Defense Finance and Accounting 

Service (DFAS) is pleased to present the 

Fiscal Year (FY) 2019 Agency Financial 

Report (AFR). This report provides highlevel financial information for the FY 

related to our mission and stewardship of 

resources.

The purpose of the DFAS FY 2019 AFR 

is to inform the President, Congress, and 

the American people about how DFAS 

used Federal resources entrusted to 

the Agency to reliably deliver first-class 

accounting and finance services to the 

Department of Defense (DoD).

The AFR highlights our activities, 

accomplishments, progress and financial 

analysis for the FY. It contains our Financial 

Statement Audit Report along with 

management’s assurances on internal 

controls.

This report is prepared in compliance 

with Office of Management and Budget’s 

(OMB) Circular No. A-136, Financial 

Reporting Requirements. The AFR is 

available online at www.dfas.mil. 

About this Document

How this Report is Organized

SECTION I SECTION II SECTION III

This section 

provides a high-level 

overview of our organizational structure 

and mission; selected 

accomplishments; 

analysis of financial 

performance; and 

management’s 

assurances on 

systems, legal 

compliance, 

and controls.

This section begins 

with a letter from 

our Chief Financial 

Officer and includes 

our Agency’s independently audited 

financial statements 

and notes, along with 

the related Independent Auditor’s Report.

This section contains 

additional information 

such as a glossary of 

acronyms.

Management’s

Discussion

and Analysis

(Unaudited)

Financials Other

Information
HISTORY OF THE ORIGINS OF THE OFFICE OF THE UNDER SECRETARY OF DEFENSE 

(COMPTROLLER) AND THE DEFENSE FINANCE AND ACCOUNTING SERVICE

1776-1944

1949

1945

1986

1995

1947

1965

1991

Today

National Defense Autorization Act

Department of Defense Reorganization Act

Departmet of Defense

President Truman

An Act to authorize appropriations for fiscal year 1995 for military 

activities of the Department of Defense, for military construction, and 

for defense programs of the Department of Energy, to prescribe 

personnel strengths for such fiscal year for the Armed Forces, and for 

other purposes.

DFAS Created

In 1991, Secretary of Defense Dick Cheney 

created the Defense Finance and Accounting 

Service (DFAS) to consolidate finance and 

accounting operations, reduce costs, and 

strengthen financial management.

In 1965, Secretary of Defense Robert S. McNamara created the Defense 

Contract Audit Agency (DCAA) as a separate agency of DoD under the 

authority, direction, and control of the Under Secretary of Defense 

(Comptroller) and Chief Financial Officer. DCAA's mission is to provide 

standardized contract audit services for the Department, as well as 

accounting and financial advisory services regarding contracts and 

subcontracts for all DoD components that are responsible for 

procurement and contract administration.

In the six decades of their existence, the Department of Defense and 

the Office of Under Secretary (Comptroller) have developed and 

changed. Today, in addition to managing the development and 

execution of the Defense budget, there is renewed emphasis on 

improving financial management across the Department to ensure that 

taxpayer resources are managed wisely and efficiently. The bottom line, 

as always, is to ensure that the U.S. military has the resources needed 

to protect and defend the United States, its interests, and its people.

National Security Act

Defense Contract Audit Agency

President Truman signed the National Security Act of 1947 

and reorganized military forces by merging the 

Department of War and the Department of the Navy into 

the National Military Establishment (later the Department 

of Defense) and creating the U.S. Air Force. The act also 

created the CIA and the National Security Council.

Shortly after World War II ended, the U.S. Government took steps to 

reorganize and consolidate national security. President Truman 

summarized the need in a message to Congress in December, 1945. 

He wrote, "Technological developments have made the Armed 

Services much more dependent upon each other than ever before. 

The boundaries that once separated the Army's battlefield from the 

Navy's battlefield have been virtually erased.... True preparedness 

now means preparedness not alone in armaments and numbers of 

men, but preparedness in organization also."

In 1949, this arrangement was codified by the legislation that created 

the Department of Defense. Title IV of the amended National Security 

Act of 1947 (Public Law 216, 81st Congress) provided for three 

Assistant Secretaries, one of whom was designated as Comptroller of 

the Department. Section 401 of the law specified that the 

Comptroller would be responsible for advising the Secretary on 

budgetary and fiscal matters, for developing and executing the 

Defense budget, and for overseeing financial management across 

the Department.

In 1986, the Department of Defense Reorganization Act (popularly 

known as "Goldwater-Nichols") changed the title of the position to 

Department of Defense Comptroller, with the status of an assistant 

secretary, but without that title. The position was upgraded to Under 

Secretary by the National Defense Authorization Act of 1995. 

The beginning

The office of the Under Secretary of Defense (Comptroller) was 

created as part of the Department of Defense in the years 

immediately following the Second World War. Throughout that 

conflict – and for most of the nation's history – the defense of the 

United States was the responsibility of two separate organizations, 

the War Department (which oversaw the Army) and the 

Department of the Navy, each with its own budget and financial 

operations. 

HISTORY OF THE OFFICE OF THE UNDERSECRETARY OF DEFENSE (COMPTROLLER) 

AND THE DEFENSE FINANCE AND ACCOUNTING SERVICE

1776-1944

1949

1945

1986

1947

1965

1991

Today

National Defense Authorization Act

Department of Defense Reorganization Act

Department of Defense

President Truman

1995

An act to authorize appropriations for the fiscal year 

1995 for military activities of the Department of 

Defense, military construction, and defense programs 

of the Department of Energy, to prescribe personnel 

strengths for such fiscal year for the Armed Forces, 

and other purposes. 

DFAS Created

In 1991, Secretary of Defense Dick Cheney 

created the Defense Finance and Accounting 

Service (DFAS) to consolidate finance and 

accounting operations, reduce costs and 

strengthen financial management.

In 1965, Secretary of Defense Robert S. McNamara created 

the Defense Contract Audit Agency (DCAA) as a separate 

agency of DoD under the authority, direction, and control of 

the Under Secretary of Defense (Comptroller) and chief 

financial officer. DCAA's mission is to provide standardized 

contract audit services for the Department, as well as 

accounting and financial advisory services regarding 

contracts and subcontracts for all DoD components that are 

responsible for procurement and contract administration.

In the 70 years of their existence, the Department of 

Defense and the Office of the Under Secretary of Defense 

(Comptroller) have developed and changed. Today, in 

addition to managing the development and execution of 

the Defense budget, there is a renewed emphasis on 

improving financial management across the Department. 

Better financial management ensures wise and efficient use 

of taxpayers’ resources. The bottom line, as always, is to 

ensure that the U.S. military has the resources needed to 

protect and defend the United States, its interests and 

its people.

National Security Act

Defense Contract Audit Agency

President Truman signed the National Security Act of 

1947 and reorganized military forces by merging the 

Department of War and the Department of the Navy 

into the National Military Establishment (later the 

Department of Defense) and creating the U.S. Air 

Force. The act also created the CIA and the National 

Security Council.

Shortly after World War II ended, the U.S. Government took 

steps to reorganize and consolidate national security. In 

December 1945, President Truman summarized the need in 

a message to Congress. He wrote, "Technological develop- ments have made the Armed Services much more 

dependent upon each other than ever before. The 

boundaries that once separated the Army's battlefield 

from the Navy's battlefield have been virtually erased. 

True preparedness now means preparedness not alone in 

armaments and numbers of men, but preparedness in 

organization also."

The first Secretary of Defense, James V. Forrestal, assigned 

one of his three Special Assistants with responsibility "for all 

budget, accounting, administrative service and reporting 

activities.” In 1949, this arrangement was codified by the 

legislation that created the Department of Defense. Title IV 

of the amended National Security Act of 1947 (Public Law 

216, 81st Congress) provided for three Assistant Secretaries, 

one of whom was designated as Comptroller of the 

Department. Section 401 of the law specified that the 

Comptroller would be responsible for advising the Secretary 

on budgetary and fiscal matters, for developing and 

executing the Defense budget, and for overseeing financial 

management across the Department.

In 1986, the Department of Defense Reorganization Act 

(popularly known as "Goldwater-Nichols") changed the title 

of the position to Department of Defense Comptroller, with 

the status of an assistant secretary, but without that title. 

The National Defense Authorization Act of 1995 upgraded 

the position to Under Secretary. 

The Beginning

In the years immediately following World War II, the 

Department of Defense created the office of the Under 

Secretary of Defense (Comptroller). Throughout that conflict 

– and for most of the nation's history – the defense of the 

United States was the responsibility of two separate 

organizations: the War Department (overseeing the Army) 

and the Department of the Navy, each with a budget and 

financial operations.
iii TABLE OF CONTENTS

MESSAGE FROM THE DIRECTOR................................................................................................................................ 1

SECTION I:

MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)

DFAS AT A GLANCE............................................................................................................................................................................4

INTRODUCTION ...............................................................................................................................................................................12

HUMAN CAPITAL .............................................................................................................................................................................14

DATA ANALYTICS TO DRIVE BUSINESS INSIGHTS...............................................................................................................18

EMERGING TECHNOLOGY............................................................................................................................................................22

GLOBAL AUDIT ENVIRONMENT.................................................................................................................................................26

MANAGEMENT ASSURANCES....................................................................................................................................................30

COMPLIANCE AND REGULATIONS...........................................................................................................................................34

FINANCIAL DISCUSSION AND ANALYSIS...............................................................................................................................38

SECTION II:

FINANCIALS

MESSAGE FROM THE CHIEF FINANCIAL OFFICER..............................................................................................................48

INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS....................................................................50

MANAGEMENT’S RESPONSE TO THE INDEPENDENT AUDITOR’S REPORT..............................................................58

COMPARATIVE FINANCIAL STATEMENTS...............................................................................................................................62

NOTES TO THE FINANCIAL STATEMENTS...............................................................................................................................68

SECTION III:

OTHER INFORMATION (UNAUDITED)

GLOSSARY OF ACRONYMS AND ABBREVIATIONS.............................................................................................................90

NOTES PAGES ....................................................................................................................................................................................94

Table of Contents
iv iv

Director’s Message
1 DIRECTOR’S MESSAGE 1

TERESA McKAY

Director

It is my honor to share the DFAS FY 2019 Agency 

Financial Report with you. Far more than just a 

presentation of our financial statements, this 

report is a snapshot of our dedication to proudly 

serving America’s heroes every day.

During this past fiscal year, we completed the 

third year of our five-year plan. Our DFAS team of 

diverse talents, skills and perspectives continues 

to execute the four strategic priorities of People, 

Audit Steadiness, Business Environment 

Modernization (BEM) and Agency Operational 

Health (AOH). 

In addition, we assessed how and where we could 

both increase our value for the Department and 

achieve further results for our customers. This 

defined focus is a key reason we are a recognized 

leader in financial management.

We continued to align our efforts with the National Defense Strategy of enhancing 

readiness, strengthening alliances and partnerships, and driving reform in DoD 

business practices. 

First, we support readiness. We leveraged cost accounting and timekeeping 

information for DoD customers with the Financial Management Line of Business 

reporting tool. DFAS continues to utilize data analytics for the Mechanization of 

Contract Administrative Service system, better known as MOCAS, which has resulted in 

a reduction of hundreds of millions of dollars in canceled funds. Our consistent work 

to keep costs down means our heroes can have more. 

Second, we strengthen alliances and attract new partners. For example, we 

collaborated with Defense Security Cooperation Agency to implement 480 Foreign 

Military Sales grant case reconciliations valued at $1.4 billion. This collaboration supports global security and the reconciliations are important to reaching an 

auditable program.

Third, we reform business practices for greater performance and affordability. 

Created in 1991 to consolidate, standardize and integrate, DFAS is an agency built 

around reform, and we analyze opportunities for improvement every day. We retired 

12 systems during the first three years of our Reduce Legacy Systems initiative, and 

our cumulative savings for these retirements is over $1.46 million per year, which is 

10% over our targeted savings. In addition, we improved our controls and business 

processes around unsupported Journal Vouchers during the past fiscal year, which 

resulted in a reduction of 71.5% and totaled $11 trillion.

In FY 2020, we are committed to accomplishing even more as we build upon a proven 

record of success. Our people perform and produce results with unwavering dedication. I am grateful to lead the dedicated DFAS employees who support the men and 

women of our armed forces and the Nation every day, and doing so is my greatest 

source of pride. 
SECTION I

Management’s Discussion

and Analysis (Unaudited)

DFAS at a Glance

Introduction

Human Capital

Data Analytics to Drive Business Insights

Emerging Technology

Global Audit Environment

Management Assurances

Compliance and Regulation

Financial Discussion and Analysis

TOPICS COVERED

4 4

DFAS at a Glance
5 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 5

SECTION I

The DoD established DFAS in 1991 to provide finance and accounting services for DoD 

components during times of peace and conflict.

Today, we support military and civilian customers throughout the world. Our mission 

emphasizes the importance of DFAS’ leadership role in standardizing and improving 

finance and accounting activities across the federal government.

DFAS pays all DoD military personnel, retirees and annuitants; civilians for all of DoD; 

and additional federal customers. DFAS is also a shared services provider, supporting 

electronic government initiatives in partnership with customers such as the Executive 

Office of the President, the Department of Energy, the Department of Veterans Affairs, 

the Department of Health and Human Services, and the U.S. Agency for Global Media. 

In 1995, DoD established DFAS as a Regional Service Center for Human Resources 

(HR) operations to provide overhead efficiencies for defense agencies and Office of 

the Secretary of Defense components. DFAS currently provides HR services for seven 

defense agency customers.

Financed as a working capital fund, instead of through direct appropriations, DFAS bills 

its customers for the costs required to provide services. The Agency sets annual billing 

rates for services two years in advance based on anticipated customer workload and 

estimated costs calculated to offset any prior year gains or losses.

DFAS’ operations are subject to oversight by the DOD as well as the executive and 

legislative branches of the federal government. DFAS has consistently improved its 

financial processes, systems and tools to understand, manage and improve cost directly 

aligned to the National Defense Strategy (NDS). These improvements include shedding 

outdated management practices and structures, while integrating insights from 

business innovation. The Agency aims to support military readiness and achieve reform 

through greater performance and affordability, predictive analytics and continuous 

communication. We have always focused on the goal of providing services at the best 

value for our customers. 

Our Agency
6 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 6

SECTION I

To be a recognized leader 

in financial management by 

consistently delivering firstclass service and products.

Lead our customers in 

finance and accounting by 

ensuring the delivery of 

efficient, exceptional 

quality pay and 

financial information.

Integrity:

Doing what is right

Service:

Remain a trusted

financial partner

Innovation:

Creating better ways 

to do business

$194.8

Million

IT and

Other

13.7%

$219.6

Million

Debt

Management 

and Payment

Services

15.4%

$459.1

Million

Payroll

32.2%

$550.4

Million

Accounting and

Reporting

38.7%

Total Revenue $1.4 Billion

Our Mission

Our Vision

Our Core Values

Our Revenue Streams
7 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 7

SECTION I

DFAS is the principal DoD executive for finance and accounting requirements, systems, 

and functions. That role includes the responsibility to direct the consolidation, 

standardization, and integration of finance and accounting requirements, functions, 

procedures, operations, and systems within the Department of Defense.

