both for the Defense Enterprise Accounting and 

Management System47 and GCSS-Army.48 The panel also made two 

recommendations to address its concerns about DOD’s data conversion 

efforts and the numerous interfaces that exist and their possible 

compromising of ERP functionality. The panel’s final recommendation 

45DOD defines a functional community as employees who perform similar functions. 

DOD’s 22 functional communities include financial management, acquisition, logistics, 

science and technology, and human resources. 

46These schedule and cost estimates supported the December 2012 full deployment 

decision for GCSS-Army. 

47GAO, DOD Business Systems Modernization: Air Force Business System Schedule and 

Cost Estimates, GAO-14-152 (Washington, D.C.: Feb. 7, 2014). 

48GAO, DOD Business Systems Modernization: Additional Enhancements Are Needed for 

Army Business System Schedule and Cost Estimates to Fully Meet Best Practices, 

GAO-14-470 (Washington, D.C.: Sept. 30, 2014).

ERP System Implementation 

Efforts

Page 23 GAO-15-463 HASC Panel Recommendations

 
related to DOD’s assessment of information systems controls testing 

needs for all ERP systems being developed and determination of whether 

appropriate workforce levels and corresponding skill sets exist within 

DOD’s developmental and operational test communities.

As detailed in appendix I, the department needs to continue taking 

actions to address all of these recommendations and take additional 

actions for some. For example, as mentioned above, the panel 

recommended that among other things, DOD evaluate lessons learned 

from previous data conversion efforts and incorporate these lessons into 

its ERP conversion plans as well as assess the merits of designating a 

senior official to be responsible for the coordination and managerial 

oversight of data conversion (4.7). Although DOD assessed the merits of 

designating a senior official responsible for data conversion and identified 

lessons learned from previous data conversion efforts, as DOD 

implements ERP systems, the department needs to continue to 

incorporate lessons learned into its current and future ERP data 

conversion plans, as recommended by the panel. Given that DOD 

officials have stated that these ERP systems are critical to DOD’s ability 

to achieve audit readiness, fully implementing these recommendations 

will be necessary for achieving this goal.

The panel’s report and its recommendations touch on some of the most 

critical challenges the department faces in achieving lasting financial 

management improvements and financial statement audit readiness. As 

previously stated, DOD has defined audit readiness to mean that the 

department has strengthened internal controls and improved financial 

practices, processes, and systems so that there is reasonable confidence 

that the information can withstand an audit by an independent auditor. 

DOD’s actions to meet the panel’s 29 recommendations, if effectively 

designed and implemented, will bring the department closer to achieving 

these important goals. However, it is important to note that 

implementation of the panel’s recommendations may not include all of the 

actions that the department must take to achieve auditable financial 

statements. As the DOD IG and the IPA firms perform examinations and 

audits, they may identify deficiencies in controls that may not have 

previously been known and as such were not addressed by the panel’s 

recommendations. Nonetheless, without taking the actions needed to fully 

implement the panel recommendations, DOD is at increased risk of not 

achieving its financial management improvement and audit readiness 

goals. DOD is monitoring its progress implementing the FIAR Plan 

against interim milestones. However, as the target date for validating 

Conclusions

Page 24 GAO-15-463 HASC Panel Recommendations
DOD’s audit readiness approaches, as we have previously stated, DOD 

has emphasized asserting audit readiness by set dates over assuring that 

processes, systems, and controls are effective, reliable, and sustainable. 

While time frames are important for measuring progress, DOD should not 

lose sight of the ultimate goal of implementing lasting financial 

management reform to ensure that it can routinely generate reliable, 

auditable financial information and other information critical to decision 

making and effective operations.

To help meet its financial management improvement and audit readiness 

goals, we recommend that the Secretary of Defense direct the Under 

Secretary of Defense (Comptroller) to reconsider the status of the three 

panel recommendations that DOD classified as met that we determined 

were partially met and take the necessary actions to reasonably assure 

that these recommendations have been met.

We provided a draft of this report to DOD for comment. In its written 

comments, reprinted in appendix II, DOD concurred with our 

recommendation to reconsider whether further actions are needed to 

meet panel recommendations 1.6, 2.1, and 2.2. DOD also described 

planned actions that it will take to address the recommendations. For

panel recommendation 2.2, DOD stated that it will update the FIAR 

Guidance to require dual signatures from both the senior executives in 

charge of financial and relevant functional areas for the subject 

assertions. As DOD updates its FIAR Guidance, DOD should require 

each component senior executive committee to review its corresponding 

component’s audit readiness assertion package as called for by the panel 

recommendation, rather than focus on dual signatures. DOD stated that it 

will continue to provide status updates on actions planned and completed 

for the remaining 23 panel recommendations in its semiannual FIAR Plan 

Status Report.

We are sending copies of this report to the appropriate congressional 

committees, the Secretary of Defense, and the Under Secretary of 

Defense (Comptroller). In addition, the report is available at no charge on 

the GAO website at http://www.gao.gov.

If you or your staff have any questions about this report, please contact 

me at (202) 512-9869 or khana@gao.gov. Contact points for our Offices 

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation

Page 25 GAO-15-463 HASC Panel Recommendations
of Congressional Relations and Public Affairs may be found on the last 

page of this report. GAO staff members who made key contributions to 

this report are listed in appendix III.

Asif A. Khan

Director

Financial Management and Assurance

Page 26 GAO-15-463 HASC Panel Recommendations
Appendix I: Status of DOD’s Actions to 

Implement the Panel on Defense Financial 

Management and Auditability Reform 

Recommendations

This appendix contains our assessment of the Department of Defense’s 

(DOD) progress in addressing the House Armed Services Committee 

(HASC) Panel on Defense Financial Management and Auditability 

Reform’s (the panel) recommendations, organized by the four areas the 

panel reviewed.1 Each section of the appendix covers the 

recommendations made for the four areas and includes (1) the panel 

recommendations, (2) statuses reported by GAO and DOD, (3) key 

background information, (4) DOD actions taken to address the 

recommendations, and (5) our assessment of the status of the 

recommendations. The status of each recommendation is based on our 

assessment of information received prior to or as of May 2015 and DOD’s 

reported status as of the May 2015 Financial Improvement and Audit 

Readiness (FIAR) Plan Status Report.2

Panel recommendation 1.1

The Department’s FIAR Strategy for Wave 4 (Full Audit Except for Legacy Asset 

Valuation) should include a complete analysis of interdependencies among Waves 1-3 

and Wave 4.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel reported that DOD had a reasonable strategy 

and methodology for its FIAR effort, although its strategy needed to be 

more detailed and refined.3 While the panel noted that DOD’s December 

2011 FIAR Guidance detailed the strategy and methodology for 

completing Wave 4, the components were instructed to continue their 

1

House Armed Services Committee Panel on Defense Financial Management and 

Auditability Reform, Findings and Recommendations (Washington, D.C.: Jan. 24, 2012). 

2

DOD provides semiannual FIAR Plan Status Reports with updates on the status of the 

department’s implementation of the FIAR Plan. DOD’s FIAR Plan is DOD’s strategic plan 

and management tool for guiding, monitoring, and reporting on the department’s financial 

management improvement efforts. 

3

DOD’s FIAR strategy includes four waves: (1) Appropriations Received Audit, 

(2) Schedule of Budgetary Activities/Statement of Budgetary Resources Audit, (3) Mission 

Critical Asset Existence and Completeness Audit, and (4) Full Financial Statements Audit.

Appendix I: Status of DOD’s Actions to 

Implement the Panel on Defense Financial 

Management and Auditability Reform 

Recommendations

FIAR Strategy and 

Methodology

Page 27 GAO-15-463 HASC Panel Recommendations

 
Appendix I: Status of DOD’s Actions to 

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Management and Auditability Reform 

Recommendations

focus on implementing the requirements of Waves 1, 2, and 3.4

Additionally, the panel reported that the department, in its FIAR 

Guidance, instructed its components not to address Wave 4 requirements 

in their financial improvement plans (FIP) until the FIAR activities 

associated with Waves 1, 2, and 3 were complete.5 The panel stated its 

concern that this approach may affect the department’s ability to achieve 

financial statement auditability in 2017, because of DOD’s lack of analysis 

of the interdependencies among Waves 1, 2, 3, and 4. For example, the 

panel stated that by testing certain information on the Statement of 

Budgetary Resources (SBR) in Wave 2, assurance can be obtained on 

the reliability of certain data in the Balance Sheet in Wave 4.

DOD Actions: DOD first identified interdependencies in its December 

2011 FIAR Guidance that can be leveraged to accelerate progress in 

Wave 4 and revised them in subsequent versions of the FIAR Guidance 

as follows:6

• Delivered Orders, reported on the SBR (covered in Wave 2), equates 

to a portion of Accounts Payable reported on the Balance Sheet 

(Wave 4).

• Spending Authority from Offsetting Collections, reported on the SBR 

(covered in Wave 2), includes some of the amounts reported in 

Accounts Receivable—Intragovernmental on the Balance Sheet 

(Wave 4).

4

The FIAR Guidance, which is updated periodically, provides the standard methodology 

for the components to implement the FIAR Plan. The FIAR Guidance requires 

components to develop and execute corrective action plans to remediate any deficiencies 

that indicate that controls are not working, transaction amounts are not supported, or both.

5

FIPs provide a framework for planning and tracking the steps and supporting 

documentation necessary to achieve auditability within the FIAR methodology. 

6

DOD officials stated that there are no interdependencies for Wave 3 (Mission Critical 

Asset Existence and Completeness Audit) with Waves 1 (Appropriations Received Audit) 

and 2 (Statement of Budgetary Resources Audit). 

Page 28 GAO-15-463 HASC Panel Recommendations

 
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• Unobligated Balances and Unpaid Obligations, reported on the SBR 

(covered in Wave 2), correlates to Fund Balance with Treasury, 

reported on the Balance Sheet (Wave 4).7

• Obligations Incurred, reported on the SBR (covered in Wave 2), 

equates to a substantial portion of Gross Costs reported on the 

Statement of Net Cost (Wave 4).

In its May 2015 FIAR Plan Status Report, DOD considered this 

recommendation as partially met and stated that its analysis of 

interdependencies will continue until the department achieves financial 

statement auditability. Also, in its April 2015 FIAR Guidance, DOD stated 

that partly because of interrelationships between financial statements, the 

department can leverage audit readiness efforts from previous waves to 

succeeding waves, much like the above interdependencies. For example, 

DOD officials stated that through Schedule of Budgetary Activity/SBR 

(Wave 2) audit readiness efforts, some portions of line items on other 

financial statements have been addressed.

GAO Status: We consider this recommendation partially met because as 

DOD continues its audit readiness activities, the department will likely 

identify additional interdependencies between accounts on its SBR, 

Balance Sheet, and Statement of Net Cost. For example, Wave 4 audit 

readiness activities include valuation of assets, liabilities, revenues, and 

costs and therefore will require DOD to determine the dollar values to be 

assigned to line items such as environmental liabilities; general property, 

plant and equipment; inventory; and operating materials and supplies. 

These audit readiness activities will involve interdependencies between 

the Balance Sheet and the Statement of Net Cost.

7

DOD stated that the most important financial relationships for Wave 2 are found between 

the SBR and the Balance Sheet. Because of the strong relationship between the Fund 

Balance with Treasury line item on the Balance Sheet and line items on the SBR, 

achieving an auditable Fund Balance with Treasury balance is critical to achieving 

successful completion of Wave 2. 

Page 29 GAO-15-463 HASC Panel Recommendations

 
Appendix I: Status of DOD’s Actions to 

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Management and Auditability Reform 

Recommendations

Panel recommendation 1.2

The Department should establish a DOD Financial Reporting element, or wave, that 

includes a process for consolidating the components’ financial information into the 

DOD’s agency-wide financial statements. The Department should report this element’s 

audit readiness progress in the FIAR Plan Status Report.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel stated that the FIAR Plan did not address the 

process for ensuring that the DOD components’ financial information will 

be properly consolidated into DOD’s department-wide financial 

statements. The panel’s concern was that the lack of an articulated 

process for addressing financial statement consolidation may affect 

DOD’s ability to achieve financial statement auditability in 2017. In its 

recommendation, the panel suggested, as one option, that DOD create a 

DOD financial reporting element or wave for consolidation of DOD’s 

financial statements and report on this element’s audit readiness progress 

in the FIAR Plan Status Report.

DOD Actions: DOD reports on the status of Defense Finance and 

Accounting Service (DFAS) financial reporting, defined as the process by 

which DFAS organizes financial data and produces financial statements, 

in the FIAR Plan Status Reports. DFAS, one of DOD’s largest service 

providers,8 performs accounting and finance services for the department, 

including preparing the financial statements for its components as well as 

the consolidated department-wide financial statements.9 According to 

DOD officials, the department will continue to use the current DFAS 

reporting system and processes to produce the department-wide 

consolidated financial statements. In accordance with the FIAR Guidance, 

DFAS’s financial reporting system and processes have undergone a 

Statement on Standards for Attestation Engagements (SSAE) No. 16 

8

DOD, in its FIAR Guidance, has defined service providers as “entities that provide 

services to and are responsible for executing one or more business processes on behalf 

of the reporting entities.”

9

Under the FIAR Guidance, DOD components include reporting entities (i.e., DOD entities 

or funds that prepare stand-alone financial statements included in the DOD-wide financial 

statements) and service providers that provide a variety of accounting, personnel, 

logistics, systems, or other support services to the reporting entities.

Page 30 GAO-15-463 HASC Panel Recommendations

 
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examination by an independent auditor.10 As DOD officials stated in the 

May 2015 FIAR Plan Status Report, the department is addressing the 

SSAE No. 16 reported findings and implementing corrective actions. 

