Military Pay: Army Reserve Soldiers Mobilized to Active Duty Experienced Significant Pay Problems
Published: 2004-07-20T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In light of GAO's November 2003 report highlighting significant pay problems experienced by Army National Guard soldiers mobilized to active duty in support of the global war on terrorism and homeland security, GAO was asked to determine if controls used to pay mobilized Army Reserve soldiers provided assurance that such pays were accurate and timely. GAO's audit used a case study approach to focus on controls over three key areas: processes, people (human capital), and automated systems.
section_title: What GAO Found
paragraphs: The processes and automated systems relied on to provide active duty pays, allowances, and tax benefits to mobilized Army Reserve soldiers are so error-prone, cumbersome, and complex that neither DOD nor, more importantly, Army Reserve soldiers themselves, could be reasonably assured of timely and accurate payments. Weaknesses in these areas resulted in pay problems, including overpayments, and to a lesser extent, late and underpayments of soldiers' active duty pays and allowances at eight Army Reserve case study units. Specifically, 332 of 348 soldiers (95 percent) we audited at eight case study units that were mobilized, deployed, and demobilized at some time during the 18-month period from August 2002 through January 2004 had at least one pay problem. Many of the soldiers had multiple problems associated with their active duty pays and allowances. Some of these problems lingered unresolved for considerable lengths of time, some for over 1 year. Further, nearly all soldiers began receiving their tax exemption benefit at least 1 month late. These pay problems often had a profound adverse impact on individual soldiers and their families. For example, soldiers were required to spend considerable time, sometimes while deployed in remote, hostile environments overseas, seeking help on pay inquiries or in correcting errors in their active duty pays, allowances, and related tax benefits. The processes in place to pay mobilized Army Reserve soldiers, involving potentially hundreds of DOD, Army, and Army Reserve organizations and thousands of personnel, were deficient with respect to (1) tracking soldiers' pay status as they transition through their active duty tours, (2) carrying out soldier readiness reviews, (3) after-the-fact report reconciliation requirements, and (4) unclear procedures for applying certain pay entitlements. With respect to human capital, weaknesses identified at our case study units included (1) insufficient resources allocated to key unit-level pay administration responsibilities, (2) inadequate training related to existing policies and procedures, and (3) poor customer service. Several automated systems issues also contributed to the significant pay errors, including nonintegrated systems and limited processing capabilities.

section_title: Letter
paragraphs: Thank you for the opportunity to discuss controls over payroll payments to  mobilized Army Reserve soldiers. In November 2003, we reported on  significant pay problems experienced by mobilized Army National Guard  soldiers.  We also testified on this matter before the full committee in  January 2004.  Because of the severity of the problems identified for these  mobilized Army National Guard soldiers, you, as well as other requestors,  asked us to examine the accuracy and timeliness of payroll payments to  mobilized Army Reserve soldiers.
In response to the September 11 attacks, many Army Reserve soldiers were  activated to federal duty. A reported 98,000 Army Reserve soldiers—almost  half of the soldiers in the Army’s selected reserve—had been mobilized to  active duty at some point since September 2001.  These forces were  deployed on various important missions across the United States and  overseas in support of Operations Noble Eagle, Enduring Freedom, and  Iraqi Freedom.  Their missions consisted mostly of combat support  missions, such as supply, medical, and transportation operations, as well as  military police and intelligence functions.  Given the critical and continuing  roles Army Reserve soldiers play in carrying out vital military and security  missions, effective controls are needed to provide timely and accurate pays  and allowances to these soldiers.  Pay-related problems are not only costly  and time-consuming to resolve, but result in financial hardship for soldiers  and their families.
Because current Department of Defense (DOD) operations used to pay  mobilized Army Reserve soldiers relied extensively on error-prone, manual  transactions entered into multiple, nonintegrated systems, we did not  statistically test controls in this area.  Instead, we audited eight Army  Reserve units as case studies to provide a detailed perspective on the  nature of payroll deficiencies with respect to Army Reserve soldiers.  Each  of these units had mobilized, deployed, and demobilized at some time  during the 18-month period from August 2002 through January 2004.   Appendix I provides details on the 14 pays and allowances we audited for  these case study units, as well as an explanation of the three phases of an  active duty mobilization (mobilization, deployment, and demobilization).   Appendix II provides further details on our scope and methodology.
We found that Army Reserve soldiers experienced very similar problems to  those we identified for Army National Guard soldiers.  We provided a draft  report detailing the results of our audit findings to DOD for review and  comment on July 9, 2004.  The draft report contains a series of 15  recommended actions.  After receiving and considering DOD’s comments,  we plan to finalize and issue the report.   To its credit, DOD has recognized  the seriousness of these problems and has already taken a number of  actions in response to our report on the Army National Guard, which I will  address later in this testimony.
Today, I will summarize the results of our work with respect to (1) the pay  experiences of Army Reserve soldiers at our case study units and (2)  deficiencies in the three key control areas of processes, people, and  automated systems.
subsections: section_title: Case Studies Illustrate Significant Pay Problems
paragraphs: We found significant problems with the active duty pays, allowances, and  related tax benefits received by the soldiers at the eight Army Reserve units  we audited.  The eight units we audited were:  824th Quartermaster Company – Ft. Bragg, N.C.  965th Dental Company – Seagoville, Tex.  948th Forward Surgical Team – Southfield, Mich.  443rd Military Police Company – Owings Mills, Md.
FORSCOM Support Unit – Finksburg, Md.  629th Transportation Detachment - Ft. Eustis, Va.  3423rd Military Intelligence Detachment – New Haven, Conn.  431st Chemical Detachment – Johnstown, Pa.
These units were deployed to help perform a variety of critical domestic  and overseas combat support operations, including supply, medical, and  transportation operations, as well as military police and intelligence  functions.
For the eight units we audited, we found numerous and varied pay  problems.  For those problems that we could quantify, we identified about  $375,000 in errors.  These problems consisted of underpayments,  overpayments, and late payments that occurred during all three phases of  Army Reserve mobilization to active duty. For the 18-month period from  August 2002 through January 2004, we identified overpayments,  underpayments, and late payments at the eight case study units estimated  at $247,000, $51,000, and $77,000, respectively.  Overall, we found that 332  of the 348 soldiers (95 percent) from our case study units had at least one  pay problem associated with their mobilization to active duty.  Table 1  shows the number of soldiers at our case study units with at least one pay  problem during each of the three phases of active duty mobilization.
Some of the pay problems we identified included the following.
Forty-seven soldiers deployed overseas with the 824th Quartermaster  Company from North Carolina improperly received hardship duty pay,  totaling about $30,000, for up to 5 months after departing from their  overseas duty locations.
Nine soldiers of the 824th Quartermaster Company improperly received  family separation allowance payments totaling an estimated $6,250  while serving at Ft. Bragg, their unit’s home station.
Forty-nine soldiers with the 824th Quartermaster Company did not  receive the hardship duty pay they were entitled to receive when they  arrived at their designated duty locations overseas until about 3 months  after their arrival.
Ten soldiers with the 443rd Military Police Company had problems with  their overseas housing allowance associated with their deployment in  Iraq, including five soldiers who were underpaid about $2,700 and seven  who did not receive their last allowance until more than 2 months after  their active duty tour ended.
A soldier with the 443rd MP Company who demobilized from an active  duty deployment in August 2002, subsequently received erroneous  active duty payments of about $52,000 through May 2004.  These  erroneous payments were not detected and stopped by DOD.  The  soldier contacted us to ask for our assistance in resolving this matter.
A soldier from the 965th Dental Company who received an emergency  evacuation from Kuwait as a result of an adverse reaction to anthrax  and antibiotic inoculations he received in preparation for his overseas  deployment, continued to receive about $2,900 in improper hostile fire  and hardship duty payments after his return from Kuwait.
A soldier with the 3423rd Military Intelligence Detachment did not  receive an estimated $3,000 in family separation allowance payments  associated with his active duty mobilization.
Two soldiers received tens of thousands of dollars in active duty pays  and allowances over the course of a year or more even though they  never mobilized with their units.
