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DOD acknowledged that it does not meet accounting standards for the financial reporting of public accounts payable. "DOD cannot support its accounts payable balances because it lacks standard procedures for recording. reporting, and reconciling the amounts among the financial, accounting, and reporting systems." [DOD IG Report 2010-002, p. 10]
Example#1: The Component did not properly identify and value the Military Department accounts payable balances reported in its 742 Report. Specifically, the Component inaccurately reported 73 percent of the $3 billion 742 Report accounts payable balances ($2.1 billion overstated and $0.1 billion understated) and did not include at least $453.9 million of valid accounts payable in the DOD accounts payable balance.
Example#2: Accounts payable transactions were not recorded in a timely manner in the Component accounting system General Funds. Specifically, 89 of 199 vendor payment transactions sampled were not recorded in compliance with DOD FMR, which requires establishing the accounts payable on the same day as performance notification is received. The timely establishment of accounts payable transactions would allow for immediate recognition of liabilities. |