However, DOD officials stated in the report that the department will not 

know whether outstanding issues related to financial statement 

compilation have been resolved until an audit of DOD’s department-wide 

financial statements has been conducted.

GAO Status: DOD has established financial reporting assessable units 

for the military departments and service providers. However, we consider 

this recommendation partially met because DOD needs to take additional 

actions to fully develop a financial reporting wave or strategy for 

consolidating individual component financial statements into departmentwide financial statements. In addition, DOD’s reporting system and 

processes do not allow for the elimination of intragovernmental 

transactions, which occur between federal entities and must be eliminated 

to prevent duplicate reporting of information. DFAS, in its SSAE No.16 

financial reporting assertion package, stated that DOD’s current 

accounting systems generally do not capture trading partner information 

at the level needed to match and eliminate these intragovernmental 

transactions between trading partners.11 DOD officials stated that they 

have actions under way to address the issues affecting the proper 

elimination of intragovernmental transactions.

10In accordance with SSAE No. 16, Reporting on Controls at a Service Organization, the 

auditors of each of these external service organizations issue reports concerning the 

design and operating effectiveness of the service organizations’ internal control over the 

processing of user transactions. Services provided by an external service organization are 

considered part of a user entity’s information system relevant to the user entity’s financial 

reporting if the services affect classes of transactions that are significant to the user 

entity’s financial statements as well as the financial reporting process used to prepare the 

financial statements.

11Trading partners are federal agencies, bureaus, programs, or other entities (within or 

between entities) participating in transactions with each other.

Page 31 GAO-15-463 HASC Panel Recommendations

 
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Recommendations

Panel recommendation 1.3

The DOD should re-evaluate its position on accepting historical asset costs when 

the Department nears auditability on its financial statements in light of certain 

allowances in federal accounting standards. The findings of a re-evaluation may 

support the development of an audit readiness strategy for valuing legacy asset 

balances.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: When the panel made its recommendation, DOD had 

decided to wait to report the historical costs of real property, general 

equipment, inventory, and operating materials and supplies on its 

Balance Sheet until (1) initial FIAR priorities had been met and (2) the 

enterprise resource planning (ERP) systems under development were 

capable of recording and reporting transaction data.12 DOD’s decision 

was based on its business case in which DOD officials stated that with 

the exception of operating materials and supplies, historical acquisition 

cost information was used exclusively for financial reporting and not for 

managerial decision making. DOD officials, in its business case, also 

recognized that the ongoing implementation of ERP systems would 

enhance the recording of auditable historical costs for future acquisitions. 

Based on its business case, DOD also decided that it would expense the 

costs of military equipment and request that the Federal Accounting 

Standards Advisory Board change the federal accounting standards to 

allow this treatment, because DOD viewed capturing, recording, and 

reporting auditable costs for military equipment as extremely challenging 

and costly.13 In its report, the panel noted that federal accounting 

standards allow for the use of other methods to provide reasonable 

estimates for the costs of these assets, which led to its recommendation 

that the department reevaluate its position on accepting historical costs.

12An ERP system is an automated system using commercial off-the-shelf software 

consisting of multiple, integrated functional modules that perform a variety of businessrelated tasks, such as general ledger accounting, payroll, and supply chain management. 

13Military equipment is weapon systems that can be used directly by the armed forces to 

carry out battlefield missions and includes aircraft, ships, tanks, and self-propelled 

weapons. 

Page 32 GAO-15-463 HASC Panel Recommendations

 
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Recommendations

DOD Actions: DOD has reevaluated its position from that described in its 

business case, deciding to include historical cost valuations of general 

property, plant and equipment, including general equipment as well as 

real property, and internal use software on its Balance Sheet, without 

waiting until initial FIAR priorities are met and the implementation of the 

ERP systems is complete.14 In September 2013, DOD described its 

overall strategy for valuing assets (1) acquired prior to October 1, 2013, 

and (2) accepted by DOD and placed into service on or after October 1, 

2013.15 In February 2014, DOD issued its general equipment valuation 

estimation methodologies.16 According to its May 2015 FIAR Plan Status 

Report, DOD has established five working groups that are addressing 

impediments to audit readiness, including the valuation of historical 

assets.17 DOD reported the status of this recommendation as partially met 

and stated that the valuation methods for various asset categories are 

being developed and that the department is working closely with the 

Federal Accounting Standards Advisory Board to leverage asset valuation 

methodologies allowed under Statement of Federal Financial Accounting 

Standards No. 35 to establish a historical cost baseline.18

GAO Status: We consider this recommendation partially met because 

DOD has developed a strategy and is basing its asset valuation for the 

Balance Sheet on historical cost, but the department faces significant 

challenges in continuing to implement its strategy and develop auditable 

14Department of Defense, Office of the Under Secretary of Defense (Comptroller)/Chief 

Financial Officer, “Business Case Analysis,” app. 3 of Financial Improvement and Audit 

Readiness (FIAR) Plan Status Report (Washington, D.C.: May 2011).

15Department of Defense, Office of the Secretary of Defense, Elimination of Military 

Equipment Definition and Increase to Capitalization Thresholds for General Property, 

Plant and Equipment (Washington, D.C.: Sept. 20, 2013). 

16Department of Defense, Office of the Under Secretary of Defense (Acquisition, 

Technology and Logistics), Property and Equipment Policy Office, General Equipment 

Valuation Estimation Methodologies (Washington, D.C.: Feb. 21, 2014). 

17The five Balance Sheet working groups are the (1) General Equipment working group, 

(2) Real Property working group, (3) Internal Use Software working group, (4) Inventory 

and Related Property working group, and (5) Environmental and Disposal Liabilities 

working group.

18Federal Accounting Standards Advisory Board, Statement of Federal Financial 

Accounting Standards 35: Estimating the Historical Cost of General Property, Plant, and 

Equipment: Amending Statements of Federal Financial Accounting Standards 6 and 23

(Washington, D.C.: Oct. 14, 2009). 

Page 33 GAO-15-463 HASC Panel Recommendations

 
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valuations for these assets. For example, DOD’s components must first 

determine the existence of these assets. In addition, DOD has cited the 

following challenges to asset valuation:

• numerous configurations of highly complex military equipment and

weapons systems;

• military equipment and weapons systems that have been modified, 

upgraded, or overhauled;

• renovated or improved real property assets that have changed in 

value since originally placed in service;

• large inventories of missiles, ammunition and munitions, spare 

engines, equipment parts, supplies, and so forth;

• enormous quantities of deployed general equipment, inventory, and 

operating materials and supplies located in Afghanistan and 

worldwide; and

• identification and valuation of internal use software and DOD property 

with contractors.

Panel recommendation 1.4

The Department should: (1) analyze the causes of FIAR Plan implementation difficulties; 

(2) develop and implement corrective action plans to address identified weaknesses or 

deficiencies; and (3) develop a communications plan to circulate any resulting lessonslearned throughout the Department.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel’s concern was that without properly 

implementing the FIAR methodology, DOD components may be 

prematurely asserting audit readiness. In its report, the panel refers to our 

September 2011 report in which we stated that the Navy and Air Force 

did not adequately develop and implement their respective FIPs19 for 

19DOD components are expected to prepare FIPs in accordance with the FIAR Guidance 

for each of their assessable units. The FIPs are intended to both guide and document 

financial improvement efforts. 

Page 34 GAO-15-463 HASC Panel Recommendations

 
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civilian pay and military equipment in accordance with the FIAR 

Guidance.20 Our review of the FIPs found that the Navy and Air Force did 

not conduct sufficient control and substantive testing and reached 

conclusions that were not supported by the testing results, did not 

complete reconciliations of the population of transactions, and did not fully 

test information systems controls.21 Also, neither the Navy nor the Air 

Force had fully developed and implemented corrective action plans 

(CAPs) to address deficiencies identified during implementation of the 

FIPs. As a result of these deficiencies, we reported that these FIPs did 

not provide sufficient support for the components’ conclusions that the 

assessable units were ready to be audited.

DOD Actions: With regard to part 1 of the recommendation, DOD’s FIAR 

Directorate,22 according to DOD officials, worked with DOD’s components 

initially to overcome FIAR Plan implementation difficulties by reviewing 

and verifying that the FIPs were consistent with FIAR strategy and 

methodology. Based on this work, the FIAR Directorate identified causes 

of implementation difficulties, or what DOD refers to as deal-breakers—

weaknesses that have prevented DOD components from demonstrating 

audit readiness or succeeding in audits.

With regard to part 2 of the recommendation, DOD’s March 2013 FIAR 

Guidance accelerated examination of audit readiness assertion packages 

by the DOD Inspector General (IG) or independent public accountant 

(IPA) firms to identify needed corrective actions based on auditor20GAO, DOD Financial Management: Improvement Needed in DOD Components’

Implementation of Audit Readiness Effort, GAO-11-851 (Washington, D.C.: Sept. 13, 

2011). 

21While “financial improvement plan” indicates that it is a plan, as a military department or 

component implements that plan, it must document the steps performed and the results of 

those steps and retain that documentation within the FIP. Therefore, a FIP includes plans 

for testing controls and data and documentation of the testing conducted, results of the 

testing, and any actions taken based on the results. When a component determines that it 

has completed sufficient financial improvement efforts for an assessable unit so that it is 

ready for audit, the FIP documentation is used to support the conclusion of audit 

readiness. 

22The FIAR Directorate provides management of the FIAR Plan to ensure integration of 

DOD-wide financial improvement efforts through various activities, including (1) the 

development and issuance of the FIAR Guidance, (2) performing monthly detailed reviews 

of component FIPs and evaluating related deliverables, and (3) the development of 

metrics for monitoring and progress reporting. 

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identified notices of findings and recommendations by combining the 

Assertion and Evaluation phases into one phase.23 In addition to 

examinations of audit readiness assertion packages, audits of the military 

departments’ General Fund Schedules of Budgetary Activity for fiscal 

year 2015 began in January 2015. The FIAR Directorate has established 

a tracking database to monitor the implementation of corrective actions 

for findings and recommendations resulting from examinations and 

audits.24

Finally, with regard to part 3 of the recommendation, DOD does not have 

a formal communications plan for sharing information on lessons learned, 

but the FIAR Directorate promotes this type of sharing. Lessons learned 

are shared at FIAR Committee, FIAR Subcommittee, and working group 

meetings, as well as other forums such as in-process review meetings 

and newsletters. According to the May 2015 FIAR Plan Status Report, the 

tracking database for notices of findings and recommendations will help in 

sharing lessons learned as deficiencies at one component are likely to 

exist at another component.

GAO Status: We consider this recommendation partially met because 

DOD components have not yet implemented all of the FIAR audit 

readiness activities to achieve its goal of department-wide financial 

statement auditability. Furthermore, the expansion of the FIAR priorities 

to include proprietary accounting and information as well as valuation will 

likely require additional corrective actions to address these areas.25 As 

recommended by the panel, the components will need to continue 

developing CAPs to address any identified weaknesses or deficiencies. 

Finally, DOD needs to develop a formal communications plan and 

23As stated in the March 2013 FIAR Guidance, the six-phase FIAR methodology was 

reduced to five phases when the Assertion and Evaluation phases were combined into 

one phase. This phase was renamed the Assertion/Examination phase in the April 2015 

FIAR Guidance. 

24This centralized tracking database will include findings and recommendations from 

(1) DOD or IPA firm examinations for specific assessable units; (2) mock audits; (3) SSAE 

No. 16 examinations; and (4) audits performed by IPA firms, GAO, the DOD IG, and the 

military departments’ audit services.

25These expanded priorities were included in the April 2015 FIAR Guidance. Proprietary 

accounts provide the information for the financial statements based on Federal Accounting 

Standards Advisory Board standards and are intended to provide an economic rather than 

a budgetary measure of operations and resources.

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components will need to communicate any lessons learned as the panel 

recommended.

Panel recommendation 1.5

The Under Secretary of Defense (Comptroller) (USD(C)), in consultation with DOD’s 

Deputy Chief Management Officer (DCMO), the secretaries of the military departments, 

and the heads of the defense agencies and field activities, should incorporate risk 

mitigation plans to support the meeting of future interim milestones in the FIAR Plan.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel raised concerns about DOD missing some of the 

interim milestones included in the May 2011 FIAR Plan Status Report. 

While recognizing that slippages of interim milestones will not necessarily 

compromise meeting audit readiness objectives, the panel stated that 

DOD must incorporate risk mitigation plans to remediate missed interim 

milestones and apply lessons learned toward achieving later milestones 

on schedule.

DOD Actions: The department, in its May 2015 FIAR Plan Status Report, 

stated that it has a three-pronged approach for addressing risk 

management in which DOD has (1) identified audit readiness dealbreakers by reviewing past audits, (2) defined the critical path to 

achieving financial statement auditability and included related tasks and 

milestones in the April 2015 FIAR Guidance, and (3) reinforced the 

importance of internal controls over areas of significant risk by including a 

new chapter on internal controls in the FIAR Guidance and implementing 

a centralized tracking database to monitor corrective actions developed in 

response to notices of findings and recommendations generated from 

examinations and audits.26

GAO Status: We consider this recommendation partially met because 

DOD needs to take additional actions to develop a department-wide risk 

management plan. In August 2013, we recommended that DOD design 

26Examinations of audit readiness are done by either the DOD IG or an IPA firm. 

Examinations are different from financial statement audits. According to DOD, auditors 

complete an examination to validate management’s assertion that the business or 

financial process is audit ready. 