What We Do

Pay People and Vendors

Accounted for 1,349active

reimbursed by foreign governments

Accounting Services

at $579 billion

Military Sales cases valued

DoD appropriations

ni

accounts

rece

vi

a

ble

s

Managed Foreign

in

Milita

ry

Retirement

General Ledger accounts

M

a

n

a

g

ed

$1

1.

7 trill oi

n

Maintained 98 million

Managed $21

bill oi n

a

n

d

H

ealth

Benefit Funds

Paid 6.5

million

customers

Processed 

140.8 million 

pay

transactions

Made 6.2

million travel

payments

Paid 15.1

million

commercial

invoices

Disbursed

$616.6 billion
8 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 8

SECTION I

All DoD military personnel, retirees, annuitants

and civilian personnel

Major DoD

contractors and vendors

Defense Agencies

and the Office of the

Secretary of Defense

Executive Office of the President

Department of Energy

Department of Veterans Affairs

Department of Health & Human Services

U.S. Agency for Global Media

Foreign partners 

Our Customers Within the DoD

Our Customers Outside of the DoD
9 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 9

SECTION I

Compensation

• Competitive Compensation

• Defined Pension Plan

• Thrift Savings Plan (TSP) (similar to 401K)

• Flexible Spending Accounts

• Health/Dental/Vision Insurance

Work-Life Balance

• Flexible Work Schedules

• Annual Leave (13 days progressing to 26 days/year)

• Sick Leave (13 days/year)

• Telework Opportunities

• Family and Medical Leave

• 10 Holidays/year

• Employee Assistance Programs

Career

• Career Development Programs

• Job Interest Alignment

• Stability of Federal Employment

• Cross-Training/Rotational Opportunities

• On-The-Job and Classroom Training

• Tuition Assistance

• Certification Reimbursement

Employer of Choice
10 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 10

SECTION I

Columbus

(Limestone)

Indianapolis

(Rome, Europe

and Texarkana)

Enterprise

Solutions and

Standards

Chief

of Staff

Internal

Review

Office of

General

Counsel

Cleveland

(Japan)

Human

Capital

Resource

Management

Information

and

Technology

Corporate

Communications

Office of Equal

Opportunity

Programs

Human

Resources

Strategy,

Policy and

Requirements

Enterprise

Management

Services

Principal Deputy Director

Audrey Davis

Deputy Director,

Strategy and Support

Aaron Gillison

Deputy Director,

Operations

Jonathan Witter

Director

Teresa McKay

Organizational Structure
11 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 11

SECTION I

Evaluates content and 

structure of the DFAS 

strategy, corporate 

operational dashboard, 

and other Agency 

priorities to successfully 

execute strategy

Members: Director, 

Chair; Principal Deputy 

Director; Deputy Director, 

Operations; Deputy 

Director, Strategy and 

Support; DFAS senior 

executives and key GS-15s

STRATEGIC

COUNCIL

Approves DFAS’ strategy, 

oversees the budget 

formulation and execution, 

approves recommendations 

from the Enterprise Business 

Council, and acts as the 

Agency’s Internal Audit 

Committee

Members: Director, Chair; 

Principal Deputy Director; 

Deputy Director, 

Operations; and 

Deputy Director, 

Strategy and Support

BOARD 

OF DIRECTORS

Serves as the DFAS 

governance body chartered 

to fulfill a number of 

statutory/regulatory 

requirements, and provides 

a forum for discussion and 

vetting of business case 

analyses or other fact-based 

analyses and requirements 

for enterprise-wide 

programs 

Members: Principal Deputy 

Director, Chair; and 

appointed members

ENTERPRISE

BUSINESS COUNCIL

We operate at eight stateside locations and in Europe and Japan.

Executive Boards

Our Locations

HEADQUARTERS – INDIANAPOLIS, IN 

LIMESTONE, ME | ROME, NY | BRATENAHL, OH | CLEVELAND, OH

COLUMBUS, OH | TEXARKANA, TX | ALEXANDRIA, VA

KAISERSLAUTERN, GERMANY | YOKOTA AIR BASE, JAPAN
12 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 12

SECTION I

Lisa Hershman (right), who is currently performing the duties of the Defense Department Chief Management Officer, 

provides insight to Andrea Pressley, Finance Mission Area Customer Operations director. Hershman visited the Defense Finance and Accounting Service on Aug. 9, 2019, and met with several mission area representatives.

(DoD photo by Eileen Hernandez)

During fiscal year (FY) 2019 we continued our focus on the DFAS Strategic Priorities of People, 

Business Environment Modernization, Agency Operational Health and Audit Steadiness. This 

focus established a collective approach where employees achieved best practices by integrating latest technologies to maximize performance while decreasing costs and adopting audit 

strategies and internal control toolsets into daily work practices. As part of the efforts 

supporting our Strategic Priorities, DFAS concentrated on four crucial areas: Human Capital, 

Emerging Technology, Data Analytics to Drive Business Insights and Global Audit Environment.

HUMAN CAPITAL, our most important asset, is an essential resource, and 

DFAS recognizes the economic value of its employees’ experience and skills. 

The Agency continued to take great strides this FY in directing, investing and 

developing its workforce to continue to flourish in a dynamic work 

environment.

DFAS is committed to investing in the development of its people by 

providing ongoing training and continuing education opportunities. Required certifications help 

employees accentuate and strengthen the skills that they possess to advance in their careers 

while achieving the Agency’s goals.

Introduction
13 INTRODUCTION 13

SECTION I

People with the right 

skills, in the right 

place, at the right time

EMERGING TECHNOLOGIES

refers to those new technologies that are being developed 

or will be making advancements 

within the next few years. These 

radical innovations are characterized by fast growth and a prominent impact 

within a field for a competitive gain.

DFAS continues to advance in running 

enterprise databases and consolidating 

applications. Migrating databases and their 

applications that use the same software to 

consolidate platforms allows DFAS to provide 

maximum end-to-end efficiency and cybersecurity. Coinciding with the use of modern 

technology, the Agency continues to eliminate 

and retire legacy systems that require costly 

maintenance.

With ever-changing external pressures, 

DFAS must expand the automation of systemic 

processes and increase efficiencies, which will 

positively impact customers as well. Long wait 

times and slow responses from antiquated 

systems have a huge impact on customer 

satisfaction. With the use of technological 

advances on the rise, the customer experience 

landscape is evolving. Customers benefit when 

we leverage and maintain the latest software 

applications and support services.

DATA ANALYTICS TO DRIVE BUSINESS 

INSIGHTS use advanced, automated techniques and tools to examine and analyze 

large amounts of data and draw intelligent 

conclusions. Raw data is extracted, prepared 

and consolidated to support 

analysis for reporting entities. 

The benefits they deliver include 

speed and efficiency, giving DFAS 

immediate insight to gauge customer needs and drive strategic 

decisions on products 

and services.

DFAS has continued to improve its data 

integrity by increasing standardization across 

the DoD reporting network. This consistency 

in how financial data is represented on budgetary reports and financial statements further 

ensures the increased accuracy and completeness of information submitted to federal 

reporting authorities.

The DFAS GLOBAL AUDIT ENVIRONMENT encompasses the DoD Consolidated 

Audit, which includes the DFAS WCF audit 

and support to the military components 

and Other Defense Organizations (ODOs) 

audits. DFAS is streamlining financial reporting processes as well as improving ways to 

safeguard assets. These steps 

ensure that best practices are 

followed and an accurate financial depiction of the organization is presented to the users of 

the financial statements.

As auditors gain an understanding of an 

entity’s internal controls related to financial 

statement reporting, management can also 

detect trends and isolate any gaps that may 

require corrective actions. Through implementation of internal risk assessments and 

internal control testing, we have placed 

major focus on many process improvements. 

We have also strengthened customer relations to achieve mutual audit objectives.
14 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 14

SECTION I

A Succession Program team member from the Human Capital Program Office speaks to a group of employees from 

DFAS Indianapolis during a Succession Program Refresh event Nov. 8, 2018. The team conducted briefings throughout 

DFAS in the months leading up to the launch of the expansion of the program, that will now include GS-12 supervisors who are interested in developing their leadership skills. (DoD photo by Jaime Charlson, Human Capital)

DFAS maintains its vision of being a recognized leader in DoD’s financial management services by continuing its commitment to having the right people, in the right place, at the right 

time. In addition to talent acquisition and talent development, DFAS focuses on retaining and 

developing leaders who are equally committed to DFAS’ goal of delivering first-class service 

and products. 

Human Capital

Career Broadening Initiatives

In support of the continuity and development of a strong leadership team, DFAS made 

significant changes to improve its highly effective Succession Program. The refreshed program 

includes an updated mentoring event, new timing for the program cycles and increased developmental opportunities, in addition to an expanded population. As a result, 59 senior managers at the GS-15 level benefited from this program. This was a 10% increase over last FY with a 

72% participation rate. The program generated savings for the Agency by switching to a biennial cycle, which allowed participants more time to develop their leadership competencies and 

extended executive education opportunities to 29 additional participants. We also expanded 

the program by adding 197 GS-12 supervisors, allowing DFAS to address the development gap 

between journeyman accountant and senior manager. As part of the Succession Program, there 

is an annual mentoring event to increase peer networking opportunities.
15 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 15

SECTION I

For employees desiring more personalized 

development of their leadership skills, the 

Coaching Program is a specific, goal-directed 

exchange of ideas for the purpose of achieving focused job-related results. This program 

is available to employees who show the 

potential of being future leaders at DFAS. Participants are nominated through the succession program or by leadership referral. Development activities include completing a 360° 

leadership assessment, coach matching and 

four telephone coaching sessions with a certified professional leadership coach external to 

DFAS. There was a 25% increase in the Coaching Program enrollment, with 259 participants 

having fulfilled the program requirements in 

FY 2019.

DFAS also offers the Mentoring Program, 

which is open to all grades at any time. It’s 

an opportunity to receive one-on-one career 

development advice from DFAS employees 

in positions at higher grade levels and not in 

their chain of command. There is an online 

Mentoring database that matches mentees 

with potential mentors. Mentoring partnerships can be short or long term and the scope 

of the relationship is more encompassing and 

focuses on broader themes.

While the programs above highlight some 

of DFAS’ career broadening initiatives, DFAS 

also offers higher education and leadership 

development programs. The higher education 

programs include tuition assistance and mission related degree programs. The leadership 

development programs include a one-year, 

cohort based developmental program, a twoyear foundational program and a 10-month 

executive leadership program. The DoD 

Executive Leadership Development Program 

is designed to provide structured, experiential 

learning opportunities with Warfighters to 

enable deliberate development of a diverse 

cadre of future leaders with the joint and 

interagency perspectives and competencies 

needed to lead teams, projects and people. 

Right People, Right Place, Right Time

DFAS recognizes that developing the 

workforce is necessary to be more efficient 

and better able to support the mission. One 

area of focus has been increasing data analytic capabilities. This fiscal year, 89 employees 

completed Audit Command Language (ACL) 

blended classes, and nearly 1,300 employees 

completed ACL online courses. With these 

skills, DFAS teams developed 120 general 

ledger reconciliations in ACL and supported 

another 49 in Advanced Analytics (Advana). 

This resulted in recognition by the American 

Society of Military Comptrollers (ASMC) with 

their meritorious award. The outcome provides an automated, repeatable, and sustainable end-to-end reconciliation process to 

ensure Military Services and Other Defense 

Organization customers are audit-ready. The 

implementation of new data analytic tools 

utilizing ACL in FY 2018 resulted in an estimated $415,000 savings across 48 projects. 

During FY 2019 an additional 90 projects 

were completed with estimated savings of 

$567,000. There are sixteen active projects, 

seven of which have a primary goal identified 

as reduction in cycle time and the remaining 

with a projected savings of $596,000. DFAS 

has integrated ACL into regular work practices, 

and the tool has been installed on over 2,200 

employee desktops. We also developed an 

online collaboration page where employees 

can find and share useful information about 

the ACL analytic tool.

In addition, DFAS increased offerings for 

Java, Standard Query Language (SQL) and 

Extensible Markup Language (XML) training, resulting in completion by 238 targeted 

employees. This training maximizes new 

technology capabilities in the Defense Cash 

Accountability System (DCAS) and Deployable 

Disbursing System (DDS) related to cash management business environment modernization 

efforts. Those capabilities also transferred over 

to Defense Departmental Reporting System 

(DDRS). These training opportunities enhanced 

the competency of the targeted workforce as 

well as positions the agency for future tech-
16 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 16

SECTION I

nology and data analysis initiatives requiring 

these skills.

There were also 213 employees who 

attended COGNOS data analytics training. 

COGNOS Analytics is an enterprise business 

analytics platform for data discovery and 

reporting that automates the creation of 

reports and dashboards, providing the ability 

to analyze customer data. It is designed so 

that we can easily prepare, create and visualize 

content using built-in intelligence as a guide. 

Employees are also learning and gaining 

experience with the Agile Project Management Methodology, which is an approach 

that includes the client and product owner in 

each step of the process. This allows for constant collaboration between all stakeholders 

throughout the life of the project. To adjust 

to this new paradigm, DFAS has developed 

an Agile Transformation Team to administer a 

training program that includes: (1) Agile Boot 

Camp, (2) Infusion and Sustainment Metrics 

and (3) Outreach. Eight teams graduated from 

Agile Boot Camp and are now in sustainment. 

There are also currently eight teams active in 

the Agile Boot Camp. The outcome included 

a reduction in production times and re-work, 

when comparing pre-Agile to post-Agile data.

Enhancing the Workforce through Training

In FY 2019, DFAS targeted specific areas 

to enhance training to ensure employees are 

better equipped to accommodate our customers’ changing needs. To demonstrate our 

commitment to being a recognized leader in 

financial management, DFAS strives to be a 

front-runner in required training initiatives.

To ensure consistency across the DoD 

audit efforts, DFAS implemented agency-wide 

audit training programs with a 97% satisfaction rate, including two workshops with 276 

attendees and seven web trainings completed 

by 1,959 employees. These programs served 

as role model for audit training across DoD. 

DFAS also rolled out a new customer service awareness training program in FY 2019. It 

is an online, interactive course that tests skills 

in managing difficult situations, communicating effectively, and collaborating with others 

to best serve our customers. Participants gain 

practical tips and learn to access resources 

and tools for collaboration and world-class 

customer service, in order to maintain healthy 

professional relationships and interact effectively with customers. 

To exemplify dedication across the agency, 

DFAS employees are on track to complete 

218,000 hours of financial management and 

leadership training for the DoD FM Certification program by December 2019. DFAS 

leads the DoD with 99.6% completion of the 

required initial certifications and continuing 

education and training. 

Another focus area is the training for new 

supervisors. This training includes topics such 

as leadership, team dynamics, communications, conflict management, organizational 

change, employee development and security. This training is required by OPM within 

one year of appointment. DFAS exceeds this 

requirement with 100% completion of new 

supervisor training within 90 days. 

