INTEGRITY  EFFICIENCY  ACCOUNTABILITY  EXCELLENCE

Inspector General 

U.S. Department of Defense

Report No. DODIG-2015-038

NOVEMBER 20, 2014

Additional Actions Needed to 

Effectively Implement the 

Army Fund Balance With 

Treasury Reconciliation Tool
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DODIG-2015-038 (Project No. D2014-D000FL-0136.000) │ i

Results in Brief

Additional Actions Needed to Effectively Implement the 

Army Fund Balance With Treasury Reconciliation Tool

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Objective

The objective was to determine whether 

the Defense Finance and Accounting Service 

(DFAS), in coordination with the U.S. Army, 

properly designed the Army Fund Balance With 

Treasury (FBWT) Tool (AFT) to effectively 

complete the FBWT reconciliation between the 

U.S. Army General Fund and the U.S. Treasury. 

Finding

The Army and DFAS‐Indianapolis (DFAS‐IN) 

did not design and implement AFT and 

corresponding processes in a way that 

effectively reconciles Army’s FBWT account 

balance. Specifically: 

• DFAS‐IN did not reengineer its processes 

to effectively integrate the AFT; 

• AFT did not effectively compare the 

Army’s summary-level FBWT with 

Treasury; and 

• AFT included only 32 percent 

of the Army’s net outlays at the 

transaction level. 

The Army and DFAS‐IN personnel did not 

develop and implement a coordinated strategy 

for integrating AFT into the reconciliation 

process. In addition, the summary‐level 

reconciliation is not effective because the 

AFT Program Management Office’s (PMO) 

goal was only to support the transaction‐level 

reconciliation, not summary‐level adjustments. 

AFT’s transaction‐level reconciliation was 

limited because the Army and AFT PMO expect 

that the total value of FBWT activity from 

the legacy systems and the appropriations 

before FY 2013 would decrease over time and 

eventually be immaterial to the FBWT account.

November 20, 2014

As a result, the Army could not use AFT to support its 

reconciliation at the transaction level for $173 billion 

of $302 billion, or 57 percent, of net outlays for all 

appropriations. For current-year appropriations, the Army 

could not use AFT to support reconciling $38 billion of 

$65 billion of net outlays. Although the Army asserted to 

the audit readiness of its FY 2015 Schedule of Budgetary 

Activity (SBA), the Army has not demonstrated an effective 

FBWT transaction-level reconciliation, a key requirement 

for assertion. The inability to reconcile at the transaction 

level for current-year appropriations represents a significant 

obstacle the Army must overcome to show it has controls in 

place to produce a complete universe of transactions for an 

auditable SBA. Until these issues are corrected, the Army 

is at risk of being unable to resolve its longstanding FBWT 

material weakness.

Recommendations

Army officials should update the Army’s Financial 

Improvement Plan to show the steps and milestones needed 

to put AFT in operation. In addition, Army and DFAS officials 

should implement a coordinated strategy for integrating 

AFT into DFAS‐IN’s reconciliation process; determine the 

most effective method for completing the summary‐level 

reconciliation; document the decrease of Army’s legacy 

balances to become immaterial over time; and implement a 

methodology for reconciling all FBWT transactions.

Management Comments and 

Our Response

Comments from the Deputy Assistant Secretary of the Army 

(Financial Operations), responding for the Assistant Secretary 

of the Army (Financial Management and Comptroller), and 

the Deputy Director, DFAS-IN, responding for the Director, 

DFAS‐IN, addressed the recommendations and no further 

comments are required. Please see the Recommendations 

Table on the back of this page. 

Finding (cont’d)
ii │ DODIG-2015-038 (Project No. D2014-D000FL-0136.000) 

Recommendations Table

Management Recommendations 

Requiring Comment

No additional 

Comment Required

Assistant Secretary of the Army (Financial 

Management and Comptroller) 1, 2.a., 2.b., 2.c., 2.d., 2.e.

Director, Defense Finance and Accounting 

Service‐Indianapolis 2.a., 2.b., 2.c., 2.d., 2.e.
DODIG-2015-038│ iii

November 20, 2014

MEMORANDUM FOR DIRECTOR, DEFENSE FINANCE AND ACCOUNTING SERVICE

AUDITOR GENERAL, DEPARTMENT OF THE ARMY

SUBJECT: Additional Actions Needed to Effectively Implement the Army Fund Balance With 

Treasury Reconciliation Tool (Report No. DODIG-2015-038)

We are providing this report for your information and use. Defense Finance and Accounting 

Service–Indianapolis, despite developing the Army Fund Balance With Treasury (FBWT) 

Reconciliation Tool (AFT) to perform a monthly, transaction‐level reconciliation of Army 

FBWT, did not reengineer its processes to integrate AFT. The Army could not use AFT to 

effectively complete a summary‐level reconciliation or support $173 billion (57 percent) of 

the FBWT net outlays at the transaction level, as of May 31, 2014. As a result, the Army risks 

being unable to resolve its FBWT material weakness. Although the Army cannot demonstrate 

an effective FBWT transaction-level reconciliation, the Army asserted to the audit readiness of 

its Schedule of Budgetary Activity.

We considered management comments on a draft of this report when preparing the final 

report. DoD Directive 7650.3 requires that recommendations be resolved promptly. 

Comments from the Deputy Assistant Secretary of the Army (Financial Operations), 

responding for the Assistant Secretary of the Army (Financial Management and Comptroller), 

and the Deputy Director, DFAS-Indianapolis, responding for the Director, DFAS-Indianapolis, 

addressed all specifics of the recommendations, and we do not require additional comments. 

We appreciate the courtesies extended to the staff. Please direct questions to me at 

(703) 601‐5945 (DSN 664-5945). 

