	Long-Standing Financial Management Problems and Attempts at Reform

History is a good teacher. The problems with the department’s financial  management operations date back decades, and previous attempts at  reform have largely proven unsuccessful. The department  continues to rely on a far-flung, complex network of finance, logistics,  personnel, acquisition, and other management information systems—  80 percent of which are not under the control of the DOD Comptroller—to  gather the financial data needed to support day-to-day management  decisionmaking. This network was not designed to be, but rather has  evolved into, the overly complex and error-prone operation that exists  today, including (1) little standardization across DOD components,  (2) multiple systems performing the same tasks, (3) the same data stored in  multiple systems, (4) manual data entry into multiple systems, and (5) a  large number of data translations and interfaces that combine to  exacerbate problems with data integrity. Defense Business Operations Fund. Actions on many of the key areas central to successfully achieving desired  financial management and related business process transformation goals  —particularly those that rely on longer term systems improvements—will  take a number of years to fully implement.
What GAO Found

Financial management problems at the Department of Defense (DOD) are complex, long-standing, and deeply rooted throughout its business operations. DOD's financial management deficiencies represent the single largest obstacle to achieving an unqualified opinion on the U.S. government's consolidated financial statements. So far, none of the military services or major DOD components have passed the test of an independent financial audit because of pervasive weaknesses in financial management systems, operations, and controls. These problems go back decades, and earlier attempts at reform have been unsuccessful. DOD continues to rely on a far-flung, complex network of finance, logistics, personnel, acquisition, and other management information systems for financial data to support day-to-day management and decision-making. This network has evolved into an overly complex and error-prone operation with (1) little standardization across DOD components; (2) multiple systems performing the same tasks; (3) the same data stored in multiple systems; (4) manual data entry into multiple systems; and (5) a large number of data translations and interfaces, which combine to exacerbate problems with data integrity. Many of the elements that are crucial to financial management reform and business process transformation--particularly those that rely on long-term systems improvements--will take years to fully implement.