Breakthrough Successes

Some noteworthy examples of how DFAS 

values its most important asset, Human Capital, is by supporting employees and customers 

who were affected by the government shutdown and by encouraging employees to seek 

certifications.

DFAS Employees completed 90

Lean Six projects related to ACL with 

$567K in savings.

DFAS has achieved 99.6% completion 

rate of DoD required

FM certifications.
17 17

SECTION I

The United States Corps of Cadets assembled on the 

Plain, Aug. 17, 2019 for the Acceptance Day Parade to 

officially welcome the Class of 2023 into the Corps. (U.S. 

Army photo by Cadet Amanda Lin) 

DFAS issued retroactive pay to 99% of 

furloughed employees at multiple federal 

agencies within three days of the end of the 

government shutdown, and all employees 

within a week. In addition, the Agency quickly 

processed retroactive pay actions for nearly 

25,000 federal employees impacted by the 

Executive Order for the pay increase, based 

on pay tables released March 28, 2019. DFAS 

processed 24,545 more retroactive adjustments the next pay period and an additional 

6,353 manual retroactive adjustments over 

the next three pay periods. Manual retroactive 

adjustments were required due to intervening 

actions such as promotions and within grade 

increases.

The in house Lean 6 certification program combines training, coaching and process improvement projects. Employees earn 

a White, Green, or Black Belt certification 

depending on the complexity of the project.

DFAS employees completed 220 Lean6 

process improvement projects, achieving $6.17 

million in savings and reallocation of resources 

during FY 2019.

555 DFAS employees completed the 

Lean Six White Belt training.

“The relationship with DFAS has been amazing, they have really gone 

out of their way to ensure we are getting what we are requesting 

because they understand that we are trying to better our Soldiers’ 

training, and they have a passion for Soldiers’ pay.”

U.S. Army Reserve Sgt. 1st Class Karen Ardon

326th Financial Management Support Center FM training NCO

United States Army Financial Management Command
18 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 18

SECTION I

Data Analytics Overview (Photo illustration by Eileen Hernandez)

The DFAS Data Analytics initiative aligns technology skillsets of personnel to their job function to ensure people understand and can apply technology solutions to help DFAS maximize 

insight from its extensive information sources. This results in increased data integrity and 

allows for multifaceted analysis.

Data Analytics to Drive Business Insights

Enhanced Data Analytics

During FY19, DFAS continued to mature its data analytics capabilities from descriptive 

analytics (insight into past performance) to predictive analytics (forecasting what will happen in 

the future). By making this shift, DFAS improves its ability to provide real-time, forward-looking 

data relevant to decision making. One example of implementing predictive analytics is a dashboard that was created to forecast surges in overaged invoices in the Mechanization of Contract 

Administration Services (MOCAS), a contract payment system. This dashboard brings together 

and compares inventory, productivity and staffing data to predict invoice inventory a month in 

advance, enabling DFAS to realign resources appropriately. 

Another illustration of DFAS’ use of data to support management decisions is the General 

Fund Enterprise Business System (GFEBS) Unmatched Transactions (UMTs) Reduction Initiative. 

This initiative focuses on reducing the inflow and volume of UMTs that result from transactions 

that arrive in the accounting system with incomplete information. Using data analytics, DFAS 

identified systemic and business process changes required to reduce the inflow of UMTs. These 

changes improved the system’s ability to automatically process IPAC transactions and increased 

the interface rate from 61% to 91%. 

DFAS further embraced business intelligence in decision making by accelerating the Programming Phase of the President’s Budget Request for FY 2021 (PBR21) and linking program 
19 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 19

SECTION I

Tested 1,427 business 

processes which are

96% effective

requirements with final budget decisions 

and customer impacts. Focusing on the DoD 

Comptroller’s “CFO of the Future,” DFAS leveraged enhanced data analytics to build preliminary customer rates from the initial programming position, prior to the budget kickoff. 

These rates were developed four months 

ahead of schedule, which was the earliest this 

preliminary information has ever been provided. DFAS senior leadership used this data to 

better link how resourcing decisions impacted 

customers for informed budgeting decisions. 

These changes more accurately connect 

DFAS execution and budgetary reporting to 

the Office of Secretary of Defense (OSD) and 

Office of Management and Budget (OMB). 

Testing and validation of the new reporting 

data structure verifies the changes are 100% 

compliant with the new regulation and pass 

error checks which help to eliminate reporting inconsistencies and the need for manual 

adjustments.

Data Standardization

Data standardization focuses on adopting enterprise-wide standards for processing 

financial information and for financial reporting. In FY 2019, we continued our initiative to 

support data standardization with the Standard Financial Information Structure (SFIS). 

The SFIS initiative requires a data structure 

that supports budgeting, financial accounting, 

cost/performance, interoperability, and external reporting across the DoD, as mandated by 

the Under Secretary of Defense (Comptroller)/

Chief Financial Officer.

The OMB Digital Accountability and 

Transparency Act of 2014 (DATA Act) requires 

improvements to data integrity in financial 

reporting. With the implementation of SFIS, 

DFAS is making sweeping changes beyond 

what is required. In the DFAS accounting system (e-Biz), each Cost Element Code (CEC) is 

aligned to a specific Object Classification. As a 

result, there is added clarity, consistency and 

improved integrity in the information reported 

to the DoD leadership, Congress and 

taxpayers.

Understanding the multiple facets of this 

project, the Agency developed an internal 

database tool to track SFIS implementation 

status of DFAS-owned systems and the creation of data stream maps. These data stream 

maps monitor the status of implementations to determine if they are SFIS compliant, 

in-progress or not yet compliant. These maps 

have resulted in enhanced metrics and reporting, which has led to higher success rates. 

Analysis after implementation revealed that six 

Enterprise Resource Planning (ERP) database 

software packages had an overall 98% match 

rate to Defense Departmental Reporting 

System (DDRS), which reduced the amount of 

journal vouchers and eliminated manual crosswalks.

Data Governance

To build upon FY 2019 successes and 

increase momentum into the future, DFAS has 

begun developing a Data Analytics Center 

of Excellence (CoE) that will be staffed with 

crucial data analytics experts who will partner 

with, support and guide operational areas 

in the completion of data analytics projects. 

The CoE will leverage its expertise and partnership to increase data analytics knowledge 

throughout DFAS to enhance the data analytics culture, which will generate greater business insights for DFAS, our customers and the 

Department going forward.

SFIS initiative adds clarity, consistency 

and improved integrity to 

financial reporting.

DFAS piloted the use of

Robotics Process Automation in 2019.
20 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 20

SECTION I

Breakthrough Successes

Being a recognized leader in financial 

management not only entails delivering effi-

cient and exceptional financial information, it 

also means harnessing innovation while devel-

oping creative approaches to drive change.

As an example of innovation in FY 2019, 

DFAS piloted the use of Robotics Process 

Automation (RPA) technology to replace man-

ual, time-consuming tasks of pulling docu-

ments to support financial statement audits. 

The RPA technology successfully retrieved 

documents from a web-based electronic file 

room, allowing over 30 employees to focus 

on more analytical work. This efficiency sup-

ports the President’s Management Agenda 

by shifting manual workload to the execution 

of other vital tasks that allows DFAS to better 

meet the aggressive audit timelines mandated 

by Congress. As DFAS matures its Robotics 

Program, it will focus on automating more 

labor-intensive processes to better serve its 

DoD and non-DoD customers.

While standardizing data, the Agency 

looks for creative approaches to add value to 

the services we provide. As part of the Office 

of the Deputy Chief Management Officer 

(ODCMO) Financial Management Line of Busi-

ness Initiative, DFAS supported the Depart-

ment’s first end-to-end review of costing for 

financial management. The Agency demon-

strated that we could link all costs to the cat-

egories and activities in a costing model that 

we developed. This resulted in DFAS providing 

significant FM services to the Department at 

an 86% savings compared to the cost of com-

piling this data manually.
21 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 21

SECTION I

Second Lieutenants Tom Vasko and Phillip Haly, students at the Basic Officer Course, fire their M249 light machine gun during 

the Crew Served Weapons Live Fire Exercise, at Marine Corps Base Quantico, Virginia, Aug. 27, 2019. 

(U.S. Marine photo by 2nd Lt. Isaac Lamberth)

“I am so impressed by all of the data here, and I also appreciate your 

focus on the process and outcomes. A lot of organizations focus on 

output. You fully embrace industry standards and benchmarking.”

Lisa Hershman

Deputy Chief Management Officer

Department of Defense
22 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 22

SECTION I

MyPay pay management system received a tech refresh that made the platform simpler, streamlined and mobilefriendly. It provides access for more than five million active military, federal civilian, military retiree and annuitant 

customers to enjoy the upscale application’s expanded functionality.

(DoD photo illustration by Eileen Hernandez)

Systems Retirement and Implementation

In order to drive efficiencies and strengthen collaboration with our customers, DFAS is 

migrating from using the Waterfall Methodology, an approach where performance has to move 

across organizational boundaries, to the more collaborative Agile methodology. Within the 

Agile framework, larger efforts are broken down into smaller, more manageable tasks completed together in a much shorter time-frame. As an example, the Defense Corporate Database/

Defense Corporate Warehouse (DCD/DCW) integration of Agile Methodology into their software 

lifecycle development process has resulted in a 44% reduction in time from receipt of a system 

change to when it was implemented in the production environment. The implementation also 

yielded a 12% decrease of rework required from test defect reports during the testing of system 

changes. 

In order to optimize the operating environment, DFAS set a goal to eliminate 20 legacy 

systems in the FY 2017-2021 time-frame, with three legacy systems targeted for retirement in 

Emerging Technology

In FY 2019, DFAS continued to seek innovative methods to leverage technology as a way to 

streamline processes and provide added value to our customers. During the year, we reached 

our objectives to retire several outdated systems, and recognized the need to develop and 

implement new platforms. 
23 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 23

SECTION I

FY 2019. DFAS exceeded the FY 2019 goal by 

retiring four systems: International Civilian Pay 

System (ICPS), Suspense Aging Monitoring 

System (SAMS), Cash History On-line Operator 

Search Engine (CHOOSE), and Transportation Support System (TSS). Estimated annual 

savings from these retirements is $1.5 million. 

Over the past three years, DFAS retired a total 

of 12 systems, and is on track to meet its FY 

2021 outcome goal. 

One example of the ongoing commitment 

to leverage technology is the use of the Oracle 

SuperCluster (OSC) platform. The OSC platform standardizes performance for core applications and provides greater reliability and 

availability. In FY 2019, subject matter experts 

from Oracle, DFAS and Defense Information 

Systems Agency (DISA) engineered and completed a reconfiguration of the OSC platform. 

These updates allowed DFAS to optimize 

OSC’s ability to efficiently host multiple systems in separate environments and maintain 

required security and data boundaries. This 

platform was first obtained to host Defense 

Departmental Reporting System (DDRS) and 

immediately reduced report generation and 

month-end production times. We also successfully migrated DCD/DCW to the OSC 

platform after the reconfiguration was complete. Partial migration of Operational Data 

Store (ODS) and Wounded In Action (WIA) 

databases were completed, with full migration 

expected by February 2020. Transition to the 

OSC improves processing of interface files 

by at least 25%, application response time 

by 25% and report generation processing by 

over 50% for users. Once complete, estimated 

annual savings for all four hosted systems 

(DDRS, DCD/ DCW, ODS, WIA) will exceed $1 

million. 

Enhancing Customer Experience

DFAS is dedicated to delivering first-class 

service and products to our customers. To this 

end, the Agency consistently looks for ways to 

enhance the customer experience. In FY 2019, 

DFAS modernized its communication delivery 

methods.

For example, text message alerts were 

implemented to provide military and civilian 

travelers using the Integrated Automated 

Travel System (IATS) status updates throughout the process of their travel claim submission. The goal was to reduce the number of 

calls received in the customer care center by 

20% in relation to these statuses while also 

minimizing the number of duplicate submissions. Studies have shown that text messages 

have a much higher rate of penetration than 

email, because they can be accessed from any

where and are typically shorter and received in 

lower volume. For FY 2019, nearly 50,000 claim 

submissions for Military Permanent Change of 

Station opted to receive claim status updates 

via a text message on personal cellphones. 

Testing of the initial pilot boasted zero calls for 

status and zero duplicate submissions. Feedback has been overwhelmingly positive, with a 

98% satisfaction rate.

In another example, the MyPay pay management system was upgraded to make the 

platform simpler, streamlined and mobilefriendly. It provides access for more than five 

million active military, federal civilian, military 

retiree and annuitant customers. In addition 

to an overall modernization of the application’s design, the MyPay homepage features 

a graphic carousel to highlight important 

customer messages up front. Navigation 

Text message alerts increase 

customer satisfaction and decrease 

customer service call volume.

Smart device technology aids in 

the productivity of deaf and 

hard of hearing employees.
24 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 24

SECTION I

improvements allow users with multiple pay 

accounts – such as civilian, military retiree 

and military reserve pay – to move among 

accounts without returning to the main menu.

Breakthrough Successes

Over the past year, the Agency pursued its 

vision to be a recognized leader in financial 

management. Following are some examples of 

breakthrough successes that demonstrate the 

delivery of first-class service and products.

DFAS pinpointed a need for employees 

requiring auditory assistance. We planned, 

developed and rapidly executed procurement 

of smart device technology with high-quality 

videophone capabilities. Within two months 

of initialization of the project, the new auto-

mation was deployed to all 42 deaf and hard 

of hearing employees that utilize American 

Sign Language, plus the five interpreters who 

assist them. To support full inclusion, DFAS 

also obtained large monitors for two employ-

ees who are visually impaired and deaf. DFAS 

supports all equipment internally and with 

existing staff. Support includes three critical 

processes: connecting to a hot spot to receive 

critical technology upgrades, collecting the 

smart device from departing hear of hearing 

employees and issuance to new deaf employ-

ees at onboarding. This acquisition increased 

videophone call success for the employees 

from less than 40% to 100% at four sites. 

Participants applauded the achievement as 

ground-breaking and conducive to more pro-

ductive meetings.

Another noteworthy breakthrough was 

the successful migration of 1099 Professional 

(PRO) hosting from the DFAS server to DISA 

milCloud 2.0+; leveraging milCloud capabili-

ties enabled file upload speeds six times faster 

than before. The DFAS data center optimiza-

tion initiative decreased physical hosting by 

moving to virtual web and database hosting 

that consolidated data, enhanced web capabil-

ity and achieved scalable hosting.
25 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 25

SECTION I

Gunner’s Mate 3rd Class Nicolas Valenzuela instructs Fireman Elliott Anderson, from Wayland, Mich., as he fires an 

M240B machine gun during a live-fire gunnery exercise aboard the Ticonderoga-class guided-missile cruiser USS 

Chancellorsville (CG 62). (U.S. Navy photo by Mass Communication Specialist 1st Class Jeremy Graham)

“The Department of Defense must embrace a more agile approach to 

technology development to keep pace with rapidly 

evolving adversaries.”