Lorin T. Venable, CPA

Assistant Inspector General 

Financial Management and Reporting

INSPECTOR GENERAL

DEPARTMENT OF DEFENSE

4800 MARK CENTER DRIVE

ALEXANDRIA, VIRGINIA 22350-1500
iv │ DODIG-2015-038

Contents

Introduction

Objective_________________________________________________________________________________________1

Background _____________________________________________________________________________________1

Review of Internal Controls ___________________________________________________________________3

Finding. AFT Not Used to Reconcile Army’s FBWT__________4

Effective Reconciliation of Army’s Fund Balance With Treasury __________________________5

DFAS Needs to Reengineer Business Processes to Use Army’s Fund Balance 

With Treasury Tool ________________________________________________________________________5

Coordinated Strategy Not Developed ____________________________________________________6

Effectiveness of Tier 1 Reconciliation ___________________________________________________8

Tier 1 Reconciliation Design ______________________________________________________________8

Current Reconciliation Includes Only Net Outlays From Target Systems __________ 10

Legacy Data Not Considered Material to Reconciliation _____________________________ 11

Unresolved Material Weakness and Increased Risk in Auditability ________________ 11

Management Actions _________________________________________________________________________ 12

Recommendations, Management Comments, and Our Response ________________________ 12

Appendixes

Appendix A. Scope and Methodology_______________________________________________________ 16

Use of Computer-Processed Data _______________________________________________________ 16

Use of Technical Assistance _____________________________________________________________ 17

Prior Coverage____________________________________________________________________________ 17

Appendix B. AFT FBWT Reconciliation Process___________________________________________ 18

Flowchart of AFT Reconciliation Process ______________________________________________ 19

Management Comments ____________________________________________________ 20

Assistant Secretary of the Army (Financial Management and Comptroller)____________ 20

Defense Finance and Accounting Service___________________________________________________ 23

Acronyms and Abbreviations_____________________________________________ 26
Introduction

DODIG-2015-038│ 1

Introduction

Objective

The audit objective was to determine whether the Defense Finance and Accounting 

Service (DFAS), in coordination with the U.S. Army, properly designed the Army 

Fund Balance With Treasury (FBWT) Tool (AFT) and corresponding processes to 

effectively complete the FBWT reconciliation between the U.S. Army General Fund 

(AGF) and the U.S. Treasury. Appendix A provides a discussion of the scope and 

methodology and prior audit coverage related to the objective. 

Background

FBWT is an asset account that reflects the available budgetary spending authority 

of a Federal agency. At the agency level, FBWT is similar to a corporation’s cash 

account. Appropriations and collections increase FBWT, and disbursements reduce 

FBWT. As of September 30, 2013, the Army reported $132.4 billion in FBWT, or 

41 percent of the $324.6 billion of total assets reported on the Army’s General Fund 

Balance Sheet.

Requirements for FBWT Reconciliation

Treasury and DoD guidance establish the requirement to perform a FBWT 

reconciliation, a control that is key to ensuring the Army produces an auditable 

Statement of Budgetary Resources (SBR). The Treasury Financial Manual 

(TFM), volume 1, part 2, chapter 5100, “Reconciling Fund Balance With Treasury 

Accounts,” requires agencies to reconcile their FBWT accounts to Treasury account 

statements on a regular basis to ensure the integrity and accuracy of their internal 

and Government-wide financial report data. The TFM states that an agency 

may not arbitrarily adjust its FBWT account. If an agency must make material 

adjustments, the agency must maintain supporting documentation. 

DoD Regulation 7000.14‐R, “DoD Financial Management Regulation” (DoD FMR), 

volume 4, chapter 2, “Accounting For Cash and Fund Balances With Treasury,” 

further requires that DoD components with FBWT accounts perform detailed 

reconciliations of their FBWT accounts at least monthly to ensure the accuracy 

and reliability of DoD fund balance records and the integrity of the financial 

statements. The DoD FMR also specifies that Army must explain any discrepancies 

between FBWT in the Army’s general ledger accounts and the balance in the 

Treasury’s accounts. Army should reconcile differences caused by time lag and 

correct any differences caused by error. According to TFM, unresolved differences 

compromise the reliability of FBWT balances and Treasury’s published financial 

reports. This, in turn, compromises the overall integrity and status of the 

Government’s financial position.
Introduction

2 │ DODIG-2015-038

The National Defense Authorization Act for FY 2012 requires the Army to validate 

the SBR for audit no later than September 30, 2014. The SBR presents the available 

budgetary resources as well as their status at the end of the period. Performing a 

monthly reconciliation is a key control to ensure the accuracy of the FBWT account. 

In addition, having an accurate FBWT account is essential to producing an auditable 

SBR. The DoD SBR audit readiness strategy limits the scope of the first‐year 

audit to the Schedule of Budgetary Activity (SBA), a report limited to current-year 

budget activity beginning with FY 2015 appropriations. On July 24, 2014, the Army 

asserted to its AGF SBA for FY 2015.

Army FBWT Reconciliation Tool

Since 2008, the Army has reported its inability to reconcile FBWT at the 

transaction level as a material weakness. This has contributed to the Army’s 

inability to receive an unqualified opinion on its financial statements. For example, 

because of the unreconciled differences between the Army and Treasury FBWT 

balances, DFAS‐Indianapolis (DFAS‐IN) made balancing adjustments decreasing 

FBWT by $28.3 billion in FY 2013. These balancing adjustments include journal 

vouchers correcting accounting irregularities that impacted FBWT balances. The 

Army and DFAS developed AFT to address the Army’s FBWT material weakness 

and to aid the Army in asserting to its SBR and SBA. DFAS‐IN and the Army 

created an automated tool, AFT, to perform a reconciliation of the FBWT account 

balances at the transaction level. Although AFT is necessary, the Army recognizes 

that because of the numerous reconciliation points in the current process, AFT may 

not be the sole solution. 

The Army’s strategy focuses on the information available in the target systems: 

General Fund Enterprise Business System (GFEBS), Global Combat Support 

System‐Army (GCSS‐A), and the Corps of Engineers Financial Management System 

(CEFMS). The AFT Program Management Office (AFT PMO) designed AFT to report 

on FBWT activity for FY 2013 appropriations and forward at the transaction level. 

AFT identifies any activity related to prior-year appropriations as out-of-scope and 

excludes this information from the reconciliation reports at the transaction level. 

As of March 31, 2014, AFT identified a difference of $1.1 billion out of $83 billion in 

net outlays. 

AFT uses data from the Treasury and Army accounting systems to perform 

four comparisons as part of the FBWT reconciliation process. The first compares 

the Treasury data with the Army’s summary‐level FBWT (Tier 1). The second 

compares the Treasury data with the Army’s component‐level reports submitted 

to Treasury (Tier 2A). The third compares the Army’s component‐level reports 

with the detailed transactions the Army submitted to Treasury (Tier 2B). 
Introduction

DODIG-2015-038│ 3

The final comparison is between the detailed transactions Army reported to 

Treasury and the detailed transactions recorded in the Army accounting systems 

(Tier 3). See Appendix B for a more detailed description and flowchart of the 

reconciliation process.

