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. 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. 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. 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. 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. 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.