Michael Griffin

Under Secretary of Defense for Research and Engineering

Department of Defense
26 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 26

SECTION I

DFAS WCF achieved its 20th consecutive unmodified audit opinion. (DoD photo illustration by 

Eileen Hernandez)

In light of the DoD-wide financial statement audit, audit readiness has been at the forefront 

of DFAS’ strategic planning initiatives for a number of years. In FY 2019, we made great strides 

in support of the DoD and customer audits while simultaneously achieving continued success 

with the DFAS WCF audit. These achievements better position DFAS to help reach the goals of 

the Department both internally and externally.

Global Audit Environment

Fostering Global Success

In its service provider role, DFAS delivers finance and accounting services to the Army, Navy, 

Air Force, Marine Corps and Other Defense Organizations (ODO), and maintains the financial 

statements for 65 individual components as well as the consolidated DoD financial statements. 

As such, the Agency plays an integral role in supporting the financial statement audits of these 

customers. This role includes preparing process maps, conducting walk-throughs, documenting 

internal controls, providing supporting documentation, creating and performing reconciliations, 

conducting internal audit testing, implementing customer Corrective Action Plans (CAPs) and 

addressing Notice of Findings and Recommendations (NFRs). 

DFAS leads the Department in the highest volume of validated CAPs, with over 49% of DFAS 

CAPs successfully validated. A CAP is validated when an independent auditor verifies that the 

CAP successfully resolves all or part of an NFR. These validated CAPs resulted in DFAS successfully supporting the Secretary of Defense’s goal of 10% FY 2018 NFR closure for the Department.
27 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 27

SECTION I

DFAS champions eight Statements on 

Standards for Attestation Engagements 

(SSAE)18(s) which are formal examinations 

of our controls as a service provider. These 

engagements allow an Independent Public Accounting (IPA) firm to assert that DFAS 

internal controls are designed and operating 

effectively. The main outputs of an SSAE18 are 

the System and Organization Controls (SOC1) 

Reports, which are designed by the American Institute of Certified Public Accountants 

(AICPA) and provide valuable information to 

customers about processes they have outsourced to DFAS. The reports also allow IPAs 

and customers to gain trust and confidence 

in the services we perform and the controls 

related to those services. The assertions are 

performed on common DFAS processes that 

support three or more customers. DFAS successfully sustained unmodified audit opinions 

for Civilian Pay, Disbursing, Military Pay and 

Contract Pay SSAE18s and received its first 

unmodified opinion for Electronic Local Area 

Network (eLAN) Hosting Services. The remaining processes related to Financial Reporting, 

Vendor Pay, and Defense Cash Accountability 

System (DCAS) sustained modified opinions. 

DFAS continues to expand the scope to pursue 

improvements to its service provider audits. 

In addition to examining its own processes, 

DFAS supports multiple audit efforts associated with the DoD wide consolidated financial 

statements. The Agency completed over 100 

multi-day auditor walkthroughs and fulfilled 

over 13,000 auditor requests (supplying over 

20,000 documents in a timely manner). This 

support contributed to many successes, such 

as unmodified opinions, and improved others’ 

positions toward achieving audit goals.

Sustained Success

In addition to supporting the DoD and 

guiding our customers toward their audit 

goals, DFAS adapted to the ever-changing 

external requirements of new systems, regulations, and guidelines to achieve its own 20th 

consecutive unmodified opinion. As part of 

the DFAS WCF audit, 242 Provided by Client 

(PBC) listings were tested. This testing resulted 

in the request for documentation to support 

768 samples and hundreds of non-sample 

inquiries, totaling nearly 3,000 documents 

submissions. Openness to process improvement, constructive dialogue and top-down 

support from senior management, contributed 

to a successful 20th opinion.

Programs such as Audit Ready Every 

Day (ARED) enables the Agency to maintain 

its unmodified opinion. ARED focuses on 

past NFRs as well as other opportunities for 

improvement that surface during the audit 

cycle. A dedicated project team works in conjunction with various organizational points of 

contact within DFAS to ensure key milestones 

are met and progress is made. This approach 

equips DFAS with the insight to mitigate 

known findings and act proactively to avoid 

future findings.

This fiscal year, DFAS also had a stronger 

focus on Process Improvement Opportunities (PIOs). PIOs are identified by the auditors 

during testing to alert the Agency of smaller 

issues that could become problems in the 

future if preventative action is not taken. PIOs 

are not exceptions or NFRs; they simply serve 

a way for DFAS to proactively address potential items of concern if not mitigated. PIOs are 

handled similarly to formal findings in that an 

identified project lead ensures action is taken 

As a service provider, DFAS fulfilled 

over 13,000 auditor requests,

supplying over 20,000 documents.

DFAS WCF achieved its

20th consecutive

unmodified audit opinion.
28 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 28

SECTION I

and progress is made on the documented 

concerns. 

One example of a PIO for which corrective action was taken was the employee exit 

process. Formerly, when an employee left the 

Agency, it was primarily up to the employee’s 

supervisor to ensure computer equipment was 

returned in a timely manner. To address this 

PIO, the Agency developed a standardized 

Personnel Departure Workflow in which the 

supervisor inputs exiting employee information. Accountable Property Officers responsible for equipment receive daily reports from 

the workflow and input the data into a tracking system to trigger asset pick-up. The new 

process also includes the creation of a database that tracks the status of the equipment 

from employee departure through pick-up, 

providing management visibility of outstanding asset retrievals. For outstanding equipment close to the 30 day benchmark, management is notified until action is taken. In 

addition to improving property accountability, 

enhancements to the employee exit process 

also provided the Agency with a 26% improvement in timely access removals for DFAS separations. Since implementation, nearly 90% of 

the system accesses for individuals who have 

departed the Agency were removed or mitigated within a timely manner. This improved 

capability is expected to increase as the process continues to mature.

The Agency also places an emphasis 

on the auditor-client relationship to ensure 

constant communication and mutual efforts 

to achieve audit goals. This emphasis includes 

daily audit update calls during each phase 

of the audit (internal control testing, interim 

testing and year end testing). These meetings 

allow the auditor and applicable DFAS personnel to collaborate and discuss any questions 

or issues that surface during testing. Similarly, weekly meetings are held between the 

auditors and DFAS executives to give status 

updates and raise any concerns. This dialogue 

can often help reduce the likelihood of an 

NFR being issued by ensuring the audit team 

receives sufficient support from management 

and allows the IPA an opportunity to elevate 

concerns that could be addressed by 

leadership.

Another way that DFAS maintains a solid 

relationship with the auditors is through an 

established audit support team, available 

year-round to act as liaisons and support the 

audit’s progress. The audit support team’s 

sole focus is making sure the auditors and 

DFAS personnel are working in tandem, that 

milestones are met and that both parties 

receive what they need to complete their mission. These dedicated personnel participate 

in the walk-throughs, understand what documentation the auditors need and work directly 

with the organizations across DFAS to ensure 

the IPA has the right level of supporting documentation. This interaction increases efficiencies and enhances outcomes by providing 

the right information within the established 

timeframe.
29 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 29

SECTION I

380th Expeditionary Security Forces Squadron Airmen take cover and fire from behind a barrier during a simunition proficiency firing course held on Al Dhafra Air Base, United Arab Emirates, Sept. 29, 2019. Al Dhafra hosted the first course of this 

kind in the U.S. Air Forces Central Command area of responsibility to align with the line of effort to increase lethality, as well 

as allowing Defenders to maintain proficiency with their weapon.

(U.S. Air Force photo by Tech. Sgt. Jocelyn A. Ford)

“I appreciate all the heavy lifting that was done this past year in 

producing a clean/unmodified Audit Opinion for the Military Retirement Trust Fund. As you’re aware, it was just one out of a handful of 

audits that received an unmodified opinion, and I believe it’s the largest audit within DoD in terms of dollars - $813B. In fact, this is the 24th 

consecutive year of having an unmodified audit opinion for the MRF. I 

think this speaks well of those professionals you have who are 

maintaining the high standards.”

U.S. Army Col. Bradford O. Whitney

Office of the Under Secretary of Defense
30 30

Management Assurances
31 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 31

SECTION I
32 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 32

SECTION I

Note: The assurances stated on pages 35-36 are to be read in conjunction with this memorandum.

Note: The material weakness referenced above for Financial Reporting, included DFAS WCF within its 

population but the resulting failures were related to DFAS in the service provider capacity to the Services 

and Defense Agencies. DFAS WCF has mitigating controls for the weaknesses identified.
33 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 33

SECTION I

This page intentionally left blank
34 34

Compliance and Regulations
35 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 35

SECTION I

DFAS management is responsible for 

compliance with existing laws and regulations related to financial reporting. DFAS did 

not identify any instances of non-compliance 

during FY 2019. The following describes specific compliance assertions and efforts taken 

by DFAS management to maintain compliance applicable to DFAS Financial Reporting.

Federal Financial Management 

Improvement Act of 1996

DFAS conducted an internal review of the 

effectiveness of the internal controls over the 

integrated financial management systems. 

Based on the results of this assessment, as of 

June 30, 2019, the internal controls over the 

integrated financial management systems 

utilized in the compilation of the DFAS financial statements, were in compliance with OMB 

Circular A-123, Appendix D, Compliance With 

the Federal Financial Management Improvement Act of 1996.

Digital Accountability and 

Transparency Act

The Digital Accountability and Transparency 

Act of 2014 (codified, as amended, at 31 U.S.C. 

6101 note) establishes a government-wide 

standard for financial data and disclosure to 

USASPENDING.gov. This enables taxpayers 

and policy makers to track federal spending 

more effectively.

DFAS is compliant and completed implementation in second quarter FY 2017, prior to the 

DoD required due date of May 2018. DFAS has 

implemented adequate internal controls to 

mitigate the risk of non-compliance by requiring change request approvals from all entities 

exposed.

Antideficiency Act

Section 1341, Title 31, United States Code (31 

U.S.C. 1341 [1990]) limits DFAS and its agents 

to making or authorizing only expenditures or 

obligations that do not exceed the available 

appropriations or funds. Additionally, DFAS 

and its agents may not contract or obligate 

for the payment of money before an appropriation is made available for that contract or 

obligation unless otherwise authorized by law.

As stated in 31 U.S.C. 1517 (2004), DFAS 

and its agents are prohibited from making 

or authorizing expenditures or obligations 

exceeding an apportionment or the amount 

permitted by prescribed regulations. According to 31 U.S.C. 1351 (2004), if an officer or 

employee of an executive agency violates 

the Antideficiency Act (ADA), the head of 

the agency must report immediately to the 

President and Congress all relevant facts and 

a statement of actions taken.

The DoD FMR, 7000.14-R, Volume 14, provides department policy for investigating and 

reporting ADA violations. During FY 2019, 

DFAS had no ADA violations to report.

Debt Collection 

Improvement Act of 1996

Public Law 104-134 Debt Collection Improvement Act of 1996 (Updated April 30, 1999) 

is legislation that provides an opportunity 

for the federal government to move toward 

its goal of increased electronic commerce 

and improved cash and debt collection management. The Act enhances debt collection 

government-wide and mandates the use of 

electronic funds transfer for federal payments, 

allows Federal Reserve Bank Treasury Check 

Offset, and provides funding for the Check 

Forgery Insurance Fund.

Compliance and Regulations
36 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 36

SECTION I

The law provides that any nontax debt or 

claim owed to the United States that has been 

delinquent for a period of 120 days shall be 

turned over to the Secretary of the Treasury for 

appropriate action to collect or terminate 

collection actions on the debt or claim. Debt 

that is in litigation or foreclosure with a collection agency or a designated federal debt 

collection center, or that will be disposed of 

under an asset sales program, is exempt from 

transfer to the Secretary of the Treasury.

DFAS implemented debt management controls 

to meet the requirements of the DCIA, OMB 

Circular No. A-129, Policies For Federal Credit 

Programs and Non-Taxable Receivables and 

other laws as applicable, including:

 Treasury Offset Program Referral of debts 

more than 120 days delinquent;

 Write-offs of delinquent debt older than 

two years;

 1099-C Reporting when closing out debts; 

and

 Credit Bureau Reporting of delinquent 

non-tax, out-of-service debts.

Government Charge Card Abuse 

Prevention Act

The Government Charge Card Abuse Prevention Act (Public Law 112-194) requires all 

federal agencies to establish safeguards and 

internal controls for government charge card 

programs and establish penalties for violations. DFAS is in compliance with the current 

requirements of PL 112-194 for both the 

Government Purchase Card and Government 

Travel Charge Card Programs.

Prompt Payment Act

The Prompt Payment Act (codified as amended 

in 31 U.S.C. 3901-3907) ensures federal agencies pay vendors in a timely manner. Prompt 

Payment ((5 Code of Federal Regulation [CFR] 

1315), formerly OMB Circular A-125, Prompt 

Payment) requires DFAS to pay commercial 

obligations within certain periods and to pay 

interest penalties when payments are late. 

In compliance with the Statute, DFAS paid 

$50,000 of Prompt Payment Interest penalties 

during FY 2019.

Improper Payments Elimination 

and Recovery 

Improvement Act of 2012

The Improper Payments Elimination and 

Recovery Improvement Act of 2012 (31 U.S.C 

3321 note) requires federal agencies to review 

spending to identify, prevent, and report 

improper payments to reduce error, waste, 

fraud, and abuse within federal spending. This 

requirement is done not by DFAS WCF but by 

DFAS the service provider. DFAS, the service 

provider, handles reporting DoD-wide for all 

components to include DFAS WCF.

Fraud Reduction and Data 

Analytics Act of 2015

DFAS implemented the required financial 

and administrative controls for the fraud risk 

principle in the Standards for Internal Control 

in the Federal Government (also known as the 

“GAO Green Book”) and OMB Circular A-123. 

DFAS implementation included: leading practices for managing fraud risk; identifying risks 

and vulnerabilities to fraud, including with 

respect to payroll, beneficiary payments, large 

contracts, and purchase and travel cards; and 

establishing strategies, procedures, and other 

steps to curb fraud.

Audit Disclosures

During FY 2019, auditor-identified findings 

were classified as control deficiencies and did 

not have a material impact to the DFAS WCF 

financial statements.
37 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 37

SECTION I

This page intentionally left blank
38 38

Financial Discussion and Analysis
39 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 39

SECTION I

Fiscal Years Ended September 30 2019 2018

Net Cost of Operations $ 111,342,366 $ 89,435,607

Net Position $ 317,722,426 $ 342,067,490

DFAS continues to provide financial and accounting services at the lowest cost possible. The 

Agency plans its revenue and expenses based primarily on the estimated amount of services 

our customers will require in the future. In order to assist the DoD in its budgeting process, the 

Agency’s budgeted rates are established two fiscal years in advance. Due to forecasting future 

budgeted rates, fluctuations in customer demand for services have a direct and significant 

effect on DFAS’ financial performance as a result of utilizing a predominantly labor-based 

expense structure. 

Significant Events

Last year, DFAS implemented Standard Financial Information Structure (SFIS) compliance 

requirements into their general ledger reporting system as mandated by the Department 

of Defense (DoD). This directive improves 

interoperability between accounting systems 

and the Defense Departmental Reporting 

System (DDRS). Another accomplishment in FY 

2019 was the successful upgrade of the DDRS 

interface, utilizing Global Exchange (GEX). 