Roles and Responsibilities

The Office of the Deputy Assistant Secretary of the Army (Financial Operations) 

(DASA‐FO), assigned under the Office of the Assistant Secretary of the Army 

(Financial Management and Comptroller) (ASA[FM&C]), is responsible for policies, 

procedures, programs, and systems pertaining to finance and accounting activities 

and operations. As DASA‐FO is responsible for reporting on the status of the 

Army’s accounts, including FBWT, DASA‐FO personnel have engaged DFAS to 

develop AFT to reconcile the FBWT. 

DFAS is a service provider to the Army and is responsible for accounting and 

reporting for Army financial transactions. As the Army’s accounting service 

provider, DFAS‐IN is also responsible for reconciling FBWT for the AGF monthly. 

The DFAS‐IN AFT PMO developed AFT and is responsible for the daily operation 

and maintenance of AFT.

Review of Internal Controls 

DoD Instruction 5010.40, “Managers’ Internal Control Program Procedures,” 

May 30, 2013, requires DoD organizations to implement a comprehensive system 

of internal controls that provides reasonable assurance that programs are 

operating as intended and to evaluate the effectiveness of the controls. The 

Army and DFAS‐IN could not support the Tier 1 reconciliation process with the 

transaction‐level detail at Tier 3. We will provide a copy of the report to the senior 

official responsible for internal control in the Department of the Army.
Finding

4 │ DODIG-2015-038

Finding 

AFT Not Used to Reconcile Army’s FBWT

The DASA‐FO and DFAS‐IN did not design and implement AFT and corresponding 

processes in a way that effectively reconciles Army’s FBWT account 

balance. Specifically: 

•	 DFAS‐IN personnel did not reengineer the reconciliation process to use 

AFT to identify differences and research transaction‐level detail. This 

occurred because DASA‐FO and DFAS‐IN personnel did not develop and 

implement a coordinated strategy for the integration of AFT into the 

reconciliation process. 

•	 The AFT PMO did not design AFT to effectively complete the comparison 

of Army’s summary‐level FBWT and Treasury data (Tier 1 reconciliation). 

This occurred because the AFT PMO’s goal in designing the tool was only 

to support the transaction‐level reconciliation (Tier 3 reconciliation); 

however, this did not provide the necessary transaction‐level detail to 

support the summary‐level adjustments. 

•	 The DASA‐FO and AFT PMO designed AFT to complete the FBWT 

reconciliation only for the target systems, which, as of May 31, 2014, 

included only 32 percent, or $96 billion, of the Army’s collections and 

disbursements (net outlays) at the transaction level. The DASA‐FO and 

AFT PMO limited the amount of data reconciled through AFT because they 

expect the total value of FBWT activity from the legacy systems and the 

appropriations before FY 2013 would decrease over time and eventually 

be immaterial to the FBWT account.

The Army and DFAS have made progress in developing AFT to perform a monthly, 

transaction‐level reconciliation of Army FBWT; however, as of May 31, 2014, 

the Army could not use AFT to support its reconciliation for $173 billion, or 

57 percent,1 of the FBWT net outlays at the transaction level. The Army also could 

not trace transactions from the Tier 3 transaction‐level reconciliation to the Tier 1 

summary‐level reconciliation or use AFT to support its reconciliation for $38 billion 

of the $65 billion FBWT net outlays at the transaction level for current‐year 

appropriations. Although the Army asserted to the audit readiness of its FY 2015 

SBA, the Army has not demonstrated an effective FBWT transaction‐level 

1 In addition to the 57 percent, 11 percent of the FBWT outlays are reconciled in AFT but are not reported, because they 

relate to appropriations made before FY 2013 and, therefore, are considered out of scope. Table 1 shows FBWT net 

outlays as of May 2014.
Finding

DODIG-2015-038│ 5

reconciliation, a key requirement for assertion in the DoD Financial Improvement 

and Audit Readiness Guidance. The inability to reconcile at the transaction level 

for current-year appropriations represents a significant obstacle the Army must 

overcome to show it has the controls in place to produce a complete universe 

of transactions for an auditable SBA. Until the Army and DFAS redesign the 

FBWT reconciliation processes to fully integrate AFT and effectively complete a 

reconciliation of the Army FBWT account, the Army is also at risk of being unable 

to resolve its longstanding FBWT material weakness.

Effective Reconciliation of Army’s Fund Balance 

With Treasury

The DASA‐FO and DFAS‐IN did not design and implement AFT and corresponding 

processes in a way that effectively reconciles Army’s FBWT account balance. 

Specifically, DFAS‐IN did not reengineer its processes to integrate AFT; AFT did not 

effectively complete the Tier 1 reconciliation; and AFT included only 32 percent, or 

$96 billion, of the Army’s net outlays at the transaction level.

DFAS Needs to Reengineer Business Processes to Use Army’s 

Fund Balance With Treasury Tool

DFAS‐IN personnel did not reengineer the Army’s FBWT reconciliation process to 

use AFT to identify differences and research transaction-level detail. Although 

AFT obtained authority to operate in December 2013 and became operational in 

January 2014, DFAS‐IN Accounting Operations has not integrated AFT into the 

Army’s FBWT reconciliation process and has not used AFT to aid in its current 

reconciliation processes. 

DFAS‐IN Accounting Operations is responsible for reconciling FBWT for the AGF 

monthly; however, as of July 2014, the agency has not used AFT to 

complete a transaction‐level reconciliation of Army’s FBWT. 

DFAS‐IN Accounting Operations still used its longstanding 

business processes, rather than AFT, to complete 

Tier 1 and Tier 2A reconciliations. For example, the 

current Tier 2A reconciliation completed by DFAS‐IN 

Accounting Operations manually compares the Treasury’s 

summary‐level data with the Army’s summary‐level 

data, but AFT’s comparison is fully automated. In addition, 

although AFT successfully reconciled transactions and identified 

differences for Tier 3, DFAS‐IN Accounting Operations did not use the results to 

research, correct, or support any of the differences. Because DFAS‐IN is not using 

AFT for these purposes, DFAS‐IN has not fully integrated the tool into the FBWT 

reconciliation process and cannot support differences at the transaction level. 

