For fiscal year  2006, DOD reported $8.5 billion was obligated for travel. Fiscal Year 2006 Improper Payments Reporting and Estimate for the DOD Travel Program Were Incomplete

In its fiscal year 2006 PAR, DOD estimated approximately $8 million in  travel program improper payments, reported as reflecting about 1 percent  of reported program payments. While this estimate would indicate the  program was not at risk of significant improper payments under OMB  guidance, we found that DOD’s travel improper payments disclosures for  fiscal year 2006 were incomplete as to the full extent of total travel  payments made by DOD. The estimate information reported by DOD,  which DOD used to assess the travel program’s risk of significant  improper payments, only included payments from one system, DTS, which  processed an estimated 10 percent of DOD’s travel. Nonetheless, DOD’s  2006 PAR describes a travel postpayment review process that may mislead  the reader to believe that the reported travel improper payment estimate  represents more than DTS-processed travel. Further, the travel improper  payment estimate excluded the largest user of DTS, the Army, which  would likely have increased DOD’s estimate by over $4 million. Finally, the  statistical sampling methodology and process used by DOD to estimate  DTS improper payments as reported for fiscal year 2006 had several  weaknesses and did not result in statistically valid estimates of travel  improper payments. DOD Faces Challenges in Plans to More Fully Assess Travel Improper Payments

As discussed in the previous section, DOD’s process for estimating and  reporting improper payments for its travel program for inclusion in its  fiscal year 2006 PAR was significantly flawed. To address reporting issues identified in its fiscal year 2006  auditor’s report, DOD has established a Program Officer for Improper  Payment and Recovery Auditing. Further, the department is establishing  an improper payment working group and held a “Department of Defense  Improper Payments Information Act Conference.”

		Improper Payments Survey Results Unreliable Due to Limited Guidance and Oversight by the Office of the Comptroller

DOD assesses its programs, including travel, for improper payments,  based on its departmentwide annual Improper Payments Survey. Our review indicated several weaknesses  in the survey and reported results, including weaknesses in the guidance  regarding the estimation of travel improper payments and lack of oversight  and review of the survey and its results. The exclusion of such a significant portion of travel payments  in the survey decreases its effectiveness as an improper payments  assessment tool and indicates inadequate monitoring of the survey process  by the Office of the Comptroller. Appendix I: Scope and Methodology

To assess the completeness and accuracy of the Department of Defense’s  (DOD) fiscal year 2006 Improper Payments Information Act of 2002 (IPIA)  disclosure for travel improper payments, we reviewed the IPIA disclosures  in its performance and accountability reports (PAR) for fiscal years 2003,  2004, 2005, and 2006. To assess DOD’s planned efforts to improve and refine its processes for  estimating and reporting on travel improper payments we met with staff  from the Office of the Comptroller.
Why GAO Did This Study

Fiscal year 2006 was the first year that the Department of Defense (DOD) reported improper payment information for its travel program under the Improper Payments Information Act of 2002 (IPIA). For fiscal year 2006, DOD reported obligations of approximately $8.5 billion for travel. Congress mandated that GAO assess the reasons why DOD is not fully in compliance with IPIA related to travel expenditures. In May 2007, GAO issued an initial report in response to this mandate. To further respond, GAO assessed (1) the completeness and accuracy of DOD's fiscal year 2006 IPIA travel disclosure in its performance and accountability report (PAR), and (2) DOD's planned efforts to improve and refine its processes for estimating and reporting on travel improper payments. To complete this work, GAO reviewed DOD's IPIA reporting, IPIA, Office of Management and Budget's (OMB) IPIA implementing guidance, and met with cognizant DOD officials.

What GAO Found

In its fiscal year 2006 PAR, DOD reported an estimate of approximately $8 million in travel improper payments, reflecting about 1 percent of reported travel payments. While this estimate would indicate the program was not at risk of significant erroneous payments under OMB guidance, DOD's improper payment travel disclosure for fiscal year 2006 was incomplete. The DOD travel payment data used to assess the program's risk of significant improper payments only included payments processed by the Defense Travel System (DTS)--approximately 10 percent of the $8.5 billion of DOD travel obligations reported for fiscal year 2006. Further, DOD's 2006 PAR described a travel postpayment review process that may mislead readers to believe that the reported travel improper payment estimate represents more than DTS-processed travel. The travel improper payment estimate also excluded the largest user of DTS, the Army, which would likely have increased DOD's estimate by over $4 million. Finally, the statistical sampling methodology and process used by DOD to estimate DTS improper payments as reported for fiscal year 2006 had several weaknesses and did not result in statistically valid estimates of travel improper payments. DOD is taking steps to more fully assess and report on its travel program for improper payments for future IPIA reporting. DOD's planned assessment is to be based on an annual Improper Payments Survey conducted by the Office of the Undersecretary of Defense (Comptroller). However, GAO's review identified several weaknesses with the survey and reported results, including limited guidance on how to estimate travel improper payments and a lack of oversight and review over implementation of the survey and its results. As shown in the figure below, there were substantial discrepancies among the travel populations reported in the PAR, improper payment survey, and fiscal year 2006 travel obligations. The exclusion of such a significant portion of travel expenditures in the survey decreases its effectiveness as an improper payments assessment tool. DOD has also established a Program Officer for Improper Payment and Recovery Auditing, an improper payment working group, and held a "Department of Defense Improper Payments Information Act Conference."