This fulfilled all requirements set forth by 

the Standard Financial Information Structure 

(SFIS) Version 10.0 Maintenance Release (MR) 

schema. The interface drastically improves the 

transparency, accuracy, and completeness of 

financial data submitted to the reporting system. The new SFIS 10.0 MR structure has also 

increased reporting efficiencies by removing 

the need to maintain complex, systemic crosswalks which previously caused process delays. 

DFAS expects these efficiencies to increase in 

FY 2020 once trading partner data is electronically passed through the interface, therefore 

eliminating manual tasks and reducing process 

time by several days.

Financial Statement Analysis

DFAS WCF continues a thorough, monthly 

review process and robust execution reporting to senior leadership in order to outline the 

status of its financial position and available 

budgetary resources. Consequently, DFAS 

leadership is armed with proprietary and budgetary information to make informed business 

decisions throughout the year in order to 

manage the DFAS WCF unobligated balance. 

The Office of Under Secretary of Defense 

(Comptroller) OUSD(C) and the Office of Management and Budget are updated quarterly 

during budget execution reviews. As a result, 

DFAS stakeholders are provided timely information regarding the current and anticipated 

DFAS status of budgetary resources in order 

to evaluate the performance of the 

organization.

The performance of the Agency can be measured by the Net Cost of Operations which is the 

difference between expenses and revenue for the year. The Net Position measures the Agency’s 

budgetary health since inception. 
40 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 40

SECTION I

As of September 30 2019 2018 Change % Change

Assets $ 511,981,800 $ 530,002,900 $ (18,021,100) (3.4%)

Liabilities 194,209,374 187,935,410 6,273,964 3.3%

Net Position $ 317,772,426 $ 342,067,490 $ (24,295,064) (7.1%)

The Balance Sheet reflects DFAS’ financial position as of September 30, 2019, and details 

amounts available to provide future economic benefits (assets) owned or available for use by 

DFAS, compared to the amounts owed (liabilities) requiring the use of available assets, and the 

difference between them (net position). The table below summarizes the fluctuations in the Balance Sheets from FY 2018 to FY 2019.

Balance Sheet
41 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 41

SECTION I

Total WCF Assets of $512.0 million on 

September 30, 2019 consisted primarily of 

$300.6 million in FBwT, and $187.5 million in 

General Property, Plant and Equipment (PP&E).

FBwT increased by $10.9 million (3.8%) due to 

timely receipt of collections from customers 

this year. General PP&E, net, decreased 

by $15.0 million (7.42%). This is primarily 

attributable to new acquisitions slightly 

decreasing when compared to last year; 

simultaneously, accumulated depreciation/

amortization increased when comparing FY 

2019 to FY 2018.

Total Liabilities of $194.2 million as of September 30, 2019, consisted primarily of $118.5 

million in Other Liabilities, Accounts Payable 

of $46.1 million, Other Federal Employment 

Benefits of $29.4 million, and $260 thousand 

for Environmental Liabilities. Other Liabilities 

consists of $96.6 million for the accrual of 

funded payroll, benefits, and annual leave. The 

remaining portion is due to a $11.7 million liability for Employer Payroll Taxes Payable, $6.7 

million FECA reimbursement to Department 

of Labor and $3.5 million for the amount of 

unfunded leave.

Composition of Assets

Composition of Liabilities

1.4%

Other Assets

23.7%

Accounts Payable

36.6%

General Property

Plant & Equipment

61.0%

Other Liabilities

3.3%

Accounts

Receivable

0.1%

Environmental

Liabilities

58.7%

Fund Balance

with Treasury

15.1%

Other Federal

Employee Benefits
42 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 42

SECTION I

During FY 2019, DFAS’ average benefit enrollment was higher than FY 2018 leading to a 

$44.2 million higher payroll and employee 

benefits expense. Another driver of the cost 

increase is due to the cost factor for Federal Employee Health Benefits (FEHB) which 

The Statement of Net Cost presents the annual cost of operations for DFAS. The net cost of 

DFAS’ operations equals the program’s gross cost less revenue earned from external sources for 

services provided to the Military Services and other Defense Agencies. The table below illustrates the changes in costs and revenues.

Fiscal Years Ended 

September 30 2019 2018 Change % Change

Gross Costs $ 1,531,646,260 $ 1,483,173,131 $ 48,473,129 3.3%

Less Earned Revenue (1,420,303,894) (1,393,737,524) 26,566,370 1.9%

Net Cost of Operations 

(Note 11) $ 111,342,366 $ 89,435,607 $ (21,906,759) 24.5%

Statement of Net Cost

increased from $7,151 in FY 2018 to $7,268 in 

FY 2019, and the Federal Employees Retirement System (FERS) service cost increasing 

from 16.2% to 16.9% in FY 2019. This equates 

to an imputed cost increase of $6.7 million in 

FY 2019.
43 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 43

SECTION I

Fiscal Years Ended September 30

2019 2018 Change % Change

Beginning Balances $ 342,067,490 $ 351,142,747 $ (9,075,257) (2.6%)

Total Financing Sources 87,047,302 80,360,350 6,686,952 8.3%

Less Net Cost of Operations 111,342,366 89,435,607 21,906,759 (24.5%)

Cumulative Results of Operations $ 317,772,426 $ 342,067,490 $ (24,295,064) (7.1%)

The Statement of Changes in Net Position presents the cumulative results of operations since 

inception. The statement focuses on how the net cost of operations is financed as well as, other 

items financing the Agency’s operations. The resulting financial position represents the difference between assets and liabilities as shown on the Balance Sheets. Various financing sources 

can increase the net position, including transfers of cash, property and imputed financing costs 

absorbed by other Federal agencies on DFAS’ behalf. Ending Cumulative Results of Operations decreased by $24.3 million (7.1%) primarily due to an increase in employee staffing and 

employee benefit costs. DFAS also executed an additional 270 work years in FY 2019 than it did 

in FY 2018.

Statement of Changes in Net Position
44 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 44

SECTION I

Fiscal Years Ended 

September 30 2019 2018

Increase

(Decrease) % Change

Gross Outlays $ 1,428,008,216 $ 1,386,180,623 $ 41,827,593 3.0%

Less Actual Offsetting 

Collections (1,438,873,891) ($1,378,849,137) 60,024,754 4.4%

Net Outlays $ (10,865,675) $ $7,331,486 $ (18,197,161) (248.2%)

Gross outlays increased by $41.8 million (3.0%) 

due to higher Agency average employee 

benefit enrollment causing payroll and benefit 

expenses to increase in FY 2019.

Offsetting collections increased by $60.0 

million (4.4%) primarily due to increased 

efforts this year in collecting outstanding 

receivable balances from customers.

The WCF Statement of Budgetary Resources presents the total budgetary resources available 

to DFAS for use in FY 2019, their status at the end of the year, and the relationship between 

the budgetary resources and the outlays made against them. It is the only financial statement 

exclusively derived from the budgetary general ledger in accordance with budgetary accounting 

rules. As part of the Defense wide WCF, DFAS’ budgetary resources are generated by collecting 

funds from customers in exchange for providing accounting and financial services. 

Statement of Budgetary Resources
45 MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 45

SECTION I

Gross Costs by Category 2019 2018 Change % Change

Payroll Expense $ 812,352,089 $ 777,534,915 $ 34,817,174 4.5%

Employee Benefits Expense 279,931,765 270,501,094 9,430,671 3.5%

Contractor Services 209,957,248 260,336,274 (50,379,026) (19.4%)

Imputed Costs Funded by DoL 87,047,302 80,360,350 6,686,952 8.3%

Lease & Office Expenses 45,026,219 48,752,442 (3,726,223) (7.6%)

Depreciation & Amortization 18,695,769 19,334,712 (638,943) (3.3%)

Non-Recoverable Depreciation/

Amortization 13,230,445 13,329,720 (99,275) (0.7%)

Travel Expense 6,650,646 7,480,640 (829,994) (11.1%)

Equipment Expense 56,583,257 3,619,977 52,963,280 1463.1%

Miscellaneous Supplies and 

Materials 2,229,473 1,634,666 594,807 36.4%

PPA Interest Expense 50,000 52,122 (2,122) (4.1%)

Other Expenses (107,955) 236,219 (344,174) (145.7%)

Total $ 1,531,646,258 $ 1,483,173,131 48,473,127 3.3%

Equipment expense increased by $52.9 million 

primarily due to reclassification of expense 

accounts to be in compliance with the Digital 

Accountability and Transparency Act (DATA) 

Act reporting requirements. The realignment 

of expense categories transferred balances 

from Contractor Services (object classification 

25.1) to Equipment Expense (object classification 31.0) for FY 2019 reporting.

Financial Statement Preface

Based upon timely information and a proactive approach, DFAS produces accurate and 

timely financial statements. These statements 

have been prepared to report the overall 

financial position and results of operations 

of the Agency pursuant to the requirements 

of Title 31, United States Code, Section 3515 

(b), to include: Balance Sheets, Statements of 

Budgetary Resources, Statements of Net Cost, 

Statements of Changes in Net Position. The 

financial statements and notes are prepared in 

accordance with federal accounting standards 

using generally accepted accounting principles 

and audited by the independent accounting 

firm of Williams, Adley & Company-DC, LLP.
SECTION II

Financials

Message from the Chief Financial Officer

Independent Auditor’s Report 

on the Financial Statements

Management’s Response to the 

Independent Auditor’s Report

Comparative Financial Statements

Notes to the Financial Statements

TOPICS COVERED

48 48

Chief Financial Officer’s Message
49 CHIEF FINANCIAL OFFICER’S MESSAGE 49

SECTION II

ROSIE TINSLEY

Chief Financial Officer

I am proud to share the enclosed Fiscal Year 

(FY) 2019 Annual Financial Report (AFR) 

and the results that led to the Agency’s 

20th favorable unmodified audit opinion 

for the Defense Finance and Accounting 

Service (DFAS) Working Capital Fund (WCF), 

in accordance with United States Generally 

Accepted Accounting Principles. The Agency’s key drivers to consistent audit success 

remain solid controls and documentation, 

along with continuous internal control 

testing. 

Through a consistent focus on Department 

priorities, customer requirements, and 

sound processes and controls, and with a 

proven strategy where the priorities remain 

people, audit, systems, and agency performance, DFAS demonstrated sound financial 

management practices that delivered key 

audit results for FY 2019. The Agency completed full implementation of the Standard Financial Information Structure (SFIS) interface between the Agency’s accounting system and the Department’s financial reporting system, streamlining manual crosswalks, standardizing data to create enhanced 

transparency, and increasing data integrity. Despite complex conversion requirements 

and preparation, the DFAS team used a methodical approach to implement this interface and installed strong risk management tactics to ensure a successful and accurate 

transition. The SFIS implementation is just one example of the Agency’s commitment 

to Department priorities and reliable financial management.

In support of the National Defense Strategy and Department of Defense (DoD) Reform 

efforts, DFAS continues to identify and implement efficiencies to offset financial 

requirements associated with new and expanded mission needs. Customer partnerships and engagement, along with data transparency, are key to attaining desired 

business results, meeting reform objectives, and achieving fiscal excellence. 

The FY 2020 financial position results from informed projections, robust monitoring 

capabilities and processes, strong internal controls, and effective and decisive leadership. DFAS will continue to leverage customer relationships, accurate rate building, and data analytics to ensure sufficient resources are available to meet customer 

requirements. A as recognized leader in financial management, DFAS remains committed to thoughtful stewardship of the Department’s resources, and agile in approach to 

respond to opportunities and constraints as they arise.
50 50

Independent Auditor’s Report on the Financial Statements
INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS 51 51

SECTION II
52 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 52

SECTION II
INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS 53 53

SECTION II
54 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 54

SECTION II
INDEPENDENT AUDITOR’S REPORT ON THE FINANCIAL STATEMENTS 55 55

SECTION II
56 56

Management’s Response to the Independent Auditor’s Report
MANAGEMENT’S RESPONSE TO THE INDEPENDENT AUDITOR’S REPORT 57 57

SECTION II
58 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 58

SECTION II
MANAGEMENT’S RESPONSE TO THE INDEPENDENT AUDITOR’S REPORT 59 59

SECTION II

This page intentionally left blank
60 60

Comparative Financial Statements
61 COMPARATIVE FINANCIAL STATEMENTS 61

SECTION II

As of September 30 2019 2018

Assets

Intragovernmental

Fund Balance with Treasury (Note 2) $ 300,589,369 $ 289,723,694

Accounts Receivable, Net (Note 3) 15,623,300 30,577,535

Other Assets (Note 5) 1,642,024 1,078,091

Total Intragovernmental Assets $ 317,854,693 $ 321,379,320

Accounts Receivable, Net (Note 3) $ 1,234,917 $ 1,142,725

General Property, Plant and Equipment, Net (Note 4) 187,538,255 202,531,315

Other Assets (Note 5) 5,353,935 4,949,540

Total Assets $ 511,981,800 $ 530,002,900

Liabilities (Note 6)

Intragovernmental

Accounts Payable $ 23,045,899 $ 26,156,973

Other Liabilities (Notes 9 & 11) 16,969,157 14,133,006

Total Intragovernmental Liabilities $ 40,015,056 $ 40,289,979

Accounts Payable $ 23,038,154 $ 18,254,852

Other Federal Employment Benefits (Note 7) 29,411,878 32,199,186

Environmental and Disposal Liabilities (Note 8) 260,000 260,000

Other Liabilities (Notes 9 & 11) 101,484,286 96,931,393

Total Liabilities $ 194,209,374 $ 187,935,410

Net Position

Cumulative Results of Operations $ 317,772,426 $ 342,067,490

Total Net Position $ 317,772,426 $ 342,067,490

Total Liabilities and Net Position $ 511,981,800 $ 530,002,900

The accompanying notes are an integral part of these financial statements.

Balance Sheets
62 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 62

SECTION II

Fiscal Years Ended September 30 2019 2018

Program Costs

Gross Costs $ 1,531,646,260 $ 1,483,173,131

Less Earned Revenue (1,420,303,894) (1,393,737,524)

Net Cost of Operations (Note 12) $ 111,342,366 $ 89,435,607

The accompanying notes are an integral part of these financial statements.

Statements of Net Cost
63 COMPARATIVE FINANCIAL STATEMENTS 63

SECTION II

Fiscal Years Ended September 30 2019 2018

Cumulative Results of Operations

Beginning Balances $ 342,067,490 $ 351,142,747

Other Financing Sources:

Imputed Financing Sources 87,047,302 80,360,350

Total Financing Sources $ 87,047,302 $ 80,360,350

Net Cost of Operations (Note 12) $ 111,342,366 $ 89,435,607

Net Change $ (24,295,064) $ (9,075,257)

Total Net Position $ 317,772,426 $ 342,067,490

The accompanying notes are an integral part of these financial statements.