As of 

July 2014, the 

agency has not used 

AFT to complete a 

transaction‐level 

reconciliation of 

Army’s FBWT. 
Finding

6 │ DODIG-2015-038

DFAS‐IN personnel stated they are considering reorganizing and revising 

business processes to support the AFT reconciliation. They provided a proposed 

organizational structure that includes DFAS‐IN organizations involved in the AFT 

reconciliation and stated this reorganization will better support audit readiness 

and improve DFAS‐IN’s ability to work with AFT. DFAS‐IN plans to make the 

changes in FY 2015. The audit team requested the revised business processes to 

support the new organizational structure, but DFAS‐IN personnel stated these are 

under development. In addition, the Director, DFAS‐IN, said DFAS is still identifying 

the necessary roles, responsibilities, and structures for the integration of AFT. 

Coordinated Strategy Not Developed 

DFAS‐IN personnel did not reengineer its FBWT 

reconciliation process to use AFT because DASA‐FO and 

DFAS‐IN personnel did not develop and implement 

a coordinated strategy for integrating AFT into 

the reconciliation process. DASA‐FO provided the 

Army’s FBWT Financial Improvement Plan (FIP) 

and the FY 2014 AGF Audit Readiness Strategy to 

support the Army’s plan for implementing AFT into 

the reconciliation process. The FBWT FIP and audit 

readiness strategy discuss developing an automated 

reconciliation tool; however, DASA‐FO did not identify the methodology, milestones, 

or roles and responsibilities necessary to develop processes to provide the tool to 

users and complete the reconciliation process.

Army Financial Improvement Plan

The Army’s FBWT FIP reported that AFT was fully implemented as of March 2013; 

however, DFAS‐IN has not integrated the tool into the current FBWT reconciliation 

process. According to the Office of the Assistant Secretary of the Army (Financial 

Management and Comptroller) (ASA[FM&C]), the FIP supports the DoD Financial 

Improvement and Audit Readiness Plan by establishing milestones and measures 

and outlining steps Army must take to achieve audit readiness. According to the 

November 2013 DoD Financial Improvement and Audit Readiness Guidance, the 

FIP should: provide a consistent, structured approach for measuring auditability 

progress; allow transparency into the challenges facing DoD; and highlight 

progress. In addition, this Financial Improvement and Audit Readiness Guidance 

directed the reporting entities to modify and regularly update their FIPs to meet 

these goals. 

The Army’s FBWT FIP included steps to develop AFT and to develop an 

implementation plan for AFT. The FIP reported that as of August 30, 2013, the 

DASA‐FO 

and DFAS‐IN 

personnel did not 

develop and implement 

a coordinated strategy 

for integrating AFT into 

the reconciliation 

process.
Finding

DODIG-2015-038│ 7

AFT implementation plan was 99 percent complete, with updated policies and 

procedures, and completion of systems’ design documents. In addition, the plan 

reported that the FBWT reconciliation “to-be” solution was 100 percent complete 

as of March 21, 2012. This step included documentation of the “to-be” process 

risks and controls, and documentation of the “to-be” procedures, requirements, 

constraints, controls, regulation, and training materials. However, in April 2014, 

when the audit team requested the Army’s implementation strategy for AFT, 

DASA‐FO personnel explained that the Army did not have a separate strategy 

addressing FBWT and referred the audit team to the Army’s overall audit 

readiness strategy. In June 2014, the audit team asked DFAS‐IN personnel to 

provide their business processes for the FBWT reconciliation under the “to-be” 

environment. However, DFAS‐IN personnel stated that the business processes were 

under development and that they could not provide them. Therefore, the audit 

team concluded that the Army’s FBWT FIP does not accurately reflect the steps, 

milestones, and progress for integrating AFT into daily operations at DFAS‐IN 

for use in the FBWT reconciliation process. The Army should update the FIP to 

accurately reflect the steps, milestones, and progress to put AFT in operation 

within the reconciliation process. 

Audit Readiness Strategy

The FY 2014 AGF Audit Readiness Strategy stated that the 

Army and DFAS partnered to develop and implement an 

automated reconciliation tool, AFT, within the Army, and 

a process for resolving identified reconciling items. It 

provided that, once the tool is operational, Army and 

DFAS would be able to reconcile the Army’s FBWT monthly. 

However, as of July 2014, DFAS has not integrated AFT into 

DFAS‐IN Accounting Operations. 

DFAS‐IN Audit Readiness personnel initiated a working group of Army and DFAS 

personnel to determine how to integrate AFT into the reconciliation process, 

document the workflows, and research identified differences between Army and 

Treasury records. The working group held its first meeting in May 2014 and has 

not been in place long enough for the audit team to assess the results of the group’s 

efforts. Army and DFAS‐IN personnel should use the working group’s results to 

develop a coordinated strategy, with goals and milestones, to reengineer the FBWT 

reconciliation processes using AFT. At a minimum, the strategy should provide 

a structured process to manage the implementation of the new reconciliation 

business process and incorporate AFT. It should also identify the roles and 

responsibilities associated with the integration of AFT and document an agreement 

between the Army and DFAS‐IN as to their respective responsibilities. 

As 

of July 2014, 

DFAS has not 

integrated AFT 

into DFAS‐IN 

Accounting 

Operations.
Finding

8 │ DODIG-2015-038

Effectiveness of Tier 1 Reconciliation 

The AFT PMO did not design AFT to effectively complete 

the comparison of Army’s summary‐level FBWT and the 

Treasury balance (Tier 1 reconciliation). Specifically, 

DFAS‐IN Accounting Operations personnel recorded 

adjustments to make the Army’s consolidated trial 

balance agree with Treasury, but the adjustments 

were not recorded at the transaction level in the Army 

systems used for the Tier 3 reconciliation. DFAS‐IN 

Accounting Operations personnel then provided the 

adjusted summary file to the AFT PMO for the AFT Tier 1 

reconciliation. Because the adjusted file DFAS‐IN Accounting 

Operations provided to AFT already agreed to Treasury records, AFT’s Tier 1 

comparison only documented the results of the reconciliation already performed 

by DFAS‐IN Accounting Operations. Therefore, AFT did not complete an effective 

comparison of Army FBWT with Treasury. 