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and implement department-level policies and detailed procedures for 

FIAR Plan risk management, including the five guiding principles for 

effective risk management.27 DOD officials acknowledged that DOD did 

not have a written risk management policy for its FIAR effort and originally 

planned to develop one, but have recently stated that its three-pronged 

approach will address risk management. According to the May 2015 FIAR 

Plan Status Report, DOD’s three-pronged approach addresses aspects of 

risk management, including the use of deal-breakers, DOD’s critical path, 

and its notices of findings and recommendations tracking database. 

However, the lack of a department-wide risk management plan to assess 

risks specifically related to meeting future interim milestones will hinder 

developing and implementing consistent risk mitigation strategies across 

DOD.

Panel recommendation 1.6

The FIAR Governance Board should attest as to whether the DOD is on track to achieve 

audit readiness in 2017 in each FIAR Plan Status Report.

GAO status: Partially met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The FIAR Governance Board is charged with providing 

vision, leadership, oversight, and accountability for DOD’s FIAR effort. 

Members of the FIAR Governance Board include the Comptroller/Chief 

Financial Officer, the Deputy Chief Financial Officer, the Deputy Chief 

Management Officer, the military department assistant secretaries for 

financial management/comptroller and deputy chief management officers 

(DCMO), the DFAS Director, and Defense Logistics Agency (DLA) 

Deputy Director.

DOD Actions: DOD officials stated that each FIAR Plan Status Report is 

coordinated among FIAR Governance Board members, providing them 

with the opportunity to (1) formally attest to the accuracy and 

completeness and (2) determine if their components are on track to 

27GAO, DOD Financial Management: Ineffective Risk Management Could Impair Progress 

toward Audit-Ready Financial Statements, GAO-13-123 (Washington, D.C.: Aug. 2, 2013). 

The five guiding principles for effective risk management are (1) identify risks, (2) analyze 

risks, (3) plan for risk mitigation, (4) implement the risk management plan, and (5) monitor 

risks. 

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achieve audit readiness in 2017. In addition, DOD officials stated that 

each military department’s chief management officer reports on audit 

readiness progress and challenges in signed statements in the FIAR Plan 

Status Report and also indicates whether his or her military department is 

on track to achieve audit readiness by September 30, 2017.

GAO Status: The FIAR Plan Status Reports have included signed 

statements by the military department chief management officers as well 

as a signed statement from DOD’s Under Secretary of Defense 

(Comptroller)/Chief Financial Officer. However, we consider this 

recommendation partially met because not all FIAR Governance Board 

members (e.g., the DFAS Director and the DLA Deputy Director) provide 

signed statements and attest to audit readiness in the FIAR Plan Status 

Reports and thus additional actions are needed. In addition, the signed 

statements provided in the May 2015 FIAR Plan Status Report did not 

explicitly state whether DOD was on track to achieve audit readiness by 

September 30, 2017, as the panel recommended. Instead, the signed 

statements expressed commitment to continue making progress toward 

financial statement auditability by September 30, 2017, but did not clearly 

state whether DOD or the military departments are on target to meet that 

date. Moreover, because the panel recommendation is addressed to the 

department, the FIAR Governance Board members need to attest for their 

individual components and the DOD Comptroller needs to attest for the 

department whether they are on track to achieve audit readiness in 2017 

in each FIAR Plan Status Report to fully meet this recommendation. In 

making these attestations, it is critical that the FIAR Governance Board 

consider the effect of known factors (e.g., the lack of integrated systems) 

and other risks, such as weaknesses and deficiencies identified in 

examinations and audits, on the status of its financial statement audit 

readiness.

Panel recommendation 2.1

The Department should include objective and measurable criteria regarding FIAR-related 

goals in its senior personnel performance plans and evaluations. Performance evaluated 

on the basis of such criteria should be appropriately rewarded or held accountable. 

Evaluated performances should be documented and tracked to measure progress over 

time.

GAO status: Partially met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Challenges to Achieving 

Financial Management 

Reform and Auditability

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Background: The panel stated, in its report, that effective leadership and 

oversight are instrumental to bringing forth and sustaining substantial 

financial management improvement. In addition to financial management 

reform being a long-term undertaking, the panel stated that it requires the 

involvement of DOD leadership within, and outside of, financial 

management operations. In addition, according to the panel, leadership 

should extend from the top officials, including the offices that comprise 

the Secretary of Defense, the military departments’ chief management 

officers, and the military departments’ assistant secretaries (financial 

management and comptroller) to senior officials in other functional areas, 

such as logistics and acquisitions. The panel recognized that DOD 

requires that senior executive performance appraisals include financial 

audit goals among their evaluation criteria and that this requirement 

includes appraisals of senior executives in functional areas having a 

financial impact. The panel considered this requirement a positive step, 

but added that the effectiveness of this requirement depends on whether 

the evaluation criteria can be objectively measured, evaluated 

performances are appropriately rewarded, and senior officials are held 

accountable.

DOD Actions: On April 9, 2013, the Deputy Secretary of Defense issued 

a memorandum, stating that most, if not all, of DOD’s executives have a 

role in its effort to achieve audit readiness. In the memorandum, three 

categories of Senior Executive Service (SES) members were described 

and their performance plans were to be updated with objective and 

measurable criteria by April 30, 2013.

• SES members in category 1 are responsible for managing resources 

or DOD business processes. The performance plans for these SES

members are to include an agency-specific performance requirement 

for business acumen.

• The second category is those SES members who have a direct role in 

their organizations’ FIAR efforts. This category includes headquarterslevel financial managers with overall FIAR responsibility as well as 

SES members in financial management and other functional 

communities (such as acquisition, logistics, and personnel) who 

directly affect their organizations’ financial records and FIAR efforts. 

These SES members should include in their performance plans 

specific audit-related goals, tied to their organizations’ FIPs, as an 

agency-specific performance requirement for being results driven. 

Moreover, to the extent that these SES members manage resources 

or DOD business processes, the executive performance plans should 

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also include the business acumen element described in the first 

category. In assessing performance for this element, rating officials 

are instructed to consider both the individual’s and the organization’s 

results.

• The third category consists of SES members who do not manage 

resources or DOD processes, who do not have a direct role in their 

organizations’ audit readiness efforts, or both. According to the April 

9, 2013, memorandum, these SES members are to request a waiver 

from having FIAR goals included in their executive performance plans. 

However, according to an April 19, 2013, memorandum, the instance 

of SES members falling into the third category should be rare.

With regard to the second part of this recommendation, DOD officials told 

us in December 2014 that officials were considering bonuses to award 

performance on the FIAR-related goals, but had not determined how to 

reward executives with bonuses based on evaluated performance for 

DOD-wide goals, such as the FIAR-related goals. With regard to part 3 of 

the panel’s recommendation, DOD officials stated that when the FIARrelated goals were first included in the SES performance plans, there was 

a perceived change in that leaders focused more attention on FIAR goals 

and efforts. However, DOD officials stated that it is difficult to determine 

the causality between the inclusion of the FIAR-related goals and 

achievement of these goals.

GAO Status: We consider this recommendation partially met because, 

although DOD components have inserted FIAR-related requirements in 

SES performance plans, additional actions are needed to determine how 

to reward executives based on evaluated performance for FIAR-related 

goals and to assess the effect of these requirements on accomplishing 

FIAR activities by tracking evaluated performances over several fiscal 

years. Without evaluating SES member performance relating to the FIAR 

goals, DOD only has anecdotal evidence on the effect of the inclusion of 

these goals.

Panel recommendation 2.2

To improve oversight of the FIAR effort, the Department should require each DOD 

component senior executive committee to review its corresponding component’s audit 

readiness assertion packages for compliance with the FIAR Guidance prior to 

submission of those packages to the Office of the USD(C) for validation.

GAO status: Partially met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

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Background: The panel based this recommendation on the fact that 

while DOD components had senior executive committees to oversee 

financial improvements efforts, their oversight responsibilities were not 

effectively being carried out, as demonstrated by the ineffective 

implementation of FIPs and insufficient evidence to support conclusions 

of audit readiness. In its report, the panel stated that effective oversight 

mechanisms must be implemented to ensure that DOD’s components are 

complying with FIAR Guidance.

DOD Actions: As shown in the May 2015 FIAR Plan Status Report, DOD 

officials determined this recommendation to be met because the FIAR 

Guidance requires that audit readiness management assertions be 

signed by the individual representing the organization responsible for the 

subject matter and that this level of review and approval is appropriate. 

By signing the audit readiness assertion letter for an assessable unit or 

line item, the responsible individual is asserting that the component has 

followed the FIAR Guidance to (1) document and evaluate internal 

controls and (2) define, assemble, and retain key supporting 

documentation to support transactions. In addition, the individual is also 

asserting that the supporting documentation can be retrieved and 

provided within a reasonable period of time to an IPA firm conducting an 

examination or subsequent audit. According to DOD officials, the 

department adopted an alternative action in response to the panel’s 

recommendation—the assignment of a functional lead to review the audit 

assertion package.28 While the functional leads do not sign off on the 

assertion packages, these leads do participate in the review process for 

the package. According to DOD officials, this alternative action 

demonstrates accountability and has addressed the intent of the panel’s 

recommendation.

GAO Status: We consider this recommendation partially met because 

DOD’s FIAR Guidance does not require senior executive committee 

reviews of audit assertion packages for compliance with the FIAR 

Guidance as the panel recommended. DOD has taken alternative actions 

of having functional leads review audit assertion packages and individuals 

responsible for the subject matter review and approve the assertion 

packages. However, recent GAO reports have identified instances in 

28Functional leads in this context generally are officials outside the financial management 

functional community.

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which the Army and DFAS have not completed tasks required by the 

FIAR Guidance, which could result in premature assertions of audit 

readiness.29 For example, we found that DFAS had asserted audit 

readiness for its contract pay assessable unit even though a deal-breaker 

was present. As we reported in June 2014, DFAS had not established a 

general ledger reconciliation process at the time it implemented its 

contract pay FIP.30 Therefore, we concluded that as a result of the lack of 

a general ledger reconciliation process, additional errors may exist in the 

recorded transactions activity and balances for DFAS contract pay. If 

DOD were to take additional actions and require senior executive 

committee reviews of the assertion packages, as recommended by the 

panel, then the committee could make a collective decision and take 

responsibility for moving forward with an assertion, even though a dealbreaker exists, rather than an individual or functional lead making that 

decision alone. Similarly, the panel cited insufficient support for 

conclusions of audit readiness in its report, reinforcing the need for higher 

levels of review of the audit readiness assertion packages.

Panel recommendation 2.3

The Department should develop comprehensive corrective action plans to address 

existing material weaknesses and those identified during the FIAR effort.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that since the mid-1990s, the 

DOD IG has reported numerous material weaknesses in internal control 

that affect the department’s ability to obtain a clean opinion on its financial 

29GAO, DOD Financial Management: Improvements Needed in Army’s Efforts to Ensure 

the Reliability of Its Statement of Budgetary Resources, GAO-14-60 (Washington, D.C.: 

May 30, 2014), and DOD Financial Management: The Defense Finance and Accounting 

Service Needs to Fully Implement Financial Improvements for Contract Pay, GAO-14-10

(Washington, D.C.: June 23, 2014).

30GAO-14-10. 

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statements.31 In its audit report for fiscal year 2014, the DOD IG reported 

previously identified material weaknesses32 in the following areas: 

(1) Financial Management Systems; (2) Fund Balance with Treasury; 

(3) Accounts Receivable; (4) Inventory; (5) Operating Materials and 

Supplies; (6) General Property, Plant and Equipment; (7) Government 

Property in Possession of Contractors; (8) Accounts Payable; 

(9) Environmental Liabilities; (10) Statement of Net Cost; 

(11) Intragovernmental Eliminations; (12) Other Accounting Entries; and 

(13) Reconciliation of Net Cost of Operations to Budget. Many of these 

material weaknesses are so serious that they contribute to GAO being 

unable to render an opinion on the U.S. government’s consolidated 

financial statements.33

DOD Actions: According to DOD officials, components that undergo 

examinations or audits are required to develop and implement CAPs. The 

13 material weaknesses identified by the DOD IG, as well as those selfreported by the department, will be addressed by specific reporting entity 

corrective actions, DOD-wide corrective actions, or DOD-wide policy 

initiatives that are carried out at the reporting entity level. Specific 

reporting entity-level corrective action timelines are included in the May 

2015 FIAR Plan Status Report and the April 2015 FIAR Guidance. In 

addition, details on DOD-wide solutions and policy initiatives are included 

in the May 2015 FIAR Plan Status Report. With regard to material 

weaknesses identified through the FIAR effort, the FIAR Directorate, 

using its notices of findings and recommendations tracking database, is 

monitoring the implementation of corrective actions.

31According to the American Institute of Certified Public Accountants’ Forming an Opinion 

and Reporting on Financial Statements (AU-C Section 700), effective for audits of financial 

statements for periods ending on or after December 15, 2012, an unmodified opinion 

states that the financial statements are presented fairly, in all material respects, in 

accordance with the applicable accounting principles. For periods ending before 

December 15, 2012, an unmodified opinion was known as an unqualified opinion.

32A material weakness is a deficiency, or combination of deficiencies, in internal control 

over financial reporting, such that there is a reasonable possibility that a material 

misstatement of the entity’s financial statements will not be prevented, or detected and 

corrected, on a timely basis. A deficiency in internal control exists when the design or 

operation of a control does not allow management or employees, in the normal course of 

performing their assigned functions, to prevent, or detect and correct, misstatements on a 

timely basis. 

33GAO, Financial Audit: U.S. Government’s Fiscal Years 2014 and 2013 Consolidated 

Financial Statements, GAO-15-341R (Washington, D.C.: Feb. 26, 2015). 