Statements of Changes in the Net Position
64 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 64

SECTION II

Fiscal Years Ended September 30 2019 2018

Budgetary Resources

Net Unobligated Balance from Prior Year Budget Authority $ 253,962,476 $ 293,756,510

Contract Authority 10,129,269 20,243,603

Spending Authority from Offsetting Collections 1,400,427,752 1,351,981,523

Total Budgetary Resources (Note 13) $ 1,664,519,497 $ 1,665,981,636

Status of Budgetary Resources

New obligations and upward adjustments (total)

Unobligated balance, end of year

$ 1,434,806,619 $ 1,415,411,553

Apportioned, unexpired accounts 229,712,878 250,570,083

Total Budgetary Resources (Note 13) $ 1,664,519,497 $ 1,665,981,636

Net Agency Outlays $ (10,865,675) $ 7,331,486

The accompanying notes are an integral part of these financial statements.

Statements of Budgetary Resources
65 COMPARATIVE FINANCIAL STATEMENTS 65

SECTION II

This page intentionally left blank
66 66

Notes to the Financial Statements
67 NOTES TO THE FINANCIAL STATEMENTS 67

SECTION II

1.A. Mission of the Reporting Entity

The Defense Finance and Accounting Service 

(DFAS), a component of the Department of 

Defense (DoD), was established in 1991 by 

the Secretary of Defense to reduce the cost of 

DoD financial and accounting operations, and 

to reform financial management throughout 

DoD. The mission of DFAS is to lead our customers in finance and accounting by ensuring 

the delivery of efficient, exceptional quality 

pay and financial information.

Operating as a Working Capital Fund (WCF), 

DFAS functions similarly to a private corporation by obtaining revenue through charging 

customers fixed prices for its services. DFAS 

sets its rates annually, two years in advance, 

based on anticipated workload and estimated 

costs calculated to offset any prior year gains 

or losses. Unlike the private sector, DFAS has 

little flexibility to adjust prices in the year of 

execution unless coordinated with the Office 

of the Under Secretary of Defense (Comptroller) (OUSD(C)). DFAS operations are subject to 

DoD, Executive Branch, and Legislative Branch 

oversight. DFAS programs and initiatives are 

guided by the Under Secretary of Defense 

Comptroller and DFAS’ Chief Financial Officer.

1.B. Basis of Presentation 

These financial statements have been prepared 

to report the financial position and results 

of operations of the DFAS WCF, as required 

by the Chief Financial Officers Act of 1990, 

expanded by the Government Management 

Reform Act of 1994, and other appropriate 

legislation. The financial statements have 

been prepared from the books and records 

of the DFAS WCF in accordance with, and to 

the extent possible, U.S. generally accepted 

accounting principles (U.S. GAAP) promulgated 

by the Federal Accounting Standards Advisory 

Board (FASAB); the Office of Management and 

Budget (OMB) Circular No. A-136, “Financial 

Reporting Requirements”; and the Department 

of Defense (DoD), Financial Management Regulation (FMR). 

FASAB is the official accounting standards-setting body of the Federal Government. The 

accompanying financial statements account 

for all resources for which the DFAS WCF is 

responsible unless otherwise noted.

In accordance with the Statements of Federal 

Financial Accounting Standards (SFFAS) 7 - 

Accounting for Revenue and Other Financing 

Sources: Detailed Information on the Statement of Financing, paragraphs 80-82, 95-101; 

Note 14 has been modified to present in 

appropriate detail the relationship between 

the net cost of operations, the accrual basis 

of financial accounting, and net outlays that 

occurred during the reporting period.

1.C. Use of Estimates

The preparation of financial statements 

requires management to make certain estimates and assumptions that affect the 

reported amount of assets and liabilities, 

at the date of the financial statements, and 

the amount of revenues and costs reported 

during the period. Actual results could differ 

materially from those estimates. Significant 

estimates and assumptions in these comparative financial statements require the exercise 

of judgment and are used for, but not limited 

to, allowance for doubtful accounts, environmental liabilities, pension and other post-retirement benefit expenses, and the Federal 

Employee Compensation Act (FECA) Liability.

1.D. Appropriations and Funds

The DFAS WCF does not receive appropriations or funds designated as general, trust, 

special or deposit. DFAS is financed as a 

working capital fund, obtaining revenue by 

charging its customers for the services it provides rather than being funded through direct 

appropriations. The DFAS WCF uses these 

funds to execute its missions and subsequently 

report on resource usage. 

Working capital funds receive funding to 

establish an initial corpus through an appropriation or a transfer of resources from existing 

Note 1: Summary of Significant Accounting Policies
68 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 68

SECTION II

appropriations or funds. The corpus finances 

operations and transactions that flow through 

the fund. Each WCF obtains the goods and 

services sold to customers on a reimbursable 

basis and maintains the corpus. Reimbursable 

receipts fund future operations and generally 

are available in their entirety for use without 

further congressional action. At various times, 

Congress provides additional appropriations 

to supplement the WCF as an infusion of cash 

when revenues are inadequate to cover costs 

within the corpus.

1.E. Basis of Accounting

DFAS presents the Balance Sheet, Statement 

of Net Cost, and Statement of Changes in Net 

Position on a consolidated basis less the Eliminations. The Statement of Budgetary Resources 

is presented on a combined basis. The financial transactions are recorded on a proprietary 

accrual and a budgetary basis of accounting. 

Under the accrual basis, revenues are recognized when earned and expenses are recognized when incurred, without regard to the 

timing of receipt or payment of cash. Whereas, 

under the budgetary basis the legal commitment or obligation of funds is recognized in 

advance of the proprietary accruals and compliance with legal requirements and controls 

over the use Federal funds.

1.F. Revenues and Other 

Financing Sources 

Revenue is recognized when earned and 

services have been rendered. Revenue is 

generated by sales of accounting and finance 

services to the DFAS customers through a 

reimbursable order process. The majority of 

services rendered by DFAS are provided to the 

Military Departments and other DoD agencies. 

The goal of a WCF organization is to breakeven 

over an extended period of time. In accordance 

with the DoD FMR, Volume 3, Chapter 19, the 

Accumulated Operating Results (AOR) and Net 

Operating Results (NOR) serve as the primary 

points of reference for determining the need 

to adjust billing rates. Working Capital Fund 

organizations adjust future billing rates to 

counter the effects the fluctuations have on 

the AOR. The positive and negative adjustments are normal business practices occurring 

when the net cost of operations is not zero. 

Because of the nature of a WCF, the unanticipated impacts on workload and cost fluctuations will result in profits or losses during any 

given year. Accumulated Operating Results are 

tracked from inception and requires constant 

routine monitoring to account for the fluctuating costs of conducting business. 

1.G. Recognition of Expenses

For financial reporting purposes, U.S. GAAP 

requires the recognition of operating expenses 

in the period incurred. 

1.H. Accounting for 

Intragovernmental Activities 

Intragovernmental costs and revenue represent transactions made between two reporting 

entities within the Federal government. Costs 

and revenues with the public represent transactions made between the reporting entity 

and a nonfederal entity. The classification of 

revenue or cost as “intragovernmental” or 

“public” transactions is defined in the DoD 

FMR Volume 4, Chapter 1.

The Treasury Financial Manual Part 2 – Chapter 

4700, “Agency Reporting Requirements for the 

Financial Report of the United States Government,” provides guidance for reporting and 

reconciling intragovernmental balances. DFAS 

is able to fully reconcile intragovernmental 

transactions with all federal agencies including 

Federal Employees’ Compensation Act transactions with the Department of Labor, and 

benefit program transactions with the Office 

of Personnel Management.

Intra-entity costs and revenue represent transactions DFAS conducted with itself in the normal course of business. All intra-entity transactions have been removed, so the financial 

statements and footnotes present fairly not 
69 NOTES TO THE FINANCIAL STATEMENTS 69

SECTION II

including transactions with interrelated parties. 

Imputed financing represents the cost paid on 

behalf of DFAS by another Federal entity. DFAS 

recognizes imputed costs for (1) employee 

pension, post-retirement health, and life 

insurance benefits; (2) post-employment benefits for terminated and inactive employees to 

include unemployment and workers compensation under the Federal Employees’ Compensation Act; (3) losses in litigation proceedings; 

and (4) military payroll for service members 

assigned to DFAS.

1.I. Funds with the Department of 

Treasury 

The DFAS WCF monetary financial resources of 

collections and disbursements are maintained 

in U.S. Treasury (Treasury) accounts. The disbursing offices of DFAS process the majority of 

the DFAS’ cash collections, disbursements, and 

adjustments worldwide. Each disbursing station prepares monthly reports to the Treasury 

on checks issued, electronic fund transfers, 

interagency transfers, and deposits.

In addition, DFAS submits reports to the Treasury by appropriation on interagency transfers, collections received, and disbursements 

issued. The Treasury records these transactions 

to the applicable FBwT account. 

The Treasury maintains and reports the 

Defense Working Capital Fund (DWCF) fund 

balances at the Treasury Index (TI) appropriation sub-numbered level. Defense Agencies, to 

include DFAS, are included at the TI 97 DWCF 

appropriation sub-numbered level, an aggregate level that does not provide identification 

of the separate Defense Agencies by Treasury. 

1.J. Accounts Receivable

Accounts receivable represents transactions 

occurring in the normal course of business by 

providing financial services to our customers. 

Accounts receivable from other federal entities or the public include accounts receivable, 

claims receivable, and refunds receivable. 

Claims receivable are transactions where DFAS 

has a right to cash (debt) from an outstanding 

customer account. Refunds receivable occur 

when DFAS receives a refund for a previous 

paid expense. 

On an annual basis, DFAS reviews all outstanding nonfederal customer accounts over 360 

days to estimate the allowance for uncollectible accounts. Allowances for uncollectible 

accounts due from the public are based upon 

factors such as: aging of accounts receivable, 

debtor’s ability to pay, and payment history. In 

addition, significant accounts receivable balances may be reviewed individually, regardless 

of age.

DFAS does not recognize an allowance for 

estimated uncollectible amounts from other 

federal agencies as receivables from other federal agencies are considered to be inherently 

collectible. Claims for accounts receivable from 

other federal agencies are resolved between 

the agencies in accordance with the Intragovernmental Business Rules published in the 

Treasury Financial Manual. 

1.K. General Property, Plant and 

Equipment (PP&E)

The WCF capitalizes all PP&E used in the 

performance of its mission. These assets are 

capitalized as General PP&E, whether or not 

they meet the definition of any other PP&E 

category. 

General PP&E is carried at historical acquisition cost plus capitalized improvements. 

General PP&E, including real property, are 

capitalized at cost if the acquisition is $250,000 

or more. The asset must also have a useful 

life of two or more years. All General PP&E is 

depreciated based on the historical cost using 

the straight-line method over the estimated 

useful lives of the assets, which range from 2 

to 40 years. Normal repairs and maintenance 

are charged to expense as incurred.

Title 10, United States Code (U.S.C.) 2682, prohibits DoD agencies from owning real property 

(i.e. buildings). Therefore, DoD has implemented the recognition criteria of Statement 
70 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 70

SECTION II

of Federal Financial Accounting Standards 

(SFFAS) No. 6, “Accounting for Property, Plant 

and Equipment,” to report the financial position of its member agencies. As implemented 

by DoD regulations, ownership of real property is not a prerequisite to asset recognition. 

DoD FMR Volume 4, Chapter 6, states that 

legal ownership usually, but not always, is the 

determinant factor when determining which 

DoD component recognizes a particular General PP&E asset for accounting and reporting 

purposes in the financial statements. Asset 

recognition may also be based on the “Preponderance of Use” principle. This concept 

recognizes the DoD agency gaining the 

most benefit by virtue of space usage should 

capitalize the asset as General PP&E on their 

Balance Sheet.

1.L. Leases

Lease payments for the rental of equipment 

and operating facilities are classified as 

operating leases. An operating lease does not 

substantially transfer all the benefits and risk 

of ownership. Payments for operating leases 

are expensed over the lease term as they 

become payable. Office space and leases 

entered into by DFAS are the largest component of operating leases and are based on 

costs gathered from existing leases, General Services Administration (GSA) bills, and 

interservice support agreements. Future year 

projections use the Consumer Price Index. 

1.M. Other Assets

Other assets include advances and prepayments permitted by law, legislative action, 

or presidential authorization as mandated 

by Title 31, U.S.C 3324. The Department of 

Defense has implemented the recognition 

criteria of SFFAS No. 1, “Accounting for 

Selected Assets and Liabilities,” to report 

advances and prepayments. As implemented 

by DoD FMR Volume 4, Chapter 5, payments 

made in advance of the receipt of goods 

and services should be reported as an asset. 

They are shown on the Balance Sheet as Other 

Assets. Components of advances and prepayments include travel and labor advances, 

tuition assistance, subscriptions, postage; as 

well as, approved contractual and intragovernmental prepay agreements. DFAS policy is to 

expense and/or properly classify assets when 

the related goods and services are received.

When advances are permitted by law, legislative action, or presidential authorization, DoD’s 

policy is to record advances or prepayments in 

accordance with U.S. GAAP. As such, payments 

made in advance of the receipt of goods and 

services are reported as an asset on the Balance Sheet. The DoD’s policy is to expense 

and/or properly classify assets when the 

related goods and services are received. 

1.N. Contingencies and Other 

Liabilities 

The SFFAS No. 5, “Accounting for Liabilities 

of the Federal Government”, as amended by 

SFFAS No. 12, “Recognition of Contingent 

Liabilities Arising from Litigation”, defines a 

contingency as an existing condition, situation, or set of circumstances that involves an 

uncertainty as to possible gain or loss. The 

uncertainty will be resolved when one or more 

future events occur or fail to occur. DFAS recognizes contingent liabilities when past events 

or exchange transactions occur, a future loss is 

probable, and the loss amount can be reasonably estimated.

Financial statement reporting is limited to 

disclosure when conditions for liability recognition do not exist, but there is at least a 

reasonable possibility of incurring a loss or 

additional losses. DFAS’ risk of loss and resultant contingent liabilities arise from various 

administrative proceedings, legal actions, and 

potential claims. 

1.O. Accrued Leave 

DFAS reports liabilities for accrued compensatory and annual leave for civilians. Civilian leave 
71 NOTES TO THE FINANCIAL STATEMENTS 71

SECTION II

is accrued as earned, and the accrued amounts 

are increased and decreased for actual leave 

taken and earned. The balances for accrued 

leave are adjusted monthly to reflect changes. 

The balances for civilian leave at the end of 

the fiscal year reflect current pay rates for the 

leave earned but not taken. Sick and other 

types of non-vested leave are expensed as 

taken. To the extent budget resources are not 

available to fund annual leave earned but not 

taken, funding will be obtained from future 

financing sources.

1.P. Net Position

Net Position consists of cumulative results of 

operations. Cumulative Results of Operations 

represent the net difference between expenses 

and losses and financing sources (including 

revenue and gains), since inception. Cumulative Results of Operations also include the 

transfer in and out of assets that were not 

reimbursed. 

1.Q. Undistributed Disbursements 

and Collections

Treasury Financial Manual (TFM) Volume I, Part 

2, Chapter 5100, requires agencies to reconcile 

their FBwT accounts on a regular and recurring basis to assure the integrity and accuracy 

of their financial reporting data. The DFAS 

WCF does not have a separate FBwT account. 