DoD FMR volume 4, chapter 2, defines a reconciliation as a process that identifies 

and explains the differences between two sets of records or account balances. It 

describes a FBWT reconciliation as a specific reconciliation of the actual accounting 

events, such as disbursements, back to the detailed amounts posted, to both entity 

general ledgers and entity Treasury accounts. In addition, the November 2013 

DoD Financial Improvement and Audit Readiness Guidance requires that reporting 

entities achieve and maintain an effective FBWT transaction-level reconciliation 

and reporting to Treasury, to demonstrate audit readiness. Therefore, to complete 

an effective reconciliation at Tier 1, AFT should complete a comparison of the 

Army’s summarized transaction‐level data to Treasury records. In addition, 

because AFT uses the adjusted consolidated trial balance, there is a risk that the 

transaction‐level detail used for the Tier 3 reconciliation will not support the 

adjustments made to the consolidated trial balance. 

Tier 1 Reconciliation Design 

The Tier 1 reconciliation is not effective because the AFT PMO’s goal in designing 

AFT was only to support the transaction‐level reconciliation (Tier 3 reconciliation); 

however, this did not provide the necessary transaction‐level detail to support 

the summary‐level adjustments. According to AFT PMO personnel, the Tier 3 

reconciliation represents AFT’s core functionality. Specifically, their goal for the 

tool is to provide transaction‐level support (Tier 3) after DFAS‐IN Accounting 

Operations records the adjustments necessary for Army’s FBWT to agree with 

Treasury at the summary level. In addition, AFT PMO’s long‐term goal is to 

complete the Tier 1 reconciliation using the Army’s unadjusted trial balance files; 

however, there are currently no plans to redesign the Tier 1 reconciliation to 

accomplish this goal. 

The 

AFT PMO did 

not design AFT to 

effectively complete 

the comparison of 

Army’s summary‐level 

FBWT and the Treasury 

balance (Tier 1 

reconciliation).
Finding

DODIG-2015-038│ 9

The Army and DFAS‐IN did not have verifiable evidence of how transactions were 

processed and summarized through all three tiers of reconciliation. According 

to the TFM, an agency must support any adjustments made to its FBWT by the 

transaction-level detail. Within AFT, transaction‐level detail is included in the 

Tier 2 and Tier 3 reconciliations. For 45 randomly selected transactions, AFT 

correctly identified differences within Tier 2 and Tier 3 

reconciliations. In addition, all 45 transactions occurred at 

both the Tier 2 and Tier 3 levels. However, because AFT 

used an adjusted consolidated trial balance to complete 

the Tier 1 reconciliation, DFAS-IN and the Army could 

not support the Tier 1 reconciliation process with the 

transaction-level detail at Tier 3. Appendix A provides a 

description of the sampling methodology used to identify 

the random sample.

After discussing the current Tier 1 reconciliation process with the audit team, AFT 

PMO and Accounting Operations personnel agreed to review the GFEBS portion 

of the adjusting entries for supportability with the Tier 3 transaction detail. The 

objective would be to reduce the unsupported portion of the adjusting entries 

created to make the Army’s FBWT agree with Treasury records. DFAS‐IN has not 

reached any conclusions or developed a timeline for completing its analysis and 

implementing any appropriate procedural changes.

Until the AFT PMO redesigns AFT, the Army will not be able to demonstrate 

the ability to complete an effective FBWT transaction-level reconciliation, as 

required by the November 2013 DoD Financial Improvement and Audit Readiness 

Guidance. To establish a direct trail from the Tier 3 detail records to the Tier 1 

summary‐level reconciliation, the AFT PMO should redesign AFT to use the 

unadjusted trial balance data from the Army source systems for AFT’s Tier 1 

reconciliation process. Alternatively, if AFT PMO personnel determine that it is not 

feasible or practical to use the unadjusted trial balance data files, the Army and 

DFAS‐IN should develop and document processes and compensating controls for 

supporting the adjusting entries with the Tier 3 transaction detail. 

DFAS‐IN 

and the 

Army could not 

support the Tier 

1 reconciliation 

process with the 

transaction‐level 

detail at Tier 3.
Finding

10 │ DODIG-2015-038

Current Reconciliation Includes Only Net Outlays From 

Target Systems 

The DASA‐FO and AFT PMO designed AFT to complete the 

FBWT reconciliation for only the target systems. As 

of May 31, 2014, these made up only 32 percent, or 

$96 billion of the Army’s $302.2 billion of net outlays, 

at the transaction level. AFT did not reconcile the 

remaining $206.2 billion in net outlays because the 

data resided in the legacy systems or related to 

appropriations made before FY 2013. Table 1 shows 

the net outlays that should be included in the AFT 

reconciliation, by category, as of May 2014.

Table 1. Army FBWT May 2014 Net Outlays Report

Source Disbursements 

(thousands)

Reimbursements 

(thousands)

Net Outlays 

(thousands) Percent

In Scope

GFEBS, GCSS‐A, CEFMS ‐ 

FY 2013 Appropriations 

and Later

$(110,374,468) $14,376,970 $ (95,997,498) 32%

Out of Scope

GFEBS, GCSS‐A, 

CEFMS ‐ Pre‐FY 2013 

Appropriations

(47,826,064) 14,347,914 (33,478,150) 11%

Legacy (179,562,421) 6,808,570 (172,753,852) 57%

Total $(337,762,953) $35,533,454 $(302,229,500)

According to the AFT PMO, the core functionality of AFT is the Tier 3 reconciliation 

between the target systems’ (GFEBS, GCSS-A, and CEFMS) transaction‐level 

data and the Statement of Transactions2 detail reported to Treasury. Because 

the transaction‐level data included in the Tier 3 reconciliation is limited to the 

target systems and certain appropriations,3 AFT did not reconcile and report the 

differences for all the FBWT net outlays. For example, the May 2014 Military 

Personnel accounts (MILPAY) made up 58 percent, or $100 billion, of the legacy net 

outlays that AFT did not include in the Tier 3 reconciliation. DASA‐FO personnel 

explained that the Army is planning to report MILPAY transactions through GFEBS, 

which will then enable AFT to reconcile these MILPAY transactions. DASA‐FO 

2 This statement reports all collection and disbursement transactions, along with any offsetting receipts on a 

monthly basis. 

3 The Tier 3 reconciliation in AFT is limited to GFEBS, GCSS-A, and CEFMS voucher-level data, comprising X, F, and R, 

appropriation data, from FY 2013 appropriations to the present.