Nearly, all of the soldiers in the seven case study units that deployed  overseas experienced late payments related to their combat zone tax  exclusion benefit.
In some cases, the problems we identified may have distracted these  professional soldiers from mission requirements, as they spent  considerable time and effort while deployed attempting to address these  issues.  Further, these problems likely had an adverse effect on soldier  morale.
section_title: Mobilized Army Reserve Pay Process, Human Capital, and Systems Deficiencies
paragraphs: Deficiencies in three key areas—process, human capital, and automated  systems—were at the heart of the pay problems we identified.  Process  deficiencies included weaknesses in (1) tracking and maintaining  accountability over soldiers as they moved from location to location to  carry out their mobilization orders, (2) carrying out soldier readiness  programs (SRPs)—primarily at the mobilization stations, (3) distributing  and reconciling key pay and personnel reports during mobilizations, and  (4) determining eligibility for the family separation allowance associated  with active duty mobilizations.  Human capital weaknesses included  insufficient resources, inadequate training, and poor customer service.   Finally, the automated systems supporting pays to mobilized Army Reserve  soldiers were ineffective because they were not integrated and had limited  processing capabilities.
subsections: section_title: Process Deficiencies
paragraphs: A substantial number of payment errors we found were caused, at least in  part, by design weaknesses in the extensive, complex set of processes and  procedures relied on to provide active duty pays, allowances, and related  tax benefits to mobilized Army Reserve soldiers. Complex, cumbersome  processes, developed in piecemeal fashion over a number of years, provide  numerous opportunities for control breakdowns.  We identified issues with  the procedures in place for both determining eligibility and processing  related transactions of active duty pay to mobilized Army Reserve soldiers.   These process weaknesses involved not only the finance and military pay  component of the Army, Army Reserve, and DFAS, but the Army’s  operational and personnel functions as well.
subsections: section_title: Flaws in Maintaining Accountability over Soldiers throughout Mobilization
paragraphs: Mobilization policies and procedures did not provide the Army with  effective accountability and visibility over soldiers’ locations to provide  reasonable assurance of accurate and timely payments to mobilized Army  Reserve soldiers.  Reserve soldiers pass through four main transitions  during the course of a typical mobilization cycle, including transitions from  (1) their home stations to their designated mobilization station, (2) the  mobilization station to their assigned deployment location, (3) the  deployment location to their demobilization station, and (4) the  demobilization station back to their home station.
Soldiers’ active duty pays, allowances, and related tax benefits are closely  tied to soldiers’ locations.  For example, timely data regarding the dates  soldiers arrive at and leave designated locations are essential for accurate  and timely hardship duty pays, allowances, and related combat zone tax  exclusion benefits.  To effectively account for soldiers’ movements during  these transitions, unit commanders, unit administrators, as well as  individuals assigned to personnel and finance offices across the Army  Reserves, Army mobilization stations, and in theater Army locations must  work closely and communicate extensively to have the necessary data to  pay Army Reserve soldiers accurately and on time throughout their active  duty tours.
However, we identified several critical flaws in the soldier accountability  procedures in place during the period of our audit.  Specifically, we  identified flawed procedures for accountability over (1) soldiers that are  supposed to go through processing for mobilization and demobilization,  and (2) dates of soldiers’ arrival to and departure from designated hardship  duty deployment locations.
section_title: Mobilization Station Accountability
paragraphs: We found that effective procedures were not in place to monitor and  validate the propriety of active duty pays to mobilized Army Reserve  soldiers.  The accountability controls in place at Army mobilization stations  responsible for unit mobilization and demobilization processing were not  effective in detecting any missing Army Reserve soldiers assigned to units  passing through those locations.  As a result of these control design flaws,  several soldiers received up to a year of active duty pay based on issued  mobilization orders, even though the soldiers never reported for active  duty.
Illustrative Cases: Flaws in Soldier Location Accountability Procedures Resulted  in Erroneous Active Duty Payments
A soldier assigned to the 965th Dental Company received a mobilization order, but  based on a discussion with his commander about a medical condition, was told he  would be transferred to a unit that was not mobilizing.  However, the unit commander  did not provide a list of the unit’s mobilizing soldiers to the UPC and did not provide any  information on this soldier indicating that he would not be reporting to the unit’s  mobilization station.  Consequently, neither the UPC nor the mobilization station  personnel had any means of detecting that a soldier had not mobilized with his unit  and therefore was improperly receiving active duty pays.  As a result, the soldier’s pay  was started on February 11, 2003, and continued through February 2004, resulting in  more than $36,000 in overpayments.  This improper active duty pay was stopped only  after we identified the error and notified Army officials.
A soldier contacted GAO in March 2004 to inquire as to why he had been receiving  active duty pay for almost a year even though, according to the soldier, he was not  mobilized to active duty during that time.  Subsequent inquiry determined that, at least  on paper, the soldier was transferred from Maryland’s 443rd Military Police Company to  Pennsylvania’s 307th Military Police Company in February 2003, and was mobilized to  active duty with that unit in March 3, 2003.  Applicable active duty pays and allowances  for the soldier were initiated based on these March 3, 2003, orders.  After the 307th  Military Police Company demobilized in February 2004, the soldier’s mobilization order  was revoked.  Nonetheless, available pay documentation indicated the soldier  continued receiving erroneous active duty pay and allowances for basic pay, and  allowances for subsistence, housing, and family separation totaling an estimated  $52,000 through May of 2004.
section_title: Deployment Accountability
paragraphs: Flaws in soldier accountability procedures associated with overseas  deployment locations resulted in payment errors for almost all of the  soldiers in our case study units.  Soldiers were generally paid late or  underpaid location-based incentives upon their initial arrival into  designated hardship duty and hostile fire locations.  Subsequently, they  were often overpaid these same location-based entitlements because these  payments continued, sometimes for long periods of time, after soldiers left  designated overseas locations.  Army local area servicing finance locations  are to obtain documentation—flight manifests, for example--showing  soldier arrival and departure date information to use as a basis for starting  and stopping location-based pays, allowances, and associated tax benefits.   However, despite diligent efforts by Army local area servicing finance  officials to develop and maintain accurate documentation showing soldiers  at the designated deployment locations, we found indications that this  information was often not timely or accurate for the soldiers at our case  study units.
One of our case study units, the 443rd MP Company, relied on an  extraordinary, labor-intensive workaround to ensure that necessary  documentation supporting any changes in the location of the unit’s  soldiers, as well as other pay-support documentation, was received by the  unit’s area servicing location while the soldiers were deployed in Iraq.
Individual Case Illustration: Biweekly Flights to Transmit Unit Pay Documents  While deployed to guard Iraqi prisoners at Camp Cropper in Iraq, the unit commander  of the 443rd Military Police Company assigned a sergeant to help address myriad pay  complaints.  The sergeant was deployed to Iraq as a cook, but was assigned to assist  in pay administration for the unit because he was knowledgeable in DJMS-RC  procedures and pay-support documentation requirements and was acquainted with  one of the soldiers assigned to the unit’s servicing finance office in Camp Arifjan,  Kuwait.  Every 2 weeks, for about 5 months, the sergeant gathered relevant pay- support documentation from the unit’s soldiers, took a 1 hour and 15 minute flight to  the Kuwait airport, and then drove an hour to the Army finance office at Camp Arifjan.   The day following the sergeant’s biweekly journey to Camp Arifjan, the sergeant  worked with the Army finance officials at Camp Arifjan to enter transactions into DMO,  often for 8-12 hours, to get unit soldiers’ pay entitlements started or corrected,  particularly hardship duty pays requiring manual input every month.
These flawed procedures, which were relied on to account for Army  Reserve soldiers’ actual locations and their related pay entitlements while  deployed, resulted in pay problems in all seven of our case study units that  deployed soldiers overseas.  For example:  All 49 soldiers who deployed overseas with our 824th Quartermaster  Company case study unit were underpaid their hardship duty pay when  they first arrived at the designated location.  Subsequently, almost all  solders in the unit were overpaid their hardship duty pay--most for up to  5 months--after they left the designated location, and some continued to  receive these payments even after they were released from active duty.   In total, we identified about $30,000 in improper hardship duty  payments received by this unit’s soldiers.