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GAO Status: DOD has taken actions to develop CAPs at the component 

level. However, we consider this recommendation partially met because 

DOD needs to take additional actions to develop comprehensive CAPs 

for addressing material weaknesses at the department level. According to 

the United States Chief Financial Officers Council’s Implementation Guide 

for OMB Circular A-123, a comprehensive CAP lists the detailed actions 

that must be taken to resolve the weakness or deficiency, including 

(1) summary description of the deficiency and year first identified; 

(2) targeted corrective action date (the date for management follow-up); 

(3) agency official responsible for monitoring progress; (4) indicators, 

statistics, or metrics used to measure progress in resolving the weakness 

or deficiency; and (5) milestone or other characteristic used to report how 

resolution activities are progressing.34 Given the critical nature of the 

long-standing, material weaknesses in internal control reported for fiscal 

year 2014, their resolution will require a concerted effort by leadership at 

the component level to implement corrective actions with oversight from 

the Office of the Under Secretary of Defense (Comptroller), to monitor 

department-wide initiatives and implement component-level CAPs.35

DOD, to meet this recommendation, will also need to monitor the 

development and implementation of corrective actions for weaknesses 

identified from FIAR-related activities, such as audits and examinations, 

to ensure that comprehensive CAPs are developed and these 

weaknesses are fully addressed at both the component and department 

levels.

Panel recommendation 2.4

To reduce improper payments, the Department should re-evaluate its methodology 

for identifying and reporting improper payments.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

34Chief Financial Officers Council, Implementation Guide for OMB Circular A-123,

Management’s Responsibility for Internal Control Appendix A, Internal Control over 

Financial Reporting (Washington, D.C.: July 2005). The guide is intended to assist federal 

managers with implementing a process for assessing the effectiveness of an entity’s 

internal control over financial reporting.

35Department of Defense, United States Department of Defense Agency Financial Report 

Fiscal Year 2014 (Washington, D.C.: November 2014).

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Background: The panel based this recommendation on GAO’s findings 

included in a July 2009 report that reported DOD may not be capturing 

the full extent of its improper payments.36 Specifically, we found in 2009 

that DOD had not conducted risk assessments for all of its payment 

activities and $322 billion in outlays were excluded from the amounts 

assessed. In addition, at that time we stated that DOD had not estimated 

improper payments for commercial pay, its largest payment activity, in 

accordance with improper payment requirements.37 The then-DOD 

Comptroller testified before the panel that DOD is taking steps, based on 

the Improper Payments Elimination and Recovery Act of 2010,38 to initiate 

a statistical sampling program for commercial payments.39 In its report, 

the panel acknowledged DOD’s efforts to initiate statistical sampling for 

commercial payments but recommended that DOD take further action to 

address this issue.

DOD Actions: In its May 2015 FIAR Plan Status Report, DOD officials 

stated that the department continues to review its sampling 

methodologies for all payment types to ensure that it can properly 

estimate improper payment dollars. For example, DFAS reevaluated and 

enhanced its statistical sampling methodology for DFAS commercial 

payments for fiscal year 2014 improper payment reporting. Also, for fiscal 

year 2014, the Defense Health Agency modified its TRICARE improper 

36GAO, Improper Payments: Significant Improvements Needed in DOD’s Efforts to 

Address Improper Payment and Recovery Auditing Requirements, GAO-09-442

(Washington, D.C.: July 29, 2009). 

37DOD’s commercial pay includes both contract and vendor payments. Contract payments 

include disbursements for complex, multiyear purchases with high dollar amounts, such as 

weapon systems. Vendor payments include purchases for day-to-day goods and services, 

such as food, fuel, and transportation. DOD’s improper payment programs relating to 

commercial pay include DFAS commercial pay (the largest of all DOD payment 

programs), Navy payments made from its ERP, and U.S. Army Corps of Engineers 

commercial pay. 

38Pub. L. No. 111-204, 124 Stat. 2224 (July 22, 2010).

39Robert F. Hale, Under Secretary of Defense (Comptroller)/Chief Financial Officer, 

Department of Defense, Oversight: Assessing Efforts to Eliminate Improper Payments, 

testimony before the Senate Committee on Homeland Security and Governmental Affairs, 

Subcommittee on Federal Financial Management, Government Information, Federal 

Services, and International Security, 112th Cong., 1st sess., May 25, 2011.

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payment calculation formula in response to our prior findings.40 DOD 

stated that the department will be reviewing the sampling methodologies 

for the other seven programs for which improper payment estimates are 

reported in its agency financial report. However, DOD stated in its fiscal 

year 2014 agency financial report that it cannot demonstrate that all 

payments subject to improper payment requirements were included in the 

population of payments to review.41

GAO Status: DOD has taken some steps to improve its improper 

payment sampling methodologies for some programs, but we consider 

this recommendation partially met because DOD still needs to reevaluate 

its methodology for identifying and reporting improper payments for other 

types of programs. In addition, DOD cannot demonstrate that the 

payments subject to improper payment estimation that are included in the 

populations from which the samples are selected are complete, accurate, 

and valid. As we stated in May 2013, the foundation of reliable statistical 

sampling estimates is a complete, accurate, and valid population from 

which to sample.42 Furthermore, we stated that DOD did not maintain the 

supporting documentation needed to substantiate reported improper 

payment estimates.

40The Defense Health Agency is the DOD agency responsible for administering the 

military health program known as TRICARE. In May 2013, we reported a calculation error 

in the military health benefits improper payment estimate. Specifically, DOD used an 

improper denominator to calculate the improper payment rate for its sample. Instead of 

dividing the dollar amount of identified improper payments in the sample by the dollar 

amount paid to providers, which would provide a percentage of improper payments, DOD 

divided the dollar amount of identified improper payments by the dollar amount billed by 

providers for the services rendered.

41Department of Defense, United States Department of Defense Agency Financial Report 

Fiscal Year 2014 (Washington, D.C.: November 2014).

42GAO, DOD Financial Management: Significant Improvements Needed in Efforts to 

Address Improper Payment Requirements, GAO-13-227 (Washington, D.C.: May 13, 

2013). 

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Panel recommendation 2.5

To reduce Antideficiency Act (ADA) violations, the Department should (1) perform an 

analysis of the causes for its ADA violations and then develop and implement 

procedures to address identified causes and (2) ensure that key funds control personnel 

are adequately trained to prevent, detect, and report ADA violations.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel noted that DOD’s poor internal 

controls put it at risk of violating the Antideficiency Act (ADA), referring to 

DOD IG and GAO testimonies.43 The Deputy IG for Auditing testified that 

DOD’s control environment weaknesses impaired its ability to determine 

the amount of funds that it had available to spend, and as a result, DOD 

was at risk of overobligating and overexpending its appropriations and 

violating the ADA.44 He added that a lack of adequate controls and 

training contributed to potential ADA violations. In 2011, we testified that 

because the ADA prohibits, and effective funds control should prevent, 

overobligations and overexpenditures of public funds, the number and 

dollar amount of ADA violations were indicators of the status of DOD’s 

funds control.45 In our testimony, we stated that DOD had issued and 

periodically updated policies that addressed responsibilities for preventing 

and identifying ADA violations. In addition, we testified that DOD’s 

guidance described frequent causes of ADA violations within the 

department and explained the actions necessary to avoid them, including 

(1) emphasizing management and supervisory duties, (2) training of key 

funds control personnel, and (3) effective systems and procedures.

4331 U.S.C. §§ 1341-42, 1349-52, 1511-19.

44Daniel Blair, Deputy Inspector General for Auditing, Department of Defense Office of 

Inspector General, DOD’s Efforts to Improve Payment and Funds Control, testimony 

before the House Committee on Armed Services, Panel on Defense Financial 

Management and Auditability Reform, 112th Cong., 1st sess., September 22, 2011.

45GAO, DOD Financial Management: Weaknesses in Controls over the Use of Public 

Funds and Related Improper Payments, GAO-11-950T (Washington, D.C.: Sept. 22, 

2011). 

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DOD Actions: In its Financial Management Regulation (FMR), DOD 

includes the causes of ADA violations it has identified46 as well as the 

department’s policies and procedures to prevent these violations.47 With 

respect to ensuring that key funds control personnel are adequately 

trained, DOD officials, in a memorandum dated December 13, 2011, 

stated that beginning October 1, 2012, the frequency of training for ADA 

investigators will change from 5-year to 3-year intervals.48 According to 

the May 2015 revised chapter of DOD’s FMR on administrative control of 

funds,49 the components are required to submit a memorandum on their 

annual evaluation of overall administrative control processes and ADA 

violations. This memorandum is to include a statement that provides the 

number of key funds control personnel identified and trained as 

prescribed in the FMR. In the May 2015 FIAR Plan Status Report, DOD 

officials stated that the military departments and components are required 

to review and evaluate training records to ensure that personnel certifying 

and handling funds have financial management and fiscal law training. In 

addition to increasing the frequency of training for ADA investigators, 

DOD has implemented its Financial Management Certification Program, 

which includes training on fiscal law. This training on fiscal law covers 

funds control and ADA requirements.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

46DOD categorizes violations of various fiscal laws and violations of the ADA, such as 

authorizing expenditures in excess of appropriations, collectively, as ADA violations.

47DOD’s regulations carrying out this requirement are in the DOD Financial Management 

Regulation (FMR), 7000.14R, vol. 14, ch. 1, “Administrative Control of Funds” (January 

2009). DOD’s FMR is issued under the authority of DOD Instruction 7000.14, Department 

of Defense Financial Management Policy and Procedures (rev. Sept. 17, 2008). The DOD 

FMR directs statutory and regulatory financial management requirements, systems, and 

functions for all appropriated and nonappropriated working capital, revolving, and trust 

fund activities.

48Department of Defense, Office of the Under Secretary of Defense (Comptroller), 

Antideficiency Act (ADA) Investigator Training Frequency (Washington, D.C.: Dec. 13, 

2011). 

49DOD Financial Management Regulation (FMR), 7000.14R, vol. 14, ch. 2, “Antideficiency 

Act Violations” (May 2015). 

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Panel recommendation 2.6

To reduce problem disbursements, the Department should address the underlying 

causes of problem disbursements in its efforts to develop and implement enterprise 

resource planning (ERP) systems.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: Problem disbursements include both unmatched 

disbursements and negative unliquidated obligations. Unmatched 

disbursements are disbursements that have been paid by an accounting 

office but have not been matched to the correct obligation records. A 

negative unliquidated obligation is a disbursement transaction that has 

been matched to an obligation, but the total recorded disbursement 

exceeds the recorded obligation. In its report, the panel stated that 

problem disbursements impede DOD’s performance of proper Fund 

Balance with Treasury reconciliations,50 which affects DOD’s ability to 

report reliable information on its financial statements.51

DOD Actions: DOD’s Deputy Chief Financial Officer testified that 

problem disbursements are caused by errors or deficiencies that have 

occurred during the procure-to-pay process.52 According to DOD officials, 

problem disbursements can occur when the disbursing function is 

separated from the entitlement and accounting processes. DOD officials 

stated that the implementation of modern financial systems, including 

ERP systems, has temporarily increased the level of problem 

50In the federal government, an agency’s Fund Balance with Treasury accounts are 

similar in concept to corporate bank accounts. The difference is that instead of a cash 

balance, Fund Balance with Treasury represents unexpended spending authority in 

appropriation accounts. Similar to bank accounts, the funds in DOD’s appropriation 

accounts must be reduced or increased as the department spends money or receives 

collections that it is authorized to retain for its own use. 

51DOD, in its November 2013 FIAR Plan Status Report, stated that because of the strong 

relationship between the Fund Balance with Treasury line item on the Balance Sheet and 

line items on the SBR, DOD’s strategy for achieving successful completion of Wave 2 

depends on achieving an auditable Fund Balance with Treasury balance. 

52Mark Easton, Deputy Chief Financial Officer, Department of Defense, DOD’s Efforts to 

Improve Payment and Funds Control, testimony before the House Committee on Armed 

Services, Panel on Defense Financial Management and Auditability Reform, 112th Cong., 

1st sess., September 22, 2011.

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disbursements because of data quality issues and the need for interfaces 

with legacy systems that are still in use. However, the officials stated that 

by the time the ERP systems mature and their operations become stable, 

the data quality issues should be resolved. Moreover, DOD officials 

stated that these ERP systems should provide an automated, integrated 

environment that will significantly reduce the number of problem 

disbursements. DOD officials also stated that the auditors’ notices of 

findings and recommendations from examinations and audits should help 

in resolving issues causing problem disbursements. In its May 2015 FIAR 

Plan Status Report, DOD officials stated that analyses will be performed 

on a recurring basis until the department is able to retire all legacy 

systems and fully implement ERP capabilities. DOD officials added that 

these analyses and reconciliations should assist in identifying root causes

of problem disbursements and implementing corrective actions.

GAO Status: We consider this recommendation partially met because 

DOD needs to continue to address the underlying causes of problem 

disbursements as it develops and implements ERP systems.

Panel recommendation 2.7

The Department should identify and institutionalize best practices, as applicable, 

throughout the DOD to reinforce the full engagement of those functional communities 

outside of the financial management community in audit readiness efforts.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that it was encouraged by the 

testimony of DOD logistics community representatives about their role in 

efforts to improve financial management and achieve audit readiness. 

However, the panel stated that engaging the functional communities in 

the audit readiness effort must continue to be prioritized.53 The panel, in 

its report, referred to the Air Force’s testimony in which the Director of 

Logistics stated that one of the biggest challenges is ensuring that the 

53DOD defines a functional community as employees who perform similar functions. 