The 

DASA‐FO 

and AFT PMO 

designed AFT to 

complete the FBWT 

reconciliation for 

only the target 

systems.
Finding

DODIG-2015-038│ 11

personnel stated that they are planning to integrate into GFEBS the MILPAY 

accounts for Army active duty components in November 2014 and the MILPAY 

accounts for the Army Reserve components by February 2015. 

Legacy Data Not Considered Material to Reconciliation 

According to Army and DFAS‐IN personnel, they did not design AFT to reconcile all 

of the Army’s net outlays at the transaction level (Tier 3) because the total value 

of FBWT activity from the legacy systems and the appropriations before FY 2013 

would decrease over time and eventually be immaterial to the FBWT account. 

However, as of June 2014, the DASA‐FO had not performed an analysis to project 

the materiality of outlays processed by the legacy versus the target systems and 

requested DFAS‐IN to complete this analysis. If, as a result of DFAS’ analysis, the 

Army decides to continue with its current strategy that the legacy balances will 

decrease to immateriality over time, the Army and DFAS should provide an analysis 

that supports this strategy. 

The Army based its FY 2015 SBA assertion on its ability to produce a universe 

of transactions to reconcile to the SBA summary data. However, until the Army 

is able to identify and include a complete universe of transactions for the Tier 3 

reconciliation, it will not be able to support the auditability of all FBWT data. 

Because the legacy data is currently not reconciled at the transaction level through 

AFT, the Army and DFAS‐IN should develop and implement a methodology for 

reconciling all FBWT transactions. 

Unresolved Material Weakness and Increased Risk 

in Auditability 

Although the Army and DFAS have made progress in developing AFT to perform 

a monthly, transaction‐level reconciliation of Army FBWT, as of May 31, 2014, the 

Army could not use AFT to support its reconciliation of $173 billion, or 57 percent, 

of the FBWT net outlays at the transaction level. AFT 

maintains an additional $33.5 billion, or 11 percent, of the 

net outlays of transactional data but does not include 

this amount in its reconciliation results reports because 

it is activity from FY 2012 and older appropriations. In 

total, AFT did not reconcile and report 68 percent of the 

net outlays at the transaction level. This is a significant 

portion of the Army’s FBWT. 

In addition, the Army could not trace transactions from the transaction‐level 

reconciliation (Tier 3) to the summary‐level reconciliation (Tier 1) in AFT. The 

transactional data should support and agree in total with the summary data in 

the Army accounting systems. However, the AFT PMO designed AFT to use Army 

transactional data for the Tier 2 and Tier 3 reconciliation, whereas, for Tier 1, 

In total, 

AFT did not 

reconcile and 

report 68 percent of 

the net outlays at 

the transaction 

level.
Finding

12 │ DODIG-2015-038

AFT uses summary data adjusted to agree with Treasury. By using the adjusted 

consolidated trial balance for the Tier 1 reconciliation, the Army and DFAS‐IN do 

not have Tier 3 transaction-level detail that supports the Tier 1 summary‐level 

reconciliation. We discussed our concerns with Army and DFAS personnel, and 

DFAS has begun to examine how it could use AFT’s Tier 3 reconciliation detail to 

support the Tier 1 adjusting entries. 

Of the $302 billion FBWT net outlays at the transaction level, $65 billion were for 

current-year appropriations. As of May 31, 2014, the Army officials could not use 

AFT to support their reconciliation for $38 billion of 

the $65 billion FBWT net outlays for current-year 

appropriations, because the $38 billion was calculated 

using legacy data. This presents a significant obstacle 

the Army must overcome to demonstrate it has the 

controls in place to produce a complete universe of 

transactions for an auditable SBA. Until the Army and 

DFAS redesign their FBWT reconciliation processes 

to fully integrate AFT and effectively complete a 

reconciliation of the Army FBWT account, the Army risks 

not being able to resolve its longstanding FBWT material weakness. Although 

the Army asserted to the audit readiness of its FY 2015 SBA, the Army has not 

demonstrated an effective FBWT transaction‐level reconciliation, a key requirement 

for assertion in the DoD Financial Improvement and Audit Readiness Guidance.

Management Actions

The Army and DFAS‐IN have not completed the AFT development and 

implementation process yet, but they are taking steps to improve AFT and to plan 

for how Army and DFAS will use it. For example, in May 2014, the Army completed 

an internal review of AFT’s operating capability and determined that it is ready 

to run in full production. The Army made 22 recommendations to assist DFAS‐IN 

with the system deployment and control implementation. 

Recommendations, Management Comments, and 

Our Response

Recommendation 1

The Assistant Secretary of the Army (Financial Management and Comptroller) 

should update the Army’s Financial Improvement Plan to accurately reflect 

the steps, milestones, and progress to place the Army Fund Balance With 

Treasury Tool into operation within the monthly reconciliation process. 

The 

Army officials 

could not use 

AFT to support their 

reconciliation for $38 

billion of the $65 billion 

FBWT net outlays 

for current-year 

appropriations.
Finding

DODIG-2015-038│ 13

Assistant Secretary of the Army (Financial Management and 

Comptroller) Comments

The DASA-FO, responding for the ASA(FM&C), agreed with the recommendation 

and stated the Army will create a plan of action and milestones to address our 

findings and adopt our recommendations, to redesign AFT so that it effectively 

completes the FBWT reconciliation between the Army General Fund and the 

U.S. Treasury. The Army plans to complete this assessment by December 1, 2014.

Our Response

Comments from the DASA-FO addressed all specifics of the recommendation, and 

no further comments are required.

Recommendation 2

The Assistant Secretary of the Army (Financial Management and Comptroller) 

and Director, Defense Finance and Accounting Service-Indianapolis, should: 

a. Use the working group’s results to develop a coordinated strategy, 

with goals and milestones, to reengineer the Fund Balance With 

Treasury reconciliation processes using the Army Fund Balance 

With Treasury Tool. At a minimum, the strategy should provide 

a structured process to manage the implementation of the new 

reconciliation business process and incorporate use of the Army 

Fund Balance With Treasury Tool. It should also identify the roles 

and responsibilities associated with the integration of the Army Fund 

Balance With Treasury Tool and document an agreement between 

the Army and Defense Finance and Accounting Service as to their 

respective responsibilities. 