Seventy-six soldiers with the 965th Dental Company received improper  hardship duty payments totaling almost $47,000 after they had left their  hardship duty location.
None of the 24 soldiers deployed with the 629th Transportation  Detachment received hardship duty pay for the months they arrived and  departed the hardship duty areas.  In addition, they did not receive  hostile fire pay for almost 3 months after their arrival at their assigned  overseas deployment locations.
The debts created by overpayment of these location-based payments  placed an additional administrative burden on both the soldiers and the  department to calculate, monitor, and collect the overpaid amounts.
section_title: Lack of Clear Pay Review Procedures at Mobilization Stations
paragraphs: Some of the pay problems we found were associated with flawed  procedural requirements for the pay support review, which is part of the  SRP process carried out at Army mobilization stations.  Procedures  followed by Army mobilization station finance officials during the SRP  were inconsistent with respect to what constitutes a “thorough review” of  soldiers’ pay support documentation to determine if it is current and  complete and has been entered into the DJMS-RC pay system.
While finance officials at some mobilization stations carried out one-on-one  detailed pay reviews with each soldier, as well as a unit-wide finance  briefing, finance officials at other mobilization stations carried out less  thorough procedures.  At two mobilization stations, finance officials  provided only a unit-wide briefing and did not meet individually with the  soldiers to conduct a detailed review of their military pay accounts.  We  found far fewer pay problems (excluding location-based pays) for the  soldiers who went through the individual detailed pay reviews during the  SRP than the soldiers who received less thorough or no individual reviews  of their pay entitlements at their mobilization stations.
section_title: Inadequate Processes for Key Pay and Personnel Reconciliation Reports
paragraphs: Design flaws in the procedures in place to obtain and reconcile key pay and  personnel reports impaired the Army’s ability to detect improper active  duty payments.  As discussed previously, we identified several cases in  which such improper payments continued for over a year without  detection.
The Army Reserve pay review and validation procedures were initially  designed for pays to Army Reserve soldiers performing weekend drills,  annual training, and short-term active duty mobilizations of 30 days or  fewer.  Correspondingly, pay and personnel reconciliation processes in  place during our audit were focused primarily on requirements for unit  commanders to reconcile data for reserve soldiers while they are in an  inactive (weekend drilling only) status.
Specifically, current Army Reserve procedures require that unit  commanders review a key report, the Unit Commanders Pay Management Report, for soldiers in their units performing weekend drill activities, for  short-term active duty mobilization activities, and in planning for lengthy  active duty mobilizations.  However, these procedures do not clearly  require unit commanders to review this key report for Army Reserve  soldiers in subsequent phases of their active duty mobilization tours.  The  unit commander at one of our case study units, the 965th Dental Company,  stated that he did not believe that a review and reconciliation was needed.   Instead, he stated he relied on the unit’s soldiers to identify any pay  problems.  However, in light of the extensive manual entry, and  nonintegrated systems currently relied on for mobilized Army Reserve  soldiers’ pay, the timely and complete reconciliation of comparable pay and  personnel data in these key reports can serve as an important detective  control to identify any pay errors shortly after they have occurred.
In addition, Army guidance does not specify how deployed units are to  receive these reports.  Distribution of these reports is particularly  problematic for units deployed in remote locations overseas.  Unit  commanders for several of our case study units stated they did not receive  these key reports while deployed.  Had those reports been available and  reconciled, they could have been used to identify and correct improper  active duty payments, such as the large, erroneous active duty  overpayments discussed previously.
section_title: Family Separation Allowance Eligibility Requirements Are Not Clear
paragraphs: The existing procedures for applying eligibility requirements for activated  Army Reserve soldiers’ family separation allowance payments were not  clear.  These flawed procedural requirements for paying family separation  allowance led to varying interpretations and pay errors for Army Reserve  soldiers at the implementing Army home stations and mobilization stations.
DOD policy clearly provides that soldiers are entitled to receive family  separation allowance if their family does not reside near the duty station,  which is generally defined as within 50 miles.  However, DOD guidance  and the form for implementing this policy were not clear because they did  not provide for a determination that the soldier’s family does not live near  the soldier’s duty station.  Specifically, they did not require soldiers to  certify that (1) they live over 50 miles away from the unit’s home station  and do not commute daily, or (2) the soldier’s commander has certified the  soldier’s required commute to the duty station is not reasonable.  As a  result, we found inconsistencies as to when soldiers received family  separation allowance.  For example, soldiers from the 824th Quartermaster  Company received family separation allowance payments while stationed  at their Ft. Bragg home station even though they lived within 50 miles of the  base and no documentation was available showing the unit commander  authorized an exception.  In contrast, 14 soldiers with Maryland’s 443rd  Military Police Company who lived over 50 miles away from their home  station, including several soldiers from Puerto Rico, did not receive family  separation allowance based on their arrival at their home station.
section_title: Human Capital Issues
paragraphs: Human capital weaknesses also contributed to the pay problems mobilized  Army Reserve soldiers experienced in our eight case study units.  Our  Standards for Internal Control in the Federal Government state that  effective human capital practices are critical to establishing and  maintaining a strong internal control environment, including actions to  ensure that an organization has the appropriate number of employees to  carry out assigned responsibilities.  Even in an operational environment  supported by a well-designed set of policies and procedures and a world- class integrated set of automated pay and personnel systems, an effective  human capital strategy—directed at ensuring that sufficient numbers of  people, with the appropriate knowledge and skills, are assigned to carry  out the existing extensive, complex operational requirements—is essential.    Such a human capital strategy supporting accurate and timely active duty  payments to mobilized Army Reserve soldiers must encompass numerous  DOD components spread across the world that are now involved in  carrying out the extensive coordination, manual intervention, and  reconciliations required to pay mobilized Army Reserve soldiers.
Well-trained pay-support personnel throughout various DOD components  are particularly critical given the extensive, cumbersome, and labor- intensive process requirements that have evolved to provide active duty  payments to mobilized Army Reserve soldiers.  We encountered many  sincere and well-meaning Army, Army Reserve and DFAS personnel  involved in authorizing and processing active duty payments to these  soldiers.  The fact that mobilized Army Reserve soldiers received any of  their entitled active duty pays, allowances, and tax benefits accurately and  on-time is largely due to the dedication and tireless efforts of many of these  pay-support personnel to do the right thing for these mobilized Army  Reserve soldiers.  However, in conjunction with our case studies, we  observed the following human capital weaknesses in the current processes  and organizational components now relied on to pay mobilized Army  Reserve soldiers: (1) inadequate resources provided to support unit-level  pay management, (2) inadequate pay management training across the  spectrum of pay-support personnel, and (3) customer service breakdowns.
subsections: section_title: Inadequate Resourcing for Critical Unit Administrator Positions
paragraphs: Vacancies and turnover in key unit administrator positions, and the  deployment of unit administrators to fill other military requirements,  impaired a unit’s ability to carry out critical pay administration tasks that  could have prevented or led to early detection of pay problems associated  with our case study units.  In addition to pay administration  responsibilities, unit administrator duties include duties for personnel and  supply operations.  We were told that vacancies in unit administrator  positions were difficult to fill and often remained vacant for many months  because Army policy requires the individual filling the unit administrator  position have a “dual” status, which means the individual must perform  duties both in the capacity of an Army Reserve military occupation  specialty as well as unit administrator.
For example, at the 948th Surgical Team, the unit administrator position  was vacant prior to and during the unit’s mobilization.  We were informed  that the 948th Surgical Team had difficulty filling the vacancy because of its  dual status—i.e., the individual must have (1)  a medical background to  meet the unit’s mission requirements, and (2) knowledge and experience  performing the personnel, payroll, and supply tasks of a unit administrator.   In the absence of the unit administrator, the unit commander assigned a  sergeant with limited knowledge of pay entitlements and DJMS-RC  processing requirements to help carry out some of the unit administrator’s  pay management duties.  The sergeant told us that during a 2-week period  during late April 2003, she spent about 100 hours attempting to resolve the  unit’s pay problems, while concurrently carrying out her duties as a health  specialist.
section_title: Inadequate Pay Management Training
paragraphs: In addition to concerns about the level of resources provided to support  critical unit administrator positions, we identified instances in which the  lack of adequate training on pay management duties and responsibilities  provided to unit administrator and finance office personnel contributed to  soldiers’ pay problems.  Further, we found that unit commanders did not  always support these important pay management duties.  Our Standards  for Internal Control in the Federal Government provide that management  should establish and maintain a positive and supportive attitude toward  internal controls and conscientious management.