Logistics and financial management are 2 of 22 DOD functional communities. 

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logistics and acquisition functional communities understand their role in 

achieving audit readiness.54

DOD Actions: DOD officials stated, in the May 2015 FIAR Plan Status 

Report, that the Office of the Under Secretary of Defense (Comptroller), 

through the FIAR governance process, is aware of solutions and best 

practices identified and implemented by DOD’s components, including 

those identified by the functional communities. As cited in the report, 

some of the best practices shared among the components, including the 

functional leads serving on the FIAR effort, are as follows:

• Solution to be used by the military departments for valuing existing 

real property assets (deflated plant replacement value).55

• Army use of an Air Force environmental liability cost estimation tool.

• Army and Air Force use of an audit response tool developed by the 

Navy.

• Navy use of a Fund Balance with Treasury reconciliation tool 

developed by the Air Force.

GAO Status: We consider this recommendation partially met because 

the FIAR Directorate needs to take additional actions to validate whether 

identified best practices have been institutionalized department-wide. In 

addition, DOD did not comprehensively document lessons learned and 

best practices, and therefore the department is missing an opportunity to 

gain institutional knowledge that would facilitate future decision making. 

Federal internal control standards highlight the importance of 

54Major General Judith Fedder, Director of Logistics, Department of the Air Force, The 

Organizational Challenges in Achieving Sound Financial Management and Audit 

Readiness, testimony before the House Committee on Armed Services, Panel on Defense 

Financial Management and Auditability Reform, 112th Cong., 1st session, Sept. 15, 2011. 

55For some property, plant and equipment, agencies may decide to continue to use the 

property even though there is diminished service utility. Plant replacement value is an 

estimated cost to replace a building in current dollars. For example, for federal real 

property purposes, plant replacement value can be used to calculate estimated utility loss 

when an agency decides to accept the reduced performance objectives of a building 

rather than make major repairs and costly upgrades. This approach uses the plant 

replacement value to determine the portion of historical cost that should be written off. 

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documenting significant events in a timely manner.56 Specifically, these 

standards state that agencies should identify, record, and distribute 

pertinent information to the right people in sufficient detail, in the right 

form, and at the appropriate time to enable them to carry out their duties 

and responsibilities and ensure that communications are relevant, 

reliable, and timely. Institutionalizing identified best practices in writing 

may assist in consistent application and fully engaging functional 

communities outside of the financial management community in audit 

readiness efforts, as necessary.

Panel recommendation 2.8

The Department should develop a forum in which the military commands can share 

lessons learned from their respective audit readiness efforts.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel recognized that the majority of 

transactions recorded in accounting systems are initiated by military 

commands, installations, and bases. Based on this, the panel stated that 

for DOD to achieve its FIAR objectives, internal controls over, and the 

accounting of, these transactions must be improved at these locations. 

Based on testimony from the Commander of the Naval Air Systems 

Command, the panel stated that the lessons learned at Naval Air 

Systems Command should be shared with other military commands and 

vice versa.57

DOD Actions: In its May 2015 FIAR Plan Status Report, DOD officials 

stated that the military departments and defense agencies regularly share 

lessons learned within their organizations in various forums, such as 

newsletters, quarterly reviews, and stakeholder meetings. The FIAR 

Subcommittee, FIAR Committee, and FIAR Governance Board meetings 

56GAO, Standards for Internal Control in the Federal Government, GAO/AIMD-00-21.3.1

(Washington, D.C.: November 1999). 

57Vice Admiral David Architzel, Commander, Naval Air Systems Command, 

Organizational Challenges in Achieving Sound Financial Management and Audit 

Readiness, testimony before the House Committee on Armed Services, Panel on Defense 

Financial Management and Auditability Reform, 112th Cong., 1st sess., September 15, 

2011.

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are forums that are regularly used to share information external to an 

individual DOD component.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

Panel recommendation 2.9

The DOD Comptroller should include milestones along with the status of DOD financial 

service provider efforts to achieve effective controls over the major processes that affect 

DOD customers in the FIAR Plan Status Reports. These milestones should be consistent 

with the customer organizations’ audit readiness milestones.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel recognized that because DFAS’s activities are 

integral to the financial activities reported in the DOD components’

financial statements, weaknesses in internal control at DFAS must be 

addressed for DOD to achieve auditability. In its report, the panel referred 

to the FIAR Guidance, which states that service providers, such as DFAS, 

that work with user entities are responsible for audit readiness efforts 

surrounding service provider systems and data, processes and controls, 

and supporting documentation that have a direct effect on user entities’

auditability. Therefore, according to the panel’s report, it is critical that 

these organizations provide documentation demonstrating that controls 

are properly designed and operating effectively and transactions are 

properly posted to the accounting records. The panel stated that DFAS 

should undergo an audit of its major processes that materially affect its 

users. In addition, timelines for establishing effective controls should be 

reported in future FIAR Plan Status Reports for all major processes.

DOD Actions: DOD included service providers’ FIAR status and 

milestones in its FIAR Plan Status Reports beginning with the May 2012 

report. In the May 2015 FIAR Plan Status Report, DOD officials stated 

that in addition to including service provider milestones in DOD reports, 

the Office of the Under Secretary of Defense (Comptroller) and DOD’s 

components monitor service providers’ milestones, progress, and 

challenges during service provider working group meetings, as well as 

during other FIAR oversight meetings, such as FIAR Committee 

meetings. DOD also stated, in the May 2015 FIAR Plan Status Report, 

that integrating the audit readiness activities of the service providers with 

their customers is complex and is one of the challenges the department 

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faces to achieving audit readiness. One reason for this complexity is that 

the components rarely control transactions from initiation to reporting on 

the component financial statements. Moreover, the components do not 

own and operate all of the information systems used to process their 

transactions. One example provided by the department relates to 

processing and recording contract pay, for which the components depend 

on over a dozen systems that are owned and operated by service 

providers.

GAO Status: We consider this recommendation partially met because 

DOD needs to take additional actions to show the comparison of the 

service provider milestones with those of their customers so that the 

consistency of the milestones between service provider and customer can 

be seen. Currently, the FIAR Plan Status Reports show the service 

providers’ status and plans for achieving audit readiness and conducting 

SSAE No. 16 examinations by assessable unit.58 Ensuring that the 

component milestones and service provider milestones are consistent for 

each process included in the FIAR effort remains challenging.

Panel recommendation 3.1

The Department should assess its financial management workforce and that of all other 

functional areas performing financial management-related functions regarding: (1) critical 

skills and competencies of the existing civilian employee workforce; (2) critical skills and 

competencies that may be needed over the next decade; (3) gaps between current 

requirements and existing workforce competencies; and (4) gaps between projected 

requirements and existing workforce competencies. The assessment should include 

federal civilian, military, and contracted personnel performing financial managementrelated functions.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel reported that at the time of its review, DOD had 

not yet performed a complete department-wide systematic competency 

assessment that included an analysis of the financial management 

58DOD service providers, upon completion of financial improvement work, undergo 

examinations in accordance with SSAE No. 16, Reporting on Controls at a Service 

Organization. Those service providers that are not required to undergo an SSAE No. 16 

examination must work with components to determine how they will support audit 

readiness efforts. 

Financial Management 

Workforce

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workforce abilities, knowledge bases, and skill sets needed now and in 

the future. DOD developed and issued its department-wide (enterprisewide) financial management competencies for its civilian workforce in 

November 2011, immediately preceding the panel report’s issuance.59 In 

issuing these competencies, DOD officials stated that they identify the 

critical knowledge, skills, and abilities that DOD financial managers need 

to meet the (1) complex 21st century national security mission and 

(2) unique requirements of the department, including analysis and audit 

readiness.

DOD Actions: DOD has taken steps toward completing a departmentwide systematic competency assessment of its financial management 

workforce. The department plans to do a review or “refresh” of its 

department-wide financial management competencies for its civilian 

workforce in fiscal year 2016. With regard to identifying the gaps between 

current requirements and the competencies of the existing workforce, 

DOD has used its Defense Competency Assessment Tool to assess 

competency gaps in its civilian financial management workforce for its 

four civilian mission-critical financial management occupations in 2014 

and its nine civilian non-mission-critical financial management 

occupations in 2015.60 As stated in the May 2015 FIAR Plan Status 

Report, DOD plans to research the feasibility of assessing the civilian 

financial management workforce in other functional areas. The panel 

recommended that DOD’s competency assessments be performed for its 

federal civilian, military, and contracted personnel performing financialrelated functions. With regard to military personnel in financial 

management occupations, DOD officials stated that its research showed 

that the military departments, through the normal annual military 

performance review process, have an effective means of assessing the 

competencies of members of the military workforce in their given 

functional specialties. Moreover, DOD officials stated that assessing the 

competency gaps of contracted staff performing financial managementrelated functions is outside the financial management community’s scope 

59Department of Defense, Department of Defense (DOD) Financial Management Civilian 

Enterprise-wide Competencies (Washington, D.C.: Nov. 16, 2011).

60As we previously reported, the Defense Competency Assessment Tool is an Army 

system that was updated for department-wide use to replace multiple competency tools. 

See GAO, Human Capital: Critical Skills and Competency Assessments Should Help 

Guide DOD Civilian Workforce Decisions, GAO-13-188 (Washington, D.C.: Jan. 17, 

2013). 

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of responsibility because required competencies are to be defined in each 

contract’s statement of work. In addition, the appropriate contracting 

officer’s technical representative has the responsibility to perform due 

diligence over the contractor’s performance.

GAO Status: We consider this recommendation partially met because 

the department has not yet assessed the competencies of all civilian, 

military, and contracted personnel performing financial managementrelated functions, as recommended by the panel. Furthermore, the 

Functional Community Manager for Financial Management concluded 

that there is not a legislative requirement for a competency skills gap 

assessment for the military financial management workforce.61 DOD, 

however, is required by law to submit a biennial strategic workforce 

management plan to Congress, which includes, among other things, an 

assessment of the critical skills and competencies that will be needed in 

the future.62 According to the law, this plan shall specifically address the 

shaping and improvement of DOD’s financial management workforce, 

including military and civilian personnel. This includes an assessment of 

the critical skills and competencies for both the civilian and military 

financial management workforces. As stated above, DOD’s competency 

assessments have only addressed the civilian workforce in the financial 

management community. When DOD conducts its review of the 

department-wide civilian financial management workforce competencies 

in fiscal year 2016, the department will need to consider projected future 

requirements (competencies) for its civilian financial management 

workforce, as the panel recommended. After the department has 

identified the projected future requirements (competencies), DOD will be 

in a position to identify the gaps between the projected future 

requirements for its civilian financial management workforce and those 

possessed by its existing workforce.

61This Functional Community Manager for Financial Management position is in the Office 

of the Under Secretary of Defense (Comptroller). The military departments have similar 

positions.

6210 U.S.C. § 115b.

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Panel recommendation 3.2

The Department should utilize the expertise of certified public accountants (CPAs) with 

financial statement audit experience in its audit readiness efforts as conducted by the 

federal civilian workforce or contracted personnel, as appropriate.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In testimony before the panel, DOD stated that the 

department uses contractors to fill skill sets missing from its existing 

workforce in certain areas, including audit readiness.63 Industry officials 

testified on the importance of hiring certified public accountants (CPA)—

either directly or through contracts—with financial audit experience.64

According to expert testimony, although hiring CPAs is an important 

aspect of improving the human capital necessary to achieve audit 

readiness, not all CPAs have the requisite audit readiness expertise.65

For example, CPAs who specialize in areas such as tax, budgets, or 

information systems may not have developed the tools necessary to 

productively participate in improving audit readiness. CPAs who have 

federal financial statement audit experience are trained to apply the 

judgment required by generally accepted government auditing standards 

to determine the relevancy and sufficiency of controls and documentation 

necessary to successfully prepare DOD for a financial statement audit.

DOD Actions: According to DOD officials, DOD uses the expertise of 

CPAs both as employees and contractors. The FIAR Directorate, within 

the Office of the Under Secretary (Comptroller), maintains a contractor 

staff of CPAs with financial audit experience. Among other things, these 

63Gladys J. Commons, Assistant Secretary of the Navy for Financial Management, Is the 

Financial Management Workforce Positioned to Achieve DOD’s Financial Improvement 

Goals?, testimony before the House Committee on Armed Services, Panel on Defense 

Financial Management and Auditability Reform, 112th Cong., 1st sess., October 6, 2011.

64JoAnn Boutelle, Deloitte & Touche LLP, Industry Perspectives on Achieving Audit 

Readiness, testimony before the House Committee on Armed Services, Panel on Defense 

Financial Management and Auditability Reform, 112th Cong., 1st sess., November 17, 

2011.

65Mark Keeley, PricewaterhouseCoopers, LLP, Department of Defense Audit Impediments 

and Audit Readiness Testimony, testimony before the House Committee on Armed 

Services, Panel on Defense Financial Management and Auditability Reform, 112th Cong., 

1st sess., November 17, 2011.

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CPAs provide consulting services, including determining how to 

implement best business practices that are used in the private sector. The 

military departments have also contracted with IPA firms. For example, 

officials stated that the Air Force has contracted a recognized accounting 

firm with both auditing and audit readiness experience as its advisory and 

assistance services contractors. According to Navy officials, the Navy 

perceives a continued need to leverage private sector expertise in future 

years to support its FIAR efforts and has developed a flexible acquisition 

strategy to facilitate this leveraging of expertise. According to Army 

officials, the Army recognizes the importance of a variety of skills that are 

critical to accomplish the needed changes associated with audit 

readiness, including individuals with knowledge of the Army, audit and 

systems experience, and with certifications such as CPAs, certified 

information systems auditors, and project management professionals. 