Assistant Secretary of the Army (Financial Management and Comptroller) 

and Defense Finance and Accounting Service-Indianapolis Comments

The DASA-FO, responding for the ASA(FM&C), and the Deputy Director, DFAS-IN, 

responding for the Director, DFAS-IN, agreed with the recommendation and stated 

the Army and DFAS are developing a coordinated strategy to reengineer the FBWT 

processes using AFT. The Army and DFAS plan to complete this coordinated 

strategy by December 31, 2014.
Finding

14 │ DODIG-2015-038

Our Response

Comments from the DASA-FO and Deputy Director addressed all specifics of the 

recommendation, and no further comments are required.

b. Assess the Army Fund Balance With Treasury Tool Tier 1 

reconciliation process to determine whether the tool can use the 

unadjusted trial balance data from the Army source systems. 

Assistant Secretary of the Army (Financial Management and Comptroller) 

and Defense Finance and Accounting Service-Indianapolis Comments

The DASA-FO, responding for the ASA(FM&C), and the Deputy Director, DFAS-IN, 

responding for the Director, DFAS-IN, agreed with the recommendation and stated 

the Army and DFAS will assess AFT to determine whether unadjusted trial-balance 

data from the Army source systems can be used. The Army and DFAS plan to 

complete this assessment by March 31, 2015.

Our Response

Comments from the DASA-FO and Deputy Director addressed all specifics of the 

recommendation, and no further comments are required.

c. Use the results of the Army Fund Balance With Treasury Tool Tier 1 

assessment to either:

1. Implement use of the unadjusted trial balance data files from 

the Army source systems; or

2. Develop and document audit trails and compensating controls 

to ensure the Fund Balance With Treasury reconciliation 

process meets Treasury Financial Manual and Financial 

Management Regulation requirements for supporting 

adjusting entries at the transaction level. 

Assistant Secretary of the Army (Financial Management and Comptroller) 

and Defense Finance and Accounting Service-Indianapolis Comments

The DASA-FO, responding for the ASA(FM&C), and the Deputy Director, DFAS‐IN, 

responding for the Director, DFAS-IN, agreed with the recommendation and 

stated that once the assessment for Recommendation 2.b is complete, the Army 

and DFAS will evaluate which of the two options best supports the overall FBWT 

reconciliation process. The Army and DFAS plan to complete their evaluation of 

these two options by May 31, 2015.
Finding

DODIG-2015-038│ 15

Our Response

Comments from the DASA-FO and Deputy Director addressed all specifics of the 

recommendation, and no further comments are required.

d. Provide an analysis supporting that the Army’s legacy balances will 

decrease to immaterial amounts over time.

Assistant Secretary of the Army (Financial Management and Comptroller) 

and Defense Finance and Accounting Service-Indianapolis Comments

The DASA-FO, responding for the ASA(FM&C), and the Deputy Director, DFAS‐IN, 

responding for the Director, DFAS-IN, agreed with the recommendation and 

stated the Army and DFAS will conduct an aging analysis by November 15, 2014, 

to determine how many years of supporting documentation are needed to 

substantiate the FBWT opening balances. 

Our Response

Although the DASA-FO and Deputy Director agreed with the recommendation, they 

did not address the specifics of the recommendation. The comments addressed 

supporting documentation for the FBWT opening balances, and not when legacy 

balances will decrease to immaterial amounts. On October 23, 2014, Army General 

Fund Audit Readiness personnel stated that the Army and DFAS are working on a 

solution to incorporate legacy detail transactions into AFT so that it includes a full 

universe of transactions, including Enterprise Resource Planning and legacy data. 

The Army and DFAS plan to complete this action by March 31, 2015. Therefore, 

these personnel stated that the actions proposed in this recommendation will not 

be necessary. The Army’s plan to incorporate legacy data into AFT addresses all 

specifics of the recommendation, and no further comments are required. 

e. Develop and implement a methodology for reconciling all Fund 

Balance With Treasury transactions, including legacy, at the 

transaction level. 

Assistant Secretary of the Army (Financial Management and Comptroller) 

and Defense Finance and Accounting Service-Indianapolis Comments

The DASA-FO, responding for the ASA(FM&C), and the Deputy Director, DFAS-IN, 

responding for the Director, DFAS-IN, agreed with the recommendation and stated 

the Army and DFAS are developing a plan for reconciling all FBWT transactions at 

the transaction level, including legacy transactions. The Army and DFAS plan to 

complete this assessment by March 31, 2015. 

Our Response

Comments from the DASA-FO and Deputy Director addressed all specifics of the 

recommendation, and no further comments are required.
Appendixes

16 │ DODIG-2015-038

Appendix A

Scope and Methodology

We conducted this performance audit from March 2014 through September 2014 

in accordance with generally accepted government auditing standards. Those 

standards require that we plan and perform the audit to obtain sufficient, 

appropriate evidence to provide a reasonable basis for our findings and conclusions 

based on our audit objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives.

We spoke with DFAS‐IN Departmental Reporting personnel to understand the 

current FBWT reconciliation processes. We met with the AFT PMO personnel 

to understand their responsibilities over AFT, including managing source files, 

performing reconciliations, and resolving variances. We also spoke with DFAS‐IN 

and Army Audit Readiness to discuss the implementation strategy for AFT. 

We determined whether DASA‐FO and DFAS‐IN designed and implemented AFT to 

perform a complete reconciliation of Army’s FBWT account balance by:

• ensuring AFT accurately reconciled 45 transactions and where a variance 

was found, correctly categorized the variance type. We also traced 

the 45 transactions to the source systems. To randomly select the 

45 transactions, the audit team identified the seven appropriations with 

the most transactions in the March 2014 AFT reconciliation files. There 

were 5,781,091 transactions in these seven appropriations from which we 

randomly selected our sample.

• observing the March 2014 AFT reconciliation process as performed by the 

AFT PMO.

• reviewing process flow documents, programming logic, and other internal 

control documentation related to the AFT PMO obtaining and preparing 

the source files to be reconciled, completing the reconciliation, and 

resolution of variance. 