Several of the individuals serving as unit administrators in our case study  units informed us that they had received limited or no formal training  covering unit administrator pay management responsibilities and that the  training they did receive did not prepare them for mobilization issues  associated with supporting and processing active duty pays.  Moreover, few  of these unit administrators had completed all of the required training on  active duty pays and allowance eligibility and processing requirements.   Unit administrators have responsibility for a variety of pay-related actions,  including working with the unit soldiers to obtain critical pay support  documentation, maintaining copies of pay support records, providing pay- transaction support documentation to the UPC, and reviewing pay reports  for errors.  Without adequate training, unit administrators may not be  aware of these critical pay management responsibilities.
Lack of training contributed to a number of pay errors that unit  administrators could have prevented:  At the 824th Quartermaster unit, while our audit of unit pay reports  showed that the unit administrator reviewed the documents, we saw no  indication that she used this information to identify and stop an  overpayment of $18,000 to one soldier in her unit.  As a result, the  erroneous pay was allowed to continue for another 5 months.
Several soldiers with the 965th Dental Company did not receive  promotion pay increases and other entitlements for over 2 months  because the unit administrator failed to process necessary pay-support  documentation--available at the time of unit’s initial SRP--until after the  unit was deployed on active duty.
At the 443rd Military Police Company, the unit’s finance sergeant who  was assigned pay management responsibilities did not gather and  submit current documentation needed to support active duty pays, such  as documents showing soldiers’ marital status and number of  dependents.  As a result, soldiers from this unit experienced  overpayments, underpayments, and late payments associated with their  housing and cost of living allowances.
Inadequate training of military pay technicians at Army finance offices at  mobilization and demobilization stations, and at area servicing finance  locations (for deployed soldiers), also adversely affected the accuracy and  timeliness of pays to mobilized Army Reserve soldiers.  Few of the military  finance personnel responsible for processing pay information at the  mobilization and demobilization stations and at the area servicing finance  office for deployed units had formal training on DJMS-RC pay procedures.   Instead, several of the military pay technicians and supervisors we talked  to at the Army mobilization and demobilization stations told us they relied  primarily on on-the-job training to become knowledgeable in the pay  eligibility and pay transaction processing requirements for mobilized Army  Reserve soldiers.  For example, military pay personnel at the Defense  Military Pay Office at Ft. Eustis informed us that instead of receiving  formal training on active duty pay entitlements or DJMS-RC pay  processing, they became knowledgeable in mobilization and  demobilization pay processing procedures by processing hundreds of  soldiers within 2 to 3 weeks of being assigned these responsibilities.  They  also said they contacted full-time civilians in the finance office, as well as  UPC and DFAS officials, by telephone for assistance.
Also, few of the Army finance personnel at overseas area servicing finance  locations received formal training on Army Reserve pay eligibility and  DJMS-RC processing requirements before assuming their duties.  These  personnel had primary responsibility for supporting active duty payments  to mobilized Army Reserve soldiers deployed overseas, including  responsibility for processing location-based active duty payments to these  soldiers.  Camp Arifjan was the Army location assigned responsibility for  processing pay to mobilized Army Reserve soldiers deployed in Kuwait and  Iraq during 2003.  Officials from the 336th Command, the Army command  with oversight responsibility for Camp Arifjan, confirmed that while  finance personnel at Camp Arifjan received training in the pay eligibility  and pay processing procedures for active duty Army soldiers, they were not  adequately trained in pay eligibility and processing procedures for Army  Reserve soldiers.
We were told of instances in which Army finance personnel were unable to  help Reserve soldiers resolve their pay problems.  For example, the 948th  Surgical Team contacted an Army finance unit located in Kandahar,  Afghanistan, to request its assistance in resolving the unit’s pay problems.   However, the finance personnel at that location were unable to help resolve  the 948th Surgical Team’s pay problems because they said they had not had  training in this area and were not familiar with DJMS-RC processing  requirements and procedures.  All 20 soldiers with the 948th  Surgical unit  experienced pay problems associated with their location-based hardship  duty payments, which  required manual processing every month by the  unit’s area servicing finance office.
Further, we saw little evidence that the unit commanders of our case study  units received any training on their role in supporting their unit  administrators in these important pay management responsibilities.  For  example, at one of our case study units, the 965th Dental Company, the unit  commander informed us that he did not support the review of pay  management reports because soldiers had the capability to review their pay  online and would use this capability to identify and report any pay  problems.  However, as discussed earlier, while we identified numerous  instances in which soldiers received overpayments or had other pay  problems, we saw little indication that these soldiers found and reported  these problems prior to our audit.  Moreover, we identified two instances in  which soldiers did not report that they had received tens of thousands of  dollars in improper active duty payments.
section_title: Customer Service Breakdowns
paragraphs: Our audit work at eight case study units identified significant soldier  concerns with both the level and quality of customer service they received  related to their active duty pays, allowances, and tax benefits.  The soldiers’  concerns centered around three distinct areas: (1) the accessibility of  customer service, (2) the ability of customer service locations to help  soldiers, and (3) the treatment of soldiers requesting assistance.  Servicing  soldiers and their families with pay inquiries and problems is particularly  critical in light of the error-prone processes and limited automated system  processing capabilities.  Ultimately, pay accuracy is left largely to the  individual soldier.
Although there are several sources that soldiers can turn to for pay issue  resolution, including an online system and a toll free phone pay assistance  number, soldiers at our case study units experienced problems in accessing  these sources.   Mission requirements and the distance between  deployment locations and field finance offices often impaired the soldiers’  ability to utilize the in-theater customer service centers.  Also, soldiers did  not always have Internet and telephone access to utilize sources through  these media.  The lack of Internet access for deployed soldiers was  particularly problematic because it limited soldiers’ access to pay,  allowance, and tax benefit data reflected in their leave and earnings  statements.  Lacking leave and earnings statements, soldiers had no means  to determine the propriety of their active duty payments.  For example,  soldiers with the 948th Surgical Team told us that their inability to access  the leave and earnings statements adversely affected their overall morale.
Even when mobilized reservists were able to contact customer service  sources, their pay issues often continued because the office they were  instructed to contact was unable to address their inquiry or correct their  problem.  In some cases, customer service sources failed to help soldiers  because they lacked an understanding of what was needed to fix the  problems.  When representatives of the 948th Surgical Team contacted their  parent company for help in correcting pay problems, personnel with the  parent company informed them that they could not fix the unit’s pay  problems because they (incorrectly) believed that the unit was paid  through the Army’s active duty pay system.   Soldiers at other units were  redirected from one source to another.  Soldiers were not aware of which  sources could address which types of problems, and more significantly, the  customer service sources themselves often did not know who should  correct a specific problem.
An Army Reserve major’s experience illustrates the time and frustration  that is sometimes involved with soldiers’ attempts to obtain customer  service for correcting errors in active duty pays, allowances, and related  tax benefits.
Individual Case Illustration:  Extensive, Time-consuming Action Required to  Resolve Pay Issue  A soldier from Maryland was mobilized in March 2003 from the Army’s Individual  Ready Reserve to active duty to serve as a liaison between the Army and Air Force to  help coordinate ground and air combat operations in Iraq.  After completing his 2- month active duty tour and returning to an inactive reserve status in May 2003, he  contacted Army officials to inform them that he was continuing to receive active duty  pays and volunteered to immediately repay these erroneous overpayments.  In July  2003, he wrote a check for $6,150.75 after receiving documentation showing his debt  computation.  However, he continued to receive Leave and Earnings Statements  indicating that he had an outstanding debt.  He contacted his Army demobilization  finance office to determine how to get the erroneous outstanding debt removed from  his pay records.  After being referred by officials at that location to various DFAS  locations (including once being told, “There is nothing more I can do for you.”), he  contacted us for assistance.  After DFAS recomputed the soldier’s debt as a result of  our inquiry, the soldier was informed that he owed an additional $1,140.54, because  the original debt computation did not fully consider the erroneous combat zone tax  exclusion benefits he received.  Overall, he spent nearly a year after his 2-month active  duty tour ended, and about 20 phone calls, faxes, and letters in contacting at least  seven different DOD representatives at five different customer service centers to  correct active duty pay and allowance overpayments and associated combat tax  exclusion benefit problems.