The Army has a mix of these skills on its civilian audit readiness staff and 

supplements this knowledge base with contractor staff. The service 

providers are also using the expertise of IPA firms. DFAS has employed 

multiple IPA firms to conduct its audit readiness efforts, including IPA 

firms to perform a mock military pay SSAE No. 16 examination as well as 

its first SSAE No. 16 examination. DLA is leveraging an IPA firm as audit 

readiness advisors, which supports its audit readiness efforts with CPAs 

as well as audit and advisory professionals experienced in financial 

statement audit and information technology audit.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

Panel recommendation 3.3

The Department should develop and implement effective financial training programs for 

personnel serving in functional communities outside of the financial management 

community.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel recognized the importance of having 

personnel within DOD’s functional communities, other than financial 

management, with the skills to perform financial management-related 

tasks. According to the panel, functional communities, such as the 

logistics and acquisitions communities, generate and maintain financial 

information critical to reporting the financial results of DOD operations 

accurately and reliably. For example, logistics personnel are responsible 

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for entering asset information into inventory records, conducting 

inventories, and performing reconciliations. Acquisition personnel enter 

obligations for contracts into the accounting system. The panel concluded 

that the department must ensure that these personnel receive financial 

management training as part of the department’s FIAR efforts.

DOD Actions: According to DOD Human Capital and Resource 

Management officials, FIAR courses are available online for members of 

all DOD functional communities, including members of the financial 

management community. Specifically, DOD officials stated that the 

department has developed over 50 web-based financial management 

courses, and these courses provide credit applicable to the department’s 

Financial Management Certification Program requirements at the various 

levels. While one learning platform is restricted to members of the 

financial management community, the web-based courses on another 

platform are open to both members of the financial management 

community and members of other functional communities. Course 

evaluations are required for each web-based course completed and these 

evaluations are reviewed monthly. According to DOD officials, course 

evaluation averages are analyzed and tracked and used to evaluate 

training effectiveness. DOD officials have stated that DOD has 

consistently maintained an average course evaluation metric of 4.12 on a 

5.0 scale for these courses.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

Panel recommendation 3.4

The Department should develop and implement effective ERP training programs for 

personnel within and outside of the financial management community who utilize, or will 

be expected to utilize, an ERP system in their day-to-day operations. In developing these 

training programs, the Department should implement lessons learned from previous 

training provided to ERP users.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that implementing effective 

training programs will be especially important as DOD transitions to 

increased use of ERP systems. For example, the Army testified that its 

General Fund Enterprise Business System (GFEBS) requires personnel 

to obtain proficiencies in skills that are not required in the legacy 

operating environment and that many of the more than 70,000 eventual 

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users of GFEBS will not reside in the Army’s financial management 

community. The Army added that the majority of users operate among the 

acquisition, logistics, public works, and property management functions. 

The Air Force testified that its financial managers are learning about new 

ERP systems, including what these systems are designed to do and how 

to work within them.66 The Air Force is experiencing a major cultural 

change for much of its workforce by moving from primarily a bookkeeping 

financial management system to ERP systems that can produce auditable 

financial statements. Officials added that the Air Force is working to get 

ahead of the ERP deployments and is retooling its workforce.

DOD Actions: In the May 2015 FIAR Plan Status Report, DOD stated 

that training exists for all current ERP systems. Officials added that these 

training programs are coordinated with each ERP system owner and the 

component’s financial management office. In addition, the military 

departments require users to complete training prior to obtaining access 

to the ERP systems. For example, for its Defense Enterprise Accounting 

and Management System (DEAMS), the Air Force has a library of online 

training courses that must be taken as part of the process to request 

access to DEAMS. In addition, the Air Force has included user job aids in 

DEAMS that provide video demonstrations of common system functions. 

According to an Air Force official, the lack of well-geared training was 

identified as an underlying cause for earlier issues that occurred during 

the DEAMS implementation process because users performing everyday 

business tasks with DEAMS did not have a clear understanding of how to 

use the ERP to perform these tasks. Army officials stated that while 

GFEBS was being deployed, its GFEBS training team provided on-site 

and classroom training for end users, and that over the years, 

improvements were made to the tools provided and the courses. For 

example, the new job aids were improved as well as the scenario-specific 

training, based on lessons learned and feedback from the end users and 

the help desk. For the Navy ERP, a Navy official stated that users must 

complete web-based training or instructor-led training prior to obtaining 

66Jamie M. Morin, Assistant Secretary of the Air Force (Financial Management and 

Comptroller), Is the Financial Management Workforce Positioned to Achieve DOD’s 

Financial Improvement Goals?, testimony before the House Committee on Armed 

Services, Panel on Defense Financial Management and Auditability Reform, 112th Cong., 

1st sess., October 6, 2011. 

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access to perform financial roles.67 The Navy, according to this official, 

has web-based training and detailed knowledge-sharing content available 

as part of the overall Navy ERP program, but not uploaded to the Navy 

ERP application itself.

The military departments measure the effectiveness of this training in 

several ways, including end-of-course surveys and analysis of help desk 

tickets, to identify any gaps in training that need to be addressed. For 

example, for GFEBS, the Army Financial Management School requires 

end users to complete end-of-course evaluations.68 Air Force officials 

provided an example in which lessons learned and feedback from users 

resulted in changes to one of its DEAMS courses. During the June 2014 

deployment training cycle, end users noted that the DEAMS program 

needed to adjust its project billing user reimbursement course to more 

closely align it with the typical scenarios and data combinations 

experienced at most bases. According to Air Force officials, given this, 

the DEAMS training team coordinated with the subject matter experts to 

reevaluate, adjust, and update the project billing user reimbursement 

course material to better support those end users’ needs. According to a 

Navy official, Navy ERP training uses several sources of information to 

continually improve the effectiveness of the training material, including 

lessons learned from student course evaluations, feedback from the end 

user community on topics where additional training may be needed, and 

analyzing help desk tickets for indications of training gaps.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

67As an example of a financial role, the Navy official described the invoice processing role, 

which allows the user to view purchase orders, create invoices, cancel invoices, and 

release blocked invoices. According to this official, access to financial roles is not granted 

until web-based or instructor-led training is confirmed as successfully completed for that 

user. The completion of the web-based training is confirmed by the system and 

completion of instructor-led training is reported by the instructor.

68With the full implementation of GFEBS, the Army Financial Management School has 

assumed responsibility for GFEBS training and training materials.

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Panel recommendation 3.5

The Department should develop its proposal for an exchange program between the DOD 

and the private sector. In doing so, the Department should develop specific criteria, 

regarding the personnel to be exchanged and the organizations that would participate. 

The Department should then submit its proposal to the congressional committees of 

jurisdiction for consideration.

GAO status: Met

DOD status: Met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: DOD testified, before the panel, that it would like to 

implement a pilot program similar to the Information Technology 

Exchange Program. According to DOD officials, the National Defense 

Authorization Act (NDAA) for Fiscal Year 2010 authorized a pilot program 

for the temporary exchange of information technology personnel between 

DOD and the private sector. DOD officials asserted that a similar 

exchange program involving the FIAR Directorate would benefit the 

department’s FIAR Plan through the sharing of best practices, partnering 

to address common challenges, and enhancing competencies. In its 

report, the panel stated that it supports improving workforce 

competencies and therefore welcomes the sharing of greater detail on the 

proposed program with the committee.

DOD Actions: On April 1, 2014, DOD submitted a proposal for a pilot 

Financial Management Exchange Program between DOD and the private 

sector to both HASC and the Senate Armed Services Committee for their 

consideration. The pilot, proposed for inclusion, but not enacted as part of

the Carl Levin and Howard P. “Buck” McKeon NDAA for Fiscal Year 

2015, was modeled on section 1110 of the 2010 NDAA, authorizing a 

pilot program for the temporary exchange of personnel working in 

information technology. According to the proposal, a DOD employee 

would be eligible for the exchange program only if the employee (1) works 

in financial management, (2) is considered to be an exceptional 

employee, and (3) is compensated at least at the General Schedule 11 

grade level (or equivalent). According to DOD officials, Senate Armed 

Services Committee members expressed their support for the program 

during an April 2014 DOD briefing on this topic. However, in the May 

2015 FIAR Plan Status Report, DOD officials stated that the department 

has not yet received any formal comments from either HASC or the 

Senate Armed Services Committee on its proposal. The legislative 

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proposal was included in the Senate version of the NDAA for Fiscal Year 

2016.69 However, DOD officials said they were told in July 2015 that 

HASC will not be proceeding with this proposal.

GAO Status: We believe DOD’s actions have met the requirements of 

the recommendation.

Panel recommendation 4.1

The Department should include additional details on ERP programs in the FIAR Plan 

Status Reports, including full deployment dates, when known, and key milestone dates. 

These status reports should describe the risks and potential consequences of: (1) failing 

to satisfy outstanding ERP functionality requirements; or (2) incurring future ERP 

milestone delays. The status reports should describe the mitigation measures taken by 

the Department to reduce these risks. The status reports should also explain any actual 

schedule slippages or cost increases and the actions taken by the DOD to remedy any 

such development.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that ERP implementation is 

instrumental to resolving DOD’s financial management weaknesses and 

achieving audit readiness and included a table that showed, by military 

department, the ERP systems that are critical to Wave 2 and Wave 3.70

The panel noted that although information was provided for select ERP 

systems in the May 2011 FIAR Plan Status Report, full deployment dates 

were not included for certain ERP systems. For example, the panel noted 

that the Air Force did not provide a full deployment date for the 

Expeditionary Combat Support System (ECSS), which was needed for its 

SBR and mission-critical assets existence and completeness audit.71

69The Senate version of the NDAA for Fiscal Year 2016 includes a pilot program on the 

temporary exchange of financial management and acquisition personnel. S. 1376, § 1112.

70The table was based on information in the May 2010 FIAR Plan Status Report. 

71ECSS was canceled per an Acquisition Decision Memorandum dated December 11, 

2012, following the Air Force’s cancellation recommendation made on November 14, 

2012. One of the root causes for the ECSS cancellation was that the Air Force did not 

adequately understand, define, and document its current business processes, nor did it 

internally understand and define the new “to be” business processes. 

ERP System 

Implementation Efforts

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DOD Actions: According to the May 2015 FIAR Plan Status Report, DOD 

officials agreed with the panel that the FIAR Plan Status Reports should 

include more detail regarding the ERP programs to better evaluate 

progress toward auditability and timely implementation of corrective 

measures and increase confidence in the management of the 

department’s investments in ERP systems. Consequently, DOD has 

included separate sections with information on ERP systems and audit 

readiness, starting with the November 2012 FIAR Plan Status Report and 

through its November 2014 report. For its May 2015 FIAR Plan Status 

Report, the information on ERP systems and audit readiness was 

included in a section on the information technology systems critical to 

audit readiness. Additional information that has been provided in the FIAR 

Plan Status Reports includes (1) overview of the ERP systems, 

(2) program cost, (3) impact on legacy systems, (4) information 

technology controls, (5) implementation milestones and audit readiness 

information, (6) financial reporting impact, and (7) status of financial 

reporting objectives by assessable unit. While the department has 

considered including additional risk management and remediation action 

information in the FIAR Plan Status Reports, DOD officials have found 

that the most effective reporting of the specific risks and potential 

consequences of failure to meet ERP functionality requirements is 

achieved through the acquisition governance and oversight reporting. 

With regard to acquisition governance, the department is managing its 

business systems, including ERP systems, as portfolios of investments. 

The goal is to aggregate data from authoritative data sources and tools to 

track and manage the overall performance of systems portfolios, including 

ERP systems. For effective control, planning, mitigation, and remediation, 

the department manages risk as part of acquisition oversight for each of 

the ERP systems.

GAO Status: We consider this recommendation partially met because 

DOD still needs to include risks and potential consequences of failing to 

satisfy outstanding ERP functionality requirements or incurring future 

milestone delays and related mitigation measures in the FIAR Plan Status 

Reports. Moreover, the department still needs to provide information on 

actual schedule slippages, cost increases, or both. While the existence of 

these risks and the resulting effects on audit readiness may be known to 

DOD management, external readers of the FIAR Plan Status Reports, 

including those with oversight responsibility, do not have an accurate 

picture of how much DOD’s financial auditability efforts rely on ERP 

systems.

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Panel recommendation 4.2

The ERP program offices should integrate FIAR milestones into their program 

schedules. ERP program managers should be evaluated on their ability to maintain FIAR 

milestones as well as program acquisition-related milestones.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel stated that it was concerned about reported 

ERP schedule delays and cost overruns because the ERP systems are 

critical to (1) resolving DOD’s financial management weaknesses and 

(2) achieving audit readiness.

DOD Actions: According to the military departments, their ERP program 

offices are integrating FIAR requirements and corresponding milestones 

into the ERP schedules through their normal process of requirements 

identification and technical solution development. According to the 

Director, Business Integration, Office of the Deputy Chief Financial 

Officer, the FIAR requirements are incorporated into the master set of 

functional needs, business operations, and technical requirements and 

appropriately integrated into the master program schedules in order to 

meet the overall program scope and function. Moreover, ERP program 

managers are accountable to their respective departments, services, and 

agency organizations, and as such, their performance is evaluated 

through the plans and performance objectives established within those 

operations and business functions.