Instead, the Treasury maintains an account for 

DFAS’ collection and disbursement activities.

On a monthly basis, DFAS’ collections and 

disbursements are adjusted with undistributed 

collections and disbursements to agree with 

the Treasury. Undistributed collections and disbursements represent the difference between 

disbursements and collections matched at the 

transaction level to a specific obligation, payable, or receivable in the source system and 

those reported by the Treasury.

The current year collections, disbursements, 

and cash transfers applicable to DFAS’ operations are recorded in the financial records 

during the fiscal year. 

1.R. Pensions, Other Retirement 

Benefits, and Other PostEmployment Benefits

Each employing Federal agency is required to 

recognize its share of the cost and imputed 

financing of providing pension and post-retirement health benefits and life insurance 

to its employees, as stated in the SFFAS No. 

5, “Accounting for Liabilities of the Federal 

Government.” Factors used in the calculation 

of pension and post-retirement health and life 

insurance benefit expenses were provided by 

the Office of Personnel Management financial 

management letters regarding cost factors for 

pension and other retirement benefits expense. 

The cost factor for computing the Federal 

Employees Health Benefits Program (FEHB) 

imputed cost in FY 2018 was $7,151 and 

$7,268 in FY 2019. The Federal Employees’ 

Group Life Insurance Program (FEGLI) the cost 

factor was .02% in both FY 2018 and 2019. 

The cost factor for employees covered by Civil 

Service Retirement System (CSRS) was 37.4% in 

FY 2018 and 38.4% in FY 2019. The cost factor 

for the Federal Employees Retirement System 

(FERS) was 16.2% in FY 2018 and 16.9% in FY 

2019. 

DFAS civilian employees participate in the 

CSRS and FERS, while military personnel are 

covered by the Military Retirement System 

(MRS). Employees and personnel covered by 

FERS and MRS also have varying coverage 

under Social Security. DFAS funds a portion of 

the civilian and military pensions. The funded 

actuarial liability and unfunded actuarial liability for the military personnel are reported in 

the DoD Military Retirement Fund. The actuarial liability for the military retirement health 

benefits is recognized in the DoD Agency-wide 

statements.

For employees participating in FERS, FERS-Revised Annuity Employee (FERS-RAE), and 

FERS-Further Revised Annuity Employees 

(FERS-FRAE), DFAS contributes an amount 

equal to 1% of the employee’s basic pay to 

the tax deferred Thrift Savings Plan (TSP), and 

matches employee contributions up to an 
72 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 72

SECTION II

additional 4% of pay. DFAS contributions to 

the TSP for FY 2019 and 2018 were $32.1 million and $30.4 million. Employees participating 

in CSRS receive no matching contributions 

from DFAS.

1.S. Interest on Late Payments

DFAS, on occasion, incurs interest penalties on 

late payments. All such interest penalties are 

paid to the respective vendor in accordance 

with the guidelines mandated by the Prompt 

Payment Act, Public Law, 97-177, as amended.

1.T. Contract Authority

As a WCF, DFAS must recover from customers, 

through revenue earned, all expenses necessary to operate. DFAS purchases assets using 

contract authority granted by the OUSD(C) 

and then recovers the cost over the useful life 

of the asset through depreciation expense 

built into the billing rates. DoD FMR, Volume 

11B, Chapter 3, Budgetary Resources, defines 

contract authority as the amount available for 

obligation and remains available through the 

end of the fiscal year. At year-end, this amount 

is reduced to match the amount of executed 

dollars through the normal year-end closing 

processes.

1.U. Contract Audit Backlog

Most DFAS contracts are subject to review by 

the Defense Contract Audit Agency (DCAA) to 

include those contracts at the Defense Contract Management Agency (DCMA). To that 

end, DCMA and DFAS contracting offices are 

not able to render decisions on the deobligation of contracts and closure until the DCAA 

contract audit is completed. DCAA has experienced a severe backlog in contracts to be 

audited since the early 1980’s. DCAA, while 

serving the public interest as its primary customer, performs all necessary contract audits 

for the DoD and provides accounting and 

financial advisory services regarding contracts 

and subcontracts to all DoD Components 

responsible for procurement and contract 

administration. The services provided by 

DCAA include negotiation, administration, and 

settlement of contracts and subcontracts to 

ensure taxpayer dollars are spent on fair and 

reasonable contract prices. To aide in rectifying the backlog situation, Class Deviation 

2012-O0013, “DCAA Policy and Procedure for 

Sampling Low-Risk Incurred Cost Proposals” 

was issued on July 24, 2012. The intent of the 

proposal was to incorporate more effective 

oversight efforts without increasing risk to 

the Government. In addition, the proposal 

serves as a means for decreasing the backlog 

of incurred cost audits at DCAA. The realization of these efforts will assist with more 

timely cost adjustments. The extensive reviews 

potentially affect DFAS’ financial position 

because of related cost adjustments from 

vendors.

The total cost adjustments from vendors cannot be reasonably estimated for FY 2019, but 

management believes the amount is immaterial.

1.V. Classified Activities

Accounting standards require all reporting 

entities to disclose that accounting standards 

allow certain presentations and disclosures to 

be modified, if needed, to prevent the disclosure of classified information.
73 NOTES TO THE FINANCIAL STATEMENTS 73

SECTION II

As of September 30 2019 2018

Status of Fund Balance with Treasury

Unobligated Balance - Available $ 229,712,878 $ 250,570,083

Obligated Balance not yet Disbursed 219,044,203 215,638,193

Non-FBWT Budgetary Accounts

Unfilled Customer Orders without Advance (16,635,629) (18,965,282)

Contract Authority (115,950,231) (126,937,808)

Receivables and Other (15,581,852) (30,581,492)

Total Non-FBWT Budgetary Accounts $ (148,167,712) $ (176,484,582)

Total FBWT $ 300,589,369 $ 289,723,694

The Treasury records cash receipts and disbursements on DFAS’ behalf and are available 

only for the purposes for which the funds were 

appropriated. DFAS FBwT consists of revolving 

funds.

The Status of FBwT reflects the budgetary 

resources to support FBwT, and is a reconciliation between budgetary and proprietary 

accounts. It primarily consists of unobligated 

and obligated balances. The balances reflect 

the budgetary authority remaining for disbursement against current or future obligations. 

Unobligated Balance is classified as available 

and represents the cumulative amount of budgetary authority that has not been set aside to 

cover future obligations. 

Obligated Balance Not Yet Disbursed represents funds that have been obligated for 

goods and services but not yet paid.

Non-FBwT Budgetary Accounts includes the 

amount of Contract Authority DFAS has not 

liquidated to date, and the uncollected portion 

of service agreements with other Federal 

Agencies. Contract Authority is a specific 

statutory authority permitting DFAS to incur 

and liquidate obligations in advance of receiving cash. Non-FBwT Budgetary Accounts 

reduce the Status of FBwT.

For 4th Quarter FY 2019 reporting, DFAS’ 

undistributed reconciling adjustment to Treasury was $3,478,374 for FY 2019 and $1,277,353 

for FY 2018.

Note 2: Fund Balance with Treasury
74 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 74

SECTION II

As of September 30

2018

Gross Amount Due

Allowance for Estimated 

Uncollectibles Accounts Receivable, Net

Intragovernmental 

Receivables $ 30,577,535 $ N/A $ 30,577,535

Nonfederal Receivables 

(With the Public) 14,108,374 (12,965,649) 1,142,725

Total Accounts Receivable $ 44,685,909 $ (12,965,649) $ 31,720,260

As of September 30

2019

Gross Amount Due

Allowance for Estimated 

Uncollectibles Accounts Receivable, Net

Intragovernmental 

Receivables $ 15,623,300 $ N/A $ 15,623,300

Nonfederal Receivables 

(From the Public) 14,199,672 (12,964,755) 1,234,917

Total Accounts Receivable $ 29,822,972 $ (12,964,755) $ 16,858,217

Accounts Receivable (AR) represent DFAS’ claim for payment from other entities. DFAS only 

recognizes an allowance for uncollectible amounts from the public. Claims with other federal 

agencies are resolved in accordance with the Intragovernmental Business Rules. 

Other Disclosures

An allowance for the full amount of an outstanding receivable was recognized during FY 2016. 

This portion of the AR balance has been referred to the Department of Justice (DoJ) for collection. The amount of the outstanding receivable balance due is $12.9 million. The Defense 

Finance and Accounting Services is not allowed to write-off the debt until the DoJ provides 

instruction to the collectability of the receivable to the Federal Government.

Note 3: Accounts Receivable, Net
75 NOTES TO THE FINANCIAL STATEMENTS 75

SECTION II

As of September 30

2019

Depreciation/

Amortization

Method

Service

Life

Acquisition

Value

(Accumulated

Depreciation/

Amortization)

Net Book

Value

Major Asset Classes

Buildings, Structures, and 

Facilities S/L 35, 40, or 45* $ 122,812,711 $ (74,443,408) $ 48,369,303

Leasehold Improvements S/L lease term 140,634,552 (104,659,962) 35,974,590

Software S/L 2-5 or 10 314,828,070 (250,943,259) 63,884,811

General Equipment S/L Various 148,526,301 (122,907,681) 25,618,620

Construction-in-Progress N/A N/A 13,690,931 N/A 13,690,931

Total General PP&E $ 740,492,565 $ (552,954,310) $ 187,538,255

As of September 30

2018

Depreciation/

Amortization

Method

Service

Life

Acquisition

Value

(Accumulated

Depreciation/

Amortization)

Net Book

Value

Major Asset Classes

Buildings, Structures, and 

Facilities S/L 35, 40, or 45* $ 122,812,710 $ (70,575,834) $ 52,236,876

 Leasehold Improvements S/L lease term 140,240,258 (97,555,860) 42,684,398

Software S/L 2-5 or 10 576,684,588 (507,136,873) 69,547,715

General Equipment S/L Various 215,243,835 (190,224,299) 25,019,536

Construction-in-Progress N/A N/A 13,042,790 N/A 13,042,790

Total General PP&E $ 1,068,024,181 $ (865,492,865) $ 202,531,315

S/L = Straight Line N/A = Non-Applicable

* Estimated useful service life is 35 years for structures, 40 years for linear structures and 45 years for buildings.

Note 4: General PP&E, Net

Other Disclosures

The total Acquisition Value and total Accumulated Depreciation/Amortization value saw a significant decrease when comparing FY 2019 to FY 2018 due to the disposal of Software and General Equipment throughout the fiscal year. The disposal was for a variety of assets that were no 

longer in use such as legacy software replaced by other systems and had been fully depreciated 

and amortized.
76 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 76

SECTION II

As of September 30 2019 2018

Intragovernmental Liabilities

Other $ 6,678,863 $ 7,140,360

Total Intragovernmental Liabilities $ 6,678,863 $ 7,140,360

Nonfederal Liabilities

Other Federal Employment Benefits $ 29,411,878 $ 32,199,186

Environmental and Disposal Liabilities 260,000 260,000

Other Liabilities 3,525,764 3,199,090

Total Nonfederal Liabilities $ 33,197,642 $ 35,658,276

Total Liabilities Not Covered by Budgetary Resources $ 39,876,505 $ 42,798,636

Total Liabilities Covered by Budgetary Resources $ 154,332,869 $ 145,136,774

Total Liabilities $ 194,209,374 $ 187,935,410

Intragovernmental Other Liabilities are the 

unfunded liabilities for Federal Employees’ 

Compensation Act (FECA). The FECA liability

 represents the billed and unbilled amount 

owed to the Department of Labor related to 

employee compensation for wages lost due to 

a job-related injury. 

Other Federal Employment Benefits consists of 

various employee actuarial liabilities not due 

and payable during the current fiscal year. 

Refer to Note 8, Environmental and Disposal 

Liabilities for additional details and disclosures.

Nonfederal Other Liabilities consists of 

unfunded compensatory and credit annual 

leave liability. Refer to Note 7, Other Federal 

Employment Benefits, for additional details.

Note 6: Liabilities Not Covered by Budgetary Resources

As of September 30 2019 2018

Intragovernmental Other Assets

Advances and Prepayments $ 1,642,024 $ 1,078,091

Total Intragovernmental Other Assets $ 1,642,024 $ 1,078,091

Nonfederal Other Assets

Advances and Prepayments $ 5,353,935 $ 4,949,540

Total Nonfederal Other Assets $ 5,353,935 $ 4,949,540

Total Other Assets $ 6,995,959 $ 6,027,631

Note 5: Other Assets
77 NOTES TO THE FINANCIAL STATEMENTS 77

SECTION II

The Department of Labor annually determines 

the liability for future workers’ compensation benefits, or better known as Federal 

Employees’ Compensation Act. This includes 

the expected liability for death, disability, 

medical and other estimated miscellaneous 

costs. Historical benefit payment patterns are 

used to predict the future costs after being 

discounted to present value using the OMB 

economic assumptions for 10-year U.S. Treasury notes and bonds. The DOL provides an 

estimated actuarial liability for future workers’ 

compensation benefits at the DoD Level only, 

and DFAS’ reported FECA liability is based on 

the DoD Agency-wide allocation method using 

an average based on the last three annual 

chargeback bills for actual claims submitted 

and approved by the DOL. The allocated portion of the actuarial liability for future workers’ 

compensation benefits for DFAS at September 

30, 2019, is $29,411,878 and $32,199,186 in FY 

2018.

Note 7: Other Federal Employment Benefits
78 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 78

SECTION II

As of September 30 2019 2018

Environmental Liabilities — Nonfederal

Other Accrued Environmental Liabilities — Non-BRAC

Asbestos $ 260,000 $ 260,000

Total Environmental Liabilities $ 260,000 $ 260,000

Applicable Laws and Regulations for 

Cleanup Requirements

Clean up of contamination from past waste 

disposal practices, leaks, spills, and other 

activity resulting in public health or environmental risk is required of DFAS. This effort is 

accomplished by DFAS in coordination with 

regulatory agencies and, if applicable, other 

responsible parties and current property owners. Recognition of closure and post-closure 

costs for its General PP&E and environmental 

corrective action costs for current operations 

is also required of DFAS. 

To clean up contamination, DFAS follows the 

Comprehensive Environmental Response, 

Compensation, and Liability Act (CERCLA, Public Law 96-510), Superfund Amendments and 

Reauthorization Act of 1986 (SARA, Public Law 

99-499), Resource Conservation and Recovery 

Act (RCRA, Public Law 94-580) or other applicable federal or state laws. The CERCLA and 

RCRA require DFAS to clean up contamination in coordination with regulatory agencies, 

current owners of property damaged by DFAS, 

and third parties with partial responsibility for 

environmental restoration. 

Failure to comply with agreements and legal 

mandates puts DFAS at risk of incurring fines 

and penalties.

Uncertainty Regarding the Accounting Estimates Used to Calculate the 

Reported Environmental Liabilities

Accounting estimates for environmental liabilities use reasonable judgments and assumptions based on available information. Actual 

results may materially vary if agreements with 

regulatory agencies require remediation to a 

different degree than anticipated when calculating the estimates. Liabilities can be further 

affected if the investigation of the environmental sites reveals contamination levels 

differing from estimate parameters.