Finally, soldiers expressed concern about the treatment they sometimes  received while attempting to obtain customer service.  Soldiers expressed  concern that certain customer service representatives did not treat soldiers  requesting assistance respectfully.  For example, one soldier who  attempted to make corrections to his Certificate of Discharge or Release  from Active Duty (DD 214) informed us that mobilization station personnel  told him that the citations and dates of service he was trying to add “didn’t  matter.”  Additionally, some soldiers told us that when they raised concerns  about the quality of customer service they received with respect to their  pay inquiries and concerns, they were sometimes ignored.  For example,  soldiers with Connecticut’s 3423rd Military Intelligence Detachment told us  they contacted the local Inspector General because they believed that  finance personnel at their deployment location had both actively tried to  impair the payment of their active duty entitlements and had tried to  intimidate and discourage the unit’s soldiers from seeking help elsewhere.   However, they were not aware of any action taken as a result of their  concerns.
section_title: Systems Problems
paragraphs: Weaknesses in automated systems contributed significantly to the  underpayments, overpayments, and late payments we identified.  These  weaknesses consisted of (1) nonintegrated systems with limited system  interfaces and (2) limited processing capabilities within the pay system.   The Army and DFAS rely on the same automated pay system to authorize  and process active duty pays for Army Reserve soldiers as they use for  Army National Guard soldiers.  In addition, similar to the Army National  Guard, the Army Reserve’s personnel and order-writing systems are not  integrated with the pay system.  Consequently, many of the systems  problems experienced by mobilized Army Reserve soldiers are similar to  those that we identified in our report on pay issues associated with  mobilized Army National Guard soldiers.
Because of the automated systems weaknesses, both Army Reserve and  active Army personnel must put forth significant manual effort to  accurately process pays and allowances for mobilized Army Reserve  soldiers.  Moreover, to compensate for the lack of automated controls over  the pay process, both DFAS and the Army place substantial reliance on the  review of pay reports to identify pay errors after the fact.  Part of this  reliance includes the expectation that soldiers review their own leave and  earnings statements, even though these statements do not always provide  clear explanations of all payments made.  Finally, because of DJMS-RC’s  limitations, the system cannot simply stop withholding taxes for soldiers in  designated combat zone locations.  Instead, for these soldiers, the system  withholds taxes and then pays the soldiers the amount that was withheld at  least a month after the soldiers were first entitled to receive this benefit.
section_title: Automated Systems Are Not Integrated and Have Limited Interfaces
paragraphs: The key pay and personnel systems involved in authorizing, entering,  processing, and paying mobilized Army Reserve soldiers are not integrated  and have only limited interfaces.  Figure 1 provides an overview of the key  systems involved in authorizing, entering, processing, and making active  duty payments to mobilized Army Reserve soldiers.
Hard copy of administrative change documents (e.g. mobilization orders, promotion orders)
Pay, allowances, Leave and Earnings Statements, etc. generated for mobilized soldiers 1 – Regional Level Application System (RLAS) 2 – Tactical Personnel System (TPS) 3 – Transition Processing (TRANSPROC) System 4 – Defense Military Pay Office (DMO) 5 – Total Army Personnel Database – Reserve (TAPDB-R) 6 – Defense Joint Military Pay System – Reserve Component (DJMS-RC)
Lacking either an integrated or effectively interfaced set of personnel and  pay systems, DOD must rely on error-prone, manual data entry from the  same source documents into multiple systems.  We found numerous  instances in which pay-affecting personnel information was not entered  promptly into the pay system, resulting in numerous pay errors.
We found several instances in which soldiers that were promoted while on  active duty did not receive their pay raises when they should have because  the promotion information was not promptly recorded in DJMS-RC.  For  example, one Army Reserve soldier’s promotion was effective on July 1,  2003.  However, the soldier’s promotion was not processed in the pay  system until October 2003, which delayed an increase in both his basic pay  and basic allowance for housing.  The soldier received his promotion pay,  including back pay, in late October 2003, resulting in late payments totaling  over $2,700.
Lacking an effective interface between pay and personnel systems, DOD  and the Army must rely on after-the-fact detective controls, such as pay and  personnel system data reconciliations to identify and correct pay errors  occurring as a result of mismatches between personnel and pay system  data.  However, even these reconciliations will not identify soldiers that are  being paid for active duty while in inactive status because the Army  Reserve personnel system currently does not maintain data to indicate  whether or not soldiers are on active duty.
section_title: Limited Automated Processing Capabilities
paragraphs: DJMS-RC was not designed to pay Army Reserve soldiers for active duty  tours longer than 30 days.  According to DOD officials, requiring DJMS-RC  to process various types of pays for active duty tours that exceed 30 days  has stretched the system’s automated processing capabilities.  Because of  the system’s limitations, the Army and DFAS were required to make  monthly error-prone manual inputs for certain active duty pays, such as  hardship duty pay.  We found many instances in which these manual inputs  resulted in payment errors.  Moreover, because of the way in which  hardship duty pay was processed and reported on soldiers’ leave and  earnings statements, mobilized Army Reserve soldiers could not always  determine whether they received all of their entitled pays and allowances.   In addition, because of current processing limitations, DJMS-RC cannot  process a required tax exclusion promptly for soldiers in a combat zone.   This processing limitation has resulted in late payments of this benefit for  all entitled Army Reserve soldiers.
subsections: section_title: Hardship Duty Pay
paragraphs: During our audit period, we found numerous errors in hardship duty pay as  a result of a DJMS-RC processing limitation that required the use of a  miscellaneous payment code for processing this type of pay.  Because of  the use of this miscellaneous code instead of a code specifically for  hardship duty pay, this pay could not be automatically generated on a  monthly basis once a soldier’s eligibility was established.  Therefore,  hardship duty pay had to be manually entered every month for eligible  soldiers.
We found that nearly all soldiers in our case studies who were eligible for  hardship duty pay experienced problems with this pay, including late  payments, underpayments, and overpayments.  For example, the 965th  Dental Company’s soldiers from Seagoville, Texas, experienced both  underpayments and overpayments.  Specifically, all 85 soldiers deployed to  Kuwait were underpaid a total of approximately $8,000 for hardship duty  pay they were entitled to receive during their deployment overseas.   Subsequently, 76 of the unit’s soldiers were overpaid a total of almost  $47,000 because they continued to receive hardship duty payments for  more than 6 months after they had left the theater.
Both underpayments and overpayments, as well as late payments, of  hardship duty pay occurred largely because of the reliance on manual  processing of this pay every month.  The errors often occurred because  local area finance personnel did not receive accurate or timely  documentation such as flight manifests or data from the Tactical Personnel  System indicating when soldiers arrived or left the theater.  As a result,  finance personnel did not start these payments on time, and did not stop  these payments as of the end of the soldiers’ active duty tour date recorded  in DJMS-RC.
Use of the miscellaneous code to process hardship duty pay also precluded  the use of system edits as backup controls to prevent overpayments.   Because a miscellaneous code is used for various types of payments, DFAS  could not set up an edit to stop hardship duty pay after a soldier’s active  duty tour ended in the event finance personnel mistakenly continued to  manually process hardship duty pay.  Similarly, DFAS could not establish  an edit to prevent duplicate payments of hardship duty pay processed using  the miscellaneous code.  As a result, hardship duty pay could be entered  more than once for a soldier in a given month without detection.  From our  case studies, we identified three soldiers who each received two hardship  duty payments for one month, resulting in total overpayments of $250.