In its May 2015 FIAR Plan Status Report, DOD officials stated that each 

ERP system program office is responsible for including all requirements, 

including FIAR requirements, in its program schedules for its ERP 

system. According to the report, the military departments have selfreported that they have included FIAR milestones and requirements in 

their schedules for those ERP systems still in the acquisition process, 

such as the Defense Agencies Initiative and the Air Force’s DEAMS.72

72The Defense Agencies Initiative is intended to modernize the financial management 

processes of defense agencies by streamlining financial management capabilities and 

transforming the budget, finance, and accounting operations. According to DOD, the 

Defense Agencies Initiative is the primary accounting system used by 11 defense 

agencies, with additional deployment in fiscal year 2016 and fiscal year 2017.

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ERP system programs that are in the development phases have been 

given the FIAR requirements to include in the program schedules.

In the May 2015 FIAR Plan Status Report, DOD officials added that the 

Office of the Under Secretary of Defense (Comptroller) has developed a 

methodology to include audit readiness in the Investment Decision 

Memorandum and the Acquisition Decision Memorandum. As stated in 

the report, during the Investment Decision Memorandum process, and for 

all systems that affect financial reporting, the Office of the Deputy Chief 

Financial Officer will provide input on each investment decision approval. 

The approval decision for each investment decision will depend on the 

DOD component’s demonstration that audit readiness and related 

compliance considerations have been included in the work products for 

each ERP. In addition, according to the report, Acquisition Decision 

Memorandums represent important checkpoints in the life cycles of DOD 

systems and are critical to ensuring that the expected outcomes are 

realized. Further, according to the report, for those systems that affect 

financial reporting, the Office of the Deputy Chief Financial Officer 

provides input for each acquisition decision approval at each business 

capability life cycle milestone.

GAO Status: DOD officials have stated that the department has taken 

actions to integrate FIAR milestones into ERP program schedules and 

hold program managers accountable throughout the life cycles of the 

ERP systems. However, we consider this recommendation partially met 

because, for ERP programs that are still in the development phases, each 

program office must still incorporate the provided FIAR requirements into 

its program schedule as recommended by the panel. Moreover, the ERP 

program managers still need to be continually evaluated on their ability to 

maintain FIAR milestones as well as program acquisition-related 

milestones as recommended by the panel. These two actions will need to 

continue until DOD has completed its FIAR Plan audit readiness 

activities.

Panel recommendation 4.3

The Department should develop ERP-related schedule and cost estimates based on 

best practices for future ERP deployments.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

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Background: In its report, the panel expressed its concern about 

reported ERP schedule delays and cost overruns and questioned whether 

ERP schedule and cost estimates were reliable. The panel’s statements 

were partly based on our October 2010 report in which we stated that the 

department had identified nine ERP systems under development as 

critical to transforming the department’s business operations and 

addressing some of its long-standing weaknesses.73 The panel stated 

that our analysis of the schedules and cost estimates for four ERP 

programs—DEAMS, ECSS, GFEBS, and the Army’s Global Combat 

Support System (GCSS-Army)—found that none of the programs were 

fully following best practices for developing reliable schedules and cost 

estimates. More specifically, none of the programs had developed a fully 

integrated master schedule that reflected all activities, including both 

government and contractor activities.74 In addition, none of the programs 

established a valid critical path or conducted a schedule risk analysis.75

DOD Actions: In the May 2015 FIAR Plan Status Report, DOD officials 

stated that the department agrees that better methods are needed for 

estimating ERP implementation costs and scheduling. However, DOD 

officials added that the department’s experience with these programs 

over the past 10 years, along with industry best practices, has helped 

shape the strategies that are now being used in the management and 

oversight of ERP implementations, including the following, among others:

73GAO, DOD Business Transformation: Improved Management Oversight of Business 

System Modernization Efforts Needed, GAO-11-53 (Washington, D.C.: Oct. 7, 2010). 

74An integrated master schedule is a document that integrates the planned work by the 

government, contractor, and other key parties; the resources necessary to accomplish that 

work; and the associated budget. 

75A critical path is the longest duration path through a sequenced list of activities within a 

schedule. A schedule risk analysis uses statistical techniques to predict a level of 

confidence in meeting a completion date. 

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• Increasing discipline in requirements management.76

• Reengineering business processes before focusing on solutions.

• Reducing customizations to commercial software.

• Sustaining leadership involvement throughout the life cycle.

• Emphasizing organizational change management to ensure that end 

users understand the impact to their jobs.

• Using end-to-end processes to better guide and constrain ERP 

development and interoperability.

• Measuring business performance consistently to assess ERP 

impacts.

• Incorporating portfolio management methods to make the right 

investment decisions.

GAO Status: We consider this recommendation partially met because, 

while DOD has taken actions to implement best practices in developing 

reliable schedule and cost estimates, issues remain and additional 

actions are needed to fully address the recommendation. In February and 

September 2014, we reported that DOD has not fully implemented best 

practices in its schedule and cost estimates for DEAMS77 and GCSSArmy, respectively.78 We found that the schedule for DEAMS did not meet 

76Requirements establish what the system is to do, how well it is to do it, and how it is to 

interact with other systems. Appropriate requirements development involves eliciting and 

developing customer and stakeholder requirements and analyzing them to ensure that 

they will meet users’ needs and expectations. It also consists of validating requirements 

as the system is being developed to ensure that the final system to be deployed will 

perform as intended in an operational environment. The inclusion of too many 

requirements can make ERPs more complicated than needed; too few requirements may 

result in ERPs that do not provide the needed functionality.

77GAO, DOD Business Systems Modernization: Air Force Business System Schedule and 

Cost Estimates, GAO-14-152 (Washington, D.C.: Feb. 7, 2014). 

78GAO, DOD Business Systems Modernization: Additional Enhancements Are Needed for 

Army Business System Schedule and Cost Estimates to Fully Meet Best Practices, 

GAO-14-470 (Washington, D.C.: Sept. 30, 2014).

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best practices, although the cost estimate did meet best practices.79 We 

reported that the issues associated with the schedule could negatively 

affect the cost estimate. For example, if there are schedule slippages, the 

costs for the program could be greater than currently estimated. DOD 

officials concurred with our recommendation that DOD consider and 

make any necessary adjustments to the DEAMS cost estimate after 

addressing our prior recommendation to adopt scheduling best 

practices.80 In our review of the schedule and cost estimates for GCSSArmy, we reported that while the Army had made some improvements to 

the schedule and cost estimates that supported the full deployment 

decision,81 the Army did not fully meet best practices in developing cost 

and schedule estimates for GCSS-Army and we recommended corrective 

actions with which DOD concurred.82

Panel recommendation 4.4

The Department should evaluate changes to ERP requirements as those systems are 

developed, implemented, and utilized.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel made this recommendation based on testimony 

that the issues surrounding changes to systems requirements are the 

cause of delays in ERP implementation. The panel noted in its report that 

the requirements process tends to be underinclusive or overinclusive. 

Including too many requirements can make ERP systems more 

complicated than needed; too few requirements may result in ERP 

systems that do not provide the needed functionality.

DOD Actions: In the May 2015 FIAR Plan Status Report, DOD officials 

stated that the department agrees that ERP requirements must be 

79For this February 2014 report, we reviewed the most current schedule and cost 

estimates at the time of our review. These estimates supported DOD’s February 2012 

Milestone B decision, which determined that investment in DEAMS was justified. 

80GAO-11-53. 

81A full deployment decision is the decision, following completion of the operational test of 

the program, to scale up production, fielding, or both. 

82GAO-14-470. 

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managed throughout ERP development, both within the program and 

through involved oversight. DOD officials added that each ERP program 

and the related “customer” DOD component has experienced project 

scope creep and user-specific requirements that have driven cost and 

schedule challenges. According to DOD officials, the lesson learned from 

these experiences has been to strengthen management discipline 

through change control boards and engaged knowledgeable seniorleader steering groups. In addition, the Milestone Decision Authority 

(MDA) monitors the programs at a macro level for cost, schedule, and 

performance and takes appropriate actions to address risks.83 The MDA 

can establish specific criteria in an Acquisition Decision Memorandum 

that an ERP program manager must meet before a program is authorized 

to proceed to the next phase of development or limited or full deployment. 

For example, the MDA signed two separate Acquisition Decision 

Memorandums on April 18, 2014, that (1) identified decision criteria that 

the Defense Agencies Initiative ERP must meet before moving forward 

with a limited deployment and (2) gave specific exit criteria for the 

Integrated Personnel and Pay System-Army Increment I program to meet 

before the Army can fully deploy it to all locations.84 DOD officials stated 

that each military department has change control boards and seniorleader steering groups to control requirements for ERP systems. The 

MDA can set specific criteria in an Acquisition Decision Memorandum that 

must be met by the ERP program manager before the decision is made 

authorizing a program to proceed to (1) the next phase of development, 

(2) limited fielding,85 or (3) full deployment.

GAO Status: This recommendation is applicable to DOD’s ongoing and 

future ERP program efforts, and we consider it partially met because 

DOD still needs to evaluate changes to ERP requirements as those 

83The MDA is the senior DOD official who has overall authority to approve entry of an 

acquisition program into the next phase of the acquisition process and is accountable for 

cost, schedule, and performance reporting, including congressional reporting.

84The Integrated Personnel and Pay System-Army is intended to provide a 24-hour, webbased, integrated human resources system to soldiers, human resource professionals, 

combatant commanders, personnel and pay managers, and other authorized Army users. 

The system is designed to serve all components of the Army—Active, Reserve, and 

National Guard.

85Limited fielding is the deployment of a capability to a limited number of users to test the 

capability in an operational environment. 

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systems are developed, implemented, and utilized, as the panel 

recommended.

Panel recommendation 4.5

The Department should evaluate its requirement process for ERP systems. The 

Department should assess the decision-making process, regarding ERP requirements, 

at every level of authority. The Department should then determine what, if any, changes 

may be needed.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: As for recommendation 4.4, the panel was concerned that 

the requirements process was either underinclusive or overinclusive. For 

example, the Army’s Chief Management Officer (CMO) stated that 

underinclusiveness contributed to delays in implementing GFEBS.

Conversely, DOD’s DCMO stated that there is a tendency to overrequire, 

supported by an institutional mindset that there is only one opportunity to 

establish requirements for an ERP.

DOD Actions: According to its May 2015 FIAR Plan Status Report, DOD 

has evaluated and modified its requirement processes for defense 

business systems. DOD’s Business Capability Lifecycle, which requires 

disciplined delivery of capabilities to end users in 18 months, operates 

within DOD’s governance framework comprising the Investment Review 

Boards and Defense Business Systems Management Committee, which 

in turn advise the MDA for the ERP programs. Working through the Major 

Acquisition Information System MDA for systems, the Deputy Chief 

Financial Officer can ensure that requirements are being met. DOD 

officials added that the Office of the DCMO and the military CMOs will 

continue to assess current practices for governing requirements and 

implement needed changes.

GAO Status: We consider this recommendation partially met because, in 

accordance with the panel recommendation, DOD needs to continue to 

assess the requirement decision-making processes at every level of 

authority for its ongoing and future ERP implementation efforts.

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Panel recommendation 4.6

The Department should establish risk mitigation plans to address actual and potential 

weaknesses or deficiencies associated with the development, implementation, or 

utilization of its ERP systems that could affect the achievement of FIAR goals. At a 

minimum, each risk mitigation plan should: (1) identify measures for resolving any such 

weaknesses or deficiencies; (2) assign responsibilities within the Department to 

implement such measures; (3) specify implementation steps for such measures; 

(4) provide timeframes for implementing such measures; and (5) identify any alternative 

arrangements outside of the ERP environment that may be necessary for meeting FIAR 

objectives.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: The panel was concerned that ERP systems may not 

provide the capabilities needed to achieve FIAR objectives. For example, 

we testified before the panel that some ERP systems do not function as 

intended.86 According to the panel’s report, if the ERP systems do not 

provide the intended capabilities, DOD components must continue to rely 

on legacy systems and manual processes. Therefore, DOD’s goals of 

modernizing and streamlining its business processes and strengthening 

its financial management capabilities—leading to financial statement 

auditability—could be jeopardized.

DOD Actions: According to its May 2015 FIAR Plan Status Report, DOD 

agrees with the panel that effective information technology acquisition 

requires thorough risk management, including the identification, analysis, 

and mitigation of risks. DOD officials stated in the report that its FIAR 

methodology identifies ERP systems and associated feeder systems that 

relate to achieving FIAR goals. Each military department has established 

a risk management approach in which major risks are tracked and 

mitigation plans are developed to identify measures for resolving 

weaknesses associated with the development, implementation, and use 

of its ERP systems that could affect the achievement of FIAR goals.

Each of the military departments reports on its respective ERP system 

program, for which it is responsible for resolving weaknesses, at the 

regularly scheduled FIAR review sessions. Officials from the military 

86GAO, DOD Financial Management: Challenges in the Implementation of Business 

Systems Could Impact Audit Readiness Efforts, GAO-12-177T (Washington, D.C.: 

Oct. 27, 2011).

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departments described the efforts to mitigate risks associated with ERP 

implementations. For example, Air Force officials stated that the risk 

management plan for DEAMS describes a comprehensive risk 

management process. According to Air Force officials, specific risks 

associated with FIAR compliance have been identified, are currently 

being assessed, and will be reported and tracked through the DEAMS 

risk management program.

According to Army officials, each Army ERP program has developed its 

own risk management procedure, based on existing Army regulations. In 

addition, each Army ERP program has developed documentation on 

applicable FIAR-related processes, risks, and controls to mitigate risks. 

The Army’s ERP program offices provide periodic acquisition and 

program reviews at the MDA level. These reviews include programmatic 

and audit-related risks associated with an ERP program as well as risk 

mitigation steps associated within the program. Army officials stated that 

additional requirements and actions are identified to mitigate risk if a risk 

is outside of the program’s direct control.

