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Hearing Hearing Date: March 22, 2012 12:00 am

New Audit Finds Problems in Army Military Pay

New Audit Finds Problems in Army Military Pay
March 22, 2012
12:00 am

2154 Rayburn House Office Building

Joint Hearing of the Subcommittee on Government Operations, Efficiency and Financial Management and the Senate Committee on Homeland Security and Governmental Affairs Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security

Chairman Todd Platts Opening Statement

The purpose of today’s hearing is to review the accuracy of pay to active service members in the U.S. Army.  The hearing will examine the findings of an audit conducted by the Government Accountability Office of the Army military payroll accounts for Fiscal Year 2010.
In 2010, there were nearly 680,000 active duty Army service members whose pay was handled by the Defense Finance Accounting System, or DFAS, centered in Indianapolis.  GAO conducted its audit of DFAS in order to verify the accuracy and validity of Army payroll transactions.
Unfortunately, there were significant problems in DFAS’s record system that made it impossible for GAO to complete its audit.  Many of these problems were caused because DFAS does not store verification documents.  Due to an inability to match payroll files with personnel files, it took almost six months before GAO got access to a valid population of transactions to use for its audit.
Once GAO finally got this data, it requested supporting documentation for 250 payroll files.  This documentation is necessary in order to show that payments are correct.  It is also necessary in order to achieve auditable financial statements.  However, DFAS could not produce any information for 245 of the 250 files GAO requested, and could only provide complete information for 2 files. 
GAO’s audit shows serious problems with the Army’s current payroll system.  These issues must be resolved before it can successfully undergo an audit.  This subcommittee has previously focused on the Department of Defense’s efforts to become audit ready, including efforts to meet the 2017 deadline for full auditability and the 2014 deadline set by Secretary Panetta for auditable Statements of Budgetary Resources.
While these goals are laudable, GAO’s audit raises serious concerns about the feasibility of meeting those deadlines.  At over $46 billion, Army military payroll is a significant portion of total Army spending.  Payroll must be auditable for the Army to pass either a full audit of the audit of its Statement of Budgetary Resources.  The Army payroll is also a significant portion of total Department of Defense.  As a result, the Department of Defense cannot pass an audit unless the payroll systems are auditable.
Auditability is important, especially given the current financial state of our country.  We have an obligation to taxpayers to make sure that their money is spent accurately and efficiently.  But we also have an obligation to our service men and women to ensure they receive the support they need, including prompt and accurate pay.
The current problems in the Army’s system can result in significant errors in payroll.  In Fiscal Year 2010 alone, the DFAS Case Management System reported over 364,000 errors in Army military pay.  Today, we will also hear from a witness who has personally experienced numerous errors in his pay during his 29 years of service in the Army National Guard. 
We will also hear from witnesses about the current problems in the Army payroll system and the results of GAO’s audit.  I look forward to hearing all of their testimony, and working with them and my colleagues in the Senate in order to resolve those problems.

Witnesses and testimonies: LTC Kirk Zecchini

U.S. Army Reserve

Panel 1

Mr. Asif Khan

Director, Financial Management and Assurance
U.S. Government Accountability Office
Panel 2

Mr. Aaron Gillison

Deputy Director, Defense Finance and Accounting Service - Indianapolis
Department of Defense


Mr. Jim Watkins

Director, Accountability and Army Audit
Department of the Army


Ms. Jeanne M. Brooks

Director, Technology & Business Architecture Integration, Office of the Deputy Chief of Staff, G-1
Department of the Army


Related Documents
Name Document
GAO Report: The Army Faces Significant Challenges in Achieving Audit Readiness for Its Military Pay Document