Use of the miscellaneous payment code also made it difficult for soldiers to  understand, and determine the propriety of, some of the payments  reflected on their leave and earnings statements.  Hardship duty pay and  other payments that are processed using the miscellaneous code are  reported on leave and earnings statements as “other credits.”  Furthermore,  the leave and earnings statements did not provide any additional  information about what the “other credits” were for unless pay clerks  entered additional explanations in the “remarks” section of the statement,  which they rarely did.   As a result, lacking any explanations, soldiers often  had no means to determine if these types of payments were appropriate  and accurate.
Unit commanders told us that they relied on soldiers to identify any pay  problems based on their review of their leave and earnings statements.   However, because leave and earnings statements do not always provide  adequate information or, as discussed previously, may not be available to  soldiers while deployed, reliance on the soldiers to identify pay errors is  not an effective control.
section_title: Combat Zone Tax Exclusion
paragraphs: In addition to soldiers’ pay problems that occurred primarily because of the  extensive use of manual processes, soldiers also experienced systematic  problems with automated payments related to their combat zone tax  exclusion, which resulted in late payments of this benefit for all soldiers in  the seven case study units that deployed overseas.  Soldiers are entitled to  the combat zone tax exclusion for any month in which the soldier performs  active service in a designated combat zone area.
Because DJMS-RC was designed as a pay system for Army Reserve soldiers  in weekend drill status, it does not have the processing capability to halt  the withholding of applicable income taxes.  Therefore, as a workaround  procedure to compensate for this limitation, an automated process was  established whereby the system first withholds taxes applicable to  payments made while soldiers are in a combat zone, and then later  reimburses soldiers for these withheld amounts in the following month.  As  a result of this workaround process, with few exceptions, Army Reserve  soldiers who served in a designated combat zone received their combat  zone tax exclusion benefit at least one month late.
Soldiers experienced longer delays in receiving this benefit if they arrived  in a combat zone after the midmonth cutoff for DJMS-RC processing,  which is approximately on the seventh day of each month.  In these cases,  entitlement to the tax exclusion was not recognized until the following  month, which then delayed the soldier’s receipt of his combat zone tax  benefit until the next month—the third month the soldier was deployed in  the combat zone.  For example, members of the 824th Quartermaster  Company that deployed to Afghanistan arrived in country on July 14, 2003,  but did not receive their first combat zone tax exclusion reimbursements  until early October, almost 3 months after they became eligible for the  exclusion.
section_title: Actions to Improve Accuracy and Timeliness of Mobilized Army Guard and Reserve Pay
paragraphs: DOD and the Army have reported a number of relatively recent positive  actions with respect to processes, human capital practices, and automated  systems that, if implemented as reported, should improve the accuracy and  timeliness of active duty pays, allowances, and related tax benefits  provided to mobilized Army Reserve soldiers.  Payroll payments to  mobilized Army Reserve soldiers rely on many of the same processes and  automated systems used for payments to mobilized Army National Guard  soldiers.  Consequently, actions to improve the accuracy and timeliness of  Army Reserve soldier payments are closely tied to actions taken in  response to several of the recommendations in our November 2003 Army  National Guard pay report.
Because many of DOD’s actions in this area were implemented in the fall of  2003 or later, they were not in place soon enough to have had a positive  impact on mobilized Army Reserve soldiers’ payments that we audited  through January 2004.  However, if implemented as reported to us, many of  DOD’s actions in response to the recommendations in our November 2003  report should help reduce the incidence of the types of pay problems we  identified for Army National Guard soldiers as well as those identified in  the Army Reserve case study units I have presented today.
With respect to the process deficiencies and related recommendations,  DOD reported implementing additional procedural guidance intended to  help minimize the pay problems attributable to non-standard or unclear  procedures.  One of the purposes of this guidance is to eliminate any  questions regarding which DOD entity is responsible for resolving a  soldier’s pay issues or questions.  Further, as of January 2004, DOD  reported establishing a new procedure under which DFAS assumed  responsibility (from the Army finance offices located in various overseas  locations) for all monthly manual entry of mobilized Army Reserve and  Army National Guard soldiers’ location-based hardship duty pays.
DOD also reported completing several actions related to our previous  recommendations to improve the human capital practices related to  payments to mobilized Army soldiers.  For example, the Army reported that  it had taken action to provide additional training for Army finance  personnel at overseas finance locations and at mobilization and  demobilization stations, as well as for those Army finance personnel  scheduled for deployment. This training was directed at better ensuring  that these personnel are adequately trained on existing and new pay  eligibility and pay processing requirements for mobilized Army National  Guard and Army Reserve soldiers.  DOD also reported establishing a new  policy in January 2004 directed at more clearly affixing responsibility for  addressing soldiers’ pay problems or inquiries.  Under this new policy, the  Army National Guard established a pay ombudsman to serve as the single  focal point for ensuring coordinated, prompt customer service on all Army  National Guard soldiers’ pay problems.
With respect to automated systems, the Army and DFAS have  acknowledged serious deficiencies in the current automated systems used  to pay mobilized Army Reserve soldiers, and report that they have  implemented a number of significant improvements, particularly to reduce  an estimated 67,000 manual monthly entries for hardship duty pay.  For  example, in response to our recommendations in the National Guard  report, DOD reported taking actions to (1) automate manual monthly  hardship duty pay in March 2004, (2) eliminate the use of “other credits” for  processing hardship duty pay and instead process these pays using a  unique transaction code to facilitate implementing a system edit to identify  and stop erroneous payments, (3) compare active duty release dates in the  Army’s system used to generate Release From Active Duty Orders with  soldiers’ end of active duty tour dates shown in DJMS-RC to identify and  stop any erroneous active duty payments, and (4) increase the reliability  and timeliness of documentation used to support soldiers’ arrival at and  departure from designated overseas locations.
Further, DOD has a major system enhancement effort underway in this  area–-the Defense Integrated Military Human Resources System  (DIMHRS).  As an interim measure, DOD is now pursuing Forward  Compatible Payroll (FCP).  FCP is intended to replace payroll systems now  used to pay Army military personnel and help eliminate several of the labor- intensive, error-prone workarounds necessitated by current DJMS-RC  processing limitations.  As of May 2004, FCP was expected to be  operational for all Army Reserve soldiers by March 2005.
section_title: Concluding Comments
paragraphs: The increased operating tempo for Army Reserve and Army National Guard  active duty mobilizations has stressed the current processes, human  capital, and automated systems relied on to pay these soldiers.  The  significant number of problems we identified associated with active duty  pay, allowances, and related tax benefits provided to mobilized Army  Reserve soldiers at eight case study locations raises serious concerns about  whether current operations can be relied on to provide accurate and timely  payments.  These pay problems caused considerable frustration, adversely  affected soldiers’ morale, and placed an additional unnecessary burden on  both the soldiers and their families.  Further, if not effectively addressed,  these pay problems may ultimately have an adverse impact on Army  Reserve reenlistment and retention.
Strengthening existing processes, human capital practices, and automated  systems is critical to preventing, or at minimum, promptly detecting and  correcting the errors we identified.  In this regard, DOD and the Army have  reported a number of relatively recent positive actions intended to improve  the accuracy and timeliness of active duty pays, allowances, and related tax  benefits provided to mobilized Army Reserve soldiers.  DOD’s completed  and planned near-term actions, if implemented as reported, should reduce  the number of pay problems.
However, mobilized Army Reserve soldiers cannot be reasonably assured  of accurate and timely active duty pays, allowances, and related tax  benefits until DOD completes a reengineering of all the processes, human  capital practices, and automated systems supporting this critical area.   Fully and effectively addressing Army Reserve soldiers pay problems will  require priority attention and sustained, concerted, coordinated efforts by  DFAS, the Army, and the Army Reserve to build on actions taken and  planned.
Finally, I commend the Chairman and Vice Chairman for holding an  oversight hearing on this important issue.  Your Committee’s continuing  interest and diligence in overseeing efforts to effectively and efficiently  support our Army Guard and Reserve forces will be essential in bringing  about comprehensive and lasting improvements to many decades-old,  entrenched problems.  We are committed to continuing to work with you  and DOD to identify and monitor actions needed to bring about  comprehensive and lasting solutions to long-standing problems in its  business and financial management operations.