Navy officials stated that its Enterprise Business Solutions (formerly the 

Navy ERP Program Office) has a risk management program consisting of 

two components: (1) the Risk Committee, which allows any individual to 

bring a risk to program leadership’s attention, and (2) the Risk Board, 

which is the program’s senior leadership review and mitigation planning 

forum for identified risks.

GAO Status: DOD has developed risk mitigation plans for its ERP 

systems. However, we consider this recommendation partially met 

because DOD and its components need to continually monitor ERP and 

FIAR efforts to identify actual and potential weaknesses or deficiencies 

associated with developing, implementing, and using ERP systems that 

could affect the achievement of FIAR goals. Moreover, DOD components 

need to identify implementation steps and assign responsibilities for the 

performance of these steps to resolve the potential weaknesses or 

deficiencies, as the panel recommended. Further, time frames need to be 

established for taking these steps. The identification of any alternative 

arrangements needed outside of the ERP environment to meet FIAR 

objectives is critical to ensuring that a DOD component will be able to 

make these arrangements and not hinder DOD’s audit readiness goals.

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Panel recommendation 4.7

The Department should evaluate lessons learned from previous data conversion efforts, 

and it should incorporate these lessons into its ERP data conversion plans. The 

Department should update its ERP data conversion plans periodically. Updates should 

include assessments of: the progress made in converting data into the ERP 

environment; whether that progress supports the satisfaction of existing requirements; 

and whether additional data conversion requirements would facilitate the achievement of 

FIAR objectives. The Department should also assess the merits of designating a senior 

official (such as the CMO or the DCMO) to be responsible for the coordination and 

managerial oversight of data conversion.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that conversion of data from 

the legacy systems to the new ERP systems is a difficult and challenging 

effort. The panel noted that each military department had taken its own 

approach to data conversion and expressed its concern that poor 

execution of data conversion efforts could cause delays in implementing 

ERP systems.

DOD Actions: In its May 2015 FIAR Plan Status Report, DOD stated that 

the military departments have learned from past experience. For 

example, the Air Force, after its initial data conversion for DEAMS at 

Scott Air Force Base, decided not to convert legacy data into DEAMS, but 

instead to use a dual-processing approach. Under this approach, newly 

initiated transactions are entered into DEAMS, but transactions already 

initiated in legacy systems continue to be processed in the legacy system 

until contract closeout. The Director of Business Integration, Office of the 

Under Secretary of the Comptroller, stated that since 2012, when the 

panel issued its report, data conversions from legacy systems to ERP 

systems have become part of standard protocols performed between an 

individual ERP program office and the deploying DOD component or 

organization. Data conversions to ERP systems focus on open 

transactions only for the purposes of providing matching transactions 

when the disbursements and matching outlays occur. According to this 

official, since 2012, the data conversions for the Defense Agencies 

Initiative ERP and Navy ERP, for example, have gone smoothly. With 

regard to the panel’s recommendation that DOD assess the merits of 

designating a senior official responsibility for coordinating and overseeing 

data conversion, a DOD official stated that while the recommendation 

may have made sense in 2012, when the panel’s report was issued, it is 

no longer relevant given the quality of data conversions over the last 3 

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years and the standard protocols used for data conversions for each 

individual ERP deployment.

GAO Status: DOD has evaluated lessons learned from previous data 

conversion efforts and considered these lessons in its current data 

conversion efforts. However, we consider this recommendation partially 

met because the department will need to periodically update its data 

conversion plans. According to the panel, these updates will need to 

include assessments of (1) the progress made in converting data into the 

ERP environment, (2) whether that progress supports the satisfaction of 

existing requirements, and (3) whether additional data conversion 

requirements would facilitate achieving FIAR objectives.

Panel recommendation 4.8

The Department should: (1) evaluate the causes of system interface problems; 

(2) determine whether the number of interfaces can be reduced (e.g., by incorporating 

activities performed by legacy systems into the ERPs); and (3) determine what 

improvements can be made to support more effective interfaces between systems.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that the DOD Deputy IG 

testified that the numerous interfaces between ERP systems and legacy 

systems may be overwhelming and may not be adequately defined.87 As 

stated in the panel’s report, the number of interfaces is driven by the 

number of legacy systems. The panel is concerned that problems 

associated with these interfaces could be compromising functionality. 

According to the panel report, DOD should make every effort to reduce 

reliance on those legacy system activities that can be effectively and 

efficiently conducted by ERP systems. The panel also stated that DOD 

should complete and validate its business process reengineering analysis 

to ensure that those business processes supported by the ERP systems 

will be as streamlined and efficient as practicable and that the need to 

tailor ERP systems to meet unique requirements or to incorporate unique 

interfaces has been eliminated or reduced to the extent practicable.

87Daniel Blair, Deputy Inspector General for Auditing, Department of Defense Office of 

Inspector General, DOD’s Efforts to Improve Payment and Funds Control, testimony 

before the House Committee on Armed Services, Panel on Defense Financial 

Management and Auditability Reform, 112th Cong., 1st sess., September 22, 2011.

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DOD Actions: According to DOD’s May 2015 FIAR Plan Status Report, 

the department is increasingly approaching investment decisions with a 

portfolio view to reduce or eliminate unique requirements and interfaces. 

As DOD also stated in that report, DOD has begun to implement process 

improvements across all systems by implementing key strategic 

initiatives, including its use of the global exchange to increase the 

interoperability and exchange of standardized data between systems. In 

its report, DOD also stated that there is a strategy to reduce the number 

of existing legacy systems over the next several years, which will lessen 

the need for a large number of interfaces. The military department CMOs 

and the DCMOs (for the other defense organizations) examine and 

validate the need for unique requirements and interfaces as they develop 

their respective organizational execution plans in preparation for review 

by the Defense Business Council.

GAO Status: We consider this recommendation partially met because 

DOD, through its business process reengineering, needs to ensure that 

unique requirements and interfaces are reduced to the minimum extent 

practicable. As the military departments and components proceed with 

FIAR activities related to ERP systems, the organizational execution plan 

reviews and other actions to implement these key strategic initiatives will 

be critical in identifying the causes of interface issues, determining how 

many and which interfaces can be reduced, and the improvements that 

can be made to support more effective interfaces. Furthermore, in 

implementing this recommendation, the department needs to ensure that 

its components are reengineering current business practices rather than 

customizing commercial ERP systems. For example, the DOD IG has 

reported that DOD has not reengineered its business processes to the 

extent necessary; instead, it has often customized commercial ERP 

systems to accommodate existing business processes.88 This 

customization creates a need for system interfaces and weakens controls 

built into an ERP. The ERP systems were designed to replace numerous 

subsidiary systems, reduce the number of interfaces, standardize data, 

eliminate redundant data entry, and provide an environment for end-toend business processes, while being a foundation for sustainable audit 

readiness. However, the DOD IG stated that the numerous interfaces

between the ERP systems and existing systems may be overwhelming 

88Department of Defense, Office of Inspector General, Inspector General’s Statement of 

Management and Performance Challenges for Fiscal Year 2014 (Alexandria, Va.: 

November 2014).

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and inadequately defined. Each interface presents a risk that a system 

might not function as designed, and each prevents the linking of all 

transactions in an end-to-end process.

Panel recommendation 4.9

The DOD DCMO, in coordination with the Director, Operational Test and Evaluation and 

the Deputy Assistant Secretary of Defense for Development Test and Evaluation, should 

assess information system control testing needs for all ERPs being developed by the 

DOD and determine whether appropriate workforce levels and corresponding skill sets 

exist within the Department’s developmental and operational test communities. The 

Department should take actions to address any identified shortfalls.

GAO status: Partially met

DOD status: Partially met

Sources: House Armed Services Committee Panel on Defense Financial Management and Auditability Reform, Findings and 

Recommendations (Washington, D.C.: Jan. 24, 2012); Department of Defense (FIAR Plan Status Report, May 2015); and GAO 

(analysis). │ GAO-15-463

Background: In its report, the panel stated that the FIAR Guidance calls 

for the DOD components to test information systems controls for key 

systems and processes. Because most financial information is maintained 

in computer systems, the controls over how those systems operate are 

integral to the reliability of financial data. For example, the panel noted 

that if auditors are able to rely on information system controls, the extent 

of substantive testing can be significantly reduced. According to the 

panel, DOD should continue to subject its systems, both legacy systems 

and ERP systems, to information systems controls testing, but it must 

also ensure that a priority is placed on this testing and that sufficient 

numbers of appropriately skilled personnel exist within the test and 

evaluation community. In addition, when implementing ERP systems, 

DOD should ensure that the systems satisfy the computer control 

objectives established in GAO’s Federal Information System Control Audit 

Manual.

89

DOD Actions: According to the May 2015 FIAR Plan Status Report, 

officials from the Office of the Director, Operational Test and Evaluation 

(OT&E), do not perform testing for all systems, but provide guidance to 

assist organizations in performing testing. Officials from OT&E stated that 

assessing information system control testing needs is difficult because of 

the different interpretations of information system controls. As a result of 

these inconsistencies, gaps exist in the types of testing that are actually 

89GAO, Federal Information System Controls Audit Manual (FISCAM), GAO-09-232G

(Washington, D.C.: February 2009). 

Page 78 GAO-15-463 HASC Panel Recommendations

 
Appendix I: Status of DOD’s Actions to 

Implement the Panel on Defense Financial 

Management and Auditability Reform 

Recommendations

accomplished. Nevertheless, OT&E officials stated that they are not 

specifically concerned with testing individual information systems 

controls, but rather that (1) a typical user can perform operational tasks 

with the production-representative system in an operationally realistic 

computing environment and (2) the system has the appropriate computer 

network defense capabilities.

According to OT&E officials, DOD’s components implementing ERP 

systems, including the military departments, are involved in the 

information systems control testing of their ERP systems by developing 

the test and evaluation master plans. According to these officials, these 

plans, provided by ERP program managers and approved by OT&E 

officials, specify appropriate testing for ERP systems. For example, Navy 

officials said that the Navy will coordinate with OT&E and others to 

ensure that the appropriate workforce and skill sets have been identified 

for evaluation and testing. OT&E officials stated that they anticipate the 

department’s increasing need to improve the cybersecurity of its ERP 

systems and other programs and networks will require increased test 

resources, especially for cyber ranges. According to these officials, there 

are three groups of organizations that play a critical role in the information 

systems control testing of ERP systems.

1. User/requirements communities. It is critical for the user/requirements 

communities to identify the specific ERP information systems control 

requirements beginning with the request for proposal.

2. Operational test agencies.90 These agencies are responsible for 

executing operational tests for each ERP.

3. ERP program managers. The program managers develop the test and 

evaluation master plans for approval from the Director, Operational 

Test and Evaluation.

GAO Status: We consider this recommendation partially met because 

OT&E officials, in consultation with the DCMO and components, will need 

to continue assessing their role in evaluating information system controls 

for all ERP systems being deployed by the department and examine 

necessary skill sets to accomplish such testing to determine if additional 

90According to a DOD Independent Operational Test Agency business rule, an 

independent operational test agency must be established for each military department to 

plan and conduct operational tests, report results, and provide evaluations of effectiveness 

and suitability. This agency is to report directly to the chief of the military department. 

Page 79 GAO-15-463 HASC Panel Recommendations

 
Appendix I: Status of DOD’s Actions to 

Implement the Panel on Defense Financial 

Management and Auditability Reform 

Recommendations

training is required within the developmental and operational test 

communities, as recommended by the panel. In addition, DOD has not 

yet ensured the testing of general and application controls for its ERP 

systems that are critical to DOD’s financial audit readiness efforts. As 

DOD stated in its May 2015 FIAR Plan Status Report, the department 

must evaluate and remediate controls for hundreds of information 

technology systems that materially affect the financial statements to 

achieve and sustain an audit ready systems environment. However, 

additional actions are needed because DOD’s approach for testing ERP 

systems may not result in the benefits of testing envisioned by the panel 

because the focus of DOD’s testing is based more on the operational 

capability of the systems and their security from attack than the specific 

application controls of the ERP systems.91 For example, the panel noted 

that if auditors are able to rely on information system controls, the extent 

of substantive testing can be significantly reduced. Under DOD’s broad 

approach, specific application controls for ERP systems that affect the 

information under audit may not be tested.

91Application controls are intended to provide reasonable assurance of completeness (all 

transactions that occurred are input into the system, processed only once, and properly 

included in output); accuracy (transactions are properly recorded, with correct data and 

amounts, in the proper period, and are processed accurately and produce reliable results); 

validity (all recorded transactions actually occurred, relate to the organization, are 

authentic, and were properly approved, and output contains only valid data); confidentiality 

(application data and reports and other output are protected against unauthorized access); 

and availability (application data and reports and other relevant business information are 

readily available to users when needed).

Page 80 GAO-15-463 HASC Panel Recommendations

 
Appendix II: Comments from the Department Appendix II: Comments from the Department of Defense

of Defense

Page 81 GAO-15-463 HASC Panel Recommendations
Appendix II: Comments from the Department 

of Defense

Page 82 GAO-15-463 HASC Panel Recommendations
Appendix III: GAO Contact and Staff 

Acknowledgments

Asif A. Khan, (202) 512-9869 or khana@gao.gov

In addition to the contact named above, Michael S. LaForge (Assistant 

Director), Sandra S. Silzer (Auditor-in-Charge), and Laura S. Pacheco 

made key contributions to this report. Also contributing to this report were 

Doreen S. Eng, Francine M. DelVecchio, Maxine L. Hattery, and Jared D. 

Minsk.

Appendix III: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(197135) Page 83 GAO-15-463 HASC Panel Recommendations
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