Methods for Assigning Total Cleanup 

Costs to Current Operating Periods

Engineering estimates and independently 

validated models are used by DFAS to project 

environmental costs. The models include the 

Remedial Action Cost Engineering Requirements application and the Normalization of 

Data System. The models are validated by 

DFAS in accordance with DoD Instruction 

5000.61, DoD Modeling and Simulation Verification, Validation, and Accreditation, and estimates liabilities based on data received during 

preliminary assessment and site investigation. 

Engineering estimates are primarily used by 

DFAS after obtaining extensive data during the 

remedial investigation/feasibility phase of the 

environmental project.

Once the environmental cost estimates are 

complete, DFAS complies with accounting 

standards to charge costs to current operating periods. Cleanup costs are expensed by 

DFAS for General PP&E placed into service 

prior to October 1, 1997, unless costs are to be 

recovered through user charges. As costs are 

recovered, DFAS expenses cleanup costs associated with the asset life that has passed since 

the General PP&E was placed into service. The 

remaining cost over the life of the assets are 

systematically recognized by DFAS.

Note 8: Environmental and Disposable Liabilities
79 NOTES TO THE FINANCIAL STATEMENTS 79

SECTION II

For General PP&E placed into service after 

September 30, 1997, DFAS expenses associated environmental costs using two methods: 

physical capacity for operating landfills and life 

expectancy in years for all other assets. The full 

cost to clean up contamination is expensed by 

DFAS for Stewardship PP&E when the asset is 

placed into service.

In accordance with reporting requirements 

for asbestos, DFAS reports liabilities for buildings and facilities containing both friable and 

non-friable asbestos. At this time DFAS is 

unable to reasonably estimate an amount of 

the total cleanup costs related to friable and 

non-friable asbestos. 

Nature of Estimates and the Disclosure of Information Regarding Possible Changes Due to Inflation, Deflation, Technology, or Applicable Laws 

and Regulations.

Estimates revised by DFAS result from overlooked or previously unknown contaminants, 

re-estimation based on different assumptions, 

and other changes in project scope. Although 

DFAS is unaware of pending changes, environmental liabilities are subject to changes in laws 

and regulations, agreements with regulatory 

agencies, and advances in technology.
80 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 80

SECTION II

As of September 30

2019

Current Noncurrent Total

Intragovernmental

FECA Reimbursement to the 

Department of Labor 3,209,045 3,469,818 6,678,862

Employer Contribution and Payroll 

Taxes Payable 10,290,294 0 10,290,294

Total Intragovernmental Other 

Liabilities $ 13,499,339 $ 3,469,818 $ 16,969,157

Nonfederal

Accrued Funded Payroll and Benefits $ 96,574,841 $ 0 $ 96,574,841

Accrued Unfunded Annual Leave 3,525,764 0 3,525,764

Employer Contribution and Payroll 

Taxes Payable 1,383,681 0 1,383,681

Total Nonfederal Other Liabilities $ 101,484,286 $ 0 $ 101,484,286

Total Other Liabilities $ 114,983,625 $ 3,469,818 $ 118,453,443

As of September 30

2018

Current Noncurrent Total

Intragovernmental

FECA Reimbursement to the 

Department of Labor 3,174,121 3,966,239 7,140,360

Employer Contribution and Payroll 

Taxes Payable 6,992,646 0 6,992,646

Total Intragovernmental Other

Liabilities $ 10,166,767 $ 3,966,239 $ 14,133,006

Nonfederal

Accrued Funded Payroll and Benefits $ 90,403,327 $ 0 $ 90,403,327

Accrued Unfunded Annual Leave 3,199,089 0 3,199,089

Employer Contribution and Payroll

Taxes Payable 3,328,977 0 3,328,977

Total Nonfederal Other Liabilities $ 96,931,393 $ 0 $ 96,931,393

Total Other Liabilities $ 107,098,159 $ 3,966,239 $ 111,064,399

Note 9: Other Liabilities
81 NOTES TO THE FINANCIAL STATEMENTS 81

SECTION II

Note 10: Operating Leases

As of September 30

2019

Asset Category

Land and Buildings Equipment Total

Federal

Fiscal Year

2020 $ 28,021,873 $ 1,309,417 $ 29,331,290

2021 28,498,245 1,331,677 29,829,922

2022 28,982,715 1,354,316 30,337,031

2023 29,475,421 1,377,339 30,852,760

2024 29,371,497 1,400,754 30,772,251

After 5 Years 86,478,052 1,424,566 87,902,618

Total Future Lease Payments Due $ 230,827,803 $ 8,198,069 $ 239,025,872

Non-Federal

Fiscal Year

2020 $ 165,393 $ 0 $ 165,393

2021 165,393 0 165,393

2022 0 0 0

2023 0 0 0

2024 0 0 0

After 5 Years 0 0 0

Total Non-Federal Future Lease 

Payment $ 330,786 $ 0 $ 330,786

Total Future Lease Payments $ 231,158,589 $ 8,198,069 $ 239,356,658

Other Disclosures

DFAS does not have any capitalized leases. In 

order to estimate the future years’ payments 

due, DFAS used the current Consumer Price 

Index (CPI) rate of 1.7%. 

While all DFAS’ leases are cancelable, at 

this time all of the amounts under commitment are reasonably expected to be future 

expenses, and are therefore included in the 

above schedule.
82 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 82

SECTION II

The Defense Finance and Accounting Service is not aware of any contingent liabilities for legal 

actions in FY 2019.

Note 11: Commitments and Contingencies
83 NOTES TO THE FINANCIAL STATEMENTS 83

SECTION II

Fiscal Years Ended September 30 2019 2018

Gross Cost $ 1,531,646,260 $ 1,483,173,131

Less: Earned Revenue (1,420,303,894) (1,393,737,524)

Total Net Cost $ 111,342,366 $ 89,435,607

The Statement of Net Cost (SNC) represents 

the net cost of programs and organizations of 

the Federal Government supported by appropriations or other means.

The intent of the SNC is to provide gross and 

net cost information related to the amount 

of output or outcome for a given program or 

organization administered by a responsible 

reporting entity. DFAS captures its current 

processes and reports accumulated costs for 

major programs as required by the Government Performance and Results Act. Additionally, DFAS has fully implemented unit cost 

reporting and reports these costs by responsibility segment on a monthly basis as required 

by the SFFAS No. 4, “Managerial Cost Accounting Concepts and Standards for the Federal 

Government,” as amended by SFFAS No. 55, 

“Amending Inter-entity Cost Provisions.” 

Intragovernmental costs and revenue represent transactions made between two reporting 

entities within the Federal Government. Public 

costs and revenues are exchange transactions 

made between the reporting entity and a 

non-federal entity.

Note 12: General Disclosures Related 

to the Statement of Net Cost
84 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 84

SECTION II

Fiscal Years Ended September 30 2019 2018

Intragovernmental:

Unpaid $ 8,966,434 $ 21,873,928

Prepaid/Advanced 1,642,024 373,759

Total Intragovernmental $ 10,608,458 $ 22,247,687

Nonfederal:

Unpaid $ 55,786,349 $ 48,623,534

Prepaid/Advanced 5,353,935 5,653,871

Total Nonfederal $ 61,140,284 $ 54,277,405

Total Budgetary Resources Obligated for Undelivered 

Orders at the End of the Period $ 71,748,742 $ 76,525,092

Apportionment categories are determined 

in accordance with the guidance provided in 

OMB Circular No. A-11, “Preparation, Submission, and Execution of the Budget.” Category A 

relates to appropriations for a specific period 

of time (e.g., Military Personnel appropriation), 

and category B relates to appropriations for 

a specific project (e.g., Military Construction 

appropriation). The total amount of DFAS’ 

obligations incurred, $1,434,806,619 is 

classified as Reimbursable Apportionment 

Category B. 

Reconciliation Differences

Under OMB Circular A-11, Federal agencies are 

to report budgetary information in the Statement of Budgetary Resources (SBR) based on 

budget terminology, definitions and guidance 

issued. OMB Circular A-11 also states that the 

information on the SBR should be consistent 

with budget execution information reported 

in the President’s Budget. Additionally, per 

SFFAS No. 7, “Accounting for Revenue and 

Other Financing Sources,” agencies are to 

provide a financial statement footnote disclosure to explain significant differences between 

amounts presented in the SBR and amounts 

described as actuals in the President’s Budget. 

However, since DFAS is a component of the 

DoD rather than a separate Federal agency as 

envisioned by OMB requirements, an analysis 

of information reported in both the SBR and 

the Report on Budget Execution and Budgetary Resources (SF-133) at September 30, 

2019, is performed. There are no differences 

between the SBR, the SF-133 and the Budget 

Program and Financing Schedule.

Note 13: Disclosures Related to the Statement 

of Budgetary Resources
85 NOTES TO THE FINANCIAL STATEMENTS 85

SECTION II

Note 14: Reconciliation of Net Cost of

Operations to Net Outlays

As of September 30

2019

Intragovernmental With the public Total

Net Cost of Operations (SNC) $ (891,767,176) $ 1,003,109,542 $ 111,342,366

Components of the Net Cost That are 

Not Part of Net Outlays

Property, plant, and equipment 

depreciation $ 0 $ (31,926,214) $ (31,926,214)

Other 0 592,148 592,148

Increase (decrease) in assets:

Accounts Receivable (14,999,641) 92,192 (14,907,449)

Other assets 563,932 404,395 968,327

(Increase)/decrease in liabilities:

Account payable 3,156,480 (4,783,302) (1,626,822)

Salaries and benefits (3,297,648) (4,226,218) (7,523,866)

Other Liabilities (Unfunded Leave, 

Unfundced FECA, Actuarial FECA) 461,497 2,460,634 2,922,131

Other financing sources:

Federal employee retirement 

benefit costs paid by OPM and 

imputed to the agency

(87,047,302) 0 (87,047,302)

Total Components of Net Costs That 

Are Not Part of Net Outlay $ (101,162,682) $ (37,386,365) $ (138,549,047)

Components of Net Outlays That Are 

Not Part of Net Cost:

Acquisition of capital assets 6,442,863 9,898,143 16,341,006

Total Components of Net Outlays 

That Are Not Part of Net Costs $ 2,280,359 $ 14,060,647 $ 16,341,006

Net Outlays $ (990,649,499) $ 979,783,824 $ (10,865,675)

Agency Outlays, Net, Statement of 

Budgetary Resources $ (10,865,675)

Reconciling Differences $ 0
SECTION III

Other Information

Glossary of Acronyms and Abbreviations

Notes Pages

TOPICS COVERED

88 88

Glossary of Acronyms and Abbreviations
89 GLOSSARY OF ACRONYMS AND ABBREVIATIONS 89

SECTION III

Acronym Description

ACL Audit Command Language 

ADA Anti-Deficiency Act 

AFR Agency Financial Report 

Agency Defense Finance and Accounting Service 

AOR Accumulated Operating Results 

BEM Business Environment Modernization 

BRS Blended Retirement System 

CAPS-W Computerized Accounts Payable System for Windows 

CERCLA Comprehensive Environmental Response and Liability Act

CET Continuing Education Training 

CPI Consumer Price Index 

CSRS Civil Service Retirement System 

CSSP Cyber Security Service Provider 

DAI Defense Agencies Initiative 

DATA Digital Accountability and Transparency Act

DCAA Defense Contract Audit Agency 

DCI Debt Collection Improvement Act

DCMA Defense Contract Management Agency 

DDRS Defense Departmental Reporting System 

DDRS-B Defense Departmental Reporting System–Budgetary 

Department Department of Defense 

DFAS Defense Finance and Accounting Service 

DISA Defense Information Systems Agency 

DoD Department of Defense 

DoD IG Department of Defense Inspector General 

DoD-EC DoD Expeditionary Civilian 

DOL Department of Labor 

DSET Digital Signature Enforcement Tool 

DWCF Defense Working Capital Fund 

eLAN Enterprise Local Area Network

ELDP Executive Leadership Development Program 

ERP Enterprise Resource Planning 

FASAB Federal Accounting Standards Advisory Board 

FBwT Fund Balance with Treasury 

FECA Federal Employee Compensation Act 
90 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 90

SECTION III

FEGLI Federal Employees’ Group Life Insurance Program 

FEHB Federal Employee Health Benefits 

FEMA Federal Emergency Management Agency 

FERS Federal Employees Retirement System 

FERS-FRAE FERS-Further Revised Annuity Employees 

FERS-RAE FERS-Revised Annuity Employee 

FIAR Financial Improvement and Audit Remediation 

FFMIA Federal Financial Management Improvement Act

FMFIA Federal Managers Financial Integrity Act

FMR Financial Management Regulation 

FMS Foreign Military Sales 

FY Fiscal Year 

GF General Fund 

GFEBS General Fund Enterprise Business System 

GSA General Services Administration 

HR Human Resources 

IPA Independent Public Accountants 

IRS Internal Revenue Service 

IT Information Technology 

JVs Journal Vouchers 

MD&A Management’s Discussion and Analysis 

MICP Managers’ Internal Control Program 

MOCAS Mechanization of Contract Administration Services 

MRS Military Retirement System 

NFR Notice of Findings and Recommendations 

NOR Net Operating Results 

OMB Office of Management and Budget

OPM Office of Personnel Management 

OUSD Office of Under Secretary of Defense 

OUSD(C) Office of the Under Secretary of Defense (Comptroller)

PCS Permanent Change of Station 

PII Personally Identifiable Information 

PP&E Property, Plant, and Equipment 

RCRA Resource Conservation and Recovery Act 

SARA Superfund Amendments and Reauthorization Act of 1986 

SA Statement of Assurance
91 GLOSSARY OF ACRONYMS AND ABBREVIATIONS 91

SECTION III

SBR Statement of Budgetary Resources 

SF-133 Report on Budget Execution and Budgetary Resources 

SFFAS Statement of Federal Financial Accounting Standards 

SFIS Standard Financial Information Structure 

SLOA Standard Line of Accounting 

SNC Statement of Net Cost 

SSAE-18 Standards for Attestation Engagements No. 18 

SSN Social Security Number 

TFM Treasury Financial Manual 

TI Treasury Index 

Treasury U.S. Department of Treasury 

TSP Thrift Savings Plan 

U.S.C. United States Code

US GAAP U.S. Generally Accepted Accounting Principles 

WCF Working Capital Fund 
92 92

Notes
93 NOTES 93

SECTION III

Notes
94 FY 2019 DEFENSE FINANCE AND ACCOUNTING SERVICE AGENCY FINANCIAL REPORT 94

SECTION III

Notes
Soldiers from the 1313th Engineer Company, Indiana National Guard.

(DoD photo illustration by Eileen Hernandez)
WWW.DFAS.MIL/

WWW.DFAS.USAJOBS.GOV/

WWW.LINKEDIN.COM/COMPANY/DFAS

WWW.YOUTUBE.COM/USER/WEPAYDOD

WWW.FACEBOOK.COM/DEFENSEFINANCEANDACCOUNTINGSERVICE