Mr. Chairman, this concludes my statement.  I would be pleased to answer  any questions you or other members of the Committee may have at this  time.
section_title: Contacts and Acknowledgments
paragraphs: For further information about this testimony, please contact Gregory D.  Kutz at (202) 512-9095 or kutzg@gao.gov.  Individuals making key  contributions to this testimony include James D. Berry Jr., Amy C. Chang,  Francine M. DelVecchio, Geoffrey B. Frank, Jennifer L. Hall, Ken Hill, Kristi  L. Karls, Jason M. Kelly, Tram Le, Julia C. Matta, Jonathan T. Meyer,  Michelle Philpott, John J. Ryan, Jenniffer F. Wilson, Leonard E. Zapata.
section_title: Background
paragraphs: While on active duty, all Army Reserve soldiers earn various statutorily  authorized types of pays and allowances.   The types and amounts of pay  and allowances that Army Reserve soldiers are eligible to receive vary  depending upon rank and length of service, dependency status, skills and  certifications acquired, duty location, and the difficulty of the assignment.   While Army Reserve soldiers mobilized to active duty may be entitled to  receive over 50 types of pays and allowances, we focused on 14 types of  pays and allowances applicable to the Army Reserve units we selected for  case studies.  As shown in table 2, we categorized these 14 pay and  allowance types into two groups: (1) pays, including basic pay, medical and  dental and foreign language proficiency skill-based pays, and location- based hostile fire and hardship duty pays, and (2) allowances, including  allowances for housing, subsistence, family separation, and cost of living  for the continental United States.
The law makes a distinction between the terms “pays” and “allowances” which together  make up a service member’s overall compensation package.  Generally, the term pay  includes basic pay, special pay, retainer pay, incentive pay, retired pay, and equivalent pay,  but does not include allowances. 37 U.S.C. Section 101(21).  DOD defines allowance as “a  monetary amount paid to an individual in lieu of furnished quarters, subsistence, or the  like.” DOD Financial Management Regulation, vol. 7A, Definitions, para. 15 (February  2001).  While generally items considered as “pay” are taxable for federal income tax  purposes, except for the cost of living allowance for the continental United States, most  allowances, such as those for housing, subsistence, and family separation, are not.
Pay when assigned to duty in specified  locations $50, $100, or $150 per month (depending  on duty location)
Hardship duty location pay for certain places  (phase out began on January 1, 2002)
Full pay for any portion of month when  assigned to a location subject to or in close  proximity to hostile fire or assigned to duty in  a designated imminent danger location $150 per month through  September 30,  2002, $225 per month, effective October 1,  2002, through December 31, 2004.
subsections: section_title: Mobilization Phases
paragraphs: As shown in figure 2, three key phases are associated with the pays and  allowances applicable to mobilized Army Reserve soldiers:   (1) mobilization: starting applicable active duty pays and allowances,   (2) deployment: starting and stopping applicable location-based active duty  pays while continuing other nonlocation-based active duty pay and  allowance entitlements, and (3) demobilization: stopping active duty pays  and allowances.
During mobilization, units receive alert orders and begin preparing for  active duty by conducting Soldier Readiness Processing (SRP) at the unit’s  home station.  Among other things, the SRP is intended to ensure that each  soldier’s financial records are in order.  The unit administrator is supposed  to gather all necessary documentation for each soldier and send it to the  U.S. Army Reserve Pay Center (UPC).  There, pay technicians enter  transactions to initiate basic pays and allowances for the mobilized soldiers  based on soldiers’ mobilization orders and documentation sent by the unit.
After the initial SRP, soldiers go as a unit to an assigned active duty Army  mobilization station, where they undergo a second SRP.  As part of this  second SRP, finance personnel at the mobilization station are responsible  for confirming or correcting the results of the first SRP, including obtaining  any necessary documentation and promptly initiating appropriate active  duty pay and allowance transactions that were not initiated during the first  SRP.
Transactions to initiate and terminate pays for all mobilized Army Reserve soldiers entitled  to receive special medical and dental pay entitlements are entered and processed centrally  at DFAS-IN. demobilization station did not take action to stop active duty pays for  demobilized Army Reserve soldiers, or if a soldier did not return to the  demobilization station for active duty out-processing, the responsibility for  stopping active duty pays and allowances falls to the soldier’s unit or the  UPC.
section_title: Scope and Methodology
paragraphs: Because current DOD operations used to pay mobilized Army Reserve  soldiers relied extensively on error-prone, manual transactions entered into  multiple, nonintegrated systems, we did not statistically test controls in this  area.  Instead, we audited eight Army Reserve units as case studies to  provide a detailed perspective on the pay experiences of mobilized Army  Reserve soldiers.  Each of these units had mobilized, deployed, and  demobilized at some time during the 18-month period from August 2002  through January 2004.  Using data supplied by the Army Reserve  Headquarters Operations Center, we selected case study units that had a  variety of deployment locations and missions.
To identify the pay experiences associated with each case study unit, we  obtained and analyzed DJMS-RC pay transaction extracts and other  available documentation.  We also conducted follow-up inquiries with  cognizant personnel at the Army Reserve Command, Regional Readiness  Command, and the Army Reserve Pay Center.  Because our objective was  to provide insight into the pay experiences of mobilized Army Reserve  soldiers, we did not perform an exact calculation of the net pay soldiers  should have received.  Our audit results reflect only problems that we  identified and we counted problems only once in the phase in which they  first occurred, even though the problems we identified sometimes  extended into subsequent phases.  Soldiers in our case study units may  have experienced additional pay problems that we did not identify.
For purposes of characterizing pay and allowance problems for this report,  we defined overpayments and underpayments as those that were in excess  of (overpayment) or less than (underpayment) the entitled payment.  We  considered as late payments any active duty pay or allowance paid to the  soldier over 30 days after the date on which the soldier was entitled to  receive such payments.  In addition, while we did not attempt to calculate  the exact impact of any soldier over, under, and late payments on their  combat zone tax exclusion benefits, we did examine readily available data  to determine the extent to which our case study unit soldiers’ experienced  problems with their entitled combat zone tax exclusion benefits.
In addition, we conducted a number of other procedures, including   Observing procedures and practices followed by the various DOD  components involved in providing active duty pays and allowances to  Army Reserve soldiers;  Interviewing recently demobilized soldiers about their pay experiences   Reviewing selected edit and validation checks in DJMS-RC, and certain  data entry processes for DJMS-RC.
We conducted our audit work from November 2003 through June 2004 in  accordance with U.S. generally accepted government auditing standards.   Further details on our scope and methodology will be provided in our soon- to-be-issued report.
section_title: Summaries of Case Studies
paragraphs: We audited the pay experiences of soldiers in the following eight Army  Reserve units as case studies of the effectiveness of the processes, human  capital practices, and automated systems in place over active duty pays,  allowances, and related tax benefits:  824th Quartermaster Company, Fort Bragg, N.C.   965th Dental Company, Seagoville, Tex.  948th Forward Surgical Team, Southfield, Mich.  443rd Military Police Company, Owings Mills, Md.
FORSCOM Support Unit, Finksburg, Md.  629th Transportation Company, Ft. Eustis, Va.  3423rd Military Intelligence Detachment, New Haven, Conn.  431st Chemical Detachment, Johnstown, Pa.
These case studies are presented to provide an overview of the types and  causes of any pay problems experienced by these units. We selected  regional readiness commands that had a large number of activated Reserve  units that had mobilized, deployed, and returned from their tour of active  duty in support of Operations Noble Eagle, Enduring Freedom, and Iraqi  Freedom.  From the list of units assigned to these Readiness Commands,  we selected eight case studies that had a variety of deployment locations  and missions, including both overseas and continental U.S. deployments.
subsections: section_title: 824th Quartermaster Company Fort Bragg, NC
paragraphs: Number of mobilized unit soldiers’ pays audited:  68 Period of mobilization: February 2003 to September 2003 Principal deployment location:  Kuwait and surrounding locations,  Afghanistan, and Fort Bragg, NC Deployment duties:  Rigged parachutes for individual soldiers and large  equipment drops.