Use of Computer-Processed Data

To perform this audit, we used March 2014 AFT reconciliation data. We reviewed 

internal control documentation related to AFT to determine whether the controls 

were adequate over the system and processes for completing the reconciliation. We 

also observed AFT PMO personnel completing the March 2014 AFT reconciliation 

to obtain an understanding of the system and its process, along with documenting 

the controls in place. We validated the reliability of this data by testing 

45 transactions from the reconciled AFT data for existence in the source system, 
Appendixes

DODIG-2015-038│ 17

such as GFEBS or GCSS‐A, and ensuring AFT correctly categorized the transactions. 

The computer-processed data we used were sufficiently reliable to support the 

audit finding and conclusions in this report.

Use of Technical Assistance

During the audit, we requested and received technical assistance from the DoD OIG 

Quantitative Methods Division (QMD), whose personnel helped us design a random 

sample of AFT reconciliation data.

Prior Coverage

During the last 5 years, the Government Accountability Office (GAO) and the 

Department of Defense Inspector General (DoD IG) issued three reports discussing 

DoD FBWT reconciliations. Unrestricted GAO reports can be accessed at 

http://www.gao.gov. Unrestricted DoD IG reports can be accessed at 

http://www.dodig.mil/pubs/index.cfm.

GAO

Report No. GAO-12-132, “Ongoing Challenges with Reconciling Navy and Marine 

Corps Fund Balance with Treasury,” December 2011

DoD IG

Report No. DODIG-2012-107, “Defense Finance and Accounting Service Needs to 

Improve the Process for Reconciling the Other Defense Organizations’ Fund Balance 

with Treasury,” July 2012

Report No. D-2011-098, “Defense Finance and Accounting Service Needs to Improve 

Controls Over the Completeness and Accuracy of the Cash Management Report,” 

August 2011
Appendixes

18 │ DODIG-2015-038

Appendix B

AFT FBWT Reconciliation Process

Tier 1

The first reconciliation (Tier 1 reconciliation), which is completed in the Defense 

Departmental Reporting System–Budgetary (DDRS-B), compares information from 

the Treasury’s Central Accounting Reporting System (CARS) with the information 

from the Army consolidated trial balance. DDRS‐B is used by DFAS to prepare 

the Army and DoD Budgetary monthly reports, including the Army’s consolidated 

trial balance. Once DFAS‐IN Accounting Operations adjusts the consolidated trial 

balance to make FBWT agree with Treasury, it provides the DDRS‐B‐certified file to 

AFT. AFT then uses the certified file to match to Treasury to establish a universe 

for the Tier 2 and Tier 3 reconciliations. 

Tier 2A

The second reconciliation (Tier 2A reconciliation) compares data from CARS with 

the Army’s accounting data reported to Treasury at the summary level. This 

compares the Treasury data with specific reporting groups within DoD, to identify 

where differences may have been reported. Once AFT completes this comparison, 

the tool generates a report of the differences, to aid the Army and DFAS in 

their research. 

Tier 2B

The development of AFT introduced two new reconciliations to the process, 

Tier 2B and Tier 3. The Tier 2B reconciliation compares Army’s accounting data 

reported to Treasury at the summary level with the detailed transactions reported 

to Treasury, to identify any irregularities in the reporting to Treasury. Once AFT 

completes this comparison, the tool generates a report of the differences, to aid the 

Army and DFAS in their research.

Tier 3

The Tier 3 reconciliation, which compares the transaction-level accounting data 

with the detailed transactions reported to Treasury, is required to bring the 

reconciliation process into compliance with the TFM and DoD FMR. Once AFT 

completes this comparison, the tool generates a report of the differences, to 

aid the Army and DFAS in their research. Figure 1 provides a flowchart of the 

reconciliation process as it relates to AFT.
Appendixes

DODIG-2015-038│ 19

Army Fund Balance with Treasury Tool Process Flow

Tier 2B Tier 1 Tier 2A Tier 3

DFAS and Army Army FBWT Tool DFAS Process

Accounting

System DataTransaction

Level (GFEBS,

GCSS-A, CEFMS)

Transaction Level

Disbursements

and Collections

Reported to

Treasury (SF 1329)

Component

Level FBWT Data

(SF 1220)

Treasury FBWT

Accounting Data

(CARS)

Consolidated

Adjusted

Accounting

Trial Balance

(DDRS-B)

Compare Compare Compare

AFT generates reports for Army and DFAS to use in researching the differences.

Journal Voucher

Prepared to Adjust

FBWT Balance

Certified DDRS-B File

sent to AFT

Treasury

Agency

Location

Code Report

(CARS)

Certified DDRS-B File

Matched to Treasury

Data to Establish

Universe for AFT

Figure 1: Army Fund Balance with Treasury Tool Process Flow

Source: DoD OIG
Management Comments

20 │ DODIG-2015-038

Management Comments

Assistant Secretary of the Army (Financial Management 

and Comptroller)
Management Comments

DODIG-2015-038 │ 21

Assistant Secretary of the Army (Financial Management 

and Comptroller) (cont’d)
Management Comments

22 │ DODIG-2015-038

Assistant Secretary of the Army (Financial Management 

and Comptroller) (cont’d)
Management Comments

DODIG-2015-038 │ 23

Defense Finance and Accounting Service
Management Comments

24 │ DODIG-2015-038

Defense Finance and Accounting Service (cont’d)
Management Comments

DODIG-2015-038 │ 25

Defense Finance and Accounting Service (cont’d)
26 │ DODIG-2015-038

Acronyms and Abbreviations

Acronyms and Abbreviations

AFT Army Fund Balance With Treasury Tool

ASA(FM&C) Assistant Secretary of the Army (Financial Management and Comptroller)

CARS Central Accounting Reporting System

CEFMS Corps of Engineers Financial Management System

DASA‐FO Deputy Assistant Secretary of the Army (Financial Operations)

DDRS‐B Defense Departmental Reporting System–Budgetary

DFAS Defense Finance and Accounting Service

DoD FMR DoD Financial Management Regulation

FBWT Fund Balance With Treasury

FIP Financial Improvement Plan

GFEBS General Fund Enterprise Business System

GCSS‐A Global Combat Support System–Army

PMO Program Management Office

SBA Schedule of Budgetary Activity

SBR Statement of Budgetary Resources

TFM Treasury Financial Manual
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on retaliation, and rights and remedies against retaliation for 

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Director. For more information on your rights and remedies against 

retaliation, visit www.dodig.mil/programs/whistleblower.

For more information about DoD IG 

reports or activities, please contact us:

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congressional@dodig.mil; 703.604.8324

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