Unit Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $60,000 (57)
Late payments identified (number of soldiers affected): $3,000 (9)
Underpayments identified (number of soldiers affected): $10,000  (49)
Combat zone tax exclusion benefit problems identified: All 49  soldiers deployed overseas received their combat zone tax exclusion  benefit at least 1 month late, totaling about $20,000.  In addition,  approximately $1,300 was over-withheld from 5 soldiers.
Examples of specific problems identified:  Nine soldiers were paid family separation allowance even though they  remained at their home station and worked within their normal  commuting distance of fewer than 50 miles.  Another soldier did not  receive his entitled family separation allowance, totaling $1,400, until  the end of his active duty tour.
Forty-nine soldiers were underpaid hardship duty pay    Forty-seven soldiers continued to receive hardship duty pay payments  for up to 5 months following their return home, totaling $30,000.
Forty-four soldiers that were deployed overseas were overpaid hostile  fire pay.
One soldier who demobilized early due to a medical condition continued  to receive active duty pay and entitlements until the end of January 2004  when we identified the error, resulting in an overpayment of about  $18,000.
section_title: 965th Dental Company Seagoville, Tex
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $100,000  (86)
Late payments identified (number of soldiers affected): $16,000 (86)
Underpayments identified (number of soldiers affected): $27,000  (65)
Combat zone tax exclusion benefit problems identified: 75 of the 85  soldiers deployed overseas received their combat zone tax exclusion  benefit 2 to 3 months late, totaling approximately $24,000.  In addition, we  identified $200 in over-withholdings and $300 in under-withholdings.
Examples of specific problems identified:  Eighty-five soldiers were underpaid for hardship duty pay of $8,000  Sixty-six soldiers received hardship duty pay totally $47,000 for at least 6  months after leaving Kuwait.
One soldier received mobilization orders but did not report to the unit’s  mobilization station.  Nonetheless, he received $36,000 of active duty  pay for over 12 months.  These overpayments continued until we  discovered them during our audit.
Another soldier received hostile fire pay, hardship duty pay, family  separation allowance, and the combat zone tax exclusion benefits that  he was no longer entitled to receive after he left his designated overseas  deployment location early as a result of severe illness incurred during  his active duty mobilization.
One soldier received a duplicate basic allowance for housing allowance  payment of $6,600.
section_title: 948th Forward Surgical Team, Southfield, MI
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $20,700 (20)
Late payments identified (number of soldiers affected): $5,600 (20)
Underpayments identified (number of soldiers affected): $2,000 (5)
Combat zone tax exclusion benefit problems identified: All 20 unit  soldiers deployed overseas received their combat zone tax exclusion  benefits at least 1 month late, totaling $15,300.  In addition, we identified  $130 that was over-withheld.
Examples of specific problems identified:  After arriving in Afghanistan, (1) 19 soldiers waited 47 days to receive  their initial hostile fire pay, (2) 19 soldiers received their February  hardship duty pay in April, and (3) 20 soldiers waited 67 days before  receiving their initial combat zone tax exclusion benefit.
A sergeant spent 100 hours in late April 2003 attempting to resolve the  unit’s pay problems. Several soldiers were forced to borrow money to  meet financial obligations.
Nineteen soldiers continued to receive hardship duty pay for a period  ranging from 1 to 5 months after leaving Afghanistan.
section_title: 443rd Military Police Company, Owings Mills, MD
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $25,000 (48)
Late payments identified (number of soldiers affected): $20,000 (110)
Underpayments identified (number of soldiers affected): $15,000  (114)
Combat zone tax exclusion benefit problems identified: One hundred  twelve of the 114 unit soldiers deployed overseas received their combat  zone tax exclusion benefits at least 1 month late, totaling an estimated  $33,000. In addition, we identified $600 in under-withholding and $400 over- withholdings.
Examples of specific problems identified:  Bi-weekly trips to Kuwait were required for 5 months to address unit  pay issues.
One hundred thirteen soldiers did not receive their last month’s  hardship duty pay.
Six unit soldiers were paid beyond their date of separation from the  Army, including 1 soldier who was overpaid about $10,500.
section_title: FORSCOM Support Unit Finksburg, MD
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $8,000 (1)
Late payments identified (number of soldiers affected): $300 (1)
Underpayments identified (number of soldiers affected): $0 (1)
Combat zone tax exclusion benefit problems identified:  This soldier  received his combat zone tax exclusion benefit after he demobilized, an  estimated $2,500 late.
Examples of specific problems identified:  Nearly a year of an estimated 20 phone calls, faxes, and letters to DFAS  and Army customer service representatives at five locations were  required to identify and resolve an overpayment of $8,000.
Did not receive any hostile fire pay until after he demobilized.
Soldier continued to receive active duty pays and allowances for a  month after demobilizing.
section_title: 629th Transportation Detachment Fort Eustis, VA
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $3,000 (24)
Late payments identified (number of soldiers affected): $14,000 (23)
Underpayments identified (number of soldiers affected): $2,000 (24)
Combat zone tax exclusion benefit problems identified: While we did  not attempt to quantify, nearly all soldiers deployed overseas received their  combat zone tax exclusion benefit at least 1 month late.
Examples of specific problems identified:  Twenty-three of 24 soldiers deployed to Kuwait received duplicate  payments of $75 for hostile fire pay during their initial month of  deployment.
Twenty-three of 24 soldiers were underpaid hardship duty pay for 1 to 2  months during their overseas deployment.
section_title: 3423rd Military Intelligence Detachment New Haven, CT
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $18,500 (10)
Late payments identified (number of soldiers affected): $5,000 (9)
Underpayments identified (number of soldiers affected): $4,000 (6)
Combat zone tax exclusion benefit problems identified:  None,  because the soldiers were not eligible for this benefit.
Examples of specific problems identified:  Nine soldiers erroneously began receiving the overseas cost of living  allowance, rather than the continental U.S. cost of living allowance, at  the beginning of the mobilization.  This created $3,500 in overpayments  and $700 in late payments for the unit.
Nine soldiers continued to receive their active duty pays and  entitlements for 13 to 28 days after demobilization, resulting in $14,000  in overpayments.
section_title: 431st Chemical Detachment Johnstown, PA
paragraphs: Pay and Allowance Problems Identified (by Phase)
Overpayments identified (number of soldiers affected):  $12,000 (10)
Late payments identified (number of soldiers affected): $1,000 (8)
Underpayments identified (number of soldiers affected): $2,000 (10)
Combat zone tax exclusion benefit problems identified: While we  were unable to quantify, nearly all soldiers deployed overseas received  their combat zone tax exclusion benefit at least 1 month late.
Examples of specific problems identified:  While deployed to Kuwait, (1) 8 of 10 soldiers did not receive their first  month’s hostile fire pay and (2) all 10 soldiers did not receive hardship  duty pay for the first month after arrival overseas.
All 10 soldiers continued to receive hardship duty pay payments for up  to 7 months following their return home, despite the unit administrator’s  attempts to get the pay stopped through the unit’s chain of command.
The unit administrator also accessed the pay hotline at 888-PAY-ARMY,  but was placed on hold for such a long time that she gave up.
section_title: GAO’s Mission
paragraphs: The Government Accountability Office, the audit, evaluation and  investigative arm of Congress, exists to support Congress in meeting its  constitutional responsibilities and to help improve the performance and  accountability of the federal government for the American people. GAO  examines the use of public funds; evaluates federal programs and policies;  and provides analyses, recommendations, and other assistance to help  Congress make informed oversight, policy, and funding decisions. GAO’s  commitment to good government is reflected in its core values of  accountability, integrity, and reliability.
section_title: Obtaining Copies of GAO Reports and Testimony
paragraphs: The fastest and easiest way to obtain copies of GAO documents at no cost  is through GAO’s Web site (www.gao.gov). Each weekday, GAO posts  newly released reports, testimony, and correspondence on its Web site. To  have GAO e-mail you a list of newly posted products every afternoon, go to  www.gao.gov and select “Subscribe to Updates.”
subsections: section_title: Order by Mail or Phone
section_title: To Report Fraud, Waste, and Abuse in Federal Programs
section_title: Congressional Relations
section_title: Public Affairs